AMERICAN BATTERY TECHNOLOGY Co annual report, FY2018

Filing summary

Period and entity: This is Oroplata Resources, Inc.’s audited Form 10-K for the fiscal year ended September 30, 2018, filed December 28, 2018. The request identifies American Battery Technology Co. and “2018 Q4”; those details do not match the registrant or fiscal period in the filing.

Business context

Oroplata describes itself as a pre-revenue lithium exploration company, operating through LithiumOre Corp. It is redirecting its focus to lithium and other battery metals in Nevada, particularly its Western Nevada Basin claims in Railroad Valley. The filing reports no established mineral resources or reserves and no production.

Financial performance and position

At September 30, 2018, cash was $122,769, total assets $308,769, current liabilities $2.741 million and working capital deficit $2.433 million. Notes payable had a carrying value of $847,652, and derivative liabilities were $800,973. The filing does not report a meaningful operating margin because the company had no revenue. Interest and accretion expense was $293,401; the change in fair value of derivative liabilities added a $165,961 loss. The company recorded a $153,200 mineral-property impairment.

Changes, outlook and risks

• Operating expenses rose substantially, with general and administrative expense increasing to $5.208 million from $1.559 million. Major disclosed items included $3.014 million of shares issued for services expensed and $887,007 of warrant-related stock-based compensation.
• The working capital deficit widened from $1.266 million. Management attributed increased liabilities in part to convertible financing, unpaid management and director fees, and derivative liabilities.
• The company planned initial exploration work in Railroad Valley in 2019, with sampling and drilling described as planned for February–June. It expected no revenue until sufficient exploration identifies reserves; exploration could take years and may never lead to production.
• Management says continued operations depend on obtaining financing. The auditor emphasized substantial doubt about the company’s ability to continue as a going concern. The company stated it expected to rely on further equity sales, with dilution risk and no assurance that financing would be available on favorable terms.
• Many notes are convertible, some at prices tied to a discount to recent trading prices; certain notes carry 10%–12% interest and may step up if unpaid at maturity. The filing also reports warrants and potential shares from convertible debt, creating further dilution risk.
• Shares traded only on an extremely limited and sporadic basis. The company disclosed ongoing litigation against a former CEO and certain relief defendants, including a counterclaim the company considers meritless.
• Management concluded disclosure controls and internal control over financial reporting were not effective as of year-end. The auditor gave an unqualified opinion on the financial statements but did not audit internal-control effectiveness.

Key facts for investors to verify

1. Confirm the filing is for Oroplata Resources, not American Battery Technology Co., and that September 30, 2018 is the intended reporting period.
2. Check the status, title and maintenance of the 1,300 WNB claims, the approved drilling permit, and the planned exploration program; the filing reports no reserves or resources.
3. Review the company’s cash runway, financing availability, debt maturities and conversion terms, derivative-liability valuation, and potential share dilution.
4. Assess the going-concern warning, ineffective controls, and the status and possible financial impact of the disclosed litigation.
5. Review subsequent events disclosed in the filing, including $450,000 raised through a 3 million-share issuance and additional share issuances for debt conversion and services.