UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the Quarter Ended
For the transition period from _______ to _______.
Commission
file number:
(Name of Registrant in Its Charter)
| (State
or Other Jurisdiction of Incorporation or Organization) |
(I.R.S.
Employer Identification No.) |
(Issuer’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
At November 13, 2024, there were shares of the registrant’s common stock outstanding (the only class of voting common stock).
FORM 10-Q
TABLE OF CONTENTS
| 2 |
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. Forward-looking statements may appear throughout this report, including without limitation, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report and in our Annual Report on Form 10-K for the year ended December 31, 2023, and in particular, the risks discussed under the caption “Risk Factors” in Item 1A of this report and in in our Form 10-K, and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Important factors that in our view could cause material adverse effects on our financial condition and results of operations include, but are not limited to, risks associated with service demands and acceptance, our ability to expand, changes in healthcare practices, changes in technology, economic conditions, the impact of competition and pricing, government regulation and approvals, impacts and disruptions caused by the COVID-19 pandemic and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. We undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
As used herein, the “Company,” “we,” “our,” and similar terms include Bitech Technologies Corporation (formerly Spine Injury Solutions, Inc.) and its subsidiaries and predecessors, unless the context indicates otherwise.
| 3 |
BITECH TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expense | ||||||||
| Deferred offering costs | ||||||||
| Total current assets | ||||||||
| Intangible Asset – BESS and Solar Development Projects | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $ par value, shares authorized, shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | ||||||||
| Common stock: $ par value, shares authorized, and shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 4 |
BITECH TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
| For the Three Months ended September 30, 2024 | For the Three Months ended September 30, 2023 | For the Nine Months ended September 30, 2024 | For the Nine Months ended September 30, 2023 | |||||||||||||
| REVENUE | ||||||||||||||||
| Equipment Sales | $ | $ | $ | $ | ||||||||||||
| Service Revenue | ||||||||||||||||
| Other Revenue | ||||||||||||||||
| TOTAL REVENUE | ||||||||||||||||
| COST OF REVENUE | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General & Administrative | ||||||||||||||||
| Stock Based Compensation | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Miscellaneous Income (Expense) | ||||||||||||||||
| Interest and Other Income | ||||||||||||||||
| Total Other Income (Expense) | ||||||||||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| BENEFIT (PROVISION) FOR INCOME TAXES | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| BASIC AND DILUTED LOSS PER SHARE | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| WEIGHTED AVERAGE SHARES | ||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 5 |
BITECH TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
| NINE MONTHS ENDED SEPTEMBER 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Common Stock issued for services | ||||||||
| Stock Based Compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Deferred Offering Costs | ( | ) | ||||||
| Cash from Sale of Common Stock, net | ||||||||
| Net cash provided by (used in) financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplementary disclosure of non-cash operating activities: | ||||||||
| Common Stock issued for legal services – and Common Shares, September 30, 2024 and 2023, respectively. | $ | $ | ||||||
| Supplementary disclosure of non-cash investing and financing activities: | ||||||||
| Common Stock cancelled related to exclusive license cancellation and settlement agreement – Common Shares | $ | |||||||
| Common Stock issued in exchange for | $ | |||||||
| Supplementary disclosure of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 6 |
BITECH TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| Common Stock | Preferred Stock | Additional Paid-In | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balances, July 1, 2023 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Stock Compensation | ||||||||||||||||||||||||||||
| Sale of Common Stock | ||||||||||||||||||||||||||||
| Stock for Legal Services | ||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balances, September 30, 2023 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Balances, July 1, 2024 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Common Stock for Services | ||||||||||||||||||||||||||||
| Stock Based Compensation | ||||||||||||||||||||||||||||
| Sale of Common Stock | - | |||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balances, September 30, 2024 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Common Stock | Preferred Stock | Additional Paid-In | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balances, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Stock Compensation | ||||||||||||||||||||||||||||
| Stock cancelled related to SuperGreen Exclusive License cancellation | ( | ) | ( | ) | ||||||||||||||||||||||||
| Sale of Common Stock | ||||||||||||||||||||||||||||
| Stock for Legal Services | ||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balances, September 30, 2023 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Balances, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Common Stock for Services | ||||||||||||||||||||||||||||
| Stock Based Compensation | ||||||||||||||||||||||||||||
| Sale of Common Stock | ||||||||||||||||||||||||||||
| Common Stock issued for Emergen Energy, LLC | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balances, September 30, 2024 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 7 |
BITECH TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS
Bitech Technologies Corporation (the “Company”, “we” or “us”) was incorporated under the laws of Delaware on March 4, 1998. In connection with the Company’s planned expansion of its business following the completion of the acquisition of Bitech Mining Corporation, a Wyoming corporation (“Bitech Mining”), it filed a Certificate of Amendment to its Certificate of Incorporation, as amended (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware on April 29, 2022 to change its corporate name to Bitech Technologies Corporation.
We have refocused our business development plans as we seek to position ourselves as a global technology solution enabler dedicated to providing a suite of green energy solutions with plans to develop Battery Energy Storage System (BESS) projects, commercial and residential renewable energy solutions, enterprise utility services, public service engagements, and other renewable energy initiatives. We plan to pursue these innovative energy technologies through research and development, technology integration, planned acquisitions of other early stage green energy development projects and plans to become a grid-balancing operator using BESS solutions and applying new green technologies as a technology enabler in the green energy sector. Our team has identified two highly competitive battery energy storage suppliers who have expressed interest in establishing partnerships with us, as we seek to integrate their products into projects that we identify, including grid-balancing BESS projects we plan to pursue following the Acquisition of Emergen Energy LLC. In addition, we are seeking business partnerships with defensible technology innovators and renewable energy providers to facilitate investments, provide new market entries toward emerging-growth regions and implement innovative, scalable energy system solutions with technological focuses on smart grid, Home Energy Management System (HEMS), Building Energy Management System (BEMS), City Energy Management System (CEMS), energy storage, and EV infrastructure.
The
Company acquired Bitech Mining on March 31, 2022 (the “Closing Date”) through a share exchange pursuant to a Share Exchange
Agreement (the “Share Exchange Agreement”) by and among the Company, Bitech Mining, each of Bitech Mining’s shareholders
(each, a “Seller” and collectively, the “Sellers”), and Benjamin Tran, solely in his capacity as Sellers’
Representative (“Sellers’ Representative”). The transaction contemplated by the Share Exchange Agreement is hereinafter
referred to as the “Share Exchange”). The Share Exchange Agreement provides that the Company will acquire from the Sellers,
an aggregate of shares of Bitech Mining’s Common Stock, par value $ per share, representing % of the issued
and outstanding shares of Bitech Mining (collectively, the “Bitech Mining Shares”). In consideration of the Bitech Mining
Shares, the Company issued to the Sellers an aggregate of shares of the Company’s newly authorized Series A Convertible
Preferred Stock, par value $ per share (the “Series A Preferred Stock”). Each Bitech Mining Share shall be entitled
to receive shares of Series A Preferred Stock.
The Share Exchange was treated as a recapitalization and reverse acquisition for financial reporting purposes, and Bitech Mining is considered the acquirer for accounting purposes. As a result of the Share Exchange and the change in our business and operations, a discussion of the past financial results of our predecessor, Spine Injury Solutions Inc., is not pertinent, and under applicable accounting principles, the historical financial results of Bitech Mining, the accounting acquirer, prior to the Share Exchange are considered our historical financial results.
Prior to March 31, 2022, we were engaged in the business of owning, developing and leasing the Quad Video Halo video recording system (“QVH”) used to record medical procedures including the collection of accounts receivables related to previously provided spine injury diagnostic services (collectively, the “QVH Business”). On June 30, 2022, we sold the assets related to the QVH Business.
| 8 |
NOTE 2. CRITICAL ACCOUNTING POLICIES
The following are summarized accounting policies considered to be critical by our management:
Going Concern
Since
our inception, our expenses substantially exceeded our revenue, resulting in continuing losses and an accumulated deficit of approximately
$
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of Bitech Technologies Corporation and its wholly owned subsidiaries, Bitech Mining Corporation, Emergen Energy LLC and Quad Video Halo, Inc. All material intercompany transactions have been eliminated upon consolidation.
Revenue recognition
The Company adopted Accounting Standards Codification (“ASC”) 606. ASC 606, Revenue from Contracts with Customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
We have assessed the impact of the guidance by performing the following five steps analysis:
Step 1: Identify the contract
Step 2: Identify the performance obligations
Step 3: Determine the transaction price
Step 4: Allocate the transaction price
Step 5: Recognize revenue
Substantially all of the Company’s revenue is derived from leasing equipment. The Company considers a signed lease agreement to be a contract with a customer. Contracts with customers are considered to be short-term when the time between signed agreements and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue when services are provided to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. The Company typically satisfies its performance obligations in contracts with customers upon delivery of the services. The Company does not have any contract assets since we have an unconditional right to consideration when we have satisfied its performance obligation and payment from customers is not contingent on a future event. Generally, payment is due from customers immediately at the invoice date, and the contracts do not have significant financing components nor variable consideration. There are no returns and there is no allowances. All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience, complete satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made.
| 9 |
Fair Value of Financial Instruments
Cash, accounts receivable, accounts payable, accrued liabilities and notes payable as reflected in the consolidated financial statements, approximates fair value. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of liquid investments with original maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value. We maintain cash and cash equivalents in banks which at times may exceed federally insured limits. We have not experienced any losses on these deposits.
Property and Equipment
Property and equipment are carried at cost. When retired or otherwise disposed of, the related carrying cost and accumulated depreciation are removed from the respective accounts, and the net difference, less any amount realized from the disposition, is recorded in operations. Maintenance and repairs are charged to operating expenses as incurred. Costs of significant improvements and renewals are capitalized.
Deferred Offering Costs
Deferred
offering costs consist of legal, accounting, and underwriter costs incurred through the balance sheet date that are directly related
to the offering and that will be charged to shareholders’ equity upon the completion of the offering. As of September 30, 2024,
the Company had deferred offering costs of $
Intangible Asset – BESS and Solar Development Projects
Intangible assets determined to have indefinite useful lives are not amortized but are tested for impairment annually, or more frequently if events or changes in circumstances indicate the assets may be impaired. To the extent that an intangible asset is successfully developed into a revenue-generating asset, it will become a component of property, plant and equipment. To the extent that an intangible asset is not successfully developed into a revenue-generating assets, it will be considered impaired and charged to operations at that time. The estimation of the fair value of the projects requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of the projects are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.
Long-Lived Assets
We periodically review and evaluate long-lived assets when events and circumstances indicate that the carrying amount of these assets may not be recoverable. In performing our review for recoverability, we estimate the future cash flows expected to result from the use of such assets and its eventual disposition. If the sum of the expected undiscounted future operating cash flows is less than the carrying amount of the related assets, an impairment loss is recognized in the consolidated statements of operations. Measurement of the impairment loss is based on the excess of the carrying amount of such assets over the fair value calculated using discounted expected future cash flows.
Concentrations of Credit Risk
Assets that expose us to credit risk consist primarily of cash and accounts receivable. Our accounts receivable arise from a diversified customer base and, therefore, we believe the concentration of credit risk is minimal. We evaluate the creditworthiness of customers before any services are provided. We record a discount based on the nature of our business, collection trends, and an assessment of our ability to fully realize amounts billed for services. We have no accounts receivable to warrant any allowance at September 30, 2024 and December 31, 2023.
We account for the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values. Under authoritative guidance issued by the Financial Accounting Standards Board (“FASB”), companies are required to estimate the fair value or calculated value of share-based payment awards on the date of grant using an option-pricing model. The value of awards that are ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. We use the Black-Scholes Option Pricing Model to determine the fair-value of stock-based awards. During the nine month periods ended September 30, 2024 and 2023, we recognized stock based compensation expenses of $ and $, respectively.
Income Taxes
We account for income taxes in accordance with the liability method. Under the liability method, deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We establish a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.
| 10 |
Uncertain Tax Positions
Accounting Standards Codification “ASC” Topic 740-10-25 defines the minimum threshold a tax position is required to meet before being recognized in the financial statements as “more likely than not” (i.e., a likelihood of occurrence greater than fifty percent). Under ASC Topic 740-10-25, the recognition threshold is met when an entity concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.
We are subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon the outcomes of such matters. When applicable, we will adjust tax expense to reflect our ongoing assessments of such matters which require judgment and can materially increase or decrease our effective rate as well as impact operating results.
Under
ASC Topic 740-10-25, only the portion of the liability that is expected to be paid within one year is classified as a current liability.
As a result, liabilities expected to be resolved without the payment of cash (e.g. resolution due to the expiration of the statute of
limitations) or are not expected to be paid within one year are not classified as current. Estimated interest and penalties are recognized
as income tax expense and tax credits as a reduction in income tax expense. For the nine months ended September 30, 2024 and year ended
December 31, 2023, we recognized
Legal Costs and Contingencies
In the normal course of business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received.
If a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.
Basic and diluted net loss per common share is presented in accordance with ASC Topic 260, “Earnings per Share,” for all periods presented. During the nine months ended September 30, 2024 and 2023, common stock equivalents from outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share in the consolidated statements of operations, because all such securities were anti-dilutive. The net loss per share is calculated by dividing the net loss by the weighted average number of shares outstanding during the periods.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting principles (“GAAP”) and, instead, requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In November 2019, the FASB issued ASU No. 2019-10 to amend the effective date for entities that had not yet adopted ASU No. 2016-13. Accordingly, the provisions of ASU No. 2016-13 are effective for annual periods beginning after December 15, 2022, with early application permitted in annual periods beginning after December 15, 2018. The amendments of ASU No. 2016-13 should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the future impact of ASU No. 2016-13 on the Company’s consolidated financial position, results of operations and disclosures.
| 11 |
NOTE 3. STOCKHOLDERS’ EQUITY
The total number of authorized shares of our common stock, par value $ per share, was shares and increased on June 27, 2022 to shares. As of September 30, 2024 and December 31, 2023, there were and common shares issued and outstanding, respectively.
On January 19, 2021, our stockholders approved the filing of an amendment to our certificate of incorporation authorizing shares of preferred stock with a par value of $ per share. Such amendment was filed on January 20, 2021.
On March 30, 2022, the Secretary of State of Delaware acknowledged the Company’s filing of a Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock (the “Certificate of Designations”) with the Delaware Secretary of State creating a series of shares of Series A Preferred Stock (the “Series A Preferred Stock”). On March 31, 2022, we issued shares of Series A Preferred Stock in exchange for shares of Bitech Mining’s Common Stock, par value $ per share, representing % of the issued and outstanding shares of Bitech Mining. On June 27, 2022 the shares of Series A Convertible Preferred Stock issued as of March 31, 2022 automatically converted to shares of common stock.
As
of September 30, 2024, the Company agreed to issue shares of its Common Stock to its legal counsel as partial payment for legal
services for the three months ended September 30, 2024. The shares were valued at $
The
Company issued of restricted securities awards valued at $
On
April 24, 2024 the Company completed the acquisition of Emergen whereby the Company issued unregistered shares of its common
stock in exchange for
The
Company issued of restricted securities awards valued at $
As of September 30, 2024 and December 31, 2023, there were , and options outstanding, respectively.
We have granted non-qualified stock options to employees and contractors. All non-qualified options are generally issued with an exercise price no less than the fair value of the common stock on the date of the grant as determined by our Board of Directors. Options may be exercised up to ten years following the date of the grant, with vesting schedules determined by us upon grant. Vesting schedules vary by grant, with some fully vesting immediately upon grant to others that ratably vest over a period of time up to five years. Standard vested options may be exercised up to three months following date of termination of the relationship unless alternate terms are specified at grant. The fair values of options are determined using the Black-Scholes option-pricing model. The estimated fair value of options is recognized as expense on the straight-line basis over the options’ vesting periods. At September 30, 2024 and December 31, 2023, we had approximately $ million and $ million unrecognized stock-based compensation, respectively.
| 12 |
| September 30, 2024 | December 31, 2023 | |||||||||||||||
| Shares | Weighted- Average Exercise Price | Shares | Weighted- Average Exercise Price | |||||||||||||
| Outstanding at Beginning of Period | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited or Cancelled | ( | ) | ( | ) | ||||||||||||
| Outstanding at End of Period | ||||||||||||||||
| Weighted-Average Fair Value of Options Granted During the Period | $ | $ | ||||||||||||||
| Options Outstanding | Options Exercisable | |||||||||||||||||||||
| Range of Exercise Prices | Number
Outstanding at September 30, 2024 |
Weighted- Average Remaining Contractual Life | Weighted- Average Exercise Price | Number
Exercisable at September 30, 2024 |
Weighted- Average Exercise Price | |||||||||||||||||
| $ | - $ | years | $ | $ | ||||||||||||||||||
NOTE 5. RESTRICTED STOCK AWARDS
| September 30, 2024 | December 31, 2023 | |||||||||||||||
| Shares | Weighted- Average Price | Shares | Weighted- Average Price | |||||||||||||
| Outstanding at Beginning of Period | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Vested | ( | ) | ( | ) | - | |||||||||||
| Forfeited or Cancelled | - | - | - | |||||||||||||
| Outstanding at End of Period | ||||||||||||||||
| Weighted-Average Fair Value of RSAs Granted During the Period | $ | $ | ||||||||||||||
NOTE 6. ACQUISITION OF EMERGEN ENERGY LLC
On April 14, 2024, the Company, Emergen Energy LLC, a Delaware limited liability company (“Emergen”), Bridgelink Development, LLC, a Delaware limited liability company (“Bridgelink”) and C & C Johnson Holdings LLC, the sole member of Bridgelink (“C&C”) entered into a Membership Interest Purchase Agreement (the “MIPA”) (the “Acquisition”).
On April 24, 2024, the Company, Emergen, Bridgelink and C&C entered into Amendment No. 1 to the MIPA (the “Amendment”) to amend Section 2.02(b)(i) of the MIPA which provides that instead of expanding the Company’s Board of Directors (the “Board”) to five persons upon the closing of the Acquisition, the size of the Board will be expanded to four persons and name Cole Johnson to the Board as of the date of closing of the Acquisition. In addition, Amendment No. 1 requires the Company to expand the size of the Board to five persons, and thereafter to name to the Board two persons as named by the Company, two persons as named by Bridgelink, and one person jointly selected by the Company and Bridgelink, which person shall meet the requirements of being an “independent director” pursuant to the rules and regulations of the Nasdaq Stock Market.
On
April 24, 2024 (the “Closing”) the Company completed the acquisition of Emergen pursuant to the MIPA whereby the Company
issued unregistered shares of its common stock to Emergen’s sole member, C&C, an entity controlled by Cole Johnson
who became an executive officer and director of the Company following the Closing, in exchange for
Originally,
in a letter agreement executed and disclosed in January 2024 the above acquisition was contingent upon the parties entering into a definitive
agreement which would contain certain conditions to close, including a commitment for a capital investment or other financing transaction
of not less than $
Emergen holds a portfolio of battery energy storage system (“BESS”) projects identified in the MIPA with a cumulative storage capacity estimated at 1.965 gigawatts (GW) upon completion of the construction of such project (the “BESS Development Projects”) and rights to develop a portfolio of solar energy development projects with a cumulative capacity estimated at 3.840 GW upon completion of construction of such project (the “Solar Development Projects,” together with the BESS Development Projects, collectively, the “Development Projects”). Following the Closing, the Company agreed to take all commercially reasonable steps necessary to uplist the Company to the NASDAQ stock exchange.
From
an accounting perspective, we treated the transaction as an acquisition of assets versus a business combination due to the lack of any
operations. Also, the projects that were purchased in the acquisition were development stage and deemed to not be tangible assets under
FASB 805-10-20 and have classified these as intangible assets with indefinite useful lives and are not amortized but are tested for impairment
annually, or more frequently if events or changes in circumstances indicate the assets may be impaired. To the extent that an intangible
asset is successfully developed into a revenue-generating asset, it will become a component of property, plant and equipment. To the
extent that an intangible asset is not successfully developed into a revenue-generating assets, it will be considered impaired and charged
to operations at that time.. The Company valued the transaction at the value of $
| 13 |
The following agreements were entered into on the date of Closing as provided for in the MIPA:
Project Management Services Agreement
At the Closing, the Company and Emergen entered into a Project Management Services Agreement including amendment number one effective June 28, 2024 (the “PMSA”) with Energy Independent Partners LLC (“Energy Independent Partners”), an entity owned or controlled by Mr. Johnson. Pursuant to the terms of the PMSA, Energy Independent Partners is obligated to provide the following project management services in connection with the development and operation of each of the Development Projects (collectively, the “Services”): (i) assist as needed with qualifying the Development Projects for financing; (ii) assist as needed with obtaining all permits required for development of the Development Projects which have sufficient rights to use all necessary real property, and for which the applicable draft interconnection agreement has been received for the Development Projects (“RTB Status”); and (iii) if Emergen foregoes the development of a Development Project, Energy Independent Partners will assist the Company as needed with marketing the Development Project to a third party or develop and retain the Development Project outside of Emergen.
The term of the PMSA (the “Term”) commenced on the date of the Closing (the “Effective Date”) and terminates on the earlier to occur of (i) all of the Development Projects reaching RTB Status or being sold to a third party; and (ii) the mutual written agreement of the Parties to the PMSA to terminate the PMSA.
Payment for Service. The Issuer agreed to pay Energy Independent Partners the following fees for providing the Services:
BESS
Development Fees. The sum of (i) $
Solar
Development Fees. The sum of (i) $
Other
Development Fees. For each other renewable energy development asset held by the Company, which are neither BESS Development Projects
nor Solar Development Projects, located in the United States in which the Company engages during the term of the PMSA (the “Other
Development Projects”), the Company shall pay Energy Independent Partners the higher of either (a) fifty percent (
Timing of Payment of Fees
The
BESS Initial Fee and the Solar Initial Fee shall be due and payable upon (i) Bitech, or any of its Affiliates, receiving project related
financing, and (ii) when the “Redbird BESS” project, identified in Exhibit A, has achieved land agreements, which shall include,
but is not limited to, an option agreement, letter of intent, or lease agreement. Subject to (i) and (ii) herein and above, the BESS
Initial Fee shall equate to $
Acceleration
of Payment Clause: Within ninety (90) days (i) of the effective date of a Change of Control or (ii) the removal of Cole W. Johnson as
an employee or consultant to Emergen and/or the head of the BESS and Solar Division of Bitech, any remaining BESS Initial Fee and Solar
Initial Fee shall become due and payable. A “Change of Control” shall be deemed to have occurred if, after the Effective
Date, (x) the beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) of securities representing more than
If
any Development Projects pursuant to the Agreement are sold by Emergen to a third-party then EIP would be due the lesser of: (i) any
unpaid Initial Fee and Development Fee or (ii)
Subject to the requirements as set forth in the PMSA, the BESS RTB Fees shall be payable at the time that Bitech has obtained project financing with respect to the applicable BESS Development Project to be able to pay such BESS RTB Fees. Subject to the requirements as set forth in the PMSA, the Solar RTB Fees shall be payable at the time that Bitech has obtained project financing with respect to the applicable Solar Development Project to be able to pay such Solar RTB Fees.
Payment for Sale of Development Projects. In the event the Company decides not to proceed with any Development Project(s), the Company may elect to sell such Development Project(s) to one or more third parties. In such event, the Company and Energy Independent Partners agree to a sales price for the applicable Development Project being sold, and provided that the parties to the PMSA agree that any sale agreement for such Development Projects shall provide that the buyer thereof shall remain obligated to pay to Energy Independent Partners the BESS Development Fees and/or the Soler Development Fee(s), as applicable, to the extent not already paid by the Company hereunder, unless otherwise agreed upon by the Company and Energy Independent Partners.
| 14 |
Termination. The PMSA may be terminated at any time prior to the expiration of its term: (a) by the mutual written consent of the parties; (b) by the Company if Energy Independent Partners has violated or breached any of the covenants or agreements of Energy Independent Partners set forth therein, or any of the representations or warranties of Energy Independent Partners set forth in the PMSA has become inaccurate or untrue, which violation, breach, inaccuracy or untruth, if reasonable capable of cure, has not been cured by Energy Independent Partners, within 20 business days after receipt by Energy Independent Partners of written notice thereof from the Company; (c) by Energy Independent Partners if the Company or Emergen has violated or breached any of the covenants or agreements of the Company or Emergen set forth in the PMSA, or any of the representations or warranties of the Company or Emergen set forth in the PMSA has become inaccurate or untrue, which violation, breach, inaccuracy or untruth, if reasonable capable of cure, has not been cured by the Company or Emergen, within 20 business days after receipt by the Company of written notice thereof from Energy Independent Partners; or (d) by any party, if a court of competent jurisdiction or other governmental authority shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Combination or the transactions contemplated by the PMSA and such order or action shall have become final and nonappealable. Any of the Parties has a right to seek specific performance of the other parties’ obligations under the PMSA in lieu of its right to terminate the agreement.
Indemnification. Subject to certain limitations provided for in the PMSA, each of the parties to the PMSA mutually agreed to indemnify and hold harmless each other and each of their affiliates and each of their respective members, managers, partners, directors, officers, employees, stockholders, attorneys and agents and permitted assignees to the fullest extent permitted by applicable law, against and in respect of any and all losses incurred or sustained by such party as a result of or in connection with (i) any breach, inaccuracy or nonfulfillment or the alleged breach, inaccuracy or nonfulfillment of any of the representations, warranties, covenants and agreements of the other party contained in the PMSA or in any of the additional agreements or any certificate or other writing delivered pursuant hereto; or (ii) any claim for brokerage commissions in connection with the transactions contemplated hereby as a result of the actions or agreements of the other party or any of their representatives.
NOTE 7. EMERGEN ENERGY LLC INTANGIBLE ASSETS – BESS and Solar Development Projects
On
April 24, 2024 the Company completed the acquisition of Emergen whereby the Company issued unregistered shares of its common
stock to Emergen’s sole member, C&C, an entity controlled by Cole Johnson who became an executive officer and director of the
Company coincident with the acquisition, in exchange for
Intangible assets determined to have indefinite useful lives are not amortized but are tested for impairment annually, or more frequently if events or changes in circumstances indicate the assets may be impaired. To the extent that an intangible asset is successfully developed into a revenue-generating asset, it will become a component of property, plant and equipment. To the extent that an intangible asset is not successfully developed into a revenue-generating assets, it will be considered impaired and charged to operations at that time. The estimation of the fair value of the projects requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of the projects are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired.
NOTE 8. SOLAR PROJECTS SALE
On
May 30, 2024, Emergen entered into a Project Sale Agreement (“Agreement”) with Bridgelink for an estimated
In the event that Purchaser, under the purchase agreement decides to transfer any Project along with its interests to Bridgelink or any creditworthy entity designated by Bridgelink (“Returned Project”), Bridgelink shall provide written notice to Emergen within ten (10) business days of receipt of such notice from the Purchaser and Bridgelink shall convey, transfer, assign, deliver, and contribute over certain rights and interests to the Returned Project to Emergen within ten (10) business days of receipt of such Returned Project, unless otherwise agreed upon by Emergen in writing. For clarity, any creditworthy entity designated by Bridgelink shall be confirmed in writing by Emergen. Bridgelink is to receive payment from the Purchaser no later than March 31 of the year following each calendar yearend for any milestones that have been achieved during that calendar year. Emergen is to receive payment within five days from Bridgelink receiving payment from the Purchaser. The Purchaser and Bridgelink can return any Project for full refund until all milestones have been achieved and payments received by Project.
The Projects sold by Emergen to Bridgelink are in what are termed as a Greenfield Projects. With respect to each Greenfield Project, Emergen will be paid:
(i)
$
(ii)
$
There is no specified timeframe for the milestones to be achieved.
The upfront payment that was received has been recorded as deferred revenue until there is no longer a right to return the Projects. The remainder of the transaction is disclosed as a footnote to the financial statements but not recorded within the financial statements. All payments that are received will be recorded as deferred revenue with proper footnote explanation of the transaction and will not be recorded as revenue until the right Bridgelink to return the Project and request a full refund no longer exists. There are no other sale contingencies besides those disclosed herein.
NOTE 9. SUBSEQUENT EVENTS
The
Company sold unregistered restricted shares to an accredited investor at $ per share for gross proceeds of $
As disclosed in Part II, Item 1. Legal Proceedings, pursuant to the Thomason Settlement Agreement dated October 7, 2024, the Company canceled shares of the Company’s common stock, par value $ per share previously issued by the Company to Thomason.
| 15 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management discussion and analysis (“MD&A”) of the financial condition and results of operations of Bitech Technologies Corporation (the “Company,” “Bitech Technologies,” “our” or “we”) is for the nine months ended September 30, 2024 and 2023. It is supplemental to, and should be read in conjunction with, our condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 and the accompanying notes for such period included in our Current Report on Form 8-K filed with the Securities and Exchange Commission, or SEC, on April 4, 2022. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Financial information presented in this MD&A is presented in United States dollars (“$” or “US$”), unless otherwise indicated.
The information about us provided in this MD&A, including information incorporated by reference, may contain “forward-looking statements” and certain “forward-looking information” as defined under applicable United States securities laws and Canadian securities laws. All statements, other than statements of historical fact, made by us that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements, including, but not limited to, statements preceded by, followed by or that include words such as “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable words and includes, among others, information regarding: our ability to become profitable and generate cash in our operating activities; our need for substantial additional financing to operate our business and difficulties we may face acquiring additional financing on terms acceptable to us or at all; our significant indebtedness and significant restrictions on our operations; the risk that the BESS and Solar Development Projects discussed below (the “Development Projects”) may not be completed, will be materially delayed or will be more costly or difficult than expected or that the Company is otherwise unable to successfully complete the Development Projects; (iii) the failure to obtain the necessary approvals and consents to complete the Development Projects, regulatory, or any other consents required to complete the projects; our ability to obtain required governmental approvals to complete the Development Projects (and the risk that such approvals may result in the imposition of conditions that could adversely affect the Company or the expected benefits of the Acquisition discussed below); the Company’s ability to fund the costs required to complete the Development Projects; the impact of global climate change on our ability to conduct future operations; our dependence on key inputs, suppliers and skilled labor to complete construction of the Development Projects and acquire equipment for the operation of the proposed Development Projects; our ability to attract and retain key personnel; growth-related risks, including capacity constraints and pressure on our internal systems and controls; risk related to the protection of our intellectual property and our exposure to infringement or misappropriation claims by third parties; risks related to competition; risks related to our lack of internal controls over financial reporting and their effectiveness; increased costs we are subject to as a result of being a public company in the United States; and other events or conditions that may occur in the future.
Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then current expectations of the party making the statement and assumptions concerning future events, which are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from that which was expressed or implied by such forward-looking statements, including, but not limited to, risks and uncertainties described in “Risk Factors.”
Although we believe that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks described in “Risk Factors.”
| 16 |
Consequently, all forward-looking statements made in this MD&A and other documents, as applicable, are qualified by such cautionary statements, and there can be no assurance that the anticipated results or developments will actually be realized or, even if realized, that they will have the expected consequences to or effects on us. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that we and/or persons acting on its behalf may issue. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required under securities legislation.
Overview of the Business
Currently, we have refocused our business development plans as we seek to position ourselves as a global technology solution enabler dedicated to providing a suite of green energy solutions with plans to develop Battery Energy Storage System (BESS) projects, commercial and residential renewable energy solutions, enterprise utility services, public service engagements, and other renewable energy initiatives. We plan to pursue these innovative energy technologies and become a grid-balancing operator by developing a portfolio of battery energy storage system (“BESS”) projects with a cumulative storage capacity estimated at 1.965 gigawatts (“GW”) and rights to develop a portfolio of solar energy development projects with a cumulative capacity estimated at 3.840 GW (collectively, the “Development Projects”) that we acquired in connection with our acquisition of Emergen Energy LLC (“Emergen”). See Note 8 – Solar Projects Sale to the financial statements included elsewhere in this Quarterly Report on Form 10-Q discussing the recent sale of 2.425 GW estimated capacity of the 3.84 solar energy development projects. We plan to raise the working capital we need to commence the Development Projects. See Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources. In addition, our team has identified two highly competitive battery energy storage suppliers who have expressed interest in establishing partnerships with us, as we seek to integrate their products into our recently acquired Development Projects. In addition, we are seeking business partnerships with defensible technology innovators and renewable energy providers to facilitate investments, provide new market entries toward emerging-growth regions and implement innovative, scalable energy system solutions with technological focuses on smart grid, Home Energy Management System (HEMS), Building Energy Management System (BEMS), City Energy Management System (CEMS), energy storage, and EV infrastructure.
To accelerate growth of a planned intellectual property (IP) portfolio through acquisition strategies, we plan to execute our Smart Acquisition Model with selected acquisitions of defensible technologies accompanied with visionary management teams who can demonstrate a common goal with us in order to unlock the full potential with capital infusion, accelerate growth. To achieve our development plans, we plan to incubate those acquired companies toward foreseeable plans for mergers and acquisitions, formation of global joint ventures, while facilitating new market entry to today’s fastest growing Southeast Asia region. With this acquisition model, we expect to build a valuable technology portfolio of IP assets in various innovative green energy technologies, leveraging our network of global capital partners with low-cost manufacturing capacity and oversea outsourcing technical talents from our niche sources in Vietnam.
Further, we plan to execute a Dual Growth Business Model encompassing (1) IP portfolio growth which includes technology licensing or technology acquisitions, enhanced with our plans to carry out research and development for specific applications, and (2) sustainable revenue growth by executing planned BESS acquisitions via joint ventures with capital partners to collect joint venture income from BESS operations or Vietnam-based manufacturing partners which can manufacture products derived from our technology solutions.
The Company acquired Bitech Mining on March 31, 2022 pursuant to a Share Exchange Agreement. Pursuant to the Share Exchange Agreement we acquired an aggregate of 94,312,250 shares of Bitech Mining’s Common Stock representing 100% of the issued and outstanding shares of Bitech Mining in exchange for an aggregate of 9,000,000 shares of the Company’s newly authorized Series A Convertible Preferred Stock. Effective June 27, 2022, each share of Series A Preferred Stock automatically converted into 53.975685 shares (an aggregate of 485,781,168) of the Company’s Common Stock upon filing of an amendment to its Certificate of Incorporation increasing the number of the Company’s authorized common stock to 1,000,000,000. Upon conversion of the Series A Preferred Stock, the Sellers held, in the aggregate, approximately 96% of the issued and outstanding shares of Company capital stock on a fully diluted basis.
| 17 |
The Share Exchange was treated as a recapitalization and reverse acquisition for financial reporting purposes, and Bitech Mining is considered the acquirer for accounting purposes. As a result of the Share Exchange and the change in our business and operations, a discussion of the past financial results of our predecessor, Spine Injury Solutions Inc., is not pertinent, and under applicable accounting principles, the historical financial results of Bitech Mining, the accounting acquirer, prior to the Share Exchange are considered our historical financial results.
Comparison of the three month period ended September 30, 2024 with the three month period ended September 30, 2023.
The Company has generated no revenues from its primary business for the three months ended September 30, 2024 and September 30, 2023.
During the three months ended September 30, 2024, we incurred $811,752 of general and administrative expenses compared to $135,434 for the same period in 2023. General and administrative expenses have increased primarily related to approximately $339,880 of non-cash stock compensation expense and approximately $70,000 legal fees related to the Emergen Acquisition and $166,000 contractor fees related to the Emergen projects. We have booked $943,500 deferred revenue related to cash received for the sale of certain solar projects originally acquired as part of the Emergen Acquisition.
As a result of the foregoing, we had net loss of ($811,762) for the three months ended September 30, 2024, compared to a net loss of ($135,434) for the three months ended September 30, 2023.
Comparison of the nine month period ended September 30, 2024 with the nine month period ended September 30, 2023.
The Company has generated minimal revenues from its primary business for the nine months ended September 30, 2024 and September 30, 2023.
During the nine months ended September 30, 2024, we incurred $1,948,487 of general and administrative expenses compared to $596,941 for the same period in 2023. General and administrative expenses the nine months ended September 30, 2024 have increased primarily related to $928,000 of non-cash stock compensation expense and the increases in the nine months ended September 30, 2024 of approximately $70,000 legal fees related to the Emergen Acquisition and $249,000 contractor fees related to the Emergen projects. We have booked $943,500 deferred revenue related to cash received for the sale of certain solar projects originally acquired as part of the Emergen Acquisition.
As a result of the foregoing, we had net loss of ($1,948,159) for the nine months ended September 30, 2024, compared to a net loss of ($589,941) which included $7,000 other income to offset the general and administrative expenses for the nine months ended September 30, 2023.
Working Capital
The calculation of Working Capital provides additional information and is not defined under GAAP but it is acknowledged that it is a defined term by the FASB. We define Working Capital as current assets less current liabilities. This measure should not be considered in isolation or as a substitute for any standardized measure under GAAP. This information is intended to provide investors with information about our liquidity.
Other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
Liquidity and Capital Resources
As of September 30, 2024 and December 31, 2023, we had total current liabilities of $1,154,995 and $35,229, respectively, and current assets of $725,311 and $163,417, respectively, to meet our current obligations. As of September 30, 2024, we had working capital of $529,625, a decrease of working capital of $453,943 as compared to December 31, 2023, driven primarily by $943,500 deferred revenue recorded related to cash provided from the sale of solar projects and cash used in operations offset by $396,000 cash proceeds from the sale of common stock during the nine months ended September 30, 2024.
| 18 |
For the nine months ended September 30, 2024, cash used by operations was approximately ($83,000) which primarily included the net loss of approximately ($1,948,000) but adjusted for the deferred revenue payment of $943,500, the non-cash stock based compensation of $928,000, and common stock issued for legal services of $66,000.
We have a history of operating losses. We have not yet achieved profitable operations and expect to incur further losses. We have funded our operations primarily from equity financing. As of September 30, 2024, cash generated from financing activities was not sufficient to fund our growth strategy in the short-term or long-term. The primary need for liquidity is to fund working capital requirements of the business, including operational and development costs to develop and construct our planned BESS and Solar projects that are part of the Development Project rights we acquired upon completion of the acquisition of Emergen. As the Development Projects are in their early phase of development, we have not determined the amount of capital needed to complete their development or operate them until sufficient cash is generated from their operations. The primary source of liquidity has primarily been private financing transactions. The ability to fund operations, to make planned capital expenditures, to execute on the development and commercialization of the Development Projects depends on our ability to raise funds from debt and/or equity financing which is subject to prevailing economic conditions and financial, business and other factors, some of which are beyond our control. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report on Form 10-Q, we do not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on our results of operations or financial condition, including, and without limitation, such considerations as liquidity and capital resources.
Changes in or Adoption of Accounting Practices
There were no material changes in or adoption of new accounting practices during the nine months ended September 30, 2024.
Critical Accounting Policies
See Note 2 of the accompanying notes to unaudited condensed consolidated financial statements, which note is incorporated herein by reference.
| 19 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by 17 C.F.R. 229 (10)(f)(i) and are not required to provide information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer are responsible for establishing and maintaining our disclosure controls and procedures. Such officers have concluded (based upon their evaluation of these controls and procedures as of the end of the period covered by this report) that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in this report is accumulated and communicated to management, including our principal executive and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of September 30, 2024.
Changes in Internal Control Over Financial Reporting
Our principal executive officer and principal financial officer have also indicated that, upon evaluation, there were no changes in our internal control over financial reporting or other factors during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
| 20 |
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of the date of this Quarterly Report, to our knowledge, there are no legal proceedings or regulatory actions material to us to which we are a party, or have been a party to, or of which any of our property is or was the subject matter of, and no such proceedings or actions are known by us to be contemplated except as provided below:
Due to the misrepresentations and omissions of SuperGreen, Calvin C. Cao and Michael H. Cao, among other reasons, the Company filed a complaint in the U.S. District Court, Central District of California on February 2, 2023 against SuperGreen, Michael H. Cao, Linh T. Dao, Calvin C. Cao and entities affiliated with them alleging fraud-concealment, breach of contract, breach of fiduciary duty-duty of good faith, breach of fiduciary duty-undivided loyalty, conversion and violation of California Penal Code Sec. 496 (the “Cao Lawsuit”). This lawsuit seeks compensatory damages of at least $33.6 million, treble and punitive damages, imposition of a constructive trust over the defendants assets, pre-judgment and post-judgment interest, attorney’s fees and such other relief as determined by the court.
Effective February 20, 2023, the Company, together with its wholly owned subsidiary Bitech Mining Corporation entered into a Confidential Settlement, Mutual Release, and Share Transfer Agreement (the “C. Cao Settlement Agreement”) with Calvin Cao (“C. Cao”) and SuperGreen Energy Corporation (“SuperGreen,” together with C. Cao, the “C. Cao Parties”). The C. Cao Settlement Agreement settles as to the C. Cao Parties, the Cao Lawsuit. Pursuant to the C. Cao Settlement Agreement, the C. Cao Parties terminated the Patent & Technology Exclusive and Non-Exclusive License Agreement between Bitech Mining Corporation and SuperGreen dated January 15, 2021 as amended on January 15, 2021 and on March 26, 2022 (the “License Agreement”) and SuperGreen canceled 51,507,749 shares of the Company’s common stock, par value $0.001 per share issued by the Company to SuperGreen pursuant to the License Agreement. In addition, the parties to the Settlement Agreement agreed to a mutual general release of liabilities against each other, refrain from making any disparaging remarks about each other and the Company’s filing a dismissal with prejudice of the Cao Lawsuit as to the C. Cao Parties. The Settlement Agreement also contains additional covenants, representations and warranties that are customary of litigation settlement agreements.
On March 6, 2023, Michael Cao and Linh Dao filed, without an attorney, a pro se Motion to Dismiss for Lack of Jurisdiction. On April 17, 2023, the court dismissed the Cao Lawsuit without prejudice due to a lack of subject matter jurisdiction.
On April 18, 2023, we filed a complaint against Michael H. Cao, Linh T. Dao, B & B Investment Holding, LLC (“B & B Investment”) and Cory Thomason in the Orange County California Superior Court containing substantially the same allegations included in the Cao Lawsuit filed in federal court (the “Cao State Court Lawsuit”). We served Mr. Cao, Ms. Dao and B & B Investment Holding, LLC on April 26, 2023 and are continuing efforts to serve Mr. Thomason. Defendants Michael H. Cao, Linh T. Dao, B & B Investment (pro se) filed a Motion to Quash Service of Summons; Motion to Dismiss or Stay Complaint (the “B & B Motions”). In response to this motion, the Company filed a Motion to Strike B & B Investment’s motion (the “Motion to Strike”), Request for Sanctions in Amount of $2,400 and Request for Default as to B & B Investment because it is being impermissibly represented by Michael H. Cao who is engaging in the unauthorized practice of law as to a corporate entity.
The Company filed a First Amended Complaint (“FAC”) on June 7, 2024. Meanwhile, Michael H. Cao, Linh T. Dao, B & B Investment’s attorney moved to be relieved as counsel, which was granted on August 2, 2024. After Michael H. Cao, Linh T. Dao, B & B Investment failed to timely file a response to the FAC, defaults were entered against them on August 23, 2024. The Company is currently seeking default judgments against Michael H. Cao, Linh T. Dao, B & B Investment.
Defendant Cory Thomason was served with the FAC. Effective October 7, 2024, the Company entered into a Confidential Settlement, Mutual Release, and Share Transfer Agreement (the “Thomason Settlement Agreement”) with Thomason. Pursuant to the Thomason Settlement Agreement, the Company canceled 2,575,387 shares of the Company’s common stock, par value $0.001 per share previously issued by the Company to Thomason. In addition, the parties to the Thomason Settlement Agreement agreed to a mutual general release of liabilities against each other, refrain from making any disparaging remarks about each other and the Company’s filing a dismissal with prejudice as to Thomason in the Cao State Court Lawsuit. The Thomason Settlement Agreement also contains additional covenants, representations and warranties that are customary of litigation settlement agreements.
The Company intends to vigorously prosecute the Cao State Court Lawsuit. We cannot predict the outcome of this lawsuit, however.
Litigation Assessment
We have evaluated the foregoing Cao Lawsuit to assess the likelihood of any unfavorable outcome and to estimate, if possible, the amount of potential loss as it relates to the litigation. Based on this assessment and estimate, which includes an understanding of our intention to vigorously prosecute the Cao Lawsuit, we believe that the potential defenses of any of the remaining defendants lack merit, however, and we cannot predict the likelihood of any recoveries by any of our claims against the remaining defendants. This assessment and estimate is based on the information available to management as of the date of this Report and involves a significant amount of management judgment, including the inherent difficulty associated with assessing litigation matters in their early stages. As a result, the actual outcome or loss may differ materially from those envisioned by the current assessment and estimate. Our failure to successfully prosecute, defend or settle the Cao Litigation with the remaining defendants could have a material adverse effect on our financial condition, revenue and profitability and could cause the market value of our common stock to decline.
| 21 |
ITEM 1A. RISK FACTORS
Smaller reporting companies are not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following information represents securities sold by us during the quarter ended September 30, 2024 which were not registered under the Securities Act. Included are new issues, securities issued in exchange for property, services or other securities, securities issued upon conversion from our other share classes and new securities resulting from the modification of outstanding securities. We sold all of the securities listed below pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act, or Regulation D or Regulation S promulgated thereunder and Section 3(a)(10) of the Securities Act.
On August 6, 2024, the Company entered into an investor relations consulting agreement whereby the Company agreed to pay the consultant a monthly cash fee of $7,000 pre-uplist and $10,000 post uplist to a major U.S. exchange, such as NASDAQ or the New York Stock Exchange. The Company granted to the consultant an option to purchase 3,000,000 shares of the Company’s common stock. The Options will vest as follows: 1,000,000 options vested October 10, 2024, the date of grant, 1,000,000 Options will vest on August 6, 2025 and 1,000,000 Options will vest on February 6, 2026. Any unvested options will forfeit upon termination of the agreement. The exercise price of the Options will be $0.08 USD per share. The Options will expire five (5) years from the issuance date. If the consulting agreement is terminated, the Options will expire two (2) years from termination of the Agreement. Any underlying shares from the exercise of Options will not be publicly sold before August 1, 2025.
As of September 30, 2024, the Company agreed to issue 264,431 shares of its Common Stock to its legal counsel as partial payment for legal services for the three months ended September 30, 2024. The shares were valued at $17,929.
The Company issued 2,000,000 of restricted securities awards (RSA) valued at $120,000 ($0.06 per share) during January 2024 and recorded $30,000 as stock compensation expense in the quarter ended March 31, 2024 as payment for services provided by two employees of the Company. These RSAs vested 25% in January 2024 and will vest 25% on each anniversary for the three years.
The Company issued 2,400,000 of restricted securities awards valued at $192,000 ($0.08 per share) during July 2024 and recorded $24,000 as stock compensation expense in the quarter ended September 30, 2024 as payment for services provided by one consultant of the Company. The RSA vested 12.5% on July,1 2024 and will vest 12.5% on the first day of each quarter until fully vested on April 1, 2026.
All of the securities referred to above were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as provided in Rule 506(b) of Regulation D promulgated thereunder. None of the foregoing securities as well as common stock issuable upon conversion or exercise of such securities, have been registered under the Securities Act or any other applicable laws and are deemed restricted securities, and unless so registered may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
The Company sold 3,600,000 unregistered restricted shares to an accredited investor at $0.05 per share for gross proceeds of $180,000 during October 2024.
| 22 |
ITEM 6. EXHIBITS
| * | Filed or furnished herein. |
| ^ | Certain confidential information has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed. |
| † | Includes management contracts and compensation plans and arrangements. |
| 23 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Bitech Technologies Corporation | ||
| Date: November 14, 2024 | By: | /s/ Benjamin Tran |
| Benjamin Tran | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: November 14, 2024 | By: | /s/ Robert J. Brilon |
| Robert J. Brilon | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) |
| 24 |