Aqua Metals, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Financial statements are unaudited; amounts below are in U.S. dollars unless otherwise noted.
Business context
Aqua Metals is developing and commercializing its AquaRefining battery-recycling technology for lead-acid and lithium-ion batteries. It was not in commercial production and generated no revenue in Q1 2024 or Q1 2023. Its immediate focus is construction and development of a lithium-ion recycling facility at its Tahoe-Reno Industrial Center campus; Phase 1 is targeted at approximately 3,000 tonnes per year, with a longer-term stated campus capacity of up to 10,000 tonnes per year.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | None | None |
| Operating expenses | $5.792 million | $4.496 million; up 28.8% |
| Operating loss | $5.792 million | $4.496 million |
| Net loss | $5.752 million | $4.606 million |
| Basic and diluted loss per share | $0.05 | $0.06 |
| Cash used in operating activities | $4.251 million | $2.863 million |
| Cash used in investing activities | $5.579 million | $5.222 million |
| Cash provided by financing activities | $1.602 million | $4.358 million |
Plant operations costs rose 107.4% to $2.209 million, primarily reflecting increased staffing and related costs, professional fees, supplies and depreciation as the company advanced its pilot and commercial-facility work. Research and development expense increased 32.1% to $588,000; general and administrative expense was essentially unchanged at $2.995 million. No revenue was recorded, so operating margins are not meaningful.
Cash and cash equivalents fell to $8.294 million from $16.522 million at December 31, 2023. The company reported working capital of approximately $1.6 million, current assets of $10.080 million and current liabilities of $8.451 million. Total assets were $31.446 million; stockholders’ equity was $22.852 million. Equipment purchases and deposits drove investing outflows, including $2.737 million of property, plant and equipment purchases and $2.992 million of equipment deposits.
The Summit Investment Services loan had approximately $3.0 million principal outstanding, bears fixed interest at 9.5%, and is due February 1, 2025; it is secured by the company’s building. It was presented as current at March 31, 2024. The company reported compliance with loan covenants. No other material borrowing balance is shown in the filing.
Material changes, outlook and risks
- Net loss increased by $1.146 million year over year, while operating cash use increased by $1.388 million. Loss per share decreased to $0.05 from $0.06 as weighted-average shares increased to 110.1 million from 81.3 million.
- Management stated that available capital is insufficient to sustain operations for at least the next 12 months and disclosed substantial doubt about the company’s ability to continue as a going concern. The company expects continuing losses and needs additional capital; access to financing is not assured. Equity financing may dilute shareholders.
- On May 14, 2024, after quarter-end, the company entered an underwriting agreement for an offering of 17.5 million common shares at $0.39 per share and accompanying warrants at $0.01 each, with an underwriter discount and a 30-day over-allotment option for additional shares and warrants. The warrants have a $0.39 exercise price and a five-year term.
- On May 13, 2024, the company signed a non-binding term sheet for a secured loan facility of up to $33 million to fund Phase 1 campus development. Closing was contemplated by June 30, subject to due diligence and definitive agreements; there is no assurance it will close.
- The company’s stated facility-development and production plans depend on obtaining additional capital. Its longer-term capacity and revenue estimates are targets, not reported operating results or firm guidance. No specific financial forecast or formal revenue guidance is provided.
- The filing reports no material change to the risk factors in the 2023 Form 10-K and no legal proceeding expected to have a material adverse effect. Management concluded disclosure controls were effective as of March 31, 2024.
- The Q1 2023 comparative presentation was reclassified for a $20,000 disposal gain. The filing also corrected an immaterial prior-period share-count error of 510,632 shares, with no effect on monetary amounts.
Key facts for investors to verify
- Whether the May 2024 equity-and-warrant offering closed, its net proceeds, and the resulting dilution.
- Whether the proposed secured facility of up to $33 million reached definitive agreements and closed, and its final terms and funding conditions.
- Cash runway, subsequent cash use, and the company’s ability to finance operations and complete Phase 1 given the disclosed going-concern uncertainty.
- Construction, commissioning and operating progress against the company’s stated facility timeline and capacity targets.
- Repayment or refinancing plans for the approximately $3 million loan due February 1, 2025.