AMERICAN BATTERY TECHNOLOGY Co

1. Organization and Nature of Operations

American Battery Technology Company (the “Company” or “ABTC”) is an integrated critical battery materials company in the lithium-ion battery industry that is working to increase the domestic U.S. production of critical 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 the Company 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.

The Company was incorporated under the laws of the State of Nevada on October 6, 2011, for the purpose of acquiring rights to mineral properties with the eventual objective of being a producing mineral company. We have a limited operating history and generated our initial revenue in the fourth quarter of the fiscal year ended June 30, 2024 (“fiscal year 2024”). Our principal executive offices are located at 100 Washington Ave., Suite 100, Reno, Nevada 89503.

**2. Liquidity **

As of December 31, 2025, the Company had cash and cash equivalents of $47.9 million and an accumulated deficit of $279.7 million. The Company incurred negative cash flows from operating activities of $16.9 million for the six months ended December 31, 2025, and $28.9 million for the fiscal year ended June 30, 2025 (“fiscal year 2025”). The Company has incurred operating losses since its inception, and management anticipates that our operating losses will lessen in the near term due to revenue growth and the pursuit of ongoing cost efficiencies. The Company’s primary sources of capital to date have been from its registered direct offerings, ATM sales agreement with Virtu Americas, LLC, proceeds from awarded government contracts, and revenue from sales of its products.

Management believes that the Company’s cash and cash equivalents as of December 31, 2025 and anticipated revenue from sales of our products, are sufficient to fund the Company’s operations for at least the next 12 months from the issuance date of these condensed consolidated financial statements.

3. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U. S. Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements.

The condensed consolidated balance sheet at December 31, 2025, the condensed consolidated statements of operations and stockholders’ equity for the three and six months ended December 31, 2025 and 2024, and the condensed consolidated statements of cash flow for the six months ended December 31, 2025 and 2024, are unaudited, but include all adjustments, consisting of normal recurring adjustments, the Company considers necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented. The results for the six months ended December 31, 2025, are not necessarily indicative of results to be expected for the year ending June 30, 2026, or for any future interim period. The condensed consolidated balance sheet at June 30, 2025, has been derived from audited financial statements; however, the condensed consolidated financial statements as of December 31, 2025, do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2025, and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, as filed with the SEC on September 18, 2025. The Company’s consolidated subsidiaries consist of its wholly owned subsidiaries, LithiumOre Corporation (formerly Lithortech Resources Inc), and ABTC 2500 Peru LLC (formerly Aqua Metals Transfer LLC).

The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, valuation and recoverability of long-lived assets and intangible assets subject to impairment testing, and deferred income tax asset valuation allowances.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. At December 31, 2025, cash equivalents included approximately $40.1 million invested in money market funds. These funds invest in short-term U.S. government securities and are highly liquid. Management considers these investments to be cash equivalents due to their short-term nature, high liquidity, and insignificant risk of changes in value. The Company didnot have any cash equivalents as of June 30, 2025.

Restricted Cash

As of June 30, 2025, the Company was subject to a minimum liquidity requirement of $5,000,000 in accordance with the terms of its loan agreement (See Note 11). This required minimum liquidity was required to be maintained in cash or cash equivalents at all times. Accordingly, $5,000,000 of the Company’s cash balance was classified as restricted cash on the consolidated balance sheet as of June 30, 2025, as it was not available for general operating purposes. As of July 29, 2025, the restrictions were lifted, and the funds became available for general use.

As of December 31, 2025, the Company had cash of $0.8 million classified as restricted cash. These funds are restricted under letters of credit issued for surety bond collateral and a vendor agreement for supply of feedstock. Restricted cash is not available for general corporate purposes until the underlying obligations are satisfied, or the letters of credit are released.

***Prepaid Expenses and Other ***

Prepaid expenses consist primarily of amounts paid in advance for goods and services to be received in future periods, including insurance, software licenses, maintenance contracts, and other operating costs. Prepaid expenses also include down payments and advance payments made in connection with the purchase of property and equipment that has not yet been placed in service. Prepaid expenses are recorded as current and are amortized to expense or reclassified to property and equipment over the period in which the related benefits are realized.

Revenue Recognition

The Company recognizes revenue upon satisfying its promises to transfer goods or services to customers under the terms of its contracts. These promises, referred to as performance obligations, consist of the transfer of physical goods, including recycled ferrous and nonferrous metals and black mass to customers. These performance obligations are satisfied at the point in time that the Company transfers control of the goods to the customer, which occurs when title to and risk of loss of the goods transfer to the customer. The timing of transfer of title and risk of loss is dictated by customary or explicitly stated contract terms. The majority of the Company’s sales involve transfer of control to the customer, and thus revenue recognition, before delivery to the customer’s destination; for example, upon release of the goods to the shipper. The Company’s bill-and-hold arrangement involve transfer of control to the customer when the goods have been segregated from other inventory at the Company’s facility and are ready for physical transfer to the customer. Shipping and handling activities that occur after a customer has obtained control of a good are accounted for as fulfillment costs rather than an additional promise in a contract. As such, shipping and handling consideration (freight revenue) is recognized when control of the goods transfers to the customer, and freight expense is accrued to cost of goods sold when the related revenue is recognized.

The Company recognizes revenue based on contractually stated selling prices and quantities shipped, net of sales tax, and adjusted for estimated claims and discounts. Claims are customary in the recycled metal industry and arise from variances in the quantity or quality of delivered products. Revenue adjustments may be required if the settlement of claims exceeds original estimates. For the six months ended December 31, 2025 and 2024, revenue adjustments related to performance obligations that were satisfied in previous periods were not material.

Cost of Goods Sold

Cost of goods sold includes the cost of the recycled products and byproducts delivered to our customers. It includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs, lower of cost or net realizable value charges, and shipping and logistics costs.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities that the reporting entity can assess at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability which include the Company’s assumptions regarding the data market participants would use in pricing the asset or liability based on the best information available under the circumstances.

The carrying values of the Company’s cash, accounts receivable, grants receivable, prepaid expenses and other, accounts payable and accrued liabilities, and notes payable, approximate fair value due to their short maturities.

The Company’s fair value measurements included the valuation of the derivative liabilities for the bifurcated notes payable freestanding call and conversion options and for the liability-classified equity-linked contracts, both of which are classified as Level 3 of the fair value hierarchy. As of December 31, 2024, the Company reclassified derivative liabilities and liability-classified equity-linked contracts from long-term liabilities to equity. No derivative instruments were issued during the six months ended December 31, 2025; accordingly, fair value measurement was not required. See Note 13 for further discussion.

The Company’s fair value measurements include the valuation of the assets held-for-sale as of December 31, 2025, and June 30, 2025. See Note 7 for relevant fair value disclosures.

Adoption of Recent Accounting Pronouncements

The Company continually assesses new accounting pronouncements to determine their applicability. When it is determined a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a review to determine the consequences of the change to its condensed consolidated financial statements and assures there are sufficient controls in place to ascertain the Company’s condensed consolidated financial statements properly reflect the change.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Improvements to Income Tax Disclosures”, which updates income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the condensed consolidated financial statements.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” As amended by ASU 2025-01, this guidance requires disclosures in the notes to financial statements of specified information about certain costs and expenses. It clarifies which certain costs and expenses that are included in cost of sales and selling, general, and administrative expense categories that should be disclosed with qualitative descriptions of amounts that are not separately disaggregated quantitatively. Additionally, it requires disclosure of total amounts of selling expenses and an entity’s definition of selling expense. The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, “Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities,” which provides authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants received by business entities. Under this guidance, a government grant is defined as a transfer of a monetary asset or tangible nonmonetary asset from a government (other than in an exchange transaction) that is subject to conditions the entity must satisfy in order to receive the benefit. ASU 2025-10 is effective for annual periods beginning after December 15, 2028 (including interim periods therein). Early adoption is permitted. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements,” to clarify the applicability, form, content, and disclosure requirements for interim financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The amendments in this update refine the guidance in ASC Topic 270 by providing a comprehensive list of required interim disclosures and codifying a disclosure principle that requires the Company to disclose events and changes that occur after the end of the most recent annual reporting period that have, or are reasonably expected to have, a material impact on its financial position, results of operations, or cash flows. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-12, “Codification Improvements,” which updates the FASB Accounting Standards Codification to clarify, correct errors, and improve the overall usability of GAAP. The improvements consist of narrow-scope amendments, technical corrections, clarification of existing guidance, and updates to clarify the appropriate scope and application of certain disclosure requirements. ASU 2025-12 is effective for annual and interim periods beginning after December 15, 2026. Early adoption is permitted. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the condensed consolidated financial statements.

4. Inventories

The Company’s inventory for its lithium-ion battery recycling operation is comprised of raw materials, in the form of battery feedstock, and finished goods, in the form of products and byproducts. Inventory is valued at the lower of average cost or net realizable value. The net carrying value of inventory includes those costs to acquire battery feedstock and any related carrying and processing costs incurred by the Company.

5. Government Grants and Tax Credit Awards

Grants receivable represent qualifying costs incurred where there is reasonable assurance that the conditions of the grant have been met but the corresponding funds have not been received as of the reporting date. As collections from the federal government have been and are expected to continue to be timely, no allowance for doubtful accounts has been established. If amounts become uncollectible, they will be charged to operations. Grants receivable was $0.5 million and $0.2 million at December 31, 2025 and June 30, 2025, respectively. The Company recognizes invoiced government funds as an offset to research and development costs in the period the qualifying costs were incurred. Grants related to investments in property and equipment are recognized as a reduction to the cost basis of the underlying assets with an ongoing reduction to depreciation expense over the assets’ estimated useful lives.

On January 20, 2021, the U.S. Department of Energy (“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 was eligible to receive reimbursement of up to 50% of eligible expenditures, or up to $2.3 million. The prime agreement contract for this 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 ending June 30, 2022. As of December 31, 2025, this project has been completed and the contract closed with cumulative funds invoiced totaling $2.3 million, which represents 100% 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 United States Advanced Battery Consortium (the “USABC grant”) as part of a competitively bid project, through which the Company received reimbursement for up to $0.5 million of eligible expenditures. The objective of the contract award was 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, and this contract award project concluded on September 30, 2024. As of December 31, 2025, this project has been completed and the contract closed with the cumulative funds invoiced and collected for this grant totalled $0.5 million, which represents 100% of the total eligible reimbursements.

On October 21, 2022, the U.S. Department of Energy (“DOE”) announced that the Company had been selected for award negotiation for a five-year project with a total budget of $115.5 million to design, construct, and commission a first-of-kind lithium hydroxide refinery using Nevada-based claystone as the feedstock to expand domestic manufacturing of battery grade lithium hydroxide for lithium-ion batteries for electric vehicles, with a focus on domestic processing of materials and components that are currently imported from foreign countries. Through this grant award the Company was eligible to receive reimbursement of up to 50% of eligible expenditures, 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 during the period ending December 31, 2023. As of December 31, 2025, the cumulative funds invoiced and collected for this grant totaled $5.9 million, which represented 10% of the total eligible reimbursements. As of December 31, 2025, $0.4 million was an outstanding receivable on the condensed consolidated balance sheet. On October 9, 2025, the DOE notified the Company that the grant was terminated, effective as of the end of the budget period ending August 31, 2025. On October 10, 2025, the Company submitted an appeal of the termination and intends to pursue its dispute resolution remedies in connection with the termination of the grant.

On November 17, 2022, the DOE announced that the Company had 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, up to $10.0 million. The prime agreement contract for this grant was issued with a project start date of October 1, 2023. The Company began receiving funds related to this award during the period ending December 31, 2023. As of December 31, 2025, the cumulative funds invoiced and collected for this grant totalled $2.5 million, which represents 25% of the total eligible reimbursements.

On March 28, 2024, ABTC was selected for a tax credit for up to $19.5 million through the Qualifying Advanced Energy Project Credits program (“48C”). This tax credit was granted by the U.S. Department of Treasury Internal Revenue Service following a competitive technical and economic review process performed by the U.S. DOE, which evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing, and refining infrastructure. This tax credit may be utilized both for the reimbursement of capital expenditures spent to date and also future capital expenditures at ABTC’s battery recycling facility in the Tahoe-Reno Industrial Center (“TRIC”) in Storey County, Nevada. As of December 31, 2025, 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.

Also on March 28, 2024, ABTC was selected for an additional tax credit of up to $40.5 million through the 48C program, which may be used in support of the design and construction of a new commercial battery recycling facility to be located in the United States. As of December 31, 2025, the Company has not incurred any qualifying expenditure toward this tax credit.

On September 23, 2024, the DOE announced that the Company had been selected for award negotiations for a competitive grant for $150 million to be applied towards the construction of a new lithium-ion battery recycling facility. On December 18, 2024, the Company received a contracted grant award for $144 million of federal investment by the DOE, with these funds awarded to the Company and an additional $6.4 million awarded to its subcontractor Argonne National Laboratory, to support the construction of a new lithium-ion battery recycling facility. The Company began receiving funds related to this award during the period ending March 31, 2025. As of December 31, 2025, the cumulative funds invoiced for this grant totalled $2.0 million, which represents 1.4% of the total eligible reimbursements. As of December 31, 2025, $0.1 million was an outstanding receivable on the condensed consolidated balance sheet.

6. Property and Equipment

The table below presents the property and equipment as of December 31, 2025 and June 30, 2025:

The Company recognized depreciation expense of $2.8 million and $2.5 million for the six months ended December 31, 2025 and 2024, respectively.

7. Assets Held for Sale

Prior to June 30, 2025, the Company classified land and a building at its Fernley, Nevada location as assets held for sale. On July 28, 2025, a potential buyer for such property terminated the agreement governing such proposed sale. The Company plans to make improvements to the property in fiscal year 2026, including obtaining a final certificate of occupancy and completing other upgrades. The property, with a carrying value of approximately $6.0 million, was reclassified into property and equipment as construction in progress during the six months ended December 31, 2025.

As of March 31, 2025, the Company reclassified certain water rights with a carrying value of $3.8 million to assets held for sale in the condensed consolidated balance sheet. This reclassification follows the Company’s decision to actively market these water rights for sale to unrelated third parties.

As of December 31, 2025, there wereno additional impairments on the assets held for sale.

8. Mining Properties

On July 21, 2022, the Company exercised the option to purchase the rights to unpatented lode claims in Tonopah, Nevada for a total consideration of $8.2 million.

In December 2023, the Company entered into a vacant land offer and acceptance agreement for the Company’s acquisition of certain mineral patents totaling $0.2 million which was capitalized to mining properties.

In June 2025, the TFLP was selected by the National Energy Dominance Council (NEDC) and the FAST-41 Permitting Council as a Transparency Priority Project. This designation highlights the project’s role in advancing domestic critical mineral lithium production and supporting U.S. energy independence. In August 2025, the TFLP was further approved by the FAST-41 Permitting Council as a Covered Priority Project, which provided additional resources to streamlining the permitting efforts for this project. The project is featured on the FAST-41 Permitting Dashboard.

The Company capitalizes costs incurred to acquire, explore, evaluate, and develop mineral properties once proven and probable mineral reserves have been established and the project is deemed economically and technically feasible. Prior to the establishment of proven and probable reserves, exploration and evaluation costs are expensed as incurred. Capitalized costs are recorded as mineral properties and mine development assets and are amortized using the units-of-production method over the estimated recoverable proven and probable reserves of the related mine, beginning when production commences. During the three and six months ended December 31, 2025, the Company capitalized approximately $0.5 million of mine development and related costs associated with activities that improved access to proven and probable reserves.

9. Intangible Assets

The Company’s acquisition of the commercial-scale battery recycling facility at the TRIC included water rights valued at $0.7 million and are described as an eighteen and forty-five one-hundredths (18.45) acre-foot/annually portion of the Truckee-Carson Irrigation District, Serial Number 1081-A-1. These have an unlimited useful life upon assignment to a property through use of a will-serve, which has no expiration date.

The table below presents total intangible assets at:

10. Accounts Payable and Accrued Liabilities

The table below presents total accounts payable and accrued liabilities at:

11. Notes Payable

On August 29, 2023, the Company and High Trail (the “Buyers”) entered into a Securities Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company can sell to the Buyers up to $51.0 million of a new series of senior secured convertible notes (the “Notes”), of which $25.0 million was initially received. The Company analyzed the conversion features of the Notes for derivative accounting considerations under ASC 815-15, “Derivatives and Hedging,” and determined a freestanding call option should be bifurcated and separately accounted for as a derivative liability. Accordingly, the derivative liability is carried at fair value at each reporting date with the corresponding gain or loss reflected in earnings in the condensed consolidated statements of operations. The Company determined the derivative liability to have a fair value of $0.4 million at issuance of the Notes. For the six months ended December 31, 2024, the Company recorded a gain of $0.7 million within the change in fair value of the derivative liability in the condensed consolidated statements of operations. As of December 31, 2024, the fair value of the derivative liability was determined to be nil given the expiration of the freestanding call option on October 1, 2024. No derivative instruments requiring liability-classification were outstanding during the period from December 1, 2024 through June 30, 2025, and there has been no related activity since the option’s expiration; accordingly, fair value measurement was not required.

The carrying value, net of debt discount and issuance costs, was being accreted over the term of the Notes from date of issuance to date of full repayment, in August 2025, based on partial redemption payments, using the effective interest rate method.

On September 13, 2024, the Notes were amended to allow payment of principal totaling $0.6 million in common shares of the Company in lieu of cash, with the remaining principal due in September 2024, deferred to October 2024. Subsequent to September 30, 2024, further payment on the Notes had been deferred by the Buyers while negotiations on a potential amendment to the Notes are on-going. Total common shares of 726,216 were issued with a fair market value of $0.7 million. The Notes were also amended to increase the conversion option rate. The Company concluded that the amendment to the Notes was an extinguishment for accounting purposes due to the increase in the conversion option fair value. The Company recognized a $0.7 million loss on extinguishment in the condensed consolidated statement of operations for the three and six months ended December 31, 2024, comprised of the write-off of the remaining debt discount and debt issuance costs of $0.6 million and the excess of fair value of the common shares paid in lieu of cash over the principal owed of $0.1 million.

On November 14, 2024, the Purchase Agreement and Notes were amended to provide for the issuance of a new series of senior secured convertible notes (the “2024 Notes”) in the aggregate principal amount of $12.0 million, less discount totaling $2.1 million. The amendment also allowed payment of principal of the Notes totaling $1.1 million in common shares of the Company in lieu of cash, with the remaining principal of the Notes of $1.8 million paid with proceeds from issuance of the 2024 Notes. The 2024 Notes bear zero coupon, mature on September 1, 2025, and require $5.0 million in cash to be maintained in a restricted account. The Buyers may request partial redemptions of up to an aggregate of $1.0 million on the 1st of each month beginning on January 1, 2025, with the remaining principal due on the maturity date, or the Buyers may convert the 2024 Notes into shares of common stock of the Company at a conversion rate of 1,333.33 shares of common stock per $1,000 of principal for the first $3,000,000 of principal, and a conversion rate of 945.0992 shares of common stock per $1,000 of principal for the remaining principal.

The Company evaluated the amendment to the Purchase Agreement and concluded it was required to be accounted for as a troubled debt restructuring under ASC 470-60, “Troubled Debt Restructurings by Debtors,” as a concession had been granted to the Company. Per ASC 470-60, the carrying value of the Notes remained the same as before the amendment, reduced only by the fair value, $1,142,580, of the common shares issued,1,210,360, to partially settle the Notes. No gain was recognized as the future undiscounted cash flows of the restructured Notes did not exceed the carrying amount of the Notes, with the effect of the restructuring accounted for prospectively through the revised effective interest rate of 50.73%.

On December 19, 2024, the 2024 Notes were amended to increase the portion of principal that is subject to the higher conversion rate of 1,333.33 shares of commons stock per $1,000 of principal from $3,000,000 to $5,000,000. The Company analyzed the embedded conversion feature of the 2024 Notes for derivative accounting considerations under ASC 815-15, “Derivatives and Hedging,” and determined that it did not qualify to be bifurcated and accounted for as a derivative liability. For the fiscal year ended June 30, 2025, amortization of the debt discount of the 2024 Notes totaled $2.3 million.

On March 24, 2025, the conversion rate of the 2024 Notes was amended for $2.0 million of principal payments upon which the payments were converted to common shares. The conversion rates for the remaining principal of the 2024 Notes were not amended. Total common shares of 2,284,410 were issued with a fair market value of $2.3 million. The amendment was accounted for as debt modification and as a result, the excess fair market value of the common shares over the principal payments was recorded as an additional debt discount.

On July 18, 2025, the Buyers converted $5,000,000 of the 2024 Notes into shares of common stock of the Company at a conversion rate of 1,333.33 shares of common stock per $1,000 of principal amount. Total common shares of 6,666,651 were issued with a fair market value of $16.0 million.

On August 20, 2025, the Buyers converted $3,000,000 of the 2024 Notes into shares of common stock of the Company at a conversion rate of 945.0992 shares of common stock per $1,000 of principal amount. Total common shares of 2,835,299 were issued with a fair market value of $6.9 million.

As of December 31, 2025, because of the conversions discussed above, the carrying value of the notes payable of $8,000,000 was fully extinguished, and no amounts remain outstanding under the notes. No gain or loss was recognized on the conversion.

12. Leases

Right-of-use (“RoU”) assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. RoU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most operating leases contain renewal options that provide for rent increases based on prevailing market conditions. The terms used to calculate the RoU assets for certain properties include the renewal options that the Company is reasonably certain to exercise.

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company estimates a rate of 8.0% for the six months ending December 31, 2025 and 2024, based primarily on historical lending agreements. RoU assets include lease payments required to be made prior to commencement and exclude lease incentives. Both RoU assets and the related lease liability exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions, or covenants.

The Company leases office space under a non-cancelable operating lease agreement. The lease commenced December 1, 2024, and has a lease term of three years, expiring on November 30, 2027. The lease includes an option to renew for an additional two years; however, the Company is not reasonably certain to exercise the renewal option. Therefore, the renewal period has not been included in the calculation of the lease liability and the right-of-use asset in accordance with ASC 842. The Company occupies other office facilities under lease agreements that expire at various dates, many of which do not exceed a year in length. The Company does not have any finance leases as of December 31, 2025 and 2024.

Operating lease right-of-use assets are presented within the asset section of the Company’s condensed consolidated balance sheets, while lease liabilities are included within the liability section of the Company’s condensed consolidated balance sheets at December 31, 2025 and June 30, 2025.

The table below presents information related to the components of lease expense for the six months ended December 31, 2025 and 2024, respectively:

The table below presents total operating lease RoU assets and lease liabilities at:

The table below presents the maturities of operating lease liabilities as of December 31, 2025:

The table below presents the weighted average remaining lease term for operating leases and the weighted average discount rate used in calculating operating lease right-of-use asset as of December 31, 2025.

13. Derivative Liabilities

During the six months ended December 31, 2024 the Company’s embedded conversion feature on its convertible notes and its outstanding warrants had been treated as derivative liabilities for accounting purposes under ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity,” due to insufficient authorized shares to settle these outstanding equity-linked contracts, while the terms of these instruments still allowed the holders to exercise which would require the Company to net-cash settle the instrument. In such cases, the Company adopted a sequencing approach under ASC 815-40 to determine the classification of its equity-linked financial instruments at issuance and at each subsequent reporting date. Under this sequencing policy, the Company reclassified to liabilities those equity-linked financial instruments with the most recent issuance or modification date. The derivative liabilities were initially recorded at fair value and subsequently re-valued each reporting date, with changes in fair value reported in the condensed consolidated statements of operations. The Company utilized the Black-Scholes option-pricing model to value the derivative liabilities at initial reclassification and subsequent valuation dates, adjusted for instrument-specific terms as applicable.

In August 2024, the Company issued common shares and warrants to purchase common shares under private placement subscription agreements. See further discussion at Note 14. As there were insufficient authorized shares available at the time of issuance, the warrants were classified as derivative liabilities, measured at fair value as of issuance, and re-measured to fair value as of September 30, 2024. Of the $1.9 million in proceeds received from the private placement, $0.6 million was received from related parties of the Company, including current employees and an immediate family member of the Chief Executive Officer. The Company recognized common shares and warrants to purchase common shares with a total fair value of $1.4 million, compensation expense of $0.7 million and a loss on private placement of $0.1 million in the condensed consolidated statements of operations. The Company recognized less than a $0.1 million loss on change in fair value of these liability-classified equity-linked financial instruments.

For the remaining private placement subscription agreements, the Company recognized the fair value of the warrants of $1.7 million and a loss on private placement of $0.6 million as of issuance, and a fair value of $1.7 million as of September 30, 2024, with the loss on change in fair value of less than $0.1 million recorded to change in fair value of liability-classified equity-linked contracts in the condensed consolidated statements of operations. The associated derivative liability was included in long-term liabilities in the condensed consolidated balance sheets. In November 2024, a portion of the private placement subscription agreements were rescinded. Prior to rescission, a gain of $0.3 million was recognized upon revaluation of the warrant liability, reducing the warrant liability from $1.2 million to $0.9 million. A gain of less than $0.1 million was recognized upon extinguishment of the warrant liability at the rescission date. A payable of $0.9 million is included in accounts payable and accrued liabilities on the condensed consolidated balance sheet as of December 31, 2024, for the return of the subscription agreement proceeds to the investors.

In September 2024, the Company’s convertible notes were amended to increase the conversion rate of the conversion option. See further discussion at Note 11. Upon modification, the Company no longer had sufficient authorized shares to settle all equity-linked contracts including the convertible notes upon a potential conversion and accordingly, the embedded conversion feature was bifurcated from the convertible notes to be accounted for as a derivative liability. The Company calculated a fair value of the bifurcated conversion feature of $0.7 million as of the modification date and a fair value of $0.9 million as of September 30, 2024, with the loss on change in fair value of $0.2 million recorded to change in fair value of liability-classified financial instruments in the condensed consolidated statements of operations.

In November 2024, the Company’s shareholders approved and adopted an amendment to the articles of incorporation to increase the number of authorized shares of the Company’s common stock from 80,000,000 to 250,000,000. Upon the increase, the Company had sufficient authorized shares available to settle all equity-linked contracts including the convertible notes and warrants to purchase common shares included in derivative liabilities. As a result, the Company revalued the bifurcated conversion feature and the warrants to purchase common shares as of the shareholder approval date and reclassified the associated derivative liabilities from long-term liabilities to additional paid-in capital in the condensed consolidated balance sheets. The Company recognized a $0.8 million gain on change in fair value of the derivative liabilities prior to the reclassification to equity from long-term liabilities. The amount reclassed to equity totaled $2.1 million.

During the period December 31, 2024 through December 31, 2025, there was no activity related to the Company’s derivative liability instruments and the balance of derivative liabilities remained unchanged throughout this period.

The table below sets forth the Black-Scholes inputs and assumptions for the Company’s valuation and re-valuation of its derivative liabilities for the period ending December 31:

14. Stockholders’ Equity

Preferred Stock

The Company’s amended and restated articles of incorporation authorize shares of preferred stock and provide that shares of preferred stock may be issued from time to time in one or more series. The Company’s board of directors (the “Board of Directors”) is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors is able to, without stockholder approval, issue shares of preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of the Board of Directors to issue shares of preferred stock without stockholder approval could have the effect of delaying, deferring, or preventing a change of control of the Company or the removal of existing management.

To date, the Company has authorized a total of 1,666,667 shares of preferred stock. Of this amount the Company has designated a total of 233,340 shares to four classes of preferred stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. A description of each class of preferred stock is listed below.

Series A Preferred Stock

The Company has 33,334 shares of Series A Preferred Stock authorized with a par value of $0.001 per share. The Company hadnil shares of Series A Preferred Stock issued and outstanding on December 31, 2025 and June 30, 2025.

Series B Preferred Stock

The Company has 133,334 shares of Series B Preferred Stock authorized with a par value of $10.00 per share. The Company hadnil shares of Series B Preferred Stock issued and outstanding on December 31, 2025 and June 30, 2025.

Series C Preferred Stock

The Company has 66,667 shares of Series C Preferred Stock authorized with a par value of $10.00 per share. The Company hadnil shares of Series C Preferred Stock issued and outstanding on December 31, 2025 and June 30, 2025.

Series D Preferred Stock

The Company has 5 shares of Series D Preferred Stock authorized with a par value of $0.001 per share. The Company hadnil shares of Series D Preferred Stock issued and outstanding on December 31, 2025 and June 30, 2025.

Common Stock

In November 2024, the Company’s shareholders approved and adopted an amendment to the articles of incorporation to increase the number of authorized shares of the Company’s common stock from 80,000,000 to 250,000,000.

Six months ended December 31, 2025:

During the period, the Company issued 1,230,959 common shares upon vesting of share-based awards.

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, subject to the terms and conditions of the Sales Agreement. On September 19, 2025, the Company filed a prospectus supplement to its registration statement on Form S-3 (File No. 333-252492) related to the offer and sale from time to time of the Shares having an aggregate offering price of up to $50,000,000. On November 7, 2025, the Company filed an automatic registration statement on Form S-3ASR (File No. 333-291387), which included a prospectus supplement that increased the amount of Shares that could be offered and sold from time to time to an aggregate offering price up to $100,000,000. During the period, the Company sold 12,434,881 Shares pursuant to the ATM sales agreement, for total proceeds of $45.2 million.

In addition, the Company settled the issuance of 572,307 common shares for a total of $0.9 million that was included in subscriptions receivable as of June 30, 2025.

On July 23, 2025, one of the Company’s institutional investors exercised 4,000,000 common stock warrants at an exercise price of $1.10 per share. The warrant exercise resulted in gross proceeds of approximately $4.4 million to the Company. The shares were issued in accordance with the original warrant terms.

On October 13, 2025, one of the Company’s institutional investors exercised 1,886,793 common stock warrants at an exercise price of $2.80 per share. The warrant exercise resulted in gross proceeds of approximately $5.3 million to the Company. The shares were issued in accordance with the original warrant terms.

On October 27, 2025, a holder of warrants exercised 250,000 common stock warrants at an exercise price of $1.00 per share. The warrant exercise resulted in gross proceeds of approximately $0.3 million to the Company. The shares were issued in accordance with the original warrant terms.

On November 10, 2025, a holder of warrants exercised 50,000 common stock warrants at an exercise price of $1.00 per share. The warrant exercise resulted in gross proceeds of approximately $50,000 to the Company. The shares were issued in accordance with the original warrant terms.

During the three months ended December 31, 2025, holders of warrants to purchase an aggregate of 3,287,875 shares of the Company’s common stock exercised their warrants on a cashless basis in accordance with the terms of the warrant agreements. In connection with the cashless exercises, the Company issued an aggregate of 2,817,478 shares of common stock and no cash proceeds were received.

The Company issued 9,501,950 common shares to the Note holders pursuant to the debt conversion option in lieu of cash payment of $8.0 million (see Note 11). The carrying value of the common shares issued of $8.0 million was recorded in additional paid-in capital.

The Company had the following potentially dilutive shares outstanding as of December 31:

15. Share Purchase Warrants

During the six months ended December 31, 2025, there were 9,004,271 common shares issued related to warrants exercised.

16. Equity Compensation Awards

The Company has established the 2021 Equity Incentive Plan (“the Retention Plan”) to issue shares in the effort to retain key executives, directors, and employees. The Retention Plan allows for several different types of awards to be granted, including but not limited to, restricted share units and restricted share awards, collectively referred to as “share awards”. Share awards generally have the same expense characteristics under US GAAP and generally vest over a four-year period at a rate of 25% per annum.

Under the Retention Plan, the Company is authorized to issue shares of common stock to employees and non-employees up to ten percent (10%) of the total number of shares of common stock outstanding as of December 31, 2022, on a fully diluted basis. The Company adjusts the authorized shares under the plan each December 31, while the Retention Plan remains in effect. During the six months ended December 31, 2025, the Company granted 8.9 million share awards under the Retention Plan.

The table below reflects the share award activity for the six months ended December 31, 2025:

As awards are granted, stock-based compensation equivalent to the fair market value of the underlying common stock on the date of grant is expensed over the requisite service period, generally four years with a maximum contractual term of ten years, using the graded vesting attribution method as acceptable under ASC 718, “Compensation-Stock Compensation.” The Company accounts for forfeitures as they occur. The fair value of share awards that vested during the six months ended December 31, 2025, totaled $4.0 million.

The Company recognized stock-based compensation expense of $5.5 million and $9.5 million for the six months ended December 31, 2025 and 2024, respectively. Of these amounts, $1.5 million and $3.9 million, respectively, were related to officers and directors of the Company. For the six months ended December 31, 2025 and 2024, total stock-based compensation expense included $0.9 million and $2.5 million, respectively, related to warrants awarded to officers of the Company.

As of December 31, 2025, there were approximately $16.6 million of unamortized expenses relating to outstanding equity compensation awards to be recognized over a remaining weighted-average period of 3.2 years.

The table below presents the stock-based compensation expense per respective line item on the condensed consolidated statements of operations for the six months ended December 31:

Executive officers and selected other key employees are eligible to receive common share performance-based awards, as determined by the board of directors. The payouts, in the form of share awards, vary based on the degree to which corporate operating objectives are met. These performance-based awards typically include a service-based requirement, which is generally four-years.

17. Segment and Other Information

The Company has determined that its Chief Executive Officer is its chief operating decision maker (“CODM”). The Company operates as a single business operating segment, which includes all activities related to 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. Accordingly, the CODM uses consolidated net income to assess financial performance and inform decisions on how to allocate resources. The financial information provided to the CODM does not contain significant disaggregated expenses outside of what is already disclosed in the statements of operations.

Revenue from five major customers during the six months ended December 31, 2025 and two major customers for the six months ended December 31, 2024 accounted for 91% and 74%, respectively of the revenue for those periods.

Substantially all of the Company’s long-lived assets and operating lease right-of-use assets were located in the United States as of December 31, 2025 and June 30, 2025.

18. Supplemental Statement of Cash Flow Disclosures

For the six months ended December 31:

19. Commitments and Contingencies

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Except as otherwise identified herein, management is currently not aware of any such legal proceedings or claims that could have, individually or in aggregate, a material adverse effect on our business, financial condition, or operating results.

Operating Leases

The Company leases its principal office location in Reno, Nevada. It also leases lab space at the University of Nevada, Reno on short term leases. The principal office location lease expires on November 30, 2027, and the Lab lease expired on November 30, 2025. The lab lease was operating on a month-to-month basis until the new agreement was finalized January 22, 2026 with a new expiration date of January 31, 2027. Consistent with the guidance in ASC 842, the Company has recorded the principal office lease in its condensed consolidated balance sheet as an operating lease. For further information on operating lease commitments, see Note 12.

Financial Assurance:

Nevada and other states, as well as federal regulations governing mine operations on federal land, require financial assurance to be provided for the estimated costs of mine reclamation and closure, including groundwater quality protection programs. The Company has satisfied financial assurance requirements using a combination of cash bonds and surety bonds. The amount of financial assurance the Company is required to provide will vary with changes in laws, regulations, reclamation and closure requirements, and cost estimates. At December 31, 2025, the Company’s financial assurance obligations associated with U.S. mine closure and reclamation/restoration cost estimate totaled $0.1 million, for which the Company is legally required to satisfy its financial assurance obligations for its mining properties in Tonopah, Nevada. The Company was previously released of all of its liability in the Railroad Valley region of Nevada.

20. Subsequent Events

On January 25, 2026, the Board of Directors of the Company appointed Alejandro Flores Arteaga to serve as Chief Financial Officer of the Company, effective February 9, 2026. Jesse Deutsch, the Interim Chief Financial Officer, will retire from his current position, effective February 9, 2026, though he will remain an employee of the Company through February 26, 2026, in order to support an effective transition of the role to Alejandro Flores Arteaga.

On January 26, 2026, Scott Jolcover notified the Company of his intent to retire and step down as Chief Mineral Resource Officer of the Company, effective January 31, 2026. Mr. Jolcover will remain with the Company following his resignation in a consulting role.