10-K: American Battery Materials Faces Going Concern Doubt Amid Losses

American Battery Materials Inc. reported a significant net loss and working capital deficit for fiscal year 2025, raising substantial doubt about its ability to continue as a going concern.

Summary

• American Battery Materials Inc. (BLTH) is an exploration stage renewable energy company focused on the extraction, refinement, and distribution of technical minerals, primarily lithium and magnesium, using Direct Lithium Extraction (DLE) technology.
• The company reported a net loss of $6,410,564 for the year ended December 31, 2025, an increase from $4,306,918 in 2024, and has an accumulated deficit of $30,957,121.
• As of December 31, 2025, the company had a working capital deficit of $10,502,348 and cash of $3,480.
• The auditor expressed substantial doubt about the company's ability to continue as a going concern.
• BLTH owns 743 placer claims over 14,320 acres in Utah's Lisbon Valley Project, with historical mineral data indicating lithium concentrations of 340 ppm and magnesium concentrations of 74,400 ppm in existing wells.
• The company has not yet commenced mining operations, has no mineral reserves, and has generated no mining revenue to date.
• Management plans to fund operations through revenue generation, equity offerings, and debt financing, but there is no assurance of success.
• Material weaknesses in internal control over financial reporting were identified, including insufficient qualified accounting personnel, lack of segregation of duties, and ineffective controls for complex transactions.
• The company's stock is classified as a 'penny stock,' which subjects it to regulatory restrictions that may limit trading activity and liquidity.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as highly negative due to the significant net losses, accumulated deficit, working capital deficit, and the auditor's going concern warning. While the company has a strategic vision and operates in a high-demand sector, its current financial state and lack of revenue present substantial risks.

Positives

• The company is strategically focused on becoming a U.S. producer of lithium and magnesium, addressing national import dependence for these critical minerals.
• Its strategy centers on Direct Lithium Extraction (DLE) technologies, which are presented as more cost-effective, environmentally responsible, and capital-efficient than traditional mining methods, offering accelerated production timelines and higher recovery rates.
• BLTH has expanded its holdings to 743 placer claims over 14,320 acres in the Lisbon Valley, Utah, an area with historical mineral data and existing infrastructure.
• Exploration permits for the Lisbon Valley Project have been obtained from both the Federal BLM and the State UDOGM.
• U.S. government initiatives, including an Executive Order to increase mineral production and the Section 45X Advanced Manufacturing Production Tax Credit, support domestic critical mineral development.
• The company has engaged RESPEC Company LLC, a geotechnical, engineering, and resource management firm, to assist in the exploration of the Lisbon Valley Project.
• Commitment to Environmental, Social, and Governance (ESG) causes, including focusing hiring efforts on local communities with high unemployment near project areas.

Negatives

• Reported a significant net loss of $6,410,564 for the year ended December 31, 2025, an increase from $4,306,918 in 2024.
• Accumulated deficit reached $30,957,121 and working capital deficit was $10,502,348 as of December 31, 2025.
• The auditor expressed substantial doubt about the company's ability to continue as a going concern.
• No revenue was generated for the fiscal years ended December 31, 2025, and 2024.
• Operating expenses increased by 19% to $1,863,256 in 2025, primarily due to increased share-based compensation.
• Recorded a loss on extinguishment of debt of $1,744,906 in 2025 and $1,842,273 in 2024.
• The fair value of stock issued for note modification was $2,082,423 in 2025, indicating significant dilution for debt restructuring.
• Interest expense increased to $719,979 in 2025 from $446,278 in 2024.
• The company is an exploration stage issuer with no known mineral reserves and has not commenced mining operations, meaning no guarantee of profitable commercial mining.
• Material weaknesses in internal control over financial reporting were identified, including insufficient qualified accounting personnel, lack of segregation of duties, and ineffective controls for complex transactions.
• The company lacks commercial capabilities for marketing and distribution and has no customers or off-take agreements at this stage.
• The company's stock is classified as a 'penny stock,' which can reduce trading activity and limit investor liquidity.
• A Merger Agreement with Seaport Global Acquisition II Corp. was terminated in November 2023 due to 'material changes to the transaction proposed by SGII making the transaction untenable'.

Risks

• Substantial doubt about the company's ability to continue as a going concern.
• The need for additional capital to fund operations, with no assurance of obtaining favorable financing terms or at all.
• Uncertainty that exploration and development will result in the commercial extraction of mineral deposits or profitable mining operations.
• Economically recoverable lithium and magnesium may not exist on the company's properties, and reserve quantity/grade may vary with commodity prices.
• Exposure to regulatory and financial risks related to climate change, potentially leading to additional regulations, restrictions, and increased compliance costs.
• Historical presence of lithium and magnesium in brine waters may not be indicative of commercially feasible reserves.
• Risks inherent in mineral exploration, construction, and extraction, including unexpected geological formations, natural disasters, power outages, construction delays, supply chain disruptions, labor shortages, and environmental liability.
• Liabilities from operational risks could exceed insurance policy limits or be excluded from coverage.
• Intense competition in the mineral and chemical processing industry from companies with greater financial resources and technical capabilities.
• Dependence on research and development capabilities for Direct Lithium Extraction (DLE) and the ability to secure capital for brine processing plants, as DLE technology still faces scalability and water management challenges.
• The development of non-lithium battery technologies could adversely affect demand for lithium compounds.
• Lithium and magnesium prices are subject to unpredictable fluctuations due to various international, economic, and political factors.
• Cybersecurity risks, including malicious software, unauthorized access, data loss, and operational interruptions, despite mitigation efforts.
• Difficulty in obtaining and renewing governmental permits and approvals, which is costly, time-consuming, and subject to third-party intervention.
• Substantial regulation of health and safety, with potential for penalties, operational closures, and adverse impacts from accidents.
• Compliance with environmental regulations and potential litigation could require significant expenditures, fines, and reputational harm.
• Burdensome and costly land reclamation and exploration restoration requirements, potentially exceeding current estimates.
• An active trading market for the company's common stock may not develop, and shares may be difficult to resell.
• The company's stock price may be volatile due to various factors, including financial results, analyst recommendations, market acceptance, competition, capital structure changes, regulatory developments, litigation, key personnel changes, and macroeconomic conditions.
• Stockholders may experience substantial dilution from future issuances of common stock or convertible debt.
• Officers and directors hold significant voting power (44.1% of outstanding shares) and may take actions not in the best interests of all stockholders.
• No dividends are expected in the foreseeable future.
• Indemnification of officers and directors and limitations on their liability could limit recourse against them.
• Failure to implement and maintain proper and effective internal controls and disclosure controls and procedures could impair the ability to produce accurate and timely financial statements, leading to potential restatements and loss of investor confidence.
• Additional common stock and preferred stock authorized for issuance could adversely affect the rights of common stockholders.
• Lack of research coverage by securities or industry analysts could adversely affect stock price and trading volume.
• Risk of securities class action litigation.
• Financial reporting obligations as a public company are expensive and time-consuming, diverting management attention.
• The company's Certificate of Incorporation, Bylaws, and Delaware law may have anti-takeover effects.
• The company's stock is a 'penny stock' subject to SEC regulations, which could restrict trading activity and limit the ability to buy and sell shares.

Future Outlook

The company's strategic goal is to become a U.S. producer of lithium and magnesium, leveraging advanced brine extraction technologies (DLE) for cost-effective and environmentally responsible production. It plans to develop projects on a measured timeline, balancing near-term cash flow with long-term value maximization. Management anticipates generating revenue from lithium and magnesium operations but also expects to rely on equity offerings and debt financing to fund ongoing operations and growth. The company projects significant growth in U.S. lithium demand (nearly 500% by 2030) and continued expansion in the magnesium market, driven by electric vehicles and Battery Energy Storage Systems. It plans to drill two appraisal wells to evaluate resource potential and devise a detailed development plan, while also seeking to expand its mineral holdings and explore acquisition opportunities. Management is committed to improving internal controls and enhancing corporate governance.

Management Comments

• "Our strategic goal is to become a producer of lithium and magnesium in the United States."
• "We believe that a strategy centered on advanced brine extraction technologies, specifically Direct Lithium Extraction (DLE)... represents the most cost-effective, environmentally responsible, and capital-efficient pathway currently available for domestic lithium and magnesium production."
• "We intend to develop our projects on a measured timeline that balances near-term cash flow generation with long-term value maximization, delivering secure, low-carbon domestic supply of these critical minerals in a manner that is both economically superior and environmentally responsible."
• "We understand that our timelines are subject to a variety of risks and variables, including, without limitation, obtaining permits, approvals and funding."
• "We are also focused on the implementation of direct lithium extraction (DLE) technologies, which we believe have the potential to significantly increase the supply of lithium and magnesium from our brine projects, similar to the impact which shale did for oil."
• "We are committed to ESG causes. As we start to hire employees for our projects, our hiring efforts will focus on hiring workers from communities near our project areas."
• "Management's plan to fund our capital requirements and ongoing operations includes the generation of revenue from our lithium and magnesium operations and projects. Management's secondary plan to cover any shortfall is selling our equity securities and obtaining debt financing."
• "Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently available."

Industry Context

StockSavvy.ai notes that American Battery Materials Inc. operates in a critical and rapidly evolving sector, aligning with broader U.S. government initiatives to secure domestic supply chains for critical minerals like lithium and magnesium. The company's focus on DLE technology positions it within a trend towards more sustainable and efficient extraction methods, contrasting with traditional hard-rock mining. The market context is characterized by strong long-term demand forecasts for lithium and magnesium, driven by electric vehicles (EVs) and Battery Energy Storage Systems (BESS), despite current oversupply and price volatility. However, the company faces intense competition from established players and other startups, many with greater financial resources. The regulatory environment, including tax credits like Section 45X, provides tailwinds, but also introduces complexities and potential future reductions.

Comparison to Industry Standards

• The company is one of only three major domestic efforts underway to restart primary magnesium production, alongside startups like Magrathea Metals (developing seawater electrolysis tech with DoD backing) and Tidal Metals (pioneering zero-carbon electrical extraction from seawater brines).
• Fastmarkets projected that by 2030, 13% of global lithium production will come from DLE, with Chile and Argentina currently leading in brine-based lithium production, indicating BLTH is pursuing a technology that is gaining traction but still represents a minority of global production.
• The BloombergNEF Electric Vehicle Outlook 2024 projects global passenger EV sales to climb from 13.9 million in 2023 to over 30 million by 2027, with EV share of new vehicle sales reaching 33%.
• The Canaccord Genuity report from March 20, 2025, highlights BESS installations surging at a 150% CAGR since 2020, reaching 166 GWh in 2024, and projected to grow to 2,100 GWh by 2035 at a 20% CAGR.
• Benchmark Minerals forecasts significant deficits in lithium (572,000 tonnes) and nickel (839,000 tonnes) by 2034, seven times larger than current surpluses, requiring $514 billion in investment, including $51 billion for upstream lithium projects, highlighting the significant capital requirements for the industry.

Management Changes

Corporate Governance

Legal Proceedings

• There are no material legal proceedings to which the Company or any of its subsidiaries is a party or of which any of their property is the subject.

Related Party Transactions

• Issued convertible promissory notes to related parties for principal amounts of $10,000 (Feb 10, 2025), $10,000 (Feb 11, 2025), $10,000 (Feb 27, 2025), $50,000 (April 7, 2025), $15,721.27 (Aug 1, 2025), $50,000 (Aug 28, 2025 to Adam Lipson), $200,000 (Oct 23, 2025 for Accrued Payroll), and $34,200 (Oct 23, 2025 for Accrued Expenses).
• Extension agreements for promissory and convertible notes involved related parties, resulting in increased principal and additional shares. For example, a $733,436 promissory note (consolidated from five short-term notes) was issued to a related party in 2024, and later extended with principal increases and share issuances.
• A related party sold $75,000 of a promissory note to another related party on September 30, 2025.
• David Graber (CEO) is the managing partner of Cobrador Multi-Strategy Partners, LLC, which owns 694,250 shares of common stock.
• Dylan Glenn (Director) is the managing partner of Quail Run Holding LLC, which owns 12,572 shares of common stock.
• Marilyn Kane (5% shareholder) is the managing partner of Automated Retail Leasing Partners, LP, and manager of AJS Properties LLC, which collectively own 178,756 shares. Mr. Graber owns a non-controlling interest in Automated Retail Leasing Partners.

Stakeholder Impact

• Shareholders face significant dilution from ongoing issuance of common stock and convertible debt for financing, with further dilution risk from future capital raises and the automatic share reserve mechanism of the incentive plan. The 'penny stock' classification limits liquidity and trading, and no dividends are expected.
• Employees and management are subject to recent leadership changes (CEO, COO, CFO appointments in March 2024). Equity incentive plans are in place to attract and retain personnel, but the company's financial instability poses job security risks.
• Creditors are exposed to increased risk due to the company's severe financial distress, ongoing debt extensions, and the auditor's going concern warning. Debt modifications often involve increased principal and interest, indicating financial strain.
• Local communities in the Lisbon Valley, Utah, may benefit from potential job creation through the company's hiring efforts, which will focus on areas with high unemployment. The company's commitment to DLE technology aims to minimize environmental impact.
• Regulatory bodies, particularly the SEC, are impacted by the company's identified material weaknesses in internal controls, requiring remediation efforts to ensure compliance with financial reporting standards.

Next Steps

• Advance geotech, engineering, geology, and fieldwork to complete technical reports on the Lisbon Valley Project.
• Develop a well plan to re-enter, sample, and test the Superior Well and other prospective plugged and abandoned wells.
• Prepare technical reports following Regulation S-K Subpart 1300 standards, including an initial assessment, preliminary feasibility study, and feasibility study.
• Test collected brines for lithium, magnesium, cobalt, manganese, and other high-value elements.
• Develop area resource estimates based on Superior well results.
• Expand holdings in the Lisbon Valley area with additional mineral claims and joint venture opportunities.
• Explore and evaluate opportunities to expand resource base and production capacity through acquisitions in other areas of the United States and South America.
• Obtain financing to support the operational drilling phase of the Lisbon Valley Project.
• Implement and improve internal controls, including using third-party specialists and increasing reconciliation frequency.
• Form required Board committees (audit, compensation, nominating and corporate governance) as part of a potential application to trade on NYSE American.

Key Dates

Recommendation

The company's severe financial distress, evidenced by substantial net losses, a large accumulated deficit, and a significant working capital deficit, coupled with the auditor's explicit 'going concern' warning, makes it an extremely high-risk investment. The lack of revenue, heavy reliance on dilutive financing, and identified material weaknesses in internal controls further compound these concerns. While the company operates in a strategically important sector with long-term demand, its current operational and financial fundamentals are critically weak, suggesting a high probability of further value erosion for shareholders and significant risk of business failure.

Keywords

Lithium extraction, Magnesium production, Direct Lithium Extraction (DLE), Critical minerals, Renewable energy, SEC 10-K, Exploration stage, Lisbon Valley Project, Utah mining claims, Battery materials, Energy transition, Corporate governance, Financial reporting, Going concern, Convertible notes, Penny stock