American Battery Technology pany(ABAT) - 2020 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for the three months ended December 31, 2019, highlighting no revenue, a net loss of $2.95 million, and a significant working capital deficit, raising going concern doubts due to reliance on convertible note financing - The financial statements have been prepared on a going concern basis, but management acknowledges substantial doubt about the Company's ability to continue[22] As of December 31, 2019, the Company has not earned revenue, has a working capital deficit of $5,989,208, and an accumulated deficit of $52,838,603[22] Consolidated Balance Sheets As of December 31, 2019, the company's total assets were $104,886, total liabilities $6,063,663, and total stockholders' deficit $5,958,777, primarily due to increased derivative liabilities and notes payable Consolidated Balance Sheet Highlights (unaudited) | Account | Dec 31, 2019 ($) | Sep 30, 2019 ($) | | :--- | :--- | :--- | | Total Current Assets | 69,636 | 57,444 | | Total Assets | 104,886 | 92,694 | | Total Current Liabilities | 6,058,844 | 4,879,614 | | Total Liabilities | 6,063,663 | 4,880,156 | | Total Stockholders' Deficit | (5,958,777) | (4,787,462) | Consolidated Statements of Operations For the three months ended December 31, 2019, the company reported no revenue and a net loss of $2,948,065, an increase from $2,569,806 in 2018, primarily due to higher interest expense and derivative liability changes Consolidated Statement of Operations (unaudited, for the three months ended Dec 31) | Metric | 2019 ($) | 2018 ($) | | :--- | :--- | :--- | | Revenues | - | - | | General and administrative | 1,071,820 | 1,142,596 | | Total other income (expense) | (1,864,934) | (1,407,590) | | Net loss | (2,948,065) | (2,569,806) | | Net loss per share | (0.02) | (0.03) | | Weighted average shares outstanding | 136,260,772 | 92,475,310 | Consolidated Statements of Stockholders' Deficit The stockholders' deficit increased from $(4,787,462) to $(5,958,777) during the quarter, driven by a net loss of $2,948,065, partially offset by share issuances for services, debt conversions, and subscriptions - Key activities affecting stockholders' deficit during the quarter included: net loss for the period of $(2,948,065), shares issued for services totaling $233,520, shares issued for conversion of notes payable amounting to $1,173,444, and share subscriptions received of $275,000[18] Consolidated Statements of Cash Flows For the three months ended December 31, 2019, net cash used in operating activities was $792,558, offset by $804,750 from financing, resulting in a net cash increase of $12,192 and an ending cash balance of $19,563 Consolidated Statement of Cash Flows (unaudited, for the three months ended Dec 31) | Cash Flow Activity | 2019 ($) | 2018 ($) | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | (792,558) | (518,802) | | Net Cash Provided By Financing Activities | 804,750 | 448,750 | | Change in Cash | 12,192 | (70,052) | | Cash – Beginning of Period | 7,371 | 122,769 | | Cash – End of Period | 19,563 | 52,717 | Notes to the Consolidated Financial Statements The notes detail the company's reliance on convertible notes for financing, resulting in a significant derivative liability of $4.24 million, with numerous notes issued and converted, and outstanding debts to related parties totaling $393,872 - The company has numerous convertible notes payable, which are its primary source of financing[24][25][26] During the quarter, many of these notes were partially or fully converted into common shares - As of December 31, 2019, the company recorded a derivative liability of $4,240,914, a significant increase from $3,437,200 on September 30, 2019, arising from the conversion features of its convertible debentures[79] - The company owes $393,872 to related parties, including current and former CEOs and directors, for advances and accrued management fees as of December 31, 2019[13][72][73] - During the quarter, the company issued 29,554,757 common shares for the conversion of notes payable and accrued interest[18][129] Management's Discussion and Analysis of Financial Condition and Results of Operations Management describes the company as a pre-revenue start-up in battery metals, with net loss increasing to $2.95 million due to higher interest and derivative liability changes, leading to a strained liquidity and growing working capital deficit of nearly $6 million - The company is a start-up engaged in the exploration, mining, extraction, and recycling of battery metals, with 1,300 mining claims on 30,000 acres in the Western Nevada Basin[111][116] Quarterly Financial Performance Comparison (Three months ended Dec 31) | Metric | 2019 ($) | 2018 ($) | | :--- | :--- | :--- | | Operating Expenses | 1,083,131 | 1,162,216 | | Interest and Accretion Expense | 1,119,583 | 277,690 | | Change in Fair Value of Derivative Liability | (876,960) | (708,155) | | Net Loss | (2,948,065) | (2,569,806) | - The working capital deficit increased to $5,989,208 as of December 31, 2019, from $4,822,170 at September 30, 2019, due to financing operating costs through convertible debentures without generating cash flow from operations[128] - Cash used in operating activities increased to $792,558 for the quarter, compared to $518,802 in the prior-year period, as the company used funds raised from financing to further its development and operations[131] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, this section on market risk disclosures is not applicable to the company - This disclosure is not applicable to the company[140] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of December 31, 2019, with no material changes to internal controls over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were not effective as of December 31, 2019[141] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[142] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ongoing litigation against its former CEO regarding alleged fraudulent share issuance and a separate shareholder lawsuit concerning restrictive legend removal on securities - The company is in litigation against its former CEO, Craig Alford, seeking the return or cancellation of 16 million common shares believed to be fraudulently issued, with Alford having filed a counterclaim[144] - In March 2019, a shareholder sued the company seeking the removal of a securities law restrictive legend and related damages[145] Risk Factors As a smaller reporting company, American Battery Metals Corporation is not required to provide risk factor information in this quarterly report - The company is a smaller reporting company and is not required to provide the information under this item[147] Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, the company engaged in significant unregistered equity sales, including issuing convertible promissory notes, 5,560,000 common shares for consulting, and 29,554,757 shares for note conversions totaling over $676,000 - The company issued a series of convertible promissory notes in October, November, and December 2019 to various investment funds to raise working capital[148][149][150] - On November 8, 2019, the company issued 5,560,000 common shares for consulting services, including 1,000,000 shares to a director[155] - From October 1 to December 31, 2019, the company issued 29,554,757 common shares for the conversion of $638,092 in principal of convertible notes and $38,713 of accrued interest[159] Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None reported[161] Mine Safety Disclosure This section on mine safety disclosure is not applicable to the company's operations for the reported period - Not Applicable[161] Other Information The company did not report any other information for this period - None reported[161] Exhibits This section lists exhibits filed with the Form 10-Q, primarily detailing securities purchase agreements, convertible promissory notes, and CEO certifications - The report includes numerous exhibits detailing securities purchase agreements and convertible promissory notes with entities such as Auctus Fund, LLC, GS Capital Partners, LLC, and others[163] - Certifications of the Chief Executive Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits[163]