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YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.15pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.40pp
Lean -
Net-tone change vs last year's 10-K.
MD&A
+0.09pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+13
negatively+9
critical+7
disputes+5
disrupt+5
Positive rising
achieve+7
profitability+7
adequately+2
efficient+2
despite+2
Risk Factors (Item 1A)
7,335 words
Item 1A. Risk Factors
Investing in our securities involves a high degree of risk. Before making an investment decision, you should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including our financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K and in our other filings with the SEC. Our business, operating results, financial condition or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. If any of the risks actually occur, our business, operating results, financial condition and prospects could be adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment. References to “we,” “our,” or “us” generally refer to the Company, unless otherwise specified.
Summary Risk Factors
Risks Relating To Our Business
Our business is subject to numerous risks and uncertainties. The following is a summary of the principal risks we face:
There is substantial doubt about Company’s ability to continue as a going and to or sustain .
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+3
claims+2
losses+2
decline+2
uncollectible+1
Positive rising
successfully+3
positive+2
satisfied+2
improved+1
able+1
MD&A (Item 7)
5,078 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.
Forward-Looking Statements
You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this Form 10-K. The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without , the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements except as required by applicable securities laws.
We may require significant additional financing within the next 12 months to fund operations and develop our recycling, extraction, and refining facilities, but there is no assurance such capital will be available on acceptable terms, or at all, which could jeopardize our business plan and continued operations.
We may face challenges in executing our growth strategy and effectively managing any expansion. Strategic transactions we pursue could be disruptive, result in shareholder dilution, or otherwise negatively impact our operations.
Our ability to source, recover, and recycle lithium-ion battery materials in an economical and efficient manner may be limited, which could affect our ability to meet market demand.
If we are unable to continue to operate our recycling facility and improveefficiency, our business could be materially harmed. Our operations depend on the continued performance and availability of our recycling facilities, as well as on securing sufficient feedstock.
Our ability to achieve and sustain profitability depends heavily on volatile global metal prices—driven by global economic, political, and market factors as well as product quality and customer specifications—and unfavorable pricing could reduce revenues, hinder customer demand, and negatively impact our business value and share price.
Safety concerns in handling lithium-ion batteries, changes in battery chemistry or technology, slower-than-expected adoption of electric vehicles or stationary energy storage batteries, or reduced government support for clean energy could all negatively impact our revenues and operating results.
Our operations are subject to development and execution risks, as well as potential limitations in obtaining applicable permits and in obtaining or maintaining insurance coverage.
Declines in demand, volatility in benchmark metal prices, or shifts in the quantity and composition of lithium-ion battery feedstock available to us could materially affect our costs, revenues, and results of operations.
We depend on the skills and experience of our senior management team and key employees. The loss of any such personnel could have a material adverse effect on our business.
We may be exposed to litigation, foreclosure, or regulatory actions, any of which could adversely affect our financial condition and results.
Geopolitical competition over critical minerals and government policies aimed at securing domestic supply chains may restrict our ability to access certain markets, partners, or suppliers, which could increase costs and limit growth opportunities.
Changes in international trade policies, tariffs, or trade disputes—particularly involving major lithium-producing countries—could disrupt supply chains, increase costs, or limit market access, materially impacting our operations and profitability.
Changes in government policies or funding priorities for critical minerals could reduce or eliminate incentives, grants, or programs we rely on, adversely affecting our operations and growth.
Export controls or trade restrictions on lithium, equipment, or technology could limit our market access, sourcing options, or partnerships, and create compliance conflicts across jurisdictions.
Mineral Resources and Reserves are estimates subject to inherent uncertainties, including geological, engineering, and economic assumptions; actual tonnage, grades, recoveries, or costs may differ materially, which could adversely affect the Company’s operations and financial results.
There is no assurance that economically recoverable mineral reserves exist on our properties, and even if reserves are identified, exploration and development risks could prevent their extraction or the generation of revenue, adversely affecting our business and operations.
Evolving federal and state regulations on battery recycling and extended producer responsibility may create new compliance obligations, increase operating costs, or affect the economics of our recycling operations.
Changes in income tax rates or laws, or disputes with tax authorities, could materially affect our results of operations and financial condition.
If we fail to adequately protect our intellectual property, or if third parties assert claims of infringementagainst us, we could face significant costs, potential damages, and restrictions on our ability to use certain technologies.
Despite mitigation measures, increasing cybersecurity threats and potential attacks could compromise our systems, disrupt operations, expose sensitive data, and materially and adversely impact the Company’s business.
Risks Relating to Ownership of Our Securities
We may issue additional equity securities in the future without seeking shareholder approval. Any such issuance could dilute existing ownership and potentially place downward pressure on the market price of our common shares. In addition, the interests of our directors and executive officers may not always align with those of other shareholders.
Our common shares have experienced, and may continue to experience significant volatility. We also do not currently anticipate paying dividends in the foreseeable future.
We have identified a material weakness in our internal control over financial reporting (ICFR). If we fail to remediate this weakness and establish effective controls, our business, operating results, and the market price of our shares could be materially adversely affected.
Compliance with the regulatory requirements applicable to U.S. domestic issuers is expected to require considerable time, cost, and resources.
We do not currently intend to pay dividends on our common shares and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common shares.
Failure to comply with covenants in our debt agreements could result in default, acceleration of repayment obligations, or loss of collateral, which could materially adversely affect our business and operations.
We may be required to record write-downs, impairments, restructurings, or other charges, any of which could materially and negatively impact our financial condition, operating results, and share value.
Risks Relating to Our Business
There is substantial doubt about our ability to continue as a going concern and to achieve or sustain profitability.
The continuation of the Company as a going concern is dependent upon generating profit from its operations and its ability to obtain debt or equity financing to meet expected cash requirements. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings, or obtain them on favorable terms, which could limit its operations. Any such financing activities are subject to market conditions.
These uncertainties cause substantial doubt about the Company’s ability to continue as a going concern for 12 months from issuance of the financial statements included in this Form 10-K. In their report on our financial statements included in this Form 10-K, our independent auditors have expressed substantial doubt about our ability to continue as a going concern.
We may require significant additional financing within the next 12 months to fund operations and develop our recycling, extraction, and refining facilities, but there is no assurance such capital will be available on acceptable terms, or at all, which could jeopardize our business plan and continued operations.
We may need additional financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at all. We may need to raise capital over the next 12 months to satisfy such requirements, the receipt of which cannot be assured. We may also require capital in order to fully develop our recycling, extraction and refining operations. We intend to seek additional funds through various financing sources, including the private sale of our equity and debt securities, potential joint ventures with capital partners, grants, government loans, and project financing of our recycling facilities. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations, in which case you may lose your entire investment.
We may face challenges in executing our growth strategy and effectively managing any expansion. Strategic transactions we pursue could be disruptive, result in shareholder dilution, or otherwise negatively impact our operations.
We are engaged in the business of lithium-ion battery recycling through proprietary recycling technology. While lithium-ion battery recycling is an established business, most existing processes rely on bulk high-temperature processes or bulk shredding techniques. In contrast, we have developed a highly strategic recycling processing train that avoids these non-selective treatments of the full battery. Having commenced commercial operations, we are continuing to ramp up and expand production capacity within our current facility. The uniqueness of our process presents potential risks associated with scaling an unproven business model, and there can be no assurance that as we advance large-scale manufacturing and operations, we will not encounter unexpected costs or hurdles that could restrict our intended scale or negatively impact projected gross profit margins.
The Company is in the process of exploring and developing a mineral resource near Tonopah, Nevada, with the intent of progressing the project to mining and processing activities. The Company has no prior history of completing the development of a mining project or conducting mining operations. If found to be economically feasible, the future development of mineral resources will require the construction and operation of a mine, processing plant and related infrastructure. While certain members of management have mining development and operational experience, the Company does not have any such experience as a collective organization. As a result of these factors, the Company’s future success is more uncertain than if it had a proven operating history.
If the Tonopah Flats project advances, the Company is and will continue to be subject to all risks inherent with establishing new mining operations including: the time and costs of construction of mining and processing facilities and related infrastructure; the availability and costs of skilled labor and mining equipment and supplies; the need to obtain necessary environmental and other governmental approvals, licenses and permits, and the timing of the receipt of those approvals, licenses and permits; the availability of funds to finance construction and development activities; potential opposition from non-governmental organizations, indigenous peoples, environmental groups or local groups which may delay or prevent development activities; and potential increases in construction and operating costs due to various factors, including changes in the costs of fuel, power, labor, contractors, materials, supplies and equipment.
It is common in new mining operations to experience unexpected costs, problems and delays during construction, commissioning and mine start-up, as well as delays in the early stages of mineral production.
Our ability to source, recover, and recycle lithium-ion battery materials in an economical and efficient manner may be limited, which could affect our ability to meet market demand.
The success of our lithium-ion battery recycling operations is fundamentally dependent on our ability to secure adequate quantities of spent lithium-ion batteries and other feedstock materials of sufficient quality and at economically viable prices. The availability of feedstock is subject to numerous factors beyond our control, including the growth rate of stationary energy storage batteries, electric vehicle adoption, battery replacement cycles, consumer and commercial battery disposal practices, competition from other recycling facilities, and the development of alternative disposal or reuse methods for spent batteries.
The quality and composition of feedstock can vary significantly depending on battery chemistry, age, usage patterns, and storage conditions prior to collection. Degraded, damaged, or contaminated feedstock may yield lower recovery rates of valuable materials, require additional processing steps, or result in higher operating costs, all of which could negatively impact our profitability. Additionally, the presence of foreign materials, different battery chemistries than expected, or hazardous contaminants in feedstock could disrupt our operations, require costly remediation, or pose safety and environmental risks.
The feedstock market is still developing, and pricing mechanisms and supply contracts are not yet standardized across the industry. We may face increasing competition for feedstock from other recycling facilities, battery manufacturers seeking to secure their own supply chains, and international buyers, potentially driving up feedstock costs. Furthermore, changes in battery technology, such as the development of longer-lasting batteries or alternative battery chemistries, could reduce the availability of feedstock or alter the economics of our recycling processes. If we are unable to secure adequate quantities of suitable feedstock at economically viable prices, our recycling operations may operate below capacity or become unprofitable, which could materially adversely affect our business and financial results.
If we are unable to continue to operate our recycling facility and improveefficiency, our business could be materially harmed. Our operations depend on the continued performance and availability of our recycling facilities, as well as on securing sufficient feedstock.
Our future business depends in large part on its ability to economically and efficiently source, recycle, and recover lithium-ion battery materials (including end-of-life batteries, manufacturing scrap, and third-party black mass) and to meet the growing market demand for an environmentally sustainable, closed-loop recycling solution. Although we have commenced operations at our McCarran, Nevada facility, we will need to continue to operate this facility and improveefficiencies.
While we have developed and begun to implement our proprietary recycling process at our McCarran location, we have not yet operated at full commercial scale to consistently produce and sell battery-grade materials. It is uncertain whether we will be able to develop and sustain efficient, automated, low-cost recycling capabilities and processes, or secure sufficient reliable sources of feedstock, in a manner that allows it to meet production standards, volumes, and costs necessary to achieve its business objectives. Even if we are successful in expanding production, we may not be able to do so without delays, cost overruns, or supply chain challenges, some of which may be outside of our control.
Our ability to manage costs over time may be limited in the near term by fixed expenses associated with facility operations, while long-term cost reductions will require ongoing investment to support growth and process improvements. Any failure to scale operations and achieve production and cost targets within projected timelines could have a material adverse effect on our business, results of operations, and financial condition.
Our ability to achieve and sustain profitability depends heavily on volatile global metal product prices—driven by global economic, political, and market factors as well as product quality and customer specifications—and unfavorable pricing could reduce revenues, hinder customer demand, and negatively impact our business value and share price.
The ability to reach and sustain profitable operations on the recycling and extraction projects, if and to the extent the projects are developed and enter full commercial operation, will be significantly affected by changes in the market price of global metal products. The market price of these products fluctuates widely and is affected by numerous factors beyond the Company’s control, including world supply and demand, pricing characteristics for alternate energy sources such as oil and gas, government policy and laws, interest rates, the rate of inflation and the stability of currency exchange rates, and other geopolitical and global economic factors. Such external economic factors are influenced by changes in international investment patterns, various political developments and macro-economic circumstances. Furthermore, the price of lithium products is significantly affected by their purity and performance, and by the specifications of end-user battery manufacturers. If the products produced from the Company’s projects do not meet battery-grade quality and/or do not meet customer specifications, pricing will be reduced from that expected for battery-grade product. In turn, the company may lose or fail to attract customers. The Company may not be able to effectively mitigate pricing risks for its products. Depressed pricing for the Company’s products will affect the level of revenues expected to be generated by the Company, which in turn could affect the value of the Company, its share price and the potential value of its properties.
Safety concerns in handling lithium-ion batteries, changes in battery chemistry or technology, slower-than-expected adoption of electric vehicles or stationary energy storage batteries, or reduced government support for clean energy could all negatively impact our revenues and operating results.
The Company’s operations are subject to all the hazards and risks normally incidental to the exploration for, and the development and operation of, mineral properties. The Company strives to implement comprehensive health and safety measures designed to comply with government regulations and protect the health and safety of the Company’s workforce in all areas of its business. The Company also strives to comply with environmental regulations in its operations. Nonetheless, risks associated with the Company’s planned operations include fires, power outages, shutdowns due to equipment breakdown or failure, aging of equipment or facilities, unexpected maintenance and replacement expenditures, human error, labor disruptions or disputes, inclement weather, higher than forecast precipitation, flooding, shortages of water, explosions, releases of hazardous materials, landslides, earthquakes, industrial accidents and explosions, protests and other security issues, and the inability to obtain adequate machinery, equipment or labor due to shortages, strikes or public health issues such as pandemics.
We may be held responsible for the costs of remediating contamination at the site of current or former activities or at third party sites or be held liable to third parties for exposure to hazardous substances should those be identified in the future. Under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) and its state law equivalents, current or former owners of properties may be held jointly and severally liable for the costs of site cleanup or required to undertake, remedial actions in response to unpermitted releases of hazardous substances at such property, in addition to, among other potential consequences, liability to governmental entities for the cost of damages to natural resources, which may be significant.
Our operations are subject to development and execution risks, as well as potential limitations in obtaining applicable permits and obtaining or maintaining insurance coverage.
Our operations in the United States are subject to the federal, state and local environmental, health and safety laws applicable to the reclamation of lithium-ion batteries and exploration for, and the development and operation of, mineral properties. Depending on how any particular operation is structured, our operations and related facilities will have to obtain environmental permits or approvals to operate, including those associated with, among other things, air emissions, water discharges, waste management and storage, and exploration and development of mineral properties on federal lands and related processing facilities. We may face opposition from local residents or public interest groups to the installation and operation of our facilities. Failure to secure (or significant delays in securing) the necessary approvals could prevent us from pursuing some of our planned operations and adversely affect our business, financial results and growth prospects. Additionally, there can be no certainty that current permits will be maintained, permitting changes will be approved, estimated permitting timelines will be met, estimated costs will be accurate, or additional or approvals required to carry out recycling, extraction and refining will be obtained. There is the risk that existing permits will be subject to challenges of regulatory administrative processes and similar litigation and appeal processes. Litigation and regulatory review processes can result in lengthy delays, with uncertain outcomes. Such issues could impact the expected timelines of the Company’s projects and consequently have a material adverse effect on the Company’s prospects and business.
While the Company maintains insurance to protect against certain risks associated with its business, insurance may not be available to insure against all risks, or the costs of such insurance may be uneconomic. The Company may also elect not to obtain insurance for other reasons. Insurance policies maintained by the Company may not be adequate to cover the full costs of actual liabilities incurred by the Company or may not be continued by insurers for reasons not solely within the Company’s control. The Company maintains liability insurance in accordance with industry standards. However, losses from uninsured and underinsured liabilities have the potential to materially affect the Company’s financial position and prospects.
Declines in demand, volatility in benchmark metal prices, or shifts in the quantity and composition of lithium-ion battery feedstock available to us could materially affect our costs, revenues, and results of operations.
The Company is exposed to commodity price movements for the inventory it holds and the products it plans to produce. Commodity price risk management activities are currently limited to monitoring market prices. The Company’s future revenues, if any, are sensitive to the market prices of the metals contained in its planned products.
The Company’s projects are highly dependent on the demand for and uses of lithium-based end products. This includes lithium-ion batteries for electric vehicles, stationary energy storage systems, and other large format batteries that currently have limited market share and whose projected adoption rates are not assured. To the extent that such markets do not develop in the manner contemplated by the Company, then the long-term growth in the market for lithium products will be adversely affected. This would inhibit the potential for development of the projects, their potential commercial viability and would otherwise have a negative effect on the business and financial condition of the Company. In addition, as a commodity, lithium market demand is subject to the substitution effect in which end-users adopt an alternate commodity as a response to supply constraints or increases in market pricing. These circumstances could limit the quantity of customers and prices paid for our products. To the extent that these factors arise in the market for lithium, it could have a negative impact on overall prospects for growth of the lithium market and pricing, which in turn could have a negative effect on the Company and its projects.
We depend on the skills and experience of our senior management team and key employees. The loss of any such personnel could have a material adverse effect on our business.
The Company is concurrently overseeing the advancement of our major battery material projects. Working to advance these projects requires the dedication of considerable time and resources by the Company and its management team. The advancement of the projects concurrently brings with it the associated risk of strains on managerial, human and other resources. The Company’s ability to successfully manage each of these processes will depend on a number of factors, including its ability to manage competing demands on time and other resources, financial or otherwise, and successfully retain personnel and recruit new personnel to support its growth and the advancement of its projects.
The Company highly values the contributions of its key personnel. The success of the Company continues to depend largely upon the performance of key officers, employees and consultants who have advanced the Company to its current stage of development and contributed to its potential for future growth. The market for qualified talent has become increasingly competitive, with shortages of qualified talent relative to the number of available opportunities being experienced in all markets where the Company conducts its operations. The ability to remain competitive by offering higher compensation packages and programs for growth and development of personnel, with a view to retaining existing talent and attracting new talent, has become increasingly important to the Company and its operations in the current climate. Any prolongedinability to retain key individuals, or to attract and retain new talent as the Company grows, could have a material adverse effect upon the Company’s growth potential and prospects.
Additionally, the Company has not purchased any “key-man” insurance for any of its directors, officers, or key employees and currently has no plans to do so.
We may be exposed to litigation, foreclosure, or regulatory actions, any of which could adversely affect our financial condition and results.
The Company may be subject to a variety of regulatory requirements, and resulting investigations, claims, lawsuits and other proceedings in the ordinary course of its business, as a result of its status as a publicly traded company and because of its mining exploration and development business. Litigation related to environmental and climate change-related matters, the Company’s environmental practices, the environmental benefits of the Company’s products or services, ESG disclosure, and securities class actions arising from share price volatility is also on the rise. The occurrence and outcome of any legal proceedings cannot be predicted with any reasonable degree of certainty due to the inherently uncertain nature of litigation, including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges and juries and the possibility that decisions may be reversed on appeal. Defense and settlement costs of legal claims can be substantial, even with respect to claims that are determined to have little or no merit.
Litigation may be costly and time-consuming and can divert the attention of management and key personnel away from day-to-day business operations. The Company and its projects are, from time to time, subject to legal proceedings or the threat of legal proceedings. If the Company were to be unsuccessful in defending any such claimsagainst it, or unable to settle claims on a satisfactory basis, the Company may be faced with significant monetary damages, injunctive relief or other negative impacts that could have a material adverse effect on the Company’s business and financial condition. To the extent the Company is involved in any active litigation, the outcome of such matters may not be determinable, and it may not be possible to accurately predict the outcome or quantum of any such proceedings at a given time.
Geopolitical competition over critical minerals and government policies aimed at securing domestic supply chains may restrict our ability to access certain markets, partners, or suppliers, which could increase costs and limit growth opportunities.
Lithium has become central to national security strategies focused on energy independence and technological competitiveness, particularly in the context of electric vehicle adoption and renewable energy storage. The ongoing strategic competition between the United States, China, and other major powers has resulted in increased scrutiny of critical mineral supply chains, with governments implementing policies to reduce dependence on foreign sources and secure domestic supply chains. This competition may limit our ability to engage in business relationships with companies from certain countries, access international markets, or utilize the most cost-effective suppliers and partners regardless of their geographic location.
Changes in international trade policies, tariffs, or trade disputes—particularly involving major lithium-producing countries—could disrupt supply chains, increase costs, or limit market access, materially impacting our operations and profitability.
The Company’s operations and profitability may be significantly impacted by changes in international trade policies, tariffs, and trade disputes. As a lithium recycling and mining company, we may be subject to tariffs on imported equipment, raw materials, or components necessary for our operations. Additionally, retaliatory tariffs imposed by other countries could affect demand for our products or increase costs of doing business internationally. Changes in trade relationships, particularly between the U.S. and major lithium-producing countries like China, could disrupt supply chains, increase operational costs, or limit market access. The Company has limited ability to mitigate these risks, and significant changes in trade policy could materially adversely affect our business, financial condition, and results of operations.
Changes in government policies or funding priorities for critical minerals could reduce or eliminate incentives, grants, or programs we rely on, adversely affecting our operations and growth.
Government policies regarding critical minerals are subject to frequent changes based on national security priorities, supply chain assessments, and political considerations. Changes to critical minerals lists, or government funding priorities related to commercial facilities for the mining or manufacturing of critical minerals, could affect our eligibility for government incentives, grants, or preferential treatment in government procurement. The termination of existing grants or the modifications of programs such as the Defense Production Act, the Infrastructure Investment and Jobs Act, or the Inflation Reduction Act could impact available funding, tax incentives, or regulatory streamlining that we currently benefit from or expect to benefit from in the future. Additionally, changes in government priorities or budget constraints could further result in the elimination or reduction of programs that support domestic critical mineral production and processing.
Export controls or trade restrictions on lithium, equipment, or technology could limit our market access, sourcing options, or partnerships, and create compliance conflicts across jurisdictions.
Governments may impose export controls, licensing requirements, or outright bans on the export of lithium and related materials, processing equipment, or technology. Such restrictions could limit our access to international markets for our products, prevent us from sourcing equipment or materials from certain countries, or restrict our ability to engage in technology transfer or joint ventures with foreign partners. The extraterritorial application of export controls by various countries could also create compliance conflicts where adherence to one country’s export control regime violates another’s requirements.
Mineral Resources and Reserves are estimates subject to inherent uncertainties, including geological, engineering, and economic assumptions; actual tonnage, grades, recoveries, or costs may differ materially, which could adversely affect the Company’s operations and financial results.
Mineral Resources and Mineral Reserves figures are estimates only. Estimated tonnages and grades may not be achieved if the projects are brought into production; differences in grades and tonnage could be material; and, estimated levels of recovery may not be realized. The estimation of Mineral Resources and Mineral Reserves carries with it many inherent uncertainties, of which many are outside the control of the Company. Estimation is by its very nature a subjective process, which is based on the quality and quantity of available data, engineering assumptions, geological interpretation and judgements used in the engineering and estimation processes. Estimates may also need to be revised based on changes to underlying assumptions, such as commodity prices, drilling results, metallurgical testing, production, and changes to mine plans of operation. Any material decreases in estimates of Mineral Resources or Mineral Reserves, or an inability to extract Mineral Reserves could have a material adverse effect on the Company, its business, results of operations and financial position.
Any estimates of Inferred Mineral Resources are also subject to a high degree of uncertainty and may require a significant amount of exploration work to determine if they can be upgraded to a higher confidence category. Risks associated with upgrading the Tonopah project to a higher confidence category include the accuracy of fault modeling and offset of lithium-hosting lithologies on western-side of mineral resource, the lack of project-specific lithologic density data, the accuracy of processing cost used in the pit optimization to define the resource which can potentially affect resource cut-off grades, and the large fluctuations in commodity prices which can potentially affect resource cut-off grades.
There is no assurance that economically recoverable mineral reserves exist on our properties, and even if reserves are identified, exploration and development risks could prevent their extraction or the generation of revenue, adversely affecting our business and operations.
We cannot assure you about the existence of economically extractable mineralization at this time, nor about the quantity or grade of any mineralization we may have found. Because the probability of an individual prospect ever having reserves is uncertain, our properties may not contain any reserves and any funds spent on evaluation and exploration may be lost. Even if we confirm reserves on our properties, any quantity or grade of reserves we indicate must be considered as estimates only until such reserves are mined. We do not know with certainty that economically recoverable minerals exist on our properties. In addition, the quantity of any reserves may vary depending on commodity prices. Any material change in the quantity or grade of reserves may affect the economic viability of our properties. Further, our lack of established reserves means that we are uncertain about our ability to generate revenue from our operations.
Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that they can be developed into producing mines and that we can extract those minerals. Both mineral exploration and development involve a high degree of risk, and few mineral properties that are explored are ultimately developed into producing mines.
Evolving federal and state regulations on battery recycling and extended producer responsibility may create new compliance obligations, increase operating costs, or affect the economics of our recycling operations.
The regulatory landscape governing battery recycling and extended producer responsibility (EPR) is rapidly evolving at both federal and state levels. Many states are considering or have implemented EPR programs that require battery manufacturers to take responsibility for the end-of-life management of their products, including collection, recycling, and proper disposal. While such regulations could increase the availability of feedstock for our recycling operations, they may also impose new compliance obligations, reporting requirements, and operational standards on recycling facilities. Changes to battery transportation regulations, hazardous waste classifications, or recycling performance standards could require costly modifications to our operations or result in penalties for non-compliance. Additionally, regulations mandating specific recycling rates, recovery efficiencies, or product quality standards could affect the economics of our recycling operations.
Changes in income tax rates or laws, or disputes with tax authorities, could materially affect our results of operations and financial condition.
Changes to U.S. tax laws could adversely affect the Company or holders of the Common Shares. In recent years, many changes to U.S. federal income tax laws have been proposed and made, and additional changes to U.S. federal income tax laws are likely to continue to occur in the future.
We are subject to review and audit by U.S. federal, state, local tax authorities. Tax authorities may disagree with or challenge tax positions we take, which if successful could harm our business. We may be subject to additional tax liabilities due to changes in non-income based taxes resulting from changes in federal, state or local tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements, or judicial decisions, changes in accounting principles, changes to our business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period. In the future, the company may also be subject to foreign jurisdictions where tax law changes may pose a similar risk.
If we fail to adequately protect our intellectual property, or if third parties assert claims of infringementagainst us, we could face significant costs, potential damages, and restrictions on our ability to use certain technologies.
The Company relies on the ability to protect its intellectual property rights and depends on patent, trademark and trade secret legislation to protect its proprietary know-how. There is no assurance that the Company has adequately protected or will be able to adequately protect its valuable intellectual property rights or will at all times have access to all intellectual property rights that are required to conduct its business or pursue its strategies, or that the Company will be able to adequately protect itself against any intellectual property infringementclaims. There is also a risk that the Company’s competitors could independently develop similar technology, processes or know-how; that the Company’s trade secrets could be revealed to third parties; that any current or future patents, pending or granted, will be broad enough to protect the Company’s intellectual property rights; or, that foreign intellectual property laws will adequately protect such rights. The inability to protect the Company’s intellectual property could have a material adverse effect on the Company’s business, results of operations and financial condition. Additionally, the applied science industry is characterized by frequent allegations of intellectual property infringement. Though we do not expect to be subject to any of these allegations, any allegation of infringement could be time consuming and expensive to defend or resolve, result in substantial diversion of management resources, cause suspension of operations or force us to enter into royalty, license, or other agreement, rather than dispute the merits of such allegation. If patent holders or other holders of intellectual property initiate legal proceedings, we may be forced into protracted and costlylitigation. We may not be successful in defending such litigation and may not be able to procure any required royalty or license agreements on acceptable terms or at all.
Despite mitigation measures, increasing cybersecurity threats and potential attacks could compromise our systems, disrupt operations, expose sensitive data, and materially and adversely impact the Company’s business.
Threats to information technology systems associated with cybersecurity risks and cyber incidents or attacks continue to grow and evolve in terms of severity and sophistication, particularly with the increase in remote work that began during the COVID-19 pandemic. A cybersecurity attack has the potential to compromise the business, financial and other systems of the Company, and could go unnoticed for some time. Risks associated with cybersecurity threats include, among other things, loss of intellectual property, disruption of business operations and safety procedures, loss or damage to worksite data delivery systems, privacy and confidentiality breaches, and increased costs and time to prevent, respond to or mitigate cybersecurity incidents. The Company has implemented a cybersecurity policy and provided training to its personnel as mitigation measures. System and network maintenance, upgrades and similar best practices are also followed. However, despite these measures, the occurrence of a significant cybersecurity incident could have a material adverse effect on the Company’s business and result in a prolongeddisruption to it.
Risks Relating to Ownership of Our Securities
We may issue additional equity securities in the future without seeking shareholder approval. Any such issuance could dilute existing ownership and potentially place downward pressure on the market price of our common shares. In addition, the interests of our directors and executive officers may not always align with those of other shareholders.
We may issue additional common shares or other equity securities in the future in connection with capital raises, acquisitions, repayment of indebtedness, or grants under the Company’s 2021 Retention Plan (“the Retention Plan”), in many cases without shareholder approval. We are actively exploring financing options and strategic alternatives, and any fundraising through equity or convertible debt could result in significant dilution to existing shareholders. In addition, newly issued securities may have rights, preferences, or privileges senior to those of our common shares.
Pursuant to the terms of the Purchase Agreement and Notes, we may issue common shares upon conversion, redemption, or exercise of related provisions. We may also issue common shares upon the exercise of outstanding warrants.
The issuance of additional equity securities could:
reduce the amount of cash available per share, including for potential future dividends;
diminish the relative voting strength of previously outstanding shares; and
negatively affect the market price of our common shares.
Our common shares have experienced, and may continue to experience significant volatility. We also do not currently anticipate paying dividends in the foreseeable future
The market price of the stock of a publicly traded company is affected by a number of variables, many of which are outside the Company’s control. Such factors include: the general condition of markets for resource stocks, and particularly for stocks of lithium exploration and development companies and other battery-metals stocks; the general strength of the economy; the availability and attractiveness of alternative investments; analysts’ recommendations and their estimates of financial performance; investor perception and reactions to disclosures made by the Company, and by the Company’s competitors; future securities sales; reputational risks of the Company; and the breadth of the public markets for the stock. Investors could suffer significant losses if the Company’s common stock is depressed or illiquid when an investor seeks liquidity.
We have identified a material weakness in our internal control over financial reporting (ICFR). If we fail to remediate this weakness and establish effective controls, our business, operating results, and the market price of our shares could be materially adversely affected.
Our reporting obligations as a public company place a significant strain on our management, operational and financial resources and systems. Because we failed to maintain an effective system of internal control over financial reporting, we could experience delays or inaccuracies in our reporting of financial information, or non-compliance with the SEC, reporting and other regulatory requirements. This could subject us to regulatory scrutiny and result in a loss of public confidence in our management, which could, among other things, cause our stock price to drop.
Compliance with the regulatory requirements applicable to U.S. domestic issuers is expected to require considerable time, cost, and resources.
As a public reporting company, we are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and other federal securities laws, rules and regulations. Complying with these laws and regulations requires more time and attention of our Board of Directors and management and requires additional employees compared to a privately-held company. In addition, the costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC, furnishing audited reports to stockholders, maintaining more comprehensive compliance functions, policies and procedures, and corporate governance, are greater than that of a privately-held company.
We do not currently intend to pay dividends on our common shares and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common shares.
The Company has not paid dividends on its Common Shares since incorporation. The Company anticipates that it will retain its earnings and other cash resources for future operations and the ongoing development of its business. As such, the Company does not intend to declare or pay any cash dividends in the foreseeable future. Payment of any future dividends is solely at the discretion of the Board, which will take into account many factors including the Company’s operating results, financial condition and anticipated cash needs.
Failure to comply with covenants in our debt agreements could result in default, acceleration of repayment obligations, or loss of collateral, which could materially adversely affect our business and operations.
The Company has contractual arrangements that contain affirmative and negative covenants that must be adhered to. It is possible that the Company could fail to meet the requirements of one or more covenants, resulting in penalties or acceleration of amounts due. No assurance can be given that a breach will not occur. This could result in a default under our credit agreements that would permit the applicable lenders to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. If we are unable to repay our debt, creditors would have the right to proceed against the collateral securing the debt. This in turn could have a material adverse effect on the Company’s business and operations.
We may be required to record write-downs, impairments, restructurings, or other charges, any of which could materially and negatively impact our financial condition, operating results, and share value.
We make certain accounting estimates and projections in connection with our impairment analysis for long-lived assets in accordance with applicable accounting guidance. An impairment charge may be required if the impairment analysis indicates that the carrying value of an asset exceeds the sum of the expected undiscounted cash flows of the asset. The projection of future cash flows used in this analysis requires the use of judgment and a number of estimates and projections of future operating results. If actual results differ from Company estimates, additional charges for asset impairments may be required in the future. If impairment charges are significant, our financial results could be negatively affected.
limitation
Overview
American Battery Technology Company (the “Company”) is a growth-stage company in the lithium–ion battery industry that is working to increase the domestic U.S. production of battery materials, such as lithium, nickel, cobalt, and manganese through its exploration of new domestic-United States primary resources of battery metals, development and commercialization of new technologies for the extraction of these battery metals from primary resources, and commercialization of an internally developed integrated process for the recycling of lithium–ion batteries. Through this three–pronged approach the Company is working to both increase the domestic production of these battery materials, and to ensure spent batteries have their elemental battery metals returned to the domestic manufacturing supply chain in an economical, environmentally-conscious, closed–loop fashion.
To implement this business strategy, the Company has constructed its first integrated lithium–ion battery recycling facility, which takes in waste and end–of–life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The Company’s revenue increased from $0.3 million in fiscal 2024 to $4.3 million in fiscal 2025. The ramp-up and operation of this facility remain a top priority, and the Company has significantly expanded resources to support its execution. These efforts included hiring additional technical staff, expanding laboratory facilities, and purchasing equipment. As a result, the Company generated its first revenue in the fourth quarter of fiscal 2024 and achieved continued growth in production volumes and revenues throughout fiscal 2025. The Company has been awarded a competitively bid grant from the U.S. Advanced Battery Consortium to support a $2 million project to accelerate the development and demonstration of the technologies within this integrated lithium–ion battery recycling facility. The Company has also been awarded an additional grant from the U.S. Department of Energy (“DOE”) to support a $20 million project under the Bipartisan Infrastructure Law to validate, test, and deploy three next-generation disruptive advanced separation and processing recycling technologies.
Additionally, the Company is accelerating the demonstration and commercialization of its internally developed low–cost and low–environmental impact processing train for the manufacturing of battery grade lithium hydroxide from Nevada–based sedimentary claystone resources. The Company has been awarded a grant cooperative agreement from the DOE’s Advanced Manufacturing and Materials Technologies Office through the Critical Materials Innovation program to support a $4.5 million project for the construction and operation of a multi–ton per day integrated continuous demonstration system to support the scale–up and commercialization of these technologies. The Company has also been awarded an additional grant award under the Bipartisan Infrastructure Law to support a $115 million project to design, construct, and commission a first-of-kind commercial-scale refinery to produce 30,000 MT of battery-grade lithium hydroxide per year from this resource.
The Company has completed the construction and commissioning of its lithium hydroxide (LiOH) pilot plant, marking a significant milestone in the commercialization of its internally-developed processes to access an unrealized domestic primary lithium resource. The construction and commissioning of this pilot plant enables the Company to demonstrate its technologies for accessing the lithium housed in its unconventional resource, Tonopah Flats Lithium Project (“TFLP”), in an integrated and continuous system, and to generate large amounts of battery grade lithium hydroxide for delivery to customers for qualifications and evaluation.
The TFLP is one of the largest identified lithium resources in the United States, and while initial pit designs and economic analyses in previous assessments evaluated the full resource, an updated Initial Assessment utilizes a commercialization pathway with a more rigorous mine plan that contemplates utilization of only Measured and Indicated Mineral Resources, and excludes Inferred Mineral Resources, to supply the planned commercial-scale lithium hydroxide monohydrate (“LHM”) refinery. This commercialization pathway allows for an engineered phased development, with improved access to the higher quality portions of the resource, and improved project economics.
On March 28, 2024, the Company was selected for an approximately $19.5 million tax credit through the Qualifying Advanced Energy Project Credits program (the “48C program”). This tax credit was granted by the U.S. Department of Treasury Internal Revenue Service following a highly competitive technical and economic review process performed by the DOE, which evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing, and refining infrastructure. This $19.5 million tax credit can be utilized both for the reimbursement of capital expenditures spent to date, and also for equipment and infrastructure for additional value-add operations at the Company’s battery recycling facility in the Tahoe-Reno Industrial Center (TRIC) near Reno, Nevada. As of June 30, 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, the Company has been selected for an additional $40.5 million tax credit through the 48C program to support the design and construction of a new, next-generation, commercial battery recycling facility to be located in the United States. As with the Company’s initial $19.5 million tax credit under the 48C program supporting the construction and buildout of its battery recycling facility in Nevada, this additional award was granted by the U.S. Department of Treasury Internal Revenue Service following a highly competitive technical and economic review process performed by the DOE, which evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing, and refining infrastructure. As of June 30, 2025, the Company has not incurred any qualifying expenditures towards this tax credit.
Fiscal Fourth Quarter 2025 Financial Highlights :
Revenue increased to $2.8 million in fourth quarter fiscal year 2025, compared to $1.0 million in third quarter fiscal year 2025, nearly tripling and reflecting a significant ramp-up of battery recycling facility operations.
Total cost of goods sold was $5.3 million for fiscal fourth quarter fiscal year 2025, compared to $3.7 million in third quarter fiscal year 2025. The fiscal fourth quarter fiscal year 2025 cost of goods sold included non-cash items of depreciation of $1.0 million and stock-based compensation of $0.2 million. Excluding these non-cash items, fiscal fourth quarter fiscal year 2025 cash cost of goods sold (a non-GAAP measure) was $3.9 million.
A reconciliation of fiscal fourth quarter 2025 GAAP to non-GAAP cost of goods sold
Description
Amount ($M)
GAAP Cost of Goods Sold
Less: Depreciation Expense
Less: Stock-Based Compensation
Non-GAAP Cash Cost of Goods Sold
Government grant reimbursement was $1.4 million for fourth quarter fiscal year 2025, compared to $2.3 million in third quarter fiscal year 2025. Out of the $1.4 million in grant funding for fourth quarter fiscal year 2025, nil was recorded as an offset to fixed assets, as reimbursements related to equipment purchases, and $1.4 million was recorded as an offset to research and development costs within the consolidated statement of operations.
ABTC conducted additional drill programs at its Tonopah Flats Lithium Project in order to further expand and define the deposit, collect data for detailed design of the mining pit shell, and continue to advance the development of the lithium mining and refining project.
ABTC continued to scale and operate its multi-tonne per day integrated pilot facility to demonstrate the performance of its internally-developed technologies for the manufacturing of battery grade lithium hydroxide from its Tonopah Flats claystone material.
On April 23, 2025, ABTC received a Letter of Interest from the US Export-Import Bank for up to $900 million in low-interest debt financing to support the construction of the Tonopah Flats Lithium Project.
Fiscal Year 2025 Financial Highlights:
Revenue increased to $4.3 million in fiscal year 2025, up from $0.3 million in fiscal year 2024, reflecting the ramp-up of facility operations and higher production volumes.
Total cost of goods sold was $14.9 million for the fiscal year ended June 30, 2025, compared to $3.3 million in fiscal year ended 2024. The fiscal year ended 2025 cost of goods sold included non-cash items of depreciation of $3.6 million and stock-based compensation of $0.8 million. Excluding these non-cash items, fiscal year ended 2025 cash cost of goods sold (a non-GAAP measure) was $10.5 million.
A reconciliation of fiscal year ended 2025 GAAP to non-GAAP cost of goods sold
Description
Amount ($M)
GAAP Cost of Goods Sold
Less: Depreciation Expense
Less: Stock-Based Compensation
Non-GAAP Cash Cost of Goods Sold
The Company was selected for, and successfully contracted, a grant from the US DOE for $150 million to support the construction of an additional battery recycling facility.
The Company successfully completed all contractual requirements of its $2.3 million grant from the US DOE, including the construction and operation of its multi-tonne per day integrated pilot facility for the demonstration of its internally-developed technologies for the manufacturing of battery grade lithium from its Nevada-based claystone resource.
The Company and its partners successfully completed all contractual requirements of its $0.5 million grant award from the US Advanced Battery Consortium, which is comprised of the US DOE, General Motors, Ford Motor Company, and Stellantis NV, including the recycling of commercial quantities of batteries, the purification and manufacturing of battery grade precursors, the manufacturing of high energy density cathode active material, and the manufacturing and testing of approximately 100 automotive scale multi-layer pouch cell batteries.
Government grant reimbursement was $5.7 million for the fiscal year ended June 30, 2025, compared to $3.3 million during the same period of the prior year. Out of the $5.7 million in grant funding for the fiscal year ended June 30, 2025, $0.6 million was recorded as an offset to fixed assets, as reimbursements related to equipment purchases, and $5.1 million was recorded as an offset to research and development costs within the consolidated statement of operations.
As of June 30, 2025, the Company had total cash on hand of $12.5 million of which $7.5 million was available and $5.0 million was restricted. Subsequent to year-end, on July 29, 2025, the restrictions were lifted, and the funds became available for general use. As the restriction was still in place as of the balance sheet date, the cash remains classified as restricted.
The Company was able to leverage its June 27, 2025 inclusion in the Russell 2000 index to raise capital, along with receiving proceeds from warrant exercises, and benefiting from convertible note conversions and the release of restricted cash subsequent to June 30, 2025. As a result, following the fiscal year ended, the Company’s net cash position has improved to $25.4 million as of September 15, 2025.
Components of Statements of Operations
The following table sets forth the Company’s operating results for the periods indicated:
Fiscal Year Ended
June 30, 2025
Fiscal Year Ended
June 30, 2024
$ Change
% Change
Revenue
Cost of goods sold
Gross loss
Operating expense
General and administrative
Research and development
Exploration
Impairment charge on held-for sale assets
Total operating expenses
Other income (expense)
Net loss
Revenue
During the fiscal years ended June 30, 2025 and 2024, our net sales were $4.3 million and $0.3 million, respectively. These sales are related to our black mass and metal byproducts resulting from recycling operations.
Cost of Goods Sold
Cost of goods sold during the fiscal years ended June 30, 2025 and 2024 were $14.9 million and $3.3 million, respectively, well above the value of the related revenue. The increase in cost of sales was primarily driven by higher headcount as the plant was commissioned and employees were hired to support expanded production capacity. In addition, cost of goods sold reflects depreciation expense associated with the recycling facility fixed assets, which commenced upon the facility’s in-service date. Costs also increased as the production process was finalized and stabilized during the period. We expect these costs to be reduced as a percentage of revenue as we scale our production and gainefficiencies in the process.
Management uses certain non-GAAP metrics to evaluate our operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing business trends as well as to view the results from management’s perspective. Non-GAAP cost of goods sold excludes certain non-cash charges including depreciation expense and stock-based compensation. Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP.
Operating Expenses
During the fiscal year ended June 30, 2025, the Company incurred $31.4 million of operating expenses compared to $44.8 million of operating expenses during the fiscal year ended June 30, 2024. The decrease is primarily due to the items described below:
General and administrative expenses consist of personnel, legal, finance, recruiting, business development, public relations, and general facility expenses. For the fiscal year ended June 30, 2025 and 2024, general and administrative expenses were $21.2 million and $16.1 million, respectively. The increase of $5.0 million is related to the following: an increase of $3.0 million in payroll, driven by the changes in employee activity, resulting in additional cost into general and administrative during fiscal year 2025 with a corresponding decrease to research and development cost; a $2.4 million increase in stock-based compensation based on the achievement of executive performance milestones; and property tax expense increased by $0.4 million due to the plant commissioning in fourth quarter of fiscal year 2024.
Research and development expenses consist primarily of personnel, laboratory leases, and supplies. Research and development expenses for the fiscal years ended June 30, 2025 and 2024 were $8.5 million and $14.3 million, respectively. The decrease is due to allocation of such costs to inventory and cost of goods sold as part of phase 1 recycling operations being commissioned in the fourth quarter of fiscal year 2024 and fiscal year 2025 seeing an increase in throughput of the plant. In addition, there was a decrease, for fiscal year ended 2025 as compared to the fiscal year ended 2024, due to higher grant reimbursements which are recorded as an offset to research and development expenses of $1.6 million.
Exploration costs consist primarily of personnel, drilling, assay, claim fees, office and warehouse costs, travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $1.8 million for the fiscal year ended June 30, 2025, compared to $4.1 million during the prior year. The decrease reflects $1.5 million in lower payroll costs resulting from the transfer of employees from exploration to technical programs (research and development) and to general and administrative. In addition, exploration costs decreased by $0.9 million as the Company completed its drilling program and shifted focus to producing and publishing the PFS.
An impairmentloss of $10.2 million on assets held-for-sale was recorded in the fiscal year ended June 30, 2024, related to two parcels of land and a building at the Fernley, Nevada location, comprising 12.44 acres and 11.55 acres, that the Company decided to sell. As of June 30, 2024, these assets had a carrying value of $8.4 million. As of June 30, 2025, the 11.55 acres of land was no longer actively marketed for sale and was therefore reclassified back to property, plant, and equipment. As of June 30, 2025, the remaining land and building has a carrying value of $6.0 million, is included within assets held for sale on the consolidated balance sheet, and is subject to further impairment, if required, until the asset is sold. Additionally, 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 consolidated balance sheet.
Other (Expense) Income
Other expense was $4.7 million in the fiscal year ended June 30, 2025 versus other expense of $4.7 million in the prior year. The noted changes for the current fiscal year as compared to the prior year are as follows: a change in fair value of the derivative liability of $1.0 million (see Note 13 of the consolidated financial statements for further detail), an increase due to recording a credit loss expense of $1.4 million related to a subscription receivable that was deemed uncollectible, consistent with the Company’s policy for expected credit losses, and a decrease in the amortization and accretion of financing costs during the fiscal year ended June 30, 2025 of $0.4 million.
Liquidity and Capital Resources
At June 30, 2025, the Company had cash of $12.5 million (of which $7.5 million was available and $5.0 million was restricted) and total assets of $84.5 million compared to available cash of $7.0 million and total assets of $77.7 million at June 30, 2024.
The Company had total current liabilities of $13.7 million at June 30, 2025, compared to $15.8 million at June 30, 2024. The decrease is related to the paydown of outstanding payables with the proceeds from the registered direct offerings and the issuance of the 2024 Notes.
As of June 30, 2025 and 2024 the Company had positive working capital of $10.9 million and $2.6 million, respectively. The positive working capital is related to the current classification of held-for-sale assets at June 30, 2025 and 2024 of $9.8 million and $8.4 million, respectively. Absent this classification, we would still maintain a positive working capital of $1.1 million at June 30, 2025 and have a $5.8 million working capital deficiency at June 30, 2024. The working capital deficiency in the prior year is largely attributed to the current classification of the 2024 Notes, as well as acquisitions of property and equipment and cash used in operating activities.
Going Concern
The continuation of the Company as a going concern is dependent upon generating profit from its operations and its ability to obtain debt or equity financing. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings, or obtain them on favorable terms, which could limit its operations. Any such financing activities are subject to market conditions. These uncertainties cause substantial doubt about the Company’s ability to continue as a going concern for 12 months from issuance of these financial statements. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material.
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 of the Company’s common stock having an aggregate offering price of up to $50,000,000, subject to the terms and conditions of the Sales Agreement (the “ATM Program”). During the fiscal year ended 2025, the Company sold 14,097,636 common shares for total proceeds of $18.6 million.
The going concern assessment excludes the ATM Program, which could provide a source of liquidity.
Based on our current operating plan, unless we generate income from the operations of our facilities and receipt of cash from United States government grant awards, or raise additional capital (debt or equity), it is possible that we will be unable to maintain our financial covenants the agreement governing the 2024 Notes (the “Note Agreement”), which, if such violation is not waived, could result in an event of default, causing an acceleration of the outstanding balance. If we raise additional capital through public or private equity offerings, as opposed to debt issuances, the ownership interests of our existing stockholders may be diluted.
Cash Flows
For the fiscal years ended June 30:
Cash Flows used in Operating Activities
Cash Flows used in Investing Activities
Cash Flows provided by Financing Activities
Net Increase in Cash During the Period
Cash from Operating Activities
During the fiscal year ended June 30, 2025, the Company used $28.9 million of cash for operating activities, compared to $16.7 million used during the fiscal year ended June 30, 2024. In both periods, the cash used has supported an increased scale of operations including increased employee headcount and personnel costs, increased production, and increased administrative costs.
Cash from Investing Activities
During the fiscal year ended June 30, 2025, the Company used cash in investing activities of $2.5 million for acquisition of property and equipment for its recycling facilities. This is in comparison to cash used in investing activities of $13.0 million for the fiscal year ended June 30, 2024. The decrease is due to the Company’s purchasing more equipment in the beginning stages of the recycling plant build-out in the prior year.
Cash from Financing Activities
During the fiscal year ended June 30, 2025, the Company had cash provided by financing activities of $36.9 million, compared to $34.4 million provided during the fiscal year ended June 30, 2024. The Company has relied on equity and debt financing to support its increased operating activities, the ramp up of the recycling plant, development of the lithium claystone pilot plant, and upgrades to the geological classification of its Tonopah Flats claims through additional studies and assessments.
The Company had proceeds from equity and debt financings of $45.7 million in the fiscal year ended June 30, 2025, compared to $58.3 million in the prior year. The proceeds are offset by principal paid on the notes payable of $7.5 million and payment of issuance costs on registered direct offerings of $1.1 million in fiscal year ended June 30, 2025. In 2024, principal paid on notes payable was $24.0 million.
Off-Balance Sheet Arrangements
As of June 30, 2025 and 2024, we had no off-balance sheet arrangements.
Working Capital
June 30, 2025
June 30, 2024
Current Assets
Restricted Cash
Current Liabilities
Working Capital
Future Financings
The Company will continue to rely on sales of our common shares, debt, or other financing to fund our business operations as needed beyond any revenue generated from internal operations and the government tax credits and grants we have been awarded. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the securities or arrange for debt or other financing to fund planned operating activities, acquisitions and exploration activities.
Critical Accounting Estimates and Judgments
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors and adjust those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates and assumptions.
Certain accounting estimates, including those concerning revenue recognition, share-based compensation, impairments of long-lived assets, and assets held-for-sale, are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates. These are described below. For further information on our accounting policies, see Note 3 to our consolidated financial statements.
Fair Value Measurements
Recurring Valuations. The Company’s 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. In making these fair value determinations, we were required to make assumptions that affected the recorded amounts, including volatility, risk free rates, and duration of time. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain. 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 June 30, 2025; accordingly, fair value measurement was not required. See Notes 6 and 11 for further discussion.
Revenue Recognition
The Company recognizes revenue upon satisfying its promises to transfer goods or services to customers under the terms of its contracts. Nearly all of 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 the Company transfers control of the goods to the customer, which is 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 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 fiscal year ended June 30, 2025, revenue adjustments related to performance obligations that were satisfied in previous periods were not material.
Long-Lived Assets
The Company evaluates long-lived assets, such as plant and equipment, with finite useful lives and ROU assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable. These events and circumstances may include significant decreases in the market price of an asset or asset group, significant changes in the extent or manner in which an asset or asset group is being used by the Company or in its physical condition, a significant change in legal factors or in the business climate, a history or forecast of future operating or cash flow losses, significant disposal activity, a significant decline in the Company’s share price, or a significant decline in revenue or adverse changes in the economic environment. The existence of an individual indicator outlined above, or otherwise, is not automatically an indicator that a long-lived asset may not be recoverable. Instead, management exercises judgment and considers the combined effect of all potential indicators and developments present, potentially positive or negative, when determining whether a long-lived asset may not be recoverable. No impairmentloss was recognized during the fiscal years ended June 30, 2025 and 2024.
Assets Held-for-Sale
The Company evaluates long-lived assets for classification as held for sale when management, having the authority to approve the action, commits to a plan to sell the asset. To qualify as held for sale, the asset must be available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets, and the sale must be probable within one year.
Management considers whether events and circumstances such as a change in strategic direction and changes in business climate would impact the fair value of long-lived assets. The Company used critical judgements in analyzing certain market data and estimates to calculate the value of the assets held-for-sale. Significant assumptions that form the basis of fair value include market comparison of similar properties, construction cost estimates and using certain dollar per square foot amounts to derive fair value. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain.
Stock-Based Compensation
The fair value of share-based payments are valued using the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires the inputs of highly subjective assumptions, including the volatility of share prices, changes in subjective input assumptions can materially affect the estimate.
New Accounting Pronouncements
New accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption. For further discussion on recent accounting pronouncements, please see Note 3, “ Accounting Pronouncements ,” to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
