AMERICAN BATTERY TECHNOLOGY Co: Form 10-Q for the period ended Dec 31, 2024

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

Forward-Looking Statements

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

While we believe our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which are based on information available to us on the date of this report or, if made elsewhere, as of the date made. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, the risks and uncertainties discussed in this report, “Item 1A — Risk Factors” in our Form 10-K for the year ended June 30, 2024 and from time to time in our other reports filed with the SEC.

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

Overview

American Battery Technology Company (the “Company”) is an integrated critical battery materials company within the lithium–ion battery industry that is working to increase the domestic U.S. production of battery materials, such as lithium, nickel, cobalt, and manganese through its exploration of new domestic-US primary resources of battery metals, development and commercialization of new technologies for the extraction of these battery metals from primary resources, and commercialization of an internally developed integrated process for the recycling of lithium–ion batteries. Through this three–pronged approach the Company is working to both increase the domestic production of these battery materials, and to ensure spent batteries have their elemental battery metals returned to the domestic manufacturing supply chain in an economical, environmentally-conscious, closed–loop fashion.

To implement this business strategy, the Company has constructed its first integrated lithium–ion battery recycling facility, which takes in waste and end–of–life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The ramp-up and operations of this facility are of the highest priority to the Company, and as such it has significantly increased the resources devoted to its execution including the further internal hiring of technical staff, expansion of laboratory facilities, and purchasing of equipment. The Company has been awarded a competitively bid grant from the U.S. Advanced Battery Consortium to support a $2 million project to accelerate the development and demonstration of the technologies within this integrated lithium–ion battery recycling facility. The Company has also been awarded an additional grant from the DOE to support a $20 million project under the Bipartisan Infrastructure Law to validate, test, and deploy three next-generation disruptive advanced separation and processing recycling technologies.

Additionally, the Company is accelerating the demonstration and commercialization of its internally developed low–cost and low–environmental impact processing train for the manufacturing of battery grade lithium hydroxide from Nevada–based sedimentary claystone resources. The Company has been awarded a competitive grant from the DOE’s Advanced Manufacturing and Materials Technologies Office through the Critical Materials Innovation program to support a $4.5 million project for the construction and operation of a multi–ton per day integrated continuous demonstration system to support the scale–up and commercialization of these technologies. The Company has also been awarded an additional grant award under the Bipartisan Infrastructure Law to support a $115.5 million project to design, construct, and commission a first-of-kind commercial-scale refinery to produce 30,000 MT of battery-grade lithium hydroxide per year from this resource.

ABTC has completed the construction and commissioning of its claystone to lithium hydroxide (LiOH) pilot plant, marking a significant milestone in the commercialization of its internally-developed processes to access an unrealized domestic primary lithium resource. The construction and commissioning of this pilot plant enables ABTC to demonstrate its technologies for accessing the lithium housed in its unconventional resource, Tonopah Flats Lithium Project (TFLP), in an integrated and continuous system, and to generate large amounts of battery grade lithium hydroxide for delivery to customers for qualifications and evaluation. The construction and operation of this pilot demonstration plant are supported by a competitively awarded grant from the DOE for this $4.5 million effort. Product from the pilot plant is being sent for analysis to confirm and validate the resource.

ABTC has filed an amended Initial Assessment for its Tonopah Flats Lithium Project (TFLP). The TFLP is one of the largest identified lithium resources in the U.S., and while initial pit designs and economic analyses in previous assessments evaluated the full resource, this updated Initial Assessment utilizes a commercialization pathway with a more rigorous mine plan that contemplates utilization of only Measured and Indicated Mineral Resources, and excludes Inferred Mineral Resources, to supply the planned commercial-scale lithium hydroxide refinery. This commercialization pathway allows for an engineered phased development, with improved access to the higher quality portions of the resource, and at improved project economics.

On March 28, 2024, ABTC was selected for an approximately $19.5 million tax credit through the Qualifying Advanced Energy Project Credits program (48C). This tax credit was granted by the U.S. Department of Treasury Internal Revenue Service following a highly competitive technical and economic review process performed by the DOE, which evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing, and refining infrastructure. This $19.5 million tax credit can be utilized both for the reimbursement of capital expenditures spent to date, and also for equipment and infrastructure for additional value-add operations at ABTC’s battery recycling facility in the Tahoe-Reno Industrial Center (TRIC) in Storey County, Nevada. As of December 31, 2024, the Company has incurred qualifying expenditures for this tax credit but will not recognize any amounts until it has reasonable assurance of compliance with the relevant standards. The Company intends to sell the credit in order to monetize it’s value.

Also on March 28, 2024, ABTC was selected for an additional $40.5 million tax credit through the Qualifying Advanced Energy Project Credits program (48C) to support the design and construction of a new, next-generation, commercial battery recycling facility to be located in the United States. As with ABTC’s initial $19.5 million tax credit under the 48C program supporting the construction and buildout of its battery recycling facility in Nevada, this additional award was granted by the U.S. Department of Treasury Internal Revenue Service following a highly competitive technical and economic review process performed by the DOE, which evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing, and refining infrastructure. As of December 31, 2024, the Company has not incurred any qualifying expenditures towards this tax credit.

On September 23, 2024, the U.S. DOE announced that the Company had been selected for award negotiations for a highly competitive grant for $150 million to be applied towards the construction of a new lithium-ion battery recycling facility. On December 18, 2024, the Company received a contracted grant award for $144 million of federal investment by the DOE, with these funds awarded to the Company and its subcontractor Argonne National Laboratory, to support the construction of a new lithium-ion battery recycling facility.

Financial Highlights:

• Revenues were $332,000 in the three months ended December 31, 2024, following the Company’s initial recognition of revenues in the fourth quarter of fiscal 2024.
• Cost of goods sold was $3.3 million in the three months ended December 31, 2024, include in this amount are non-cash items such as depreciation expense of $1.1 million and stock-based compensation of $0.1 million leaving cash cost of goods sold of $2.1 million.
• On September 23, 2024, the Company was selected for a new highly competitive grant from the U.S. DOE for $150 million and on December 18, 2024, the Company received a contracted grant award for $144 million of federal investment to construct a second lithium-ion battery recycling facility.
• Government grant reimbursement was $2.3 million for the six months ended December 31, 2024 compared to $1.7 million during the same period of the prior year. Out of the $2.3 million in grant funding for the six months ended December 31, 2024, $0.6 million was recorded as an offset to fixed assets, as reimbursements related to equipment purchases, and $1.7 million was recorded as an offset to research and development costs within the condensed consolidated statement of operations.
• As of December 31, 2024, the Company had total cash on hand of $20.6 million of which $15.6 million was available and $5.0 is restricted.
• Cash used in operations for the six months ended December 31, 2024 was $12.8 million, compared to $7.4 million of cash used in operations for the six months ended December 31, 2023.
• On November 14, 2024, the Company issued a new series of senior convertible notes (the “2024 Notes”) in the aggregate principal amount of $12 million.
• In December 2024, the Company entered into two registered direct offerings, as described below, for a total amount of $15 million in gross proceeds.

26

Results of Operations for the Three Months Ended December 31, 2024 and 2023

Revenue

During the three months ended December 31, 2024, our revenue was $0.3 million. This is related to the sale of our recycled products produced from recycling operations and followed our initial revenue generated by the Company in the fourth quarter of fiscal 2024.

Cost of Goods Sold

Cost of goods sold during the three months ended December 31, 2024 was $3.3 million. After the removal of non-cash items of $1.2 million such as depreciation expense of $1.1 million and stock-based compensation of $0.1 million, cash cost of goods sold was $2.1 million. The high cost of goods sold is related to the depreciation of the recycling facility fixed assets which is time based, and labor and overhead costs. We expect these costs to continue to rise on an absolute basis but will be reduced as a percentage of revenue as we scale our production and sales and gain efficiencies in the production process.

Management uses certain non-GAAP metrics to evaluate our operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing business trends as well as to view the results from management’s perspective. Non-GAAP Cost of Goods sold excludes certain non-cash charges including depreciation expense and stock-based compensation. Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP.

Operating Expenses

During the three months ended December 31, 2024, the Company incurred $10.8 million of operating expenses compared to $8.8 million during the three months ended December 31, 2023.

General and administrative expenses consist of personnel, stock-based compensation, office expenses, legal, recruitment, business development, public relations, and general facility expenses. For the three months ended December 31, 2024 and 2023, general and administrative expenses were $7.7 million and $4.4 million, respectively. The increase of $3.3 million in the current period primarily related to increased employee stock-based compensation, personnel costs due to increased headcount, and external, audit and insurance costs.

Research and development expenses consist primarily of laboratory leases, supplies, personnel, stock-based compensation, and employee benefits. Research and development expenses for the three months ended December 31, 2024 and 2023 were $2.9 million and $3.6 million, respectively. The decrease in the current period is primarily due to allocation of a portion of such costs to inventory and cost of goods sold as part of phase 1 recycling operations coming online in the fourth quarter of fiscal 2024. Research and development expenses are partially offset by federal grant funds for awards the Company has contracted with various federal agencies. The Company recognized an offset to its research and development costs of $1.8 million and $0.7 million related to these awards for the three months ended December 31, 2024 and 2023 respectively.

Exploration costs consist primarily of drilling, assay, claim fees, personnel, stock-based compensation, office and warehouse, travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $0.2 million for the three months ended December 31, 2024 compared to $0.8 million during the same period in the prior year. The decrease quarter-over-quarter resulted principally from higher costs in the prior year related to drilling, assaying and engineering to further define and potentially upgrade the geological classification of the mineral rights.

Other Income (Expense)

During the three months ended December 31, 2024, the Company recorded other income of $0.4 million, consisting of income of $1.1 million resulting from a change in the fair value of liability classified financial instruments partially offset by expense of $0.7 million for amortization of debt financing costs.

Results of Operations for the Six Months Ended December 31, 2024 and 2023

Revenue

During the six months ended December 31, 2024, our revenue was $0.5 million. This is related to the sale of our recycled products produced from recycling operations and followed our initial revenue generated by the Company in the fourth quarter of fiscal 2024. The materials were sold to several customers who took delivery at our plant . Approximately $0.2 million of revenue is attributed to materials that will remain at our plant to be further processed when phase two of the plant is complete. The customer for these materials has full ownership, rights and obligations associated with the materials, including cost of storage.

Cost of Goods Sold

Cost of goods sold during the six months ended December 31, 2024 was $5.8 million. After the removal of non-cash items of $2.4 million such as depreciation expense of $2.2 million and stock-based compensation of $0.2 million, cash cost of goods sold was $3.4 million. The high cost of goods sold is related to the depreciation of the recycling facility fixed assets, which is time based, and the finalization of the production process. We expect these costs to continue to rise on an absolute basis but will be reduced as a percentage of revenue as we scale our production and sales and gain efficiencies in the production process.

Management uses certain non-GAAP metrics to evaluate our operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing business trends as well as to view the results from management’s perspective. Non-GAAP Cost of Goods sold excludes certain non-cash charges including depreciation expense and stock-based compensation. Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP.

Operating Expenses

During the six months ended December 31, 2024, the Company incurred $18.3 million of operating expenses compared to $16.8 million during the six months ended December 31, 2023.

General and administrative expenses consist of personnel, stock-based compensation, office, legal, recruitment, business development, public relations, and general facility expenses. For the six months ended December 31, 2024, general and administrative expenses were $12.7 million, an increase of $5.2 million over the same period in the prior year primarily related to increased employee stock-based compensation, personnel costs, and audit and insurance costs.

Research and development expenses consist primarily of laboratory leases, supplies, personnel, stock-based compensation, and employee benefits. Research and development expenses for the six months ended December 31, 2024 and 2023 were $5.0 million and $7.2 million, respectively. The decrease in the current period is primarily due to allocation of a portion of such costs to inventory and cost of goods sold as part of phase 1 recycling operations coming online in the fourth quarter of fiscal 2024. These costs are partially offset by federal grant funds for awards that it has contracted with various federal agencies. The Company recognized an offset to its research and development costs of $2.3 million and $1.2 million related to these awards for the six months ended December 31, 2024 and 2023 respectively.

Exploration costs consist primarily of drilling, assay, claim fees, personnel, stock-based compensation, office and warehouse, travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $0.7 million for the six months ended December 31, 2024 compared to $2.2 million during the same period in the prior year. The decrease year-over-year resulted principally from higher costs in the prior year related to drilling, assaying and engineering to further define and potentially upgrade the geological classification of the mineral rights.

Other Income (Expense)

During the six months ended December 31, 2024, the Company recorded other expense of $1.5 million, including $1.9 million for amortization of debt financing costs, a $0.7 million loss on debt extinguishment, and $0.6 million loss on private placement. These expenses were partially offset by other income of $0.9 million for change in fair value of liability classified instruments and $0.7 million for change in fair value of derivative liability.

Liquidity and Capital Resources

At December 31, 2024, the Company had cash of $20.6 million (of which $15.6 million was available and $5.0 million is restricted) and total assets of $88.3 million compared to available cash of $7.0 million and total assets of $77.7 million at June 30, 2024. On December 23, 2024, the Company issued 5,000,000 shares of common stock and warrants exercisable for up to 5,000,000 shares of common stock in exchange for gross proceeds of $5.0 million (the “First Offering”). On December 27, 2024, the Company issued 3,773,586 shares of common stock and warrants exercisable for up to 3,773,586 shares of common stock in exchange for gross proceeds of $10.0 million (the “Second Offering” and, together with the First Offering, the “Offerings”). The increase of cash is due to proceeds of approximately $15 million from the Offerings and approximately $12 million from the issuance of the 2024 Notes, offset by normal transactional activities related to plant production and paydown of debt obligations.

The Company had total current liabilities of $17.7 million at December 31, 2024, compared to $15.8 million at June 30, 2024. The increase is related to the issuance of the 2024 Notes, offset by some paydown of debt, and the timing of payments for accounts payable and accrued expenses.

As of December 31, 2024 the Company had working capital of $12.8 million compared to $2.6 million at June 30, 2024. The positive working capital at the end of both periods results from the classification of $8.4 million of held-for-sale assets as current at December 31, 2024 and June 30, 2024 and the increase in cash due to proceeds from the Offerings and the issuance of the 2024 Notes. Absent the held-for-sale classification of certain assets, the working capital would have been a positive $4.4 million and a deficiency of $5.8 million at December 31, 2024 and June 30, 2024, respectively.

The continuation of the Company as a going concern is dependent upon generating profit from its operations and its ability to obtain debt or equity financing. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings, or obtain them on favorable terms, which could limit its operations. Any such financing activities are subject to market conditions. These uncertainties cause substantial doubt to exist as to the Company’s ability to continue as a going concern for 12 months from issuance of these financial statements. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These adjustments could be material.

Based on our current operating plan, unless we generate income from the operations of our facilities or raise additional capital (debt or equity), it is possible that we will be unable to maintain our financial covenants under our existing debt agreements. If such covenant violations are not waived by the holders of the Notes and the 2024 Notes, it would result in an event of default, causing an acceleration of the outstanding balances. If we do raise additional capital through public or private equity offerings, as opposed to debt issuances, the ownership interest of our existing stockholders may be diluted.

Cash Flows

For the six months ended December 31:

Cash from Operating Activities.

During the six months ended December 31, 2024, the Company used $12.8 million of cash for operating activities, compared to $7.4 million used during the six months ended December 31, 2023. In both periods, the cash used has supported an increased scale of operations including increased employee headcount and personnel costs, increased production, and increased administrative costs related to insurance, legal and accounting.

Cash from Investing Activities

During the six months ended December 31, 2024, the Company used cash in investing activities of $1.5 million for acquisition of property and equipment for its recycling facilities. This is in comparison to cash used in investing activities of $10.9 million for the six months ended December 31, 2023. The decrease is due to the Company’s purchasing more equipment in the beginning stages of the recycling plant build-out in the prior year.

Cash from Financing Activities

During the six months ended December 31, 2024, the Company had cash provided by financing activities of $27.9 million, compared to $23.6 million provided during the six months ended December 31, 2023. The Company has relied on equity and debt financings to support its increased operating activities, the ramp up of the recycling plant, development of the lithium ore pilot plant, and upgrades to the geological category of its Tonopah claims through additional studies and assessments.

The Company had proceeds from equity and debt financings of $23.5 million in the six months ended December 31, 2024 compared to $14.7 million in the prior year period. The increase in cash provided by equity financings in the six months ended December 31, 2024 is related to the sale of 5,938,786 shares of common stock pursuant to its at-the-market (“ATM”) sales agreement for total proceeds of $6.3 million and proceeds from the Offerings; partially offset by paydowns of previous secured convertible notes.

Working Capital

Future Financing

The Company will continue to rely on sales of our common shares, debt, or other financing to fund our business operations as needed beyond any revenue generated from internal operations and the government tax credits and grants we have been awarded. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the securities or arrange for debt or other financing to fund planned operating activities, acquisitions and exploration activities.

Critical Accounting Estimates

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors and adjust those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates and assumptions.

While some of our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” in the notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, all our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the year ended June 30, 2024.

Off-Balance Sheet Arrangements

As of December 31, 2024, we had no off-balance sheet arrangements.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2024, the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2024, the Company’s disclosure controls and procedures are not effective, based on the material weaknesses described below.

Material Weakness in Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Management, with the participation of the principal executive officer and principal financial officer, under the oversight of our Board of Directors, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, management concluded that, as of December 31, 2024, our internal control over financial reporting was not effective, due to the material weaknesses in internal control over financial reporting, described below.

Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including the individuals serving as our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

The Company did not have a sufficient complement of personnel with appropriate technical expertise to perform an effective risk assessment. In addition, the Company did not maintain proper segregation of duties related to accounting processes. As a consequence, internal control deficiencies related to the design and operation of process-level controls were determined to be pervasive throughout the Company’s financial reporting processes. While these material weaknesses did result in immaterial misstatements of the Company’s consolidated financial statements, these material weaknesses create a reasonable possibility that a material misstatement of account balances or disclosures in the consolidated financial statements may not be prevented or detected in a timely manner. Therefore, we concluded that the deficiencies represent material weaknesses in the Company’s internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2024.

Remediation Plan

During the fiscal year ended June 30, 2024, remediation efforts included removing accounting personnel access to both create and post a journal entry, moving the systems administration tasks to personnel outside of the accounting department, and adding review procedures by qualified personnel over complex accounting matters by way of engaging third-party professionals with whom to consult regarding complex accounting applications and valuations. However, there is no guarantee that these measures will remediate the material weaknesses described above.

In addition to the steps taken outlined above, in July 2024, we hired a new corporate controller with extensive experience in technical accounting, SEC reporting and internal control over financial reporting. In October 2024, we hired a senior accountant with public accounting and public company reporting experience, which will help to mitigate the segregation of duties weakness. We plan to continue to utilize an outside CPA firm for technical expertise and we plan to perform a complete risk assessment to update our control procedures. We expect these additional steps will help mitigate the technical expertise weakness, the segregation of duties weakness and identify any other areas of risk to be incorporated in our overall internal control plan. We expect to remediate these material weaknesses by the end of fiscal year 2025. The Company is currently conducting a diligent search for a permanent Chief Financial Officer with relevant and extensive experience in accounting and finance.

We are committed to ensuring that our internal control over financial reporting is designed and operating effectively. While we believe procedures are in place as of December 31, 2024 to address the material weaknesses, remediation steps are required to be in place and effective for an adequate period of time. We cannot provide assurance that such material weaknesses will be remediated, and we may discover additional material weaknesses that may require additional time and resources to remediate.

Changes in Internal Control over Financial Reporting

Except as noted above with respect to the completion of certain steps in the remediation plan, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter covered by this Interim Report on Form 10–Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our business is subject to various risks, including those described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2024. There have been no changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended June 30, 2024 under “Item 1A - Risk Factors” and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 under “Item 1A – Risk Factors”. Additionally, the Trump Administration has issued numerous Executive Orders (“EOs”), including the Unleashing American Energy Executive Order on January 20, 2025, which requires an immediate pause in the disbursement of funds appropriated through the Inflation Reduction Act of 2022 during a 90-day review period. The Company is currently evaluating these EOs and other related memoranda to determine what, if any, impact they might have on awards selected or received from the DOE. This pause, or a similar pause, particularly if extended, could delay the timing of projects, and could have a material adverse impact on our business, financial condition, and results of operations.