AMERICAN BATTERY TECHNOLOGY Co quarterly report, Q3 FY2014

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Filing identity and reporting period

The supplied filing is Oroplata Resources, Inc.’s unaudited Form 10-Q for the quarter and nine months ended June 30, 2014, not a filing for American Battery Technology Co. The filing describes Oroplata as an exploration-stage mineral company with rights to the Leomary Gold Claim in the Dominican Republic. The company marked itself as a shell company.

Financial results and liquidity

  • Revenue: None in the three- or nine-month periods ended June 30, 2014 or 2013, or since inception.
  • Net loss: $6,168 for the three months ended June 30, 2014, versus $32,005 in 2013. For the nine months, the loss was $37,206 versus $35,730. Cumulative loss since inception was $126,540.
  • Expenses: Nine-month exploration costs fell to $5,824 from $21,294; general and administrative expenses rose to $31,382 from $14,436. No impairment charge was recorded in either nine-month period; the $13,000 mineral-rights impairment was recorded earlier.
  • Cash flow: Nine-month operating cash use was $32,288, compared with $32,474 in 2013. Financing provided $35,515, entirely from related-party advances; cash increased $3,227 to $25,831.
  • Balance sheet: At June 30, 2014, cash and total assets were $25,831; current liabilities were $72,371, including $60,887 due to the sole director and officer. Stockholders’ deficit was $46,540, and working capital was negative $46,540. The related-party advances are non-interest-bearing and payable on demand.
  • Debt and margins: No debt securities were outstanding. Operating margins are not meaningful because there was no revenue.

Changes, outlook, and material risks

  • The quarterly loss narrowed year over year, but the nine-month loss increased modestly. Management attributed much of the current-period spending to administrative, filing, and claim-related work; the latest sampling program had been completed in August 2013.
  • Management proposed a Phase II exploration and initial drilling program estimated at $95,843, subject to financing and assessment of sampling results. The filing says the company did not have the funds for the program and that its director had not committed to further advances. The stated cash requirement for the next twelve months is $100,852 after cash on hand, including the drilling program.
  • The filing also states that if drilling is deferred, additional funding needs would be substantially lower, but gives inconsistent figures: one passage says $30,840 in other obligations, while another says the requirement would fall from $96,348 to $505. These estimates do not clearly reconcile.
  • The company reported substantial doubt about its ability to continue as a going concern, citing no revenue, accumulated losses, negative working capital, and dependence on new financing. It expected further losses and no near-term profitability.
  • Exploration results remain preliminary: no commercial reserves have been established, and the filing notes that most of the 99 samples had little mineralization. The company disclosed that it had not received the environmental “letter of no objection” needed for initial drilling. Maintaining the claim also entails Dominican Republic filing and annual payment requirements; failure to maintain good standing could result in loss of mineral rights.
  • Key risks include uncertain financing, speculative exploration, possible dilution, no established public trading market, foreign-country and currency exposure, environmental and title risks, and dependence on one director and officer. The company had no exploration liability insurance.
  • Management concluded disclosure controls and procedures were ineffective as of June 30, 2014 because of material weaknesses in internal control over financial reporting. No material control changes were reported during the quarter.
  • The company dismissed Goldman Accounting Services and engaged DKM Certified Public Accountants on June 6, 2014. The prior auditor’s reports had noted going-concern uncertainty; the company reported no disagreements with the former auditor.

Important facts for investors to verify

  1. Confirm the filing issuer and period: this source is Oroplata Resources, Inc., not American Battery Technology Co.
  2. Reconcile the differing cash-need estimates and confirm which costs are included in the proposed $95,843 exploration program.
  3. Verify current financing, related-party advances and repayment terms, and the company’s ability to meet its obligations.
  4. Check the Leomary claim’s current legal standing, required fees and reports, and environmental approvals before relying on the proposed drilling timeline.
  5. Review the sampling data and quality-control limitations; the filing says no opinion on sample quality could be presented and no other quality-control procedures were used.
  6. Assess the disclosed material weaknesses, the auditor change, and the filing’s shell-company classification.