American Battery Technology pany(ABAT) - 2023 Q4 - Annual Report

PART I Business The company is a pre-revenue firm developing a domestic supply of battery metals via a three-pronged strategy - The company's business model is based on a three-pronged approach: resource exploration, new extraction technology development, and integrated battery recycling[12] - ABTC is commissioning a novel two-phase battery recycling plant in McCarran, Nevada, with Phase 1 expected in Q4 2023 and Phase 2 in calendar year 2024[29] - The company is developing its Tonopah Flats Lithium Exploration Project in Nevada to extract lithium from sedimentary claystone resources[36] - ABTC has received significant government support, including a $2 million USABC contract and a $4.5 million DOE grant to advance its technologies[33][39] - As of September 26, 2023, the company had 54 full-time and 2 part-time employees[41] Risk Factors The company faces significant risks from its pre-revenue status, unproven technologies, and need for financing - As a pre-revenue company with a limited operating history and accumulated losses, financial planning is challenging[45] - The company requires additional financing over the next 12 months to execute its business plan, with no assurance of securing capital on reasonable terms[46] - The commercial-scale profitability of the company's proprietary recycling process is unproven and presents potential risks[48] - Projects are subject to risks of not meeting efficiency targets and potential cost overruns, with concurrent project advancement straining resources[54][58] - Operations are subject to extensive environmental regulations, and failure to secure necessary permits could adversely affect business plans[60] - The company believes it has alleviated substantial doubt about its ability to continue as a going concern, but this is based on estimates that could prove wrong[71] Unresolved Staff Comments This section is not applicable to the company - Not required[100] Properties The company's key properties include its Nevada recycling facility, exploration claims, and corporate headquarters - In August 2023, the company purchased a recycling facility in McCarran, Nevada, to be repurposed for its proprietary lithium-ion battery recycling process[102] - The company owns approximately 12.44 acres of industrial land in Fernley, Nevada, for a subsequent recycling plant[105] - ABTC purchased water rights in Fernley, Nevada for $3.9 million to support future plant operations[108] - The Tonopah Flats Lithium Exploration Project consists of 517 unpatented lode claims totaling approximately 10,340 acres[111][113][114][115] Legal Proceedings The company is contesting two employee lawsuits and has settled a third with an investor - A complaint was filed by former Chief of Staff John Lukrich for breach of contract and failure to pay wages; the company denies the allegations[120] - A lawsuit filed by an investor regarding share registration was settled and dismissed with prejudice in July 2023[121] - Former CFO Kimberly Eckert filed an OSHA complaint alleging unlawful retaliatory termination, which the company believes is without merit[122] Mine Safety Disclosures Current exploration activities do not require a Mine Safety and Health Administration ID - The company's exploration activities do not currently require a Mine Safety and Health Administration ID[123] PART II Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities The company's stock trades on Nasdaq as "ABAT", and it does not plan to pay dividends - The company's common stock began trading on the Nasdaq Capital Market under the symbol "ABAT" on September 21, 2023[125][288] - The company has never paid cash dividends and intends to retain all future earnings to support operations and growth[126] - As of June 30, 2023, there were 7,465,736 potentially issuable shares of common stock from outstanding warrants and restricted share awards[127] [Reserved.] This item is reserved and contains no information - Item 6 is reserved[128] Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a reduced net loss of $21.3 million but a significant decrease in cash and working capital Fiscal Year 2023 vs 2022 Financial Results | Financial Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Net Loss | ($21.3M) | ($33.5M) | +$12.2M | | Loss Per Share | ($0.49) | ($0.80) | +$0.31 | | Operating Expenses | $21.6M | $33.7M | -$12.1M | | R&D Costs | $7.7M | $1.0M | +$6.7M | | Cash at Year-End | $2.3M | $29.0M | -$26.7M | Cash Flow Summary (Fiscal Years Ended June 30) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Used in Operating Activities | ($13.4M) | ($10.2M) | | Used in Investing Activities | ($36.7M) | ($15.1M) | | Provided by Financing Activities | $23.4M | $41.4M | Working Capital (as of June 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Working Capital | ($8.6M) | $26.8M | - The company has been selected for two significant DOE grant awards totaling up to $135.5 million to support its production and recycling projects[143][144] - Management believes that its cash holdings and subsequent financing have alleviated the substantial doubt about the company's ability to continue as a going concern[157] Quantitative and Qualitative Disclosures about Market Risk This section is not applicable to the company - Not Applicable[158] Financial Statements and Supplementary Data This section presents the audited consolidated financial statements and the independent auditor's unqualified opinion Report of Independent Registered Public Accounting Firm The independent auditor issued an unqualified opinion on the financial statements with no critical audit matters - Marcum LLP expressed an unqualified opinion, stating the financial statements present fairly the company's financial position and results of operations[164] - The auditor determined there were no critical audit matters arising from the current period audit[168] Consolidated Financial Statements The statements show asset growth to $74.7 million and a net loss of $21.3 million for fiscal year 2023 Consolidated Balance Sheet Data (as of June 30) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Total Assets | $74,658,652 | $52,861,989 | | Total Current Assets | $4,753,590 | $29,888,992 | | Property and equipment, net | $29,946,099 | $18,876,895 | | Total Liabilities | $13,444,168 | $3,227,930 | | Total Current Liabilities | $13,389,864 | $3,052,141 | | Total Stockholders' Equity | $61,214,484 | $49,634,059 | | Accumulated Deficit | ($159,973,575) | ($138,635,368) | Consolidated Statement of Operations Data (for fiscal year ended June 30) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Total operating expenses | $21,575,274 | $33,736,160 | | General and administrative | $11,960,831 | $31,698,072 | | Research and development | $7,703,895 | $963,390 | | Net loss | ($21,338,207) | ($33,539,962) | | Net loss per share | ($0.49) | ($0.80) | Notes to the Consolidated Financial Statements The notes detail a reverse stock split, a major facility acquisition, and significant post-year-end financing - On September 11, 2023, the company effected a one-for-fifteen reverse stock split, with all share data adjusted accordingly[184] - The company acquired a recycling facility for an aggregate price of $27.6 million, paid with $21.0 million in cash and 733,333 shares of common stock[210] - Subsequent to year-end, the company entered a Securities Purchase Agreement for up to $51 million of new convertible notes, receiving an initial $25 million[285] - On September 21, 2023, the company's common stock began trading on the Nasdaq Capital Market under the symbol "ABAT"[288] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with accountants on accounting and financial disclosure during the period - None[290] Controls and Procedures Disclosure controls were effective, but a material weakness exists in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of June 30, 2023[292] - Internal control over financial reporting was deemed not effective as of June 30, 2023, due to a material weakness[294] - The identified material weakness is the failure to maintain appropriate segregation of duties related to accounting processes[295] - A remediation plan is underway, with the company expecting to resolve the material weakness by the end of calendar year 2023[297] Other Information There is no other information to report - None[298] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section is not applicable to the company - Not applicable[298] PART III Directors, Executive Officers, and Corporate Governance This section details the company's leadership, board committee structure, and a code of conduct - The report lists the current directors and executive officers, including their ages and positions[301] - The Board has established an Audit Committee, a Nominating and Corporate Governance Committee, and a Compensation Committee[323][324][326] - The company has adopted a Code of Ethics titled "Code of Conduct"[328] - There were delinquent Section 16(a) filings for two executive officers during the fiscal year ended June 30, 2023[331] Executive Compensation Executive compensation is primarily composed of base salaries and substantial stock awards Executive Compensation Summary (Fiscal Year 2023) | Name and Principal Position | Salary ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Ryan Melsert, CEO & CTO | 358,750 | 3,020,105 | 3,378,855 | | Andres Meza, COO | 247,917 | 1,842,427 | 2,090,344 | | Jesse Deutsch, CFO | 27,778 | 373,300 | 401,078 | | Scott Jolcover, CRO | 231,875 | 1,131,035 | 1,362,910 | - Independent director compensation includes an annual cash fee of $25,000 and an annual RSU award valued at $150,000[332] - Executive employment agreements include eligibility for performance-based bonuses tied to strategic milestones[334][335][336][337] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Directors and executives as a group own approximately 4% of common stock, with no single owner exceeding 5% - As of September 26, 2023, all directors and executive officers as a group beneficially owned 3.982% of the common stock[346] - To the company's knowledge, no person or entity beneficially owns more than 5.00% of its common stock[344] - The 2021 Retention Plan authorizes stock issuance up to 10% of total outstanding shares as of December 31, 2022[347] Certain Relationships and Related Transactions, and Director Independence The CEO is not an independent director, and the Audit Committee oversees related party transactions - CEO Ryan Melsert is not considered an independent director under NASDAQ rules[349] - The Audit Committee is responsible for reviewing and approving or ratifying related party transactions[349] Principal Accounting Fees and Services Total fees paid to the principal accountant, Marcum LLP, were $309,868 for fiscal year 2023 Accountant Fees (Fiscal Year Ended June 30) | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | Audit fees | $130,000 | $155,000 | | Audit-related fees | $105,443 | $71,585 | | Tax fees | $21,700 | $34,327 | | All other fees | $52,725 | $6,953 | | Total | $309,868 | $267,865 | - All services provided by Marcum LLP were pre-approved by the Audit Committee[351][352] PART IV Exhibits and Financial Statement Schedules This section lists all exhibits filed, including corporate documents, material contracts, and required certifications - The report includes a comprehensive list of exhibits, such as corporate governance documents, employment agreements, and material contracts[353] - Key filed agreements include the Asset Purchase Agreement for the LiNiCo assets and DOE Grant Awards[353] - Certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits[353] Form 10-K Summary No Form 10-K summary was provided - None[354]