AMERICAN BATTERY TECHNOLOGY Co

Previous wording

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this Form 10-K. The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and undue reliance should not be placed on the Company’s forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements except as required by applicable securities laws.

Current wording

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q and the Form 10-K for the fiscal year ended June 30, 2023. The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and undue reliance should not be placed on the Company’s forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements except as required by applicable securities laws.

Previous wording

To implement this business strategy, the Company has constructed and is now operating its first integrated lithium–ion battery recycling facility, which takes in waste and end–of–life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The ramp-up and operations of this facility are of the highest priority to the Company, and as such it has significantly increased the resources devoted to its execution including the further internal hiring of technical staff, expansion of laboratory facilities, and purchasing of equipment. The Company has been awarded a competitively bid grant from the U.S. Advanced Battery Consortium to support a $2 million project to accelerate the development and demonstration of the technologies within this integrated lithium–ion battery recycling facility. The Company has also been awarded an additional grant from the U.S. Department of Energy to support a $20 million project under the Bipartisan Infrastructure Law to validate, test, and deploy three next-generation disruptive advanced separation and processing recycling technologies.

Current wording

To implement this business strategy, the Company has constructed its first integrated lithium–ion battery recycling facility, which takes in waste and end–of–life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The ramp-up and operations of this facility are of the highest priority to the Company, and as such it has significantly increased the resources devoted to its execution including the further internal hiring of technical staff, expansion of laboratory facilities, and purchasing of equipment. The Company has been awarded a competitively bid grant from the U.S. Advanced Battery Consortium to support a $2 million project to accelerate the development and demonstration of the technologies within this integrated lithium–ion battery recycling facility. The Company has also been awarded an additional grant from the U.S. Department of Energy to support a $20 million project under the Bipartisan Infrastructure Law to validate, test, and deploy three next-generation disruptive advanced separation and processing recycling technologies.

Previous wording

During the six months ended December 31, 2023, the Company incurred $14.6 million of operating expenses compared to $8.8 million during the six months ended December 31, 2022. The increase is primarily due to the items described below.

Current wording

During the nine months ended March 31, 2024, the Company incurred $29.1 million of operating expenses compared to $14.2 million during the nine months ended March 31, 2023.

Previous wording

General and administrative expenses consist of stock-based compensation, office expenses, legal, recruitment, business development, public relations, and general facility expenses. For the six months ended December 31, 2023, general and administrative expenses were $7.3 million, an increase of $1.4 million over the same period in the prior year. The Company recognized a $2.3 million in non-cash stock-based compensation expense, while other general and administrative expenses decreased by $0.9 million largely due to payroll tax credits related to research & development activities.

Current wording

General and administrative expenses consist of stock-based compensation, office expenses, legal, recruitment, business development, public relations, and general facility expenses. For the nine months ended March 31, 2024, general and administrative expenses were $10.7 million, an increase of $1.3 million over the same period in the prior year primarily related to increases in stock-based compensation, audit and insurance costs.

Previous wording

Research and development expenses consist primarily of laboratory leases, supplies, salaries, stock-based compensation, and employee benefits. Research and development expenses for the six months ended December 31, 2023 and 2022 were $5.3 million and $2.0 million, respectively. The increase is primarily due to increased employee headcount. These costs are partially offset by federal grant funds for awards that it has contracted with various federal agencies. The Company recognized an offset to its research and development costs of $1.2 million and $0.4 million related to these awards for the six months ended December 31, 2023 and 2022, respectively.

Current wording

Research and development expenses consist primarily of laboratory leases, supplies, salaries, stock-based compensation, and employee benefits. Research and development expenses for the nine months ended March 31, 2024 and 2023 were $11.1 million and $3.5 million, respectively. The increase is primarily due to increased employee headcount. These costs are partially offset by federal grant funds for awards that it has contracted with various federal agencies. The Company recognized an offset to its research and development costs of $2.2 million and $0.7 million related to these awards for the nine months ended March 31, 2024 and 2023 respectively.

Previous wording

Exploration costs consist primarily of drilling, assay, claim fees, personnel, stock-based compensation, office and warehouse costs, travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $2.1 million for the six months ended December 31, 2023 compared to $0.9 million during the same period in the prior year. The increase year-over-year resulted principally from increased drilling, assaying and engineering costs to further define and potentially upgrade the geological classification of the mineral rights.

Current wording

Exploration costs consist primarily of drilling, assay, claim fees, personnel, stock-based compensation, office and warehouse costs, travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $3.6 million for the nine months ended March 31, 2024 compared to $1.5 million during the same period in the prior year. The increase year-over-year resulted principally from increased drilling, assaying and engineering costs to further define and potentially upgrade the geological classification of the mineral rights.

Previous wording

During the six months ended December 31, 2023, the Company recorded other expense of $1.9 million, including $0.1 million for interest expense and $1.8 million for amortization of debt financing costs. During the six months ended December 31, 2022, the Company recorded other income of $0.1 million largely related to the sale of mining claims it previously held in Railroad Valley, Nevada.

Current wording

During the nine months ended March 31, 2024, the Company recorded other expense of $3.6 million, including $3.0 million for amortization of debt financing costs, $0.1 million for interest expense and $0.4 million for changes in fair value of the derivative liability. During the nine months ended March 31, 2023, the Company recorded other income of $0.2 million largely related to the sale of mining claims it previously held in Railroad Valley, Nevada.

Previous wording

During the six months ended December 31, 2023, the Company incurred a net loss of $16.5 million or $0.35 loss per share compared to a net loss of $8.6 million, or $0.20 loss per share, during the six months ended December 31, 2022.

Current wording

During the nine months ended March 31, 2024, the Company incurred a net loss of $29.1 million or $0.59 loss per share compared to a net loss of $14.2 million, or $0.33 loss per share, during the nine months ended March 31, 2023.

Previous wording

At December 31, 2023, the Company had cash of $7.6 million and total assets of $88.9 million compared to cash of $2.3 million and total assets of $74.7 million at June 30, 2023. The increase in cash is due to the Company having received net proceeds of $5.3 million from Tysadco financing transactions.

Current wording

At March 31, 2024, the Company had cash of $6.0 million and total assets of $89.3 million compared to cash of $2.3 million and total assets of $74.7 million at June 30, 2023. The increase in cash is due to utilization of the common stock purchase agreements with Tysadco.

Previous wording

The Company had total current liabilities of $22.3 million at December 31, 2023, compared to $13.4 million at June 30, 2023. The increase related to new convertible notes debt, offset by Mercuria debt fully repaid and payments on the convertible notes.

Current wording

The Company had total current liabilities of $17.0 million at March 31, 2024, compared to $13.7 million at June 30, 2023. The increase related to new convertible debt, offset by full repayment of the Mercuria debt and principal payments on the new convertible debt.

Previous wording

As of December 31, 2023 the Company had a working capital deficiency of $10.7 million compared to a working capital deficiency of $8.6 million at June 30, 2023. The higher level of working capital deficiency is largely attributed to the current classification of the convertible notes, as well as acquisitions of property and equipment and cash used in operating activities, partially offset by an increase in cash generated from financing activities during the six months ended December 31, 2023.

Current wording

As of March 31, 2024 the Company had a working capital deficiency of $6.7 million compared to a working capital deficiency of $9.0 million at June 30, 2023. The working capital deficiency in both periods is largely attributed to the current classification of all or nearly all of the convertible notes, as well as acquisitions of property and equipment and cash used in operating activities, partially offset by an increase in cash generated from financing activities during the nine months ended March 31, 2024.

Previous wording

During the six months ended December 31, 2023, the Company used $7.4 million of cash for operating activities, which was in line with the $7.4 million cash used during the six months ended December 31, 2022. The increase included cash costs for engineering, research and development as well as increased exploration expenses. Increased research and development costs were to support the development of the Company’s process for the recycling of lithium-ion batteries and for the extraction of lithium from the Company’s lithium claystone mining claims. The Company has also seen a steady increase in exploration activity expenses as it works to continue upgrading the geological category of its claims in the Tonopah, Nevada region.

Current wording

During the nine months ended March 31, 2024, the Company used $12.4 million of cash for operating activities, compared to $10.8 million cash used during the nine months ended March 31, 2024. The increase included cash costs for engineering, research and development as well as increased exploration expenses. Increased research and development costs were to support the development of the Company’s process for the recycling of lithium-ion batteries and for the extraction of lithium from the Company’s lithium claystone mining claims. The Company has also seen a steady increase in exploration activity expenses as it works to continue upgrading the geological category of its claims in the Tonopah, Nevada region.

Previous wording

During the six months ended December 31, 2023, the Company used cash in investing activities of $10.9 million, consisting primarily of $10.0 million related to property and equipment for its recycling facilities. This is in comparison to cash used in investing activities of $10.2 million for the six months ended December 31, 2022, consisting primarily of $8.0 million for mineral rights.

Current wording

During the nine months ended March 31, 2024, the Company used cash in investing activities of $11.4 million, consisting primarily of $10.2 million related to property and equipment for its recycling facilities. This is in comparison to cash used in investing activities of $18.0 million for the nine months ended March 31, 2023, consisting primarily of $8.0 million for mineral rights and $6.0 million for plant equipment.

Previous wording

During the six months ended December 31, 2023, the Company had net cash provided by financing activities of $23.6 million. This represents the need for capital while the Company ramps up the recycling plant, develops its lithium ore pilot plant, and upgrades the geological category of its Tonopah claims through additional studies and assessments.

Current wording

During the nine months ended March 31, 2024, the Company had net cash provided by financing activities of $27.5 million. This represents the need for capital while the Company ramps up the recycling plant, develops its lithium ore pilot plant, and upgrades the geological category of its Tonopah claims through additional studies and assessments.

Previous wording

During the six months ended December 31, 2023, the Company issued 3,106,225 shares of common stock pursuant to purchase agreements for net proceeds of $15.8 million, of which, $1.5 million was received after December 31, 2023.

Current wording

During the nine months ended March 31, 2024, the Company issued 8.2 million shares of common stock pursuant to purchase agreements for net proceeds of $25.7 million and the Company issued convertible notes for net proceeds of $20.3 million. These were partially offset by repayment of notes payable during the period totaling $16.8 million.

Previous wording

We will continue to rely on sales of our common shares, debt, or other financing to fund our business operations as needed beyond any revenue generated from internal operations and the government grants that offset research & development expenses, and capital expenditures. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the securities or arrange for debt or other financing to fund planned operating activities, acquisitions and exploration activities.

Current wording

We will continue to rely on sales of our common shares, debt, or other financing to fund our business operations as needed beyond any revenue generated from internal operations and the government tax credits and grants that offset research & development expenses, and capital expenditures. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the securities or arrange for debt or other financing to fund planned operating activities, acquisitions and exploration activities.