International Battery Metals (IBATF) trims loss with warrant gain, seeks MDLE capital
Rhea-AI Filing Summary
International Battery Metals Ltd. reported minimal activity for the quarter ended June 30, 2026 as it remains in pre-revenue commercialization. Service revenue from preliminary brine testing was $120,000 (in thousands), up from $7,000 a year earlier, with gross margin of $117,000.
The company recorded an operating loss of $2.9 million, improved from a $3.6 million loss, and a near break-even net loss of $28,000, largely due to a non-cash $2.9 million gain from revaluing its warrant liability. Cash was $9.4 million and total assets $39.2 million, including a net book value of $26.3 million for the existing MDLE Plant.
IBAT raised $2.8 million in a related-party private placement during the quarter and has working capital of about $10.0 million, which management believes funds operations for at least 12 months. However, management estimates $2.0–$12.0 million of additional capital will be required to customize the MDLE Plant for a first commercial deployment and fully recover capitalized plant costs.
Positive
- None.
Negative
- Ongoing losses and funding needs: Operating loss was $2.9 million and management estimates $2.0–$12.0 million of additional capital will be required to customize the MDLE Plant for commercial deployment, beyond current cash on hand.
- Heavy dependence on non-cash warrant gains: Near break-even net results relied on a $2.9 million gain from revaluing warrant liabilities, while core operations continue to generate negative cash flow.
Key Figures
Key Terms
modular direct lithium extraction plant technical
warrant liability financial
going concern basis financial
fair value hierarchy financial
Level 3 fair value measurements financial
Earnings Snapshot
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did International Battery Metals (IBATF) perform financially in the June 30, 2026 quarter?
What is IBATF’s cash position and working capital as of June 30, 2026?
How much additional capital does IBATF expect to need for its MDLE Plant?
What were the key drivers of IBATF’s near break-even net result this quarter?
Is IBATF generating meaningful commercial revenue from its MDLE Plant?
How is IBATF currently financing its operations and development?
Table of Contents
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 XXXXXXXX XX, XXXX to XXXXXXXX XX, XXXX
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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Registrant’s telephone number, including area code: (
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). Yes ☐
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
As of August 5, 2026, the registrant had
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PART I. |
FINANCIAL INFORMATION |
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Item 1. |
Condensed Consolidated Financial Statements |
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Notes to the Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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Controls and Procedures |
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PART II. |
OTHER INFORMATION |
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Risk Factors |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. |
Defaults Upon Senior Securities |
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Item 4. |
Mine Safety Disclosures |
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Item 5. |
Other Information |
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Item 6. |
Exhibits |
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Signatures |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
International Battery Metals Ltd.
Condensed Consolidated Balance Sheets
As of June 30, 2026 and March 31, 2026
(In thousands)
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Current liabilities |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
International Battery Metals Ltd.
Condensed Consolidated Statements of Income (Loss)(Unaudited)
For the Three Months Ended June 30, 2026 and 2025
(In thousands, except per share amounts)
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REVENUE |
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Service |
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Total Revenue |
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COST OF REVENUE |
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OPERATING COSTS AND EXPENSES |
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Operating loss |
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Net income (loss) per share, basic |
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Weighted average shares outstanding, basic |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
International Battery Metals Ltd.
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended June 30, 2026 and 2025
(In thousands)
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CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES |
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Adjustments to reconcile net income (loss) to cash used in operating activities: |
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Depreciation |
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Change in fair value of warrant liability |
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Changes in assets and liabilities: |
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CASH USED IN INVESTING ACTIVITIES |
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CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES |
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Proceeds from private placement of shares and warrants |
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Share issuance costs |
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Net change in cash |
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Supplemental disclosures of non-cash transactions: |
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Equipment purchases included in trade payables |
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Shares issuance costs included in trade payable and other liabilities |
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Private placement proceeds allocated to warrant liability |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
International Battery Metals Ltd.
For the Three Months Ended June 30, 2026 and 2025
(In thousands)
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Common |
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Share |
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Accumulated |
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Total |
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Shares |
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Capital |
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Equity |
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Balance as of March 31, 2026 |
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Private placements of shares |
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Shares issued for restricted stock units |
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Shares issued for restricted stock awards |
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Shares cancelled |
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Share issuance costs |
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Net loss for the period |
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Balance as of June 30, 2026 |
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Total |
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Capital |
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Deficit |
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Balance as of March 31, 2025 |
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Private placements of shares |
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Share-based compensation |
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Share issuance costs |
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Net income for the period |
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Balance as of June 30, 2025 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
International Battery Metals Ltd.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
For the Three Months Ended June 30, 2026 and 2025
International Battery Metals Ltd. (the “Company”) was incorporated under the Business Corporations Act (British Columbia) on July 29, 2010. The Company trades on the TSX Venture Exchange in Canada under the stock symbol “IBAT”. The Company also trades on the Over-The-Counter Markets (“OTC”) in the United States of America under the stock symbol “IBATF”. The Company’s registered and records office is located at 300 - 638 Smithe Street, Vancouver, BC V6B 1P3.
The Company is an advanced technology and manufacturing business focused on environmentally responsible methods of extracting lithium compounds from brine. The Company seeks to provide its technology and equipment to holders of resource properties such as oilfield brines, subsurface brine aquifers and industrial customers who have lithium rich brine by products from their operations. The Company’s proprietary extraction process is environmentally friendly, low cost and able to produce high-quality commercial grade lithium chloride products.
The Company’s current operations consist of the development of a modular direct lithium extraction plant (“MDLE Plant”) which can be rapidly deployed and assembled onsite at a customer's property. The MDLE Plant is designed to process brine solutions to extract lithium chloride which can be further processed (refined) into lithium carbonate and used for industrial purposes or as a battery component. The Company constructed the first demonstration MDLE Plant in Lake Charles, Louisiana where it performed feasibility testing and was made available for demonstration to potential customers. The Company is currently marketing the current MDLE Plant to potential customers and developing the next generation of our MDLE Plant technology which we anticipate could provide customers with additional options for processing brine solutions and increasing lithium chloride production.
Basis of Presentation and Principles of Consolidation
The Company’s condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. The condensed consolidated statements furnished reflect all normal adjustments, which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. The condensed consolidated financial statements include the results of the Company and its subsidiaries. A subsidiary is consolidated from the date upon which control is acquired by the Company and all intercompany transactions and balances have been eliminated.
Functional Currency
Liquidity and Capital Resources
These condensed consolidated financial statements have been prepared on a going concern basis which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of June 30, 2026, the Company had an accumulated deficit of approximately $
Our existing MDLE Plant was constructed with twelve absorption columns, which form the core of the direct lithium extraction process. In operation, brine flows continuously through these columns, where lithium and chloride ions are selectively captured utilizing IBAT's proprietary media located inside the absorption columns and subsequently eluted to produce a concentrated lithium chloride solution. Our MDLE Plant was designed for a specific deployment in the Lithium Triangle in South America which had lithium concentrations of roughly 1,800 ppm and therefore required lower flow rates, of approximately
5
Table of Contents
efficiently recover lithium. However, the MDLE Plant is designed to be scalable and commercially flexible and was engineered to permit retrofitting to process a range of alternative brine resources of different lithium concentrations. We are currently targeting deploying our existing MDLE Plant at naturally occurring brine reservoirs either in the United States, which have brine concentrations in the range of 250 ppm to as high as 800 ppm, or in the Middle East, where brine concentrations are expected to be approximately 400 ppm, although brine concentrations in the Smackover play in Texas and Arkansas are generally estimated to be between 200 and 400 ppm based on publicly published recent brine resource lithium concentrations by a number of resource owners. At 400 ppm, the MDLE Plant can operate at approximately 200 gallons per minute, resulting in output of between 600 and 700 metric tons per year of lithium chloride, on a lithium carbonate equivalent basis. Based on ongoing discussions with potential customers and their requirements based on their specific brine concentrations, we have evaluated various customizations that we could implement to increase flow rate and expand the MDLE Plant’s capacity. For example, management has designed a case to optimize the flowrate to fully utilize the twelve-column absorption capacity by adding components such as additional heat exchangers, pumps, condensate coolers, a reverse osmosis unit, chillers, tanks and pipelines. We estimate that the optimized MDLE Plant could increase throughput to approximately 480 gallons per minute, which based on a 400 ppm brine stream, we believe would be capable of producing approximately 2,000 metric tons per year of lithium chloride, on a lithium carbonate equivalent basis. Depending on the level of customization required, we anticipate that we could incur between $
Cash
Cash consists of deposits with financial institutions.
Revenue
During the three months ended June 30, 2026 the Company had three revenue transactions for preliminary brine testing. During the three months ended June 30, 2025 the Company had one revenue transaction from preliminary brine testing.
The Company follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy a performance obligation. Billings to customers for which services are not rendered are considered deferred revenue. The Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products or providing services to a customer. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms.
Supply Inventory
Inventories are carried at the lower of cost and net realizable value and primarily consist of spare parts for the MDLE Plant. The Company determines the costs for inventory using the weighted average cost method. There were
Plant and Equipment
Equipment is recorded at cost, less accumulated depreciation and impairment losses. The Company provides for depreciation over the expected useful life of the assets. No depreciation is recorded on assets prior to their initial commencement of operations. Costs include expenditures to acquire or construct an asset, including the preparation of an asset to commence operations, installation, commissioning, and certification costs. Subsequent costs are capitalized, either to the asset’s carrying amount or recognized as a separate asset when it is probable that the Company will derive future economic benefits, generally from extending the assets’ life or enhancing its’ productive capacity. The estimated useful lives of assets are reviewed by management and adjusted if necessary. Repair and maintenance costs are charged to profit or loss during the period they are incurred.
The Company substantially completed the construction of its first MDLE Plant in November 2021. As the MDLE Plant did not commence commercial operations, the Company did not initiate the recognition of depreciation on the MDLE Plant until June 19, 2024, when it was briefly placed into service at US Magnesium. Prior to commencement of operations, the Company utilized the MDLE Plant to perform feasibility studies and as a demonstration plant for potential customers. During these feasibility studies and demonstrations, based on the results, the Company continued to make enhancements to the MDLE Plant and capitalize the associated costs.
Fixed assets include tangible assets with useful lives that exceed one year and valued at historical cost-plus costs incurred to place that asset into service. Subsequent expenditures are only capitalized if it will increase the future economic benefit of the asset. Subsequent expenditures that do not increase the future economic benefit are recognized as profit and loss when incurred.
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Leasehold improvements |
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Intangible Assets
Intangible assets include patented technology acquired by the Company and have finite useful lives measured at cost less accumulated amortization and any accumulated impairment losses. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are recognized in profit or loss as incurred.
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Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.
Fair Value of Financial Instruments
The Company has classified fair value measurements of its financial instruments using a fair value hierarchy that reflects the significance of inputs used in making the measurements as follows:
The fair value of financial assets and financial liabilities at amortized cost is determined based on discounted cash flow analysis or using prices from observable current market transactions. The Company considers that the carrying amount of all its financial assets and financial liabilities recognized at amortized cost in the condensed consolidated financial statements approximates their fair value due to the demand nature or short-term maturity of these instruments. Cash is measured using level 1 of the fair value hierarchy. Financial assets do not include amounts due from a government agency as it is a statutory (not contractual) obligation.
Leases
The Company assesses at the inception of a contract whether it contains a lease. A contract is classified as a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any indirect costs incurred. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined using the same criteria as those for property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses and adjusted for certain remeasurements of the lease liability, if any.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the Company’s incremental borrowing rate. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or changes in assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Research and Development
Research costs are expensed in the period in which they are incurred. Development costs are expensed in the period in which they are incurred unless certain criteria, including technical feasibility, commercial feasibility, intent and ability to develop and use the technology, are met for capitalization and amortization.
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing the net earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted average number of common shares outstanding is adjusted for the
7
Table of Contents
number of shares that are potentially issuable in connection with stock options and warrants (if dilutive). The Company assumes that outstanding dilutive stock options and warrants were exercised and that the proceeds from such exercises (after adjustment of any unvested portion of stock options) were used to acquire Common Shares at the average market price during the reporting periods.
Shareholders’ Equity
Share issuance costs are recorded as a reduction of share capital when the related shares are issued. When shares and warrants are issued together as units the proceeds are allocated between common share and share purchase warrants on a pro-rata basis based on relative fair values at the date of issuance. The fair value of common shares is based on the market closing price on the date the units are issued and the fair value of share purchase warrants is determined using the Black-Scholes Option Pricing Model as of the date of issuance. When compensation options are issued to agents who refer investors to the Company, their fair value is determined using the Black-Scholes Option Pricing Model as of the date of issuance. The fair value of compensation options is recorded as a reduction of share capital as share issuance costs. When a warrant is exercised, forfeited or expires, the initial value recorded is reversed from reserves and credited to share capital.
Share-Based Payments
Share-based payments to employees are measured at the fair value of the instruments issued and recognized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The fair value of options is determined using the Black-Scholes Option Pricing Model which incorporates vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the estimated number of equity instruments that will eventually vest. Over the vesting period, share-based payments are recorded as an operating expense and additional paid-in capital. When options are exercised, the consideration received is recorded as additional paid-in capital.
The Company grants RSUs to eligible directors, officers, employees, and consultants of the Company. The fair value of the estimated number of RSUs that will eventually vest, determined at the date of grant, is recognized as share-based payments expense over the vesting period, with a corresponding amount recorded as equity since the Company expects to settle the RSUs with common shares. The fair value of the RSUs is estimated using the market value of the underlying shares as well as assumptions related to the market and non-market conditions at the grant date.
Warrants
The Company determines the accounting classification of warrants it issues as either liability or equity classified by first assessing whether the warrants meet liability classification. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date.
Impairment of Long-lived Assets
The Company performs impairment testing on long-lived assets, including property, plant, and equipment, and intangible assets with finite lives, in accordance with ASC 360, “Property, Plant, and Equipment.” Impairment testing is conducted whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or changes in circumstances may include a significant decrease in the market price of a long-lived asset, a significant change in the extent or manner in which an asset is used, a significant change in legal factors or in the business climate, a significant deterioration in the amount of revenue or cash flows expected to be generated from a group of assets, a current expectation that, more likely than not a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life, or any other significant adverse change that would indicate that the carrying value of an asset or group of assets may not be recoverable. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable and the expected undiscounted future cash flows attributable to the asset group are less than the carrying amount of the asset group, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. To date, the Company has not recorded any impairment losses on long-lived assets.
Related Party Transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company did not have any outstanding payable balances with related parties on June 30, 2026.
8
Table of Contents
Contingencies
Contingencies are assessed on an ongoing basis to evaluate the appropriateness of liabilities and disclosures for such contingencies. Liabilities for estimated loss contingencies when management believes a loss is probable and the amount of the probable loss can be reasonably estimated. Once established, the liabilities are adjusted to the carrying amount of a contingent liability upon the occurrence of a recognizable event when facts and circumstances change, altering previous assumptions with respect to the likelihood or amount of loss. Corresponding assets are recognized for those loss contingencies that are probable of being recovered through insurance. Legal costs are expensed as they are incurred, and with a corresponding asset for such legal costs expected to be recovered through insurance.
Segment Reporting
The Company operates as a operating and reportable segment because:
Accounting Standards Issued but Not Yet Effective
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), which requires disaggregated disclosure of specific expense categories in the notes to the financial statements on an interim and annual basis. In January 2025, the FASB issued ASU No. 2025-01 to clarify that this guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. This ASU is applicable to the Company's fiscal year beginning April 1, 2027 for annual disclosures and April 1, 2028 for interim disclosures. We are currently evaluating the effect of this guidance on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU updates the cost capitalization threshold for internal-use software development costs by removing all references to software project development stages and providing new guidance on how to evaluate whether the probable-to-complete recognition threshold has been met. This ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods. This ASU is applicable to our fiscal year beginning April 1, 2028, with early adoption permitted. The transition method may be prospective, modified, or retrospective. We are currently evaluating the effect the guidance will have on our consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11 to amend the guidance in Interim Reporting (Topic 270). The amendments in this update clarify current interim disclosure requirements and provide a comprehensive list of required interim disclosures. The update also incorporates a disclosure principle that requires entities to disclose events that occur after the end of the last annual reporting period. This update is effective for interim periods within annual periods beginning after December 15, 2027, though early adoption is permitted. This ASU is applicable to the Company's fiscal year beginning April 1, 2028 and we do not expect it to have a material effect on our consolidated financial statements.
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the condensed consolidated financial statements and reported amounts of income and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.
Significant judgment, estimates and assumptions that affect reported amounts of assets and liabilities are outlined below:
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Table of Contents
The Company’s accounts receivables as of June 30, 2026 and March 31, 2026 are as follows (in thousands):
|
|
June 30, |
|
|
March 31, |
|
||
|
|
2026 |
|
|
2026 |
|
||
Accounts receivable |
|
$ |
|
|
$ |
|
||
Sales tax refunds |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
The Company had
The Company’s other assets as of June 30, 2026 and March 31, 2026 are as follows (in thousands):
|
|
June 30, |
|
|
March 31, |
|
||
|
|
2026 |
|
|
2026 |
|
||
Prepaid insurance |
|
$ |
|
|
$ |
|
||
Rental deposit |
|
|
|
|
|
|
||
Retainers |
|
|
|
|
|
|
||
Technology licenses |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other assets |
|
$ |
|
|
$ |
|
||
The Company’s plant and equipment as of June 30, 2026 and March 31, 2026 are as follows (in thousands):
|
|
June 30, |
|
|
March 31, |
|
||
|
|
2026 |
|
|
2026 |
|
||
Existing MDLE Plant |
|
$ |
|
|
$ |
|
||
Equipment |
|
|
|
|
|
|
||
Office equipment |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Depreciation expense for the three months ended June 30, 2026 and 2025 was $
On April 12, 2018, the Company closed an asset purchase agreement with North American Lithium, Inc. (“NAL”) and Selective Adsorption Lithium, Inc. (“SAL”), a company formerly controlled by shareholders of NAL, pursuant to which the Company acquired NAL’s data, analysis and reports related to lithium extraction from oilfield brines and all the outstanding shares of SAL, which held certain intellectual property (the “Acquisition”). The consideration for the Acquisition consisted of $
10
Table of Contents
the Company achieving certain milestones related to the filing of additional patents and raising additional financing. The total value of the Acquisition, including the Milestone Shares, was valued at approximately $
Additionally, the Company has filed additional patents to expand its intellectual property for the development of lithium extraction technologies.
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
||||
|
|
|
|
|
|
|
|
|
|
|
Average |
|
||||
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Remaining |
|
||||
|
|
Assets |
|
|
Amortization |
|
|
Assets |
|
|
Life (Years) |
|
||||
Intellectual property |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
Patents |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
The Company’s intangible assets as of March 31, 2026, are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
||||
|
|
|
|
|
|
|
|
|
|
|
Average |
|
||||
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Remaining |
|
||||
|
|
Assets |
|
|
Amortization |
|
|
Assets |
|
|
Life (Years) |
|
||||
Intellectual property |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
Patents |
|
|
|
|
|
( |
) |
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
Amortization expense for the three months ended June 30, 2026 and 2025 was $
|
|
Three Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Operating lease costs |
|
$ |
|
|
$ |
|
||
Variable lease costs |
|
|
|
|
|
|
||
Short-term lease costs |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
The Company has elected not to recognize a lease liability for leases with an expected term of
|
|
June 30, |
|
|
March 31, |
|
||
|
|
2026 |
|
|
2026 |
|
||
Assets: |
|
|
|
|
|
|
||
Operating lease right-of-use asset |
|
$ |
|
|
$ |
|
||
Liabilities: |
|
|
|
|
|
|
||
Lease obligation, current |
|
|
|
|
|
|
||
Lease obligation, long-term |
|
|
|
|
|
|
||
operating lease liabilities |
|
$ |
|
|
$ |
|
||
11
Table of Contents
The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, with the fair value hierarchy as of June 30, 2026 and March 31, 2026 (in thousands):
|
|
June 30, 2026 |
|
|||||||||||||
|
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
March 31, 2026 |
|
|||||||||||||
|
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Authorized
Authorized share capital: an number of common shares with
Issued and Outstanding
On April 29, 2026, the Company and EV Metals (collectively EV Metals VI LLC, EV Metals 7 LLC, EV Metals 8 LLC, and or EV Metals 9 LLC, companies controlled by Jacob Warnock, a director of the Company and a related party), in connection with the 2025 EV Metals Letter Agreement purchased
On February 23, 2026, the Company and EV Metals, in connection with the 2025 EV Metals Letter Agreement purchased
On October 30, 2025, the Company and EV Metals, came to an agreement under the 2025 EV Metals Letter Agreement for EV Metals to acquire an additional
On July 20, 2025, the Company entered into the Subscription Agreements with certain entities managed or sub managed by Encompass Capital Advisors LLC (“Encompass”), a beneficial owner of more than
On July 20, 2025, the Company entered into amended and restated registration rights agreements (“A&R Registration Rights Agreements”) which amended the Registration Rights Agreements with each of EV Metals and Encompass. Pursuant to the A&R Registration Rights Agreements, we have agreed to use our reasonable best efforts to cause this Registration Statement to be declared effective as promptly as reasonably practicable but in no event later than July 20, 2026. In addition, pursuant to the Encompass A&R Registration Rights Agreement, upon the closing of the 2025 Encompass Offering we have agreed that, upon request of Encompass, we will use our commercially reasonable efforts to (i) file a registration statement registering the Common Shares to be issued at closing of the 2025 Encompass Offering, including the Common Shares issuable upon exercise of the warrants which form a part of the 2025
12
Table of Contents
Encompass Units within 90 days and (ii) have such registration statement declared effective as promptly as reasonably practicable following the filing thereof but in no event later than 60 days if the registration statement is not reviewed by the SEC or 180 days if subject to review. The A&R Registration Rights Agreements provide that, subject to certain requirements and customary conditions, each of EV Metals and Encompass will have “piggy-back” registration rights with respect to underwritten offerings by us and other shareholders. In addition, upon the request of EV Metals, we have agreed to take necessary steps to facilitate up to two underwritten offerings which must occur prior to the third anniversary of the effective date of the Company's registration statement on Form S-1, or February 11, 2029; provided that the aggregate price of such offering is expected to be $
The A&R Registration Rights Agreements contain customary cross-indemnification provisions, under which we are obligated to indemnify the selling shareholders in the event of material misstatements or omissions in the registration statement and any violation or alleged violation by us of the Securities Act, Exchange Act, or any state securities law, or any rule or regulation thereunder, and the selling shareholders are obligated to indemnify us for material misstatements or omissions attributable to them. We will generally pay all registration expenses in connection with our obligations under the A&R Registration Rights Agreements, regardless of whether any our Common Shares are sold pursuant to a registration statement.
In connection of the foregoing, pursuant to the A&R Registration Rights Agreements, we agreed to extend the expiration date of the warrants previously issued to Encompass and EV Metals pursuant to the private placements which occurred on April 21, 2023, February 29, 2024, May 3, 2024, and June 19, 2024 to the earlier of (i) five years from the date of such warrants original issuance or (ii) three years from the date of the closing of the 2025 Encompass Offering (the “Warrant Amendments”) and each of EV Metals and Encompass has agreed to waive their respective rights to any possible claims, including the right to liquidation damages, under the Registration Rights Agreements provided that the Warrant Amendments are approved by the TSX Venture Exchange ("TSXV").
On February 28, 2025, the Company entered into a letter agreement (the “2025 EV Metals Letter Agreement”) with EV Metals, agreeing to the principal terms and conditions upon which EV Metals, directly or through one or more of its subsidiaries or affiliates, could complete one or more transactions to purchase up to $
The pricing of the 2025 Units was be based on the five-day trading average of the common shares on the TSXV for the applicable tranche less the maximum allowable discount permitted by the rules of the TSXV. The warrants included in the 2025 Units will have a term of four years from date of issuance and will entitle the holders to purchase a common share at an exercise price equal to the closing price of the common shares on the TSXV as of the date immediately preceding the date of the news release announcing the 2025 Offering or the closing of the applicable tranche of the 2025 Offering. In connection with the first and second closing of the 2025 Offering, the Company paid structuring fees of $
On June 19, 2024, the Company completed another further private placement with EV Metals and Encompass, issuing
On May 6, 2024, the Company completed a further private placement with EV Metals and Encompass, issuing
13
Table of Contents
Weighted-average Common Shares Outstanding
(in thousands, except per share amounts) |
|
Three Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net income (loss) |
|
$ |
( |
) |
|
$ |
|
|
Weighted average number of shares: |
|
|
|
|
|
|
||
Issued common shares at beginning of period |
|
|
|
|
|
|
||
Effect of common shares issued during period |
|
|
|
|
|
|
||
Weighted average number of shares basic |
|
|
|
|
|
|
||
Assumed exercise of warrants |
|
|
|
|
|
|
||
Assumed exercise of stock options |
|
|
|
|
|
|
||
Weighted average number of shares diluted |
|
|
|
|
|
|
||
Weighted average number of shares diluted |
|
|
|
|
|
|
||
Net income (loss) per share, basic |
|
$ |
( |
) |
|
$ |
|
|
Net income (loss) per share, diluted |
|
$ |
( |
) |
|
$ |
|
|
Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share for the three months ended June 30, 2026 and 2025 are as follows (in thousands):
|
|
Three Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Warrants to purchase common shares |
|
|
|
|
|
|
||
Options to purchase common shares |
|
|
|
|
|
|
||
Restricted share units |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Equity Incentive Plans
On December 17, 2025, the Company adopted the 2025 Omnibus Equity Incentive Plan (the “Omnibus Plan”) which provides for the issuance of up to
In addition to the Omnibus Plan, the Company has
Stock Options
The Company previously had the “Stock Option Plan" which provided the Company the ability to issue options up to
The Company’s has historically issued options utilizing Canadian dollars (CAD$) for the strike price as the Company’s principle public listing of common shares is reported on the TSXV utilizing CAD$. There were
|
|
|
|
|
Weighted- |
|
|
Weighted- |
|
|||
|
|
|
|
|
Average |
|
|
Average |
|
|||
|
|
Options |
|
|
Exercise |
|
|
Exercise |
|
|||
|
|
Outstanding |
|
|
Price |
|
|
Life (years) |
|
|||
|
|
(thousands) |
|
|
(CAD$) |
|
|
|
|
|||
Balance as of March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|||
Expired |
|
|
|
|
|
|
|
|
|
|||
Forfeited |
|
|
|
|
|
|
|
|
|
|||
Balance as of June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|||
14
Table of Contents
The share-based compensation expense for the three months ended June 30, 2026 and 2025 less than $
Restricted Share Units
The Company previously had the RSU Plan which provided the Company with the ability to issue RSUs covering up to
On June 19, 2026, the Company granted
On May 19, 2026, the Company granted
On May 14, 2026, the Company granted
On February 4, 2026, the Company granted
On November 3, 2025, the Company granted
On October 2, 2025, the Company granted
On June 2, 2025, the Company granted
On April 7, 2025, the Company granted
On February 12, 2025, the Company granted
The share-based compensation expense for all of the RSUs in the three months ended June 30, 2026 and 2025 was $
Restricted Share Awards
On December 18, 2025, under the 2025 Omnibus Plan, the Company granted RSAs to the certain non-employee members of the Board of Directors with four directors each receiving
15
Table of Contents
Warrants
The Company has historically issued warrants utilizing CAD$ for the strike price as the Company’s principle public listing of common shares is reported on the TSXV utilizing CAD$.
|
|
Warrants |
|
|
Weighted- |
|
|
Weighted- |
|
|||
|
|
Outstanding |
|
|
Price |
|
|
Life (years) |
|
|||
|
|
(thousands) |
|
|
(CAD$) |
|
|
|
|
|||
Balance as of March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|||
Balance as of June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|||
|
|
Warrants Outstanding |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Exercise Life (Years) |
|
|||
|
|
(thousands) |
|
|
(CAD$) |
|
|
|
|
|||
Balance as of March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|||
Balance as of June 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|||
As the strike price of the warrants is stated in a currency, Canadian dollars, which is different than the Company’s functional currency, the warrants are treated as a liability in the consolidated balance sheets. The outstanding warrant liability as of June 30, 2026 and March 31, 2026 was approximately $
|
|
As of June 30, |
|
|||||
|
|
2026 |
|
2025 |
|
|||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected volatility |
|
|
% |
|
|
% |
||
Expected life (years) |
|
|
|
|
|
|
||
Expected dividend yield |
|
|
% |
|
|
% |
||
In November 2018, the Company entered into licensing agreements as amended with Ensorcia Metals Corporation (“Ensorcia”) and its wholly-owned subsidiaries, Sorcia and Ensorcia Argentina LLC (“EAL”) (collectively, “Ensorcia Group”) whereby the Company issued lithium extraction technology licenses to Sorcia and EAL to use extraction systems manufactured by the Company in exchange for a six percent royalty (
On March 30, 2023, the Company and Entec, an affiliate of the Ensorcia Group, entered into the Entec Licensing Agreement. Pursuant to the terms of the Entec Licensing Agreement, the Company will provide Entec with a non-exclusive, limited, world-wide (other than Chile and Argentina) license to access to all patents, trade secrets, and other proprietary rights for use by Entec within the territory solely for the use and operation of equipment and systems manufactured and sold in accordance with the Entec License Agreement for the extraction of lithium salts from lithium bearing raw brine. In consideration for entering the Entec Licensing Agreement, Entec has agreed to provide the Company with a royalty equal to
16
Table of Contents
The Company participates in a defined contribution retirement plan sponsored by its professional employer organization (“PEO”). Eligible employees may make voluntary contributions to the plan pursuant to Section 401(k) of the Internal Revenue Code. The Company matches participant contributions up to
Provision for Income Taxes
The Company is incorporated in Canada and is subject to Canadian federal and British Columbia provincial income taxes. Because the Company conducts substantially all of its operations through its United States subsidiary — with its operations headquarters in Texas and its initial commercial operations in Utah — the Company is also subject to United States federal income tax and to state and local taxes in the jurisdictions in which it operates, including the Texas franchise (margin) tax and Utah state income tax.
The Company recorded
The Company is subject to various claims, assessments, and regulatory requirements arising in the normal course of business. Management assesses the likelihood of any adverse outcomes as well as the range of any potential losses. Where a loss is reasonably possible but not probable, or where the amount cannot be reasonably estimated, no liability is recorded, and the matter is disclosed if material. Management does not believe that the ultimate resolution of any such matters will have a material adverse effect on the Company's condensed consolidated financial statements.
Concentration of Credit risk
Financial instruments that potentially subject the Company to credit risk consist of cash. The Company manages its credit risk relating to cash by dealing only with high-rated financial institutions as determined by rating agencies. As a result, credit risk is considered insignificant. The Company does not consider any of its financial assets to be impaired.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company manages liquidity risk by maintaining sufficient cash balances to enable settlement of transactions on the due date. The Company is exposed to liquidity risk. The Company addresses its liquidity by raising capital through the issuance of equity. While the Company has been successful in securing financings in the past, there is no assurance that it will be able to do so in the future.
Foreign currency risk
Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar and the U.S. dollar will affect the Company’s operations and financial results. The operating results and financial position of the Company are reported in U.S. dollars. As of June 30, 2026, the Company held approximately $
Other risks
Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest rate risk and commodity price risk arising from financial instruments.
The Company operates as a reportable segment, which reflects the manner in which the CODM manages the business, allocates resources, and evaluates performance. The Company’s activities to date have been limited to research and development and pre-commercialization activities and it has not generated any significant revenue from product sales or services.
Significant Expense Categories
The Company discloses significant segment expense categories that are regularly provided to the CODM. These categories, which represent the major costs incurred in the development of the Company’s technology and operations, are as follows:
17
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|
|
Three Months Ended June 30, |
|
|||||
Expense Category |
|
2026 |
|
|
2025 |
|
||
General and administrative |
|
$ |
|
|
$ |
|
||
Stock-based compensation |
|
$ |
|
|
$ |
( |
) |
|
Other operating expenses |
|
$ |
|
|
$ |
|
||
Geographic Information
All operations and assets are located in the United States. As of June 30, 2026, the Company does not have revenue or long-lived assets located outside of the United States.
The Company has evaluated subsequent events and transactions occurring after June 30, 2026 through August 12, 2026, the date these condensed consolidated financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in these condensed consolidated financial statements.
18
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto (“Financial Statements”) in Item 1 and the Special Note Regarding Forward-Looking Statements later in this Item 2. All Note references herein refer to the Notes to the Financial Statements. Tabular amounts are displayed in thousands of U.S. dollars except per share and unit count amounts, or as otherwise specifically identified. All references to “CAD$” are to the currency of Canada. Percentages may not recompute due to rounding. You should review the “Risk Factors” set forth in the Company’s Form 10-K filed with the Securities and Exchange Commission on June 17, 2026 for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following MD&A.
Overview
We are an advanced technology and manufacturing company focused on exploiting our proprietary and patented technology used in our modular direct lithium extraction plants, or modular direct lithium extraction plant (“MDLE Plant”), to assist owners of lithium brine deposits to extract lithium chloride at sufficient concentration and purity to economically facilitate the production of Lithium Carbonate, an integral component in the manufacture of batteries. Our proprietary and patented MDLE Plant is (1) modular, meaning it can be deployed and then redeployed at a different brine deposit when the resource source is spent and (2) scalable, meaning the component-driven system can specifically configure valves, pumps, our proprietary columns and media and many other pieces to customize the plant to a customer’s requirements based on the needs and resource concentration and that multiple MDLE Plants can be linked together based on the characteristics of the resource location. In addition, our proprietary absorption extraction process is designed to be an environmentally responsible, low-cost method of producing high-quality commercial grade lithium chloride to be converted into Lithium based products.
We believe our MDLE Plants can be utilized by owners on a variety of different brine deposits including, (i) salar or salt lake brine deposits, such as those found in the Lithium Triangle of Argentina, Chile and Bolivia, (ii) brine reservoirs in the US and Canada, including in the US states of North Dakota, Wyoming, Utah, Nevada, Oklahoma, Pennsylvania, Arkansas and Texas (including the Smackover geological formation found in Arkansas and Texas), and (iii) any other naturally occurring lithium brine deposits around the world, including through our collaboration agreement with a major Middle East energy services provider. In addition, we plan to market our technology to industrial customers who have lithium rich brine by-products from their operations. While our Existing MDLE Plant was initially designed for potential customers in the Lithium Triangle, we believe that the US owners of brine reservoirs, especially within the Smackover geological formation in Arkansas and Texas, are currently best positioned to benefit from our existing MDLE Plant. Consequently, we are actively marketing our Existing MDLE Plant and our technology to US and foreign owners of brine reservoirs and anticipate that we will need to spend approximately between $2.0 million and $12.0 million to customize the Existing MDLE Plant to meet the needs of this initial customer depending on the reservoir’s lithium concentration and purity. In addition, we will have costs to transport the MDLE Plant to the new owner. We have not yet delivered MDLE Plants nor licensed our technology to customers and are therefore a pre-revenue company.
Our strategy is to deploy our Existing MDLE Plant and continue to build upon our proprietary DLE technology developed by Dr. John Burba, our founder and Chief Technology Officer, to develop and deploy additional MDLE plants. We believe that our advanced brine extraction technologies and methodologies for selective mineral extraction is less capital intensive and a more environmentally responsible approach compared to traditional lithium extraction processes of hard rock mining and solar evaporation. We believe that this approach is environmentally sustainable because our process does not deconstruct land structures as is the case from hard rock mining nor does it waste precious water as is the case in solar evaporation. Instead, our technology is designed to extract the desired lithium chloride from subsurface brine and typically re-injects the spent or used brine into the aquifer to maintain pressure after lithium extraction.
We are currently in the preliminary stages of researching and developing the media and design for the next generation of our MDLE Plant Technology which we anticipate could provide customers with additional options for processing brine solutions and increasing lithium chloride production. We have recently purchased two larger diameter columns and are currently conducting laboratory and field studies to determine the optimal process for utilizing these columns. We currently estimate that the cost for instrumentation and engineering related to the next generation module and columns of the MDLE Plant will be approximately $500,000 with an additional estimated $250,000 relating to the construction and testing of the larger diameter columns.
Components of the Statement of Operations
Revenue
We generated revenue by testing brine content of potential customers. However, we anticipate generating future revenues through a combination of technology licensing agreements, equipment rentals, constructing MDLE plants and selling them with an associated technology licensing agreement, participation in joint ventures or special purpose entities with resource developers and management fees for overseeing the construction and development of future lithium extraction facilities.
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Table of Contents
Operating Costs and Expenses
We operate with a small number of corporate employees to oversee our operations and development with the primary functions including accounting, engineering, fabrication, laboratory, legal, and research being outsourced to third party service providers. This model has allowed us to continue to develop our business and scale the operations as we had funds available. We anticipate that we will add to both our corporate staff and field staff as we commence commercial operations and work to continue developing our technology. To date, we have not experienced any shortages of available employees or outsourced service providers.
Results of Operations
Three months ended June 30, 2026, as compared to the three months ended June 30, 2025
The operating results for the three months ended June 30, 2026 and 2025, are summarized as follows (in thousands):
|
|
Three Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
REVENUE |
|
|
|
|
|
|
||
Service |
|
$ |
120 |
|
|
$ |
7 |
|
Total revenue |
|
|
120 |
|
|
|
7 |
|
|
|
|
|
|
|
|
||
COST OF REVENUE |
|
|
|
|
|
|
||
Service |
|
|
3 |
|
|
|
1 |
|
Total cost of revenue |
|
|
3 |
|
|
|
1 |
|
Gross margin |
|
|
117 |
|
|
|
6 |
|
|
|
|
|
|
|
|
||
OPERATING COSTS AND EXPENSES |
|
|
|
|
|
|
||
Operating costs, excluding depreciation |
|
|
409 |
|
|
|
600 |
|
Selling, general and administrative expenses, excluding depreciation |
|
|
1,843 |
|
|
|
2,277 |
|
Amortization of intangible assets |
|
|
269 |
|
|
|
269 |
|
Depreciation |
|
|
503 |
|
|
|
498 |
|
Operating loss |
|
|
(2,907 |
) |
|
|
(3,638 |
) |
Change in fair value of warrant liability |
|
|
2,883 |
|
|
|
5,323 |
|
Other income (expense) |
|
|
(4 |
) |
|
|
3 |
|
Net income (loss) |
|
$ |
(28 |
) |
|
$ |
1,688 |
|
Revenue
For the three months ended June 30, 2026 we generated testing revenue on brine content for three potential customers. For the comparative period ended June 30, 2025, we generated revenue testing brine content from one potential customer.
Operating Cost, excluding depreciation
For the three months ended June 30, 2026 and 2025, we incurred operating costs of $0.4 million and $0.6 million, respectively, the decrease in costs are due to lower research and development costs for the three months ended June 30, 2026.
20
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Selling, General And Administrative Expenses
The major components of selling, general and administrative expenses for the three months ended June 30, 2026 and 2025, are as follows (in thousands):
|
|
Three Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Compensation expense |
|
$ |
816 |
|
|
$ |
1,376 |
|
Share-based compensation |
|
|
369 |
|
|
|
(276 |
) |
Professional fees |
|
|
237 |
|
|
|
500 |
|
Legal fees |
|
|
148 |
|
|
|
417 |
|
Rent and miscellaneous office |
|
|
198 |
|
|
|
173 |
|
Other |
|
|
75 |
|
|
|
87 |
|
|
|
$ |
1,843 |
|
|
$ |
2,277 |
|
Compensation expense decreased compared to the prior period primarily due to large severance payments in the prior three months ended June 30, 2025 offset by higher payroll during the three months ended June 30. 2026 due to hiring full time employees compared to contractors and consultants.
Share-based compensation increased for the three months ended June 30, 2026 as there was a large forfeiture of stock awards due to the changes in the executive management team that occurred during the three months ended June 30, 2025.
Professional fees increased compared to the prior period as a result of additional accounting and auditing fees related to the additional work that lead to the filing of our registration statement during the prior year.
Legal fees decreased as compared to the prior period as a result of the timing of the changes to executive management and additional work that was incurred related to the registration statement activities.
Rent and miscellaneous office costs increased compared to the prior year period due to additional costs for our Houston office.
Other expenses decreased minimally as compared to the prior year period.
Changes in Fair Value of Warrant Liability
The Company values the outstanding warrant liabilities at each balance sheet date based on the Black-Scholes option pricing model. Any change in the fair value of the warrants is recognized as a change in fair value of warrant liability in the condensed consolidated statement of income (loss). During the three months ended June 30, 2026, the Company recognized a gain of approximately $2.9 million as compared to approximately $5.3 million for the three months ended June 30, 2025, for the change in fair value of warrant liability during the period. The primary reason for the decrease in the warrant liability valuation was the change in our stock price offset by the addition of new warrants.
Liquidity and Capital Resources
These condensed consolidated financial statements have been prepared on a going concern basis which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of June 30, 2026, the Company had an accumulated deficit of approximately $39.5 million and working capital of approximately $10.0 million. During the three months ended June 30, 2026, the Company raised additional cash in a private placement totaling $2.8 million. The Company raised approximately $9.0 million through four private placements during the year ended March 31, 2026. Cash from these private placements and existing working capital is anticipated to support the Company’s operations for at least twelve months from the date of these financial statements which alleviates the substantial doubt that the Company would continue as a going concern, however the Company continues to incur operating losses and negative cash flows. The Company has historically relied on raising funds through private placements of the Company’s common units and warrants and there is no assurance that the Company will be able to do so in the future or raise necessary funds at terms acceptable to the Company.
As previously discussed, our existing MDLE Plant was designed for a specific deployment in the Lithium Triangle in South America which had lithium concentrations of roughly 1,800 ppm and therefore required lower flow rates of approximately 300 gallons per minute of brine to efficiently recover lithium. However, the MDLE Plant is designed to be scalable and commercially flexible and was engineered to permit retrofitting to process a range of alternative brine resources of different lithium concentrations. We are currently targeting deploying our existing MDLE Plant at naturally occurring brine reservoirs either in the United States, which have brine concentrations in the range of 250 ppm to as high as 800 ppm, or in the Middle East, where brine concentrations are expected to be approximately 400 ppm. Based on ongoing discussions with potential customers and their requirements based on their specific brine concentrations, we anticipate that we will need to spend between $2.0 million and $12.0 million for customizations, which would include adding components such as additional heat exchangers, pumps, condensate coolers, a reverse osmosis unit, chillers, tanks and pipelines
21
Table of Contents
to increase the flowrate to fully utilize the twelve-column absorption capacity and expand the MDLE Plant’s capacity. Management estimates that the full range of customizations at a cost of approximately $10.0 million could increase the MDLE Plant’s throughput to approximately 480 gallons per minute and have production capacity of approximately 2,000 metric tons per year of lithium chloride, on a lithium carbonate equivalent basis, based on a 400 ppm brine stream. The cash on hand as of June 30, 2026 will not be sufficient to fund the high end of these expenditures. Additional funds from current or new investors will be necessary to fund the modifications to the MDLE Plant to allow us to fully recover the current amounts capitalized on our balance sheet.
Summary of Cash Flows
The cash flows for the three months ended June 30, 2026 and 2025, are as follows (in thousands):
|
|
Three Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash used in operating activities |
|
$ |
(2,341 |
) |
|
$ |
(3,334 |
) |
Cash used in investing activities |
|
|
(2 |
) |
|
|
(351 |
) |
Cash provided by (used in) financing activities |
|
|
2,597 |
|
|
|
(27 |
) |
Net change in cash |
|
$ |
254 |
|
|
$ |
(3,712 |
) |
Operating Activities
Cash used in operating activities for the three months ended June 30, 2026 was approximately $2.3 million as compared to $3.3 million for the three months ended June 30, 2025. The decrease compared to prior period is mostly due to higher operating expenses in the three months ended June 30, 2025 incurred mostly as a result of higher development costs as well as severance costs.
Investing Activities
Cash used in investing activities for the three months ended June 30, 2026 decreased compared to the three months ended June 30, 2025 as we had additional investments for completing the purchases related to the MDLE Plant build-out.
Financing Activities
Cash provided by financing activities for the three months ended June 30, 2026 increased compared to prior period, as we raised net proceeds of $2.8 million for the proceeds of a private placement during the three months ended June 30, 2026, with none during the three months ended June 30, 2025.
22
Table of Contents
Critical Accounting Estimates
There were no changes to our critical accounting policies from those disclosed in our Form 10-K filed with the Securities and Exchange Commission on June 17, 2026.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements and we do not contemplate having them in the foreseeable future.
Financial Instruments and Other Instruments
The carrying values of cash, other receivable, trade payables and other liabilities and lease liability approximate their fair values because of the short-term maturity of these financial instruments. We have no exposure to asset backed commercial paper.
Accounting Policies
A detailed summary of all the Company’s significant accounting policies is included in Note 3 to the audited consolidated financial statements for the year ended March 31, 2026, found in our Form 10-K filed with the Securities and Exchange Commission on June 17, 2026.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We have not entered into any market risk sensitive instruments for trading purposes. We are exposed to market risks in the ordinary course of business including fluctuations in interest rates and commodity prices, which can affect our operating, investing, and financing activities.
Special Note Regarding Forward-Looking Statements
Certain information contained in this annual report, including information regarding future financial and operational performance and plans, targets, aspirations, expectations, and objectives of management, constitute forward-looking statements within the meaning of the Section 21E of the Exchange Act and forward-looking information within the meaning of and Canadian provincial and territorial securities laws. We refer to all of these as forward-looking statements. Forward-looking statements are forward-looking in nature and, accordingly, are subject to risks and uncertainties. All statements other than statements of historical fact included in this quarterly report regarding the prospects of the Company’s industry or its prospects, plans, financial position or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “plans,” “expects,” “does not expect,” “is expected,” “look forward to,” “budget,” “scheduled,” “estimates,” “forecasts,” “will continue,” “intends,” “the intent of,” “have the potential,” “anticipates,” “does not anticipate,” “believes,” “should,” “should not,” or variations of such words and phrases that indicate that certain actions, events or results “may,” “could,” “would,” “might,” “will,” “be taken,” “occur,” “be achieved,” or the negative of these terms or variations of them or similar terms and include, without limitation, statements regarding our expectations or beliefs regarding:
Our forward-looking statements, included in this quarterly report and elsewhere, represent management’s expectations as of the date that they are made and we undertake no obligation to update these statements. Our forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, these forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results, level of activity, performance or achievements to differ materially
23
Table of Contents
from those expressed or implied by these forward-looking statements include those risks set forth in our SEC filings and risks related to:
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, consisting of controls and other procedures designed to give reasonable assurance that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including our Interim Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding such required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our Interim Chief Executive Officer and Chief Financial Officer have evaluated such disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q and have determined that such disclosure controls and procedures are effective.
Changes in internal control over financial reporting.
There was no change in our internal control over financial reporting during the three months ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
24
Table of Contents
PART II—OTHER INFORMATION
Item 1A. RISK FACTORS
There were no material changes to the risk factors disclosed in Part I, Item 1A "Risk Factors" of the Form 10-K
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
10b5-1 Trading Plans
During the three months ended June 30, 2026, none of our officers (as defined in Rule 16a-1(f) of the Exchange Act) or directors
25
Table of Contents
Item 6. Exhibits.
Exhibit Number |
|
Description |
10.43 |
|
Subscription Agreement for Units dated April 29, 2026 by and between the Company and EV Metals 9 LLC(1) |
10.44 |
|
Warrant Certificate dated April 29, 2026(1) |
10.45+ |
|
First Amendment to Executive Employment Agreement, dated November 3, 2025, by and between the Company and James Garrett Galloway |
10.46+ |
|
Restricted Share Unit Agreement, dated February 4, 2026, by and between the Company and James Garrett Galloway |
10.47+ |
|
First Amendment to Restricted Share Unit Agreement, dated March 9, 2026, by and between the Company and James Garrett Galloway |
31.1* |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1* |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2* |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
+ Indicates management contract or compensatory plan.
(1) Incorporated by reference to the Company’s Form 8-K on April 29, 2026 (No. 333-286616).
26
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
International Battery Metals Ltd. |
|
|
|
|
|
|
Date: |
August 12, 2026 |
|
By: |
/s/ James Garrett Galloway |
|
|
|
|
Name: James Garrett Galloway |
|
|
|
|
Title: Interim Chief Executive Officer |
|
|
|
|
|
Date: |
August 12, 2026 |
|
By: |
/s/ Michael Rutledge |
|
|
|
|
Name: Michael Rutledge |
|
|
|
|
Title: Chief Financial Officer |
27