# AMERICAN BATTERY TECHNOLOGY Co (ABAT) FY 2026 MD&A

Verbatim Item 7 Management's Discussion and Analysis from AMERICAN BATTERY TECHNOLOGY Co's 10-K for fiscal year 2026.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1576873/000149315226042497/form10-k.htm
Accession: 0001493152-26-042497
Filing date: 2026-09-14
Report date: 2026-06-30
Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Company profile: /company/ABAT/
All MD&A years: /company/ABAT/mda/
Previous year: /company/ABAT/mda/fy2025/ (FY 2025)

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

Forward-Looking
Statements

You
should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial
statements and the notes thereto included elsewhere in this Form 10-K. The information in this discussion contains forward-looking statements
and information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements
include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected
costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “may,” “plans,” “projects,” “will,” “would”
and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these
identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and
you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans,
intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks
and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without
limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which
they are made, and we do not assume any obligation to update any forward-looking statements except as required by applicable securities
laws.

Overview

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

28

To
implement this business strategy, the Company has constructed and is operating its first integrated lithium–ion battery recycling
facility, which takes in waste and end–of–life battery materials from the electric vehicle, battery energy storage system
(“BESS”), consumer electronics industries, and manufactures several types of recycled products and byproducts. The ramp-up
and operation of this facility remain top priorities, and the Company has significantly expanded resources to support its development.
These efforts include hiring additional technical staff, expanding laboratory facilities, and purchasing equipment. As a result, the
Company generated its first revenue in the fourth quarter of fiscal year 2024 and has achieved continued growth in production volumes
and revenue through June 30, 2026.

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

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

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

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

ABTC
is currently developing a mine and refinery at the TFLP for the manufacturing of 30,000 tonnes of high purity critical mineral lithium
hydroxide per year. In October 2022, ABTC was selected for a competitively awarded $58 million grant from the U.S. Department of Energy
to support the construction of the first 5,000 tonnes lithium hydroxide per year processing train at this facility.

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

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

29

Fiscal
Fourth Quarter 2026 Financial Highlights:

[[GREPCENT_TABLE]]
[["","\u25cf","Revenue was $8.2 million for the three months ended June 30, 2026, as compared to $2.8 million for the three months ended June 30, 2025."],["","\u25cf","Total cost of goods sold was $6.9 million for three months ended June 30, 2026, compared to $5.3 million for the three months ended June 30, 2025. Cost of goods sold for the three months ended June 30, 2026 included non-cash items, of depreciation of $0.7 million and stock-based compensation of $0.2 million. Excluding these non-cash items cash cost of goods sold (a non-GAAP measure) for the three months ended June 30, 2026 was $6.0 million. Cost of goods sold for the three months ended June 30, 2025 included non-cash items of depreciation of $1.0 million and stock-based compensation of $0.2 million. Excluding these non-cash items, cash cost of goods sold (a non-GAAP measure) for the three months ended June 30, 2025 was $4.1 million."]]
[[/GREPCENT_TABLE]]

A
reconciliation of cost of goods sold to cash cost of goods sold and adjusted gross margin (both are non-GAAP measures) for the three
months ended June 30, 2026 was as follows:

[[GREPCENT_TABLE]]
[["Description","","Amount ($M) Three Months Ended June 30, 2026","","","Amount ($M) Three Months Ended June 30, 2025"],["Revenue","","$","8.2","","","$","2.8"],["Cost of goods sold (GAAP)","","","6.9","","","","5.3"],["Gross margin (loss)","","$","1.3","","","$","(2.6",")"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Description","","Amount ($M) Three Months Ended June 30, 2026","","","Amount ($M) Three Months Ended June 30, 2025"],["Revenue","","$","8.2","","","$","2.8"],["Cost of goods sold (GAAP)","","","6.9","","","","5.3"],["Less: depreciation expense","","","(0.7",")","","","(1.0",")"],["Less: stock-based compensation","","","(0.2",")","","","(0.2",")"],["Cash cost of goods sold (Non-GAAP)","","$","6.0","","","$","4.1"],["Adjusted gross margin (loss) (Non-GAAP)","","$","2.2","","","$","(1.3",")"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Gross margin for the three months ended June 30, 2026 of $1.3 million compared to gross loss of $2.6 million for the three months ended June 30, 2025."]]
[[/GREPCENT_TABLE]]

Fiscal
Year 2026 Financial Highlights:

[[GREPCENT_TABLE]]
[["","\u25cf","Revenue was $21.7 million for the fiscal year ended June 30, 2026, a 407% increase over the $4.3 million for the fiscal year ended June 30, 2025."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Total cost of goods sold was $24.8 million for the fiscal year ended June 30, 2026, compared to $14.9 million for the fiscal year ended June 30, 2025. Cost of goods sold for the fiscal year ended June 30, 2026 included non-cash items of depreciation of $3.7 million and stock-based compensation of $1.1 million. Excluding these non-cash items, cash cost of goods sold (a non-GAAP measure) for the fiscal year ended June 30, 2026 was $20.0 million. Cost of goods sold for the fiscal year ended June 30, 2025 included non-cash items of depreciation of $3.6 million and stock-based compensation of $0.8 million. Excluding these non-cash items, cash cost of goods sold (a non-GAAP measure) for the fiscal year ended June 30, 2025 was $10.5 million."]]
[[/GREPCENT_TABLE]]

A
reconciliation of cost of goods sold to cash cost of goods sold and adjusted gross margin (both are non-GAAP measures) for the fiscal
year ended June 30, 2026 was as follows:

[[GREPCENT_TABLE]]
[["Description","","Amount ($M) Fiscal Year 2026","","","Amount ($M) Fiscal Year 2025"],["Revenue","","$","21.7","","","$","4.3"],["Cost of goods sold (GAAP)","","","24.8","","","","14.9"],["Gross loss","","$","(3.1",")","","$","(10.6",")"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Description","","Amount ($M) Fiscal Year 2026","","","Amount ($M) Fiscal Year 2025"],["Revenue","","$","21.7","","","$","4.3"],["Cost of goods sold (GAAP)","","","24.8","","","","14.9"],["Less: depreciation expense","","","(3.7",")","","","(3.6",")"],["Less: stock-based compensation","","","(1.1",")","","","(0.8",")"],["Cash cost of goods sold (Non-GAAP)","","$","20.0","","","$","10.5"],["Adjusted gross margin (loss) (Non-GAAP)","","$","1.7","","","$","(6.2",")"]]
[[/GREPCENT_TABLE]]

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.

[[GREPCENT_TABLE]]
[["","\u25cf","At June 30, 2026, the Company had available cash and cash equivalents of $49.5 million."],["","\u25cf","The Company had no outstanding debt as of June 30, 2026."]]
[[/GREPCENT_TABLE]]

Components
of Statements of Operations

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

[[GREPCENT_TABLE]]
[["","","Fiscal Year Ended June 30, 2026","","","Fiscal Year Ended June 30, 2025","","","$ Change","","","% Change"],["Revenue","","$","21,741,726","","","$","4,290,224","","","$","17,451,502","","","","407","%"],["Cost of goods sold","","","24,830,966","","","","14,864,633","","","","9,966,333","","","","67"],["Gross loss","","","(3,089,240",")","","","(10,574,409",")","","","7,485,169","","","","71"],["Operating expense"],["General and administrative","","","51,632,213","","","","21,151,445","","","","30,480,768","","","","144"],["Research and development","","","17,871,542","","","","8,470,161","","","","9,401,381","","","","111"],["Exploration","","","2,114,995","","","","1,827,314","","","","287,681","","","","16"],["Total operating expenses","","","71,618,750","","","","31,448,920","","","","40,169,830","","","","128"],["Other income (expense)","","","1,328,969","","","","(4,739,296",")","","","6,068,265","","","","128"],["Net loss attributable to shareholders","","$","(73,379,021",")","","$","(46,762,625",")","","$","(26,616,396",")","","","(57",")"]]
[[/GREPCENT_TABLE]]

Revenue

During
the fiscal year ended June 30, 2026 and 2025, our revenue was $21.7 million and $4.3 million, respectively, which related to the sale
of our products and byproducts resulting from recycling operations. The increase in revenue was primarily driven by an increase in processed
feedstock, which enabled higher production throughput, as well as higher market prices for our products and byproducts during the current-year
period.

30

Cost
of Goods Sold

Cost
of goods sold during the fiscal years ended June 30, 2026 and 2025 were $24.8 million and $14.9 million, respectively. The increase
in cost of goods sold was primarily driven by an increase in feedstock costs of $4.1 million to support higher volumes of
throughput, an increase of $3.7 million in compensation, as we hired to support expanded production capacity, and an increase in
facility absorption costs of $2.2 million as production volume increased.

Operating
Expenses

During
the fiscal year ended June 30, 2026, the Company incurred $71.6 million of total operating expenses compared to $31.4 million of total
operating expenses during the fiscal year ended June 30, 2025. The increase is primarily due to the items described below:

General
and administrative expenses consist primarily of personnel, stock-based compensation, office expenses, legal and accounting fees, recruiting,
business development, public relations, and facility-related costs. For the fiscal year ended June 30, 2026, general and administrative
expenses were $51.6 million, an increase of $30.5 million compared with the prior-year period. The increase was 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. The expense recognized in the period was further impacted by the vesting of awards during fiscal
year 2026, as well as a higher grant-date stock price for fiscal year 2026 awards compared to the prior year.

Research
and development expenses consist primarily of personnel, laboratory leases, and supplies. Research and development expenses for the fiscal
years ended June 30, 2026 and 2025, were $17.9 million and $8.5 million, respectively. The increase was primarily driven by higher payroll
costs of $4.5 million related to expansion of engineering and technical teams to support production ramp-up, increased stock-based compensation
of $2.4 million from new hires and fiscal year 2026 performance awards, an increase in legal expenses of $0.5 million related to site
selection, and increased depreciation expense of $0.4 million.

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 remained relatively consistent year-over-year totaling
$2.1 million for the fiscal year ended June 30, 2026, compared to $1.8 million during the same period in the prior year.

Other
Income (Expense)

Other
income was $1.3 million in the fiscal year ended June 30, 2026, versus other expense of $4.7 million in the prior year. This $6.0 million
change resulted principally from an increase in interest and other income of $1.5 million resulting from significantly higher cash balances
throughout fiscal 2026, a $3.5 million reduction in amortized financing costs, and the absence in fiscal 2026 of the following items
in fiscal 2025: a $1.4 million credit loss on a receivable pursuant to a share purchase agreement; $1.2 million in losses on a private
placement and extinguishment of debt; and $1.6 million in gains recognized for changes in fair value of a derivative liability and liability
classified financial instruments.

Liquidity
and Capital Resources

At
June 30, 2026, the Company had available cash and cash equivalents of $49.5 million and total assets of $132.8 million compared to
available cash of $7.5 million and total assets of $84.5 million at June 30, 2025. The increase in available cash and cash
equivalents resulted from raising capital through the exercise of warrant agreements, utilization of the ATM sales agreement with
Virtu Americas, LLC, and a reduction in the amount of cash used in operations resulting from higher revenues and improved margins,
partially offset by an increase in investing activities to support the expansion of our recycling operations and purchase of mining
properties.

The
Company had total current liabilities of $6.4 million at June 30, 2026, compared to $13.7 million at June 30, 2025. The decrease related
to conversion of the debt (as discussed in Note 11 of the consolidated financial statements) and timing of payments for accounts payable
and accrued expenses.

As
of June 30, 2026, the Company had working capital (excluding restricted cash) of $53.7 million compared to $10.9 million at June 30,
2025. Working capital increased primarily due to an increase in cash, driven by the use of the ATM sales agreement with Virtu Americas
LLC, and an increase in accounts receivable resulting from higher revenue. Additionally, assets previously classified as held for sale
were reclassified to intangible assets. The increase in working capital was further supported by the extinguishment of debt during the
period.

31

Cash
Flows

For
the fiscal years ended June 30:

[[GREPCENT_TABLE]]
[["","","2026","","","2025"],["Cash flows used in operating activities","","$","(24,187,555",")","","$","(28,921,158",")"],["Cash flows used in investing activities","","$","(13,577,868",")","","$","(2,548,476",")"],["Cash flows provided by financing activities","","$","75,610,593","","","$","36,942,152"],["Net increase in cash, cash equivalents and restricted cash during the period","","$","37,845,170","","","$","5,472,518"]]
[[/GREPCENT_TABLE]]

Cash
from Operating Activities

During
the fiscal year ended June 30, 2026, the Company used $24.2 million of cash for operating activities, compared to $28.9 million used
during the fiscal year ended June 30, 2025. In both periods, the cash used supported an increased scale of operations including increased
employee headcount and personnel costs, increased production, and increased administrative costs.

Cash
from Investing Activities

During
the fiscal year ended June 30, 2026, the Company used cash in investing activities of $13.6 million. The Company used $2.0 million for
its purchase of 3400 Peru and $8.9 million for acquisition of property and equipment for its recycling facility while $1.4 million was
for the purchase of mining properties. This is in comparison to cash used in investing activities of $2.5 million for the fiscal year
ended June 30, 2025 for acquisition of property and equipment.

Cash
from Financing Activities

During
the fiscal year ended June 30, 2026, the Company had cash provided by financing activities of $75.6 million, compared to $36.9 million
provided during the fiscal year ended June 30, 2025. The Company has relied on equity and debt financing to support its increased operating
activities, the ramp up of the recycling plant, development of the lithium claystone pilot plant, and upgrades to the geological classification
of its Tonopah Flats claims through additional studies and assessments.

In
the fiscal year ended June 30, 2026, the Company generated $65.8 million through the issuance of common shares through our ATM sales
agreement with Virtu Americas LLC, an increase of $47.2 million over the prior year. Other sources of cash from financing activities
totaled $10.8 million in fiscal 2026, primarily from the exercise of warrants of $10.0 million, compared to $27.2 million in fiscal
2025 primarily from $16.9 million in registered direct offerings and $9.9 million from issuances of notes payable.

Off-Balance
Sheet Arrangements

As
of June 30, 2026 and 2025, we had no off-balance sheet arrangements.

Working
Capital

[[GREPCENT_TABLE]]
[["","","June 30, 2026","","","June 30, 2025"],["Current assets","","$","60,933,662","","","$","29,532,110"],["Restricted cash","","$","(800,000",")","","$","(5,000,000",")"],["Current liabilities","","$","(6,394,722",")","","$","(13,668,605",")"],["Working capital","","$","53,738,940","","","$","10,863,505"]]
[[/GREPCENT_TABLE]]

32

Future
Financings

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

Critical
Accounting Estimates

Our
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 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 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.

Certain
accounting estimates, including those concerning revenue recognition, share-based compensation, impairments of long-lived assets, and
assets held-for-sale, are considered to be critical in evaluating and understanding our financial results because they involve inherently
uncertain matters and their application requires the most difficult and complex judgments and estimates. These are described below. For
further information on our accounting policies, see Note 3 to our consolidated financial statements.

Fair
Value Measurements

Recurring
Valuations. The Company’s fair value measurements included the valuation of the derivative liabilities for the bifurcated notes
payable freestanding call and conversion options and for the liability-classified equity-linked contracts, both of which are classified
as Level 3 of the fair value hierarchy. In making these fair value determinations, we were required to make assumptions that affected
the recorded amounts, including volatility, risk free rates, and duration of time. Our estimates of fair value are based upon assumptions
we believe to be reasonable, but which are inherently uncertain. As of December 31, 2024, the Company reclassified derivative liabilities
and liability-classified equity-linked contracts from long-term liabilities to equity. There were no derivative instruments issued or
outstanding from January 1, 2025 through June 30, 2026; accordingly, fair value measurement was not required. See Note 13 of the consolidated
financial statements for further discussion.

Revenue
Recognition

The
Company recognizes revenue upon satisfying its promises to transfer goods or services to customers under the terms of its contracts.
These promises, referred to as performance obligations, consist of the transfer of physical goods, including recycled ferrous and nonferrous
metals and black mass to customers. These performance obligations are satisfied at the point in time that the Company transfers control
of the goods to the customer, which occurs when title to and risk of loss of the goods transfer to the customer. The timing of transfer
of title and risk of loss is dictated by customary or explicitly stated contract terms. The majority of the Company’s sales involve
transfer of control to the customer, and thus revenue recognition, before delivery to the customer’s destination; for example,
upon release of the goods to the shipper. Shipping and handling activities that occur after a customer has obtained control of a good
are accounted for as fulfillment costs rather than an additional promise in a contract. As such, shipping and handling consideration
(freight revenue) is recognized when control of the goods transfers to the customer, and freight expense is accrued to cost of goods
sold when the related revenue is recognized.

The
Company recognizes revenue based on contractually stated selling prices and quantities shipped, net of sales tax, and adjusted for estimated
claims and discounts. Claims are customary in the recycled metal industry and arise from variances in the quantity or quality of delivered
products. Revenue adjustments may be required if the settlement of claims differs from original estimates. For the fiscal year ended
June 30, 2026 and 2025, revenue adjustments related to performance obligations that were satisfied in previous periods were not material.

33

Long-Lived
Assets

The
Company evaluates long-lived assets, such as plant and equipment, with finite useful lives and Right of Use (RoU) assets for impairment
whenever events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable. These
events and circumstances may include significant decreases in the market price of an asset or asset group, significant changes in the
extent or manner in which an asset or asset group is being used by the Company or in its physical condition, a significant change in
legal factors or in the business climate, a history or forecast of future operating or cash flow losses, significant disposal activity,
a significant decline in the Company’s share price, or a significant decline in revenue or adverse changes in the economic environment.
The existence of an individual indicator outlined above, or otherwise, is not automatically an indicator that a long-lived asset may
not be recoverable. Instead, management exercises judgment and considers the combined effect of all potential indicators and developments
present, potentially positive or negative, when determining whether a long-lived asset may not be recoverable. No impairment loss was
recognized during the fiscal years ended June 30, 2026 and 2025.

Assets
Held-for-Sale

The
Company evaluates long-lived assets for classification as held-for-sale when management, having the authority to approve the action,
commits to a plan to sell the asset. To qualify as held-for-sale, the asset must be available for immediate sale in its present condition,
subject only to terms that are usual and customary for sales of such assets, and the sale must be probable within one year.

Management
considers whether events and circumstances such as a change in strategic direction and changes in business climate would impact the fair
value of long-lived assets. The Company used critical judgements in analyzing certain market data and estimates to calculate the value
of the assets held-for-sale. Significant assumptions that form the basis of fair value include market comparison of similar properties,
construction cost estimates and using certain dollar per square foot amounts to derive fair value. Our estimates of fair value are based
upon assumptions we believe to be reasonable, but which are inherently uncertain. As of June 30, 2026, there were no assets classified
as held for sale on the Company’s consolidated balance sheets.

Common
Share Warrant Compensation

The
fair value of common share warrants are determined using the Black-Scholes option pricing model that incorporates market data and involves
uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires the inputs of
highly subjective assumptions, including the volatility of share prices and weighted average expected term, changes in subjective input
assumptions can materially affect the estimate.

New
Accounting Pronouncements

New
accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by
us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not
yet effective will not have a material impact on our financial position or results of operations upon adoption. For further discussion
on recent accounting pronouncements, please see Note 3, “Accounting Pronouncements,” to our consolidated financial statements
included in this Annual Report on Form 10-K for additional information.