International Battery Metals Ltd 10-Q for FY2027 Q1
International Battery Metals Ltd. (IBATF)
About this 10-Q
International Battery Metals Ltd filed this 10-Q on August 12, 2026, covering the quarter ended June 30, 2026 (FY2027 Q1).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $120K
- up 1614.3% from $7000 a year earlier
- Net loss
- $28K
- compared with net income of $1.69M a year earlier
- Diluted EPS
- $0.00
- compared with $0.01 a year earlier
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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Emerging growth company |
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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
Table of Contents
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PART I. |
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Item 1. |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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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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June 30, |
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March 31, |
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2026 |
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2026 |
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(Unaudited) |
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Assets |
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Current assets |
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Cash |
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$ |
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Accounts receivable, net |
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Supply inventory |
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Other current assets |
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Total current assets |
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Plant and equipment, net |
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Intangible assets, net |
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Right of use asset |
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Total assets |
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$ |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Lease obligation, current |
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Total current liabilities |
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Warrant liability |
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Lease obligation, long-term |
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Total liabilities |
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Shareholders' equity |
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Share capital, |
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Accumulated deficit |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
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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Three Months Ended June 30, |
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2026 |
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2025 |
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REVENUE |
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Service |
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$ |
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$ |
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Total Revenue |
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COST OF REVENUE |
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Cost of revenue |
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Gross margin |
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OPERATING COSTS AND EXPENSES |
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Operating costs, excluding depreciation |
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Selling, general and administrative expenses, excluding depreciation |
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Amortization of intangible assets |
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Depreciation |
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Operating loss |
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Change in fair value of warrant liability |
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Other income (loss) |
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Net income (loss) before income tax provision |
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Net income (loss) |
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$ |
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$ |
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Net income (loss) per share, basic |
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$ |
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Net income (loss) per share, diluted |
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$ |
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$ |
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Weighted average shares outstanding, basic |
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Weighted average shares outstanding, diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
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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Three Months Ended June 30, |
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2026 |
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2025 |
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CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES |
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Net income (loss) |
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$ |
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$ |
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Adjustments to reconcile net income (loss) to cash used in operating activities: |
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Share-based compensation |
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Amortization of intangible assets |
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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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Accounts receivable |
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Prepaid expenses |
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Trade payables and other liabilities |
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Net cash used in operating activities |
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CASH USED IN INVESTING ACTIVITIES |
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Purchase of equipment |
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Net 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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Payments for taxes withheld of vested stock awards |
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Net cash provided by (used in) financing activities |
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Net change in cash |
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Beginning cash balance |
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Ending cash balance |
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$ |
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$ |
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Supplemental disclosures of non-cash transactions: |
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Equipment purchases included in trade payables |
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$ |
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$ |
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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.
3
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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Deficit |
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Equity |
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Balance as of March 31, 2026 |
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$ |
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$ |
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$ |
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Private placements of shares |
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— |
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Shares issued for restricted stock units |
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— |
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— |
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— |
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Shares issued for restricted stock awards |
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— |
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— |
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Shares cancelled |
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( |
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— |
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Share-based compensation |
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— |
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— |
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Share issuance costs |
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— |
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( |
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— |
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Net loss for the period |
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— |
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— |
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( |
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Balance as of June 30, 2026 |
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$ |
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$ |
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$ |
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Total |
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Common |
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Share |
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Accumulated |
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Shareholders' |
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Shares |
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Capital |
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Deficit |
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Equity |
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Balance as of March 31, 2025 |
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$ |
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$ |
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$ |
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Private placements of shares |
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— |
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Share-based compensation |
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— |
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— |
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( |
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Share issuance costs |
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— |
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— |
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Net income for the period |
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— |
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— |
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Balance as of June 30, 2025 |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
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
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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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Computer equipment and furniture and fixtures |
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Leasehold improvements |
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Plant |
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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Patents |
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Intellectual property |
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
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
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:
9
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 |
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|
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|
||
Technology licenses |
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|
|
|
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|
||
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
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.
|
|
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|
|
|
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|
|
Weighted |
|
||||
|
|
|
|
|
|
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|
|
|
|
Average |
|
||||
|
|
Gross |
|
|
Accumulated |
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|
Net |
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Remaining |
|
||||
|
|
Assets |
|
|
Amortization |
|
|
Assets |
|
|
Life (Years) |
|
||||
Intellectual property |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
Patents |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|||
The Company’s intangible assets as of March 31, 2026, are as follows (in thousands):
|
|
|
|
|
|
|
|
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|
|
Weighted |
|
||||
|
|
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|
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|
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|
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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
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
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
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
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
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
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
|
|
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
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.
19
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
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
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
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
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
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
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 |
|
|
10.45+ |
|
|
10.46+ |
|
|
10.47+ |
|
|
31.1* |
|
|
31.2* |
|
|
32.1* |
|
|
32.2* |
|
|
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
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
FIRST AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (“Amendment”) is made and entered into as of November 3, 2025 (the “Amendment Effective Date”), by and between James Garrett Galloway, an individual resident of the State of Texas (“Executive”), and International Battery Metals Ltd., incorporated under the Business Corporation Act of British Columbia (the “Company”). The parties acknowledge that the Company’s subsidiaries and controlled affiliates shall be third-party beneficiaries of this Agreement.
WITNESSETH
WHEREAS, the Company and Executive entered into an Executive Employment Agreement dated effective May 5, 2025 (the “Employment Agreement”) pursuant to which the Executive was engaged to serve as the Senior Vice-President of Corporate Development of the Company; and
WHEREAS, the Company and Executive mutually desire to amend certain terms of the Employment Agreement as of the Amendment Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows.
1. Amendment to Section 5. Section 5 of the Employment Agreement is hereby deleted and restated in its entirety as follows:
“5. RSU Awards. Executive acknowledges and agrees that, as consideration for the covenants and promises contained in this Agreement, the Executive will receive the following awards of either restricted share units (the “RSUs”) or restricted shares (“RSAs”) with respect to the Company’s common shares (the “Common Shares”), which shall be subject to time-based and performance-based vesting as set forth below and shall be subject to such other terms and conditions as set forth therein and in the Company’s Equity Plan.
(a) As soon as practicable following the Start Date, the Executive will be granted an award of RSUs with respect to Four Hundred Thousand (400,000) Common Shares, which Award will vest in full on the first anniversary of the Start Date, subject to the Executive’s continuous employment with the Company through such vesting date, and accelerated vesting in full in connection with a consummation of a Change in Control (as defined in Section 12 below).
(b) Upon approval of the Company’s new Equity Plan at the next Annual Meeting of Shareholders, the Executive will be granted an award of RSUs or RSAs with respect to Two Hundred Thousand (200,000) Common Shares, which Award will vest in full sixty
(60) days after the Company’s successful listing on the Toronto Stock Exchange, The Nasdaq Stock Market or The New York Stock Exchange subject to the Executive’s continuous employment with the Company through such vesting date, and accelerated vesting in full in connection with a consummation of a Change in Control.
(c) As soon as practicable following the Start Date, the Executive will be granted an RSU award with respect to Eight Hundred Thousand (800,000) Common Shares, which RSUs will vest in full on the date that the Company completes the building and deployment (with secured financing) of two additional Direct Lithium Extraction (“DLE”) plants (in addition to the existing DLE plant that the Company is currently planning to deploy as of the Effective Date), subject to the Executive’s continuous employment with the Company through such vesting date and accelerated vesting in connection with a consummation of a Change in Control.
(d) As of February 1, 2027, the Executive will be granted an award of RSUs or RSAs with respect to a number of Common Shares equal to two-tenths of one percent (0.2%) of the Company’s Fully Diluted Outstanding Common Shares at the time of such grant pursuant to this Section 5(d), which Award will vest in full on the date the Company achieves 25,000 tons per annum of Lithium Carbonate production, equivalent Lithium Chloride production, or royalties with respect to equivalent production levels through technology licensing agreements, subject to the Executive’s continuous employment with the Company through such vesting date and accelerated vesting in connection with a consummation of a Change in Control.
(e) Upon approval of the Company’s new Equity Plan at the next Annual Meeting of Shareholders, the Executive will be granted an additional award of RSUs or RSAs with respect to four-tenths of one percent (0.4%) of the Company’s Fully Diluted Outstanding Common Shares at the time of such grant pursuant to this Section 5(e), which RSUs will vest with respect to 50% of such RSUs on the date Compensation Committee certifies, in good faith, that the Company first achieves aggregate EBITDA of US $25 million in any four fiscal quarter period, and the remaining 50% of such RSUs on the date the Compensation Committee certifies, in good faith, that the Company first achieves aggregate EBITDA of US $50 million in any four fiscal quarter period, subject to the Executive’s continuous employment with the Company through each applicable vesting date and accelerated vesting in connection with a consummation of a Change in Control.
(f) Upon approval of the Company’s new Equity Plan at the next Annual Meeting of Shareholders, the Executive will be granted an additional award of RSUs or RSAs with respect to two-tenths of one percent (0.2%) of the Company’s Fully Diluted Outstanding Common Shares at the time of such grant pursuant to this Section 5(f)), which Award will vest with respect to 50% of such RSUs or RSAs on the date the Compensation Committee certifies, in good faith, that the Company first achieves a market capitalization of US $750
million based upon the Company’s 60-day volume weighted average trading price (“VWAP”), and the remaining 50% of such RSUs or RSAs on the date the Compensation Committee certifies, in good faith, that the Company first achieves a market capitalization of US $1.5 billion based upon the Company’s 60-day VWAP, subject to the Executive’s continuous employment with the Company through each applicable vesting date and accelerated vesting in connection with a consummation of a Change in Control.
(g) To the extent that the Company issues additional Common Shares or Common Share Equivalents in a single or series of capital raise transactions that in the aggregate raise gross proceeds of at least Five Million United States Dollars ($5,000,000) (each a “Covered Capital Raise”) after the grant of Awards pursuant to Sections 5(d), 5(e) or 5(f) above (including upon the exercise of any warrants for cash that were not included in the calculation of Fully Diluted Outstanding at the time of such grant), the Compensation Committee shall grant Executive, concurrently at the time of such issuance, the following:
(i) RSUs or RSAs equal to two-tenths of one percent (0.2%) of the number of Common Shares issued in the Covered Capital Raise which shall vest on the same terms as set forth in Section 5(d), but in no event earlier than one year from the date of grant;
(ii) Options with an exercise price equal to the average of the exercise price of the Common Share Equivalents issued in the Covered Capital Raise equal to two-tenths of one percent (0.2%) of the number of Common Shares issued in the capital raise transaction which shall vest on the same terms as set forth in Section 5(d), but in no event earlier than one year from the date of grant;
(iii) RSUs or RSAs equal to four-tenths of one percent (0.4%) of the number of Common Shares issued in the Covered Capital Raise which shall vest on the same terms as set forth in Section 5(e), but in no event earlier than one year from the date of grant;
(iv) Options with an exercise price equal to the average of the exercise price of the Common Share Equivalents issued in the Covered Capital Raise equal to four-tenths of one percent (0.4%) of the number of Common Shares issued in the Covered Capital Raise which shall vest on the same terms as set forth in Section 5(e), but in no event earlier than one year from the date of grant;
(v) RSUs or RSAs equal to two-tenths of one percent (0.2%) of the number of Common Shares issued in the Covered Capital Raise which shall vest on the same terms as set forth in Section 5(f), but in no event earlier than one year from the date of grant;
(vi) Options with an exercise price equal to the average of the exercise price of the Common Share Equivalents issued in the Covered Capital Raise equal to two-tenths of one percent (0.2%) of the number of Common Shares issued in the Covered Capital
Raise which shall vest on the same terms as set forth in Section 5(f), but in no event earlier than one year from the date of grant;
provided, however, if the Company’s ability to grant such additional RSU or RSAs and Option awards set forth in clauses (i) through (vi) above is restricted due to contractual, regulatory or stock exchange rules then the Executive will receive (x) a performance cash award for the equivalent amount of RSUs and RSAs that is payable in cash and vest on the terms set forth above and (y) a stock appreciation right for the equivalent amount of Options that is settled in cash and vest on the terms set forth above.
(h) For the avoidance of doubt, the vesting of all of the RSUs or RSAs described above is contingent upon Executive remaining in continuous service with the Company as Senior Vice President of Corporate Development through the applicable vesting date. In addition, the Common Shares issued to Executive pursuant to the RSUs or RSAs shall be subject to trading restrictions/limitations as determined by the Board in good faith such that all sales thereof are subject to advance approval by the Board. The Board and Executive shall discuss in good faith any Rule 10b5-1 trading plan proposed by the Executive during the Term.”
2. New Section 5.1. The following new Section 5.1 of the Employment Agreement is hereby inserted as follows:
“5.1 Change in Control Payments.
(a) Upon consummation of a Change in Control, to the extent that the Executive is still serving as the Senior Vice President Corporate Development, the Executive will receive a cash bonus equal to (i) four-tenths of one percent (0.4%) of the Company’s Fully Diluted Outstanding Common Shares immediately prior to the Change in Control times (ii) the Diluted Per Share Consideration. In addition, to the extent that the RSU Award set forth above in Section 5(d) has not yet been granted, the Executive will receive an additional cash bonus equal to (x) two-tenths of one percent (0.2%) of the Company’s Fully Diluted Outstanding Common Shares immediately prior to the Change in Control times (y) the Diluted Per Share Consideration.
(b) Definitions. For purposes of this Agreement, the following terms will have the definitions set forth below:
(i) “Common Share Equivalents” shall mean any securities of the Company that would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
(ii) “Diluted Per Share Consideration” shall be calculated as the fair market value of all consideration paid (cash or securities) to shareholders in connection with the Change in Control divided by the number of Fully Diluted Outstanding Common Shares immediately prior to the Change in Control.
(iii) “Fully Diluted Outstanding” shall mean, as of any date of calculation, the sum of the Common Shares issued and outstanding plus any Common Shares issuable upon the conversion, exchange or exercise of any Common Share Equivalents (but only to the extent that such Common Share Equivalents are “in-the-money” at the time of such calculation).”
3. Amendment to Section 12. Clause (b) of Section 12 of the Employment Agreement is hereby deleted and restated in its entirety as follows:
“(b). For purposes of this Agreement, a “Change of Control” shall mean: (i) any “person” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding voting securities; (ii) consummation of a merger or consolidation of the Company with any other entity or the issuance of voting securities in connection with a merger or consolidation of the Company (or any direct or indirect subsidiary thereof) pursuant to applicable exchange requirements, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) at least 50% of the combined voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as defined above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of either of the then outstanding shares of Common Share or the combined voting power of the Company’s then outstanding voting securities; or (iii) the consummation of the sale, lease or disposition by the Company of all or substantially all of the Company’s assets (or any transaction or series of transactions within a period of twelve (12) months ending on the date of the last sale or disposition having a similar effect).
Notwithstanding the foregoing, a transaction or other event described above or in an award agreement may constitute a “Change of Control” for purposes of any Award which is subject to Section 409A of the Code for purposes of earning and vesting, but no payment shall be made thereunder until the earliest of (x) the Change of Control, if such transaction constitutes a “change in the ownership of the corporation,” a “change in the effective control of the corporation” or a
“change in the ownership of a substantial portion of the assets of the corporation,” within the meaning of Code Section 409A(2)(A)(v), (v) the date such Award would otherwise be settled pursuant to the terms of the Award Agreement, and (z) the Executive’s “separation from service” within the meaning of Code Section 409A.”
4. Amendment to Section 21. Section 21 of the Employment Agreement is hereby deleted and restated in its entirety as follows:
“21. Arbitration. Except for any claim for equitable or injunctive relief under Section 18 of this Agreement (to which Section 22 shall apply), any dispute, controversy or claim arising out of or related to this Agreement, or to the construction, interpretation or alleged breach of this Agreement, or to Executive’s employment with the Company shall be submitted to and decided by binding arbitration. Arbitration shall be administered exclusively by the Houston, Texas offices of JAMS before one (1) arbitrator mutually selected by the parties, or the parties cannot so agree, by JAMS pursuant to its applicable rules and regulations (the “Rules”). The arbitral language shall be English, limited discovery shall be permitted as the arbitrator shall determine, and the arbitration and shall be conducted consistent with the Rules of JAMS, in addition to any requirements imposed by state law. Any arbitral award determination shall be final and binding upon the parties. In rendering his or her award, the arbitrator shall award the prevailing party, in addition to such other relief as may be granted, all such attorneys’ fees and costs reasonably incurred and any reasonable attorneys’ fees and costs incurred in enforcing any judgment or order entered. The prevailing party shall be determined by the arbitrator in the initial or any subsequent proceeding. Notwithstanding anything in this Section 21 to the contrary, neither the Company nor Executive shall be prohibited from commencing litigation before the any appropriate judicial tribunal or court of law or equity to obtain injunctive relief to compel compliance with this Agreement.”
5. Amendment to Section 22. Section 22 of the Employment Agreement is hereby deleted and restated in its entirety as follows:
“22. Governing Law: Jurisdiction and Venue for Injunctive Relief. This Agreement, for all purposes, shall be construed in accordance with the laws of Texas without regard to conflicts of law principles. Subject to the provisions of Section 21 above, any proceeding by either of the parties to obtain injunctive relief under Section 18 of this Agreement shall be brought only in a state or federal court located in the County of Harris, State of Texas. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such proceeding in such venue.”
6. Effect of Amendment. Other than as expressly set forth herein, this Amendment shall not (a) constitute a (i) modification or alteration of the terms, conditions or covenants of the Employment Agreement, or (ii) waiver, release or limitation upon the exercise by any party of any of its rights, legal or equitable, thereunder; or (b) establish any course of dealing or waive the
performance of any provision of the Employment Agreement. Except as modified by this Amendment, all other terms and conditions of the Employment Agreement shall continue in full force and effect. To the extent that the terms and conditions of this Amendment conflict with the Employment Agreement, then the terms of this Amendment shall control, provided that, to the maximum extent possible, the terms of this Amendment and the terms of the Employment Agreement shall be interpreted and construed as supplementing and not as conflicting with one another.
7. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Texas without regard to conflicts of law principles.
8. Defined Terms. Definitions not set forth herein shall have the definitions provided for in the Employment Agreement
9. Counterpart Execution. This Amendment may be executed in counterparts, each of which shall be deemed to be an original Amendment, but all such counterparts shall together constitute one and the same instrument. Signatures to this Amendment transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means (such as, but not limited to DocuSign) intended to preserve the original graphic and pictorial appearance of the party so transmitting his or its signature, shall have the same effect as physical delivery of a paper document bearing such party’s original, ink or “wet” signature.
(Signatures on Next Page)
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.
INTERNATIONAL BATTERY METALS LTD.
By: /s/ Joseph A. Mills
By: Joseph A. Mills
Title: Chief Executive Officer
EXECUTIVE
/s/ James Garrett Galloway
James Garrett Galloway
INTERNATIONAL BATTERY METALS LTD
RESTRICTED SHARE UNIT AGREEMENT
This RESTRICTED SHARE UNIT AGREEMENT (this “Agreement”) is made by and between International Battery Metals Ltd. (the “Company”), a corporation existing under the Business Corporations Act (British Columbia), and JAMES GARRETT GALLOWAY (the “Participant”), effective as of February 4, 2026 (the “Award Date”).
WHEREAS, the Board of Directors (the “Board”) and shareholders of the Company previously adopted and approved the 2025 Omnibus Equity Incentive Plan (the “Plan”) (the terms of which are hereby incorporated by reference and made part of this Agreement);
WHEREAS, Section 3 of the Plan provides that the Plan shall be administered by the Board, or a committee of the Board;
WHEREAS, the Participant has entered into the Executive Employment Agreement dated May 5, 2025, (as amended by the First Amendment to Executive Employment Agreement dated November 3, 2025, the “Employment Agreement”), with the Company, whereby the Participant has agreed to serve as the Senior Vice-President of Corporate Development of the Company;
WHEREAS, the Board acting as a committee (the “Committee”) has determined that it would be to the advantage and best interest of the Company and its shareholders to award Restricted Share Units as provided for herein to the Participant for compensation and retention purposes and to further align the Participant’s interests with those of the shareholders and has advised the Company thereof and instructed the appropriate officer of the Company to issue said Restricted Share Units;
WHEREAS, the Participant desires to accept the award of Restricted Share Units and agrees to be bound by the terms and conditions of the Plan and this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt and adequacy of which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates to the contrary. The masculine pronoun shall include the feminine and neuter, and the singular shall include the plural, where the context so indicates. All capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Plan.
Section 1.1 Award Agreement
“Award Agreement” means any agreement pursuant to which an eligible Director, Employee or Consultant has been granted a Restricted Share Unit Award and which shall provide the terms of such award.
Section 1.2 Change in Control
Unless otherwise defined in the Employment Agreement which such definition shall be used for the purposes of this Agreement, “Change of Control” shall mean: (i) any “person” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company or any “person” that is a Control Person as of the date of adoption of the Plan), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding voting securities; (ii) consummation of a merger or consolidation of the Company with any other entity or the issuance of voting securities in connection with a merger or consolidation of the Company (or any direct or indirect subsidiary thereof) pursuant to applicable exchange requirements, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) at least 50% of the combined voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as defined above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of either of the then-outstanding Common Shares or the combined voting power of the Company’s then-outstanding voting securities; or (iii) the consummation of the sale, lease or disposition by the Company of all or substantially all of the Company’s assets (or any transaction or series of transactions within a period of twelve (12) months ending on the date of the last sale or disposition having a similar effect).
Notwithstanding the foregoing, a transaction or other event described above may constitute a “Change in Control” for purposes of any award of Restricted Share Units which is subject to Section 409A of the Code for purposes of earning and vesting, but no payment shall be made thereunder until the earliest of (i) the Change in Control, if such transaction constitutes a “change in the ownership of the corporation,” a “change in the effective control of the corporation” or a “change in the ownership of a substantial portion of the assets of the corporation,” within the meaning of Code Section 409A(2)(A)(v), (ii) the date such award would otherwise be settled pursuant to the terms herein, and (iii) the Participant’s “separation from service” within the meaning of Code Section 409A.
Section 1.3 Code
“Code” means the US Internal Revenue Code of 1986, as it may be amended from time to time, and the rules and regulations promulgated thereunder.
Section 1.4 Common Shares
“Common Shares” means common shares in the capital of the Company and any shares or securities of the Company into which such common shares are changed, converted, subdivided, consolidated, or reclassified.
Section 1.5 Disability
If the Participant is a US Grantee, “Disability” shall mean “permanent and total disability” within the meaning of Section 22(e)(3) of the Code.
Section 1.6 Exchange Act
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
Section 1.7 Restricted Share Units
“Restricted Share Units” shall mean the 2,782,715 Restricted Share Units awarded to the Participant pursuant to this Agreement.
Section 1.8 Section 409A
“Section 409A” shall mean the Section 409A of the Code and the Treasury Regulations and other guidance promulgated or issued thereunder.
Section 1.9 Securities Act
“Securities Act” shall mean the Securities Act of 1933, as amended.
Section 1.10 Settlement
“Settlement” or “Settled” shall mean the delivery to the Participant of either (i) a certificate evidencing the number of Common Shares underlying the designated Restricted Share Units or (ii) an electronic issuance evidencing such Common Shares, which shall occur on the Settlement Date(s) calculated in accordance with Section 3.1 of this Agreement.
Section 1.11 Settlement Date
“Settlement Date” shall have the meaning set out in Section 3.1 of this Agreement.
Section 1.12 US Grantee
“US Grantee” shall mean a Person who is subject to the regulations of Section 409A of the Code.
ARTICLE II.
AWARD OF RESTRICTED SHARE UNITS
Section 2.1 Award of Restricted Share Units
Subject to the terms and conditions provided in this Agreement and the Plan, the Company hereby awards to the Participant 2,782,715 Restricted Share Units as of the Award Date. Each Restricted Share Unit represents the right to receive one Common Share if the Restricted Share Unit becomes vested and non-forfeitable in accordance with Sections 2.2 or 2.3 of this Agreement.
Section 2.2 Vesting
(a) Except as may be otherwise provided in Section 2.3 of this Agreement and the Employment Agreement, the Participant’s rights and interest in the Restricted Share Units shall vest in accordance with Schedule A to this Agreement.
(b) Except as may be otherwise provided in Section 2.3 of this Agreement and the Employment Agreement, the vesting of the Restricted Share Units is contingent upon the Participant remaining in continuous service with the Company as Senior Vice-President of Corporate Development through the applicable vesting date or event in Schedule A.
Section 2.3 Acceleration of Vesting
Notwithstanding any vesting schedule provided for hereunder, subject to the terms of the Employment Agreement:
(a) any time-based portion of the Restricted Share Units that is not yet vested shall become immediately vested in connection with a consummation of a Change in Control; provided, however, that this acceleration of vesting shall not take place if the time-based Restricted Share Units were forfeited prior to consummation of a Change in Control;
(b) any performance-based portion of the Restricted Share Units that is not yet vested shall become immediately vested in connection with a consummation of a Change in Control; and
(c) any portion of the Restricted Share Units that is not yet vested shall become immediately vested in the event of the Participant’s death or Disability.
ARTICLE III.
SETTLEMENT OF RESTRICTED SHARE UNITS
Section 3.1 Timing and Manner of Settlement of Restricted Share Units
Unless and until the Restricted Share Units become vested and nonforfeitable in accordance with Section 2.2 or 2.3 of this Agreement, the Participant will have no right to Settlement of any such Restricted Share Units. Reasonably promptly after the date any of the Restricted Share Units become vested and non-forfeitable in accordance with Section 2.2 or 2.3 of this Agreement (and in all events not later than two and one-half (2-1/2) months after such vesting date) (the “Settlement Date”), such vested and non-forfeitable Restricted Share Units shall be Settled by the Company
delivering to the Participant (or his or her beneficiary in the event of death) either (i) a certificate evidencing a number of Common Shares equal to the number of Restricted Share Units that become vested and non-forfeitable upon that Settlement Date or (ii) an electronic issuance evidencing such Common Shares; provided, however, that unless the issuance of the Common Shares have been registered under the Securities Act, the Common Shares will be issued with the following legend, along with such other legends that the Board or the Committee shall deem necessary and appropriate or which are otherwise required or indicated pursuant to any applicable stockholders agreement:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR U.S. STATE SECURITIES LAWS. BY PURCHASING OR OTHERWISE HOLDING THESE SECURITIES, THE HOLDER AGREES FOR THE BENEFIT OF INTERNATIONAL BATTERY METALS LTD. (THE “CORPORATION”) THAT THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE CORPORATION; OR (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS; OR (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY (I) RULE 144 OR (II) RULE 144A THEREUNDER, IF AVAILABLE, AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS; OR (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS; OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, PROVIDED THAT, IN THE CASE OF TRANSFERS PURSUANT TO (C)(I) OR (D) ABOVE, THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”
Section 3.2 Tax Withholding
Upon the occurrence of a vesting event specified in Sections 2.2 or 2.3 above, the Participant is responsible for all federal, state, local or foreign income and social insurance withholding taxes imposed by reason of the vesting of the Restricted Share Units. To the extent permitted by the Company’s insider trading policy, the Exchange Policy and the U.S. federal and state securities laws, the Participant may elect to pay the amount of withholding due by either:
(1) on or prior to the vesting date of any portion of the Restricted Share Units, delivering, by cash or a check, funds equal to the amount of withholding due;
(2) to the extent permissible under Section 409A of the Code, instructing the Company to withhold a number of Common Shares deliverable upon the Settlement Date, which have a Fair Market Value on the date of vesting equal to the amount of withholding due (a “net-settlement” arrangement) provided, however, the Company has been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act for a period of no less than 90 days prior to the Settlement Date;
(3) instructing the Company to execute a broker-assisted sale and remittance program, or “cashless” exercise/sale procedure, acceptable to the Committee where the amount of withholding due is remitted to the Company provided, however, the Company has been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act for a period of no less than 90 days prior to the Settlement Date; or
(4) on or prior to the vesting date of the Restricted Share Units, delivering other Common Shares which have a Fair Market Value on the date of vesting equal to the amount of withholding due provided, however, the Company has been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act for a period of no less than 90 days prior to the Settlement Date.
Unless the Participant makes a tax withholding election (i) in the case of a vesting pursuant to Section 2.2(a), prior to the fifth (5th) business day preceding the vesting date, (ii) in the case of a vesting pursuant to Section 2.3(b), prior to the tenth (10th) day after Company has notified Participant that the Restricted Share Units shall vest pursuant to Section 2.3(b) (including the date of such vesting), or (iii) in the case of a vesting pursuant to Section 2.3(a), prior to the earlier of (A) the fifth (5th) business day preceding the vesting date or (B) the tenth (10th) day after the Company has notified Participant that the Restricted Share Units shall vest pursuant to Section 2.3(a), the Company will automatically satisfy the tax withholding obligation, if any, through a “net-settlement” arrangement as set forth in option (2) above. Additionally, if the Participant does not deliver the cash, check or Common Shares set forth in options (1) or (4), or such cash, check or Common Shares are in an amount less than the full amount of the withholding due, the Company is authorized to deduct from any amounts payable to the Participant, either compensation, proceeds from the sale, or otherwise, any taxes required to be withheld with respect to the Restricted Share Units. It is intended that the terms of this award of Restricted Share Units will not result in the imposition of any tax liability pursuant to Section 409A of the Code, and this Agreement shall be construed, interpreted, operated, and administered consistent with that intent.
Section 3.3 Consideration to the Company
In consideration of the awarding of the Restricted Share Units by the Company, the Participant agrees to render faithful and efficient services to the Company, with such duties and
responsibilities as the Company or the Board shall from time to time prescribe, and to comply with the policies and procedures of the Company to which the Participant is subject. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continued employment with the Company or shall interfere with or restrict in any way the rights of the Company to terminate the Participant’s employment at any time, with or without cause, subject to the terms of the Employment Agreement.
Section 3.3 Adjustments in Restricted Share Units
Notwithstanding any other provision of this Agreement, the Board or the Committee, may make adjustments with respect to the Restricted Share Units in accordance with the provisions of the Plan.
Section 3.4 Conditions to Issuance of Common Shares
The Common Shares deliverable upon the Settlement of the Restricted Share Units, or any portion thereof, shall be authorized but unissued Common Shares. Such Common Shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any Common Shares upon the vesting of the Restricted Share Units or any portion thereof prior to fulfillment of all of the following conditions:
(a) The listing of such Common Shares on all stock exchanges on which such Common Shares are then listed;
(b) The completion of any registration or other qualification of such Common Shares under any U.S. state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Board or the Committee shall, in its absolute discretion, deem necessary or advisable;
(c) Compliance with all applicable Canadian securities laws and the Exchange Policy;
(d) The obtaining of any approval or other clearance from any state or federal governmental agency which the Board or the Committee shall, in its absolute discretion, determine to be necessary or advisable; and
(e) The lapse of such reasonable period of time following the vesting of the Restricted Share Units as the Board or the Committee may from time to time establish for reasons of administrative convenience.
Section 3.5 Rights as Shareholder
The Participant shall have no right to vote or receive dividends or any other rights as a shareholder of the Company with respect to the Restricted Share Units or the Common Shares underlying the Restricted Share Units unless and until the Restricted Share Units become vested and
non-forfeitable and such Shares are delivered to the Participant in accordance with Section 3.1 of this Agreement.
Section 3.6 Compliance with Section 409A
In accepting the Restricted Share Units, the Participant acknowledges that:
(a) General. Notwithstanding any provision of the Plan to the contrary, it is intended that with respect to any US Grantee, such US Grantee’s participation in the Plan shall be in a manner which does not subject the US Grantee’s interests in the Plan to accelerated or additional tax under Section 409A because such benefits and rights should qualify for the “short-term deferral” exemption to Section 409A set forth in Treasury Regulation 1.409A-1(b)(4), and the provisions of this Agreement shall be construed in a manner consistent with that intention. If the Company believes, at any time, that any such benefit or right is subject to Section 409A but does not so comply, the Company may, without the Participant’s consent, amend the terms of such benefits and rights such that they are exempt from or comply with Section 409A.
(b) No Ability to Designation Taxable Year. Notwithstanding anything to the contrary, the US Grantees shall not have a right to designate the taxable year of any payment under the Plan.
(c) No Guaranty of 409A Compliance. Notwithstanding the foregoing, the Company does not make any representation to the Participant that the payments or benefits provided under this Agreement are exempt from, or satisfy, the requirements of Section 409A, and the Company shall have no liability or other obligation to indemnify or hold harmless the Participant or any beneficiary of the Participant for any tax, additional tax, interest or penalties that the Participant or any beneficiary of the Participant may incur in the event that any provision of this Agreement, or any amendment or modification thereof, or any other action taken with respect thereto, is deemed to violate any of the requirements of Section 409A.
ARTICLE IV.
OTHER PROVISIONS
Section 4.1 Administration
The Board or the Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Board or the Committee in good faith shall be final and binding upon the Participant, the Company and all other interested persons. No member of the Board or the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Restricted Share Unit. In its absolute discretion, the Board
may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan and this Agreement except with respect to matters which, under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules issued thereunder, are required to be determined in the sole discretion of the Committee.
Section 4.2 Limitations on Transferability
The Restricted Share Units shall not be assignable or transferable by the Participant, other than an assignment or transfer without the payment of any consideration (i) by will or the laws of descent and distribution, (ii) to a Participant’s family member, whether directly or by means of a trust or otherwise or (iii) subject to the prior approval of the Board or Committee and, if necessary, the Exchange, to a company of which all of the voting securities are beneficially owned by the Participant. For purposes of this Agreement, “family member” has the meaning given to such term in the General Instructions to the Form S-8 registration statement under the Securities Act. Any Restricted Share Units assigned or transferred pursuant to this Section 4.2 shall continue to be subject to the same terms and conditions as were applicable to the Restricted Share Units immediately before the transfer. Notwithstanding the foregoing, in no event shall any rights pursuant to this Agreement be assignable or transferable by the Participant if and to the extent the Committee determines that the Restricted Share Units are subject to Section 409A and that such assignment or transfer would result in a violation of Section 409A.
Section 4.3 Shares to Be Reserved
The Company shall at all times prior to the Settlement Date of the Restricted Share Units reserve and keep available such number of Common Shares as will be sufficient to satisfy the requirements of this Agreement.
Section 4.4 Notices
Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the officer designated as the Administrator from time to time, and any notice to be given to the Participant shall be communicated to him or her (i) by e-mail to the Participant at the Participant’s e-mail address on file with the Company, or (ii) by mail to the Participant at the Participant’s mailing address on file with the Company. By a notice given pursuant to this Section 4.4, either party may hereafter designate a different address for notices to be given to him. Any notice which is required to be given to the Participant shall, if the Participant is then deceased, be given to the Participant’s personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 4.4. Any notice delivered by mail shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.
Section 4.5 Representations of Participant
In consideration of (i) the grant of the Restricted Share Units and (ii) upon vesting, the issuance of the Common Shares, the Participant represents to the Company the following:
a) I am aware of the Company’s business affairs and financial condition and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am receiving these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act;
b) I acknowledge that I have read and understand the Plan, that I will abide by its terms and conditions, and that the Award is subject to the terms of the Plan and this Agreement;
c) I understand that the Company’s issuance of the Securities has not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein. In this connection, I understand that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if my representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future;
d) I further understand that the Securities must be held indefinitely unless the transfer is subsequently registered under the Securities Act or unless an exemption from registration is otherwise available; and moreover, I understand that the Company is under no obligation to register any transfer of the Securities; and in addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless registered or such registration is not required in the opinion of counsel for the Company;
e) I am familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions specified in such rules as they may be in effect at the time of any resale by me; and that notwithstanding this paragraph (e), I acknowledge and agree to the restrictions set forth in paragraph (f) hereof;
f) I further understand that in the event the Company’s Common Shares are publicly listed for trade on a U.S. exchange, (i.e., the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act), under Rule 701, I will not be able to resell the Common Shares issued upon Settlement until 90 days after such public listing and that more restrictive conditions apply to affiliates of the Company under Rule 144;
g) I further understand that in the event all of the applicable requirements of Rule 144 or Rule 701 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 and Rule 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that Persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 or Rule 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such Persons and their respective brokers who participate in such transactions do so at their own risk;
h) I recognize that (A) during the period between granting of a Restricted Share Unit Award and the Vesting Date of the Restricted Share Unit Award (or settlement thereof), the value of a Restricted Share Unit Award may be subject to a number of factors and the Corporation accepts no responsibility for any fluctuations in the value of the Award, and (B) there is no assurance as to when, if at all, a Change of Control will occur and therefore if or when the Restricted Share Unit Award will vest due to Change of Control;
i) I recognize that, at the sole discretion of the Company, the Plan can be administered by the Board of Directors of the Company or a Committee of the Board of Directors and any communication from or to the Board or such Committee shall be deemed to be from or to the Company;
j) I acknowledge that the Company assumes no responsibility as regards to the tax consequences that participation in the Plan will have for the Participant and the Participant is urged to consult his or her own tax advisor in such regard; and
k) I acknowledge and agree that the Company has determined and confirmed that the I am a bona fide Employee, Consultant or Director, as the case may be; and acknowledge that I am solely liable for any taxes or penalties which may be payable to Canada Revenue Agency under the Income Tax Act (Canada) or any other taxing authority in respect of the grant of a Restricted Share Unit Award and that the delivery of common shares pursuant to an Award is contingent upon satisfaction of applicable withholding requirements and applicable taxes may be withheld from any such payment in settlement of a Restricted Share Unit Award.
Section 4.6 Titles
Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
Section 4.7 Governing Law; Venue
The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan will be determined in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable in Ontario. Any suit, action or proceeding with respect to the Plan or any Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of any thereof, shall be resolved only in the courts of the State of Texas in the United States. In that context, and without limiting the generality of the foregoing, the Company and each Participant shall irrevocably and unconditionally (a) submit in any proceeding relating to the Plan or any Award Agreement, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the State of Texas, and agree that all claims in respect of any such Proceeding shall be heard and determined in such Texas court, (b) consent that any such Proceeding may and shall be brought in such courts and waives any objection that the Company and each Participant may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agree not to plead or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d) agree that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participant’s address shown in the books and records of the Company or, in the case of the Company, at the Company’s principal offices, attention General Counsel, and (e) agree that nothing in the Plan shall affect the right to effect service of process in any other manner permitted by the laws of the Province of Ontario.
Section 4.8 Conformity to Securities Laws
The Participant acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including, without limitation, the applicable exemptive conditions of Rule 16b-3. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Restricted Share Units are awarded and may be Settled, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
Section 4.9 Amendments
This Agreement and the Plan may be amended without the consent of the Participant provided that such amendment would not affect in any materially adverse manner any rights of the Participant under this Agreement. No amendment of this Agreement shall, without the consent of the Participant, affect in any materially adverse manner any rights of the Participant under this Agreement.
Section 4.10 Conflicts
In the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of the Employment Agreement, the terms and conditions of the Employment Agreement shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
INTERNATIONAL BATTERY METALS LTD.
By: /s/ Joseph A. Mills
Name: Joseph A. Mills
Title: Chief Executive Officer
PARTICIPANT
By: /s/ James Garrett Galloway
Name: James Garrett Galloway
Title: Senior Vice-President of Corporate Development
SCHEDULE A
Grant of RSUs |
Vesting Schedule |
200,000 |
Vest in full sixty (60) days after the Company’s successful listing on the Toronto Stock Exchange, The Nasdaq Stock Market or The New York Stock Exchange |
1,721,810 |
50% of such RSUs will vest on the date Compensation Committee certifies, in good faith, that the Company first achieves aggregate EBITDA of US $25 million in any four fiscal quarter period, and the remaining 50% of such RSUs will vest on the date the Compensation Committee certifies, in good faith, that the Company first achieves aggregate EBITDA of US $50 million in any four fiscal quarter period |
860,905 |
50% of such RSUs will vest on the date the Compensation Committee certifies, in good faith, that the Company first achieves a market capitalization of US $750 million based upon the Company’s 60-day volume weighted average trading price (“VWAP”), and the remaining 50% of such RSUs will vest on the date the Compensation Committee certifies, in good faith, that the Company first achieves a market capitalization of US $1.5 billion based upon the Company’s 60-day VWAP |
INTERNATIONAL BATTERY METALS LTD
FIRST AMENDMENT TO RESTRICTED SHARE UNIT AGREEMENT
This FIRST AMENDMENT TO RESTRICTED SHARE UNIT AGREEMENT (this “Amendment”) is made by and between International Battery Metals Ltd. (the “Company”), a corporation existing under the Business Corporations Act (British Columbia), and James Garrett Galloway (the “Participant”), effective as of March 9, 2026.
WHEREAS, the Company and the Participant entered into that certain Restricted Share Unit Agreement, effective as of June 2, 2025 (the “RSU Agreement”), pursuant to which the Participant was awarded 1,200,000 Restricted Share Units (“RSUs”);
WHEREAS, Schedule A to the RSU Agreement provides that 400,000 of the Restricted Share Units are time-based and scheduled to vest in full on May 5, 2026, the first anniversary of the date of the Participant’s Employment Agreement dated May 5, 2025;
WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Committee”), by Unanimous Written Consent dated March 6, 2026, approved an amendment to the RSU Agreement to change the vesting date of such 400,000 time-based Restricted Share Units from May 5, 2026 to June 15, 2026, for compensation and retention purposes and to ensure that the Restricted Share Units vest during an open window pursuant to the Company’s Insider Trading Policy;
WHEREAS, the Company is now registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and common shares issued upon the vesting of the RSUs maybe resold subject only to Rule 144 of the Exchange Act for control securities to the extent that the Participant is deemed an “Affiliate” as defined in the Exchange Act and therefore the parties wish to amend the default provisions in the case of a vesting; and
WHEREAS, the Company and the Participant desire to amend the RSU Agreement to reflect the foregoing.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Amendment to Section 3.2
The last paragraph of Section 3.2 is hereby deleted and restated in its entirety as follows:
Unless the Participant makes a tax withholding election (i) in the case of a vesting pursuant to Section 2.2(a), prior to the fifth (5th) business day preceding the vesting date, (ii) in the case of a vesting pursuant to Section 2.3(b), prior to the tenth (10th) day after Company has notified Participant that the Restricted Share Units shall vest pursuant to Section 2.3(b)
(including the date of such vesting), or (iii) in the case of a vesting pursuant to Section 2.3(a), prior to the earlier of (A) the fifth (5th) business day preceding the vesting date or (B) the tenth (10th) day after the Company has notified Participant that the Restricted Share Units shall vest pursuant to Section 2.3(a), the Company will automatically satisfy the tax withholding obligation, if any, through a “cashless exercise” arrangement as set forth in option (3) above. Additionally, if the Participant does not deliver the cash, check or shares set forth in options (1) or (4), or such cash, check or shares are in an amount less than the full amount of the withholding due, the Company is authorized to deduct from any amounts payable to the Participant, either compensation, proceeds from the sale, or otherwise, any taxes required to be withheld with respect to the Restricted Share Units. It is intended that the terms of this award of Restricted Share Units will not result in the imposition of any tax liability pursuant to Section 409A of the Code, and this Agreement shall be construed, interpreted, operated, and administered consistent with that intent.
2. Amendment to Schedule A. Schedule A to the RSU Agreement is hereby amended and restated in its entirety as follows:
Grant of RSUs |
Vesting Schedule |
400,000 |
Vest in full on June 15, 2026, subject to the Participant’s continuous employment through such vesting date. |
800,000 |
Vest in full on the date that the Company completes the building and deployment (with secured financing) of two additional Direct Lithium Extraction (“DLE”) plants in addition to the existing DLE plant, subject to the Participant’s continuous employment through such vesting date. |
2. No Other Changes. Except as expressly modified by this Amendment, the RSU Agreement shall remain in full force and effect in accordance with its terms. In the event of any conflict between this Amendment and the RSU Agreement, this Amendment shall control.
3. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable in the Province of British Columbia, consistent with Section 4.7 of the RSU Agreement.
4. Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.
[Signature page follows]
INTERNATIONAL BATTERY METALS LTD.
By: /s/ Joseph A. Mills
Name: Joseph A. Mills
Title: Chief Executive Officer
PARTICIPANT
By: /s/ James Garrett Galloway
Name: James Garrett Galloway
Title: Senior Vice President of Corporate Development
Exhibit 31.1
CERTIFICATION 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
I, James Garrett Galloway, certify that:
Date: |
August 12, 2026 |
By: |
/s/ James Garrett Galloway |
|
|
|
James Garrett Galloway |
|
|
|
Interim Chief Executive Officer |
Exhibit 31.2
CERTIFICATION 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
I, Michael Rutledge, certify that:
Date: |
August 12, 2026 |
By: |
/s/ Michael Rutledge |
|
|
|
Michael Rutledge |
|
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of International Battery Metals, LTD. (the “Company”) on Form 10-Q for the period ending June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: |
August 12, 2026 |
By: |
/s/ James Garrett Galloway |
|
|
|
James Garrett Galloway |
|
|
|
Interim Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of International Battery Metals LTD. (the “Company”) on Form 10-Q for the period ending June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: |
August 12, 2026 |
By: |
/s/ Michael Rutledge |
|
|
|
Michael Rutledge |
|
|
|
Chief Financial Officer |