5E Advanced Materials (NASDAQ: FEAM) cuts losses but warns on going concern
Rhea-AI Filing Summary
5E Advanced Materials, Inc. reported a net loss of
Total assets were
The company eliminated its convertible note debt in March 2025 through an exchange into equity and continued to raise capital via several equity offerings and warrant exercises, including a subsequent
Positive
- Material resource upgrade: Measured plus indicated boric acid resources increased to 28.3M tons (a
61% rise) and lithium carbonate equivalent to 328K tons (a54% rise), strengthening the long-term potential of the Fort Cady project. - Debt elimination through equity exchange: All senior secured convertible notes were exchanged into 13.6M common shares in March 2025, extinguishing the Amended and Restated Note Purchase Agreement and removing significant interest expense and covenant pressure.
- Substantial post-period equity financing: The February 2026 Equity Offering raised gross proceeds of
$36.0M , materially improving near-term liquidity to support ongoing project development and operations.
Negative
- Going concern uncertainty: Management concludes there is substantial doubt about the company’s ability to continue as a going concern, given pre-revenue status, recurring losses, and dependency on additional, not-yet-assured financing.
- Very low period-end cash: Cash and cash equivalents were only
$571K at December 31, 2025, against six-month operating cash outflows of$9.5M , highlighting acute liquidity pressure before subsequent capital raises. - Ongoing significant operating losses: The company recorded a net loss of
$10.9M for the quarter and$21.6M for six months, with no operating revenue yet generated from the Fort Cady project.
Insights
Balance sheet deleveraged, but liquidity tight and going concern risk remains elevated.
5E Advanced Materials converted all outstanding convertible notes into 13.6M shares in March 2025, extinguishing related debt and minimum cash covenants. As of December 31, 2025, only vehicle notes of
However, cash and cash equivalents were just
A February 2026 equity offering raised gross proceeds of
Resource base and technical de-risking improved, but project still pre-revenue.
The updated mineral resource estimate identifies 28.3M tons of measured plus indicated boric acid and 328K tons of lithium carbonate equivalent, representing increases of
Operationally, the company advanced its small-scale facility, shipping boric acid for specialty glass trials in Taiwan and for boron carbide production, demonstrating product quality and process capability. Depreciation rose as new wellfield sidetrack costs were capitalized and well lives shortened to 3.75 years, reflecting refined development plans.
Boron’s addition to the 2025 U.S. Critical Minerals List and an omnibus patent filing for closed-loop in-situ boron mining support the strategic positioning of the project. Still, with no operating revenue and continued operating losses, the ultimate value of the enlarged resource depends on securing substantial project financing and moving to commercial scale.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of February 13, 2026, the registrant had
Table of Contents
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Page
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PART I—Financial Information |
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Item 1. |
Financial Statements (Unaudited) |
4 |
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Condensed Consolidated Balance Sheets |
4 |
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Condensed Consolidated Statements of Operations |
5 |
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Condensed Consolidated Statements of Cash Flows |
6 |
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Condensed Consolidated Statements of Equity |
7 |
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Notes to the Unaudited Condensed Consolidated Financial Statements |
8 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
30 |
Item 4. |
Controls and Procedures |
30 |
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Part II—Other Information |
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Item 1. |
Legal Proceedings |
32 |
Item 1A. |
Risk Factors |
32 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
32 |
Item 3. |
Defaults Upon Senior Securities |
32 |
Item 4. |
Mine Safety Disclosures |
32 |
Item 5. |
Other Information |
32 |
Item 6. |
Exhibits |
33 |
Signatures |
34 |
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2
References herein to the “Company,” “we,” “our,” “us,” and "5E" refer to 5E Advanced Materials, Inc., and its subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2025, and any documents incorporated by reference herein (this “Quarterly Report on Form 10-Q) include statements that express our and our subsidiaries’ opinions, expectations, beliefs, plans, goals objectives, assumptions or projections regarding future events or future financial performance and results, financial condition, business strategy, including certain projections, milestones, targets, business trends and other statements that are not historical facts. These statements constitute forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “forecasts,” “budgets,” “targets,” “aims,” “intends,” “plans,” “may,” “will,” “should,” “could,” “would,” “will be,” “will continue,” “will likely result” and similar expressions, and in each case including their negative or other variations of comparable terminology. However, not all forward-looking statements contain these identifying words. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including without limitation, statements regarding our results of operations and financial position, our purchase order commitments, business strategy, plans and prospects, our ability to secure additional financing and continue as a going concern, our Preliminary Feasibility Study (as defined herein) and recently updated mineral resource estimate, statements regarding the success and enforceability of the Company's patent applications and other intellectual property protections, development plans, production capabilities, commercialization strategy, offtake discussions, customer qualification processes and success thereof, market demand for boron and lithium, the potential applications of the Company’s products across energy, defense, and industrial markets, ability to access and secure any government-based financing, our vision of becoming a leading global supplier of borates and advanced boron materials and our ability to continue to operate the small-scale facility (the “SSF”) and develop the Project (each as defined herein), production forecasts and capital expenditure estimates. Forward-looking statements reflect management’s expectations regarding our future growth, results of operations, operational and financial performance and business prospects and opportunities. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting our business.
The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions, and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including risks described under the heading “Part I. Item IA. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, any of which could cause the Company’s actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.
Other sections of this Quarterly Report on Form 10-Q include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment.
You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations. You should read this Quarterly Report on Form 10-Q and the documents that we reference or incorporate by reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance, and achievements may be materially different from what we expect. You are advised, however, to consult any additional disclosures we make in our reports to the U.S. Securities and Exchange Commission (the “SEC”). All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in our latest Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and this Quarterly Report on Form 10-Q.
3
Part I—Financial Information
Item 1. Financial Statements.
5E ADVANCED MATERIALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
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December 31, |
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June 30, |
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2025 |
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2025 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Prepaid expenses |
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Deferred offering costs and other current assets |
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Total current assets |
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Mineral rights and properties, net |
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Construction in progress |
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Properties, plant and equipment, net |
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Reclamation bond deposits |
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Right of use asset |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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Lease liabilities, current |
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Total current liabilities |
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Long-term debt, net |
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Lease liabilities |
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Asset retirement obligations |
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Total liabilities |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings (accumulated deficit) |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
5E ADVANCED MATERIALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
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Three months ended December 31, |
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Six months ended December 31, |
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2025 |
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2024 |
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2025 |
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2024 |
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Operating expenses: |
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Project expenses |
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$ |
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$ |
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$ |
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$ |
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Small-scale facility operating costs |
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General and administrative |
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Depreciation and amortization expense |
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Total operating expenses |
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Income (loss) from operations |
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( |
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( |
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( |
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( |
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Non-operating income (expense): |
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Interest income |
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Other income |
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Derivative gain (loss) |
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( |
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Interest expense |
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( |
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( |
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( |
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( |
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Other expense |
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( |
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( |
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( |
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Total non-operating income (expense) |
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( |
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( |
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Income (loss) before income taxes |
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( |
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( |
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( |
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( |
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Income tax expense (benefit) |
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Net income (loss) |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net income (loss) per common share — basic and diluted |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average common shares outstanding — basic and diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
5E ADVANCED MATERIALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Six months ended December 31, |
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2025 |
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2024 |
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Cash Flows From Operating Activities: |
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Net income (loss) |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Depreciation and amortization |
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Share-based compensation |
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Common stock issued for services |
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Gain on convertible note derivatives |
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Accretion of asset retirement obligations |
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Amortization of debt issuance costs and discount — convertible notes |
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Amortization of right of use asset |
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Interest earned on reclamation bond |
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( |
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( |
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Change in: |
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Prepaid expenses and other current assets |
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Accounts payable and accrued liabilities |
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Net cash used in operating activities |
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( |
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Cash Flows From Investing Activities: |
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Construction in progress |
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( |
) |
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( |
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Properties, plant and equipment additions |
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( |
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( |
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Properties, plant and equipment disposals |
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Refund on previously acquired equipment |
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Net cash used in investing activities |
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( |
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( |
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Cash Flows From Financing Activities: |
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Proceeds from issuance of common stock and warrants, net of issuance costs |
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Proceeds from warrant exercises |
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Proceeds from issuance of convertible notes |
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Debt issuance costs |
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( |
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Payments on note payable |
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( |
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( |
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Taxes paid for equity award vesting |
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( |
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( |
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Net cash provided by financing activities |
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Net increase (decrease) in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental Disclosure of Cash Flow Information: |
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Cash paid for interest |
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$ |
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$ |
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Noncash Investing and Financing Activities: |
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Construction in progress transferred to properties, plant and equipment (Note 4) |
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$ |
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$ |
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Accounts payable and accrued liabilities change related to capital additions |
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( |
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( |
) |
Accounts payable and accrued liabilities change related to debt issuance costs |
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( |
) |
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Accounts payable and accrued liabilities change related to equity issuance costs |
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( |
) |
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Interest paid through issuance of additional convertible notes (Note 7) |
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Fair value of common stock issued in exchange for services |
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Increase in asset retirement costs |
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$ |
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$ |
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Convertible note derivatives liability reclassification to equity (Note 10) |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
5E ADVANCED MATERIALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
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Additional |
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Total |
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Common Stock |
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Paid-in |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock, net of offering costs |
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— |
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Issuance of warrants, net of offering costs |
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— |
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— |
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— |
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Vesting of restricted share units |
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— |
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( |
) |
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— |
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( |
) |
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Share-based compensation expense |
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— |
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— |
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— |
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Net income (loss) |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at September 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Vesting of restricted share units |
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— |
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— |
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( |
) |
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— |
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( |
) |
Share-based compensation expense |
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— |
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— |
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— |
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Convertible note derivative liability reclassification |
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— |
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— |
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— |
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Net income (loss) |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at December 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Additional |
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Total |
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Common Stock |
|
|
Paid-in |
|
|
Accumulated |
|
|
Stockholders’ |
|
||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
|||||
Balance at June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock, net of offering costs |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Vesting of restricted share units |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Common stock issued for services |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Share based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock, warrant exercise |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Share based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
5E ADVANCED MATERIALS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Financial Statement Presentation
These unaudited condensed consolidated financial statements (herein after referred to as “financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and should be read in the context of the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the U.S. Securities and Exchange Commission on September 29, 2025. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position as of December 31, 2025, results of operations for the three and six months ended December 31, 2025 and 2024 and cash flows for the six months ended December 31, 2025 and 2024 have been included. Operating results for the three and six months ended December 31, 2025 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2026.
Basis of Consolidation
The unaudited condensed consolidated financial statements comprise the financial statements of 5E Advanced Materials, Inc. and its wholly owned subsidiaries, American Pacific Borates Pty Ltd. and 5E Boron Americas, LLC (formerly Fort Cady (California) Corporation, (“5EBA”)), (collectively, the “Company”). The Company holds
Reverse Stock Split
On February 14, 2025 (the “Effective Time”), the Company completed a 1-for-
Debt Exchange
During March 2025, the Company completed a debt restructuring transaction with BEP Special Situations IV LLC (“Bluescape”), Meridian Investments Corporation (“Meridian”) and Ascend Global Investment Fund SPC (“Ascend”), for and on behalf of Strategic SP (together with Meridian, “Ascend”) in connection with certain restructuring and recapitalization transactions with respect to the Company’s capital structure (collectively the “Exchange Transaction”), including the Company’s Convertible Notes (as defined in Note 7-Debt) issued pursuant to the Amended and Restated Note Purchase Agreement (as defined in Note 7-Debt). The Exchange Transaction resulted in:
8
Going Concern
Management evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that these condensed consolidated financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company's ability to continue as a going concern. The mitigating effect of management's plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the condensed consolidated financial statements are issued. In performing this analysis, management concluded there continues to exist substantial doubt regarding the Company’s ability to continue as a going concern.
As a pre-revenue development stage company, the Company is dependent on debt and equity financing transactions to fund its continued development and operational activities. While the Company has continued to execute a number of financing transactions, as described in Note 10-Equity and Note 15-Subsequent Events, each of which have improved the Company’s cash position, and while the Company continues to operate under a business plan that includes reductions in certain spending, management anticipates the need for additional financing to maintain its operations and carry out its business objectives. The receipt of potential funding cannot be considered probable at this time because these plans are not entirely within management's control as of the date of these condensed consolidated financial statements. Therefore, there exists substantial doubt regarding the Company's ability to continue as a going concern. Even if additional financing is successfully consummated, available liquidity may still not be sufficient to eliminate the aforementioned substantial doubt regarding the Company's ability to continue as a going concern. If the Company is unable to raise additional capital or generate cash flows necessary to fund its operations and business objectives, the Company will need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect its business, financial condition, results of operations, and prospects.
These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.
Financial Instruments
The Company's financial instruments consist of cash and cash equivalents, reclamation bond deposits, vehicle notes, accounts payable and accrued liabilities, and lease liabilities. Management believes the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair values of these instruments, due to their short-term nature, approximate their carrying value.
Concentrations of Risk
The Company maintains cash deposits at several major banks, which at times may exceed amounts covered by insurance provided by the United States Federal Deposit Insurance Corporation. Management monitors the financial health of the banks and believes the Company is not exposed to any significant credit risk, and the Company has not experienced any such losses.
The Company’s operations are predominately focused on the Project, which results in the Company being dependent upon a single mining operation in a single geographic region in the western United States in California. The geographic concentration of the Company’s operations may disproportionately expose it to disruptions if the region experiences severe weather, transportation capacity constraints, constraints on the availability of required equipment, facilities, personnel or services, significant governmental regulation or natural disasters.
Risks and Uncertainties
The Company is subject to a number of risks that its management believes are similar to those of other companies of similar size and industry, including but not limited to, the success of its exploration activities, need for significant additional capital (or financing) to fund operating losses, competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, tariff and trade policy impacts on operating and construction costs, and dependence on key individuals. The Company currently generates no revenue from operations and will need to rely on raising additional capital or financing to sustain current and planned operations in the long term. There can be no assurance that management will be successful in its efforts to raise
9
additional capital on terms favorable to the Company, or at all, or in management's ability to adequately reduce expenses, if necessary, to maintain sufficient liquidity or capital resources. Refer to the Going Concern discussion above for additional details.
Segment Information
The Company has evaluated how it is organized and managed and has identified only one reportable business segment, which is the development of the Project. There has been no change in the determination of the Company’s segment information in the current reporting period. All of the Company’s operations and assets are located in the United States.
Reclassifications
Certain reclassifications have been made to prior reported amounts in order to conform to the current period’s presentation. These reclassifications did not impact our previously reported net income (loss), stockholders’ equity or cash flows.
Recently Issued and Adopted Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s consolidated financial statements upon adoption.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to improve income tax disclosures primarily through enhanced disclosure of income tax rate reconciliation items, and disaggregation of income (loss) from continuing operations, income tax expense (benefit) and income taxes paid, net disclosures by federal, state, and foreign jurisdictions, among others. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, and early adoption is permitted. The Company plans to adopt ASU 2023-09 effective for its fiscal year ending June 30, 2026.
In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disaggregation of certain expenses in the notes of the financial statements, to provide enhanced transparency into the expense captions presented on the face of the income statement. In January 2025, the FASB issued Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective dates of ASU 2024-03. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact that ASU 2024-03 will have on its related disclosures, including the adoption date and transition method.
2. Mineral Rights and Properties, Net
Mineral rights and properties, net consisted of the following at the end of each period presented.
|
|
December 31, |
|
|
June 30, |
|
||
|
|
2025 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Mineral properties |
|
$ |
|
|
$ |
|
||
Hydrology wells |
|
|
|
|
|
|
||
Asset retirement cost, net of accumulated amortization of |
|
|
|
|
|
|
||
Mineral rights and properties, net |
|
$ |
|
|
$ |
|
||
10
3. Construction in Progress
During the six months ended December 31, 2025, the Company drilled horizontal sidetracks from two of its existing injection and recovery wells and therefore transferred approximately $
|
|
December 31, |
|
|
June 30, |
|
||
|
|
2025 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Engineering services and vendor testing |
|
$ |
|
|
$ |
|
||
Injection and recovery wells |
|
|
|
|
|
|
||
Buildings |
|
|
|
|
|
|
||
Capitalized interest |
|
|
|
|
|
|
||
Total construction in progress |
|
$ |
|
|
$ |
|
||
4. Properties, Plant and Equipment, Net
During the six months ended December 31, 2025, the Company drilled horizontal sidetracks from two of its existing injection and recovery wells and therefore transferred approximately $
|
|
Depreciation |
|
Estimated useful |
|
December 31, |
|
|
June 30, |
|
||
Asset category |
|
method |
|
life (in years) |
|
2025 |
|
|
2025 |
|
||
|
|
|
|
|
|
(in thousands) |
|
|||||
Land |
|
|
— |
|
$ |
|
|
$ |
|
|||
Small-scale facility — plant |
|
|
|
|
|
|
|
|
||||
Injection and recovery wells |
|
|
|
|
|
|
|
|
||||
Buildings |
|
|
|
|
|
|
|
|
||||
Vehicles |
|
|
|
|
|
|
|
|
||||
Other plant and equipment |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Properties, plant and equipment, net |
|
|
|
|
|
$ |
|
|
$ |
|
||
The Company recognized depreciation expense of approximately $
The Company recognized depreciation expense of approximately $
5. Asset Retirement Obligations
The change in the Company’s asset retirement obligations during the period presented and the balance of its accrued reclamation liabilities at the end of the period are set forth below.
|
|
Six months ended |
|
|
|
|
December 31, 2025 |
|
|
|
|
(in thousands) |
|
|
Asset retirement obligation — beginning of period |
|
$ |
|
|
Accretion |
|
|
|
|
Asset retirement obligation — end of period |
|
$ |
|
|
11
6. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following at the end of each period presented.
|
|
December 31, |
|
|
June 30, |
|
||
|
|
2025 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Accounts payable - trade(1) |
|
$ |
|
|
$ |
|
||
Accrued expenses |
|
|
|
|
|
|
||
Accrued capital expenditures |
|
|
|
|
|
|
||
Accrued payroll |
|
|
|
|
|
|
||
Income taxes payable - federal |
|
|
|
|
|
|
||
Current portion of debt |
|
|
|
|
|
|
||
Accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
||
7. Debt
Long Term Debt
Long-term debt consisted of the following at the end of each period presented.
|
|
December 31, |
|
|
June 30, |
|
||
|
|
2025 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Vehicle notes payable |
|
$ |
|
|
$ |
|
||
Total debt |
|
|
|
|
|
|
||
Current portion of debt |
|
|
|
|
|
|
||
Long-term debt |
|
$ |
|
|
$ |
|
||
Interest expense consisted of the following for each period presented.
|
|
Three months ended December 31, |
|
|
Six months ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Convertible notes interest |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Vehicle notes interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of debt issuance costs and |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other interest |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: amount capitalized to construction in progress |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net of amounts capitalized |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effective interest rate — convertible notes(1) |
|
N/A |
|
|
|
% |
|
N/A |
|
|
|
% |
||||
Convertible Notes - Background
In August 2022, the Company entered into a $
12
Notes”). Interest on the Convertible Notes was payable
On March 5, 2025, the Company completed the Exchange, pursuant to which all outstanding Convertible Notes were exchanged for an aggregate
Convertible Notes - Activity
On August 15, 2024, the Company elected to issue additional notes as payment for approximately $
On September 16, 2024, the Company entered into a third amendment to the Amended and Restated Note Purchase Agreement and agreed, among other things, to issue and sell $
In connection with its entry into the September 2024 Notes, the Company incurred approximately $
Convertible Notes - Conversion Terms
The Amended and Restated Note Purchase Agreement contained provisions that allowed for the conversion of the Convertible Notes, including interest paid-in-kind, into shares of the Company’s Common Stock in various circumstances at both the Company and holder’s election at various conversion rates. However, during the period over which the Convertible Notes were outstanding, and prior to the Exchange, no such conversion occurred.
The conversion rate applicable to the Convertible Notes issued in June 2024 (the “June 2024 Notes”) and the September 2024 Notes was subject to adjustment if, after the issuance date of such notes and on or prior to December 31, 2024, the Company sold Common Stock or any other equity-linked securities in one or more transactions at an effective price per share that was less than the respective conversion price then in effect, subject to certain exemptions (a “Degressive Issuance”). In the event of a Degressive Issuance, the conversion rate applicable to the respective Convertible Notes was subject to adjustment based on the weighted average issuance price of the securities sold in such Degressive Issuance, as set forth in the Amended and Restated Note Purchase Agreement. As part of the August 2024 Equity Offering (as further described and defined in Note 10-Equity), a Degressive Issuance provision applicable to the June 2024 Notes resulted in an adjustment to the conversion rate applicable to the June 2024 Notes. A Degressive Issuance did not occur with respect to the September 2024 Notes prior to the expiration of such feature on December 31, 2024.
Convertible Notes - Derivatives
The Degressive Issuance feature associated with the June 2024 Notes and September 2024 Notes were deemed to be embedded derivatives requiring bifurcation and separate accounting as stand-alone derivative instruments (the “June 2024 Convertible Note Derivative” and “September 2024 Convertible Note Derivative,” respectively, and together, the “Convertible Note Derivatives”) through December 31, 2024. Refer to Note 8-Convertible Note Derivatives for additional details regarding the accounting for the Convertible Note Derivatives.
The September 2024 Notes were initially recorded at their face amount of $
8. Convertible Note Derivatives
The June 2024 Convertible Note Derivative and September 2024 Convertible Note Derivative, each which relate to the June 2024 Notes and September 2024 Notes, respectively, described in Note 7-Debt, were valued upon initial recognition and at each
13
reporting period at fair value using a with-and-without methodology utilizing a binomial lattice model (a model which utilizes Level 3 fair value inputs).
The valuation model for the Convertible Note Derivatives required the input of subjective assumptions including expected share price volatility, risk-free interest rate and debt rate. Changes in the input assumptions as well as the Company's underlying share price could have materially affected the fair value estimates.
Changes in the fair value between periods were recognized in Derivative gain (loss) in the statement of operations but had no related impact on the Company’s cash position or cash flows. The provision that resulted in separate accounting for the June 2024 Convertible Note Derivative began June 11, 2024 in connection with the issuance of the June 2024 Notes, and on September 16, 2024 for the September 2024 Convertible Note Derivative in connection with the issuance of the September 2024 Notes. Each of these provisions expired on December 31, 2024, and accordingly, the Convertible Note Derivatives were derecognized, and the remaining fair values were transferred to additional paid-in capital on such date. Refer to Note 10-Equity for additional information. There were no other derivative instruments outstanding for any period after December 31, 2024.
The components of changes to the fair value of the Convertible Note Derivatives for the period presented are summarized below.
|
|
Derivative |
|
|
|
|
(Asset)/Liability |
|
|
|
|
(in thousands) |
|
|
Convertible note derivatives (asset) liability — June 30, 2024 |
|
$ |
|
|
Additions, at fair value, September 16, 2024 |
|
|
|
|
Fair value adjustments (gain) loss, net |
|
|
( |
) |
Reclassified to additional paid-in capital, at fair value, December 31, 2024 |
|
|
( |
) |
Convertible note derivatives (asset) liability — December 31, 2024 |
|
$ |
|
|
9. Financial Instruments and Fair Value Measurements
At December 31, 2025, cash equivalents, trade and other payables, as well as vehicle notes approximated their fair value due to their short-term nature. The Company’s financial instruments also consist of environmental reclamation bonds which are invested in certificates of deposit and money market funds which are classified as Level 1. The Convertible Notes and Convertible Note Derivatives were classified as Level 2 and Level 3, respectively, while outstanding. The reconciliation of changes in the fair value of the Convertible Note Derivatives for the period outstanding can be found in Note 8-Convertible Note Derivatives.
10. Equity
The Company is authorized to issue up to
August 2024 Equity Offering
On August 27, 2024, the Company completed an offering (the “August 2024 Equity Offering”) of (i)
Convertible Note Derivative Reclassification
On December 31, 2024, the provision that resulted in separate accounting for the Convertible Note Derivatives expired. Accordingly, the remaining $
14
and transferred to additional paid-in capital on such date. Refer to Note 7-Debt and Note 8-Convertible Note Derivatives for additional information.
Shares Issued for Services
On July 15, 2025, the Company issued a total of
August 2025 Equity Offering
On August 21, 2025, the Company entered into an underwriting agreement to issue and sell an aggregate of
December 2025 Warrant Exercise
In connection with the Exchange Transaction, on March 13, 2025, and as further described in Note 1-Basis of Financial Statement Presentation, the Company issued Restructuring Warrants to purchase up to an aggregate of
On December 4, 2025, the Company entered into amendments to the Restructuring Warrants with each of Bluescape, Ascend and Meridian (the “Warrant Amendments”). The Warrant Amendments permitted each holder to exercise its Restructuring Warrants on a cashless basis after the holder exercised at least
On December 4, 2025, each of Bluescape, Ascend and Meridian exercised their respective Restructuring Warrants in full (
Warrant Terms
The Series A Warrants and the Series B Warrants became exercisable on February 27, 2025. The Series A Warrants will expire on
The 2024 Warrants and previously outstanding Restructuring Warrants (collectively, the “Warrants”) contain standard adjustments to the exercise price including for stock splits, stock dividends, rights offerings and pro rata distributions. The Warrants also include certain rights upon the occurrence of a “fundamental transaction” (as described in the respective Warrant), including the right of the holder thereof to receive from the Company or a successor entity the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of Common Stock in such fundamental transaction in the amount of the Black Scholes value (as described in the respective Warrant) of the unexercised portion of the Warrant on the date of the consummation of such fundamental transaction. The Warrants include cashless exercise rights to the extent the resale of the shares of Common Stock underlying the Warrants is not registered under the Securities Act.
Vesting of Equity Awards
During the three months ended December 31, 2025 and 2024, the Company issued
15
Company issued approximately
2024 Equity Distribution Agreement
On March 28, 2024, the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Canaccord Genuity LLC and D.A. Davidson & Co. (the “Agents”) pursuant to which the Company may offer and sell up to $
As a result of the August 2024 Equity Offering, the Company was precluded from utilizing the ATM Program for one year following the closing of the offering, and as a result approximately $
11. Share Based Compensation
Share based compensation expense is included in general and administrative expense and represents costs associated with restricted share unit (“RSU”) and performance share unit (“PSU”) activity and options granted to directors, employees, and consultants of the Company. Share based compensation expense consisted of the following for the periods presented.
|
|
Three months ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Share-based compensation expense — service based |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ABR Employee share option plan |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2022 Equity Compensation Plan — Options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2022 Equity Compensation Plan — PSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2022 Equity Compensation Plan — RSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total share-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of December 31, 2025, the Company had approximately $
Stock Options
Option grants are made under the 2022 Equity Compensation Plan and vest ratably over the vesting period, which is generally
|
|
Six months ended December 31, |
|
|
2024 |
Exercise price |
|
$ |
Share price |
|
$ |
Volatility |
|
|
Expected term in years |
|
|
Risk-free interest rate |
|
|
Dividend rate |
|
16
The following table summarizes stock option activity for each of the periods presented.
|
|
Six months ended December 31, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
|
|
Number of Options |
|
|
Weighted Average Exercise Price |
|
|
Number of Options |
|
|
Weighted Average Exercise Price |
|
||||
|
|
(In thousands, except per share data) |
|
|||||||||||||
Outstanding at beginning of the period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expired/forfeited |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Outstanding at end of the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested at the end of the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unvested at the end of the period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The weighted average remaining life of vested options as of December 31, 2025 and 2024, was approximately
As of December 31, 2025, there was approximately $
The following table summarizes the activity for unvested options for each of the periods presented.
|
|
Six months ended December 31, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
|
|
Number of Options |
|
|
Weighted Average Grant Date Fair Value per share |
|
|
Number of Options |
|
|
Weighted Average Grant Date Fair Value per share |
|
||||
|
|
(In thousands, except per share data) |
|
|||||||||||||
Unvested at beginning of the period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Unvested at end of the period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
As of December 31, 2025 and 2024, all outstanding stock options and vested stock options had
17
Full Value Awards (Restricted Share Units and Performance Share Units)
The following table summarizes RSU and PSU activity for each of the periods presented.
|
|
Serviced-Based Shares |
|
|
Weighted Average Grant Date Fair Value per Share |
|
|
Performance- Based Shares |
|
|
Weighted Average Grant Date Fair Value per Unit |
|
|
Total Shares |
|
|||||
|
|
(In thousands, except per share data) |
|
|||||||||||||||||
Non-vested shares/units |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Vested |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Non-vested shares/units |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Serviced-Based Shares |
|
|
Weighted Average Grant Date Fair Value per Share |
|
|
Performance- Based Shares |
|
|
Weighted Average Grant Date Fair Value per Unit |
|
|
Total Shares |
|
|||||
|
|
(In thousands, except per share data) |
|
|||||||||||||||||
Non-vested shares/units |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|||||
Granted |
|
|
|
|
|
|
|
|
|
(1) |
|
|
|
|
|
|||||
Vested |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Forfeited |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Non-vested shares/units |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|||||
(1) |
During the three and six months ended December 31, 2024, approximately |
12. Earnings (Loss) Per Common Share
Basic loss per share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted loss per share includes certain adjustments to basic loss per share for income and to common shares outstanding that could occur if RSUs, PSUs, stock options and convertible securities such as the Convertible Notes and Warrants were exercised or converted into common stock. Diluted loss per share equals basic loss per share for the three and six months ended December 31, 2025 and 2024, as the effect of including dilutive securities in the calculation would be antidilutive.
For the three and six months ended December 31, 2025 and 2024, the following effects are excluded from the computation of dilutive loss per share as such effects would have an anti-dilutive effect.
|
|
Three months ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Interest expense on convertible notes, net of amounts capitalized |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Derivative gain (loss) — convertible note derivatives |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Additional shares assuming conversion of convertible notes(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Additional shares assuming exercise of warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options and unvested restricted stock units and |
|
|
|
|
|
|
|
|
|
|
|
|
||||
18
Subsequent Equity Issuance - February 2026
As discussed in Note 15–Subsequent Events, subsequent to December 31, 2025, the Company issued an aggregate of
13. Commitments and Contingencies
Purchase Obligations
As of December 31, 2025, the Company had purchase order commitments of approximately $
Litigation
On July 17, 2023, the Company filed a complaint (the “Complaint”) against a previous construction contractor in the United States District Court for the Central District of California, Eastern Division, alleging, among other things, numerous breaches by the contractor of its contractual obligations to 5EBA under the Procurement and Construction Contract, effective April 26, 2022, by and between 5EBA and the contractor, relating to the construction of the SSF in California (the “Contract”). On August 10, 2023, the contractor filed an answer to the Complaint as well as a counterclaim for, among other things, alleged breaches by 5EBA of its contractual obligations to the contractor under the Contract and has requested relief in the approximate amount of $
14. Related Party Transactions
As of December 31, 2025, Ascend and Bluescape beneficially owned approximately
As described in Note 10-Equity, on December 4, 2025, the Company entered into the Warrant Amendments with Bluescape, Ascend and Meridian, and each exercised all of their outstanding Restructuring Warrants.
As described in Note 15-Subsequent Events, on January 7, 2026, the Company issued warrants to purchase up to $
As described in Note 15-Subsequent Events, on February 2, 2026, the Company completed the February 2026 Equity Offering (as defined in Note 15-Subsequent Events). As part of the February 2026 Equity Offering, Bluescape purchased
15. Subsequent Events
EXIM Warrant Issuance
During November 2025, the Company formally submitted an application to the Export-Import Bank of the United States (“EXIM”) for a $
19
services undertaken prior to the commencement of the implementation phase of a physical project, for projects that are anticipated to generate additional exports of U.S. goods and services. The Company believes the Project and the remaining costs associated with the engineering work needed qualifies for a loan pursuant to the EMP program.
On December 8, 2025, at the Company’s 2025 annual meeting of stockholders, the Company’s stockholders approved the Company’s entry into an agreement (the “Letter Agreement”) to issue up to
On January 7, 2026, the Company and the Guarantors entered into the Letter Agreement, pursuant to which the Company issued the EXIM Warrants. The terms of the EXIM Warrants are substantially identical to the terms of the Restructuring Warrants, except:
Consistent with the terms of the Restructuring Warrants, the EXIM Warrants contain customary adjustments in the event of any stock split, stock dividend, stock combination, recapitalization, or similar transaction occurring after the issuance date. As of the date these financial statements have been issued, the EXIM Loan has not been awarded to the Company, and the Company is still evaluating the accounting method for the EXIM Warrants.
February 2026 Equity Offering
On February 2, 2026, the Company completed the issuance and sale of an aggregate of
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) summarizes the significant factors affecting the operating results, financial condition, liquidity and capital resources, and cash flows of our Company for the three and six months ended December 31, 2025 and 2024. This MD&A should be read in conjunction with, and is qualified in its entirety by, the unaudited condensed consolidated financial statements, the accompanying notes thereto and other financial information included in this Quarterly Report on Form 10-Q, and the consolidated financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on September 29, 2025 (the “Annual Report”). Except for historical information, this discussion and analysis contains various forward looking statements that involve risks, uncertainties and assumptions and other important factors, which include, but are not limited to, the risks described in our Annual Report filed with the SEC, any of which could cause the Company’s actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made. Additionally, you should refer to the “Cautionary Note Regarding Forward-Looking Statements.” References within this MD&A to the “Company,” “we,” “our,” and “us,” refer to 5E Advanced Materials, Inc., and its subsidiaries.
Overview
5E Advanced Materials, Inc. is a development stage company focused on becoming a vertically integrated global leader and supplier of refined borates and advanced boron derivative materials whose mission is to enable decarbonization, increase food security, and ensure domestic supply of critical materials. Our business strategy and objectives are to develop capabilities ranging from upstream extraction and product sales of borates, calcium-based co-products, and potentially other byproducts such as lithium carbonate, to downstream advanced boron material processing and development. Our vision is to safely process borates and other industrial minerals through sustainable best practices and a continuous improvement mindset. We hold 100% of the rights through ownership and lode claims filed with the United States Bureau of Land Management (the “BLM”) in the 5E Boron Americas (Fort Cady) Complex (the “Project”) located in southern California through our wholly owned subsidiary 5E Boron Americas LLC (formerly Fort Cady (California) Corporation (“5EBA”)). Our Project is underpinned by boron reserves and a lithium resource, with the borates being contained in a conventional boron mineral known as colemanite. Our facility was designated as Critical Infrastructure by the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency in 2022, and boron was added to the U.S. Department of the Interior’s 2025 Critical Minerals List on November 7, 2025. We currently operate our small-scale facility (the “SSF”) at the Project, which provides data and information necessary for us to ultimately establish a commercial-scale facility (the “Commercial Scale Facility”) at the Project.
We believe the Project represents one of the most compelling domestic critical material projects in the United States as a strategically located operation that targets stable long-term demand, with a defined pathway to production and a low-cost, high margin and profitable financial profile.
Recent Developments
Ferroboron Supply Chain Collaboration
We have begun to assess a potential domestic supply chain that would utilize boric acid produced from the Project as upstream feedstock in the production of ferroboron, an iron-boron alloy used in specialty steel and as an input in neodymium-iron-boron permanent magnet manufacturing. We have held preliminary discussions with a U.S. magnet producer regarding potential commercial requirements. However, we have not executed any definitive agreements and there can be no assurance that any transaction will result from these discussions. According to the U.S. Geological Survey, the United States currently does not produce ferroboron and relies on imports, and our assessment is focused on whether we can address this market with a domestic product offering. Our evaluation includes engineering pathways, technical requirements, and potential partnership structures, and any decision to proceed would be subject to technical validation and the availability of financing, among other factors.
21
Highlights for the Three Months Ended December 31, 2025
Operational Highlights
Mineral Resource Estimate Update
On November 15, 2025, we received an updated mineral resource estimate for the Project. The updated mineral resource estimate was prepared by Mr. Steven Kerr of Escalante Geological Services, LLC, one of the Qualified Persons with respect to our Preliminary Feasibility Study Technical Report Summary (the “PFS”). The new mineral resource estimate updates the prior estimate dated March 10, 2025, and incorporates mineral resource from additional lode claims we staked and filed with the BLM and recorded in San Bernardino County in August 2025.
The updated mineral resource estimate identified 61.9 million short tons of measured ore, containing 9.1 million short tons of in-situ boric acid (H3BO3), with an average grade of 8.34% (B2O3), and 138.6 million short tons of indicated ore, containing 19.2 million short tons of in-situ boric acid (H3BO3), with an average grade of 7.97% (B2O3). On a combined basis, measured plus indicated mineral resource represent 28.3 million tons of boric acid, with an average grade of 8.09% (B2O3), which represents an increase of 10.8 million tons, or 61%, as compared to the prior resource estimate. The updated mineral resource estimate also identified an aggregate measured plus indicated mineral resource estimate of 328 thousand tons of lithium carbonate equivalent (“LCE”), with an average grade of 0.17% LCE, an increase of 115 thousand tons, or 54%, as compared to the prior resource estimate. Each of these increases relate exclusively to the addition of mineral resource that resulted from the aforementioned additional lode claims. For more information, see our Current Report on Form 8-K filed on November 19, 2025.
Boric Acid Shipments for Specialty Glass Trial and Boron Carbide
During August 2025, we packaged boric acid at our Project location and shipped an ocean freight container of finished product where it completed a 20-day international transit to Taiwan to a global specialty glass manufacturing facility. Upon receipt, our product passed a handling trial and met all required specifications. During October 2025, we shipped an additional 20 tons of boric acid produced from our SSF to a potential customer for a large-scale specialty glass trial, and during December of 2025 we were notified that the boric acid had been dispatched into the glass furnace. We also shipped 1,000 pounds of boric acid for domestic boron carbide (B4C) production. These shipments mark important milestones as the Company advances toward commercial production. We believe these shipments confirm the quality of our product and the reliability of our process technology, reinforcing our confidence in our near-term production path and our mission to establish a secure, U.S. supply of boron for industries that bolster national security and drive economic export growth.
Boron Criticality
On November 7, 2025, the United States Department of the Interior released its 2025 list of critical materials (the “2025 U.S. Critical Minerals List”), formally adding boron as a critical mineral vital to the U.S. economy and national security. The U.S. Geological Survey compiled the list, which identifies 60 minerals deemed essential to national security, economic growth, and supply chain stability. Boron's addition highlights its prominent role in energy technologies, advanced materials, defense systems, and critical infrastructure. We believe boron's inclusion on the 2025 U.S. Critical Minerals List enhances our eligibility to engage with U.S. government funding programs, including programs administered by the U.S. Department of War Office of Strategic Capital and the U.S. International Development Finance Corporation, that support the development, processing, and refining of critical minerals. The One Big Beautiful Bill Act of 2025 authorized $5 billion for investments in critical minerals supply chains made pursuant to the Industrial Base Fund and up to $100 billion in principal amounts of direct loans and guaranteed loans for critical minerals and related industries and projects. We currently have a $285 million letter of interest for a potential project finance debt guarantee from the Export-Import Bank of the United States (“EXIM”) as part of the Make More in America Initiative (“MMIA”).
Closed-Loop In-situ Boron Mining Patent Application
During December of 2025, we filed an omnibus patent application with the U.S. Patent and Trademark Office covering our proprietary, closed-loop in-situ leach (“ISL”) borate mining and production process. The application includes 167 claims and is intended to protect end-to-end process steps from injection and recovery through processing, reinjection, and impurity management, including production pathways for boric acid, gypsum, and calcium chloride. We expect to submit additional standalone patent applications as we continue building our broader intellectual property portfolio.
22
Financing Highlights
August 2024 Equity Offering
On August 27, 2024, we completed an offering (the “August 2024 Equity Offering”) of (i) 231,884 shares (the “Shares”) of our common stock, par value $0.01 per share (“Common Stock”), (ii) Series A warrants to purchase up to an aggregate of up to 231,885 shares of Common Stock (the “Series A Warrants”) and (iii) Series B warrants to purchase an aggregate of 231,885 shares of Common Stock (the “Series B Warrants”, and collectively with the Series A Warrants, the “2024 Warrants”). The Shares and 2024 Warrants were offered and sold on a combined basis for consideration equating to $17.25 for one Share and two 2024 Warrants. The exercise price for each of the 2024 Warrants is $18.3563 per share. The net proceeds to us for the August 2024 Equity Offering were approximately $3.0 million after deducting placement agent fees and other offering expenses.
September 2024 Notes Offering
On September 16, 2024, we entered into a third amendment (“Amendment No. 3”) to a January 2024 amended and restated note purchase agreement (as described in Note 7-Debt, of Part I, Item 1 of this Quarterly Report, the “January 2024 Amended and Restated Note Purchase Agreement”) and agreed, among other things, to (i) issue and sell new senior secured convertible notes in substantially the same form and under the same terms as convertible notes issued in June of 2024 (as described in Note 7–Debt of Part I, Item 1 of this Quarterly Report, the “June 2024 Notes”), in an aggregate principal amount of $6.0 million (the “September 2024 Notes”) to Bluescape Special Situations IV (“Bluescape”), Meridian Investments Corporation (“Meridian”) and Ascend Global Investment Fund SPC for and on behalf of Strategic SP (together with Meridian, “Ascend”), and (ii) amend and restate the January 2024 Amended and Restated Note Purchase Agreement in the form attached as Annex A to Amendment No. 3 (the “September 2024 Amended and Restated Note Purchase Agreement”). The net proceeds to us for the September 2024 Notes were approximately $5.5 million after deducting issuance costs and fees.
January 2025 Notes Offering
On January 14, 2025, we entered into a fourth amendment (“Amendment No. 4”) to the January 2024 Amended and Restated Note Purchase Agreement and agreed, among other things, to (i) issue and sell new senior secured convertible notes in substantially the same form and under the same terms as the September 2024 Notes, in an aggregate principal amount of $5.0 million (the “January 2025 Notes” and, together with the August 2022 Notes, the June 2024 Notes and the September 2024 Notes, the “Convertible Notes”) to Bluescape and Ascend, and (ii) amend and restate the January 2024 Amended and Restated Note Purchase Agreement in the form attached as Annex A to Amendment No. 4 (as amended, the “Amended and Restated Note Purchase Agreement”). The Amended and Restated Note Purchase Agreement also extended the date to which we were required to comply with a financial covenant to maintain a cash balance of at least $7.5 million from December 31, 2024, to March 31, 2025. The net proceeds to us for the January 2025 Notes were approximately $4.7 million after deducting issuance costs and fees.
Debt Exchange and Related Agreements
During March 2025, we completed a debt restructuring transaction with Bluescape, Meridian and Ascend in connection with certain restructuring and recapitalization transactions with respect to our capital structure (collectively the “Exchange Transaction”), including our Convertible Notes issued pursuant to the Amended and Restated Note Purchase Agreement. The Exchange Transaction resulted in:
23
May 2025 Equity Offering
On May 12, 2025 and May 13, 2025, we entered into subscription agreements to issue and sell an aggregate of 1,984,709 shares of our Common Stock at a price of $3.55 per share (collectively, the “May 2025 Subscription”). In connection with the May 2025 Subscription, we also issued 37,042 shares of our Common Stock as an advisory fee. The May 2025 Subscription closed on May 15, 2025 and resulted in aggregate net proceeds to us of approximately $6.4 million after deducting fees and other offering expenses.
August 2025 Equity Offering
On August 21, 2025, we entered into an underwriting agreement to issue and sell an aggregate of 2,374,481 shares of our Common Stock at a price of $3.50 per share (the “August 2025 Equity Offering”). The August 2025 Offering closed on August 25, 2025, and resulted in aggregate net proceeds of approximately $7.4 million after deducting underwriting discounts and commissions, and other offering expenses.
December 2025 Warrant Amendments and Exercises
On December 4, 2025, we entered into amendments to the Restructuring Warrants with each of Bluescape, Ascend and Meridian (the “Warrant Amendments”). The Warrant Amendments permitted each holder to exercise its Restructuring Warrants on a cashless basis after the holder exercised at least 10% of the shares underlying its Restructuring Warrants for cash. Also on December 4, 2025, each of Bluescape, Ascend and Meridian exercised their respective Restructuring Warrants in full (10% cash exercise and 90% cashless exercise). In connection with the exercise, we issued 1,067,296 shares of our Common Stock and received approximately $2.0 million in cash proceeds (the “2025 Warrant Exercise”).
EXIM Engineering Multiplier Program Application and Warrant Issuance
During November of 2025, we formally submitted an application to EXIM for a $10.0 million funding package (the “EXIM Loan”) through EXIM’s Engineering Multiplier Program (“EMP”). The EMP is a program designed to finance feasibility studies, pre-construction design, engineering, architectural and environmental services undertaken prior to the commencement of the implementation phase of a physical project, for projects that are anticipated to generate additional exports of U.S. goods and services. The Company believes the Project and the remaining costs associated with the engineering work needed prior to a final investment decision qualifies for a loan pursuant to the EMP program. We continue to hold a $285 million letter of interest through EXIM’s MMIA program that has the potential to fund a portion of the anticipated costs for the proposed commercial-scale facility, the EMP application complements this letter of interest by targeting earlier-stage engineering needs. There can be no assurance that the EMP application will be approved or that any financing will be completed on the terms sought or at all.
On December 8, 2025, at our 2025 annual meeting of stockholders, our stockholders approved our entry into an agreement (the “Letter Agreement”) to issue up to 2,816,346 warrants with an exercise price of $3.5507 to purchase up to $10.0 million shares of our Common Stock (the “EXIM Warrants”), to Bluescape and Ascend, or their respective affiliates (the “Guarantors”) in connection with each party providing a guarantee or collateral package (the “Guarantee”) to EXIM as a condition of awarding the EXIM Loan.
On January 7, 2026, we and the Guarantors entered into the Letter Agreement, pursuant to which we issued the EXIM Warrants. The terms of the EXIM Warrants are substantially identical to the terms of the Restructuring Warrants, except;
Consistent with the terms of the Restructuring Warrants, the EXIM Warrants contain customary adjustments in the event of any stock split, stock dividend, stock combination, recapitalization, or similar transaction occurring after the issuance date. As of the date of this Form 10-Q, we have not yet been awarded the EXIM Loan.
24
February 2026 Equity Offering
On February 2, 2026, we completed the issuance and sale of an aggregate of 18,000,000 shares of our Common Stock at a price of $2.00 per share (the “February 2026 Equity Offering”). The February 2026 Equity Offering resulted in aggregate proceeds of $36.0 million before deducting placement agent fees, and other offering expenses paid or payable by us.
Financing Transactions — Liquidity Considerations and Going Concern
As a pre-revenue development stage company, we are dependent on debt and equity financing transactions to fund our continued development and operational activities. While we have continued to execute a number of financing transactions, as described under the heading Financing Highlights above, each of which improved our cash position, we continue to operate under a business plan that includes reductions in certain spending, and we will need additional financing to maintain our operations and carry out our planned business objectives. The receipt of potential funding cannot be considered probable at this time because these plans are not entirely within management’s control as of the date of this Quarterly Report. Therefore, there exists substantial doubt regarding our ability to continue as a going concern. Even if additional financing is successfully consummated, available liquidity may still not be sufficient to eliminate the aforementioned substantial doubt regarding our ability to continue as a going concern. Refer to the “Going Concern” discussion within Note 1-Basis of Financial Statement Presentation of the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report and “Liquidity and Capital Resources” below for more information.
Reverse Stock Split
On February 14, 2025, we effected a 1-for-23 reverse stock split (the “Reverse Stock Split”) of our Common Stock. As such, all references to the number of shares and per share amounts of our Common Stock included in this Quarterly Report on Form 10-Q have been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented.
Results of Operations
The following table summarizes our results of operations for the periods presented.
|
|
Three Months Ended December 31, |
|
|
Variance |
|
|
Six Months Ended December 31, |
|
|
Variance |
|
||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(in thousands) |
|
|
|
|
|
(in thousands) |
|
|
|
|
||||||||||||||||||||
COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Project expenses |
|
$ |
1,801 |
|
|
$ |
1,679 |
|
|
$ |
122 |
|
|
|
7 |
% |
|
$ |
2,957 |
|
|
$ |
3,233 |
|
|
$ |
(276 |
) |
|
|
(9 |
%) |
Small-scale facility operating costs |
|
|
782 |
|
|
|
1,080 |
|
|
|
(298 |
) |
|
|
(28 |
%) |
|
|
1,615 |
|
|
|
2,668 |
|
|
|
(1,053 |
) |
|
|
(39 |
%) |
General and administrative |
|
|
2,945 |
|
|
|
3,280 |
|
|
|
(335 |
) |
|
|
(10 |
%) |
|
|
6,377 |
|
|
|
8,077 |
|
|
|
(1,700 |
) |
|
|
(21 |
%) |
Depreciation and amortization |
|
|
5,377 |
|
|
|
4,992 |
|
|
|
385 |
|
|
|
8 |
% |
|
|
10,691 |
|
|
|
9,962 |
|
|
|
729 |
|
|
|
7 |
% |
Total costs and expenses |
|
|
10,905 |
|
|
|
11,031 |
|
|
|
(126 |
) |
|
|
(1 |
%) |
|
|
21,640 |
|
|
|
23,940 |
|
|
|
(2,300 |
) |
|
|
(10 |
%) |
LOSS FROM OPERATIONS |
|
|
(10,905 |
) |
|
|
(11,031 |
) |
|
|
126 |
|
|
|
(1 |
%) |
|
|
(21,640 |
) |
|
|
(23,940 |
) |
|
|
2,300 |
|
|
|
(10 |
%) |
NON-OPERATING INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
|
26 |
|
|
|
25 |
|
|
|
1 |
|
|
|
4 |
% |
|
|
81 |
|
|
|
48 |
|
|
|
33 |
|
|
|
69 |
% |
Other income |
|
|
— |
|
|
|
4 |
|
|
|
(4 |
) |
|
|
(100 |
%) |
|
|
— |
|
|
|
4 |
|
|
|
(4 |
) |
|
|
(100 |
%) |
Derivative gain (loss) |
|
|
— |
|
|
|
(830 |
) |
|
|
830 |
|
|
|
(100 |
%) |
|
|
— |
|
|
|
1,357 |
|
|
|
(1,357 |
) |
|
|
(100 |
%) |
Interest expense |
|
|
(5 |
) |
|
|
(2,430 |
) |
|
|
2,425 |
|
|
|
(100 |
%) |
|
|
(11 |
) |
|
|
(4,585 |
) |
|
|
4,574 |
|
|
|
(100 |
%) |
Other expense |
|
|
(11 |
) |
|
|
— |
|
|
|
(11 |
) |
|
N/A |
|
|
|
(15 |
) |
|
|
(5 |
) |
|
|
(10 |
) |
|
|
200 |
% |
|
Total non-operating income |
|
|
10 |
|
|
|
(3,231 |
) |
|
|
3,241 |
|
|
|
(100 |
%) |
|
|
55 |
|
|
|
(3,181 |
) |
|
|
3,236 |
|
|
|
(102 |
%) |
Income tax expense (benefit) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
N/A |
|
||
NET INCOME (LOSS) |
|
$ |
(10,895 |
) |
|
$ |
(14,262 |
) |
|
$ |
3,367 |
|
|
|
(24 |
%) |
|
$ |
(21,585 |
) |
|
$ |
(27,121 |
) |
|
$ |
5,536 |
|
|
|
(20 |
%) |
25
Comparison of the three and six months ended December 31, 2025 and 2024
Project expenses
Project expenses include drilling, site preparation, engineering (excluding amounts eligible to be capitalized), testing and sampling, development and testing of our wellfield, hydrology, permits, property taxes, surveys, certain consultants, certain insurance costs, and other expenses associated with further progressing our Project. For the three months ended December 31, 2025, Project expenses increased $122 thousand, or 7%, versus the comparable period in the prior fiscal year. The increase was primarily the result of an increase in development costs associated with our commercial wellfield design and testing ($0.3 million), which was offset to a lesser extent by a decrease in site-related costs ($0.2 million).
For the six months ended December 31, 2025, project expenses decreased $276 thousand, or 9%, versus the comparable period in the prior fiscal year. The decrease was primarily the result of: (i) decreases in site-related costs ($0.5 million), and (ii) decreases in insurance costs ($0.1 million). These decreases were offset by an increase in development costs associated with our commercial wellfield design and testing ($0.3 million).
Small-scale facility operating costs
Small-scale facility operating costs consist of raw materials, salaries and benefits for employees that are directly responsible for the operation of the SSF and wellfield, and maintenance and upkeep related to the SSF. For the three months ended December 31, 2025, Small-scale facility operating costs decreased $298 thousand, or 28%, versus the comparable period in the prior fiscal year. The decrease was primarily the result of decreases in: (i) salaries and benefits for our employees directly responsible for operating the SSF ($0.2 million), and (ii) raw materials necessary to operate the SSF and produce boric acid ($0.1 million).
For the six months ended December 31, 2025, Small-scale facility operating costs decreased $1.1 million, or 39%, versus the comparable period in the prior fiscal year. The decrease was primarily the result of decreases in: (i) salaries and benefits for our employees directly responsible for operating the SSF ($0.7 million), (ii) raw materials necessary to operate the SSF and produce boric acid ($0.3 million), and (iii) maintenance, upkeep and other costs incurred for the operation of the SSF ($0.1 million).
General and administrative expenses
General and administrative expenses include professional fees, costs associated with marketing, on-going SEC and public company costs, public relations, rent, salaries for administrative personnel, share based compensation, corporate insurance, certain consultants, investor relations and other expenses. For the three months ended December 31, 2025, general and administrative expenses decreased $335 thousand, or 10%, versus the comparable period in the prior fiscal year. The decrease was primarily the result of decreases in: (i) insurance related costs ($0.2 million), and (ii) miscellaneous administrative expenses as a result of cost-cutting measures across the organization ($0.1 million).
For the six months ended December 31, 2025, general and administrative expenses decreased $1.7 million, or 21%, versus the comparable period in the prior fiscal year. The decrease was primarily due to decreases in: (i) share based compensation ($0.9 million) which is primarily the result of prior fiscal year including approximately $1.1 million of share based compensation expense associated with the acceleration of expense pursuant to an employee severance agreement, (ii) professional fees, primarily as a result of incurring incremental legal fees in the prior fiscal year leading up to the Exchange Transaction ($0.5 million), (iii) corporate insurance costs ($0.4 million), (iv) other miscellaneous cost-cutting measures across the organization ($0.3 million), and (v) severance related costs ($0.2 million). These decreases were offset by an increase in investor relations and marketing costs ($0.6 million).
Depreciation and amortization expense
Depreciation and amortization relate to use of our SSF, injection and recovery wells, owned or leased vehicles, buildings and equipment and the accretion of our asset retirement obligations. For the three months ended December 31, 2025, depreciation and amortization expense increased $385 thousand, or 8%, versus the comparable period in the prior fiscal year. For the six months ended December 31, 2025, depreciation and amortization expense increased $729 thousand, or 7%, versus the comparable period in the prior fiscal year. These increases were primarily due to the combined effect of (i) our beginning to depreciate $2.1 million of costs incurred for the horizontal sidetracks we drilled from our existing injection and recovery wells during the quarter ended September 30, 2025, and (ii) the reduction in useful life of the injection and recovery wells from 5.0 years to 3.75 years to more closely align with our operational and development plans.
26
Interest income
Interest income is derived from the investment of our excess cash and cash equivalents and reclamation bond deposits in short-term (original maturities of three months or less) investments of highly liquid treasury bills and certificates of deposit. For the three months ended December 31, 2025, interest income increased $1 thousand, or 4%, versus the comparable period in the prior fiscal year. For the six months ended December 31, 2025, interest income increased $33 thousand, or 69%, versus the comparable period in the prior fiscal year. These increases were primarily due to interest income from the reclamation bond deposit account that was established during April 2025.
Other income
Other income is primarily derived from the sale of scrap and other materials. For the three and six months ended December 31, 2025, we did not recognize other income from the sale of scrap materials, versus $4 thousand recognized during the three and six months ended December 31, 2024.
Derivative gain
Derivative gain (loss) results from changes in the fair value of the embedded conversion features relating to degressive issuance provisions originally contained in an amended and restated note purchase agreement entered into during May of 2024 and subsequently incorporated into and continued under the September 2024 Amended and Restated Note Purchase Agreement. These conversion features were deemed to be embedded derivatives requiring bifurcation and separate accounting as stand-alone derivative instruments (the “June 2024 Convertible Note Derivative” and “September 2024 Convertible Note Derivative”), each as discussed within Note 7-Debt and Note 8-Convertible Note Derivatives to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.
There was no unrealized derivative gain (loss) during the three and six months ended December 31, 2025, as the June 2024 Convertible Note Derivative and September 2024 Convertible Note Derivative each expired on December 31, 2024, prior to the beginning of such period.
The unrealized derivative gain (loss) during the three months ended December 31, 2024, was primarily due to an increase in our stock price during the period, which resulted in losses on the June 2024 Convertible Note Derivative and September 2024 Convertible Note Derivative. Our stock price on September 30, 2024 (the last trading day of our prior fiscal quarter) and December 31, 2024 (the end of the prior year fiscal quarter) was $12.42 and $14.72, respectively. The observed increase in our stock price resulted in increases in the value of the embedded conversion feature liabilities and resulted in aggregate derivative losses of $0.8 million.
The unrealized derivative gain of $1.4 million during the six months ended December 31, 2024, was primarily due to a decrease in our stock price during the period, which resulted in a gain on the June 2024 Convertible Note Derivative. Our stock price on June 28, 2024 (the last trading day prior to the end of our prior fiscal year) and December 31, 2024 (the end of the prior year fiscal quarter) was $27.83 and $14.72, respectively. The observed decline in our stock price resulted in a decline in the value of the embedded conversion feature liability and a resulting derivative gain of $2.2 million. This derivative gain was offset, to a lesser extent, by a loss with respect to the September 2024 Convertible Note Derivative during the same period. The unrealized derivative loss was primarily due to an increase in our stock price from $11.50 on September 16, 2024 (the issuance date of the September 2024 Notes) to $14.72 on December 31, 2024 (the end of the prior year fiscal quarter), resulting in an increase in the value of the embedded conversion feature liability during such period and a resulting derivative loss of $0.9 million. On December 31, 2024, the conversion features associated with the June 2024 Notes and September 2024 Notes that resulted in separate accounting expired and the remaining aggregate fair value of such derivatives of $3.6 million was transferred to additional paid-in capital.
Interest expense
Interest expense primarily related to interest expense incurred on the Convertible Notes while such notes were outstanding and was net of amounts capitalized to construction-in-progress. Prior to the January 2024 Amended and Restated Note Purchase Agreement, the Convertible Notes accrued interest at a rate of 6.0% when interest was paid-in-kind through the issuance of additional notes. Subsequent to the January 2024 Amended and Restated Note Purchase Agreement, the Convertible Notes accrued interest at a rate of 10.0% when interest was paid-in-kind through the issuance of additional notes, with such rate also applying to the June 2024 Notes, September 2024 Notes and January 2025 Notes. We also recognized interest expense for the amortization of debt issuance costs and the amortization of debt discounts on the Convertible Notes. As part of the modification of the terms of our debt associated with the January 2024 Amended and Restated Note Purchase Agreement, the modified debt was recognized at fair value on our
27
balance sheet which eliminated the prior debt discount and prior debt issuance costs that were amortized to interest expense. In connection with the Exchange Transaction on March 5, 2025, all indebtedness owed by the Company under the Amended and Restated Note Purchase Agreement was extinguished and the recognition of interest expense ceased.
For the three months ended December 31, 2025, interest expense decreased $2.4 million, versus the comparable period in the prior fiscal year. For the six months ended December 31, 2025, interest expense decreased $4.6 million, versus the comparable period in the prior fiscal year. These decreases were due to the extinguishment of the Convertible Notes and recognition of interest expenses thereon.
Other expense
Other expense relates to losses on foreign currency transactions, certain non-income related taxes, and penalties. For the three months ended December 31, 2025, other expense increased $11 thousand, versus the comparable period in the prior fiscal year. For the six months ended December 31, 2025, other expense increased $10 thousand, versus the comparable period in the prior fiscal year. Such increases were primarily due to increases in fines and penalties.
Liquidity and Capital Resources
Overview
As of December 31, 2025, we had cash and cash equivalents of $0.6 million and a working capital deficit of $4.8 million compared to $3.8 million of cash and cash equivalents and a working capital deficit of $1.8 million as of June 30, 2025. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions may exceed insured limits. Market conditions can impact the viability of these institutions.
Our predominant source of cash has been generated through equity financing from issuances of our common stock and equity-linked securities, including our previously outstanding Convertible Notes. Since inception, we have not generated revenues, and as such, have relied on equity financing and equity-linked instruments to fund our operating and investing activities. As a result of the Exchange Transaction in March of 2025, all outstanding indebtedness pursuant to the Convertible Notes was extinguished in exchange for equity interest in the Company, and the financial covenant requiring us to maintain a minimum cash balance was eliminated.
To date, during fiscal year 2026, we have completed the August 2025 Equity Offering, the 2025 Warrant Exercise and February 2026 Equity Offering, each aimed at strengthening our balance sheet, to help fund mining and SSF operations, wellfield development and analysis, and engineering for our proposed commercial scale facility.
A summary of our cash flows for the six months ended December 31, 2025 and 2024 follows.
|
|
For the six months ended December 31, |
|
|
Variance |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
|
|
($ in thousands) |
|
|
|
|
||||||||||
Net cash used in operating activities |
|
$ |
(9,523 |
) |
|
$ |
(11,677 |
) |
|
$ |
2,154 |
|
|
|
(18 |
%) |
Net cash used in investing activities |
|
|
(2,806 |
) |
|
|
(781 |
) |
|
|
(2,025 |
) |
|
|
259 |
% |
Net cash provided by financing activities |
|
|
9,064 |
|
|
|
8,386 |
|
|
|
678 |
|
|
|
8 |
% |
Net increase (decrease) in cash and cash equivalents |
|
$ |
(3,265 |
) |
|
$ |
(4,072 |
) |
|
$ |
807 |
|
|
|
(20 |
%) |
Cash Flows Used For Operating Activities
Net cash used in operating activities for each of the above periods was primarily the result of general and administrative costs (exclusive of share based compensation), costs incurred in furthering the Project, and operating costs of the SSF. During the six months ended December 31, 2025, we used $9.5 million of cash for operating activities, a decrease of approximately $2.2 million or 18% compared to the comparable period in the prior fiscal year. The decrease in cash used in operations during the current period primarily results from decreases in Small-scale facility operating costs, General and administrative expenses, net of non-cash share-based compensation expense, and Project expenses (refer to the discussion of period-over-period changes in Small-scale facility operating costs, General and administrative expenses and Project expenses within Results of Operations above for additional details).
28
Cash Flows Used For Investing Activities
Our cash flows used for investing activities primarily relate to wellfield development activities, equipment purchases, stage 2 of our front-end loading (“FEL-2”) engineering and related vendor testing related to our commercial-scale facility, and advanced planning for stage 3 of our front-end loading (“FEL-3”) engineering program. During the six months ended December 31, 2025, we used $2.8 million of cash for investing activities, an increase of approximately $2.0 million, or 259%, compared to the comparable period in the prior fiscal year. The increase in cash used in investing activities primarily results from wellfield development activities, including the horizontal sidetracks we drilled from two of our existing injection and recovery wells.
Cash Flows From Financing Activities
Our cash flows from financing activities primarily relate to equity and equity-linked financing transactions to fund our business and operations. Cash flows provided by financing activities for the six months ended December 31, 2025 were the result of (i) approximately $7.4 million of net proceeds received from the August 2025 Equity Offering, and (ii) approximately $2.0 million of net proceeds received from the 2025 Warrant Exercise. These net cash inflows were offset by (i) approximately $0.2 million of costs paid in connection with the May 2025 Subscription, and (ii) approximately $0.1 million of taxes paid upon the vesting and release of shares for equity awards.
Cash flows provided by financing activities for the six months ended December 31, 2024 were the result of (i) approximately $3.0 million of net proceeds received from the August 2024 Equity Offering, after recognition of the related costs and fees, (ii) approximately $5.5 million of proceeds received from the issuance of September 2024 Notes, after recognition of the related costs and fees, and (iii) approximately $0.1 million of taxes withheld and paid upon the vesting and release of shares for equity awards.
Material Cash Requirements
Our material short-term cash requirements include general and administrative expenses including recurring payroll and benefit obligations for our employees, costs necessary to further the engineering of our proposed commercial-scale facility, professional fees, operating costs for the SSF, Project related costs, payments under certain lease agreements and working capital needs. Our long-term material cash requirements from currently known obligations include future obligations to reclaim, remediate, or otherwise restore properties to a condition that existed prior to our operations, and $2.5 million primarily for raw materials for the operation of the SSF; wellfield materials, consulting and services; engineering services and vendor testing related to the design of the proposed commercial-scale facility; environmental testing and other corporate services. Refer to the “Construction in Progress,” “Asset Retirement Obligations,” “Accounts Payable and Accrued Liabilities,” and “Commitments and Contingencies” footnotes in the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on certain of these expenditures and obligations.
Future Capital Requirements and Going Concern
Over the next 12 months we have the following plans that will require additional capital:
Although the August 2025 Equity Offering, 2025 Warrant Exercise and February 2026 Equity Offering, each improved our cash position, and we continue to operate under a business plan that includes reductions in certain spending, we will need additional financing to maintain our operations and carry out our business objectives. Absent additional financing, we may no longer be able to meet our ongoing obligations, continue operations, or achieve the milestones outlined above.
29
We intend to explore different potential financing strategies to help support the growth of our business and execution of our business plan, including equity or debt financing, government funding or grants, private capital, royalty agreements or customer prepayments, or other strategic alliances with third parties. However, there is no assurance that we will be able to secure additional financing on adequate terms, in a timely manner, or at all.
The receipt of any potential funding cannot be considered probable at this time because these plans are not entirely within our control as of the date of this Quarterly Report on Form 10-Q. Therefore, there exists substantial doubt regarding our ability to continue as a going concern for a period of one year after the date of this Quarterly Report on Form 10-Q. Even if additional financing is successfully consummated, available liquidity may still not be sufficient to eliminate the aforementioned substantial doubt regarding our ability to continue as a going concern. If the Company is unable to raise additional capital or generate cash flows necessary to fund our operations, we will need to curtail planned activities, discontinue certain operations, or sell certain assets, which could materially and adversely affect our business, financial condition, results of operations, and prospects. Refer to the “Going Concern” discussion within Note 1-Basis of Financial Statement Presentation of the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for more information.
Critical Accounting Policies
A complete discussion of our critical accounting policies is included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025. There have been no significant changes in our critical accounting policies during the six months ended December 31, 2025. Unless otherwise discussed, we believe that the impact of recently issued standards did not or will not have a material impact on our consolidated financial statements upon adoption.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to improve income tax disclosures primarily through enhanced disclosure of income tax rate reconciliation items, and disaggregation of income (loss) from continuing operations, income tax expense (benefit) and income taxes paid, net disclosures by federal, state, and foreign jurisdictions, among others. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, and early adoption is permitted. We plan to adopt ASU 2023-09 effective for our fiscal year ending June 30, 2026.
In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disaggregation of certain expenses in the notes of the financial statements, to provide enhanced transparency into the expense captions presented on the face of the income statement. In January 2025, the FASB issued Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective dates of ASU 2024-03. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027 and may be applied either prospectively or retrospectively. We are evaluating the impact that ASU 2024-03 will have on our related disclosures, including the adoption date and transition method.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act, and are not required to provide the information otherwise required under this Item 3.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management evaluated, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and
30
procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2025. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2025 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in the evaluation for the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we and our subsidiaries may become subject to various claims, legal proceedings, governmental inspections, audits, or investigations arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain and we cannot assure you that their ultimate disposition will not have a material adverse effect on our business, financial condition, cash flows, or results of operations. For additional information, see Note 13-Commitments and Contingencies in the unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report, which is incorporated herein by reference.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A., “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025. You should carefully consider the factors discussed in Part 1, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, which could materially affect our business, financial condition, and future results. Additional risk and uncertainties not currently known to us may also materially adversely affect our business, financial condition, cash flows, or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sale of Equity Securities
There were no unregistered sales of equity securities during the three months ended December 31, 2025.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable as we do not currently operate any mines subject to the U.S. Federal Mine Safety and Health Act of 1977.
Item 5. Other Information.
a) Disclosure in lieu of reporting on a Current Report on Form 8-K.
None.
b) Material changes to the procedures by which security holders may recommend nominees to the board of directors.
None.
c) Insider Trading Arrangements and Policies.
During the three months ended December 31, 2025, none of the Company's directors or executive officers (as defined in Rule 16a-1(f) under the Exchange Act)
32
Item 6. Exhibits.
The following documents are filed as exhibits hereto:
Exhibit
|
Exhibit Title
|
3.1 |
Amended and Restated Certificate of Incorporation of 5E Advanced Materials, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 19, 2024). |
3.2 |
Certificate of Amendment to Amended and Restated Certificate of Incorporation of 5E Advanced Materials, Inc., dated February 14, 2025 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 18, 2025). |
3.3 |
Second Amended and Restated Bylaws of 5E Advanced Materials, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on form 8-K filed with the SEC on November 1, 2024). |
4.1 |
Form of Series A Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 28, 2024). |
4.2 |
Form of Series B Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 28, 2024). |
4.3 |
Form of Restructuring Common Stock Purchase Warrant (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on January 14, 2025). |
4.4 |
Form of Amendment and Notice to Exercise of Common Stock Purchase Warrant. |
10.1 |
Amendment to the Amended and Restated 5E Advanced Materials, Inc. 2022 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 8, 2025). |
31.1* |
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* |
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1** |
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2** |
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101* |
Interactive data files (formatted as Inline XBRL). |
104* |
Cover page interactive data file (formatted as Inline XBRL and contained in Exhibit 101). |
* |
Filed herewith. |
** |
Furnished herewith. |
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
5E Advanced Materials, Inc. |
|
|
|
|
Date: February 17, 2026 |
By: |
/s/ Paul Weibel |
|
|
Paul Weibel |
|
|
Chief Executive Officer (Principal Executive Officer) |
|
|
|
Date: February 17, 2026 |
By: |
/s/ Joshua Malm |
|
|
Joshua Malm |
|
|
Chief Financial Officer (Principal Financial Officer) |
34
FAQ
How did 5E Advanced Materials (FEAM) perform financially in the quarter ended December 31, 2025?
What is the liquidity position and going concern status of 5E Advanced Materials (FEAM)?
How were 5E Advanced Materials’ balance sheet and debt profile changed by recent transactions?
What are the key updates to 5E Advanced Materials’ Fort Cady mineral resource estimate?
Is 5E Advanced Materials (FEAM) generating revenue from its Fort Cady project?
What financing steps did 5E Advanced Materials take after the December 31, 2025 quarter?
Why is boron’s classification as a U.S. critical mineral significant for 5E Advanced Materials?
