Aqua Metals, Inc.

Aqua Metals is engaged in the business of applying its commercialized clean, water-based recycling technology principles to develop the clean and cost-efficient recycling solutions for both lead and lithium-ion (“Li”) batteries. Our recycling process is a patented hydro- and electrometallurgical technology that is a novel, proprietary and patented process we developed and named AquaRefining. AquaRefining is a low-emissions, closed-loop recycling technology that replaces 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 metalone atom at a time, closing the sustainability loop for the rapidly growing energy storage economy.

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.

For the lead market, our focus is on providing equipment and licensing of our lead acid battery recycling technologies in an enabler model which allows us to work with anyone in the industry globally and address the entire marketplace. Our focus for the lithium market includes building and operating ourfirst-of-a-kind lithium battery recycling facility, utilizing electricity to recycle instead of intensive chemical processes, fossil fuels, or high-temperature furnaces.

Liquidity and Going Concern Assessment

For the years ended* December 31, 2025* and2024, the Company reported a net loss of $22,646,000 and $24,555,000, respectively, and cash used in operations of $10,253,000 and $13,632,000, respectively. As of* December 31, 2025*, the Company had cash and cash equivalents of approximately $10,810,000, a working capital of approximately $8,977,000 and an accumulated deficit of $270,416,000. The net loss for thetwelve months ended* December 31,2025 includes a non-cash impairment and loss on disposal of property, plant, and equipment of $9,114,000 associated with the sale of the TRIC facility. The Company hasnot generated revenues from commercial operations over thetwo years ended December 31, 2025and2024* and expects to continue incurring losses for the foreseeable future.

On* October 16, 2025,the Company closed a registered direct offering and a concurrent private placement with an institutional investor. 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 $11,939,000. Additional information regarding this transaction is disclosed in Note12* – Stockholders’ equity.

As an additional liquidity source, the Company maintains an At-the-Market (“ATM”) offering program. Under the prior ATM Sales Agreement with The Benchmark Company, LLC (“Benchmark”), the Company was permitted to offer and sell shares of its common stock, par value $0.001 per share, from time to time through Benchmark, acting as sales agent, with an aggregate offering price of up to $30,000,000, later increased to $50,000,000. Sales of common stock, if any, under the ATM program are deemed to be “at-the-market” offerings as defined in Rule415(a)(4) of the Securities Act of1933, as amended. During the year ended* December 31, 2025,the Company sold an aggregate of 836,219 shares of common stock for net proceeds of approximately $5,931,000, after deducting commissions and offering expenses. Further details of the agreement are included in Note12* – Stockholders’ equity.

In addition to the ATM, the Company also maintains an equity line of credit with Lincoln Park Capital Fund, LLC (“ELOC”) providing for aggregate sales of up to $10,000,000 of common stock. During thetwelve months ended* December 31, 2025*, the Company had sold approximately $903,000 of common stock under the facility. However, pursuant to the securities purchase agreement entered into in connection with the Company’s* October 2025registered direct offering, the Company is restricted from entering into certain variable rate transactions, which maylimit the Company’s ability to utilize the Lincoln Park facility for a period oftwelve* months following the closing of that transaction. The Company* mayissue additional shares under the facility in the future, subject to the terms of the agreement and applicable registration requirements. Further details of the agreement and accounting treatment are included in Note12* – Stockholders’ equity.

Management believes that there is substantial doubt about the entity’s ability to continue as a going concern withinone year after the date the financial statements are issued. Given the Company’s continuing losses and expected cash requirements, additional capital will be necessary to fund ongoing operations. While the Company intends to pursue such funding opportunities, including through the ATM, and other potential financing arrangements, there can beno assurance that these efforts will be successful.

The accompanying consolidated financial statements have been prepared under the assumption the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The consolidated financial statements donot include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that* may*result from uncertainty related to the Company’s ability to continue as a going concern.

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Basis of presentation and consolidation

The accompanying consolidated financial statements include those of Aqua Metals, Inc. and its subsidiaries (collectively, the “Company” or “Aqua Metals”), after elimination of all intercompany accounts and transactions. The Company has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).

Use of estimates

The preparation of the consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the period. Significant items subject to such estimates and assumptions include the carrying amount and valuation of long-lived assets, valuation allowances for deferred tax assets, the determination of stock option expense and the determination of the fair value of stock warrants issued. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all highly liquid instruments with original or remaining maturities ofninety days or less at the date of purchase to be cash equivalents. The Company maintains its cash balances in large financial institutions. Periodically, such balances* may*be in excess of federally insured limits.

Accounts receivable

The Company has traditionally sold its products to large well-established companies and extends credit without requiring collateral, based on an ongoing evaluation of the customer’s business prospects and financial condition. We determine if any allowance for credit losses using is required considering a combination of factors to reduce receivable balances to the net amount expected to be collected. As of* December 31, 2025and2024*, the Company hadno trade accounts receivable balance and hasnot created an allowance for credit losses.

Note receivable

The Company records notes receivable when it extends credit or financing tothird parties. The Company evaluates notes receivable for collectability at each reporting period under the current expected credit loss (CECL) model, in accordance with ASC326 (Financial Instruments – Credit Losses). If necessary, an allowance for credit losses is recorded to reflect expected losses. As of* December 31, 2025*, we evaluated the need for an allowance for credit loss, and have determined this note is fully collectible and, therefore, we havenot recorded an allowance against the note receivable balance.

Inventory

Inventory is stated at the lower of cost or net realizable value. Cost is recorded on afirst-in,first-out basis using the weighted average method. Net realizable value is determined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company records a write-down, if necessary, to reduce the carrying value of inventory to its net realizable value. The effect of these write-downs is to establish a new cost basis in the related inventory, which isnot subsequently written up.

Property, plant and equipment, net

Property, plant and equipment are stated at cost net of accumulated depreciation. Depreciation on property, plant and equipment is calculated on the straight-line basis over the estimated useful lives of the assets. Leasehold improvements are depreciated over the shorter of the life of the asset or the remaining term of the lease.

Property, plant and equipment are stated at cost net of accumulated depreciation. Depreciation on property, plant and equipment is calculated on the straight-line basis over the estimated useful lives of the assets. Leasehold improvements are depreciated over the shorter of the life of the asset or the remaining term of the lease. We periodically evaluate our property, plant and equipment assets for indications that the carrying amount of an asset* may**not* be recoverable. At* December 31, 2025*, management reviewed the remaining estimated lives of our long-lived assets and determined that the estimated life of the property, plant and equipment properly reflected the current remaining economic life of the asset.

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Intellectual property, net

Intellectual property consists of patent applications contributed to the Company byfive founding stockholders and patent applications for technology developed by the Company. The useful life of this intellectual property has been determined to beten years and the assets are being amortized straight-line over this period. The Company periodically evaluates its intangible and other long-lived assets for indications that the carrying amount of an asset* may**not* be recoverable. In reviewing for impairment, the Company compares the carrying value of such assets to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. When the estimated undiscounted future cash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets’ fair value and their carrying value. In addition to the recoverability assessment, the Company routinely reviews the remaining estimated lives of its long-lived assets. Any reduction in the useful life assumption will result in increased depreciation and amortization expense in the period when such determination is made, as well as in subsequent periods. The Company evaluates the need to record impairment during each reporting period. As of* December 31, 2025* and2024, the Company determined that the estimated life of the intellectual property properly reflected the current remaining economic life of the asset.

Leases

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets (“ROU assets”) and short-term and long-term lease liabilities are included in the consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases donot provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s lease terms* mayinclude options to extend or terminate the lease. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. For lease agreements with terms less than12* months, the Company has elected the short-term lease measurement and recognition exemption, and the Company recognizes such lease payments on a straight-line basis over the lease term.

Research and development

The Company conducts research and development activities, primarily focusing on refining recycling processes to increase yield and purity of recovered materials. This entails experimenting with different techniques, equipment, and operational parameters to enhance efficiency. All research and development expenditures are expensed as incurred.

Income taxes

The Company accounts for income taxes in accordance with the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. The provision for income taxes is comprised of the current tax liability and the changes in deferred tax assets and liabilities. The Company establishes a valuation allowance to the extent that it is more-likely-than-not that deferred tax assets willnot be recoverable against future taxable income.

The Company recognizes the effect of uncertain income tax positions only if those positions are more-likely-than-not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Fair value measurements

The carrying amounts of cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these instruments. The carrying value of short and long-term debt, and lease liabilities also approximates fair value since these instruments bear market rates of interest or are calculated using market rates of interest.None of these instruments are held for trading purposes.

Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Athree-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

Level1. Quoted prices in active markets for identical assets or liabilities.

Level2. Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that arenot active, or other inputs that are observable, either directly or indirectly.

Level3. Significant unobservable inputs that cannot be corroborated by market data.

The asset or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement.

As of* December 31, 2025and2024*, the Company had a Level3 warrant liability related to freestanding warrants issued in connection with a private placement transaction that is measured at fair value on a recurring basis.

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Stock-based compensation

The Company recognizes compensation expense for stock-based compensation in accordance with ASC718 “Compensation – Stock Compensation.” The fair value of restricted stock units ("RSUs") is measured on the grant date based on the closing fair market value of our common stock. The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which is generallythree years for RSUs. Stock-based compensation expense is recognized on a straight-line basis, net of actual forfeitures in the period.

The fair value of RSU grants with performance conditions is determined using the closing price of our common stock on date of grant. The calculated compensation cost is adjusted based on an estimate of awards ultimately expected to vest and our assessment of the probable outcome of the performance condition. The fair value of RSU grants with market conditions is calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected share price volatility, the risk-free rate of return, the expected dividend yield and other award design features.

If at any point in time the Company doesnot currently have a sufficient quantity of shares authorized for issuance under their approved stock incentive plan, the Company has established a sequencing policy that shares are issued to grants with the earliest inception date first. When multiple grants have the same inception date, shares arefirst allocated to non-named executive officers, then to shares with satisfied market and performance conditions, and last to service-only grants made to named executive officers. Therefore, grants to named executive officers with service-only conditions with the latest grant date will be reclassified to liabilities first. For service-based grants, the value of grants required to be reclassified to liabilities will be re-measured on a periodic basis based on the closing fair market value of our common stock.

Net loss per share

Basic net loss per share is computed by dividing net loss by the weighted average number of vested shares outstanding during the period. Diluted net loss per share is computed by giving effect to all potential dilutive common securities, options and warrants. Potential dilutive common shares include the dilutive effect of the common stock underlying in-the-money stock options and is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an option and the average amount of compensation cost, if any, for future services that the Company hasnot yet recognized when the option is exercised, are assumed to be used to repurchase shares in the current period.

For all periods presented in this report, unvested restricted stock, stock options and warrants werenot included in the computation of diluted net loss per share because such inclusion would have had an antidilutive effect.

(1) Securities are presented on a weighted average outstanding calculation as required if the securities were dilutive and adjusted to give effect to the* November 4, 2024and August 4, 2025*reverse stock split.

Segment and geographic information

Our chief operating decision maker (“CODM”) is the Chief Executive Officer. Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the CODM in deciding how to allocate resources and in assessing performance. The CODM views its operations and manages its business inone operating segment. For further discussion related to segment reporting, please refer to Note18 - Segment reporting.

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Concentration of credit risk

The Company didnot have a trade receivable balance as of* December 31, 2025* and* December 31, 2024*, respectively. As of* December 31, 2025,the Company had a note receivable of approximately $2,069,000 from a single counterparty, Lion Energy, LLC which represents a concentration of credit risk. See Note6* – Notes Receivable for further information.

Recent accounting pronouncements

Recent accounting pronouncements adopted

In* December 2023,the FASB issued ASUNo.* 2023-09, Improvements to Income Tax Disclosures (Topic740) which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional disclosures regarding income taxes paid. The Company adopted this standard on a retrospective basis effective* January 1, 2025.Accordingly, prior period amounts have been recast to conform to the current year presentation. The adoption didnot* impact the Company’s consolidated financial statements, as the guidance only modifies income tax disclosure requirements. The Company enhanced its income tax disclosures, including additional disaggregation in the rate reconciliation and expanded information regarding income taxes paid.

Recently issued accounting pronouncementsnot* yet adopted*

In* November 2024,the FASB issued ASU2024*-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses, which introduced new guidance on disclosures of specified information about certain costs and expenses included within expenses presented on the face or the income statements, such as purchases of inventory and employee compensation. This guidance is effective for the Company for annual reporting periods beginning* January 1, 2027and interim reporting periods beginning January 1, 2028.*The Company is currently evaluating the impact that the adoption of this pronouncement will have on the Company's consolidated financial statements and disclosures.

In* September 2025,the Financial Accounting Standards Board (“FASB”) issued ASU2025*-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU amends certain aspects for the accounting and disclosure of internal-use software by replacing prescriptive project-stage guidance with a principles-based capitalization model that applies to all development approaches. Capitalization begins when management authorizes and commits to fund a project and it is probable the software will be completed and used as intended, while development uncertainty defers capitalization until resolved. The ASU also integrates website-development guidance, aligns software disclosures with those for property, plant and equipment. The amendments are effective for fiscal years beginning after* December 15, 2027,including interim periods, with early adoption permitted. The Company is evaluating the impact of this ASU and doesnot* expect a material effect on its consolidated financial statements upon adoption.

In* December 2025,the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2025-12, Codification Improvements. Among other items, the update includes amendments to Topic260,* Earnings Per Share, which clarify the calculation of diluted earnings per share when an entity reports a loss from continuing operations and has contracts that* maybe settled in cash or stock and are classified as assets or liabilities. Under the amended guidance, entities are required to evaluate whether including potential common shares would have a dilutive effect by considering the combined impact on both the numerator and denominator of the diluted earnings per share calculation. The amendments in ASU2025*-12 are effective for annual reporting periods beginning after* December 15, 2026,including interim periods within those fiscal years, and are required to be applied retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and doesnot* expect a material effect on its consolidated financial statements upon adoption.

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Inventory consisted of the following (in thousands):

Property, plant and equipment, net, consisted of the following (in thousands):

Property, plant and equipment depreciation expense was $815,000 and $902,000 for the years ended* December 31, 2025and December 31, 2024*, respectively. Equipment under construction is comprised of our lithium-ion battery recycling commercial equipment along with various components being manufactured or installed by the Company.

In* April 2025,the Company’s Board of Directors approved a plan to sell a facility located at TRIC that was under construction and intended for the Company’s Li AquaRefining recycling campus. The decision was driven by a change in the Company’s priorities and capital allocation plans. The facility included the building structure, the underlying land, and various permanent improvements, and was previously classified as construction-in-progress within property, plant, and equipment on the Company’s consolidated balance sheet as of December 31, 2024.The sale of the facility was completed in June 2025for total net proceeds of approximately $4,064,000. During the year ended December 31, 2025*, the Company also sold additional equipment for total net proceeds of approximately $318,000. In connection with these sales, the Company recognized a total impairment and loss on disposal of property, plant, and equipment of $9,114,000.

In2024, management shifted its strategic focus to prioritizing lithium carbonate production alongside mixed hydroxide precipitate. This decision aimed to reduce capital and operational intensity while enabling a larger-scale facility with higher revenue and improved margins than the previous design. As a result of this strategic shift, at* December 31, 2025* the Company recognized an impairment of approximately $2,640,000 related to vendor equipment deposits for equipment that was initially required for Phase One of the recycling campus at TRIC but isno longer needed under the revised plan. The $2,640,000 write-down of vendor equipment deposits and a loss on disposal of property, plant and equipment of approximately $440,000 was included under “Impairment and loss on disposal of property, plant and equipment” in the Consolidated Statement of Operations for the year ended* December 31, 2024.The fair value of the impaired assets was determined based on management’s assessment of recoverability, as the equipment wasno* longer needed.

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Intellectual property, net, is comprised of the following (in thousands):

Amortization expense was $70,000 and $135,000 for the years ended* December 31, 2025and December 31, 2024*, respectively.

Estimated future amortization is as follows as of* December 31, 2025* (in thousands):

During the year ended* December 31, 2023,the Company sold its $2,000,000 stock investment in LINICO and recorded an impairment of $1,400,000 and a note receivable of $600,000. The note was payable over a12*-month installment which began in* January 2024.The balance of the note receivable was $100,000 as of December 31, 2024,and was fully collected during thefirst* quarter of2025. The Company accounted for the LINICO investment under ASC321, Investments-Equity Securities, using the measurement alternative of recording at cost as the investment in LINICO didnot have a readily determinable fair value.

On* December 1, 2025,the Company entered into an agreement with Lion Energy, LLC (“Lion Energy”) pursuant to which the Company provided $2,069,000 of short-term financing to Lion Energy. Under the arrangement, repayment was dueno* later than* December 30, 2025.As of December 31, 2025,the entire amount remained outstanding and is recorded as a note receivable in the Consolidated Balance Sheet. The Company evaluated the collectability of the note receivable and concluded thatno allowance for credit losses was required as of December 31, 2025.*

Subsequent to year end, on* February 6, 2026,the Company entered into a non-binding term sheet contemplating a potential acquisition of Lion Energy and purchased a subordinated participation interest in Lion Energy’s senior secured credit facility. In connection with this arrangement, the Company contributed its approximately $2,069,000 note receivable to Lion Energy and advanced an additional $2,000,000 to acquire the participation interest. The participation interest is subordinated to the senior secured lender and is subject to the terms and conditions of the underlying credit facility. See Note19* — Subsequent events for additional information regarding the proposed transaction.

Other assets consist of the following (in thousands):

(1) See Footnote9.

(2) Deposits for equipment.

Accrued liabilities consist of the following (in thousands):

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As of* December 31, 2025*, the Company maintainedtwo operating leases for real estate. The Company's operating leases had terms of 36 and 37 months and includeone or more options to extend the duration of the agreements. These operating leases are included in "Other assets" on the Company's* December 31, 2025* and2024 consolidated balance sheets and represent the Company's right to use the underlying assets for the term of the leases. The Company's obligation to make lease payments are included in "Lease liability, current portion" and "Lease liability, non-current portion" on the Company's* December 31, 2025* and2024 consolidated balance sheets.

On* December*9,* 2025,* the Company extended its operating lease for its headquarters located at5370 Kietzke Lane, Reno, NV. The lease extension was determined to be a lease modification that qualified as a change of accounting on the existing lease andnot a separate contract. As such, the Right-of-Use (“ROU”) assets and operating lease liabilities were remeasured using an incremental borrowing rate at the date of modification of 9.26%, which resulted in an increase of the ROU asset of $147,000 and an increase in the operating lease liabilities of $159,000.

On* June 9, 2024**,* the Company extended its operating lease for its Innovation Center located at160 Denmark Dr, McCarran, NV. The lease extension was determined to be a lease modification that qualified as a change of accounting on the existing lease andnot a separate contract. As such, the Right-of-Use (“ROU”) assets and operating lease liabilities were remeasured using an incremental borrowing rate at the date of modification of 9.52%, which resulted in an increase of the ROU asset of $347,000 and an increase in the operating lease liabilities of $324,000.

Based on the present value of the lease payments for the remaining lease term of the Company's existing operating leases, as of* December 31, 2025*, total right-of-use assets were approximately $442,000, and operating lease liabilities were approximately $449,000. As of* December 31, 2024*, total right-of-use assets were approximately $542,000 and operating lease liabilities were approximately $552,000. For its real estate leases, the Company has elected the practical expedient tonot separate a lease into lease and nonlease components.

The Company currently maintainsone finance lease for equipment. On* April 1, 2024the Company entered into a finance lease for laboratory equipment which expires in2029**.In November 2021**,* the Company entered into a finance lease for a modular laboratory which expired in* October 2024.The Company's obligation to make finance lease payments are included in "Lease liability, current portion" and "Lease liability, non-current portion" on the Company's December 31, 2025* and2024 consolidated balance sheets. As of* December 31, 2025* total finance lease liabilities were $143,000.

Information related to the Company's right-of-use assets and related lease liabilities were as follows (in thousands):

Maturities of lease liabilities as of* December 31, 2025* were as follows (in thousands):

Due in12-month period ended* December 31,*

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On* February 1, 2023,Aqua Metals Reno, Inc., our wholly-owned subsidiary, entered into a Loan Agreement with Summit Investment Services, LLC, a Nevada limited liability company (the “Lender”), pursuant to which the Lender provided us with a loan in the amount of $3,000,000. The loan proceeds were used to purchase a building located at2999* Waltham Way McCarran, NV89434 (the “Building”). The loan accrued interest at a fixed annual rate of 9.50%. Interest-only payments were due monthly for thefirst twenty-four months and the principal and all unpaid interest was due on* February1,* 2025. We had the right to prepay the loan at any time, provided that we pay guaranteed minimum interest of $213,750 (9-months of interest). During2025, we extended the existing maturity date to* April27,* 2025 and later on to* July 27, 2025.In connection with the July 27, 2025extension, the loan accrued interest at a fixed annual rate of 10.50%. Interest-only payments were due monthly and we had the right to prepay the loan at any time, provided that we must pay guaranteed minimum interest of $76,125 (3-months of interest). The Loan Agreement included representations, warranties, and affirmative and negative covenants that are customary of institutional loan agreements. The loan was collateralized by afirst* priority lien on the building and site improvements, and is guaranteed by Aqua Metals, Inc. During* February 2025,Eric Gangloff, founder and CEO of Summit Investment Services, LLC was appointed as a member of the Board of Directors of the Company. On June 11, 2025,*in connection with the sale of the building, the Company paid off the outstanding principal balance of $3,000,000 along with the guaranteed minimum interest balance due of $49,000.

On* December 18, 2024,the Company entered into a Securities Purchase Agreement with eight accredited investors, including executives and related parties of the Company, in connection with a private placement of secured promissory notes (“Notes”) in the aggregate principal amount of $1,500,000 and common stock purchase warrants (“Warrants") to purchase 75,000 shares of the Company’s common stock. The Securities Purchase Agreement included customary representations, warranties, and covenants by the investors and the Company. Certain officers and directors of the Company purchased Notes in the aggregate amount of $1,250,000, including $400,000 related to a holder who was appointed as a director of the Company in February**2025.* The Notes accrued interest at the rate of 20% per annum, subject to a payment of a minimum of12 months interest in the event of prepayment. The entire principal amount evidenced by the Notes plus all accrued and unpaid interest was due on* December 31, 2025.We had the right to prepay the loan at any time, subject to our payment of12* months interest. Additionally, upon the occurrence of an event of default, the note holders* maydeclare the Notes to be forthwith due and payable, whereupon the principal and all accrued and unpaid interest thereon, plus all costs of enforcement and collection (including court costs and reasonable attorney’s fees), shall immediately become and be forthwith due and payable. The Company’s obligations under the Notes were secured by afirst* lien on the Company’s strategic metal inventory and asecond lien on all other assets of the Company. Each Note purchaser received a Warrant to purchase share of the Company’s common stock in an amount equal to the principal amount of the investor’s Note divided by two, for a total of 75,000 shares of common stock. The Warrants are exercisable over afive-year period at an exercise price of $19.20 and $19.30 per share and are convertible to shares of common stock of the Company upon a change in control of the Company.

The private placement closed on* December 19, 2024for the gross proceeds of $1,500,000. Proceeds from the transaction werefirst* allocated to the warrants and then to the notes on a residual basis resulting in $986,000 allocated to liability-classified warrants and $514,000 to the notes, creating a discount on the notes. Any subsequent changes to the fair value of the Warrant Liability will be recorded in current period earnings. The Company incurred issuance costs of $58,000, which were proportionally allocated between the notes and warrants. Costs related to the warrants were immediately expensed, while costs associated with the notes were included in the note discount and are amortized as interest expense over the loan term. The notes payable are presented net of discount, and the amortization of the discount is recorded as interest expense in the Company’s consolidated financial statements. As of* December 31, 2024,the outstanding principal balance on the secured notes was $1,500,000. During thefirst* quarter of2025, we made a principal payment of $500,000 and on* May 5, 2025,the Company repaid in full the outstanding balance of $1,000,000, plus12* months of interest totaling $300,000. As part of the extinguishment, the Company recorded an $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.

Notes payable is comprised of the following (in thousands):

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The Company accounted for the warrants issued in connection with the Securities Purchase Agreement discussed in Note10, to purchase 75,000 shares in accordance with the guidance contained in ASC Topic815 “Derivatives and Hedging”. These warrants contain provisions—such as a mandatory conversion feature upon a change in control—that preclude equity classification. Accordingly, the Company classified the warrants as a liability at fair value and adjusts them to fair value at each reporting period. This liability is re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations. The fair value of the warrants was estimated using the Monte-Carlo option pricing model to determine the fair value of its liability-classified warrants. These instruments are classified within Level3 of the fair value hierarchy due to the use of unobservable inputs. Key assumptions used in the valuation as of* December 31, 2025and December 31, 2024,*included:

The following table provides a rollforward of the Level3 warrant liability for the year ended* December 31, 2025and2024* (in thousands):

The change in fair value of $1,266,000 was recognized as other income in the statement of operations for the year ended* December 31, 2025*.

Effective* November 5, 2024,the Company effected aone*-for-20 reverse stock split of its issued and outstanding common shares. Subsequently, on* August**4,* 2025, the Company effected aone-for-10 reverse stock split of its issued and outstanding common shares. All share and share price information set forth in this report has been adjusted retrospectively to reflect these reverse stock splits.

Authorized capital

The authorized capital stock of the Company consists of 300,000,000 shares of common stock, par value $0.001 per share. In the event of liquidation of the Company, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities. The common stock hasno preemptive or conversion rights or other subscription rights. There areno redemption or sinking fund provisions applicable to the common stock. The outstanding shares of common stock are fully paid and non-assessable.

The holders of the Company’s common stock are entitled toone vote per share. Holders of common stock are entitled to receive a ratable share of dividends, if any, as* may*be declared by the board of directors.

At-the-Market (“ATM”) Offering Program

On* August 22, 2024,the Company filed a prospectus supplement under its effective shelf registration statement on Form S-3 authorizing an At-the-Market (“ATM”) offering program for the sale of up to $30,000,000 of the Company’s common stock and later increased to $50,000,000. Under the ATM Sales Agreement with The Benchmark Company, LLC (“Benchmark”), acting as sales agent, the Company mayoffer and sell shares of its common stock from time to time in transactions that are deemed to be “at-the-market” offerings as defined in Rule415*(a)(4) of the Securities Act of1933, as amended. Benchmark is entitled to compensation at a rate of 2.5% of the gross proceeds from each sale of common stock under the Sales Agreement. The Company has also agreed to provide customary indemnification and contribution to Benchmark with respect to certain liabilities, including liabilities under the Securities Act. During2025, the Company sold 836,219 shares of common stock under the ATM program for net proceeds of approximately $5,931,000, after deducting sales commissions and offering costs.

As of the date of this report, the Company is subject to the limitations of Form S-3 (the "baby shelf" rules), which limit the amount of securities it* may*offer and sell pursuant of its Form S-3 registration statement.

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Equity Line of Credit and Derivative

On* May 15, 2025,the Company entered into an equity purchase agreement granting it the right, butnot* the obligation, to sell up to$10,000,000 of common stock to Lincoln Park Capital Fund, LLC over 24 months, at a discounted purchase price. On* June 6, 2025,the Company registered 177,283 shares of common stock that the Company mayelect to issue and sell under the ELOC. Additionally, on July 22, 2025,the Company’s shareholders voted to approve, for purposes of complying with Nasdaq Listing Rule5635*(d), the potential issuance and sale of up to $10,000,000 of common stock under the ELOC. Sales under the agreement are solely at the Company’s election and subject to various additional limitations, including pricing formulas, volume caps, and ownership percentage restrictions. The contract was concluded to be a purchased put option equity derivative which doesnot meet the indexation guidance for the scope exception for contracts in a company’s own equity underASC 815‑40. As the shares are sold at fair value less a discount the Company has concluded the derivative asset doesnot have material fair value. During the year ended* December 31, 2025*, the Company issued 177,283 shares of common stock pursuant to the ELOC with Lincoln Park Capital Fund, LLC for net proceeds of $903,000. During the year ended* December 31, 2025*, the Company also issued 22,717 shares of common stock to Lincoln Park Capital Fund, LLC related to a commitment fee under the ELOC. However, pursuant to the securities purchase agreement entered into in connection with the Company's* October 2025registered direct offering, the Company is restricted from entering into certain variable rate transactions for a period oftwelve* months following the closing of that transaction, which* maylimit the Company’s ability to utilize the Lincoln Park facility during that period. The Company may*issue additional shares under the facility in the future, subject to the terms of the agreement and applicable registration requirements.

Shares issued

During the year ended* December 31, 2025*, the Company issued 62,531 shares of common stock upon vesting of Restricted Stock Units ("RSUs") granted by the Company to management and employees, including 17,144 of reissued treasury stock. We withheld 19,508 shares to satisfy approximately $147,000 of employees’ tax obligations. We treat shares of common stock withheld for tax purposes on behalf of our employees in connection with the vesting of RSUs in a similar manner as common stock repurchases and reported as treasury stock.

During the year ended* December 31, 2025*, the Company issued 9,365 shares of common stock upon vesting of RSUs granted to Board members and 4,568 shares of common stock to Board members related to director fees.

During the year ended* December 31, 2025*, the Company issued 22,717 shares of common stock to Lincoln Park Capital Fund, LLC related to broker fees.

During the year ended* December 31, 2025*, the Company issued 836,219 shares of common stock pursuant to the At The Market Issuance Sales Agreement for net proceeds of $5,931,000.

On* October 15, 2025,the Company entered into a Securities Purchase Agreement with an institutional investor pursuant to which it agreed to issue and sell, in a registered direct offering, (a)205,213 shares of common stock at an offering price of $11.34 per share and (b)928,581 pre-funded warrants at an offering price of $11.339 per warrant, with each warrant exercisable forone share of common stock at an exercise price of $0.001 per share. In a concurrent private placement, the Company also sold 1,133,794 common stock purchase warrants at an offering price of $0.125 per warrant, with each warrant exercisable forone share of common stock at an exercise price of $11.34 per share. The offering closed on October 16, 2025and after the deduction of expenses payable by us we received net proceeds of approximately $11,939,000. The Pre-Funded Warrants were immediately exercisable and were exercised in full as of October 16, 2025.The Private Placement Warrants are exercisable upon issuance, may*be exercised on a cashless basis under certain circumstances, and expire five years from the date of issuance. The Company used the relative fair value method to allocate the net proceeds of approximately $11,939,000 between the common stock, pre-funded warrants and the warrants. As presented below, the Company recorded the fair value of the warrants of $5,682,000, pre-funded warrants of $5,125,000 and common stock of $1,133,000.

During the year ended* December 31, 2024*, the Company issued 7,856 shares of common stock upon vesting of Restricted Stock Units ("RSUs") granted by the Company to management and employees, including 4,426 of reissued treasury stock. We withheld 5,225 shares to satisfy approximately $552,000 of employees’ tax obligations. We treat shares of common stock withheld for tax purposes on behalf of our employees in connection with the vesting of RSUs in a similar manner as common stock repurchases and reported as treasury stock.

During the year ended* December 31, 2024*, the Company issued 2,011 shares of common stock for consulting services.

During the year ended* December 31, 2024*, the Company issued 1,068 shares of common stock upon vesting of RSUs granted to Board members.

During the year ended* December 31, 2024*, the Company issued 942 shares of common stock to a Board member related to director fees.

During the year ended* December 31, 2024*, the Company issued 660 shares of common stock to a former employee related to a severance agreement.

During the year ended* December 31, 2024*, the Company issued 1,064 shares of common stock pursuant to the employee stock purchase plan.

During the year ended* December 31, 2024*, the Company issued 119,503 shares of common stock pursuant to the At The Market Issuance Sales Agreement for net proceeds of $5,014,000.

In* May2024,* the Company completed a public offering of 100,625 shares of its common stock at the public offering price of $78 per share. In connection with the sale of common stock, the Company issued warrants to purchase shares of common stock at the rate ofone warrant for every share of purchased common stock, at the offering price of $2 per warrant. After the deduction of the underwriter’s discount and expenses payable by us, we received net proceeds of $7,306,000. The Company used the relative fair value method to allocate the net proceeds of approximately $7,306,000 between the common stock and the warrants. As presented below, the Company recorded the fair value of the warrants of $3,081,000 and common stock of $4,225,000.

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Warrants outstanding

In* July2023,* the Company issued a warrants to purchase 1,819 shares of the Company's common stock to the underwriter of the Company's public offering, equal to 2% of the 90,965 shares sold. The warrants are exercisable at $275 per share, commencingsix months after* July 17,2023. The warrants have an expiration date of 5 years from the date of issuance and will expire on July17,* 2028. Using the Black Scholes Merton model, the Company estimated the warrants' fair value to be $388,000 with the assumptions as follows: $308 per share fair value on the date of issuance;5-year term;81.9% volatility;3.81% discount rate and 0% annual dividend rate. Warrants are accounted for under the equity classification.

In* August2023,* the Company issued a warrant to purchase 1,029 shares of the Company's common stock to the underwriter of the transaction in connection with the Yulho SPA. The warrants have an expiration date of 5 years from the date of issuance and are exercisable immediately at $250 per share. The warrant will expire on* August4,* 2028. Using the Black Scholes Merton model, the Company estimated the warrants' fair value to be $181,000 with the assumptions as follows: $254 per share fair value on the date of issuance;5-year term;82.3% volatility;3.81% discount rate and 0% annual dividend rate. Warrants are accounted for under the equity classification.

In* May2024,* the Company issued a warrant to purchase 3,913 shares of the Company's common stock to the underwriter of the Company's public offering, equal to 2% of the shares and the number of shares underlying the warrants sold in the offering. The warrants have an expiration date of 5 years from the date of issuance and are exercisable immediately at $97.50 per share. The warrant will expire on* May14,* 2029. Using the Black Scholes Merton model, the Company estimated the warrants' fair value to be $245,000 with the assumptions as follows: $94.20 per share fair value on the date of issuance;5-year term;80.3% volatility;4.46% discount rate and 0% annual dividend rate. Warrants are accounted for under the equity classification.

In* May* 2024, in conjunction with the Company's public offering, the Company issued a warrant to purchase 100,625 shares of the Company's common stock. The warrants have an expiration date of 5 years from the date of issuance and are exercisable immediately at $78 per share. The warrant will expire on* May* 14, 2029. Using the Black Scholes Merton model, the Company estimated the warrants' fair value to be $6,666,000 with the assumptions as follows: $94.20 per share fair value on the date of issuance;5-year term;80.3% volatility;4.46% discount rate and 0% annual dividend rate. Warrants are accounted for under the equity classification.

In* December* 2024, the Company issued warrants to purchase 75,000 shares of the Company's common stock to theeight accredited investors, including executives and related parties of the Company, in connection with the private placement of secured promissory notes. The warrants are exercisable over afive-year period at an exercise price of $19.20 and $19.30 per share and are convertible to shares of common stock of the Company upon a change in control of the Company. The warrant will expire on* December* 19, 2029. See further discussion of the* December 2024warrants within Note11.*

In* October* 2025, in conjunction with the Company's private placement, the Company issued warrants to purchase 1,133,794 shares of the Company's common stock to an institutional investor. The warrants have an expiration date of 5 years from the date of issuance and are exercisable immediately at $11.34 per share. The warrants will expire on* October* 16, 2030. Using the Black Scholes Merton model, the Company estimated the warrants' fair value to be $14,348,000 with the assumptions as follows: $13.94 per share fair value on the date of issuance;5-year term;142.0% volatility;3.63% discount rate and 0% annual dividend rate. Warrants are accounted for under the equity classification.

Warrants outstanding to purchase shares of the Company’s common stock at a weighted average exercise price per share are as follows:

Stock-based compensation

2014 Stock Incentive Plan

In2014, the Board of Directors adopted the Company’s stock incentive plan (the*“2014* Plan”). The2014 Plan expired in* September 2024.*

2019 Stock Incentive Plan

In2019, the Board of Directors adopted the Company’s stock incentive plan (the*“2019* Plan”). The2019 Plan was most recently amended and restated effective as of the Company’s2024 Annual Stockholders’ Meeting. A total of 140,000 shares of common stock was authorized for issuance pursuant to the2019 Plan. Subsequently, on* July 22, 2025,260,000 shares of common stock were authorized and added to the plan, bringing the total shares authorized for issuance under the2019* Plan to 400,000 shares. The2019 Plan provides for the following types of stock-based awards: incentive stock options; non-statutory stock options; restricted stock; and performance stock. The2019 Plan, under which equity incentives* maybe granted to employees and directors under incentive and non-statutory agreements, requires that the option price maynot* be less than the fair value of the stock at the date the option is granted. Option awards are exercisable until their expiration, which* maynot* exceed 10 years from the grant date. The restricted shares that are issued from the2019 Plan normally vest insix equal tranches over three years.

Stock-based compensation expense recorded was allocated as follows (in thousands):

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The following table summarizes the stock-based compensation plan activity and related information through* December 31, 2025*.

As of* December 31, 2025*, there is approximately $1,955,000 of total unrecognized compensation cost related to the unvested share-based (option and RSU) compensation arrangements granted under the stock-based compensation plans. The remaining unrecognized compensation cost will be recognized over a weighted-average period of 2.2 years.

Our policy is to fulfill the required shares for a restricted share vesting byfirst depleting any available Treasury Stock held by the Company and the remaining outstanding balance is satisfied with unissued shares.

Stock Price Hurdle Awards

In2023, the Company granted stock price hurdle restricted share units as a result of the pilot plant commissioning. The stock price hurdle restricted share units expirethree years from the date of grant and vest based on the Corporation’s common stock achieving an absolute stock price hurdles based on a5-day VWAP at any time over thethree-year term.

In2024, the Company granted stock price hurdle restricted share units as part of the long-term incentive bonus. The stock price hurdle restricted share units expirethree years from the date of grant and vest based on the Corporation’s common stock achieving an absolute stock price hurdles based for5 consecutive days closing prices at any time over thethree-year term.

The following table summarizes the activity of stock price hurdle awards during the year ended* December 31, 2025*:

The fair value of stock price hurdle awards were calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected Company share price volatility, the risk-free interest rate, the cost of equity, and other award design features. The following are weighted-average key assumptions for2024 and2023 grants.

Total Shareholder Return (TSR) Awards

In2024, the Company granted TSR-based restricted share units as part of the long-term incentive bonus. These awards vest based on the Company achieving specified total shareholder return performance relative to our Performance Peer Group and expirethree years from the date of grant if performance conditions arenot achieved.

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The following table summarizes the activity of TSR awards during the year ended* December 31, 2025*:

Subsequent to* December 31, 2025,on January 7, 2026,the NEOs voluntarily agreed to forfeit and cancel all outstanding PSUs, which include stock price hurdle awards and total shareholder return awards, previously granted under the Company’s2019* Stock Incentive Plan. For further information, see to Note19 - Subsequent events.

2025 Restricted stock units

During thefirst quarter of2025, the Company granted 535 RSUs, all of which were subject to vesting, with a grant date fair value of $10,000 to an employee. The shares vest inthree equal installments over athree-year period.

During thefirst quarter of2025, thefirst funding tranche under the* October 3, 2024*supplemental retention program was achieved, resulting in granting of 11,847 RSUs to eligible employees in accordance with the program’s terms. These RSUs vest after asix-month service period.

During thefirst quarter of2025, the Company granted 2,500 RSUs to an employee, all of which were subject to vesting, with a grant date fair value of $49,000. The shares vest over asix-month period.

During thesecond quarter of2025, the Company granted 10,204 RSUs to an employee, all of which were subject to vesting, with a grant date fair value of $100,000. The shares vest inthree equal installments over athree-year period.

During thesecond quarter of2025, the Company granted 21,739 RSUs all of which were subject to vesting, with a grant date fair value of $250,000 to Board Members. The shares vest infour equal installments over atwelve-month period.

During thesecond quarter of2025, the Company granted 4,567 RSUs to Board Members as compensation for board services. These RSUs vested immediately upon grant and had an aggregate grant-date fair value of $85,000, which was recognized as stock-based compensation expense in the period.

During thethird quarter of2025, the Company granted 99,606 RSUs to employees, all of which were subject to vesting, with a grant date fair value of $377,000. The shares vest inthree equal installments over athree-year period.

During thethird quarter of2025, the Company granted 11,250 RSUs to an employee, all of which were vested immediately, with a grant date fair value of $46,350.

During thefourth quarter of2025, the Company granted 70,878 RSUs, all of which were subject to vesting, with a grant date fair value of $702,401 to employees. The shares vest insix equal semi-annual installments over athree-year period. In addition, the Company granted the Company granted 14,749 RSUs to an employee, all of which were vested immediately, with a grant date fair value of $80,530.

2024 Restricted stock units

During thefirst quarter of2024, the Company granted 557 RSUs, all of which were subject to vesting, with a grant date fair value of $60,000 to employees. The shares vest inthree equal installments over athree-year period.

During thesecond quarter of2024, the Company granted 624 RSUs, all of which were subject to vesting, with a grant date fair value of $40,000 to employees. The shares vest inthree equal installments over athree-year period.

During thethird quarter of2024, the Company granted 1,857 RSUs, all of which were subject to vesting, with a grant date fair value of $83,000 to Board Members. The shares vest infour equal installments with thefirst installment vesting immediately and the remainingthree installments vesting over anine-month period.

During thethird quarter of2024, the Company granted 2,011 RSUs, all of which were vested immediately, with a fair value of $150,000 for consulting fees.

During thethird quarter of2024, the Company granted 660 RSUs, all of which were vested immediately, with a fair value of $28,000 to an employee upon termination of a severance agreement.

During thefourth quarter of2024, the Company granted 396 RSUs, all of which were subject to vesting, with a grant date fair value of $10,000 to employees. The shares vest inthree equal installments over athree-year period.

During thefourth quarter of2024, the Company granted 17,776 RSUs, all of which were subject to vesting, with a grant date fair value of $311,000 to employees. The shares vest insix equal semi-annual installments over athree-year period.

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On* October 3, 2024,the Company approved a supplemental retention program designed to retain business-critical resources essential to ongoing operations and strategic initiatives. Participation in the program is contingent upon management achieving specified fundraising targets and subject to the continued service of eligible employees. The program established specific funding tranches tied to cumulative fundraising milestones, which must be achieved on or before March 7, 2025.The grant terms included a fixed dollar, variable share, structure with potential settlement valued from $0 to $925,014 dependent upon satisfaction of performance conditions. Once performance conditions are met, the shares to be granted are fixed and subject to an additionalsix-month service condition. As of December 31, 2024,the Company hasnot* yet recognized any expenses related to this program as the performance conditions werenot deemed probable of achievement. In thefirst quarter of2025, thefirst funding tranche was achieved, triggering the issuance of 11,847 RSUs to qualified employees in accordance with the program’s terms. These shares will be granted subject to continued service requirements.

On* December**19,* 2024, the Company approved a long-term incentive plan for its Named Executive Officers (NEOs), consisting of 47,445 time-vested RSUs and 15,881 performance stock units (PSUs) with market-based goals. RSUs will continue to vest in equal semi-annual installments over athree-year period, subject to continuation of service,50% of PSUs granted in2024 will vest based on total shareholder return (TSR) attainment relative to our Performance Peer Group and 50% based on hitting certain stock price hurdles within 3-years. TSR shares issued vestone third annually. The number of shares issued each year is based on where the Company compares with a peer group such that 50% of shares vest at the25th percentile,100% of shares vest at the at50th percentile, and 200% of shares vest at75th percentile. Subsequent to* December 31, 2025,on January 7, 2026,the NEOs voluntarily agreed to forfeit and cancel all outstanding PSUs previously granted under the Company’s2019* Stock Incentive Plan. For further information, see to Note19 - Subsequent events.

Total intrinsic value of RSUs vested and released during2025 was $552,000. Intrinsic value of RSUs outstanding at* December 31, 2025* was $1,188,000.

Reserved shares

At* December 31, 2025*, the Company has reserved shares of common stock for future issuance as follows:

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided an employee retention tax credit to certain employers that either (1) fully or partially suspend operations because of government orders associated with COVID-19 or (2) experience a substantial decline in income but continue to pay employees their wages. The credit is equal to50% of qualified wages paid in2020, up to a maximum of*$10,000* in qualified wages per employee for the year, and70% of qualified wages paid in2021 (through thethird quarter), up to a maximum of*$10,000* in qualified wages per employee per quarter and can be applied against payroll taxes, with any excess tax credit eligible for a cash refund. The Company’s policy is to recognize these credits based on ASC450-30, Gain Contingencies, when all uncertainties are resolved, and the income is realized. During the year ended* December 31, 2025,*the Company recorded government grant income of $643,000, related to the employee retention credit, and interest income $99,000. These amounts are presented within interest and other income on the Consolidated Statements of Operations.

We* may,from time to time, be party to litigation and subject to claims incident to the ordinary course of business. As our growth continues, we maybecome party to an increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and the resolution of any future matters could materially affect our future financial position, results of operations or cash flows. We evaluate such matters in accordance with ASC 450 - Contingencies, and record a liability when it is probable that a loss has been incurred and the amount can be reasonably estimated. If a loss is reasonably possible butnot* probable, or if the amount cannot be reasonably estimated, we disclose the nature of the contingency and an estimate of the possible loss or range of loss, if such an estimate can be made.

In* October 2021,we filed an action against Johnson Controls Fire Protections, LP (“Defendant”) relating to its involvement in the November 2019fire at our former TRIC facility (Aqua Metals, Inc., et. al v. Johnson Controls Fire Protections, LP, Second Judicial District of the State of NevadaCV21*-01891). Our complaint alleged Defendant’s liability for a portion of the fire loss based on Defendant’s negligence, breach of contract and other causes of action in connection with Defendant’s failure to properly inspect, maintain and repair the fire suppression system in the TRIC facility. On* March 25, 2025,the Court dismissed our complaint in response to a motion for summary judgment filed by Defendant. On May 12, 2025,Defendant filed a Memorandum for Costs seeking approximately $300,000 in litigation-related costs. On May 29, 2025,Defendant filed a motion to recover its attorney’s fees and costs in the aggregate approximate amount of $3.5 million, including approximately $300,000 of costs (the same costs identified in Defendant’s Memorandum of Costs) and approximately $3.2 million of legal fees. While it is reasonably possible that a loss maybe incurred, we believe that we have a strong defense to Defendant’s claim for recovery of fees and costs, especially with regard to Defendant’s claim for legal fees, and we intend to vigorously defend against Defendant’s motion. However, should Defendant be successful in obtaining an award for all or a substantial portion of the requested amount, such outcome could have a material adverse effect on our liquidity and mayrequire us to raise additional capital or liquidate assets to satisfy any such obligation. Based on the assessment of legal counsel, management concluded that a loss isnot* probable and, accordingly, no liability has been recorded.

The Company has adopted a policy that any transactions with directors, officers, beneficial owners offive percent or more of our common shares, any immediate family members of the foregoing or entities of which any of the foregoing are also officers or directors or in which they have a financial interest, will only be on terms consistent with industry standards and approved by a majority of the disinterested directors of our board. As of* December 31, 2024,the Company hadtwo debt arrangements with related parties. As of December 31, 2025,the Company had repaid both related party debt arrangements. For further details on these related party transactions, refer to Note10* – Notes payable in the financial statements.

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Loss before income tax expense consists of the following (in thousands):

The components of the provision for income tax expense consist of the following (in thousands):

Reconciliation of the statutory federal income tax rates consist of the following (in thousands):

(a) State taxes in California made up the majority (greater than50 percent) of the tax effect in this category for the years ended* December 31, 2025and2024.*

As discussed in Note 2 - Recent Accounting Pronouncements section he Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on a retrospective basis effective* January 1, 2025.*Accordingly, prior period amounts have been recast to conform to the current year presentation. As a result, the Company enhanced its income tax disclosures, including additional disaggregation in the rate reconciliation and expanded information regarding income taxes paid. Differences between the Company’s effective tax rate and the statutory tax rate relate primarily to state income taxes, stock-based compensation, tax credits, and change in valuation allowance. Deferred taxes reflect the net tax effects of the temporary differences between the carrying amount of assets and liabilities for financial reporting and the amount used for income tax purposes.

The components of deferred tax assets (liabilities) included on the consolidated balance sheets are as follows (in thousands):

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Income taxes paid (net of refunds) are comprised of the following (in thousands):

The amount of income taxes paid during the years ended* December 31, 2025and2024* doesnot meet the5% disaggregation threshold.

Based on the available objective evidence at this time, management believes that it is more-likely-than-not that the net deferred tax assets of the Company willnot be realized. Accordingly, management has applied a full valuation allowance against net deferred tax assets at both* December 31, 2025and December 31, 2024*. The net valuation allowance increased by approximately $4.4 million during the year ended* December 31, 2025*. The increase in net valuation allowance primarily relates to net operating losses generated during2025.

As of* December 31, 2025*, the Company has total net operating loss carryforwards of $219.8 million for federal income tax purposes. Approximately $25.2 million of the federal net operating losses will begin to expire in* December 31, 2034,ifnot* utilized. Approximately $194.6 million of the federal net operating losses were generated after* December 31, 2017,and thus donot* expire. As of* December 31, 2025,the Company has state net operating loss carryforwards of $4.1 million, which will begin to expire in December 31, 2034.*

Utilization of the Company’s net operating loss* may*be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of net operating loss carryforwards prior to utilization.

At* December 31, 2025*, the Company had research and development credits carryforward of approximately $0.7 million and $0.5 million for Federal and California income tax purposes, respectively. Ifnot utilized, the Federal research and development credits carryforward will begin to expire on* December 31, 2034.*The California credits can be carried forward indefinitely.

The Company’s policy is to account for interest and penalties as income tax expense. As of* December 31, 2025*, the Company hadno interest related to unrecognized tax benefits. No amounts of penalties related to unrecognized tax benefits were recognized in the provision for income taxes.

The Company maintains liabilities for uncertain tax positions. These liabilities involve considerable judgement and estimation and are continuously monitored by management based on the best information available, including changes in tax regulations, the outcome of relevant court cases, and other information. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits as income tax expense. At* December 31, 2025*, the Company’s total amount of unrecognized tax benefit was approximately $0.6 million,none of which will affect the effective tax rate, if recognized. The Company doesnot expect its unrecognized benefits to change materially over the nexttwelve months.

The Company files income tax returns with the United States federal government and the State of California. The Company isno longer subject to U.S. federal and state income tax examinations for tax years prior to 2022.

The Company maintains a defined-contribution savings plan under Section401(k) of the Internal Revenue Code (the*“401*(k) Plan”). The401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pretax or after tax basis. Beginning in* January 2021,the Plan included a maximum of 4% employer matching contributions with immediate vesting. We recognized $88,000 and $210,000 of expenses related to employer contributions for the401*(k) savings plan during the years ended* December 31, 2025* and2024, respectively.

Aqua Metals, Inc. hasone operating segment: sustainable metals recycling. The Company's operations are focused on the development and commercialization of AquaRefining technology for the clean and efficient recovery of valuable metals from lead-acid and lithium-ion batteries. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM evaluates financial performance at a consolidated, entity-wide level and doesnot assess operating results by individual business unit or product line. Financial results are reviewed in line with the Company’s consolidated financials, and resource allocation decisions are made based on overall Company performance.

The CODM assesses performance for the segment based on net loss, which is reported on the statement of operations as net loss. The measure of segment assets is reported on the balance sheet as total assets. Significant expenses within net loss, include plant operations, research and development cost, impairment expense, loss (gain) on disposal of property, plant and equipment, and general and administrative expenses, which are each separately presented on the Company’s Consolidated Statements of Operations.

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On* February 6, 2026,the Company entered into a non-binding term sheet (the “Term Sheet”) with Lion Energy, LLC (“Lion Energy”) and certain of its members, setting forth the principal terms under which the Company intends to acquire all of the issued and outstanding equity interests of Lion Energy, subject to negotiation and execution of a definitive acquisition agreement and the satisfaction of specified closing conditions. Under the Term Sheet, the total consideration payable at closing wouldnot* exceed $94.9 million and is contemplated to consist of (i) $4.1 million of cash and other consideration representing the Company’s prior investment in Lion Energy, (ii) approximately $25.8 million of Aqua Metals common stock and, if applicable, preferred stock subject to negotiated ownership caps, and (iii) up to $65 million of contingent earn-out consideration based on Lion Energy’s revenue and EBITDA over a12-month performance period following closing. The number of shares to be issued as equity consideration at closing would be determined by dividing $25.8 million by the volume-weighted average price of the Company’s common stock over the20 trading days preceding the closing date, subject to negotiated ownership limitations under the Term Sheet.

The proposed transaction remains subject to customary conditions, including completion of satisfactory due diligence, negotiation and execution of a definitive acquisition agreement, the closing of an asset-based credit facility or similar financing, execution of supply and offtake agreements, Nasdaq approval of the shares to be issued, and receipt of required board and stockholder approvals. There can beno assurance that a definitive agreement will be executed or that the proposed transaction will be completed on the anticipated timeline or at all.

Additionally, on* February 6, 2026,*we entered into a Subordinated, Last Out Participation Agreement pursuant to which we purchased a fully subordinated participation interest in Lion Energy’s existing senior secured credit facility in the amount of $4,069,000. We funded this participation through $2,000,000 in cash and $2,069,000 of notes receivable previously outstanding to Lion Energy, LLC. The participation interest is secured by Lion Energy’s assets; however, it is fully subordinated to the senior obligations under the facility and provides limited rights, and we bear the economic risk of our participation.

On* January 7, 2026,the NEOs voluntarily agreed to forfeit and cancel all outstanding PSUs previously granted under the Company’s2019* Stock Incentive Plan. In accordance with ASC718, Compensation—Stock Compensation, the Company expects to recognize $121,000 remaining unamortized compensation expense associated with the cancelled PSUs on the cancellation date in thefirst quarter of2026.

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