Forward-Looking Statements
You should read the following discussion of our financial condition and results
of operations in conjunction with the financial statements and the notes thereto
included elsewhere in the Form 10-Q. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to these
differences include those discussed below and elsewhere in this Form 10-Q.
Background
The lithium-ion battery manufacturing supply chain is organized into four
industries that operate in series: battery feedstock providers, material
refiners, cell manufacturers, and end-use product (electric vehicle, stationary
storage, consumer electronics, etc.) manufacturers. While the scale of
manufacturing of lithium-ion battery cells and of electric vehicles and other
end-use products have grown substantially within the US in recent years, there
has been little domestic growth in the battery feedstock and material refining
portions of the manufacturing supply chain. This has led to an imbalance within
the domestic US supply chain and has caused the majority of cell manufacturing
and end-use product manufacturers to rely on foreign supplies of their raw and
refined feedstock materials. The situation is so dire that in its "Mineral
Commodity Summaries 2020" report, the US Geological Survey calculated that less
than 1% of each of the critical and strategic battery metals (lithium, nickel,
cobalt, and manganese) produced globally in 2019 were produced within the US.
American Battery Metals Corporation ("ABMC" or the "Company") is a startup
company in the lithium-ion battery industry that is working to increase the
domestic US production of these four battery metals through its engagement in
the exploration of new primary resources of battery metals, in the development
and commercialization of new technologies for the extraction of these battery
metals from primary resources, and in the commercialization of an internally
developed integrated process for the recycling of lithium-ion batteries for the
recovery of battery metals. Through this three-pronged approach ABMC is working
to both increase the domestic production of these battery metals, and also to
ensure that as these materials reach their end of lives that the constituent
elemental battery metals are returned to the manufacturing supply chain in a
closed-loop fashion.
The Company was incorporated under the laws of the State of Nevada on October 6,
2011 for the purpose of acquiring rights to mineral properties with the eventual
objective of being a producing mineral company, if and when it ever occurs. We
have limited operating history and have not yet generated or realized any
revenues from our activities. Our principal executive offices are located at 930
Tahoe Blvd., Suite 802-16, Incline Village, NV 89451.
On August 8, 2016, the Company formed Lithortech Resources Inc. as a wholly
owned subsidiary of the Company to serve as its operating subsidiary for lithium
resource exploration and development. On June 29, 2018, the Company changed the
name of Lithortech Resources to LithiumOre Corp. ("LithiumOre"). On May 3, 2019,
the Company changed its name to American Battery Metals Corporation.
The growth in demand for lithium-ion batteries is predicted by industry
researchers to grow by over ten-fold over the next ten years, while over the
same period there are limited announcements for new production sources of
domestic US based lithium, nickel, cobalt, or manganese. As a result, there will
be increased pressure on the prices of domestically sourced battery metals, and
increased reliance on foreign sourced battery metals. These industry trends
support and validate the Company's multifaceted three-pronged business model to
increase the production of domestic US sourced battery metals. The Company is
currently a pre-revenue organization and we do not anticipate earning revenues
until such time as we have initial operations of our lithium-ion battery
recycling facility underway, or until we have undertaken sufficient exploration
work to identify lithium and or other battery metals reserves and have validated
and commercialized a cost-effective extraction system.
Employees
The company has fourteen employees: (a) two officers, Mr. Cole, our chief
executive officer, Ryan Melsert, our Chief Technical Officer, and (b) twelve
other employees which include Head of Resources, Principal Chemical Engineer,
Lead Onsite Project Manager, Senior Chemist, Head of Business Development,
Controller, Human Resources head, and Corporate Communications head.
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RESULTS OF OPERATIONS
American Battery Metals Corp. ("ABMC") has not realized any revenue from its
exploration activities on the Nye County property and it is extremely doubtful
that the mineral property will be able to produce any revenue for many years.
Without an ore reserve ABMC cannot seek substantial investors to further fund
the Company so that production can be achieved. Not until commercial production
is realized will ABMC have any chance of recognizing any form of revenue.
Results of Operations
Revenues
During the three months ended September 30, 2020 and 2019, the Company has not
realized any revenues.
Expenses
Three Months Ended September 30, 2020 and 2019
During the three months ended September 30, 2020, the Company incurred
$2,413,093 of operating expenses compared to $1,394,637 of operating expenses
during the three months ended September 30, 2019. Overall, the increase in
operating expense was due to the fact that the Company issued 13,240,000 common
shares for services with a fair value of $1,582,270 in fiscal 2020 compared to
3,650,000 common shares for fair value of $690,500 during fiscal 2019. The
Company also had an increase in payroll expense from $151,000 during the three
months ended September 30, 2019 to $447,000 during the three months ended
September 30, 2020 as the Company had more employees and operations compared to
the prior year.
In addition to operating expenses, the Company incurred interest and accretion
expense of $1,362,547 during the three months ended September 30, 2020 compared
to $1,100,494 during the three months ended September 30, 2019. The increase in
interest and accretion expense was due to the fact that the Company had more
conversions of outstanding convertible notes in the current year compared to
prior year which resulted in the acceleration of accretion on the debt discount
that was originally derived due to the fair value of the convertibility features
on the convertible notes. The Company also had an increase in the loss due to
the change in the fair value of the derivative liability from $62,554 for the
three months ended September 30, 2019 to $773,886 for the three months ended
September 30, 2020 due to the fact that the Company had a more volatile share
price during the current year which resulted in a wider spread between the fair
value of the common stock and the discounted conversion rates for the
convertible debentures. Finally, the Company recorded a gain on the settlement
of debt of $1,612,433 compared a gain of $86,187 during the three months ended
September 30, 2019 due to the fact that the Company entered into more settlement
agreements for the conversion of notes payable as well as cash settlements of
outstanding notes payable during the current fiscal period that resulted in an
elimination of a larger amount of the outstanding derivative liability which
resulted in a higher gain on settlement of debt. As part of the cash settlement
of outstanding notes payable, the Company incurred financing costs of $214,116
during the current period compared to $nil in the prior year.
Net Loss
During the three months ended September 30, 2020, the Company incurred a net
loss of $3,151,209 or $0.01 loss per share compared to a net loss of $2,475,244
or $0.02 loss per share during the three months ended September 30, 2019. The
increase in the net loss is due to the fact that the Company had more general
and administrative costs due to increases in payroll expense and share-based
compensation, but was offset by the fact that the Company recorded a larger gain
on settlement of debt in the current year due to an increase in the number of
debt settlements which included the elimination of the derivative liability.
Liquidity and Capital Resources
At September 30, 2020, the Company had cash of $1,292,358 and total assets of
$1,627,240 compared to cash of $829,924 and total assets of $1,161,314 as at
June 30, 2020. The increase in cash is due to the fact that the Company
received $1,343,750 of financing from private placements and $1,075,000 of
proceeds from convertible debentures during the period ended September 30, 2020
less repayments of convertible debentures of $882,571. The increase in total
assets is due to the increase in cash of $462,434 and increase in prepaid
expense of $6,093.
The Company had total current liabilities of $4,718,322 at September 30, 2020
compared to $5,795,170 at June 30, 2020. The decrease is due to a decline in
the derivative liability from $4,519,654 at June 30, 2020 to $2,777,634 at
September 30, 2020 based on the settlement of convertible notes payable from the
conversion of debt and the repayment of notes payable with cash during the
period. As at September 30, 2020, the Company had total face value of
convertible debt outstanding of $2,116,000 compared to total face value of
convertible debt of $2,211,200 as at June 30, 2020.
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As at September 30, 2020, the Company had a working capital deficit of
$3,182,537 compared to a working capital deficit of $4,727,912 at June 30, 2020.
The decrease in the working capital deficit was due to the settlement of
outstanding convertible notes payable, and the corresponding derivative
liabilities associated with those convertible notes, with the issuance of common
shares and payment of cash during the period.
During the three months ended September 30, 2020, the Company issued 13,240,000
common shares for services with a fair value of $1,582,270, issued 15,153,315
common shares to convert outstanding notes payable and accrued interest totaling
$1,770,232, issued 60,625,000 common shares in a private placement for
$2,450,000 (which was received during the year ended June 30, 2020), and issued
5,055,132 common shares for the exercise of cashless share purchase warrants
that were previously issued to note holders as an inducement for the convertible
note proceeds.
As at September 30, 2020 and June 30, 2020, the Company does not have any issued
or outstanding stock options.
Cash Flows
Cash from Operating Activities.
During the three months ended September 30, 2020, the Company used $1,071,651 of
cash for operating activities as compared to $838,772 during the three months
ended September 30, 2019. The increase in the use of cash for operating
activities was due to the fact that the Company raised more funding from
financing activities, including $1,343,750 from share subscriptions, which
allowed them to incur more operating costs to further the Company's development
and operations.
Cash from Investing Activities
During the three months ended September 30, 2020, the Company incurred $2,094
for the acquisition of equipment. The Company did not have any investing
activities during the three months ended September 30, 2019.
Cash from Financing Activities
During the three months ended September 30, 2020, the Company received
$1,536,179 of financing, which included $1,343,750 from subscription proceeds
related to a private placement of units, $1,075,000 of funding from the issuance
of convertible notes payable less repayments of $882,571 on the convertible
notes during the period. Comparatively, for the three months ended September
30, 2019, the Company received $829,453 of funding from financing activities
which was primarily from the funding and repayment of outstanding convertible
notes.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies and Estimates
In presenting the Company's financial statements in conformity with
U.S. generally accepting accounting principles, or GAAP, the Company is required
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, costs and expenses and related disclosures.
Some of the estimates and assumptions the Company is required to make relate to
matters that are inherently uncertain as they pertain to future events. The
Company bases these estimates and assumptions on historical experience or on
various other factors that it believes to be reasonable and appropriate under
the circumstances. On an ongoing basis, the Company reconsiders and evaluates
its estimates and assumptions. Actual results may differ significantly from
these estimates.
The Company believes that the critical accounting policies listed below involve
its more significant judgments, assumptions and estimates and, therefore, could
have the greatest potential impact on its financial statements. In addition, the
Company believes that a discussion of these policies is necessary to understand
and evaluate the financial statements contained in this filing.
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Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Mineral claim acquisition and exploration costs
The cost of acquiring mineral properties or claims is initially capitalized and
then tested for recoverability whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. Mineral exploration
costs are expensed as incurred.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under
the liability method deferred tax assets and liabilities are determined based on
differences between financial reporting and the tax bases of the assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect, when the differences are expected to be reversed. An allowance
against deferred tax assets is recorded, when it is more likely than not, that
such tax benefits will not be realized.
Recent Accounting Pronouncements
The Company does not expect the adoption of any recent accounting pronouncements
to have a material impact on its financial statements.
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AMERICAN BATTERY TECHNOLOGY COMPANY 
