Filing identity and reporting period
Important identity discrepancy: The request identifies American Battery Technology Co, but the filing itself is for Oroplata Resources, Inc. This summary reflects the filing as provided. It is a unaudited Form 10-Q for the quarter ended March 31, 2017, the company’s fiscal second quarter, and six months ended March 31, 2017.
Oroplata is an exploration-stage mineral company with claims in Nevada and the Dominican Republic. It had no revenue and had not established a mineral reserve or begun commercial production.
Financial performance and position
| Metric | Three months ended March 31, 2017 | Six months ended March 31, 2017 | Prior comparable period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net loss | $1,222,086 | $2,058,550 | $5,613 and $26,371, respectively |
| Basic and diluted loss per share | $0.02 | $0.04 | $0.00 in both periods |
| Cash used in operating activities | Not provided | $132,642 | $21,608 used |
| Cash from financing activities | Not provided | $71,412 | $20,190 provided |
At March 31, 2017, cash and total assets were $28,810, versus $90,040 at September 30, 2016. Current liabilities were $571,641; total liabilities were $846,573. The company reported a working-capital deficit of $542,831, compared with $215,993 at September 30, 2016, and an accumulated deficit of $30,560,450. Stockholders’ deficit was $817,763.
General and administrative expense for the six months was $1,281,122, in addition to $600,000 of exploration costs recorded for shares issued in connection with the Nevada claims. The filing does not report meaningful operating margins because there was no revenue.
Material changes and unusual items
- Six-month net loss increased substantially from $26,371 in 2016 to $2,058,550 in 2017, reflecting increased activity, noncash share- and warrant-based charges, exploration-related costs, and interest and accretion expense.
- General and administrative expense for the three months was $1,120,744, versus $5,613 a year earlier. The company attributed much of the increase to warrants valued at $652,977 and shares issued for services, as well as consulting and management costs.
- Six-month interest and accretion expense was $141,428. A $36,000 loss resulted from settling $60,000 of accounts payable with shares valued at $96,000.
- Cash declined by $61,230 over the six months. Financing provided $71,412, while operations used $132,642; there were no investing cash flows.
- Current liabilities rose from $306,033 at September 30, 2016 to $571,641 at March 31, 2017. The company reported $223,146 due to related parties, including unsecured, non-interest-bearing amounts due on demand.
- Common shares outstanding were 58,000,000 at March 31, 2017; 2,742,000 warrants were outstanding. The filing describes substantial equity issuance for services, property-related amendments, and debt settlement.
Outlook, risks, and contingencies
Management said exploration of the Western Nevada Basin lithium claims was expected to begin in 2017, with subsequent work dependent on initial results. Drilling would require Bureau of Land Management permitting. The company said it did not expect to explore the Mogollon claim. It had not identified an ore body, and management cautioned that revenue may be many years away or may never occur.
The filing states that the company had no revenue, a $542,831 working-capital deficit, and a $30,560,450 accumulated deficit, and that substantial doubt existed about its ability to continue as a going concern. Continued operations depend on management support and obtaining debt or equity financing; financing may not be available on favorable terms. Subsequent to quarter-end, the company received additional loan proceeds under an amended agreement, bringing the stated aggregate principal to $211,178. It also entered a May 18, 2017 waiver and amendment addressing certain events of default under an investment agreement.
Management concluded disclosure controls and internal control over financial reporting were ineffective as of March 31, 2017, citing material weaknesses involving entity-level controls, period-end reporting, and ongoing monitoring. The filing reported no material legal proceedings and no off-balance-sheet arrangements.
Key facts for investors to verify
- Confirm the issuer: the supplied filing is for Oroplata Resources, Inc., not American Battery Technology Co.
- Review liquidity and going-concern disclosures, including near-term obligations, related-party advances, and the availability and terms of future financing.
- Reconcile the company’s debt balances, convertible-note terms, and subsequent borrowing and waiver disclosures.
- Assess the valuation and dilution implications of warrant and share issuances, including the large noncash charges recorded during the period.
- Verify claim title, annual maintenance-fee compliance, permitting requirements, and whether exploration produced results supporting further investment.
- Consider the disclosed material weaknesses in financial reporting controls and whether management reports remediation.