Financial Data and Key Metrics Changes - As of June 30, the company incurred approximately €124 million of the total expected €245 million cost for Phase one construction [5] - The company ended the quarter with €6.7 million in cash, which includes proceeds from a €5 million convertible note issuance in June [7] - Following the quarter, the company completed a follow-on transaction for an additional €5 million, resulting in over €12 million in cash on hand [8] Business Line Data and Key Metrics Changes - The qualification line at the Callantan graphite plant produced CSPG samples exceeding one metric ton for customer preproduction sales trials and testing [5] - Enhancements were implemented to improve cycle times and graphite flow rates, optimizing line performance [6] Market Data and Key Metrics Changes - The company is encouraged by the level of engagement from financing partners and believes the Callatin project aligns with U.S. policy priorities and growing market demand for domestic battery-grade graphite [7][10] Company Strategy and Development Direction - The company is focused on securing capital to complete the build of the Callantan graphite plant and is advancing multiple financing paths [7][10] - Long-term strategy includes vertical integration through the Coosa deposit while currently prioritizing flexibility and progress on the Callantan project [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to finance and produce the Callantan project, citing strong demand signals and federal policy support [12][13] - The company is committed to execution, transparency, and long-term value creation for shareholders [13] Other Important Information - The company has faced broader capital market volatility and trade policy shifts but remains optimistic about project financing and market conditions [7][10] Q&A Session Summary Question: Impact of potential interest rate cuts on financing - Management indicated that lower interest rates would be beneficial for project financing and long-term growth [17] Question: Future plans for convertible notes - Management stated that they would remain opportunistic regarding potential follow-on convertible note issuances [18] Question: Status of the project in Turkey - Management clarified that they are 100% focused on graphite and Phase one financing, with no current presence or claims in Turkey [22][24]

[DEFINITIONS](index=3&type=section&id=DEFINITIONS) This section defines key terms used throughout the Form 10-Q, covering financial instruments, company agreements, and industry-specific terminology - The report provides definitions for **key terms** used throughout the Form 10-Q, including **financial instruments**, **company agreements**, and **industry-specific terminology** related to graphite and critical minerals[7](index=7&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk) [PART I — FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and equity, with notes on accounting policies and liquidity [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time, reflecting its financial position | ASSETS (thousands of dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $6,704 | $4,272 | | Total Current Assets | $7,324 | $4,863 | | Net property, plant and equipment | $139,225 | $137,868 | | Total Assets | $150,498 | $146,357 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total Current Liabilities | $14,331 | $11,762 | | Total Liabilities | $15,728 | $13,235 | | Total Stockholders' Equity | $134,770 | $133,122 | | Total Liabilities and Stockholders' Equity | $150,498 | $146,357 | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss over specific periods, illustrating its operational performance | Operating Expenses (thousands of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product development expenses | $(275) | $(281) | $(457) | $(596) | | General and administrative expenses | $(3,133) | $(2,489) | $(5,427) | $(5,094) | | Total operating expenses | $(3,575) | $(2,838) | $(6,210) | $(5,831) | | Other expense, net | $(294) | $(981) | $(335) | $(886) | | Net Loss | $(3,869) | $(3,819) | $(6,545) | $(6,717) | | BASIC AND DILUTED LOSS PER SHARE | $(0.05) | $(0.07) | $(0.09) | $(0.12) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by the company across operating, investing, and financing activities over specific periods | Cash Flow Activities (thousands of dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Used In Operating Activities | $(4,673) | $(5,181) | | Net Cash Used In Investing Activities | $(4,800) | $(3,222) | | Net Cash Provided By Financing Activities | $11,905 | $715 | | Net increase (decrease) in Cash and Cash Equivalents | $2,432 | $(7,688) | | Cash and Cash Equivalents, End of Period | $6,704 | $3,164 | [Condensed Consolidated Statements of Stockholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in the company's equity accounts, including common stock, paid-in capital, and accumulated deficit, over specific periods Stockholders' Equity (thousands of dollars) | Stockholders' Equity (thousands of dollars) | Balances, December 31, 2024 | Balances, June 30, 2025 | | :---------------------------------------- | :-------------------------- | :---------------------- | | Common Stock (Shares) | 64,830,081 | 78,439,226 | | Common Stock (Amount) | $65 | $78 | | Paid-In Capital | $507,001 | $515,181 | | Accumulated Deficit | $(373,686) | $(380,231) | | Total Stockholders' Equity | $133,122 | $134,770 | Stockholders' Equity (thousands of dollars) | Stockholders' Equity (thousands of dollars) | Balances, December 31, 2023 | Balances, June 30, 2024 | | :---------------------------------------- | :-------------------------- | :---------------------- | | Common Stock (Shares) | 55,387,794 | 57,842,023 | | Common Stock (Amount) | $55 | $58 | | Paid-In Capital | $501,675 | $502,863 | | Accumulated Deficit | $(361,029) | $(367,746) | | Total Stockholders' Equity | $140,443 | $134,917 | [1. BASIS OF PRESENTATION](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION) This section details the accounting principles and standards used in preparing the interim financial statements, including recent ASU adoptions and evaluations - The interim financial statements are prepared in accordance with **U.S. GAAP** for interim information and Form 10-Q instructions, and should be read with the annual report. Management considers all necessary adjustments for fair presentation to be included[23](index=23&type=chunk) - The Series A-1 Convertible Notes are classified as a **liability** and measured at **fair value** using the Fair Value Option, with changes in fair value recognized in the Condensed Consolidated Statement of Operations or Other Comprehensive Income[24](index=24&type=chunk)[25](index=25&type=chunk) - The Company adopted **ASU 2023-07 (Segment Reporting)** retrospectively, resulting in expanded segment disclosures. **ASU 2024-02 (Codification Improvements)** and **ASU 2024-01 (Stock Compensation)** did not materially impact the interim financial statements[27](index=27&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) - The Company is currently evaluating the potential impact of recently issued ASUs, including **2025-01 (Expense Disaggregation)**, **2024-04 (Convertible Debt)**, **2024-03 (Expense Disaggregation)**, **2023-09 (Income Tax Disclosures)**, and **2023-06 (Disclosure Improvements)**[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [2. LIQUIDITY AND GOING CONCERN](index=17&type=section&id=2.%20LIQUIDITY%20AND%20GOING%20CONCERN) This section addresses the company's ability to meet its financial obligations, highlighting substantial doubt about its going concern status and reliance on external financing - The Company's financial statements are prepared on a **'going concern' basis**, but events and conditions raise substantial doubt about its ability to continue within one year due to current liabilities exceeding current assets and ongoing cash losses from construction activities[36](index=36&type=chunk)[37](index=37&type=chunk)[43](index=43&type=chunk) - The Company has relied on **equity financings**, **debt financings**, and **asset sales** to fund operations since 2009. Construction activities at the Kellyton Graphite Plant have been significantly reduced due to insufficient funding[37](index=37&type=chunk)[38](index=38&type=chunk) Liquidity Metrics | Metric | Value (as of June 30, 2025) | | :----- | :-------------------------- | | Cash Balance | $6.7 million | | ATM Sales Agreement (6 months ended June 30, 2025) | 7.1 million shares sold for $4.4 million net proceeds | | 2024 Lincoln Park PA (6 months ended June 30, 2025) | 5.1 million shares sold for $3.2 million net proceeds | | Remaining ATM Sales Agreement availability | ~$47.3 million | | Remaining 2024 Lincoln Park PA availability | ~$26.3 million | - The Company issued Series A-1 Convertible Notes for **$5.0 million** on June 13, 2025. However, there is no assurance that additional financing will be available on acceptable terms, with market volatility, interest rates, and geopolitical conditions posing significant risks[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) [3. PREPAID AND OTHER CURRENT ASSETS](index=19&type=section&id=3.%20PREPAID%20AND%20OTHER%20CURRENT%20ASSETS) This section details the composition of the company's prepaid expenses and other current assets, including inventory held for future sales or sample production Prepaid and Other Current Assets (thousands of dollars) | Prepaid and other current assets (thousands of dollars) | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------- | :------------ | :---------------- | | Prepaid insurance | $307 | $90 | | Graphite flake inventory | $206 | $460 | | Other current assets | $107 | $41 | | Total prepaid and other current assets | $620 | $591 | - As of June 30, 2025, inventory represents raw material under contract for sale or for product sample production within the next twelve months[45](index=45&type=chunk) [4. INVENTORY](index=19&type=section&id=4.%20INVENTORY) This section describes the valuation and composition of the company's raw material inventory, noting no write-downs in the current period Inventory (raw material of natural flake graphite concentrate) | Inventory (raw material of natural flake graphite concentrate) | June 30, 2025 | December 31, 2024 | | :----------------------------------------------------------- | :------------ | :---------------- | | Value (thousands of dollars) | $200 | $500 | - Inventory is valued at the lower of cost or net realizable value. No write-downs were recognized for the three and six months ended June 30, 2025, compared to a **$0.7 million** write-down in the prior comparable periods of 2024[47](index=47&type=chunk) [5. PROPERTY, PLANT AND EQUIPMENT](index=20&type=section&id=5.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) This section details the company's long-lived assets, including mineral rights, buildings, and construction in progress for the Kellyton Graphite Plant Net Book Value of Property, Plant and Equipment (thousands of dollars) | Net Book Value of Property, Plant and Equipment (thousands of dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------------------------- | :------------ | :---------------- | | Mineral rights and properties | $8,972 | $8,972 | | Buildings | $3,183 | $3,243 | | Other property, plant and equipment | $3,995 | $2,377 | | Construction in progress | $123,075 | $123,276 | | Total | $139,225 | $137,868 | - Construction in progress primarily relates to the **Kellyton Graphite Plant**. The Company received **$0.3 million** and **$0.8 million** from asset sales during the six months ended June 30, 2025 and 2024, respectively, as part of design optimization[49](index=49&type=chunk)[50](index=50&type=chunk) - No impairment was deemed necessary for long-lived assets for the six months ended June 30, 2025. However, potential abandonment or alteration of Kellyton Graphite Plant plans could trigger an impairment evaluation[51](index=51&type=chunk) [6. SERIES A-1 CONVERTIBLE NOTES](index=20&type=section&id=6.%20SERIES%20A-1%20CONVERTIBLE%20NOTES) This section outlines the terms and accounting treatment of the Series A-1 Convertible Notes, including conversion features, interest rates, and beneficial ownership caps - On June 13, 2025, the Company issued Series A-1 Convertible Notes for an aggregate principal amount of **$5.0 million**, convertible into Common Stock, subject to a **9.99% Beneficial Ownership Cap**[52](index=52&type=chunk)[54](index=54&type=chunk) - The notes do not bear interest unless an event of default occurs, in which case the rate becomes **18% per annum**. They mature on the twenty-four month anniversary of issuance and require a minimum cash balance of **$2.25 million**[56](index=56&type=chunk) - The conversion price is **$0.63**, or the lower of **$0.63** or **92%** of the lowest VWAP during the five trading days prior to an Installment Date. As of June 30, 2025, approximately **$1.0 million** of notes were due but deferred[57](index=57&type=chunk) - The Company elected the **Fair Value Option** for these notes and will seek stockholder approval for conversion shares exceeding **19.99%** of outstanding Common Stock[59](index=59&type=chunk)[60](index=60&type=chunk) - Assuming conversion at **$0.63**, the Series A-1 Convertible Notes were convertible into approximately **9,126,984 shares** of Common Stock as of June 30, 2025, using the if-converted method[61](index=61&type=chunk) [7. FAIR VALUE MEASUREMENTS](index=22&type=section&id=7.%20FAIR%20VALUE%20MEASUREMENTS) This section explains the company's fair value measurement methodology and the classification of financial instruments within the fair value hierarchy - The Company follows **ASC 820** for fair value measurements, which defines fair value as an exit price and establishes a three-level hierarchy based on input observability[62](index=62&type=chunk)[68](index=68&type=chunk) Fair Value Measurements (thousands of dollars) | Fair Value Measurements (thousands of dollars) | Level 1 | Level 2 | Level 3 | Total | | :--------------------------------------------- | :------ | :------ | :------ | :---- | | Series A-1 Convertible Notes (June 30, 2025) | $— | $— | $(5,000)| $(5,000)| - The fair value of the Series A-1 Convertible Notes is classified as **Level 3** due to the use of unobservable inputs related to the probability of contingent redemption features. The change in fair value from inception to June 30, 2025, was immaterial[65](index=65&type=chunk)[67](index=67&type=chunk) [8. ACCRUED LIABILITIES](index=26&type=section&id=8.%20ACCRUED%20LIABILITIES) This section provides a breakdown of the company's accrued liabilities, including compensation, insurance, and legal fees Accrued Liabilities (thousands of dollars) | Accrued Liabilities (thousands of dollars) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Accrued compensation | $1,331 | $1,329 | | Liabilities related to Company insurance | $174 | $50 | | Accrued legal fees | $47 | $387 | | Other accrued liabilities | $383 | $339 | | Total accrued liabilities | $1,935 | $2,105 | [9. COMMON STOCK](index=26&type=section&id=9.%20COMMON%20STOCK) This section details the company's common stock activities, including sales under ATM agreements and the Lincoln Park Purchase Agreement, and related stockholder approvals - Under the ATM Sales Agreement with H.C. Wainwright, the Company sold **4.6 million shares** for **$2.4 million** net proceeds in Q2 2025, and **7.1 million shares** for **$4.4 million** net proceeds in H1 2025. Approximately **$47.3 million** remains available for future sales[71](index=71&type=chunk)[73](index=73&type=chunk) - The previous ATM Offering Agreement with Cantor Fitzgerald & Co. was terminated on August 29, 2024. Prior to termination, the Company sold **0.5 million shares** for **$0.2 million** net proceeds in Q2 2024, and **1.8 million shares** for **$0.8 million** net proceeds in H1 2024[75](index=75&type=chunk)[76](index=76&type=chunk) - Under the 2024 Lincoln Park PA, Lincoln Park committed to purchase up to **$30.0 million** of Common Stock. The Company sold **1.3 million shares** for **$0.6 million** net proceeds in Q2 2025, and **5.1 million shares** for **$3.2 million** net proceeds in H1 2025. Approximately **$26.3 million** remains available[77](index=77&type=chunk)[78](index=78&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - Stockholder approval was obtained on May 27, 2025, for the issuance of more than **19.99%** of outstanding Common Stock under the 2024 Lincoln Park PA[80](index=80&type=chunk) [10. STOCK-BASED COMPENSATION](index=30&type=section&id=10.%20STOCK-BASED%20COMPENSATION) This section reports the company's stock-based compensation expense, equity incentive plans, and activity related to stock options and restricted stock units Stock-Based Compensation Expense (thousands of dollars) | Stock-Based Compensation Expense (thousands of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Expense | $0.8 | $0.3 | $0.9 | $0.5 | - The Company's equity incentive plans include the **2013 Plan** and the **Inducement Plan**. As of June 30, 2025, **48,281 shares** were available under the 2013 Plan and **114,429 shares** under the Inducement Plan[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) Stock Options Activity (6 months ended June 30) | Stock Options Activity (6 months ended June 30) | 2025 (Number of Stock Options) | 2025 (Weighted Average Exercise Price) | 2024 (Number of Stock Options) | 2024 (Weighted Average Exercise Price) | | :---------------------------------------------- | :----------------------------- | :------------------------------------- | :----------------------------- | :------------------------------------- | | Outstanding at beginning of period | 649,345 | $1.91 | 424,826 | $2.66 | | Granted | 16,390 | $0.48 | 224,519 | $0.49 | | Outstanding at end of period | 665,735 | $1.88 | 649,345 | $1.91 | | Exercisable at end of period | 665,735 | $1.88 | 424,826 | $2.66 | RSU Activity (6 months ended June 30) | RSU Activity (6 months ended June 30) | 2025 (Number of RSUs) | 2025 (Weighted-Average Grant Date Fair Value) | 2024 (Number of RSUs) | 2024 (Weighted-Average Grant Date Fair Value) | | :------------------------------------ | :-------------------- | :-------------------------------------------- | :-------------------- | :-------------------------------------------- | | Unvested RSUs at beginning of period | 4,090,639 | $0.60 | 1,773,058 | $1.03 | | Granted | 20,101,991 | $0.48 | 3,235,731 | $0.49 | | Forfeited/Expired | (142,139) | $0.92 | (6,784) | $3.93 | | Vested | (1,826,582) | $0.51 | (884,817) | $1.03 | | Unvested RSUs at end of period | 22,223,909 | $0.49 | 4,117,188 | $0.60 | - As of June 30, 2025, the Company had **$6.1 million** of unrecognized compensation costs related to non-vested RSUs, to be recognized over approximately **2.5 years**[93](index=93&type=chunk) [11. OTHER EXPENSE, NET](index=32&type=section&id=11.%20OTHER%20EXPENSE,%20NET) This section details the components of other expense, net, including inventory sales, write-downs, interest income, and convertible note issuance costs Other Expense, Net (thousands of dollars) | Other Expense, Net (thousands of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales of raw material inventory | $28 | $982 | $266 | $1,124 | | Costs related to sales of raw material inventory | $(28) | $(1,336) | $(266) | $(1,506) | | Write-down of raw material inventory | $— | $(694) | $— | $(694) | | Interest income | $27 | $65 | $70 | $191 | | Other (expense) income | $(316) | $3 | $(401) | $2 | | Total other expense, net | $(294) | $(981) | $(335) | $(886) | - The Company recognized **$0.3 million** in issuance costs for the Series A-1 Convertible Notes, included in 'Other (expense) income' for the three and six months ended June 30, 2025[98](index=98&type=chunk) [12. EARNINGS PER SHARE](index=34&type=section&id=12.%20EARNINGS%20PER%20SHARE) This section explains the calculation of basic and diluted loss per share, noting the exclusion of anti-dilutive securities due to net loss - Basic and diluted loss per common share are calculated based on weighted-average shares outstanding. Potentially dilutive shares (unvested RSUs, stock options, convertible notes) totaling **32,016,628** were excluded as their effect would be anti-dilutive due to the net loss[99](index=99&type=chunk) [13. COMMITMENTS AND CONTINGENCIES](index=34&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines the company's environmental compliance, legal proceedings, and future lease obligations for plant equipment - The Company believes its operations are materially compliant with current environmental regulations and does not expect material effects from legal proceedings. It has future lease obligations of approximately **$1.2 million** for Kellyton Graphite Plant equipment[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [14. SEGMENT REPORTING](index=34&type=section&id=14.%20SEGMENT%20REPORTING) This section details the company's single operating segment, the battery-grade graphite business, including its Kellyton Graphite Plant and Coosa Graphite Deposit - The Company operates with one reporting segment: the **'battery-grade graphite business,'** which includes the Kellyton Graphite Plant and the Coosa Graphite Deposit, both in a pre-revenue stage[103](index=103&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - The Kellyton Graphite Plant will process natural graphite concentrate using a proprietary purification process (caustic bake, acid leach, thermal treatment) to produce CSPG, with a patent application approved. The Coosa Graphite Deposit is being evaluated for future mining to provide in-house feedstock[105](index=105&type=chunk)[106](index=106&type=chunk) Segment Assets (thousands of dollars) | Segment Assets (thousands of dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Battery-grade graphite business segment assets | $142,934 | $141,470 | | Corporate and other assets | $7,564 | $4,887 | | Consolidated total assets | $150,498 | $146,357 | Segment Expenditures (thousands of dollars) | Segment Expenditures (thousands of dollars) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------------------------ | :------------------------------- | :----------------------------- | | Battery-grade graphite business segment assets | $2,200 | $5,100 | Segment Net Loss (thousands of dollars) | Segment Net Loss (thousands of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Battery-grade Graphite Segment | $(1,034) | $(1,873) | $(2,135) | $(2,906) | | Corporate and Other | $(2,835) | $(1,946) | $(4,410) | $(3,811) | | Consolidated Net Loss | $(3,869) | $(3,819) | $(6,545) | $(6,717) | [15. SUBSEQUENT EVENT](index=39&type=section&id=15.%20SUBSEQUENT%20EVENT) This section discloses the issuance of Series B-1 Convertible Notes after the reporting period, outlining their principal amount and conversion terms - On August 7, 2025, the Company issued Series B-1 Convertible Notes for an aggregate principal amount of **$5.0 million**, with similar terms to Series A-1 notes but a conversion price of **$0.83**[113](index=113&type=chunk)[114](index=114&type=chunk) - Stockholder approval will be sought for conversion shares from both Series A-1 and B-1 notes if they exceed **19.99%** of outstanding Common Stock[115](index=115&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=39&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, condition, and operational developments, focusing on the Kellyton Graphite Plant, financing efforts, and critical minerals projects [INTRODUCTION](index=39&type=section&id=INTRODUCTION) This introduction outlines Westwater Resources' focus as an energy technology and critical minerals company developing battery-grade natural graphite materials - Westwater Resources is an **energy technology** and **critical minerals company** focused on developing **battery-grade natural graphite materials** through its Kellyton Graphite Plant and Coosa Graphite Deposit in Alabama[117](index=117&type=chunk) - The Kellyton Graphite Plant is expected to produce **12,500 metric tons per year** of CSPG in Phase I for lithium-ion batteries, with the Coosa Graphite Deposit anticipated to provide natural graphite flake concentrate[117](index=117&type=chunk) [RECENT DEVELOPMENTS](index=39&type=section&id=RECENT%20DEVELOPMENTS) This section highlights recent progress at the Kellyton Graphite Plant, customer interest, financing efforts, and the strategic implications of domestic graphite production - Westwater is experiencing increased customer interest in Phase II production due to tariffs and the desire for domestic CSPG supply, with samples meeting initial specifications for major battery suppliers and vehicle manufacturers[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - Total expected costs for Phase I of the Kellyton Graphite Plant remain at **$245 million**, with approximately **$124.4 million** incurred to date. Construction activities have been at a measured pace, awaiting additional funding[121](index=121&type=chunk)[122](index=122&type=chunk) - The qualification line at the Kellyton Graphite Plant produced over **1 metric ton** of CSPG samples for customer trials and is being optimized for cycle times and graphite flow rates. Commissioning of micronizer and shaping mills has begun[123](index=123&type=chunk)[124](index=124&type=chunk) - The Company is progressing with syndication of a **$150 million** secured debt facility for Phase I completion and has submitted a loan application to EXIM under the 'Make More in America Initiative' and 'China and Transformational Exports Program'[125](index=125&type=chunk)[129](index=129&type=chunk) - A strategic financing review for the Coosa Graphite Deposit is underway, seeking investment sources and partners, with further advancement expected after Kellyton Graphite Plant Phase I financing closes[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - The U.S. is nearly **100% dependent** on graphite imports, primarily from China. New executive orders, tariffs, and anti-dumping duties (**93.5%** proposed on Chinese graphite-based anode materials) highlight supply chain risks and potential opportunities for Westwater's domestic production[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) [Equity Financings](index=45&type=section&id=Equity%20Financings) This section summarizes the company's equity financing activities, including shares sold and net proceeds from ATM sales agreements and the Lincoln Park Purchase Agreement Equity Financing Source | Equity Financing Source | Period | Shares Sold (millions) | Net Proceeds (millions of dollars) | | :---------------------- | :----- | :--------------------- | :--------------------------------- | | ATM Sales Agreement | Q2 2025 | 4.6 | $2.4 | | ATM Sales Agreement | H1 2025 | 7.1 | $4.4 | | 2024 Lincoln Park PA | Q2 2025 | 1.3 | $0.6 | | 2024 Lincoln Park PA | H1 2025 | 5.1 | $3.2 | [RESULTS OF OPERATIONS](index=47&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's net loss and loss per share, attributing changes to stock compensation, financing costs, depreciation, and inventory-related expenses Net Loss and Loss Per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(3.9) million | $(3.8) million | $(6.5) million | $(6.7) million | | Loss Per Share | $(0.05) | $(0.07) | $(0.09) | $(0.12) | - The increase in net loss for the three months ended June 30, 2025, was primarily due to increased stock compensation expense, Series A-1 Convertible Notes issuance costs, and higher depreciation, partially offset by lower prior-period inventory-related expenses[142](index=142&type=chunk) - The decrease in net loss for the six months ended June 30, 2025, was mainly due to lower prior-period inventory-related expenses and reduced product development expenses, partially offset by increased stock compensation, convertible note issuance costs, depreciation, and lower interest income[143](index=143&type=chunk) - General and administrative expenses increased by **$0.6 million** (QoQ) and **$0.3 million** (YoY) primarily due to higher stock compensation and reduced capitalized payroll costs, partially offset by cost-saving initiatives[146](index=146&type=chunk) - Other expense, net, decreased significantly due to prior-period losses on sales and write-downs of raw material inventory, partially offset by current period issuance costs for Series A-1 Convertible Notes[147](index=147&type=chunk) [FINANCIAL POSITION](index=48&type=section&id=FINANCIAL%20POSITION) This section reviews the company's cash flow activities, highlighting changes in operating, investing, and financing cash flows Cash Flow Activity (millions of dollars) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :----------------------------- | :----------------------------- | | Net Cash Used In Operating Activities | $(4.7) million | $(5.2) million | | Net Cash Used In Investing Activities | $(4.8) million | $(3.2) million | | Net Cash Provided By Financing Activities | $11.2 million increase | $0.7 million | | Net increase (decrease) in Cash and Cash Equivalents | $2.4 million | $(7.7) million | | Cash and Cash Equivalents, End of Period | $6.7 million | $3.2 million | - The increase in cash provided by financing activities was primarily driven by net cash proceeds from Series A-1 Convertible Notes and increased Common Stock sales under the ATM Sales Agreement and 2024 Lincoln Park PA[150](index=150&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=48&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's liquidity challenges, going concern risk, and reliance on external financing, detailing available funds and market risks - The Company faces significant liquidity challenges and going concern risk due to ongoing cash losses, current liabilities exceeding current assets, and reliance on external financing to fund the Kellyton Graphite Plant construction[151](index=151&type=chunk)[152](index=152&type=chunk) Liquidity and Capital Resources Metrics | Metric | Value | | :----- | :---- | | Cash balance (June 30, 2025) | $6.7 million | | Cash balance (August 11, 2025) | $12.5 million | | Net proceeds from ATM Sales Agreement (H1 2025) | $4.4 million | | Net proceeds from 2024 Lincoln Park PA (H1 2025) | $3.2 million | | Remaining ATM Sales Agreement availability | ~$47.3 million | | Remaining 2024 Lincoln Park PA availability | ~$26.3 million | | Series A-1 Convertible Notes (June 13, 2025) | $5.0 million | | Series B-1 Convertible Notes (August 7, 2025) | $5.0 million | - The Company's ability to raise additional funds is subject to market volatility, interest rates, inflation, EV production rates, economic conditions, and geopolitical factors, which could significantly impact access to necessary funding[156](index=156&type=chunk) [OFF-BALANCE SHEET ARRANGEMENTS](index=50&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) This section confirms the absence of any off-balance sheet arrangements for the company - The Company has no off-balance sheet arrangements[157](index=157&type=chunk) [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=50&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section advises on the inherent risks and uncertainties associated with forward-looking statements, including funding, economic conditions, and regulatory changes - The report contains forward-looking statements subject to risks and uncertainties, including funding adequacy, liquidity, access to capital, economic conditions, development costs, and regulatory changes[158](index=158&type=chunk)[159](index=159&type=chunk)[161](index=161&type=chunk) - Factors that could cause actual results to differ materially include graphite and vanadium prices, competition, customer contracts, cost control, supply chain disruptions, interest rates, and geopolitical conditions[158](index=158&type=chunk)[161](index=161&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=52&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Westwater Resources is exempt from providing quantitative and qualitative disclosures about market risk in its quarterly reports - The Company is not required to provide quantitative and qualitative disclosures about market risk in its Quarterly Reports as it is a smaller reporting company[160](index=160&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=54&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management confirmed the effectiveness of disclosure controls and procedures as of June 30, 2025, with no material changes to internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and concluded to be effective at a reasonable assurance level as of June 30, 2025[162](index=162&type=chunk)[163](index=163&type=chunk) - There were no changes in internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[164](index=164&type=chunk) [PART II - OTHER INFORMATION](index=54&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and a list of exhibits [ITEM 1. LEGAL PROCEEDINGS](index=54&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) There have been no material changes to the legal proceedings previously disclosed in the Company's Annual Report - No material changes to legal proceedings previously disclosed in the Annual Report[165](index=165&type=chunk) [ITEM 1A. RISK FACTORS](index=54&type=section&id=ITEM%201A.%20RISK%20FACTORS) Investors are directed to the 'Risk Factors' section in the Annual Report for a comprehensive discussion of investment risks - Investors should refer to the **'Risk Factors'** section in the Annual Report for a comprehensive understanding of investment risks[166](index=166&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=54&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES,%20USE%20OF%20PROCEEDS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The Company reports no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - None reported for unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities[167](index=167&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=54&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The Company reports no defaults upon senior securities during the period - None reported for defaults upon senior securities[168](index=168&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=54&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable[169](index=169&type=chunk) [ITEM 5. OTHER INFORMATION](index=54&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The Company reports no other information required to be disclosed - No other information required to be disclosed[170](index=170&type=chunk) [ITEM 6. EXHIBITS](index=56&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, securities agreements, and certifications - The exhibits include the **Restated Certificate of Incorporation**, **Certificate of Amendment**, **Amended and Restated Bylaws**, **Securities Purchase Agreement**, **Form of Series A-1 Convertible Note**, **Form of Voting Agreement**, and various certifications (CEO, CFO) under Sarbanes-Oxley Act[171](index=171&type=chunk) [SIGNATURES](index=58&type=section&id=SIGNATURES) This section confirms the official signing of the report by the company's President, CEO, CFO, and Senior Vice President of Finance - The report is duly signed on behalf of Westwater Resources, Inc. by **Frank Bakker, President and Chief Executive Officer**, and **Steven M. Cates, Chief Financial Officer and Senior Vice President - Finance**, as of August 13, 2025[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk)

FOR VALUE RECEIVED, Westwater Resources, Inc., a Delaware corporation (the "Company"), hereby promises to pay to the order of [BUYER] or its registered assigns ("Holder") the Outstanding Principal Value (as defined below) with respect to such amount set forth above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "Principal") when due, whether upon the Maturity Date, on any Installment Date (as defined below) with respect to the I ...

Financial Data and Key Metrics Changes - The company reported a strong start to the year, focusing on advancing and derisking projects, with a successful commissioning of the qualification line at the Calythen graphite processing plant producing over 800 kilograms of CHPG sample [4] - The estimated total cost of Phase one remains at €245,000,000, with approximately 85% of the necessary equipment secured [5][21] - The company anticipates commercial production at Callenton to begin in 2026 [5] Business Line Data and Key Metrics Changes - The qualification line at the Calythen facility is capable of processing approximately one metric ton of CFPG battery anode material each day, which will inform operations of the main line expected to produce 12,500 metric tons per day upon Phase one completion [4] - The company envisions the Callentan facility reaching 50,000 metric tons per year of CHPG battery anode production upon completion of both Phase one and two [5] Market Data and Key Metrics Changes - Customer interest in Westwater's ability to supply domestically produced battery anode materials to the North American market remains strong, with 100% of Phase one production capacity already committed under existing offtake agreements [7] - The company is currently in discussions with multiple customers interested in the Phase two output of 37,500 metric tons per year [8] Company Strategy and Development Direction - The company is committed to vertical integration through the development of the Coosa deposit and is actively engaging with customers while fulfilling sample material requests [12] - The company is closely monitoring the evolving tariff landscape that may impact Phase I costs [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in securing financing for Phase one of the Kellyton plant, despite recent protests at the current feedstock supplier temporarily slowing the syndication process [11][12] - The management highlighted the importance of diversifying the supply chain and is at an advanced stage in securing a backup feedstock supply [12] Other Important Information - The company announced the successful completion of the U.S. Patent and Trademark Office review of its patent application, marking another important milestone for its business plan [6] - The company is exploring additional funding opportunities, including a letter of interest from the Export Import Bank, which could provide further financial support for advancing its business [38] Q&A Session Summary Question: What components of entering production could go right or wrong? - Management highlighted the qualification line as a key milestone, providing invaluable experience for the operating team ahead of full operations [18] Question: What are the current trends in construction costs and equipment? - Management noted that 85% of the equipment is already purchased, and they are somewhat shielded from inflation and tariffs, maintaining confidence in the $245,000,000 construction budget [21][22] Question: Can you provide more details on the backup supply from non-Chinese suppliers? - Management stated they are close to securing a backup supply agreement but could not disclose further details due to NDA constraints [28] Question: What is the status of the loan and timing for financing? - Management indicated that the loan process has taken longer than expected but expressed confidence in the current syndicate and their ability to close financing [35][42] Question: What is the potential size of funding from the Export Import Bank? - Management mentioned that they are working through the sizing and approval processes with the Export Import Bank, which could serve as additional funding for the business [40]

Financial Data and Key Metrics Changes - The company reported a strong start to the year, focusing on advancing and derisking projects, with a successful commissioning of the qualification line at the Calythen graphite processing plant producing over 800 kilograms of CHPG sample [4] - The estimated total cost of Phase one remains at €245 million, with approximately 85% of the necessary equipment secured [5][11] - The company anticipates commercial production at Callenton to begin in 2026 [5] Business Line Data and Key Metrics Changes - The qualification line at the Calythen facility is capable of processing approximately one metric ton of CFPG battery anode material each day, which will inform operations of the main line expected to produce 12,500 metric tons per day upon Phase one completion [4] - The company envisions the Callentan facility reaching 50,000 metric tons per year of CHPG battery anode production upon completion of both Phase one and two [5] Market Data and Key Metrics Changes - Customer interest in domestically produced battery anode materials remains strong, with 100% of Phase one production capacity already committed under existing offtake agreements [7] - The company is in discussions with multiple customers interested in the Phase two output of 37,500 metric tons per year [8] Company Strategy and Development Direction - The company is well-positioned to meet the growing demand for sustainable and secure battery-grade anode materials in the U.S., aligning with U.S. policy goals to onshore sourcing and manufacturing of critical minerals [6][7] - The company is committed to vertical integration through the development of the Coosa deposit and is actively engaging with customers and fulfilling sample material requests [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in securing financing for Phase one of the Kellyton plant despite recent market uncertainties and supplier protests [12][13] - The company remains focused on executing its strategy, delivering value to shareholders, and navigating opportunities and challenges in the upcoming quarters [14] Other Important Information - The company announced the successful completion of the U.S. Patent and Trademark Office review of its patent application, marking another important milestone [6] - The company is evaluating several non-Chinese feedstock sources to diversify its supply chain and mitigate future risks [13] Q&A Session Summary Question: What components of entering production could go right or wrong? - Management highlighted the qualification line as a key milestone, providing invaluable experience for the operating team ahead of full operations [18] Question: What are the current trends in construction costs and equipment pricing? - Management noted that 85% of equipment is already purchased, and they remain within the $245 million construction budget despite tariff uncertainties [21][22] Question: Can you provide more details on the backup supply from non-Chinese suppliers? - Management stated they are close to securing a backup supply agreement but could not disclose further details due to NDA constraints [27] Question: What is the status of the loan and timing for financing? - Management indicated that the loan process has taken longer than expected but remains confident in closing financing soon, with a focus on the current syndicate [32][39] Question: What is the potential opportunity with the Export-Import Bank? - Management explained that the letter of interest from the Export-Import Bank is a preliminary step and could provide additional funding for advancing the business beyond Phase one [35][36]

Summary of Westwater Resources (WWR) Conference Call - May 27, 2025 Company Overview - **Company**: Westwater Resources Inc. (WWR) - **Industry**: Graphite production, specifically for battery anode materials Key Points and Arguments Project Updates - The qualification line at the Kelantan graphite processing plant has been successfully commissioned, producing over 800 kilograms of CHPG sample [3][4] - The qualification line can process approximately one metric ton of CFGB battery material daily, with the mainline expected to produce 12,500 metric tons per day upon Phase one completion [4] - The total cost for Phase one is estimated at CHF $245 million, with 85% of the necessary equipment already secured [4][21] - Commercial production at the Callenton facility is anticipated to begin in 2026 [4] Market Position and Demand - 100% of Phase one production capacity is already committed through existing offtake agreements, with strong demand for Phase two output of 37,500 metric tons per year [7] - Customer interest in domestically produced battery anode materials remains strong, aligning with U.S. policy goals to onshore sourcing and manufacturing of critical minerals [5][6] Financing and Supply Chain - The company is working on securing a secured debt facility to cover the remaining costs of Phase one, with a strategic priority on financing reflecting market demand [10] - Recent protests at the current feedstock supplier have temporarily slowed processes, but operations are expected to resume in June [11][12] - Westwater is diversifying its supply chain by evaluating non-Chinese feedstock sources and is close to securing a backup supply agreement [12][27] Challenges and Risks - The unexpected withdrawal of an offshore institutional investor from the financing syndication has caused delays, but the company is now working with multiple lenders [10][11] - The evolving tariff landscape may impact Phase one costs, although the company believes it is somewhat shielded from inflation due to the majority of equipment already purchased [21][22] Future Opportunities - The company received a letter of interest from the Export-Import Bank, which could provide additional funding for advancing its business beyond Phase one [36][38] - The potential for additional funding from the Export-Import Bank is being explored, although it is not currently needed to complete Phase one financing [36][41] Additional Important Information - The qualification line's operation is critical for gaining experience ahead of full operations, which is seen as a game changer for the company [18][19] - The company remains committed to transparency and operational discipline while navigating opportunities and challenges in the market [13][43]

Production and Capacity - Westwater expects the Kellyton Graphite Plant to produce 12,500 metric tons of CSPG per year in Phase I, primarily for lithium-ion batteries[87] - Westwater has secured offtake agreements for 100% of its anticipated Phase I production capacity and a portion of anticipated Phase II production capacity[89] - The company produced over an 800 kg sample of CSPG for pre-production cell trials during the first quarter of 2025[94] Financial Performance - Net loss for the three months ended March 31, 2025, was $2.7 million, a decrease from a net loss of $2.9 million for the same period in 2024[113] - Net cash used in operating activities was $2.3 million for the three months ended March 31, 2025, a decrease of $0.5 million compared to the same period in 2024[118] - Net cash provided by financing activities increased by $3.7 million for the three months ended March 31, 2025, due to increased shares sold under the ATM Sales Agreement and 2024 Lincoln Park PA[122] Funding and Financial Challenges - The company is working to complete a secured debt facility for approximately $150 million to finance the completion of Phase I of the Kellyton Graphite Plant[96] - The Company's planned non-discretionary expenditures for one year exceed the cash on hand as of the date of the Interim Financial Statements[124] - The Company has faced challenges in securing additional financing due to market volatility, higher interest rates, and uncertain economic conditions[126] - The ability to raise additional funds under the ATM Sales Agreement may be limited by the Company's market capitalization, share price, and trading volume[126] - Construction activities related to the Kellyton Graphite Plant have been significantly reduced until additional funding is secured[124] Cash Position - As of March 31, 2025, the Company's cash balance was approximately $3.3 million[125] - During the three months ended March 31, 2025, the Company sold 2.5 million shares of Common Stock for net proceeds of $2.0 million and approximately 3.8 million shares for net proceeds of $2.6 million[125] - The Company has approximately $49.9 million remaining available for future sales under the ATM Sales Agreement[125] Supply Chain and Geopolitical Risks - The U.S. is almost 100% dependent on imports for battery-grade graphite, highlighting the geopolitical risks and supply-chain vulnerabilities[105][107] - Westwater is at an advanced stage in securing a backup feedstock supplier due to recent protests affecting its primary supplier[97] Forward-Looking Statements and Risks - Forward-looking statements regarding funding adequacy and operational timelines are subject to various risks and uncertainties[129] - The Company cautions that actual results may differ materially from forward-looking statements due to factors such as inflation, supply chain disruptions, and geopolitical issues[130] - The Company has no off-balance sheet arrangements[128]

Financial Performance - For the year ended December 31, 2024, the consolidated net loss from continuing operations was $12.7 million, or $0.22 per share, compared to a net loss of $7.8 million, or $0.15 per share in 2023, reflecting a $4.9 million increase in losses [255]. - Net loss increased to $12,657,000 in 2024 from $7,751,000 in 2023, representing a rise of about 63% [298]. - Basic and diluted loss per share rose from $0.15 in 2023 to $0.22 in 2024, an increase of approximately 47% [298]. - The Company recognized a total other expense of $1.2 million for the year ended December 31, 2024, compared to other income of $2.4 million in 2023 [389]. - The Company reported a net loss of $4.98 million for the battery-grade graphite segment in 2024, compared to a net loss of $5.97 million in 2023 [416]. Cash Flow and Liquidity - Net cash used in operating activities for the year ended December 31, 2024, was $5.8 million, a decrease of $5.6 million compared to 2023 [262]. - Cash and cash equivalents decreased significantly from $10,852,000 at the end of 2023 to $4,272,000 at the end of 2024, a drop of approximately 61% [302]. - As of December 31, 2024, the Company had cash balances of $4.3 million and current liabilities exceeded current assets [335]. - The Company expects to continue incurring cash losses due to construction activities at the Kellyton Graphite Plant until operations commence [336]. - The Company has relied on equity financings, debt financings, and asset sales since 2009 to fund its operations [339]. Production and Development - The anticipated annual offtake volume for CSPG natural graphite anode products is 10,000 mt in 2026 and 15,000 mt from 2027 to 2031 under the Offtake Agreement with FCA [242]. - Westwater has secured offtake agreements for 100% of its anticipated Phase I production capacity from the Kellyton Graphite Plant [244]. - The qualification line at the Kellyton Graphite Plant is expected to produce approximately 1 mt per day of CSPG once fully operational [250]. - The company continued construction activities related to Phase I of the Kellyton Graphite Plant during 2024 [303]. - The Company has received all necessary permits to complete the construction of Phase I of the Kellyton Graphite Plant, including air and stormwater permits [411]. Expenses and Costs - General and administrative expenses for the year ended December 31, 2024, were $10.0 million, an increase of approximately $0.2 million compared to the prior year [258]. - Operating expenses decreased from $13,271,000 in 2023 to $11,468,000 in 2024, a reduction of approximately 14% [298]. - Capital expenditures for 2024 were $6,146,000, down from $58,295,000 in 2023, indicating a significant reduction of about 90% [302]. - Product development expenses for the years ended December 31, 2024, and 2023, were $1.2 million and $2.9 million, respectively, indicating a decrease of approximately 58.6% year-over-year [326]. - Stock-based compensation expense for the year ended December 31, 2024, was $1.3 million, compared to $0.8 million in 2023, reflecting a 62.5% increase [383]. Assets and Liabilities - Total current assets decreased from $11,614,000 in 2023 to $4,863,000 in 2024, a decline of approximately 58% [297]. - Total liabilities increased from $9,388,000 in 2023 to $13,235,000 in 2024, marking a growth of about 41% [297]. - Total stockholders' equity fell from $140,443,000 in 2023 to $133,122,000 in 2024, a decrease of about 5% [300]. - The net book value of property, plant, and equipment increased to $137.868 million as of December 31, 2024, from $132.400 million as of December 31, 2023 [347]. - The Company reported accrued liabilities of $2.1 million, an increase of 24.1% from $1.7 million in 2023 [359]. Financing and Debt - The company has executed a term sheet for a $150 million secured debt facility to complete the construction of Phase I of the Kellyton Graphite Plant [251]. - A term sheet has been executed with a global financial institution for a secured debt facility, but no assurance can be given that financing will be available [271]. - The Company is exploring alternative project financing options, including project debt and joint ventures, to fund the construction of the Kellyton Graphite Plant [270]. - The Company has committed to purchase up to $30.0 million of its common stock under the 2024 Lincoln Park PA [340]. - The Company has approximately 9.5 million shares of common stock available for future sales under the 2024 Lincoln Park PA, with a total commitment of up to $30.0 million [377]. Inventory and Write-downs - The Company recognized a $1.0 million write-down of inventory for the year ended December 31, 2024, based on net realizable value [283]. - The Company values its inventory at the lower of cost or net realizable value, with write-downs reported as a component of costs applicable to sales [282]. - The company reported a write-down of raw material inventory of $1.0 million in 2024, while there was no write-down in 2023 [390]. - The Company completed agreements to sell a portion of its raw material inventory, recognizing sales of $3.6 million in 2024, up from $0.1 million in 2023 [389]. Regulatory and Market Considerations - The Company anticipates that U.S. regulations regarding graphite extraction may evolve but does not foresee any unique adverse impacts on its operations [407]. - The Company’s proprietary purification process for graphite is subject to a patent application filed with the U.S. Patent and Trademark Office [408]. - The company evaluates its long-lived assets for impairment when events indicate that carrying amounts may not be recoverable, considering significant negative impacts in market price or demand for graphite [316]. - The company’s estimates of future cash flows for impairment assessments require significant management judgment and are subject to risks and uncertainties [318]. - The Company has not recorded revenues from operations since 2009, raising substantial doubt about its ability to continue as a going concern [288].

Production and Offtake Agreements - Westwater expects the Kellyton Graphite Plant to produce 12,500 metric tons of CSPG annually in Phase I, primarily for lithium-ion batteries [88]. - The company has entered into a binding off-take agreement with Hiller Carbon for the supply of Graphite Fines, expecting production of approximately 14,000 metric tons per year [89]. - Under the Offtake Agreement with FCA, the anticipated annual offtake volume is 10,000 metric tons in 2026, increasing to 15,000 metric tons from 2027 to 2031 [90]. Construction and Financing - Westwater has reduced the estimated cost of Phase I construction to $245 million, a decrease of 9.6% from the previous estimate of $271 million [93]. - As of September 30, 2024, the company has incurred approximately $121.5 million in costs related to the construction of Phase I of the Kellyton Graphite Plant [95]. - The company expects to require approximately $124 million to complete construction of Phase I, with production anticipated to begin in 2026, subject to securing financing [95]. - The qualification line at the Kellyton Graphite Plant is expected to be operational in Q4 2024, producing approximately 1 metric ton of CSPG per day for customer qualification [96]. - Westwater has executed a term sheet for a $150 million secured debt facility to complete the construction of Phase I of the Kellyton Graphite Plant [99]. - The company is considering alternative financing sources, including project debt and joint ventures, to fund the construction of the Kellyton Graphite Plant [123]. Financial Performance - The net loss for the three months ended September 30, 2024, was $3.1 million, a decrease from a net loss of $3.5 million for the same period in 2023 [111]. - The net loss for the nine months ended September 30, 2024, was $9.8 million, compared to a net loss of $9.5 million for the same period in 2023 [112]. - Product development expenses for Q3 and the first nine months of 2024 were $0.3 million and $0.9 million, respectively, a decrease of $0.7 million and $1.8 million compared to the same periods in 2023 [113]. - Exploration expenses for Q3 and the first nine months of 2024 decreased by $0.1 million and $0.2 million, respectively, compared to the same periods in 2023 due to lower personnel costs [114]. - Net cash used in operating activities for the first nine months of 2024 was $3.8 million, a decrease of $8.4 million compared to the same period in 2023, primarily due to cash collected on sales of raw material inventory [117]. - Net cash used in investing activities decreased by $51.8 million for the first nine months of 2024 compared to the same period in 2023, attributed to lower capital expenditures [118]. - Net cash provided by financing activities decreased by $3.0 million for the first nine months of 2024 compared to the same period in 2023, due to fewer shares sold under the ATM Sales Agreement [119]. - As of September 30, 2024, the company's cash balance was approximately $4.5 million, with $7.8 million remaining available for future sales under the ATM Sales Agreement [122]. - The company has registered approximately 10.5 million shares of common stock available for future sales under the 2024 Lincoln Park PA, which allows for up to $30.0 million in purchases [122]. - The company expects to continue incurring losses until operations commence at the Kellyton Graphite Plant, relying on debt and equity financing for funding [123]. - The company has not recorded revenue from operations since 2009, and as of September 30, 2024, current liabilities exceeded current assets [120].

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