Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes in "Item 1. Condensed Consolidated Financial Statements". References in this report to "American Battery," the "Company," "we," "our" and "us" are references to American Battery Technology Company and its subsidiaries.

Forward-Looking Statements

We make forward-looking statements in this report and may make such statements in future filings with the Securities and Exchange Commission, or SEC. We may also make forward-looking statements in our press releases or other public or shareholder communications. Our forward-looking statements are subject to risks and uncertainties and include information about our current expectations and possible or assumed future results of our operations. When we use words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "could," "plan," "potential," "predict," "forecast," "project," "intend," "is focused on" or similar expressions, or make statements regarding our intent, belief, or current expectations, we are making forward-looking statements. Our forward-looking statements also include, without limitation, statements about our liquidity and capital resources; our ability to continue as a going concern; our ability to successfully execute on our business strategy; our ability to raise additional capital and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.

While we believe our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which are based on information available to us on the date of this report or, if made elsewhere, as of the date made. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, the risks and uncertainties discussed in this report, "Item 1A - Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026, and from time to time in our other reports filed with the SEC.

Other factors not currently anticipated may also materially and adversely affect our results of operations, cash flows, and financial position. There can be no assurance future results will meet expectations. Forward-looking statements speak only as of the date of this report and we expressly disclaim any intent to update or alter any statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.

Overview

American Battery Technology Company (the "Company", "ABTC", "we" and "us") is an integrated critical minerals manufacturing company that is working to increase the domestic U.S. production of critical minerals, such as lithium, nickel, cobalt, manganese, copper, aluminium, and graphite through its exploration of new primary resources of critical minerals, the development and commercialization of new technologies for the extraction of these critical minerals from primary resources, and the 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 critical minerals and to ensure that as these materials reach their end of life, the constituent elemental critical minerals are returned to the domestic manufacturing supply chain in a closed-loop fashion.

To implement this business strategy, the Company has constructed and is operating its first integrated lithium-ion battery recycling facility, which takes in waste and end-of-life battery materials from the electric vehicle, battery energy storage system ("BESS"), consumer electronics industries, and manufactures several types of recycled products and byproducts. The ramp-up and operation of this facility remain top priorities, and the Company has significantly expanded resources to support its development. These efforts include 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 year 2024 and has achieved continued growth in production volumes and revenue through September 30, 2026.

The development and demonstration of these recycling technologies were supported by a competitively awarded grant from the U.S. Advanced Battery Consortium, which consists of General Motors, Ford Motor Company, Stellantis NV, and the US Department of Energy. The continued expansion of this facility is also supported by a competitively awarded $19.5 million investment tax credit awarded by the U.S. Department of Energy and administered by the U.S. Internal Revenue Service through the 48C program. ABTC was selected for an additional $10.0 million competitively awarded grant by the U.S. Department of Energy to demonstrate, optimize, and construct commercial implementations of ABTC's next generation of advanced critical mineral separations and processing manufacturing technologies.

With the successful operations of ABTC's first critical mineral recycling facility with a design processing rate of approximately 20,000 tonnes per year, ABTC was awarded a competitive $150 million grant from the U.S. Department of Energy to support the construction of a second critical mineral recycling facility with a processing rate of 100,000 tonnes per year. The construction of this second facility is also supported by a competitively awarded $40.5 million investment tax credit awarded by the U.S. Department of Energy and administered by the U.S. Internal Revenue Service through the 48C program. ABTC has been performing due diligence on several prospective locations for this second facility throughout the southeastern US.

In addition to its critical mineral recycling facilities, ABTC is also developing TFLP, one of the largest identified lithium resources in the United States. In September 2025, ABTC published a Pre-Feasibility Study (PFS) for this project that details the inferred, indicated, and measured resources and proven and probable reserves at this claystone property, as well as the technical and financial roadmap for bringing the associated lithium mine and 30,000 tonne lithium hydroxide monohydrate (LHM) per year refinery to commercialization. This PFS has estimated that the TFLP contains approximately 21.3 million tonnes LHM resource, with 2.7 million tonnes of LHM further classified as proven and probable reserves (Inferred, indicated, and measured resources have lower levels of geological confidence than proven and probable reserves, and in certain cases may not be considered when assessing the economic viability of a mining project). The total processing costs for manufacturing this battery grade LHM is projected to be $4,307 per tonne LHM.

To demonstrate the performance of ABTC's internally developed claystone-to-lithium hydroxide technologies, ABTC was awarded a competitive $2.3 million grant from the U.S. Department of Energy to construct and operate a multi-tonne per day integrated demonstration facility. ABTC has constructed and operated this demonstration facility and processed tonne-level quantities of claystone from ABTC's claystone property near Tonopah, Nevada, and manufactured high-purity battery grade lithium hydroxide product that has been delivered to global customers for evaluation and qualifications.

ABTC is currently developing a mine and refinery at the TFLP for the manufacturing of 30,000 tonnes of high purity critical mineral lithium hydroxide per year. In October 2022, ABTC was selected for a competitively awarded $57.7 million grant from the U.S. Department of Energy to support the construction of the first 5,000 tonnes lithium hydroxide per year processing train at this facility.

In October 2025, the DOE notified the Company that the $57.7 million cooperative agreement for the lithium hydroxide refinery was terminated. The Company appealed, and following a series of technical and commercial reviews, the DOE reinstated the award in its entirety in January 2026, with no change to funds awarded or to technical and commercial milestones, and with an updated contracted project schedule to reflect the time spent in the review process. The temporary termination and reinstatement did not result in a material change to the Company's project timeline or capital program. See Note 5 to the condensed consolidated financial statements.

As this prospective mine and refinery are located on land managed by the U.S. Bureau of Land Management ("BLM"), ABTC works closely with the federal government on the permitting, design, and operations of this facility. In June 2025, ABTC's TFLP was selected by President Trump's National Energy Dominance Council ("NEDC") and the FAST-41 Permitting Council as a Transparency Priority Project. This designation implements streamlined federal permitting procedures and highlights the project's role in advancing domestic critical mineral lithium production and supporting U.S. energy independence. In August 2025, the TFLP was further approved by the FAST-41 Permitting Council as a Covered Priority Project, which provided additional resources to streamlining the permitting efforts for this project.

On July 30, 2026, President Trump issued a Presidential Determination pursuant to Section 101 of the Defense Production Act of 1950, as amended (the "DPA"), declaring black mass produced from the recycling of lithium-ion batteries to be a critical material essential to the national security of the United States. On August 6, 2026, the Bureau of Industry and Security ("BIS") within the U.S. Department of Commerce published a Temporary Final Rule in the Federal Register titled "DPAS Directive Allocation Order and Additional Requirements for Recoverable Critical Minerals and Materials" (the "Directive"), which imposes a requirement that U.S. entities selling black mass allocate 100% of their monthly sales to U.S. persons. The Directive took effect on August 27, 2026, and remains in effect for approximately one year from the date of publication.

ABTC submitted a request to BIS for an exception from the Directive's domestic allocation requirement. On September 30, 2026, the Company received approval from the U.S. Department of Commerce's Bureau of Industry and Security for the sale of up to $100 million of its recycled black mass material through a license to export under specified terms following the implementation of recently enacted federal export controls governing critical battery materials.

Company Financial Highlights - Three months ended September 30, 2026:

A reconciliation of cost of goods sold to cash cost of goods sold and adjusted gross loss

(both are non-GAAP measures) for the three months ended September 30 was as follows:

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 analysing 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.

The Directive, effective August 27, 2026, restricted international exports of black mass. This limited the Company's ability to export its finished black mass inventory and increased inventory levels during the quarter. The inventory on the balance sheet includes capitalized labor and overhead costs. These costs are recognized in cost of goods sold when the related inventory is sold, subject to any write-downs to net realizable value. On October 1, 2026, ABTC announced that the U.S. Department of Commerce's Bureau of Industry and Security approved a license to export up to $100 million of the Company's recycled black mass under specified terms.

Components of Statements of Operations

The following table sets forth the Company's operating results for the periods indicated:

Results of Operations for the Three Months Ended September 30, 2026 and 2025

Revenue

During the three months ended September 30, 2026 and 2025, our revenue was $1.7 million and $0.9 million, respectively, which related to the sale of our products and byproducts resulting from recycling operations. The increase in revenue was primarily driven by an increase in processed feedstock, which enabled higher production throughput, as well as higher market prices for our products and byproducts during the current-year period. Revenue during the period was negatively impacted by the black mass federal export restriction, which restricted the Company's ability sell certain materials. Following receipt of the approval to export $100 million of our black mass product, the Company expects revenue to begin recovering in the second quarter as it resumes or expands activities previously constrained by the restrictions. The timing and extent of the recovery will depend on the Company's ability to process accumulated feedstock inventory, fulfill customer demand, and convert finished goods inventory into sales.

Cost of Goods Sold

Cost of goods sold during the three months ended September 30, 2026 and 2025 were $5.4 million and $4.5 million, respectively. Cost of sales is impacted by changes in inventory levels and the timing of inventory cost recognition. Due to the federal export restrictions on black mass, the Company has experienced elevated inventory levels during the fiscal year first quarter of 2027 as compared to fiscal year 2026 as restrictions on the processing, movement, or sale of black mass have limited the Company's ability to convert finished goods inventory into sales. In accordance with the Company's inventory costing methodology, labor and overhead costs are allocated to inventory through periodic allocation entries and capitalized as part of inventory carrying costs. These costs are subsequently recognized in cost of sales when the related inventory is sold or when inventory is written down to net realizable value, as applicable.

The increase in cost of goods sold was primarily attributable to a $3.3 million inventory write-down to net realizable value, compared to $0.3 million in the prior-year period. Federal export restrictions on black mass significantly reduced the Company's ability to sell inventory, resulting in lower sales volumes and higher-than-normal inventory levels. As a result, production costs associated with unsold inventory were capitalized rather than recognized in cost of goods sold upon sale, resulting in lower traditional cost of sales relative to production levels. In the prior-year period, the Company generally produced and sold its production, resulting in lower inventory levels and a more traditional recognition of production costs in cost of goods sold. During the current period, the accumulation of inventory, combined with production costs capitalized in inventory, resulted in inventory carrying values exceeding estimated net realizable value. Accordingly, the Company recorded a $3.3 million inventory write-down to reduce inventory to its estimated net realizable value.

Operating Expenses

During the three months ended September 30, 2026, the Company incurred $11.4 million of operating expenses compared to $6.6 million of operating expenses during the three months ended September 30, 2025. The increase is primarily due to the items described below:

General and administrative expenses consist of stock-based compensation, office expenses, legal, accounting, recruiting, business development, public relations, and general facility expenses. For the three months ended September 30, 2026, general and administrative expenses were $7.3 million, an increase of $3.6 million from the same period in the prior year. The majority of the increase relates to approximately $3.3 million in stock-based compensation expense associated with the fiscal year 2026 executive performance-based awards and the long-term incentive agreement granted to the Chief Executive Officer in the fourth quarter of fiscal year 2026.

Research and development expenses consist primarily of personnel, laboratory leases, and supplies. Research and development expenses for the three months ended September 30, 2026 and 2025, were $3.6 million and $2.7 million, respectively. The increase is primarily related to an increase in stock compensation expense of $0.1 million and payroll for $0.7 million as the Company hired additional engineers and technical program managers to support the operations of the Plant and the progression of the TFLP through the feasibility studies and National Environmental Policy Act ("NEPA") review processes.

Exploration costs consist primarily of drilling, assay, claim fees, personnel, stock-based compensation, office and warehouse, travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $0.4 million for the three months ended September 30, 2026 and $0.3 million for the three months ended September 30, 2025.

Other Income (Expense)

Other income was $0.4 million for the three months ended September 30, 2026, versus other expense of $0.2 million during the same period in the prior year. The change for the three months ended September 30, 2026 primarily resulted from a $0.4 million increase in interest income (expense), net, due to investment of cash in money market funds, and a $0.3 million decrease in the amortization and accretion of financing costs following the conversion of the Company's notes payable in fiscal year 2026, partially offset by a $0.1 million decrease in other income.

Liquidity and Capital Resources

At September 30, 2026, the Company had available cash and cash equivalents of $43.3 million and total assets of $123.6 million compared to available cash of $49.5 million and total assets of $132.8 million at June 30, 2026. The decrease in available cash and cash equivalents resulted from the $5.0 million of cash used in operations and $1.9 million of cash used in investing activities to support the expansion of our recycling operations and purchase of mining properties.

The Company had total current liabilities of $6.2 million at September 30, 2026, compared to $6.4 million at June 30, 2026.

As of September 30, 2026, the Company had working capital (excluding restricted cash) of $44.9 million compared to $53.7 million at June 30, 2026. Working capital decreased primarily due to lower cash balances as cash was used to fund operations. Accounts receivable also decreased during the period as a result of customer collections, partially offset by an increase in inventory resulting from the federal export restrictions on black mass that remained in effect during the quarter until the Company received an export license on September 30, 2026.

Cash Flows

For the three months ended September 30:

Cash from Operating Activities

During the three months ended September 30, 2026, the Company used $5.0 million of cash for operating activities, compared to $7.1 million used during the three months ended September 30, 2025. In both periods, the cash used 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 three months ended September 30, 2026, the Company used cash in investing activities of $2.0 million. The Company used $1.8 million for acquisition of property and equipment for its recycling facility while $0.2 million was for the purchase of mining properties. This is in comparison to cash used in investing activities of $0.7 million for the three months ended September 30, 2025 for acquisition of property and equipment.

Cash from Financing Activities

During the three months ended September 30, 2026, the Company had zero cash provided by financing activities, compared to $26.3 million provided during the three months ended September 30, 2025. 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.

Working Capital

Future Financing

The Company will continue to rely on sales of our common shares, debt, or other financings to fund its business operations as needed beyond any cash 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 our securities or arrange for debt or other financings to fund planned operating activities, acquisitions, and exploration activities.

Critical Accounting Estimates

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of the condensed 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 condensed 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.

While some of our significant accounting policies are more fully described in Note 3, "Summary of Significant Accounting Policies," in the notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, all our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026.

Off-Balance Sheet Arrangements

As of September 30, 2026, we had no off-balance sheet arrangements.