10-Q: American Battery Technology Company Reports Q2 2025 Results, Highlights Revenue Growth and Strategic Funding

American Battery Technology Company reports revenue of $332,000 for the three months ended December 31, 2024, and secures significant grant funding for recycling facility construction.

Summary

• American Battery Technology Company (ABTC) reported its financial results for the second quarter of fiscal year 2025, ending December 31, 2024.
• The company generated revenue of $332,000 during the quarter from its recycling operations.
• Cost of goods sold was $3.3 million, including $1.1 million in depreciation and $0.1 million in stock-based compensation.
• Operating expenses totaled $10.8 million, with general and administrative expenses at $7.7 million and research and development expenses at $2.9 million.
• The company secured a $144 million grant from the DOE to construct a lithium-ion battery recycling facility.
• ABTC also received approximately $19.5 million in tax credits through the Qualifying Advanced Energy Project Credits program (48C).
• The company had $20.6 million in cash on hand as of December 31, 2024, with $15.6 million available and $5.0 million restricted.
• Cash used in operations for the six months ended December 31, 2024, was $12.8 million.
• The company issued a new series of senior convertible notes for $12 million and raised $15 million through registered direct offerings.
• The company is still in the exploration stage and expenses all mineral exploration costs.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While the company is generating revenue and securing significant funding, it is also experiencing net losses and relying on external financing. The material weaknesses in internal control over financial reporting are also a concern.

Positives

• The company generated initial revenue from recycling operations.
• ABTC secured significant grant funding from the DOE for the construction of a new lithium-ion battery recycling facility.
• The company was selected for tax credits through the Qualifying Advanced Energy Project Credits program.
• ABTC successfully raised capital through the issuance of senior convertible notes and registered direct offerings.
• The company has completed construction and commissioning of its claystone to lithium hydroxide (LiOH) pilot plant.

Negatives

• The company incurred a net loss of $25.1 million for the six months ended December 31, 2024.
• Cash used in operations for the six months ended December 31, 2024 was $12.8 million.
• The company has a high cost of goods sold relative to revenue.
• The company's disclosure controls and procedures are not effective, based on the material weaknesses described in the document.
• The company did not have a sufficient complement of personnel with appropriate technical expertise to perform an effective risk assessment.
• The company did not maintain proper segregation of duties related to accounting processes.

Risks

• The company's ability to continue as a going concern is dependent on generating profit from operations and obtaining debt or equity financing.
• There is no assurance that the company will be able to generate sufficient profits or obtain financing on favorable terms.
• Failure to maintain financial covenants under existing debt agreements could result in an event of default.
• Issuance of additional shares will result in dilution to existing stockholders.
• The Trump Administration has issued Executive Orders that could delay the timing of projects, and could have a material adverse impact on our business, financial condition, and results of operations.

Future Outlook

The company will continue to rely on sales of common shares, debt, or other financing to fund business operations as needed beyond any revenue generated from internal operations and the government tax credits and grants awarded.

Industry Context

The company operates in the lithium-ion battery recycling industry, which is experiencing growth due to the increasing demand for electric vehicles and energy storage systems. The company's focus on domestic production of battery materials aligns with the U.S. government's efforts to secure the supply chain for critical minerals.

Comparison to Industry Standards

• It is difficult to compare ABTC directly to industry standards without more specific information on its operational efficiency and cost structure relative to its peers.
• However, the company's focus on securing government grants and tax credits is a common strategy among companies in the battery recycling and materials space, as these incentives can significantly improve project economics.
• Companies like Li-Cycle and Redwood Materials are also focused on lithium-ion battery recycling, but their financial performance and operational metrics may differ based on their specific technologies, scale, and business models.

Management Changes

Related Party Transactions

• Of the $ 1.9 million in proceeds received from the private placement, $ 0.6 million was received from related parties of the Company, including current employees and an immediate family member of the Chief Executive Officer.

Stakeholder Impact

• The company's performance and strategic initiatives impact shareholders, employees, customers, and suppliers.
• The company's ability to secure funding and execute its business plan will affect shareholder value.
• The company's operations provide employment opportunities and contribute to the development of a domestic battery materials supply chain.
• The company's recycling activities can reduce the environmental impact of battery production and disposal.

Next Steps

• The company plans to continue the ramp-up and operations of its integrated lithium-ion battery recycling facility.
• ABTC intends to sell the credit in order to monetize its value.
• The company plans to continue to utilize an outside CPA firm for technical expertise and we plan to perform a complete risk assessment to update our control procedures.
• The company expects to remediate these material weaknesses by the end of fiscal year 2025.
• The Company is currently conducting a diligent search for a permanent Chief Financial Officer with relevant and extensive experience in accounting and finance.

Key Dates