aqms20200930

SEC Form 10-Q filed by Aqua Metals, Inc.

aqms20200930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-37515

Aqua Metals, Inc.

(Exact name of registrant as specified in its charter)

Delaware	47-1169572
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification no.)

2500 Peru Dr.

McCarran, Nevada 89437

(Address of principal executive offices, including zip code)

(775) 525-1936

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class of stock:	Trading symbol	Name of each exchange on which registered:
Common Stock	AQMS	The Nasdaq Capital Market

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. Yes ☒ No ☐

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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company (as defined in Rule 12b-2 of the Act):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging Growth Company	☐

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 ☐ No ☒

As of April 22, 2021, there were 68,042,841 outstanding shares of the common stock of Aqua Metals, Inc.

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders' Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 6.	Exhibits	28

	*March 31, 2021*			*December 31, 2020*
	*(unaudited)*			*(Note 2)*
ASSETS
Current assets
Cash and cash equivalents	$	11,727		$	6,533
Accounts receivable		—			32
Inventory		1,091			1,091
Prepaid expenses and other current assets		641			702
Total current assets		13,459			8,358

Non-current assets
Property and equipment, net		24,722			24,883
Intellectual property, net		775			819
Investment in LiNiCo		1,500			—
Other assets		1,108			1,078
Total non-current assets		28,105			26,780

Total assets	$	41,564		$	35,138

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable	$	1,697		$	1,552
Accrued expenses		1,709			1,253
Lease liability, current portion		606			620
Notes payable, current portion		31			29
Total current liabilities		4,043			3,454

Lease liability, non-current portion		108			242
Notes payable, non-current portion		170			303
Total liabilities		4,321			3,999

Commitments and contingencies

Stockholders’ equity
Common stock; $0.001 par value; 100,000,000 shares authorized; 67,755,336 and 64,461,065 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		68			64
Additional paid-in capital		206,914			196,728
Accumulated deficit		(169,739	)		(165,653	)
Total stockholders’ equity		37,243			31,139

Total liabilities and stockholders’ equity	$	41,564		$	35,138

	*Three Months Ended March 31,*
	*2021*			*2020*

Product sales	$	—		$	18

Operating cost and expense
Cost of product sales		1,610			1,454
Research and development cost		289			242
General and administrative expense		2,299			2,385
Total operating expense		4,198			4,081

Loss from operations		(4,198	)		(4,063	)

Other income and (expense)
Insurance proceeds net of related expenses		(12	)		(203	)
PPP loan forgiveness		131			—
Interest expense		(5	)		(183	)
Interest and other income		—			22

Total other income (expense), net		114			(364	)

Loss before income tax expense		(4,084	)		(4,427	)

Income tax expense		(2	)		—

Net loss	$	(4,086	)	$	(4,427	)

Weighted average shares outstanding, basic and diluted		66,877,948			59,582,603

Basic and diluted net loss per share	$	(0.06	)	$	(0.07	)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity (Deficit)

Balances, December 31, 2020		64,461,065	$	64	$	196,728	$	(165,653	)	$	31,139

Stock-based compensation		—		—		678		—			678
RSUs issued for consulting services		—		—		34		—			34
Common stock issued to employees, includes RSUs vesting		584,249		1		—		—			1
Common stock issued upon exercise of employee stock options		345,818		—		724		—			724
Common stock issued upon warrant exercise		65,590		—		—		—			—
Common stock issued for ATM share sales, net of $244 transaction costs		1,923,614		2		7,483		—			7,485
Common stock issued related to LiNiCo investment		375,000		1		1,267		—			1,268
Net loss		—		—		—		(4,086	)		(4,086	)

Balances, March 31, 2021		67,755,336	$	68	$	206,914	$	(169,739	)	$	37,243

Balances, December 31, 2019		57,997,780	$	58	$	189,422	$	(139,891	)	$	49,589

Stock-based compensation		—		—		956		—			956
Common stock issued to employees, includes RSUs vesting		1,816,039		2		—		—			2
Common stock issued for consulting services		23,078		—		24		—			24
Net loss		—		—		—		(4,427	)		(4,427	)

Balances, March 31, 2020		59,836,897	$	60	$	190,402	$	(144,318	)	$	46,144

	March 31,
Excluded potentially dilutive securities (1):	2021		2020

Options to purchase common stock		1,040,522		1,709,106
Unvested restricted stock units		4,771,537		2,397,299
Financing warrants to purchase common stock		6,372		805,747
Total potential dilutive securities		5,818,431		4,912,152

	March 31, 2021		December 31, 2020

Finished goods	$	2	$	2
Work in process		247		247
Raw materials		842		842
Total inventory	$	1,091	$	1,091

	Useful Life
Asset Class	(Years)		March 31, 2021			December 31, 2020

Operational equipment		3 - 10	$	12,126		$	12,126
Lab equipment		5		524			524
Computer equipment		3		222			222
Office furniture and equipment		3		221			221

Land		-		1,047			1,047
Building		39		19,508			19,508
Equipment under construction				3,762			3,597
				37,410			37,245
Less: accumulated depreciation				(12,688	)		(12,362	)

Total property and equipment, net			$	24,722		$	24,883

	Three Months Ended
	March 31,
	2021		2020
Cash paid for operating lease liabilities	$	163	$	158
Operating lease cost	$	144	$	144

	March 31, 2021
Weighted-average remaining lease term (in years)		1.0
Weighted-average discount rate		9.66	%

	*Three Months Ended March 31,*
	*2021*			*2020*
Supplemental disclosure of cash flows information
Cash paid for income taxes	$	2		$	—
Cash paid for interest	$	—		$	161

Supplemental disclosure of non-cash transactions
Change in accounts receivable resulting from insurance funds held in escrow	$	—		$	2,750
Change in property and equipment resulting from change in accounts payable	$	303		$	(973	)
Change in property and equipment resulting from change in accrued expenses	$	—		$	(189	)
Change in equity resulting from change in accrued expenses	$	—		$	24
Change in investing activity resulting from issuance of equity	$	(1,268	)	$	—

Due in 12-month period ended March 31,
2022	$	634
2023	$	91
	$	725
Less imputed interest	$	(35	)
Total lease liabilities	$	690

Current operating lease liabilities	$	600
Non-current operating lease liabilities	$	90
	$	690

	Three Months Ended March 31,
	2021			2020

Net cash used in operating activities	$	(2,156	)	$	(4,262	)
Net cash (used in) provided by investing activities	$	(859	)	$	3,149
Net cash provided by (used in) financing activities	$	8,209		$	(76	)

	Three Months Ended March 31,
	2021		2020
Cost of product sales	$	31	$	22
Research and development cost		42		105
General and administrative expense		606		829
Total	$	679	$	956

	Three Months Ended March 31,
					Favorable			%
	2021		2020		(Unfavorable)			Change

Product sales	$	—	$	18	$	(18	)		(100.0	)%
Cost of product sales		1,610		1,454		(156	)		10.7	%
Research and development cost		289		242		(47	)		19.4	%
General and administrative expense		2,299		2,385		86			(3.6	)%
Total operating expense	$	4,198	$	4,081	$	(117	)		2.9	%

Exhibit No.	Description	Method of Filing

3.1	First Amended and Restated Certificate of Incorporation of the Registrant	Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on July 22, 2015.
3.2	Second Amended and Restated Bylaws of the Registrant	Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on September 27. 2018.
3.3	Certificate of Amendment to First Amended and Restated Certificate of Incorporation of the Registrant	Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 9, 2015.
3.4	Certificate of Amendment to the First Amended and Restated Certificate of Incorporation	Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2019
10.1	Industrial Lease Agreement dated February 15, 2021 between Aqua Metals Reno Inc. and LINICO Corporation	Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on February 17. 2021
10.2	Series A Preferred Stock Purchase Agreement dated February 15, 2021 between the Registrant and LINICO Corporation	Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on February 17. 2021
10.3	Investor Rights Agreement dated February 15, 2021 between the Registrant and LINICO Corporation	Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on February 17. 2021
10.4	Voting Agreement dated February 15, 2021 between the Registrant and LINICO Corporation	Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on February 17. 2021
31.1	Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed electronically herewith
31.2	Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed electronically herewith
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).	Filed electronically herewith

101.INS	Inline XBRL Instance Document	Filed electronically herewith
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Filed electronically herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	Filed electronically herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed electronically herewith
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed electronically herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed electronically herewith
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

		AQUA METALS, INC.

Date:	April 29, 2021	By:	/s/ Stephen Cotton
			Stephen Cotton,
			President, Chief Executive Officer and Director (Principal Executive Officer)

Date:	April 29, 2021	By:	/s/ Judd Merrill
			Judd Merrill,
			Chief Financial Officer
			(Principal Financial Officer)

Three Months Ended March 31,

Clarios (successor of Johnson Controls Battery Group, Inc.)