10-Q: ABTC Q1 2026: Revenue Soars, Cash Reserves Bolstered

American Battery Technology Company reports significant revenue growth and a strengthened cash position for Q1 fiscal year 2026, despite a major DOE grant termination.

Summary

• Cash and cash equivalents increased to $30.9 million as of September 30, 2025, with $30.1 million unrestricted, representing a $22.6 million increase from June 30, 2025.
• Post-period, the net cash position further improved to $54.9 million as of November 3, 2025, due to additional capital raised through an At-The-Market (ATM) offering.
• Revenue for the three months ended September 30, 2025, was $0.9 million, a 364% increase compared to $0.2 million for the same period in the prior year.
• The company reported a gross loss of $(3.5) million for the three months ended September 30, 2025, compared to a gross loss of $(2.3) million in the prior year period.
• Net loss for the three months ended September 30, 2025, was $(10.3) million, an improvement from $(11.7) million in the corresponding prior year period.
• All notes payable were fully extinguished through conversion to common shares, eliminating outstanding debt.
• The U.S. Department of Energy (DOE) terminated a $57.7 million grant for the design, construction, and commissioning of a lithium hydroxide refinery, effective August 31, 2025; the company is appealing this decision.
• A Pre-Feasibility Study (PFS) for the Tonopah Flats Lithium Project was published, detailing a 21.3 million tonnes Lithium Hydroxide Monohydrate (LHM) resource, including 2.7 million tonnes LHM classified as proven and probable reserve, with estimated processing costs of $4,307 per tonne LHM.
• A material weakness in internal control over financial reporting was identified due to a lack of proper segregation of duties.

Sentiment

Score: 5

Explanation: While the company achieved significant revenue growth and bolstered its cash position through financing activities, the substantial increase in gross loss, continued operating cash burn, and the termination of a major DOE grant are significant concerns. The identified material weakness in internal controls also adds a layer of operational risk. The positive developments in project milestones and other grants are offset by these financial and operational challenges.

Positives

• Cash and cash equivalents significantly increased to $30.9 million ($30.1 million unrestricted) as of September 30, 2025, up $22.6 million from June 30, 2025.
• Net cash position further improved to $54.9 million as of November 3, 2025, following additional capital raises through an ATM offering.
• Revenue grew by 364% to $0.9 million for the three months ended September 30, 2025, compared to $0.2 million in the prior year period.
• Net loss improved to $(10.3) million for the quarter, from $(11.7) million in the same period last year.
• All notes payable were fully extinguished through conversion to common shares, removing debt from the balance sheet.
• Received US EPA approval for its McCarran, Nevada battery recycling facility to receive waste material under CERCLA, enabling processing of damaged batteries.
• Awarded a contract to recycle up to 10,000 tonnes of damaged batteries from the Moss Landing BESS facility, described as one of the largest battery recycling projects in US history.
• Formed a strategic partnership with Call2Recycle to advance lithium-ion battery recycling for consumers across the United States.
• The Tonopah Flats Lithium Project was approved as a Covered Priority Project for streamlined federal permitting by the National Energy Dominance Council and the FAST-41 Permitting Council.
• Published a Pre-Feasibility Study (PFS) for the Tonopah Flats Lithium Project, identifying a substantial 21.3 million tonnes LHM resource, with 2.7 million tonnes LHM classified as proven and probable reserve.
• Secured a $1 million agreement from the DOE's Argonne National Laboratory ReCell Center to support domestic manufacturing of critical mineral lithium hydroxide.
• Selected for tax credits of up to $19.5 million and an additional $40.5 million through the Qualifying Advanced Energy Project Credits (48C) program for battery recycling facilities.

Negatives

• Gross loss increased by 50% to $(3.5) million for the three months ended September 30, 2025, from $(2.3) million in the prior year, indicating worsening profitability at the operational level.
• Cost of goods sold increased by 75% to $4.5 million, outpacing revenue growth and driven by higher headcount for plant commissioning and expanded production capacity.
• The $57.7 million DOE grant for the lithium hydroxide refinery project was terminated, effective August 31, 2025, posing a significant setback despite the company's appeal.
• Incurred negative cash flows from operating activities of $7.1 million for the three months ended September 30, 2025.
• Accumulated deficit increased to $270.4 million as of September 30, 2025.
• A material weakness in internal control over financial reporting was identified due to a lack of proper segregation of duties.

Risks

• The termination of the $57.7 million DOE grant for the lithium hydroxide refinery project creates uncertainty regarding its future funding and development, despite the company's appeal.
• Reliance on sales of common shares, debt, or other financing to fund business operations carries the risk that additional funding may not be secured, impacting planned activities.
• Issuances of additional shares through ATM offerings or other financings will result in dilution to existing stockholders.
• A material weakness in internal control over financial reporting due to a lack of proper segregation of duties could lead to material misstatements in financial statements not being prevented or detected on a timely basis.
• Litigation is subject to inherent uncertainties, and adverse results in legal proceedings could have a material adverse effect on business, financial condition, or operating results.
• The amount of financial assurance required for mine reclamation and closure can vary with changes in laws, regulations, reclamation and closure requirements, and cost estimates, potentially increasing financial obligations.

Future Outlook

Management anticipates that operating losses will lessen in the near term due to expected revenue growth and ongoing cost efficiencies. The company believes its current cash, funds from recent ATM issuances, and anticipated product sales revenue are sufficient to fund operations for at least the next 12 months. Cost of goods sold is expected to decrease as a percentage of revenue with increased production scale and efficiency gains. The company plans to make improvements to its Fernley, Nevada property in fiscal year 2026 and expects to remediate the identified material weakness in internal control over financial reporting by the end of fiscal year 2026.

Management Comments

• "Management anticipates that our operating losses will lessen in the near term due to revenue growth and the pursuit of ongoing cost efficiencies."
• "Management believes that the Company's cash and cash equivalents as of September 30, 2025, funds received from ATM issuances in October 2025, and anticipated revenue from sales of our products, are sufficient to fund the Company's operations for at least the next 12 months from the issuance date of these condensed consolidated financial statements."
• "We expect these costs [cost of goods sold] to be reduced as a percentage of revenue as we scale our production and gain efficiencies in the production process."
• "We have implemented, and are continuing to design and implement, measures to remediate the control deficiency that resulted in the material weakness identified in our internal control over financial reporting."
• "We expect to remediate the material weakness by the end of fiscal year 2026."

Industry Context

The company operates as an integrated critical battery materials provider, focusing on increasing domestic U.S. production of key battery metals like lithium, nickel, cobalt, and manganese through exploration, new extraction technologies, and lithium-ion battery recycling. This strategy aligns with broader industry and governmental trends emphasizing the establishment of secure, domestic supply chains for critical minerals, particularly for the rapidly expanding electric vehicle and stationary storage markets. The company's ability to process CERCLA waste and secure a large contract for damaged battery recycling highlights a growing and specialized need within the battery recycling sector. The designation of the Tonopah Flats Lithium Project as a 'Covered Priority Project' further underscores the national strategic importance placed on accelerating domestic critical mineral production.

Comparison to Industry Standards

• The Tonopah Flats Lithium Project's identified resource of 21.3 million tonnes LHM, with 2.7 million tonnes LHM classified as proven and probable reserve, positions it as one of the largest identified lithium resources in the United States, indicating significant scale relative to many other domestic lithium projects.
• The estimated processing cost of $4,307 per tonne LHM for the Tonopah Flats project provides a benchmark for claystone-based lithium extraction. This figure can be compared to industry averages for different lithium sources; for instance, some low-cost brine operations might target sub-$3,000/tonne, while hard rock spodumene conversion can be higher, often exceeding $6,000-$8,000/tonne, depending on the specific project and market conditions.
• The contract to recycle up to 10,000 tonnes of damaged batteries from the Moss Landing BESS facility is described as one of the largest battery recycling projects in US history, indicating a substantial scale when considering the nascent stage of large-scale battery recycling infrastructure in the US.

Management Changes

Corporate Governance

Legal Proceedings

• The company may be involved in routine legal proceedings from time to time, but their resolution is not expected to have a material effect on operations or consolidated financial statements.
• The company intends to pursue dispute resolution remedies in connection with the termination of the $57.7 million DOE grant.

Related Party Transactions

• In August 2024, $0.6 million of the $1.9 million proceeds from a private placement were received from related parties, including current employees and an immediate family member of the Chief Executive Officer.

Stakeholder Impact

• Shareholders face potential dilution from ongoing ATM offerings and warrant exercises, but could benefit from successful project commercialization and grant appeals. Negative impacts include increased gross loss and internal control weakness.
• Employees are impacted by increased headcount for plant commissioning and expanded production capacity, with stock-based compensation being a significant component of their remuneration.
• Customers benefit from increased capacity for battery recycling, including specialized CERCLA waste, and the potential for future supply of battery-grade lithium hydroxide.
• Creditors benefit from the full extinguishment of notes payable, reducing the company's debt burden.

Next Steps

• Pursue dispute resolution remedies in connection with the termination of the $57.7 million DOE grant.
• Continue the ramp-up and operation of the first integrated lithium-ion battery recycling facility.
• Implement facility upgrades to process the 10,000 tonnes of damaged batteries from the Moss Landing BESS facility.
• Advance the Tonopah Flats Lithium Project towards commercialization, leveraging its 'Covered Priority Project' status for streamlined federal permitting.
• Generate large amounts of battery grade lithium hydroxide from the pilot plant for delivery to customers for qualifications and evaluation.
• Incur qualifying expenditures for the $19.5 million 48C tax credit and recognize amounts upon reasonable assurance of compliance.
• Incur qualifying expenditures for the additional $40.5 million 48C tax credit for a new commercial battery recycling facility.
• Remediate the material weakness in internal control over financial reporting by the end of fiscal year 2026, including designing and implementing controls, hiring qualified IT personnel, and engaging third-party consultants.
• Conduct a search for a permanent Chief Financial Officer.
• Continue to rely on sales of common shares, debt, or other financing to fund business operations as needed.

Key Dates

Recommendation

The company demonstrates strong strategic progress in securing domestic critical mineral resources and recycling capabilities, evidenced by the large Moss Landing contract, EPA approval for CERCLA waste, and the promising PFS for Tonopah Flats. The significant capital raises post-period have also substantially improved liquidity. However, the termination of the $57.7 million DOE grant is a major setback, and the persistent operating losses coupled with the identified material weakness in internal controls present considerable execution and governance risks. The stock is likely to experience volatility as the market weighs the long-term strategic potential against immediate operational challenges and funding uncertainties related to the terminated grant. A 'Hold' recommendation reflects the balance between these significant positive developments and the material risks and operational inefficiencies.

Keywords

Lithium-ion battery recycling, Critical battery materials, Lithium hydroxide, Tonopah Flats Lithium Project, SEC 10-Q, Battery metals exploration, DOE grants, 48C tax credits, Financial results, Nevada mining, EV battery supply chain, Corporate governance, Internal controls, CERCLA waste