Aqua Metals, Inc.

Previous wording

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto contained elsewhere in this report. The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other filings with the Securities and Exchange Commission, or SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025, or our Annual Report.

Current wording

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto contained elsewhere in this report. The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other filings with the Securities and Exchange Commission, or SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025, or our 2024 Annual Report.

Previous wording

Aqua Metals is engaged in the business of applying its commercialized clean, water-based, recycling technology principles to develop cost-efficient recycling solutions for both lead and lithium-ion (“Li”) batteries. Our recycling process is a patented hydro and electrometallurgical technology that is an innovative, proprietary and patented process we developed and named AquaRefining. AquaRefining is a low-emissions, closed-loop recycling technology that has the potential to replace polluting furnaces and hazardous chemicals with electricity-powered electroplating to recover valuable metals and materials from spent batteries with higher purity, lower emissions, and with minimal waste. The modular “Aqualyzers” cleanly generate ultra-pure metal one atom at a time, closing the sustainability loop for the rapidly growing energy storage economy.

Current wording

Aqua Metals is engaged in the business of applying its commercialized clean, water-based, recycling technology principles to develop cost-efficient recycling solutions for lithium-ion (“Li”) batteries. Our recycling process is a hydro and electrometallurgical technology that is an innovative, proprietary and patented process we developed and named AquaRefining. AquaRefining is a low-emissions, closed-loop recycling technology that has the potential to replace polluting furnaces and hazardous chemicals with electricity-powered chemical regeneration and electroplating to recover valuable metals and materials from spent batteries with higher purity, lower emissions, and with minimal waste. The modular “Aqualyzers” cleanly generate ultra-pure metal one atom at a time, closing the sustainability loop for the rapidly growing energy storage economy.

Previous wording

We are also applying our commercialized clean, water-based recycling technology principles with the goal of developing the cleanest and most cost-efficient recycling solution for lithium-ion batteries. We believe our process has the potential to produce higher quality products at a lower operating cost without the damaging effects of furnaces and greenhouse emissions.

Current wording

Since 2021, the Company has focused on applying our commercialized clean, water-based recycling technology principles with the goal of developing the cleanest and most cost-efficient recycling solution for lithium-ion batteries. We believe our process has the potential to produce higher quality products at a lower operating cost without the damaging effects of furnaces and traditional hydro processes and greenhouse emissions.

Previous wording

During the six months ended June 30, 2025, we issued 211,474 shares of common stock pursuant to an at the market, or ATM, sales agreement for net proceeds of $2,735,000. During the year ended December 31, 2024, we issued 119,503 shares of common stock pursuant to the ATM facility for net proceeds of $5,014,000. In May 2024, we completed a public offering of 100,625 shares of our common stock, at the public offering price of $78 per share. In connection with the sale of common stock, we issued warrants to purchase shares of common stock at the rate of one warrant for every share of purchased common stock, at the price of $2 per share. After the deduction of the underwriter’s discount and expenses payable by us, we received net proceeds of $7,306,000.

Current wording

During the year ended December 31, 2024, we issued 119,503 shares of common stock pursuant to the ATM facility for net proceeds of $5,014,000. In May 2024, we completed a public offering of 100,625 shares of our common stock, at the public offering price of $78 per share. In connection with the sale of common stock, we issued warrants to purchase shares of common stock at the rate of one warrant for every share of purchased common stock, at the price of $2 per share. After the deduction of the underwriter’s discount and expenses payable by us, we received net proceeds of $7,306,000.

Previous wording

Our business strategy is based on the pursuit of building, operating and licensing Li AquaRefining recycling capacity to meet the growing demand for critical metals in lithium-ion batteries driven by innovations in automobile batteries, growth in internet data centers, and alternative energy applications, including solar, wind, and grid-scale storage.

Current wording

Our business strategy is based on the pursuit of building, operating and licensing Li AquaRefining recycling capacity to meet the growing demand for critical battery metals in lithium-ion batteries driven by innovations in automobile batteries, growth in internet data centers being rapidly accelerated by artificial intelligence (AI), and alternative energy applications, including solar, wind, and grid-scale storage.

Previous wording

We are in the process of demonstrating that Li AquaRefining, which is fundamentally non-polluting, can create the highest quality and highest yields of recovered minerals from lithium-ion batteries with lower waste streams and lower costs than existing alternatives. Throughout 2023 and 2024, we have demonstrated at our pilot facility our ability to recover key valuable minerals in lithium-ion batteries, such as lithium hydroxide or lithium carbonate, copper, nickel, cobalt, and other compounds. Our goal is to process commercial quantities of nickel, cobalt, and copper in a pure metal form that can be sold to the general metals and superalloy markets and can be made into battery precursor compound materials with known processes already used in the mining industry. We have operated the first Li AquaRefining pilot plant in 2023 and in 2024. The location for the pilot demonstration facility is currently the Innovation Center. Our next phase is constructing our first commercial ARC and we are actively working with multiple potential supply, off-take, and funding partners to determine the optimal timing and location. The construction of the first commercial facility is subject to our receipt of additional financing.

Current wording

We are in the process of demonstrating that Li AquaRefining, which is fundamentally non-polluting, can create the highest quality and highest yields of recovered minerals from lithium-ion batteries with lower waste streams and lower costs than existing alternatives. Throughout 2023 and 2024, we have demonstrated at our pilot facility our ability to recover key valuable minerals in lithium-ion batteries, such as lithium hydroxide or lithium carbonate, copper, nickel, cobalt, and other compounds. These demonstrations ran for 24 hours x 5 days a week for many weeks in 2024 and an extended 24 hours x 7 days a week endurance run in November-December of 2024 that produced the results the Company believes makes the process commercial scale ready. Our next goal for lithium AquaRefining is to process commercial quantities of nickel, cobalt, and copper in a pure metal form that can be sold to the general metals and superalloy markets and can be made into battery precursor compound materials with known processes already used in the mining industry. The location for the pilot demonstration facility is in our Innovation Center in Tahoe-Reno Industrial Center. Our next phase is constructing our first commercial ARC and we are actively working with multiple potential supply, off-take, and funding partners to determine the optimal timing and location. The construction of the first commercial facility is subject to our receipt of additional financing.

Previous wording

Our focus for the lithium market includes operating our first-of-a-kind lithium battery recycling facility, utilizing electricity to recycle instead of intensive chemical processes, fossil fuels, or high-temperature furnaces. We are also exploring partnership and/or joint venture agreements, particularly as our Li AquaRefining matures. We believe that Aqua Metals is in a position to become one of the few critical minerals recovery players for which our environmental and economic value proposition should generate both great commercial wins and potentially government grants to accelerate our expansion and progress.

Current wording

Our focus for the critical battery minerals market includes operating our first-of-a-kind lithium battery recycling facility, utilizing electricity to recycle instead of traditional approaches involving intensive and dangerous and expensive one time use chemical processes, fossil fuels, or high-temperature furnaces which also produce very large gas (CO2) and solid (sodium sulfate) waste streams our process avoids. Because of the cost savings (labor, chemical, waste streams, footprint), the Company believes it is the low cost producer giving a material economic advantage to lithium AquaRefining compared to other processes. We are also exploring partnership and/or joint venture agreements, particularly as our Li AquaRefining matures. We believe that Aqua Metals is in a position to become one of the few critical minerals recovery players for which our environmental and economic value proposition should generate both great commercial wins and potentially government grants and support to accelerate our expansion and progress.

Previous wording

We did not engage in commercial operations in 2025 or 2024. Our operations have been devoted to developing our Li AquaRefining battery recycling technology. During the six months ended June 30, 2025, Aqua Metals was focused on the continued operation of the pilot facility and advancing the underlying processes that support our recycling capabilities. We did not earn any revenue during the three and six months ended June 30, 2025 and 2024. The following table summarizes our results of operations with respect to the items set forth below for the three and six months ended June 30, 2025 and 2024 together with the dollar and percentage changes in those items (in thousands).

Current wording

We did not engage in commercial operations in 2025 or 2024. Our operations have been devoted to developing our Li AquaRefining battery recycling technology. During the nine months ended September 30, 2025, we focused on the continued operation of the pilot facility and advancing the underlying processes that support our recycling capabilities. We did not earn any revenue during the three and nine months ended September 30, 2025 and 2024. The following table summarizes our results of operations with respect to the items set forth below for the three and nine months ended September 30, 2025 and 2024 together with the dollar and percentage changes in those items (in thousands).

Previous wording

Plant operations include materials, supplies related costs, salaries and benefits, consulting, outside services costs, inventory adjustments, depreciation, amortization, insurance, travel and overhead costs. Plant operations decreased approximately $1,597,000, or 67.3%, and $3,081,000, or 67.2%, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024. The decrease in plant operations for the three months ended June 30, 2025 was primarily driven by a reduction in payroll and related costs of approximately $1,149,000, resulting from workforce reductions implemented in August 2024 and continued reductions during the first quarter of 2025. Additionally, professional fees decreased by approximately $155,000 and supplies, materials, inventory adjustments and other overhead expenses decreased by $293,000. The decrease in plant operations for the six month ended June 30, 2025 was primarily due to a decrease in payroll and payroll related fees of approximately $1,935,000 resulting from workforce reductions, professional fees decreased by approximately $544,000 and a decrease of $602,000 in other overhead expenses, including supplies, materials and inventory adjustments. Management does not expect the reduction in force to materially impact its current pilot operations or continuing research and development. However, until additional funding is secured, employee-related and overhead expenses are expected to remain at the reduced levels throughout the remainder of 2025.

Current wording

Plant operations include materials, supplies related costs, salaries and benefits, consulting, outside services costs, inventory adjustments, depreciation, amortization, insurance, travel and overhead costs. Plant operations decreased approximately $1,041,000, or 64.4%, and $4,122,000, or 66.5%, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024. The decrease in plant operations for the three months ended September 30, 2025 was primarily driven by a reduction in payroll and related costs of approximately $634,000, resulting from workforce reductions implemented in August 2024 and continued reductions during the first quarter of 2025. Additionally, professional fees decreased by approximately $153,000 and supplies, materials, inventory adjustments and other overhead expenses decreased by $254,000. The decrease in plant operations for the nine month ended September 30, 2025 was primarily due to a decrease in payroll and payroll related fees of approximately $2,570,000 resulting from workforce reductions, professional fees decreased by approximately $697,000 and a decrease of $855,000 in other overhead expenses, including supplies, materials and inventory adjustments. Management does not expect the reduction in force to materially impact its current pilot operations or continuing research and development. However, until additional funding is secured, employee-related and overhead expenses are expected to remain at the reduced levels throughout the remainder of 2025.

Previous wording

Research and development cost includes expenditures related to the continued enhancement of the AquaRefining technology and the development of our lithium-ion battery recycling process. During the three months ended June 30, 2025, research and development expenses decreased $68,000, or approximately 18.7%, compared to the three months ended June 30, 2024, and $320,000, or approximately 33.6%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. This decrease, six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to lower payroll and related costs of approximately $229,000, as well as a reduction in supplies, materials, and other overhead expenses of approximately $111,000 off set by an increase in professional fees of approximately $20,000.

Current wording

Research and development cost includes expenditures related to the continued enhancement of the AquaRefining technology and the development of our lithium-ion battery recycling process. During the three months ended September 30, 2025, research and development expenses decreased $70,000, or approximately 17.6%, compared to the three months ended September 30, 2024, and $389,000, or approximately 28.8%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This decrease over the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to lower payroll and related costs of approximately $297,000, as well as a reduction in supplies, materials, and other overhead expenses of approximately $116,000 offset by an increase in professional fees of approximately $24,000.

Previous wording

For the three and six months ended June 30, 2025, the Company recognized a non-cash impairment and loss on disposal of property, plant and equipment of $3,765,000 and $9,012,000, respectively, in connection with the sale of the facility located at TRIC and related equipment.

Current wording

For the three and nine months ended September 30, 2025, we recognized a non-cash impairment and loss on disposal of property, plant and equipment of $25,000 and $9,037,000, respectively, in connection with the sale of the facility located at TRIC and related equipment. During the three and nine months ended September 30, 2024, we recognized a loss on disposal of property, plant and equipment of $448,000.

Previous wording

General and administrative expense decreased $1,231,000, or approximately 35.9%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 and $1,850,000, or approximately 28.8%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease for the three months ended June 30, 2025 was primarily due to a reduction in payroll and related costs of approximately $856,000 due to workforce reductions and restructuring and $153,000 in other overhead expenses and $222,000 decrease in professional fees. The decrease for the six month ended June 30, 2025, was primarily attributable to a reduction in payroll and related expenses of approximately $1,593,000 due to workforce reductions, a $59,000 decrease in director fees, a $182,000 decrease in professional fees, and a $16,000 decrease in other overhead expenses.

Current wording

General and administrative expense decreased $612,000, or approximately 22.3%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 and $2,463,000, or approximately 26.9%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease for the three months ended September 30, 2025 was primarily due to a reduction in payroll and related costs of approximately $366,000 due to workforce reductions and restructuring and $277,000 decrease in professional fees offset by an increase of approximately $31,000 in other overhead expenses. The decrease for the nine month ended September 30, 2025, was primarily attributable to a reduction in payroll and related expenses of approximately $1,960,000 due to workforce reductions, a $47,000 decrease in director fees, a $459,000 decrease in professional fees offset by an increase of $3,000 in other overhead expenses.

Previous wording

The following table summarizes our other income and interest expense for the three and six months ended June 30, 2025 and 2024 together with the dollar and percentage changes in those items (in thousands).

Current wording

The following table summarizes our other income and interest expense for the three and nine months ended September 30, 2025 and 2024 together with the dollar and percentage changes in those items (in thousands).

Previous wording

The increase in interest expense for the three and six months ended June 30, 2025 is due to the increase in the notes payable outstanding balance and an increase in the amortization of the related debt discount.

Current wording

The decrease in interest expense for the three months ended September 30, 2025, is due to the decrease in the notes payable outstanding balance. The increase in interest expense for the nine months ended September 30, 2025, is due to the increase in the notes payable outstanding balance and an increase in the amortization of the related debt discount.

Previous wording

On May 5, 2025, the Company repaid its $1,500,000 bridge loan prior to the December 31, 2025 maturity. As part of the agreement, the Company was required to pay a guaranteed interest amount of $300,000 regardless of early repayment. For the six months ended June 30, 2025, the Company recognized $435,000 in interest expense (including amortization of issuance costs), and recorded a $825,000 loss on extinguishment of debt related to the write-off of unamortized financing costs and the remaining unaccrued portion of the guaranteed interest.

Current wording

On May 5, 2025, the Company repaid its $1,500,000 bridge loan prior to the December 31, 2025 maturity. As part of the agreement, the Company was required to pay a guaranteed interest amount of $300,000 regardless of early repayment. For the nine months ended September 30, 2025, the Company recognized $435,000 in interest expense (including amortization of issuance costs), and recorded a $825,000 loss on extinguishment of debt related to the write-off of unamortized financing costs and the remaining unaccrued portion of the guaranteed interest.

Previous wording

We recognized approximately $497,000 and $777,000 in interest and other income during the three and six months ended June 30, 2025, an increase of $398,000 and $532,000 compared to the three and six months ended June 30, 2024. The increase was primarily driven by the approval of a payroll tax employee retention credit.

Current wording

We recognized approximately $28,000 and $805,000 in interest and other income during the three and nine months ended September 30, 2025, a decrease of $56,000 for the three months ended September 30, 2025 and an increase of $476,000 for the nine months ended September 30, 2025. The increase was primarily driven by the approval of a payroll tax employee retention credit during the first six months of the 2025.

Previous wording

For the three and six months ended June 30, 2025, the Company recognized a change in fair value of warrant liability of $836,000 and $1,327,000, which was primarily due to the remeasurement of the warrants issued in December 2024.

Current wording

For the three and nine months ended September 30, 2025, the Company recognized a change in fair value of warrant liability of $72,000 and $1,255,000, which was primarily due to the remeasurement of the warrants issued in December 2024.

Previous wording

As of June 30, 2025, the Company had cash and cash equivalents of approximately $1,933,000, current liabilities of $3,633,000 and a working capital deficit of approximately $1,264,000. The Company has not generated revenues from commercial operations and expects to continue incurring losses for the foreseeable future. In order to satisfy our capital requirements, the Company will need to improve its liquidity position through equity or debt financings and/or reductions in operating costs, in order to satisfy its liquidity needs for the next twelve months. Management is devoting significant efforts to increasing liquidity, raising capital and developing its business.

Current wording

As of September 30, 2025, we had cash and cash equivalents of approximately $3,586,000, current liabilities of $3,459,000 and a working capital of approximately $508,000. However, on October 16, 2025, we closed a registered direct offering of 205,213 shares of common stock at an offering price of $11.34 per share and 928,581 pre-funded warrants at an offering price of $11.339 per pre-funded warrant, In a concurrent private placement, we also sold 1,133,794 common stock purchase warrants at an offering price of $0.125 per warrant, with each warrant exercisable over a five year period for one share of common stock at an exercise price of $11.34 per share. After the deduction of the placement and legal fees payable by us, the aggregate net proceeds from the registered direct offering and warrant placement were approximately $12,000,000. The Company has not generated revenues from commercial operations and expects to continue incurring losses for the foreseeable future. In order to satisfy our capital requirements, the Company will need to improve its liquidity position through equity or debt financings and/or reductions in operating costs, in order to satisfy its liquidity needs. Management is devoting significant efforts to increasing liquidity, raising capital and developing its business.

Previous wording

Management believes that the Company does not have sufficient capital resources to sustain operations through at least the next twelve months from the date of this filing. Additionally, in view of the Company’s expectation to incur significant losses for the foreseeable future, and its current working capital deficit, it will be required to raise additional capital resources in order to fund its operations, although the availability of, and the Company’s access to such resources, is not assured. Accordingly, management believes that there is substantial doubt regarding the Company’s ability to continue operating as a going concern through the next twelve months from the date of this filing.

Current wording

Even after giving effect to the October 2025 registered direct offering and concurrent warrant placement, management believes that the Company's capital resources remain insufficient to sustain operations through at least the next twelve months from the date of this filing. Additionally, in view of the Company’s expectation to incur significant losses for the foreseeable future, and its current working capital level, it will be required to raise additional capital resources in order to fund its operations, although the availability of, and the Company’s access to such resources, is not assured. Accordingly, management believes that there is substantial doubt regarding the Company’s ability to continue operating as a going concern through the next twelve months from the date of this filing.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2025 and six months ended June 30, 2024 was $5,299,000 and $8,002,000, respectively. Net cash used in operating activities during each of these periods consisted primarily of our net loss adjusted for non-cash items such as depreciation, amortization, amortization of deferred financing costs, loss on extinguishment of debt, stock-based compensation, impairment and loss on disposal of property, plant and equipment, as well as net changes in working capital.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2025 and nine months ended September 30, 2024 was $7,648,000 and $11,637,000, respectively. Net cash used in operating activities during each of these periods consisted primarily of our net loss adjusted for non-cash items such as depreciation, amortization, amortization of deferred financing costs, loss on extinguishment of debt, stock-based compensation, impairment and loss on disposal of property, plant and equipment, as well as net changes in working capital. During the nine months ended September 30, 2025, we recognized approximately $9,037,000 expense for impairment and loss on disposal of property, plant, and equipment related to the sale of the facility located at TRIC.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2025 was $4,936,000 and consisted mainly of $4,347,000 cash received from the sale of the building and equipment, $1,141,000 from equipment deposits, the payment of our $100,000 related to our note receivable, offset by cash utilized towards equipment deposits of $231,000 and purchases of fixed assets of $421,000. Net cash used in investing activities for the six months ended June 30, 2024 was $9,762,000 and consisted mainly of cash utilized towards equipment deposits of $3,522,000 and purchases of fixed assets related to the build out of our commercial facility of $6,440,000, offset by $200,000 of cash received related to our note receivable.

Current wording

Net cash provided by investing activities for the nine months ended September 30, 2025 was $4,971,000 and consisted mainly of $4,382,000 cash received from the sale of the building and equipment, $1,141,000 from equipment deposits, the payment of our $100,000 related to our note receivable, offset by cash utilized towards equipment deposits of $231,000 and purchases of fixed assets of $421,000. Net cash used in investing activities for the nine months ended September 30, 2024 was $11,062,000 and consisted mainly of cash utilized towards equipment deposits of $3,975,000 and purchases of fixed assets related to the build out of our commercial facility of $7,452,000, offset by $350,000 of cash received related to our note receivable.

Previous wording

Net cash used in financing activities was $1,783,000 for the six months ended June 30, 2025, consisting of $2,735,000 in net proceeds from the sale of Aqua Metals shares pursuant to the at-the-market offering, or ATM, and $69,000 of net proceeds from the sale of Aqua Metals shares pursuant to the equity-line-of-credit purchase agreement, or ELOC, with Lincoln Park Capital Fund, LLC offset by $66,000 related to tax withholdings to cover RSU vesting and $4,500,000 principal payments on notes payable. Net cash provided by financing activities of $9,075,000 for the six months ended June 30, 2024 consisted of $2,542,000 in net proceeds from the sale of Aqua Metals shares pursuant to the at-the-market offering, or ATM, and $7,306,000 in net proceeds from our May 2024 public offering, offset by $360,000 related to tax withholdings to cover RSU vesting and $413,000 related to debt issuance costs.

Current wording

Net cash provided by financing activities was $2,184,000 for the nine months ended September 30, 2025, consisting of $5,921,000 in net proceeds from the sale of Aqua Metals shares pursuant to the at-the-market offering, or ATM, and $903,000 of net proceeds from the sale of Aqua Metals shares pursuant to the equity-line-of-credit purchase agreement, or ELOC, with Lincoln Park Capital Fund, LLC offset by $108,000 related to tax withholdings to cover RSU vesting and $4,500,000 principal payments on notes payable. Net cash provided by financing activities of $9,127,000 for the nine months ended September 30, 2024 consisted of $2,820,000 in net proceeds from the sale of Aqua Metals shares pursuant to the at-the-market offering, or ATM, and $7,306,000 in net proceeds from our May 2024 public offering, offset by $552,000 related to tax withholdings to cover RSU vesting and $424,000 related to debt issuance costs.

Previous wording

No material changes from what was reported in the 2024 Form 10-K.

Current wording

No material changes from what was reported in the 2024 Annual Report.