AMERICAN BATTERY TECHNOLOGY Co (ABAT)

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

Forward-Looking
Statements

You
should read the following discussion of our financial condition and results of operations 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. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and
you should not place undue reliance on our 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.

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Overview

American
Battery Technology Company (the “Company”) is a relatively new entrant in the lithium–ion battery industry that is
working to increase the domestic U.S. production of battery materials, such as lithium, nickel, cobalt, and manganese through its
exploration of new domestic-United States primary resources of battery metals, development and commercialization of new technologies for the
extraction of these battery metals from primary resources, and commercialization of an internally developed integrated process for
the recycling of lithium–ion batteries. Through this three–pronged approach the Company is working to both increase the
domestic production of these battery materials, and to ensure spent batteries have their elemental battery metals returned to the
domestic manufacturing supply chain in an economical, environmentally-conscious, closed–loop fashion.

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 which led to the Company’s first revenue generation in the fourth quarter of fiscal 2024. 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 (“DOE”) 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.

Additionally,
the Company is accelerating the demonstration and commercialization of its internally developed low–cost and low–environmental
impact processing train for the manufacturing of battery grade lithium hydroxide from Nevada–based sedimentary claystone resources.
The Company has been awarded a grant cooperative agreement from the DOE’s Advanced Manufacturing and Materials
Technologies Office through the Critical Materials Innovation program to support a $4.5 million project for the construction and operation
of a multi–ton per day integrated continuous demonstration system to support the scale–up and commercialization of these
technologies. The Company has also been awarded an additional grant award under the Bipartisan Infrastructure Law to support a $115 million
project to design, construct, and commission a first-of-kind commercial-scale refinery to produce 30,000 MT of battery-grade lithium
hydroxide per year from this resource.

The Company
has completed the construction and commissioning of its lithium hydroxide (LiOH) pilot plant, marking a significant milestone in the
commercialization of its internally-developed processes to access an unrealized domestic primary lithium resource. The construction
and commissioning of this pilot plant enables the Company to demonstrate its technologies for accessing the lithium housed in its
unconventional resource, Tonopah Lithium Flats Project (“TLFP”), in an integrated and continuous system, and to generate large amounts of
battery grade lithium hydroxide for delivery to customers for qualifications and evaluation. The construction and operation of this
pilot demonstration plant are supported by a competitively awarded grant from the DOE for this $4.5
million effort. Product from the pilot plant is being sent for analysis to confirm and validate the resource.

The Company
has filed an Amended IA for its TFLP. The TFLP is one of the largest identified lithium
resources in the United States, and while initial pit designs and economic analyses in previous assessments evaluated the full resource, this
updated Initial Assessment utilizes a commercialization pathway with a more rigorous mine plan that contemplates utilization of only
Measured and Indicated Mineral Resources, and excludes Inferred Mineral Resources, to supply the planned commercial-scale lithium hydroxide
monohydrate (“LHM”) refinery. This commercialization pathway allows for an engineered phased development, with improved access to the higher
quality portions of the resource, and improved project economics.

On
March 28, 2024, the Company was selected for an approximately $19.5 million tax credit through the Qualifying Advanced Energy Project
Credits program (the “48C program”). This tax credit was granted by the U.S. Department of Treasury Internal Revenue
Service following a highly competitive technical and economic review process performed by the DOE, which
evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material
recycling, processing, and refining infrastructure. This $19.5 million tax credit can be utilized both for the reimbursement of
capital expenditures spent to date, and also for equipment and infrastructure for additional value-add operations at the Company’s
battery recycling facility in the Tahoe-Reno Industrial Center (TRIC) near Reno, Nevada. As of June 30, 2024, the Company has incurred qualifying expenditures for this tax credit but
will not recognize any amounts until it has reasonable assurance of compliance with the relevant standards.

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Also
on March 28, 2024, the Company has been selected for an additional $40.5 million tax credit through the 48C
program to support the design and construction of a new, next-generation, commercial battery recycling facility to be located in
the United States. As with the Company’s initial $19.5 million tax credit under the 48C program supporting the construction and buildout
of its battery recycling facility in Nevada, this additional award was granted by the U.S. Department of Treasury Internal Revenue Service
following a highly competitive technical and economic review process performed by the DOE, which evaluated
the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing,
and refining infrastructure. As of June 30, 2024, the Company has not incurred any qualifying expenditures towards this tax credit.

2024
Financial Highlights:

Components
of Statements of Operations

Revenue

During
the year ended June 30, 2024, our net sales were $0.3 million. These sales related to our Black Mass product resulting from
recycling operations and were the initial revenue generated by the Company. The materials were sold to a customer who took delivery
at our plant and the materials will remain at our plant to be further processed when phase two of the plant is complete.

Cost
of Goods Sold

Cost
of goods sold during the year ended June 30, 2024 was $3.3 million, well above the value of the related revenue. The high cost of
goods sold is related to the in-service date and depreciation of the recycling facility fixed assets, which is time based, and the
finalization of the production process. We expect these costs to continue to rise but will be reduced as a percentage of revenue as
we scale our production and gain efficiencies in the process.

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Operating
Expenses

During
the fiscal year ended June 30, 2024, the Company incurred $44.8 million of operating expenses compared to $22.4 million of operating
expenses during the fiscal year ended June 30, 2023. The increase is primarily due to the items described below:

General
and administrative expenses consist of personnel, legal, finance, recruiting, business development, public relations, and general
facility expenses. For the fiscal year ended June 30, 2024 and 2023, general and administrative expenses were $16.1 million and
$12.8 million, respectively. The increase of $3.3 million is primarily related to increases in
employee stock-based compensation, compliance and insurance costs.

Research
and development expenses consist primarily of personnel, laboratory leases, and supplies. Research and development expenses for the
fiscal year ended June 30, 2024, and 2023, were $14.3 million and $7.6 million, respectively. The increase of $6.8 million is
primarily due to increased employee headcount, stock-based compensation, insurance and facility costs. These costs are partially offset by federal grant funds for awards that the Company
has contracted with various United States federal agencies. The Company recognized an offset to its research and development costs
of $3.3 million and $0.9 million related to these awards for the fiscal year ended June 30, 2024, and 2023, respectively.

Exploration
costs consist primarily of personnel, drilling, assay, claim fees, office and warehouse costs,
travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $4.1 million for the fiscal
year ended June 30, 2024, compared to $2.0 million during 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.

An
impairment loss on assets held-for-sale was recorded in the year ended June 30, 2024 and is related to certain assets, primarily to land and a building, at
the Fernley, Nevada location the Company has decided to sell. Upon this decision, the Company performed a valuation analysis to
determine the potential realizable value of these and that estimated amount was $10.2 million less than the carrying value of the
assets. These assets have a carrying value of $8.4 million at June 30, 2024 and are subject to further impairment, if warranted,
until the assets are sold.

Other
(Expense) Income

Other expense was $4.7 million in the year ended June 30, 2024 versus other income of $0.2 million in the prior year. The increase of $4.9 million is primarily due to the accretion
of financing costs of $4.2 million and the change in fair value of derivative liability of $0.3 million. During the fiscal year ended
June 30, 2024, the Company reported a correction of prior periods related to the derivative liability (see Note 3 of the consolidated financial statements for further detail).

Net
Loss

During
the fiscal year ended June 30, 2024, the Company incurred a net loss of $52.5 million or $1.02 loss per share compared to a net loss
of $22.2 million or $0.51 loss per share during the fiscal year ended June 30, 2023.

Liquidity
and Capital Resources

At
June 30, 2024, the Company had cash of $7.0 million and total assets of $77.7 million compared to cash of $2.3 million and total
assets of $74.7 million at June 30, 2023. The increase in cash is primarily due to utilization of the common stock purchase
agreement with Tysadco and ATM agreement with Virtu offset by many uses of cash for the continued build out of our production process during the year.

The
Company had total current liabilities of $15.8 million at June 30, 2024, compared to $13.7 million at June 30, 2023. The increase is
primarily related to an increase in accounts payable and accrued liabilities which include the full amount of $1.8 million related
to the settlement of Mercuria Marketing Agreement.

As
of June 30, 2024 the Company had positive working capital of $2.2 million compared to a working capital deficiency of $9.0 million
at June 30, 2023. The positive working capital is related to the current classification of $8.4 million of held-for-sale assets at
June 30, 2024. Absent this classification, we would have a working capital deficiency of $5.8 million compared to a deficiency of
$9.0 million in the prior year. The working capital deficiency is largely attributed to the current classification of all of the convertible notes, as well as acquisitions of property and equipment and cash used in operating
activities.

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Going
Concern

The
continuation of the Company as a going concern is dependent upon generating profit from its operations and its ability to obtain debt
or equity financing. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings, or obtain
them on favorable terms, which could limit its operations. Any such financing activities are subject to market conditions. These uncertainties
cause substantial doubt about the Company’s ability to continue as a going concern for 12 months from issuance of these financial
statements. These consolidated financial statements do not include any adjustments to the recoverability and classification
of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going
concern. These adjustments could be material.

The
going concern assessment excludes the Company’s at-the-market (“ATM”) offering, which could provide a source
of liquidity.

On April 3, 2024, the Company entered into an ATM sales agreement with Virtu Americas LLC, pursuant to which the Company
may offer and sell, from time to time through the sales agent, shares (the “Shares”) of the Company’s common stock, par value $0.001
per share, having an aggregate offering price of up to $50,000,000, subject to the terms and conditions of the Sales Agreement. During
the period, the Company sold 9,109,573 common shares for total proceeds of $12.1 million.

Based
on our current operating plan, unless we generate income from the operations of our facilities and receipt of cash from United
States Government grant awards, raise additional capital (debt or equity), it is possible that we will be unable to maintain our financial covenants under our existing Note agreement, which, if such violation is not waived, could
result in an event of default, causing an acceleration of the outstanding balances. If we do raise additional capital through public
or private equity offerings, as opposed to debt or additional Note issuances, the ownership interest of our existing stockholders
may be diluted.

Grant
Awards

On
January 20, 2021, the US DOE announced that the Company had been selected for award negotiation for a three-year project with a total
budget of $4.5 million for the field demonstration of its selective leaching, targeted purification, and electro-chemical production
of battery grade lithium hydroxide from domestic claystone resources technology. Through this grant award the Company is eligible to
receive reimbursement of up to 50% of eligible expenditures, or up to $2.3 million. The prime agreement contract for this grant (“AMO
grant”) was issued with a project start date of October 1, 2021. The Company began receiving funds related to this award during
the fiscal year ended June 30, 2022. As of June 30, 2024, the cumulative funds invoiced for this grant totaled $1.7 million, which
represents 73% of the total eligible reimbursements.

On
August 16, 2021, the Company received a contract award for a 30-month project with a total budget of $2.0 million from the US Advanced
Battery Consortium (the “USABC grant”) as part of a competitively bid project, through which the Company will receive reimbursement
for up to $500,000 of eligible expenditures. The objective of the contract award is for the commercial-scale development and demonstration
of an integrated lithium-ion battery recycling system, the production of battery cathode grade metal products, the synthesis of high
energy density active cathode material from these recycled battery metals, and the fabrication of large format automotive battery cells
from these recycled materials and the testing of these cells against otherwise identical cells made from virgin sourced metals. The Company
began receiving funds related to this award during the fiscal year ended June 30, 2022. As of June 30, 2024, the cumulative funds invoiced
for this grant totaled $0.5 million, which represents 97% of the total eligible reimbursements.

On
October 21, 2022, the US DOE announced that the Company has been selected for award negotiation for a five-year project with a total
budget of $115.5 million to expand domestic manufacturing of battery grade lithium hydroxide for lithium-ion batteries for electric
vehicles, a focus on domestic processing of materials and components that are currently imported from foreign countries. Through
this grant award the Company is eligible to receive reimbursement of up to 50% of eligible expenditures, or up to $57.7 million. The
prime agreement contract for this grant was issued with a project start date of September 1, 2023. The Company began receiving funds
related to this award in fiscal 2024. As of June 30, 2024, the cumulative funds invoiced for this grant totaled $1.7 million, which represents 3% of the total eligible reimbursements.

On
November 17, 2022, the US DOE announced that the Company has been selected for award negotiation for a three-year project with a total
budget of $20.0 million to demonstrate and commercialize next generation techniques for its lithium-ion battery recycling processes to
produce low-cost and low-environmental impact domestic battery materials. Through this grant award the Company is eligible to receive
reimbursement of up to 50% of eligible expenditures, or up to $10.0 million. The Company is expected to begin receiving funds associated
with this during the fiscal year ended June 30, 2024. As of June 30, 2024, the cumulative funds invoiced for this grant totaled $0.6 million, which represents 6% of the
total eligible reimbursements.

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Cash
Flows

For
the fiscal years ended June 30:

Cash
from Operating Activities.

During
the fiscal year ended June 30, 2024, the Company used $16.7 million of cash for operating activities as compared to $13.4 million
used during the fiscal year ended June 30, 2023. The increase is mainly due to non-cash items related to the write down loss on
held-for-sale assets of $10.3 million, stock-based compensation expense of $14.6 million, and accretion of financing costs of $4.2
million. The change in operating assets was mainly driven by costs for engineering and research and development as well as increased
exploration expenses. Increased engineering and 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 incurred a steady increase in exploration activity expenses as it continues to
evaluate its claims in the Tonopah, Nevada region. General and administrative
expenses have increased to further support the Company’s business objectives.

Cash
from Investing Activities

During
the fiscal year ended June 30, 2024, the Company used cash for investing activities of $12.9 million, consisting primarily of $11.4
million related to property and equipment for its recycling facilities. This is in comparison to cash used for investing activities
of $36.7 million for the fiscal year ended June 30, 2023, including $28.6 million of acquisition costs associated with property and
equipment for its recycling facilities and $8.1 million for mineral rights acquired in Tonopah, Nevada.

As
of June 30, 2024, the Company had total non-current assets of $59.3 million compared to $69.9 million at June 30, 2023. The Company will
continue to see an increase in investing activities as it continues to invest heavily in its recycling and primary resource extraction
activities.

Cash
from Financing Activities

During
the year ended June 30, 2024, the Company had net cash provided by financing activities of $34.4 million compared to $23.4 million
for the fiscal year ended June 30, 2023. The increase is due to the use of share purchase agreements.

During
the period, the Company issued 17.3 million shares of common stock pursuant to purchase agreements for net proceeds of $38.1 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 $24 million.

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Off-Balance
Sheet Arrangements

As
of June 30, 2024 and 2023, we had no off-balance sheet arrangements.

Working
Capital

Future
Financings

We
will continue to rely on sales of our common shares, debt, or other financing to fund our business operations. Issuance 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.

Critical
Accounting Estimates and Judgments

Our
consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in
the United States of America. These accounting principles require us to make estimates, judgments and assumptions that affect the reported
amounts of revenues, expenses, assets, liabilities, and contingencies. All significant estimates, judgments and assumptions are developed
based on the best information available to us at the time made and are regularly reviewed and updated when necessary. Actual results
could differ from these estimates. Changes in estimates are reflected in our financial statements in the period of change based upon
on-going actual experience, trends, or subsequent realization depending on the nature and predictability of the estimates and contingencies.

Certain
accounting estimates, including those concerning revenue recognition, share based compensation, impairments of long-lived assets, assets
held-for-sale, and accounting for income taxes, are considered to be critical in evaluating and understanding our financial results because
they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates. These
are described below. For further information on our accounting policies, see Note 3 to our consolidated financial statements.

Fair
Value Measurements

Recurring
Valuations. The Company’s recurring fair value measurements include the valuation of the derivative liability for the bifurcated
notes payable freestanding call option. In making these fair value determinations, we were required to make assumptions that affected
the recorded amounts, including volatility, risk free rates, and duration of time. Our estimates of fair value are based upon assumptions
we believe to be reasonable, but which are inherently uncertain.

Nonrecurring
Valuations. The Company’s nonrecurring fair value measurements include the valuation of assets held-for-sale. In making these
fair value determinations, we were required to make assumptions that affected the recorded amounts, including estimates related to construction
work, comparable market listings for similar assets and current market conditions. Our estimates of fair value are based upon assumptions
we believe to be reasonable, but which are inherently uncertain.

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Revenue
Recognition

Revenue
recognition requires judgment and the use of estimates, especially in identifying and evaluating the various non-standard terms and conditions
in our contracts with customers as to their effect on reported revenue.

We
account for revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC
606”). The core principle of ASC 606 is to recognize revenue upon the transfer of services or products to customers in
an amount that reflects the consideration we expect to be entitled to in exchange for those services or products. We apply a five-step
framework to recognize revenue as described in our Revenue Recognition policy included in Note 3 of our consolidated financial statements
included in this Annual Report on Form 10-K.

Generally,
we recognize revenue related to sales of our products upon shipment, when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the fee is fixed or determinable, and collectability is reasonably assured. The Company has
limited revenue recognition history. There are no provisions for payment discounts, product return allowances and uncollectable accounts
at this time.

Bill
and Hold Transactions

The
majority of revenue is derived from a bill and hold arrangement. In this case, at the customer’s request, we enter into bill-and-hold
transaction whereby title transfers to the customer, but the product does not ship until a specified later date. We recognize revenue
associated with bill-and-hold arrangements when the product is complete and ready to ship, hold criteria have been met, the amount due
from the customer is fixed, and collectability of the related receivable is reasonably assured. All of the foregoing requires us to apply
our judgment. Bill-and-hold arrangements most often occur when the customer requests us to hold the product for potential future processing
or until they provide us further instructions at a later date to ship the product to a different location.

Assets
Held-for-Sale

Management
considers whether events and circumstances such as a change in strategic direction and changes in business climate would impact the fair
value of long-lived assets. The Company used critical judgements in analyzing certain market data and estimates to calculate the value
of the assets held-for-sale. Significant assumptions that form the basis of fair value include market comparison of similar properties,
construction cost estimates and using certain dollar per square foot amounts to derive fair value. Our estimates of fair value are based
upon assumptions we believe to be reasonable, but which are inherently uncertain.

Stock-Based
Compensation

The
fair value of share-based payments are subject to the limitations of the Black-Scholes option pricing model that incorporates market
data and involves uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires
the inputs of highly subjective assumptions, including the volatility of share prices, changes in subjective input assumptions can materially
affect the estimate.

Accounting
for Income Taxes

Tax
interpretations, regulations and legislation in the various jurisdictions in which the Company operates are subject to change and interpretation.
As such, income taxes are subject to measurement uncertainty. Assessing the recoverability of deferred tax assets requires the Company
to make estimates related to the expectations of future taxable income and the application of existing tax laws. To the extent that future
taxable income differs significantly from estimates, the ability of the Company to realize deferred tax assets could be impacted.

New
Accounting Pronouncements

New
accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by
us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not
yet effective will not have a material impact on our financial position or results of operations upon adoption. For further discussion
on recent accounting pronouncements, please see Note 3, “Accounting Pronouncements,” to our consolidated financial
statements included in this Annual Report on Form 10-K for additional information.

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

Forward-Looking
Statements

You should read the following discussion of our
financial condition and results of operations 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. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not
place undue reliance on our 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.

Overview

American
Battery Technology Company (the “Company”) is a new entrant in the lithium–ion battery industry that is working to
increase the domestic US production of battery materials, such as lithium, nickel, cobalt, and manganese through its exploration of new
primary resources of battery metals, development and commercialization of new technologies for the extraction of these battery metals
from primary resources, and commercialization of an internally developed integrated process for the recycling of lithium–ion batteries.
Through this three–pronged approach the Company is working to both increase the domestic production of these battery materials,
and to ensure spent batteries have their elemental battery metals returned to the domestic manufacturing supply chain in an economical,
environmentally-conscious, closed–loop fashion.

To
implement this business strategy, the Company is currently constructing and commissioning its first integrated lithium–ion
battery recycling facility, which will take in waste and end–of–life battery materials from the electric vehicle,
stationary storage, and consumer electronics industries. The construction, commissioning, and operation 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 $2M grant from the US Advanced Battery Consortium to accelerate the development and demonstration of
this pre–commercial scale integrated lithium–ion battery recycling facility, and the Company has been selected for an
additional $20M grant award under the Bipartisan Infrastructure Law to validate, test, and deploy three disruptive advanced
separation and processing technologies.

Additionally,
the Company is accelerating the demonstration and commercialization of its internally developed low–cost and
low–environmental impact processing train for the manufacturing of battery grade lithium hydroxide from Nevada–based
sedimentary claystone resources. The Company has been awarded a $4.5M grant cooperative agreement from the US Department of
Energy’s Advanced Manufacturing Office through the Critical Materials Innovation program to support the construction and
operation of a multi–ton per day integrated continuous demonstration system to support the scale–up and
commercialization of these technologies. The Company has been awarded an additional $115M grant award under the Bipartisan
Infrastructure Law to design, construct, and commission a first-of-kind commercial manufacturing facility to produce battery-grade
lithium hydroxide from this resource.

2023
Financial Highlights:

Components
of Statements of Operations

Operating
Expenses

During
the fiscal year ended June 30, 2023, the Company incurred $21.6 million of operating expenses compared to $33.7 million of operating
expenses during the fiscal year ended June 30, 2022. The decrease is primarily due to the items described below.

General
and administrative expenses consist of stock-based compensation, office expenses, legal, recruitment, business development, public relations,
and general facility expenses. The Company recognizes stock-based compensation for its employees using over the requisite service period
of the employee, these costs help retain key employees while preserving cash on hand. The Company has reduced the number of common shares
it directly issues to non-employees for professional services, and thus, has recognized a $12.4 million reduction to the non-cash compensation
components on the statement of operations and statement of cash flows for the fiscal year ended June 30, 2023.

Research
and development expenditures are charged to operations as incurred. These costs consist primarily of laboratory leases, supplies, salaries,
stock-based compensation, and benefits. Research and development costs for the years ended June 30, 2023 and 2022 were $7.7 million and
$1.0 million, respectively. The increase in 2023 is attributed to increased headcount and related compensation. These costs are offset
by federal grant funds it receives for grant awards that it has contracted with various federal agencies. The Company recognized an offset
to its research and development costs of $0.9 million and $0.1 million for the fiscal years ended June 30, 2023 and 2022, respectively.

Exploration
costs consist primarily of drilling, assay, claim fees, field office lease and warehouse costs, personnel, stock-based compensation,
travel and other costs related to exploration of claims in central Nevada as it pursues critical battery metals in the region.

Other
Income (Expense)

During
the fiscal years ended June 30, 2023 and 2022, the Company recognized gains of $0.3 million and $0.2 million, respectively, related to
the sale of mining claims. The Company records in other income the money receives from a land lease and unrealized loss on investment,
though immaterial to the Company’s operations.

Net
Loss

During
the fiscal year ended June 30, 2023, the Company incurred a net loss of $21.3 million or $0.49 loss per share compared to a net loss
of $33.5 million or $0.80 loss per share during the fiscal year ended June 30, 2022.

Liquidity
and Capital Resources

At
June 30, 2023, the Company had cash of $2.3 million and total assets of
$74.7 million compared to cash of $29.0 million and total assets of $52.9 million at June 30, 2022. The decrease in cash is due to the
Company having received net proceeds of $23.4 million from financing activities, offset by $8.1 million to acquire claims in Tonopah,
Nevada, $21.9 million of deposits towards its building and related equipment and $6.8 million towards other property and equipment related
to its core business objectives.

The
Company had total current liabilities of $13.4 million at June 30, 2023, compared to $3.1 million at June 30, 2022. The increase in current
liabilities is primarily due to the costs necessary to equip its recycling facility and prepare the facility for its intended use. Current
liabilities at June 30, 2023 includes a $6.0 million financing instrument to assist with the transportation and commissioning of its
recycling facility.

As
of June 30, 2023 the Company had a working capital deficiency of $8.6 million compared to a positive working capital of $26.8 million
at June 30, 2022. The decrease in working capital attributed to acquisitions of property and equipment, increased operating activities
and a decrease to financing activities during the fiscal year ended June 30, 2023. The Company believes its cash holdings and subsequent
financing will be sufficient to meet its future working capital needs.

Grant
Awards

On
August 16, 2021, the Company received a contract award for a 30-month project with a total budget of $2.0 million from the US
Advanced Battery Consortium (the “USABC grant”) as part of a competitively bid project, through which the Company will
receive reimbursement for up to $500,000 of eligible expenditures. The objective of the contract award is for the commercial-scale
development and demonstration of an integrated lithium-ion battery recycling system, the production of battery cathode grade metal
products, the synthesis of high energy density active cathode material from these recycled battery metals, and the fabrication of
large format automotive battery cells from these recycled materials and the testing of these cells against otherwise identical cells
made from virgin sourced metals. The Company began receiving funds related to this award during the fiscal year ended June 30, 2022.

On
January 20, 2021, the US DOE announced that the Company had been selected for award negotiation for a three-year project with a total
budget of $4.5 million for the field demonstration of its selective leaching, targeted purification, and electro-chemical production
of battery grade lithium hydroxide from domestic claystone resources technology. Through this grant award the Company is eligible to
receive reimbursement of up to 50% of eligible expenditures, or up to $2.3 million. The prime agreement contract for this grant (“AMO
grant”) was issued with a project start date of October 1, 2021. The Company began receiving funds related to this award during the fiscal
year ended June 30, 2022.

On
October 21, 2022, the US DOE announced that the Company has been selected for award negotiation for a five-year project with a total
budget of $115.5 million to expand domestic manufacturing of battery grade lithium hydroxide for lithium-ion batteries for electric
vehicles, a focus on domestic processing of materials and components that are currently imported from foreign countries. Through
this grant award the Company is eligible to receive reimbursement of up to 50% of eligible expenditures, or up to $57.7 million. The
prime agreement contract for this grant was issued with a project start date of September 1, 2023. The Company is expected to begin
receiving funds associated with this during the fiscal year ended June 30, 2024.

On
November 17, 2022, the US DOE announced that the Company has been selected for award negotiation for a three-year project with a total
budget of $20.0 million to demonstrate and commercialize next generation techniques for its lithium-ion battery recycling processes to
produce low-cost and low-environmental impact domestic battery materials. Through this grant award the Company is eligible to receive
reimbursement of up to 50% of eligible expenditures, or up to $10.0 million. The Company is expected to begin receiving funds associated with this during
the fiscal year ended June 30, 2024.

Cash Flows

For the fiscal years ended June 30:

Cash
from Operating Activities.

During
the fiscal year ended June 30, 2023, the Company used $13.4 million of
cash for operating activities as compared to $10.2 million used during the fiscal year ended June 30, 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 continues to evaluate its claims in the Tonopah, Nevada region. The Company also continues to see a stable increase in its general
administrative function to further support its business objectives.

Cash
from Investing Activities

During
the fiscal year ended June 30, 2023, the Company used cash for investing
activities of $36.7 million, including acquisition costs of $28.6 million of property and equipment for its recycling facilities and $8.1
million for mineral rights acquired in Tonopah, Nevada. This is in comparison to cash used for investing activities of $15.1 million for
the fiscal year ended June 30, 2022, consisting primarily of $12.9 million for construction and equipment and $2.2 million for water rights.

As
of June 30, 2023, the Company had recorded specific deposits of $26.9 million, consisting of $21.0 million of cash and $5.9 million of
common stock to acquire its new recycling facility located in McCarran, NV. On August 11, 2023, the Company closed on the acquisition
and will present these deposits as property, plant and equipment for the fiscal quarter ending September 30, 2023.

As
of June 30, 2023, the Company had total non-current assets of $69.9 million
compared to $23.0 million at June 30, 2022. The Company will continue to see an increase in investing activities as it continues to invest
heavily in its recycling and primary resource extraction activities.

Cash
from Financing Activities

During
the fiscal year ended June 30, 2023, the Company had net cash provided by financing activities of $23.4 million compared to $41.4 million
for the fiscal year ended June 30, 2022. The decrease represents a decrease in the need for capital requirements while the Company nears
completion of its revenue-generating recycling facility.

During
the period, the Company issued 433,333 shares of common stock pursuant to purchase agreements for net proceeds of $3.9 million,
of which, $0.4 million was received after June 30, 2023.

In
March 2023, the Company entered into a share purchase agreement for the purchase and sale of 952,381 shares of common stock at
an issuance price of $10.50 per share. In addition to the issuance of common shares, the Company issued 952,381 Series A warrants
that are each exercisable into one common share of the Company at $12.00 per share for a period of five years from the date of issuance
and 952,381 Series B warrants that are each exercisable into one common share of the Company at $10.50 per share for a period
of eighteen months from the date of issuance. As part of the financing, the Company engaged a placement agent in connection with the
offering and agreed to pay the placement agent a cash fee of 7.5% of the gross proceeds of the offering, a 1% expense allowance, and
other reimbursable expenses. In addition, the Company issued 57,143 warrants to the placement agent as a commission fee, which are
exercisable at $13.13 per share for a period of five years from the date of issuance. The Company received net proceeds under this
share purchase agreement of $8.9 million.

In May 2023, the Company entered into multiple share
purchase agreements for the purchase and sale of 476,187 common shares at an issuance price of $10.50 per share. In addition to
the issuance of common shares, the Company issued 476,187 Series A warrants that are exercisable into one common share of the Company
at $12.00 per share for a period of five years from the date of issuance and 476,187 Series B warrants that are exercisable into
one common share of the Company at $10.50 per share for a period of eighteen months from the date of issuance. The Company received net
proceeds under this share purchase agreement of $5.0 million. The Company’s offering of the Units was made in reliance on the exemption
from registration provided by Section 4(a)(2) of the Securities Act. The Company relied on this exemption from registration based in part
on representations made by the purchasers, including that such purchasers are “accredited investors” (as defined under the
Securities Act) and will resell such securities only if registered under the Securities Act or pursuant to an applicable exemption from
registration requirements.

On May 17, 2023, the Company entered into a Credit Agreement (the “Credit
Agreement”) with Mercuria Investments US, Inc. for pre-payment on the purchase of the Company’s recycled battery metal products.
The Credit Agreement provides for an aggregate loan amount of up to $20.0 million, comprised of (i) an initial term loan in the aggregate
principal amount of $6.0 million and (ii) delayed draw term loan commitments in an aggregate amount equal to $14.0 million. Borrowings
under the Credit Agreement carry interest calculated as the secured overnight financing rate published on the Federal Reserve Bank of
New York’s website, plus the applicable credit spread adjustment, based on the elected interest period, plus an applicable margin
rate of 6%. On August 30, 2023, the Company caused the repayment in full of all indebtedness, liabilities and other obligations
under, and terminated, the Credit Agreement.

Off-Balance
Sheet Arrangements

As
of June 30, 2023, we had no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenses
or capital resources that are material to stockholders.

Working
Capital

Future
Financings

We will continue to rely on sales of our common shares,
debt, or other financing to fund our business operations. 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.

Going
Concern

At
the Company’s current operating levels and capital usage, we believe that without any further acquisition or investments our aggregate
cash, cash equivalents, and funds raised during August 2023, would allow us to fund our operations through at least 12 months from issuance
of these financial statements. The continuation of the Company as a going concern is dependent upon generating profit from operations
and its ability to identify future investment opportunities and obtain any necessary debt or equity financing. In our filing for the
period ended March 31, 2023, it was noted that uncertainties raise substantial doubt as to the Company’s ability to continue as
a going concern for 12 months. Considering the recycling plant has since progressed and is near operational, the Company has since obtained
financing, and additional financing options are available, the Company has concluded that the substantial doubt of its ability to continue
as a going concern has been alleviated.

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

Forward-Looking
Statements

You
should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial
statements and the notes thereto included elsewhere in this Form 10-K. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-K.

Overview

ABTC
is a startup company in the lithium-ion battery industry that is working to increase the domestic US production of battery materials,
such as lithium, nickel, cobalt and manganese through its engagement in the exploration of new primary resources of battery metals, in
the development and commercialization of new technologies for the extraction of these battery metals from primary resources, and in the
commercialization of an internally developed integrated process for the recycling of lithium-ion batteries. Through this three-pronged
approach ABTC is working to both increase the domestic production of these battery materials, and to ensure that as these materials reach
their end of lives that the constituent elemental battery metals are returned to the domestic manufacturing supply chain in a closed-loop
fashion.

To
implement this business strategy, the Company is currently constructing its first integrated lithium-ion battery recycling facility,
which will take in waste and end-of-life battery materials from the electric vehicle, stationary storage, and consumer electronics industries.
The construction, commissioning, 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 US Advanced Battery Consortium to accelerate
the development and demonstration of this pre-commercial scale integrated lithium-ion battery recycling facility.

Additionally,
the Company is accelerating the demonstration and commercialization of its internally developed low-cost and low-environmental impact
processing train for the manufacturing of battery grade lithium hydroxide from Nevada-based sedimentary claystone resources. The Company
has been awarded a grant cooperative agreement from the US Department of Energy Advanced Manufacturing Office through the Critical Materials
Innovation program to support the construction and operation of a multi-ton per day integrated continuous demonstration system to support
the scale-up and commercialization of these technologies.

2022
Financial Highlights:

Components
of Statements of Operations

Expenses

The Company recognized $33.7 million of operating
expenses compared to $37.7 million of operating expenses during the fiscal years ended June 30, 2022 and 2021, respectively.

Research
and development expenses for the fiscal year include salaries for laboratory staff, laboratory costs, and lease expenses for the
laboratory space occupied at NCAR at the University of Nevada, Reno. The Company incurred $1.1 million and $0.9 million in research
and development expenses for the fiscal years ended June 30, 2022 and June 30, 2021, respectively. The Company was awarded two
grants in the fiscal year ended June 30, 2022. Income received from these grants was $0.1 million for the fiscal year
ended June 30, 2022. The Company records any grant revenue as an offset to research and development
expenses.

General
and administrative expenses primarily consist of legal, office, consulting, salaries, and benefits expense. The Company recognized
general and administrative expenses of $31.7 and $36.3 million for the fiscal years ended June 30, 2022 and 2021, respectively.
Included within general and administrative expenses is a non-cash expense related to shares issued for professional services of
$20.4 million and $29.4 million during the fiscal years ended June 30, 2022 and 2021, respectively. The Company has significantly reduced the use of shares for professional services to non-employees therefore, we
expect to see a reduction in these expenses beginning July 1, 2022.

Exploration
costs consist primarily of expenses related to the salaries, leasing and drill operations primarily associated with the exploration
of new primary resources of battery metals. The Company recognized exploration costs of $0.9 million and $0.5 million for the fiscal
years ended June 30, 2022 and 2021, respectively.

11

The
Company recorded other income of $0.2 million during the fiscal year ended June 30, 2022 compared to other expenses of $4.0 million during
the fiscal year ended June 30, 2021. The Company recognized a gain of $153,393 related to the sale of mining claims in Railroad Valley,
NV during the fiscal year ended June 30, 2022.

Net
Loss

During
the fiscal year ended June 30, 2022, the Company incurred a net loss of $33.5 million or $0.05 loss per share compared to a net loss
of $41.8 million or $0.08 loss per share during the fiscal year ended June 30, 2021.

Liquidity
and Capital Resources

At
June 30, 2022, the Company had cash of $29.0 million and total assets of $52.9 million compared to cash of $12.8 million and total
assets of $21.3 million at June 30, 2021. The increase in cash is due to the Company having received net proceeds of $40.9 million
from private placements and share purchases of common stock and $0.9 million of proceeds from exercises of share purchase warrants, partially offset by higher acquisition costs of property and equipment
and intangible assets.
The increase in total assets was due to the increase in cash of $16.1 million and increase in property and equipment and intangible
assets of $13.4 million relating to additional acquisitions of land, construction in progress, equipment and water rights which will
be used for the Company’s future pilot plant operations.

Liquidity
and Capital Resources (continued)

The
Company had total current liabilities of $3.1 million at June 30, 2022, compared to $1.8 million at June 30, 2021. The increase in current
liabilities is due to an increase in accounts payable and accrued liabilities based on increased expenses in investing activities,
an increase in accounts payable and accrued liabilities and day-to-day operating expenses.

As
of June 30, 2022, the Company had working capital of $26.8 million compared to a working capital of $12.3 million at June 30, 2021. The
increase in working capital was primarily attributed to the inflow of financing activity during the fiscal year ended
June 30, 2022.

Cash
Flows

Cash
from Operating Activities.

During
the fiscal year ended June 30, 2022, the Company used $10.2 million of cash for operating activities as compared to $7.8 million
during the fiscal year ended June 30, 2021. The increase in the use of cash for operating activities was due to an increase in
operating activities in the current period including an increase in a number of expenses including, employment and recruiting,
research and development, exploration and reclamation, and professional fees and services.

Cash
from Investing Activities

During
the fiscal year ended June 30, 2022, the Company used $15.1 million on the construction, procurement of equipment, and water rights
necessary to construct, commission, and operate its lithium-ion battery recycling Pilot Plant. This is in comparison to the cash
used of $7.1 million for the fiscal year ended June 30, 2021. The increase in investing activities is due to the Company continuing
to construct its Pilot Plant where necessary demonstrations are to occur. The Company also continues its acquisition of water rights
and land in the Northern Nevada region to support further operations of the Company. The Company expects to see additional increases
in investing activities as these projects progress to meet management expectations.

Cash
from Financing Activities

During
the fiscal year ended June 30, 2022, the Company had net cash provided by financing activities of $41.4 million compared to $26.9 million
for the fiscal year ended June 30, 2021.

On
September 27, 2021, the Company entered into a securities purchase agreement for the purchase and sale of an aggregate of 25,389,611
shares of the Company’s common stock and warrants to purchase an aggregate of up to 25,389,611 shares of common stock in a registered
direct offering at a combined purchase price of $1.54 per share and warrant, for net proceeds to the Company of $36.9 million. The warrants
are immediately exercisable and may be exercised at any time until September 29, 2026, at an exercise price of $1.75 per warrant.

The
Company engaged a placement agent in connection with the offering and agreed to pay the placement agent a cash fee of 5% of the gross
proceeds the Company receives in the offering. In addition, the Company agreed to issue to the placement agent warrants to purchase shares
equal to 5% of the gross proceeds sold under the securities purchase agreement, or warrants to purchase up to an aggregate of 1,955,000
shares. The placement agent warrants generally will have the same terms as the investor warrants, except they will expire September 29,
2024, at an exercise price of $1.54 per warrant.

12

On
August 5, 2021, the Company elected to exercise its rights pursuant to the Purchase Agreement dated April 2, 2021, to issue 3,000,000
shares for net proceeds to the Company of $4.0 million.

During
the fiscal year ended June 30, 2022, the Company received $1.0 million of proceeds from the exercise of share purchase warrants.

Off-Balance
Sheet Arrangements

As
of June 30, 2022, we had no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenses
or capital resources that are material to stockholders.

RESULTS
OF OPERATIONS

Working
Capital

Cash
Flows

For
the fiscal years ended June 30:

Future
Financings

We
will continue to rely on equity sales of our common shares to continue to fund our business operations. Issuances of additional shares
will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities
or arrange for debt or other financing to fund planned acquisitions and exploration activities.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

You
should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial
statements and the notes thereto included elsewhere in the Form 10-K. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-K.

17

RESULTS
OF OPERATIONS

Working
Capital

Cash
Flows

Operating
Revenues

During
the twelve months ended June 30, 2021 and nine months ended June 30, 2020, the Company did not earn any revenues. The Company is currently
still in its development stage.

Operating
Expenses and Net Loss

During
the twelve months ended June 30, 2021, the Company incurred operating expenses of $37,724,330 compared to operating expenses of $4,387,169
during the nine months ended June 30, 2020. The increase in operating expenses was due to an increase in our overall operations during
the fiscal year of 2021, highlighted by purchases of various properties and water rights in preparation for the commencement
of construction of our lithium-ion battery recycling pilot plant. Our biggest expenditures for the twelve months ended June 30, 2021
were related to labor costs, including consulting fees of $24,133,707 and management fees of $5,017,231 of which the majority of those
costs related to share-based compensation. We also saw an increase in payroll expense from $1,346,994 in fiscal year of 2020 to
that of $3,409,866 in fiscal year of 2021 due to an increase in the number of staff in our office relating to the
growth of our operations. We currently are expecting that we will require more staffing as we continue to grow our business. We
also saw an increase in professional fees from $372,186 during the nine months ended June 30, 2020 to $1,239,351 during the twelve months
ended June 30, 2021 due to additional legal fees for due diligence and general legal services related to our acquisitions of various
land properties and water rights throughout the fiscal year of 2021 as well as an increase in accounting and audit fees
related to the increased time and costs incurred in connection therewith.

We
incurred a net loss attributable to stockholders of $41,864,705 during the twelve months ended June 30, 2021 or a loss of $0.08 per share
compared to a net loss attributable to stockholders of $13,318,408 or a loss of $0.05 per share during the nine months ended June 30,
2020. In addition to operating expenses, we incurred finance costs of $422,768, a loss of $19,655,296 relating to the change in the fair
value of derivative liabilities during the twelve-month period ended June 30, 2021 as well as $2,915,025 of accretion and
interest costs which was offset by a gain on settlement of convertible debt of $18,683,279 from the activity relating to the servicing
and settlement of our convertible debentures during that year. During the nine months ended June 30, 2020, we incurred a loss
on the change in fair value of derivative liability of $5,863,127 and accretion and interest expense of $4,391,184, which was offset
by a gain on settlement of debt of $1,319,326. The increase in other expense during the current year was due to an increase in the number
and dollar value of convertible debentures in the fiscal year ended June 30, 2021 compared to that of the prior
year and also due to an increase in the activity of convertible debentures as we focused more of our financing activities to raising
equity from the issuance of common shares that were buoyed by an appreciation in the market price of our common stock. As we were able
to raise funds from the issuance of equity instruments, we used part of the proceeds from the offerings of our common
stock to pay down and settle our outstanding convertible debentures that carried discounts to the market price of the Company’s
common shares upon conversion as well as high interest rates indicative of the borrowing costs of a development stage company. Moving
forward, we believe that the Company is in a much stronger financial position than the fiscal year of 2020 due to
a higher cash base and working capital, which will be a key factor as the Company continues its strategic objectives of graduation
from the development stage to construction of our battery recycling pilot plant and eventually of production and revenue-earning
activities.

18

Liquidity
and Capital Resources

Cash
and Assets

As
of June 30, 2021, the Company had cash of $12,843,502 and total assets of $21,263,103 compared to cash of $829,924 and total assets
of $1,161,314 at June 30, 2020. The increase in cash was due to proceeds received from the sales of our shares of common stock
and exercise of share purchase warrants which was offset by an increase in the amount of cash used for our day-to-day operating expenditures
as we continue to grow our business. We also continued to build out our core asset base through the strategic acquisitions of various
land properties in Nevada and various water rights which will be used in our future production process and will be more cost effective
and efficient than sourcing our expected water use through third parties.

Liabilities

Our
liabilities decreased from $6,101,818 at June 30, 2020 to $1,822,498 at June 30, 2021 primarily due to paying down and
settling our outstanding convertible debentures during the year of 2021, which carried high interest rates and a significant discount
to the market price of our common shares which could cause dilution for our existing shareholders. As of June 30, 2021, we no
longer have any outstanding convertible debentures issued and outstanding or derivative liability with respect to conversion
features that are held by note holders. This was in comparison to outstanding face value of convertible debentures of $2,211,200,
of which $2,084,051 was unamortized discount, and the fair value of derivative liability of $4,519,654 (the fair value of the
conversion features within the convertible debentures) held by our convertible note holders at June 30, 2020. As of June 30, 2021, the
majority of our liabilities was comprised of accounts payable and accrued liabilities in the aggregate amount of $1,616,852 compared
to that of $514,838 at June 30, 2020 and the increase in the amount of $1,102,014 reflected an increase in the Company’s
day-to-day operating costs. Most of our trade accounts payable and accrued liabilities are expected to be settled over the next 12
months.

Working
Capital and Capital Transactions

As
at June 30, 2021, we have a working capital of $12,313,220 compared to a working capital deficit of $4,727,912 as at June 30,
2020. The strengthening of our working capital was due to our ability to raise significant funding through the issuance of equity instruments
which were used to repay our debt financing and continue to fund our growth and strategic objectives as we move closer to construction
of our battery recycling pilot plant and, eventually, to production activity.

We
have 573,267,632 common shares issued and outstanding at June 30, 2021 compared to 365,191,213 common shares issued and outstanding at
June 30, 2020. During the twelve months ended June 30, 2021, we issued 69,715,910 common shares from registered and unregistered sales
of our common shares, 57,670,677 common shares from the exercise of outstanding share purchase warrants, 34,534,830 common
shares as payments for services, including share-based compensation to certain officers and directors of the Company,
22,685,750 common shares for the settlement of convertible debentures, 16,750,000 common shares for share purchase agreements,
5,900,000 common shares for the conversion from certain issued Series C preferred shares, and 69,252 common shares for deposit
on real property.

Cash
flows from Operating Activities

During
the twelve months ended June 30, 2021, we used $7,756,438 for operating activities compared to use of $3,018,519 for operating activities
during the nine months ended June 30, 2020. The increase in cash used for our operating activities is due to an overall increase in our
day-to-day operations.

Cash
flows from Investing Activities

During
the twelve months ended June 30, 2021, we used $7,083,247 of cash for investing activities including $5,440,087 for the acquisition of
land and building properties, and $1,643,160 for acquisition of water rights. During the nine months ended June 30, 2020, we used $3,896
of cash for acquisition of properties and equipment.

19

Cash
flows from Financing Activities

During
the year ended June 30, 2021, we received $26,853,263 of cash from financing activities, which included $25,931,451 from
the issuance of common shares from private placements, net of issuance costs of $1,300,000, $1,395,000 from the issuance of convertible
debentures, $862,500 from the exercise of share purchase warrants, and was offset by the repayment of convertible debentures in the
aggregate amount of $1,295,202. During the nine months ended June 30, 2020, we received $2,600,000 from the issuance of common shares,
$2,522,250 of proceeds from issuance of convertible debentures less repayments of $1,533,274, and proceeds of $255,992 from government
loans.

Liquidity
and Capital Resources

During
the year ended June 30, 2021, the Company has incurred a net loss of $41,760,064 and used cash of $7,756,438 for operating activities.
As of June 30, 2021, the Company has an accumulated deficit of $105,073,651.

On
September 27, 2021, the Company secured approximately $36,925,000 net proceeds to construct and commission the pilot plant, fund operations,
and increase research and development activities. The Company believes its recent capital raise, and its current cash holdings will be
sufficient to meet its future working capital needs. The Company cannot give assurance that it can increase its cash balances or limit
its cash consumption and thus maintain sufficient cash balances for its planned operations. The Company may need to raise additional
capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at
all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at
least one year from the date of issuance of the accompanying financial statements.

These
audited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts
and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance
Sheet Arrangements

As
of June 30, 2021, we had no significant off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Future
Financings

We
will continue to rely on equity sales of our common shares to continue to fund our business operations. Issuances of additional shares
will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities
or arrange for debt or other financing to fund planned acquisitions and exploration activities.

Critical
Accounting Policies

Our
consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting periods.

We
regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. A complete summary
of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical
experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under
the facts and circumstances. Actual results could differ from those estimates made by management.

20

Recently
Issued Accounting Pronouncements

In
August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The
guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments,
requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at
a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope
exception, permitting more contracts to qualify for it. The ASU is effective for annual reporting periods beginning after December 15,
2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year
beginning after December 15, 2020.

The
Company has not yet adopted the new pronouncement as of June 30, 2021.