ABAT — FY2026 Annual Report Analysis

Revenue up 407%, but a federal export ban now threatens most of it

American Battery Technology Company (ABTC) closed its fiscal year on 30 June 2026 with the operational result it had been promising: its lithium-ion battery recycling plant at the Tahoe-Reno Industrial Center in Storey County, Nevada finally ran at enough volume to sell $21.7 million of product, up from $4.3 million the year before, and the fourth quarter produced the company's first positive gross margin — the money left over from sales after paying the direct cost of making the product. Then, seven weeks after the fiscal year ended, a U.S. federal directive effectively banned the export of "black mass" — the shredded, metal-rich powder recovered from spent batteries — which the filing states is "the majority of the Company's total revenue," sold almost entirely to customers outside the United States.

That single subsequent event dominates any read of these results. The operating progress is real and measurable; whether it survives the next twelve months depends on a Commerce Department decision that had not been made when the 10-K was filed on 14 September 2026.

Key figures (fiscal year ended 30 June)

Industry-specific note: for a recycler still ramping a single plant, the two numbers that matter most are throughput-driven gross margin and cash burn, both shown above. Management also discloses an "adjusted gross margin" that strips depreciation ($3.7M) and stock compensation ($1.1M) out of cost of goods sold — a non-GAAP figure, meaning it is not a standard accounting measure, but a reasonable proxy for whether each tonne processed covers its own cash costs. On that basis the plant crossed into positive territory in FY2026.

What actually drove the revenue increase

Management attributes the jump to two things: "an increase in processed feedstock, which enabled higher production throughput, as well as higher market prices for our products and byproducts." Both matter, and they are not equally durable. Volume growth reflects the plant working; price is a commodity tailwind that can reverse.

The trajectory within the year is steeper than the annual figure suggests. Fourth-quarter revenue was $8.2 million against $2.8 million a year earlier — meaning Q4 alone was 38% of the full year, and the exit run rate annualizes to roughly $33 million, about 51% above the FY2026 total. Cost of goods sold in that quarter was $6.9 million, producing $1.3 million of GAAP gross profit versus a $2.6 million gross loss in the year-ago quarter. This is the first quarter in which the recycling facility covered its own reported production costs.

Cost of goods sold rose only 67% against 407% revenue growth, which is the operating-leverage result a ramping plant is supposed to show. The filing breaks the $10.0 million cost increase into $4.1 million of feedstock to support higher throughput, $3.7 million of added compensation "as we hired to support expanded production capacity," and $2.2 million of higher facility absorption costs. Inventory write-downs to net realizable value — writing stock down when its expected selling price falls below cost — dropped to $0.9 million from $2.9 million, another sign that what the plant produces is now saleable closer to the price assumed when it was made.

The loss got bigger, and stock compensation is why

Net loss widened by $26.6 million to $73.4 million despite the gross-margin improvement. The cause sits almost entirely in one non-cash line. Stock-based compensation — the accounting charge for shares and options granted to employees, which costs no cash but dilutes existing shareholders — was $46.5 million, up $31.8 million. Of that, $38.5 million ran through general and administrative expense, which is why G&A more than doubled to $51.6 million.

Management is specific about the trigger: the increase "is primarily attributable to a $29.4 million increase in value of stock-based compensation expense. A majority of the increase is related to the fiscal year 2026 executive performance-based awards recognized in the fiscal year upon finalization and approval of the performance milestones by the Board of Directors in January 2026," compounded by "a higher grant-date stock price for fiscal year 2026 awards compared to the prior year."

Strip stock compensation out of both years and the picture inverts: an adjusted loss of roughly $26.9 million in FY2026 against roughly $32.1 million in FY2025 — a 16% improvement rather than a 57% deterioration. Cash used in operations, which mechanically excludes the non-cash charge, confirms it at $24.2 million versus $28.9 million. So the headline loss and the underlying cash performance point in opposite directions, and the honest reading is the second one — with the caveat that share-based pay is a real transfer of value to employees, and at $46.5 million it equals more than twice the company's entire annual revenue.

Research and development also more than doubled, to $17.9 million, on "higher payroll costs of $4.5 million related to expansion of engineering and technical teams to support production ramp-up" plus $2.4 million more stock compensation. Note that reported R&D is stated net of government reimbursements, which fell to $3.2 million from $5.1 million — so about $1.9 million of the R&D increase is simply less grant money offsetting the same spending.

Loss per share was unchanged at $(0.58) in both years only because the share count grew almost exactly as fast as the loss: weighted average shares rose 59% to 127.6 million. That is arithmetic coincidence, not stability.

Balance sheet: the strongest position in the company's history

ABTC ended the year with $49.5 million of cash and cash equivalents (including $40.8 million parked in government money-market funds) against $7.5 million a year earlier, and — the more consequential change — no outstanding debt. The $7.7 million of notes payable on last year's balance sheet, remnants of an expensive convertible note structure that carried a 50.73% effective interest rate after a troubled-debt restructuring in late 2024, is gone; the final settlement moved roughly $8.0 million into additional paid-in capital. The $5.0 million minimum-liquidity restriction that lender imposed was lifted on 29 July 2025, and restricted cash fell to $0.8 million, now backing letters of credit for surety bonds and a feedstock supply agreement.

Working capital excluding restricted cash reached $53.7 million against $10.9 million. Total liabilities are $6.5 million against $132.8 million of assets. There is no going-concern warning anywhere in this filing — notable for a company at this stage, and a genuine change from its recent history.

The money came from shareholders. Financing activities provided $75.6 million: $65.8 million from at-the-market share sales through Virtu Americas (up $47.2 million year over year), $10.0 million from warrant exercises, and $0.7 million from the employee stock purchase plan, less $0.9 million of issuance costs. Shares outstanding rose 45% to 141.5 million, against 250 million authorized — headroom that is ample for now but not unlimited given the pace. Management states plainly that it "will continue to rely on sales of our common shares, debt, or other financing," and that issuances "will result in dilution to existing stockholders."

Investing stepped up sharply to $13.6 million from $2.5 million: $8.9 million into recycling-facility equipment, $2.0 million for the 3400 Peru property, and $1.4 million of mining-property purchases including 88 claims adjacent to the Tonopah Flats lithium project for $0.5 million. Separately, the Fernley, Nevada property came back onto the books — a buyer terminated the purchase agreement on 28 July 2025, and the roughly $7.0 million asset was reclassified from held-for-sale into construction-in-progress. Water rights carried at $3.8 million made a similar round trip, moving from held-for-sale into intangible assets after sitting unsold for more than a year with "no current offer or pending transaction."

The export directive

A federal directive effective 27 August 2026 "essentially prohibits the export of black mass by any domestic company from the United States, unless an exception or adjustment is obtained from the U.S. Department of Commerce's Bureau of Industry and Security." It runs for approximately one year.

The filing does not soften what this means. Black mass sales are "the majority of the Company's total revenue," and "substantially all of its current black mass customers are located outside the United States in OECD countries." ABTC has filed an exception request; BIS has said it intends to respond to such requests within 14 days, and a public comment period on the directive runs until 4 November 2026. Management states it "cannot predict the outcome of these efforts," and that if no exception is granted or the terms are "commercially impracticable," it "may be required to seek alternative income sources, reduce operating costs, or pursue additional financing." Building a domestic customer base instead "may take considerable time, and the terms of domestic sales may be significantly less favorable."

The risk concentrates further: five customers accounted for approximately 86% of FY2026 revenue (three customers were 74% in FY2025), and four customers held 81% of year-end receivables. There are no long-term fixed-volume commitments behind those relationships.

Takeaway: ABTC spent FY2026 proving its recycling plant can cover its cash costs — Q4 delivered the first positive gross margin in company history, cash burn fell 16%, and the balance sheet went from $7.5 million and leveraged to $49.5 million and debt-free. Then a federal directive banned the export of the product generating most of that revenue to the customers who buy nearly all of it. The operating thesis is now validated and simultaneously hostage to a Commerce Department exception request whose outcome the company explicitly declines to predict.

Government funding: large on paper, barely drawn

ABTC's capital plan leans on federal awards totalling well over $200 million, but the amounts actually collected remain small, and one award already proved reversible. On 9 October 2025 the DOE terminated the $57.7 million cooperative agreement supporting the Tonopah Flats lithium hydroxide refinery. ABTC appealed the next day, went through technical and commercial reviews culminating in a December 2025 meeting, and the DOE reinstated the award "in its entirety" in January 2026 with no change to funds or milestones. Management says the episode caused no material change to project timeline or capital program.

Drawdown status as of 30 June 2026:

These are reimbursement-based and conditioned on technical, cost-share, reporting and compliance milestones, and — as October 2025 demonstrated — remain "subject to governmental appropriations, audit, and unilateral action." Total grant benefit recognized in FY2026 was $3.7 million, down from $5.7 million. The gap between headline award figures and cash actually received is the relevant number for anyone modelling the company's funding.

Internal controls

Management concluded that as of 30 June 2026 both disclosure controls and internal control over financial reporting were not effective. (As a non-accelerated filer, ABTC is not required to obtain — and did not obtain — an auditor attestation on internal controls.) The filing identifies two material weaknesses: insufficient personnel "with the appropriate level of technical accounting expertise to effectively identify, evaluate, and design controls related to complex transactions," and inadequate segregation of duties producing "incompatible responsibilities and insufficient independent review controls," with the resulting deficiencies described as "pervasive throughout the Company's financial reporting processes." Remediation is in progress but incomplete. This does not imply the reported figures are wrong; it does mean they carry less control assurance than effective controls would provide, which is worth weighting when the company is also reporting its first favourable operating inflection.

Outlook

ABTC gives no revenue or earnings guidance, so the forward view has to be built from the filing's own mechanics.

On cash: $49.5 million against FY2026 operating burn of $24.2 million and capital spending of $13.6 million implies roughly 16 months at the combined FY2026 rate, before any further share issuance and before any revenue disruption. Operating burn should keep improving if throughput holds, since the plant now covers its cash production costs. The at-the-market facility remains the funding mechanism of choice, so expect continued dilution.

On the export ban: this is binary and near-term. A BIS exception granted on workable terms leaves the Q4 exit run rate of roughly $33 million annualized intact and the story is a recycler scaling into profitability. A denial, or conditions that make foreign sales uneconomic, removes the majority of revenue with no replacement channel ready — and the filing's own language ("reduce operating costs, or pursue additional financing") describes the response. The 14-day BIS response window means this should resolve well before the December quarter closes; the directive's roughly one-year duration caps the damage even in the bad case, but a year is long enough to force a materially different cost structure.

On the pipeline: the second 100,000-tonne recycling facility, the Tonopah Flats mine and refinery, and the $900 million EXIM letter of interest are all pre-construction and dependent on federal money that has been drawn at 1% to 27%. None of it changes the FY2027 picture. The realistic FY2027 question is narrower: does the Nevada plant hold its throughput and its newly positive gross margin, and does it still have somewhere to sell what it produces.