Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market
Risk Framework
Market
risk represents the risk of losses, or financial volatility in our operations, that may result from the fluctuations of various factors.
The scope of our market risk, management policies and procedures is expected to include market-sensitive data related to interest rate,
liquidity, input and selling prices.
The
Company’s different types of market risk include:
Interest
rate risk
Interest
rate risk represents the potential volatility from changes in market interest rates. We are exposed to interest rate risk arising from
changes in the level and volatility of interest rates, changes in the slope of the yield curve, changes in credit spreads, and the rate
of prepayments on our interest-earning assets (e.g., inventories) and our funding sources (e.g., short-term financing) which finance
these assets. Project finance and loan facilities are a key component of our financing strategy. Volatility in the interest rate market
could impede our plans for growth.
Liquidity
risk
Liquidity
risk is the risk that we are unable to timely access necessary funding sources in order to operate our business, as well as the risk
that we are unable to timely divest securities that we hold in connection with our sales and trading activities. The Company has been
successful in equity financing in the past but there is no assurance that it will continue to be able to finance the Company with equity
financing. The Company does not have substantial credit lines for financing the Company.
Credit
risk
Credit
risk refers to the potential for loss due to the default or deterioration in credit quality of a counterparty, customer, borrower, or
issuer. The nature and amount of credit risk depends on the type of transaction, the structure and duration of that transaction and the
parties involved. Credit risk also results from an obligor’s failure to meet the terms of any contract with us or otherwise fail
to perform as agreed. This may be reflected through issues such as settlement obligations or payment collections.
Operational
risk
The
success of our plan requires us to be able to operationally deliver on the project plan and timelines as projected by management. In
order to mitigate and control operational risk, we expect to develop policies and procedures that are designed to help identify and
manage operational risk at appropriate levels throughout the organization. We also expect to have business continuity plans in place
that we believe should cover critical processes on a company-wide basis, and redundancies are built into our systems as we deem
appropriate. These control mechanisms will be designed to help confirm that operational policies and procedures are being followed and
that our various businesses are operating within established corporate policies and limits. We are leveraging and intend to continue
implementing established best practices for our industry to reduce operational risk.
Human
Capital Risk
The
success of our business is dependent upon the skills, expertise, industry knowledge and performance of our employees. Human capital risks
represent the risks posed if we fail to attract and retain qualified individuals, particularly those having specialized technical knowledge
in the exploration, extraction, and purification of brine from varying sources to produce battery-grade lithium, and employees who are
motivated to serve the best interests of our clients, thereby serving the best interests of our Company. Attracting and retaining employees
depends, among other things, on our Company’s culture, management, work environment, geographic locations and compensation. There
are risks associated with the proper recruitment, development and rewards of our employees to ensure quality performance and retention.
We offer competitive compensation and benefits to retain human capital, intend to offer educational opportunities to allow advancement,
and promote balance in work life conditions by offering hybrid work- from-home options.
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Legal
and regulatory risk
Legal
and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and the loss to our
reputation that we may suffer as a result of a failure to comply with laws, regulations, rules, related self-regulatory organization
standards and codes of conduct applicable to our business activities. We are generally subject to extensive regulation in the
various jurisdictions in which we conduct our business. We are in the process of setting up procedures that are designed to help promote
compliance with applicable statutory and regulatory requirements, such as public company reporting obligations, regulatory net
capital requirements, sales practices, potential conflicts of interest, anti-money laundering, privacy and recordkeeping. We also expect to establish procedures that are designed to require that our policies relating to ethics and business conduct are
followed.
Market
Risk Exposure
Interest
Rate Risk
As
of December 31, 2025, the Company did not have any significant risk for changes in interest rates.
Credit
Risk
We
are subject to credit risk with respect to our cash balances for those amounts in excess of the FDIC insured amount of $250,000. The
Company has only one financial banking institution.
Inflation
Risk
We
do not believe that inflation has had a material effect on our business, financial condition, or results of operations for the year ended December 31, 2025, other than
its impact on the general economy. However, we are currently operating in a more volatile inflationary environment due to
macroeconomic conditions and have limited data and experience doing so in our history, particularly as we continue to invest in
growth in our business. The principal inflationary factor affecting our business is higher costs. Our inability or failure to
address challenges relating to inflation could harm our business, financial condition, and results of operations.
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