Aqua Metals, Inc. (AQMS) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Aqua Metals, Inc. is a pre-revenue company developing the AquaRefining technology, a hydrometallurgical and electrochemical process for recycling lithium-ion and lead-acid batteries. The company operates a single segment focused on sustainable metals recycling and is currently advancing "Project Headwaters ARC," a planned commercial processing campus. The company has not generated commercial revenue and continues to incur losses.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(8,434,000) | $(15,085,000) |
| Net Loss Per Share (Diluted) | $(2.54) | $(17.54) |
| Cash and Cash Equivalents (End of Period) | $4,744,000 | $1,933,000 |
| Working Capital | $4,047,000 | Filing text does not provide a clear value |
| Total Debt / Lease Liabilities | $441,000 (Current + Non-current) | Filing text does not provide a clear value |
| Net Cash Used in Operating Activities | $(6,474,000) | $(5,299,000) |
Material Changes vs. Prior Period
- Net Loss Reduction: Net loss decreased by approximately $6.65 million (44%) compared to the prior year period. This improvement is primarily due to the absence of a $9.01 million non-cash impairment charge on construction-in-progress at the Tahoe Reno Industrial Center (TRIC) facility recognized in the prior year.
- Provision for Credit Losses: The company recorded a significant non-cash provision for credit losses of $2.496 million related to a subordinated participation interest in Lion Energy, LLC. This was a new expense item not present in the comparable prior period.
- Operating Expenses: Total operating expenses decreased by $6.98 million (44%). Plant operations and R&D costs declined due to workforce reductions and lower insurance expenses. General and administrative expenses remained relatively flat, increasing slightly by $72,000.
- Investing Activities: The company utilized $2.0 million in cash to advance funds for the Lion Energy participation interest, contrasting with a net cash inflow of $4.9 million in the prior year driven by asset sales.
Outlook, Risks, and Management Commentary
- Going Concern: Management has expressed substantial doubt about the company's ability to continue as a going concern for the next twelve months. The company expects to continue incurring losses and will require additional capital to fund operations and advance Project Headwaters ARC.
- Liquidity Strategy: The company maintains an At-the-Market (ATM) offering program with $48.05 million remaining available. During the six months ended June 30, 2026, the company raised approximately $1.88 million via the ATM and $0.62 million via an Employee Stock Purchase Plan (ESPP). An Equity Line of Credit (ELOC) is currently restricted from use for 12 months following an October 2025 transaction.
- Lion Energy Contingency: The Lion Energy participation interest ($4.16 million gross exposure) is in default. The company terminated a potential acquisition term sheet in May 2026. The allowance for credit losses is based on a probability-weighted recovery estimate of 40%, but actual recoveries could differ materially.
- Legal Contingency: The company is defending against a motion by Johnson Controls Fire Protections, LP to recover approximately $3.5 million in legal fees and costs related to a 2019 fire at the former TRIC facility. Management believes a loss is not probable, but an adverse outcome could materially impact liquidity.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $4.74 million cash balance against current burn rates and the timeline for securing additional financing.
- Lion Energy Recovery: Monitor the status of the Lion Energy default and the likelihood of recovering the $4.16 million exposure, given the assignment of rights to a potentially affiliated entity.
- Capital Raising: Track the utilization of the ATM program and the potential impact of dilution on existing shareholders.
- Legal Exposure: Review updates on the Johnson Controls litigation and the potential $3.5 million fee assessment.
- Project Headwaters ARC: Assess progress on site selection, permitting, and financing for the planned commercial facility.