Business Context and Reporting Period
Company: American Battery Technology Company (ABAT)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Six months ended December 31, 2025 (Fiscal Q2 2026)
Business Overview: An integrated critical battery materials company focused on domestic U.S. production of lithium, nickel, cobalt, and manganese. Operations include exploration of primary resources, extraction technology development, and commercialization of lithium-ion battery recycling.
Key Financial Metrics
| Metric | Six Months Ended Dec 31, 2025 | Six Months Ended Dec 31, 2024 |
|---|---|---|
| Revenue | $5.70 million | $0.53 million |
| Cost of Goods Sold (COGS) | $10.81 million | $5.85 million |
| Gross Loss | $(5.12 million) | $(5.31 million) |
| Net Loss | $(19.58 million) | $(25.10 million) |
| Net Loss Per Share (Basic/Diluted) | $(0.16) | $(0.35) |
| Cash and Cash Equivalents (End of Period) | $47.89 million | $7.47 million (June 30, 2025) |
| Working Capital | $58.02 million | $10.86 million (June 30, 2025) |
| Total Debt (Notes Payable) | $0 | $7.73 million (June 30, 2025) |
Non-GAAP Highlights: Management reported a "Cash Cost of Goods Sold" of $8.2 million for the six-month period, resulting in an adjusted gross loss of $2.5 million, excluding depreciation and stock-based compensation.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 966% year-over-year to $5.70 million, driven by higher production throughput and increased market prices for black mass and mixed metals byproducts.
- Debt Elimination: The company fully extinguished $8.0 million in convertible notes payable by converting the principal into common stock. No debt remains outstanding as of December 31, 2025.
- Liquidity Improvement: Cash and cash equivalents increased by approximately $40.4 million compared to June 30, 2025, primarily due to $45.5 million in proceeds from At-The-Market (ATM) offerings and $10.0 million from warrant exercises.
- Operating Expenses: Total operating expenses decreased 19% to $14.89 million. General and administrative expenses dropped 41% largely due to the deferral of $4.1 million in executive performance-based stock compensation until Q3 2026.
- Asset Reclassification: Assets previously held-for-sale (Fernley, Nevada property) were reclassified to property and equipment as construction in progress after a sale agreement was terminated.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary and Outlook
Management anticipates operating losses will lessen in the near term due to revenue growth and cost efficiencies. The company believes current cash reserves ($47.9 million) are sufficient to fund operations for at least the next 12 months. Strategic focus remains on ramping up the recycling facility and advancing the Tonopah Flats Lithium Project (TFLP), which has been designated a "Covered Priority Project" under the FAST-41 Permitting Council.
Risks and Contingencies
- Internal Control Material Weakness: Management concluded that disclosure controls and internal controls over financial reporting were not effective as of December 31, 2025, due to a lack of proper segregation of duties. Remediation is expected by the end of fiscal year 2026.
- Grant Termination: A $115.5 million DOE grant for a lithium hydroxide refinery was terminated in October 2025. The company has submitted an appeal and intends to pursue dispute resolution remedies.
- Customer Concentration: Five major customers accounted for 91% of revenue for the six months ended December 31, 2025.
- Future Financing: The company expects to rely on additional equity or debt financing to fund future operations, which may result in dilution.
Unusual Items
Significant non-cash stock-based compensation expense of $5.53 million was recorded for the six-month period. Additionally, the company recognized a gain on the change in fair value of derivative liabilities in the prior year, which was reclassified to equity in November 2024 following an increase in authorized shares.
Investor Verification Checklist
- Internal Control Remediation: Verify the progress of the remediation plan for the material weakness in internal controls over financial reporting.
- DOE Grant Appeal Status: Monitor the outcome of the appeal regarding the terminated $115.5 million DOE grant.
- Production Economics: Assess the timeline for achieving positive gross margins, given the current GAAP gross loss despite revenue growth.
- Capital Raise Dilution: Review the impact of recent ATM offerings and warrant exercises on existing shareholder dilution.
- Executive Transition: Note the appointment of a new CFO (Alejandro Flores Arteaga) effective February 9, 2026, and the retirement of the Interim CFO.