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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number:
Aqua Metals, Inc.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of | (I.R.S. Employer |
(Address of principal executive offices, including zip code)
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class of stock: | Trading symbol | Name of each exchange on which registered: |
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company (as defined in Rule 12b-2 of the Act):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging Growth Company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 24, 2026, there were
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AQUA METALS, INC.
Condensed Consolidated Balance Sheets - Unaudited
(in thousands, except share and per share amounts)
| June 30, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Note receivable - LION ENERGY, net | ||||||||
| Interest receivable - LION ENERGY, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Intellectual property, net | ||||||||
| Other assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Lease liability, current portion | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Lease liability, non-current portion | ||||||||
| Warrant liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 13) | ||||||||
| Stockholders’ equity | ||||||||
| Common stock; $ par value; shares authorized; and , shares issued and outstanding as of June 30, 2026, respectively and and shares issued and outstanding as of December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost; common shares: and as of June 30, 2026 and December 31, 2025, respectively | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Operations - Unaudited
(in thousands, except share and per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating cost and expense | ||||||||||||||||
| Plant operations | $ | $ | $ | $ | ||||||||||||
| Research and development cost | ||||||||||||||||
| Impairment and loss on disposal of property, plant and equipment | ||||||||||||||||
| Provision for credit losses | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| Total operating expense | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income and (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Interest and other income | ||||||||||||||||
| Change in fair value of warrant liability | ||||||||||||||||
| Total other income, net | ||||||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average shares outstanding, basic and diluted | ||||||||||||||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Stockholders’ Equity - Unaudited
(in thousands, except share amounts)
| Additional | Total | |||||||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Treasury Stock | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Shares | Amount | Equity | ||||||||||||||||||||||
| Balances, March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||
| Common stock issued to employees and directors, includes RSUs vesting and withholdings to satisfy tax withholdings on RSUs vesting | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Common stock issued for ATM share sales, net of $ transaction costs | ||||||||||||||||||||||||||||
| Net loss | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Balances, June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Balances, December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||
| Common stock issued to employees and directors, includes RSUs vesting and withholdings to satisfy tax withholdings on RSUs vesting | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Common stock issued for employee stock purchase plan sales | ||||||||||||||||||||||||||||
| Common stock issued for ATM share sales, net of $ transaction costs | ||||||||||||||||||||||||||||
| Net loss | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Balances, June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Balances, March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||
| Common stock issued to employees and directors, includes RSUs vesting and withholdings to satisfy tax withholdings on RSUs vesting | ||||||||||||||||||||||||||||
| Common stock issued for ATM share sales, net of $ transaction costs | ||||||||||||||||||||||||||||
| Common stock issued for ELOC share sales, net of $ transaction costs | ||||||||||||||||||||||||||||
| Common stock issued for broker fees | ||||||||||||||||||||||||||||
| Net loss | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Balances, June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Balances, December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||
| Common stock issued to employees and directors, includes RSUs vesting and withholdings to satisfy tax withholdings on RSUs vesting | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Common stock issued for ATM share sales, net of $ transaction costs | ||||||||||||||||||||||||||||
| Common stock issued for ELOC share sales, net of $ transaction costs | ||||||||||||||||||||||||||||
| Common stock issued for broker fees | ||||||||||||||||||||||||||||
| Net loss | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Balances, June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows - Unaudited
(in thousands)
| Six Months Ended June 30, |
||||||||
| 2026 |
2025 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Reconciliation of net loss to net cash used in operating activities |
||||||||
| Depreciation and ROU asset amortization |
||||||||
| Amortization of intellectual property |
||||||||
| Fair value of common stock issued for consulting services |
||||||||
| Stock-based compensation |
||||||||
| Change in fair value of warrant liability |
( |
) | ( |
) | ||||
| Amortization of deferred financing costs |
||||||||
| Loss on extinguishment of debt |
||||||||
| Impairment and loss on disposal of property, plant and equipment |
||||||||
| Non-cash interest income |
( |
) | ||||||
| Non-cash note receivable contribution |
( |
) | ||||||
| Provision for credit losses |
||||||||
| Changes in operating assets and liabilities |
||||||||
| Accounts receivable |
||||||||
| Inventory |
||||||||
| Prepaid expenses and other current assets |
||||||||
| Accounts payable |
( |
) | ||||||
| Accrued expenses |
( |
) | ( |
) | ||||
| Other assets and liabilities |
( |
) | ( |
) | ||||
| Net cash used in operating activities |
( |
) | ( |
) | ||||
| Cash flows from investing activities: |
||||||||
| Payments for note receivable - LION ENERGY |
( |
) | ||||||
| Purchases of property, plant and equipment |
( |
) | ||||||
| Proceeds from sale of property, plant and equipment |
||||||||
| Proceeds from note receivable - LINICO |
||||||||
| Proceeds from refund of equipment deposit |
||||||||
| Equipment deposits |
( |
) | ||||||
| Net cash provided by (used in) investing activities |
( |
) | ||||||
| Cash flows from financing activities: |
||||||||
| Proceeds from employee stock purchase plan |
||||||||
| Principal payments on notes payable |
( |
) | ||||||
| Principal payments on finance leases |
( |
) | ( |
) | ||||
| Cash paid cash in lieu of fractional shares reverse split |
||||||||
| Cash paid for tax withholdings on RSUs vesting |
( |
) | ( |
) | ||||
| Proceeds from ELOC, net |
||||||||
| Proceeds from ATM, net |
||||||||
| Net cash provided by (used in) financing activities |
( |
) | ||||||
| Net decrease in cash and cash equivalents |
( |
) | ( |
) | ||||
| Cash and cash equivalents at beginning of period |
||||||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
| Six Months Ended June 30, |
||||||||
| 2026 |
2025 |
|||||||
| Supplemental disclosure of cash flows information |
||||||||
| Cash paid for income taxes |
$ | $ | ||||||
| Cash paid for interest |
$ | $ | ||||||
| Supplemental disclosure of non-cash transactions |
||||||||
| Acquisitions of property, plant and equipment included in accounts payable |
$ | $ | ||||||
| Acquisitions of property, plant and equipment paid by prior-period deposits |
$ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1. Organization
Aqua Metals (collectively with its subsidiaries, the “Company”) 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 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 replaces 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.
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.
Our focus for the lead market is 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 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 and licensing.
Reverse Stock Splits
Effective August 4, 2025, the Company effected a one-for-
Liquidity and Going Concern Assessment
For the six months ended June 30, 2026 and 2025, the Company reported a net loss of $
As an additional liquidity source, the Company maintains an At-the-Market (“ATM”) offering program. Under the ATM Sales Agreement with The Benchmark Company, LLC (“Benchmark”), the Company is permitted to offer and sell shares of its common stock, par value $
In addition to the ATM program, the Company also maintains an equity line of credit (“ELOC”) with Lincoln Park Capital Fund, LLC providing for aggregate sales of up to $
During the six months ended June 30, 2026, under the 2026 ESPP program, the Company sold
Management believes that there is substantial doubt about the Company’s ability to continue as a going concern within one 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 program, ELOC, and other potential financing arrangements, there can be no assurance that these efforts will be successful.
The accompanying condensed 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 condensed consolidated financial statements do not 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.
2. Summary of significant accounting policies
The significant accounting policies and estimates used in preparation of the condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the "SEC") on March 31, 2026. There have been no material changes in the Company’s significant accounting policies during the three and six months ended June 30, 2026.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements of Aqua Metals, Inc. and subsidiaries (collectively, the “Company” or “Aqua Metals”) have been prepared in accordance with the interim reporting requirements of Form 10-Q, pursuant to the rules and regulations of the SEC and should be read in conjunction with the Company's audited consolidated financial statements for the period ended December 31, 2025, which are included on Form 10-K filed with the SEC on March 31, 2026. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for annual consolidated financial statements.
In the opinion of management, all adjustments (which include normal recurring adjustments) considered necessary to present fairly each of the condensed consolidated balance sheet as of June 30, 2026, the condensed consolidated statements of operations for the three and six months ended June 30, 2026 and June 30, 2025, the condensed consolidated statements of stockholders' equity for the three and six months ended June 30, 2026 and June 30, 2025 and the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and June 30, 2025, as applicable, have been made. The condensed consolidated balance sheet as of December 31, 2025 has been derived from the Company’s audited consolidated financial statements as of such date, but it does not include all disclosures required by U.S. GAAP for annual presentation.
The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of results that may be expected for the year ending December 31, 2026.
Principles of consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned subsidiaries. Inter-company accounts and transactions have been eliminated in consolidation.
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, credit loss allowance, 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.
Allowance for credit losses
The Company follows the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments - Credit Losses, to estimate expected credit losses for financial assets measured at amortized cost, including notes receivable and participation interests. ASC 326 requires the use of a current expected credit loss (“CECL”) methodology, under which management estimates lifetime expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts.
The Company evaluates collectability by considering available information relevant to the collectability of the asset, including the financial condition of the borrower, underlying collateral values, expected repayment structure, current economic conditions, and other relevant factors. The Company considers a financial asset to be past due when a contractually required payment has not been received by its due date or when the borrower is in default under the terms of the underlying credit facility. The Company accrues interest on its financial assets in accordance with their contractual terms. The Company places a financial asset on nonaccrual status when, based on the specific facts and circumstances, the collection of contractual interest is no longer probable or the collection of the principal is doubtful. When a financial asset is placed on nonaccrual status, the Company ceases recognizing interest income. Contractual interest may continue to accrue under the applicable agreement but is not recognized in the financial statements unless and until its collection becomes probable. Previously recognized accrued interest is included in the amortized-cost basis of the related financial asset and is evaluated for expected credit losses using the same methodology applied to the underlying asset. Financial assets are presented net of the allowance for credit losses in the condensed consolidated balance sheets, with changes in the allowance recognized in the condensed consolidated statements of operations. Financial assets are evaluated individually when they do not share similar risk characteristics with other financial assets and are written off against the allowance when they are deemed uncollectible and there is no reasonable expectation of recovery. The Company reassesses the adequacy of the allowance for credit losses at each reporting period and adjusts the allowance as necessary based on changes in facts and circumstances.
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. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:
Level 1. Quoted prices in active markets for identical assets or liabilities.
Level 2. Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.
Level 3. 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 June 30, 2026 and December 31, 2025, the Company had a Level 3 warrant liability related to freestanding warrants issued in connection with a private placement transaction that is measured at fair value on a recurring basis.
Net loss per share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common share equivalents outstanding for the period determined using the treasury-stock method or the if-converted method, as applicable. For purposes of this calculation, stock options, restricted stock units (RSUs) and warrants to purchase common stock are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. The following shares underlying outstanding convertible notes, stock options, RSUs and warrants to purchase common stock were anti-dilutive due to a net loss in the periods presented and, therefore, were excluded from the dilutive weighted average securities computation for the six months ended June 30, as indicated below:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| Excluded potentially dilutive weighted average securities (1): | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Unvested restricted stock units | ||||||||||||||||
| Financing warrants to purchase common stock | ||||||||||||||||
| Total potential dilutive weighted average securities | ||||||||||||||||
|
| (1) Securities are presented on a weighted average outstanding calculation as required if the securities were dilutive and adjusted to give effect to the August 4, 2025 reverse stock splits. |
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. Our CODM views its operations and manages its business in one operating segment. For further discussion related to segment reporting, please refer to Note 12 - Segment reporting.
Recent accounting pronouncements
Recently issued accounting pronouncements not yet adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): 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, 2027 and 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 FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): 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 does not expect a material effect on its consolidated financial statements upon adoption.
In December 2025, the FASB issued Accounting Standards Update (“ASU”) No. 2025-12, Codification Improvements. Among other items, the update includes amendments to Topic 260, 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 may be 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 ASU 2025-12 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 does not expect a material effect on its consolidated financial statements upon adoption.
3. Note receivable, net
On December 1, 2025, the Company entered into an agreement with Lion Energy, LLC (“Lion Energy”) pursuant to which the Company provided $
On February 6, 2026, the Company entered into a non-binding term sheet contemplating a potential acquisition of Lion Energy and acquired a subordinated, last-out participation interest in Lion Energy’s senior secured asset-based lending facility with GRC SPV Investments (“GRC SPV”), the fund entity managed by Great Rock Capital Partners Management, LLC, which financed Lion Energy’s working capital needs. In connection with this arrangement, the Company contributed $
During the quarter ended June 30, 2026, the Company’s management decided to cease pursuit of a business combination with Lion Energy. As a result, the probability-weighted recovery analysis no longer considers a scenario whereby the note receivable was to be fully settled as a portion of the purchase consideration. Effective June 17, 2026, GRC SPV assigned its senior loan position and participation-related rights and obligations to CG Ventures LLC (“CG Ventures”), an entity that the Company believes may be affiliated with an owner of Lion Energy. As of June 30, 2026, the Company had not received any repayment of amounts associated with its participation interest. The Company is evaluating, with the assistance of legal counsel, the effect of the assignment on its contractual and legal rights and its ability to pursue recovery of the amounts owed. The underlying credit facility remained in default under its terms based on the most recent borrowing base certificate available to the Company. The participation interest continues to be classified as a current asset based on the default status of the underlying credit facility.
The Company evaluates the Lion Energy exposure individually due to its borrower-specific credit characteristics.The Company's sole credit quality indicator for the Lion Energy exposure is the borrower's compliance status under the underlying senior secured credit facility. At June 30, 2026, the entire $
The Company includes accrued interest in the amortized-cost basis of the related financial asset and applies the same CECL methodology and allowance rate to principal and accrued interest. During the second quarter of 2026, the Company placed the participation interest on nonaccrual status and ceased recognizing interest income. Accordingly, no interest income related to the participation interest was recognized during the three months ended June 30, 2026. During the six months ended June 30, 2026, the Company recognized approximately $
At June 30, 2026, the gross amortized-cost basis was $
The Company estimated expected credit losses using an individual, probability-weighted recovery analysis that considered a range of potential outcomes, including full recovery, partial recovery through a negotiated commercial resolution, and no recovery. Based on the latest reliable information available, management estimated a probability-weighted recovery of approximately
The table below summarizes the allowance for credit loss balance for the three and six months ended June 30, 2026 (in thousands):
| Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for credit losses | ||||||||
| Balance as of June 30, 2026 | $ | $ | ||||||
4. Inventory
Inventory consisted of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Total inventory | $ | $ | ||||||
5. Property and equipment, net
Property and equipment, net, consisted of the following (in thousands):
| Useful Life | ||||||||||||
| Asset Class | (Years) | June 30, 2026 | December 31, 2025 | |||||||||
| Operational equipment | - | $ | $ | |||||||||
| Lab equipment | ||||||||||||
| Computer equipment | ||||||||||||
| Office furniture and equipment | ||||||||||||
| Leasehold improvements | ||||||||||||
| Equipment under construction | ||||||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||||||
| Total property and equipment, net | $ | $ | ||||||||||
Property and equipment depreciation expense was $
6. Other assets
Other assets consist of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Nevada facilities Right of Use Assets (1) | $ | $ | ||||||
| Other assets | ||||||||
| Total other assets, non-current | $ | $ | ||||||
(1) See Footnote 8.
7. Accrued expenses
Accrued expenses consist of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Property and equipment related | $ | $ | ||||||
| Payroll related | ||||||||
| Professional services | ||||||||
| Other | ||||||||
| Total accrued expenses | $ | $ | ||||||
8. Leases
As of June 30, 2026, the Company maintained one finance lease for equipment and two operating leases for real estate. The operating leases had terms of
On December 9, 2025, the Company extended its operating lease for its headquarters located at 5370 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 and not 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
Based on the present value of the lease payments for the remaining lease term of the Company's existing operating leases, as of June 30, 2026, total ROU assets were approximately $
The Company currently maintains one finance lease for equipment. On April 1, 2024, the Company entered into a finance lease for laboratory equipment which expires in 2029. 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 consolidated balance sheets. As of June 30, 2026 total finance lease liabilities were $
Information related to the Company's ROU assets and related lease liabilities were as follows (in thousands):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Cash paid for operating lease liabilities | $ | $ | $ | $ | ||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Cash paid for finance lease liabilities | $ | $ | $ | $ | ||||||||||||
| Interest expense | $ | $ | $ | $ | ||||||||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Weighted-average remaining lease term (years) - operating leases | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
| Weighted-average remaining lease term (years) - finance leases | ||||||||
| Weighted-average discount rate - finance leases | % | % | ||||||
Future maturities of lease liabilities as of June 30, 2026 are as follows (in thousands):
| Due in the 12-month periods from June 30, | ||||||||
| Operating Leases | Finance Leases | |||||||
| 2026 | $ | $ | ||||||
| 2027 | ||||||||
| 2028 | ||||||||
| Less imputed interest | ( | ) | ( | ) | ||||
| Total lease liabilities | $ | $ | ||||||
| Current lease liabilities | $ | $ | ||||||
| Non-current lease liabilities | ||||||||
| Total lease liabilities | $ | $ | ||||||
9. Warrant liability
The Company accounted for the warrants to purchase
| As of June 30, 2026 | As of December 31, 2025 | |||||||
| Expected life of the options to convert | ||||||||
| Risk-free rate | % | % | ||||||
| Historical volatility | % | % | ||||||
| Valuation date stock price | $ | $ | ||||||
| Strike price |
|
| ||||||
| Probability of completing a change in control | % | % | ||||||
| Volatility if change in control occurs | % | % | ||||||
| Dividend yield | % | % | ||||||
The following table provides a roll forward of the Level 3 warrant liability as of December 31, 2025 and June 30, 2026 (in thousands):
| Warrant liability | ||||
| Fair value as of December 31, 2025 | $ | |||
| Change in fair value of warrant liabilities | ( | ) | ||
| Fair value as of June 30, 2026 | $ | |||
10. Employee Retention Credit
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 to 50% of qualified wages paid in 2020, up to a maximum of $10,000 in qualified wages per employee for the year, and 70% of qualified wages paid in 2021 (through the third 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 ASC 450-30, Gain Contingencies, when all uncertainties are resolved, and the income is realized. During the three and six months ended June 30, 2025, the Company recorded government grant income of $
11. Stockholders’ equity
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 $
As of December 31, 2025, 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. However, in March 2026, the staff of the SEC issued interpretive guidance indicating that a company that filed a prospectus supplement for an at-the-market offering while eligible to use Form S-3 pursuant to General Instruction I.B.1 may continue to offer and sell securities covered by such prospectus supplement following a Section 10(a)(3) update, even if the company subsequently becomes subject to the limitations of General Instruction I.B.6. As of June 30, 2026, $
Equity Line of Credit and Derivative
On May 15, 2025, the Company entered into an equity purchase agreement granting it the right, but not the obligation, to sell up to common stock to Lincoln Park Capital Fund, LLC over at a discounted purchase price. On June 6, 2025, the Company registered
However, pursuant to the securities purchase agreement entered into in connection with the Company’s October 2025 registered direct offering, the Company is restricted from entering into certain variable rate transactions, which may limit the Company’s ability to utilize the ELOC for a period of twelve months following the closing of that transaction. 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 six months ended June 30, 2026, the Company issued
During the six months ended June 30, 2026, the Company issued
During the six months ended June 30, 2026, the Company issued
During the six months ended June 30, 2025, the Company issued
During the six months ended June 30, 2025, the Company issued
During the six months ended June 30, 2025, the Company issued
During the six months ended June 30, 2025, the Company issued
During the six months ended June 30, 2025, the Company issued
Stock-based compensation
The stock-based compensation expense was allocated as follows (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Plant operations | $ | $ | $ | $ | ||||||||||||
| Research and development cost | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
2019 Stock Incentive Plan
In 2019, our Board adopted the Aqua Metals, Inc. 2019 Stock Incentive Plan (the “2019 Plan”). Initially,
| Number of Shares | Number of | Number of | ||||||||||
| Available for | PSUs | RSUs | ||||||||||
| Grant | Outstanding | Outstanding | ||||||||||
| Balances, December 31, 2025 | ||||||||||||
| Granted | ( | ) | — | |||||||||
| Released | — | ( | ) | |||||||||
| Forfeited | ( | ) | ( | ) | ||||||||
| Returned to Plan | — | — | ||||||||||
| Balances, June 30, 2026 | ||||||||||||
Restricted stock units
During the first quarter of 2026, the Company granted
During the first quarter of 2026, the named executive officers of the Company voluntarily agreed to forfeit and cancel all outstanding PSUs previously granted under the Company’s 2019 Stock Incentive Plan. In accordance with ASC 718, Compensation—Stock Compensation, the Company recognized approximately $
During the second quarter of 2026, the Company granted
Aqua Metals, Inc. has 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 does not assess operating results by individual business unit or product line. Financial results are reviewed in line with the Company’s condensed 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, provision for credit losses, impairment expense, loss (gain) on disposal of property, plant and equipment, and general and administrative expenses, which are each separately presented on the condensed consolidated statements of operations.
13. Commitments and contingencies
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 may become 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 but not 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 2019 fire at our former TRIC facility (Aqua Metals, Inc., et. al v. Johnson Controls Fire Protections, LP, Second Judicial District of the State of Nevada CV21-01891). 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 $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement
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 SEC including our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 31, 2026, or our 2025 Annual Report.
In this report we make, and from time to time we otherwise make written and oral statements regarding our business and prospects, such as projections of future performance, statements of management’s plans and objectives, forecasts of market trends, and other matters that are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements containing the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimates,” “projects,” “believes,” “expects,” “anticipates,” “intends,” “target,” “goal,” “plans,” “objective,” “should” or similar expressions identify forward-looking statements, which may appear in our documents, reports, filings with the SEC, and news releases, and in written or oral presentations made by officers or other representatives to analysts, stockholders, investors, news organizations and others, and in discussions with management and other of our representatives.
Our future results, including results related to forward-looking statements, involve a number of risks and uncertainties, including those risks included below in Part II, Item 1A “Risk Factors”. No assurance can be given that the results reflected in any forward-looking statements will be achieved. Any forward-looking statement speaks only as of the date on which such statement is made. Our forward-looking statements are based upon assumptions that are sometimes based upon estimates, data, communications and other information from suppliers, government agencies and other sources that may be subject to revision. Except as required by law, we do not undertake any obligation to update or keep current either (i) any forward-looking statement to reflect events or circumstances arising after the date of such statement or (ii) the important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or which are reflected from time to time in any forward-looking statement.
General
Aqua Metals is commercializing a domestic critical minerals processing platform centered on its proprietary AquaRefining™ technology. The Company’s near-term commercialization strategy is focused on Project Headwaters ARC, a planned phased critical minerals processing campus designed to begin with commercially proven lithium iron phosphate (“LFP”) battery preprocessing and expand over time through the integration of AquaRefining™ into higher-value critical mineral production.
The Company’s phased commercialization strategy is intended to reduce execution risk by establishing initial processing operations and commercial relationships before integrating AquaRefining™ into the project. Aqua Metals believes this staged approach supports disciplined capital deployment while creating a scalable platform capable of expanding beyond LFP into additional battery chemistries and selected critical mineral feedstocks over time.
AquaRefining™ is Aqua Metals’ patented hydrometallurgical and electrochemical process designed to recover valuable battery materials while reducing one-time-use process chemicals, minimizing waste generation and supporting a safer, lower-cost processing architecture compared with conventional approaches. The Company believes AquaRefining™ can become an important differentiator as it advances the commercial deployment of Project Headwaters ARC.
Project Headwaters ARC is intended to serve as the Company’s first commercial critical minerals processing campus and the initial node in a broader domestic processing platform. During the quarter, the Company continued advancing multiple project development workstreams, including site diligence, engineering, equipment evaluation, commercial discussions, project financing alternatives, incentive programs and permitting activities. The timing and scope of the project remain subject to financing, commercial agreements, permitting, engineering and Board approval.
The Company continues to prioritize preserving financial flexibility while advancing Project Headwaters ARC through disciplined, milestone-based capital deployment. Consistent with this strategy, management is evaluating multiple potential sources of capital, including project equity, equipment financing, real estate financing, working capital facilities and government incentives, with the objective of matching each capital source to the appropriate project use.
The Company also continues to advance its broader technology platform, which is intended to support future processing of additional lithium-ion battery chemistries and selected critical mineral feedstocks as commercial opportunities develop.
Effective August 4, 2025, the Company effected a one-for-10 reverse stock split of its issued and outstanding common shares. Accordingly, all common share, stock option, per common share and warrant amounts for all periods presented in the condensed consolidated financial statements and notes thereto have been adjusted retroactively to reflect this reverse stock split.
During the six months ended June 30, 2026, we issued 379,772 shares of common stock pursuant to the ATM program, sales agreement for net proceeds of $1,876,000 and 131,569 shares of common stock pursuant to the 2026 ESPP for the net proceeds of $621,000.
During the six months ended June 30, 2025, we issued 211,474 shares of common stock pursuant to the ATM program for net proceeds of $2,735,000.
Results of Operations
We did not engage in commercial operations in 2026 or 2025. Our operations have been devoted to developing our Li AquaRefining battery recycling technology. During the six months ended June 30, 2026, 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 six months ended June 30, 2026 and 2025. 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, 2026 and 2025 together with the dollar and percentage changes in those items (in thousands).
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||||
| Favorable |
% | Favorable |
% | |||||||||||||||||||||||||||||
| 2026 |
2025 |
(Unfavorable) |
Change |
2026 |
2025 |
(Unfavorable) |
Change |
|||||||||||||||||||||||||
| Plant operations |
$ | 564 | $ | 776 | $ | 212 | (27.3 | )% | $ | 1,065 | $ | 1,501 | $ | 436 | (29.0 | )% | ||||||||||||||||
| Research and development cost |
248 | 295 | 47 | (15.9 | )% | 530 | 631 | 101 | (16.0 | )% | ||||||||||||||||||||||
| Impairment and loss on disposal of property, plant and equipment |
— | 3,765 | 3,765 | (100.0 | )% | — | 9,012 | 9,012 | (100.0 | )% | ||||||||||||||||||||||
| Provision for credit losses |
2,059 | — | (2,059 | ) | 100.0 | % | 2,496 | — | (2,496 | ) | 100.0 | % | ||||||||||||||||||||
| General and administrative expense |
1,723 | 2,195 | 472 | (21.5 | )% | 4,643 | 4,571 | (72 | ) | 1.6 | % | |||||||||||||||||||||
| Total operating expense |
$ | 4,594 | $ | 7,031 | $ | 2,437 | (34.7 | )% | $ | 8,734 | $ | 15,715 | $ | 6,981 | (44.4 | )% | ||||||||||||||||
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 $212,000, or 27.3%, and $436,000, or 29.0% for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025. The decrease in plant operations for the three months ended June 30, 2026 was primarily due to $122,000 reduction in insurance-related expenses. In addition, payroll and related costs decreased by approximately $56,000 while supplies, materials, inventory adjustments and other overhead expenses decreased by $34,000. The decrease in plant operations for six months ended June 30, 2026 was primarily due to a $244,000 reduction in insurance-related expenses and a decrease of approximately $221,000 in payroll and related costs, primarily resulting from continued workforce reductions implemented during the first quarter of 2025, as well as the reallocation of personnel and resources to general and administrative activities related to identifying and securing a site for the Company’s planned lithium-ion battery recycling campus. In addition, supplies, materials, inventory adjustments, and other overhead expenses decreased by approximately $76,000. These decreases were partially offset by an increase of approximately $105,000 in professional fees.
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. For the three months ended June 30, 2026, research and development expenses decreased $47,000, or approximately 15.9%, compared to the three months ended June 30, 2025. This decrease was primarily due to lower payroll and related costs of approximately $38,000 and a decrease in supplies, materials, and other overhead expenses of approximately $9,000. For the six months ended June 30, 2026, research and development expenses decreased $101,000, or 16%, compared to the six months ended June 30, 2025. This decrease was primarily due to lower payroll and related costs of approximately $94,000, and a decrease in supplies, materials, and other overhead expenses of approximately $7,000.
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.
For the three and six months ended June 30, 2026, the Company recognized a non-cash provisions for credit losses of $2,059,000 and $2,496,000, respectively, related to the Lion Energy participation interest, including accrued interest. The provisions reflect management’s estimate of expected credit losses under ASC 326 based on a probability-weighted analysis of potential recovery scenarios.
General and administrative expense decreased $472,000, or approximately 21.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease was primarily attributable to a reduction of approximately $498,000 in professional fees and a decrease of approximately $87,000 in other overhead expense. These decreases were offset by an increase of $113,000 in payroll and related costs, primarily resulting from the reallocation of personnel and resources to general and administrative activities related to identifying and securing a site for the Company’s planned lithium-ion battery recycling campus. For the six months ended June 30, 2026, general and administrative expense increased by $72,000, or 1.6%, compared to the six months ended June 30, 2025. The increase was primarily due to $127,000 increase in professional fees, $62,000 increase in payroll and related costs, and $40,000 in travel expenses offset by $157,000 in other overhead expenses. The $127,000 increase in professional fees for the six month period reflects an increase of approximately $625,000 during the first quarter of 2026 compared with the first quarter of 2025, partially offset by the $498,000 decrease during the second quarter of 2026. The first quarter increase was primarily attributable to professional fees related to due diligence and other professional services related to the contemplated acquisition of Lion Energy.
The following table summarizes our other income and interest expense for the three and six months ended June 30, 2026 and 2025 together with the dollar and percentage changes in those items (in thousands).
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||||
| Favorable |
% | Favorable |
% | |||||||||||||||||||||||||||||
| 2026 |
2025 |
(Unfavorable) |
Change |
2026 |
2025 |
(Unfavorable) |
Change |
|||||||||||||||||||||||||
| Interest expense |
$ | (6 | ) | $ | (245 | ) | $ | 239 | (97.6 | )% | $ | (14 | ) | $ | (647 | ) | $ | 633 | (97.8 | )% | ||||||||||||
| Loss on extinguishment of debt |
— | (825 | ) | 825 | (100.0 | )% | — | (825 | ) | 825 | (100.0 | )% | ||||||||||||||||||||
| Interest and other income |
51 | 497 | (446 | ) | (89.7 | )% | 201 | 777 | (576 | ) | (74.1 | )% | ||||||||||||||||||||
| Change in fair value of warrant liability |
69 | 836 | (767 | ) | (91.7 | )% | 115 | 1,327 | (1,212 | ) | (91.3 | )% | ||||||||||||||||||||
| Total other income, net |
$ | 114 | $ | 263 | $ | (149 | ) | (56.7 | )% | $ | 302 | $ | 632 | $ | (330 | ) | (52.2 | )% | ||||||||||||||
Interest expense decreased approximately $239,000, or 97.6%, and $633,000, or 97.8%, for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025. The decrease in interest expense is due to the decrease in the notes payable outstanding balance.
On May 5, 2025, the Company repaid its $1,500,000 bridge loan prior to its December 31, 2025 maturity date. Under the terms of the bridge loan, 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.
We recognized approximately $51,000 and $201,000 in interest and other income during the three and six months ended June 30, 2026, a decrease of $446,000 and $576,000 compared to the three and six months ended June 30, 2025. The decrease was primarily driven by the approval of a payroll tax employee retention credit during the six months ended June 30, 2025.
For the three and six months ended June 30, 2026, the Company recognized a $69,000 and $115,000 change in the fair value of its warrant liability, primarily due to the remeasurement of warrants issued in December 2024.
Liquidity and Capital Resources
As of June 30, 2026, we had cash and cash equivalents of approximately $4,744,000, current liabilities of $2,828,000 and working capital of approximately $4,047,000. 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.
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 and continue utilizing cash in operations for the foreseeable future, the Company 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, cannot be 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.
Looking ahead, Aqua Metals intends to continue pilot operations, advance site selection and permitting for its first commercial AquaRefining facility and pursue additional strategic partnerships to support commercialization.
The following table summarizes our cash provided by (used in) operating, investing and financing activities (in thousands):
| Six Months Ended June 30, |
||||||||
| 2026 |
2025 |
|||||||
| Net cash used in operating activities |
$ | (6,474 | ) | $ | (5,299 | ) | ||
| Net cash provided by (used in) investing activities |
$ | (2,000 | ) | $ | 4,936 | |||
| Net cash provided by (used in) financing activities |
$ | 2,408 | $ | (1,783 | ) | |||
Net cash used in operating activities
Net cash used in operating activities for the six months ended June 30, 2026 and six months ended June 30, 2025 was $6,474,000 and $5,299,000, 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, provision for credit losses, stock-based compensation, impairment and loss on disposal of property, plant and equipment, as well as net changes in working capital. During the six months ended June 30, 2026, the Company recognized a non-cash provision for credit losses of $2,496,000 related to the Lion Energy participation interest. During the six months ended June 30, 2025, we recognized approximately $9,012,000 non-cash impairment expense related to the construction-in-progress for the facility located at TRIC.
Net cash used in investing activities
Net cash used in investing activities for the six months ended June 30, 2026 was $2,000,000 and consisted mainly of cash advanced to acquire a subordinated participation interest in Lion Energy’s senior secured credit facility. 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 provided by financing activities
Net cash provided by financing activities was $2,408,000 for the six months ended June 30, 2026, consisting of $1,876,000 in net proceeds from the sale of Aqua Metals shares pursuant to the ATM program, and $621,000 of net proceeds from the sale of Aqua Metals shares pursuant to the 2026 ESPP, offset by $78,000 related to tax withholdings to cover RSU vesting and $11,000 principal payments on finance leases. 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 ATM program, and $69,000 of net proceeds from the sale of Aqua Metals shares pursuant to the 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.
Critical Accounting Estimates
Allowance for Credit Losses on Lion Energy Exposure
The Company’s estimate of expected credit losses on its $4,160,000 exposure to Lion Energy requires significant management judgment due to the borrower-specific nature of the exposure, the Company’s subordinated position relative to the senior secured lender, limited access to certain current financial, operating, and collateral information, and uncertainty regarding future recovery outcomes. As described in Note 3 to the condensed consolidated financial statements, management identified changes in facts and circumstances during the six months ended June 30, 2026.
Management estimated the allowance using a probability-weighted analysis that considered full, partial, and no-recovery scenarios. The most sensitive assumptions include the probabilities assigned to the recovery scenarios and the estimated recovery for each outcome. Based on the latest reliable information available as of June 30, 2026, management estimated probability-weighted recovery rate of approximately 40% and recorded an allowance for credit losses of approximately $2,496,000.
The estimate remains highly subjective and subject to substantial uncertainty. Actual recoveries and realized credit losses could differ materially from the recorded allowance based on collateral realization, recovery costs, market conditions, the availability and enforceability of credit support, and other developments affecting the Company’s recovery. Changes in any of these assumptions or factors could result in a material adjustment to the allowance for credit losses in future periods.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, management, including our chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three month period ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| Risk Factors |
Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 includes certain risk factors that could materially affect our business, financial condition or future results. There have been no material changes to those risk factors, except as described below:
We will need additional financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at all. As of June 30, 2026, we had cash and cash equivalents of approximately $4,744,000, current liabilities of $2,828,000 and working capital of $4,047,000. As of the date of this report, we believe that we will require additional capital in order to fund our current level of ongoing costs and our proposed business plan over the next 12 months as we move forward with our business strategy. We intend to acquire the necessary capital through debt financing, sale of assets or through the sale of equity. Funding that includes the sale of our equity may be dilutive. If such funding is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations, in which case you may lose your entire investment.
The report of our independent registered public accounting firm for the year ended December 31, 2025 states that there is substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
Our allowance for credit losses related to our Lion Energy exposure may not be adequate to cover actual credit losses, which could adversely affect our financial condition and results of operations. As of June 30, 2026, we had approximately $4,160,000 of gross amortized-cost exposure related to Lion Energy through a subordinated participation interest, including accrued interest. During the second quarter of 2026, the senior loan position and participation-related rights and obligations were assigned to an entity that we believe is affiliated with an owner of Lion Energy. Following the assignment, our access to certain current financial, operating, and collateral information concerning Lion Energy was significantly reduced. Consequently, our estimate of expected credit losses is based on the latest reliable information available to us.
In accordance with U.S. GAAP, we maintain an allowance for expected credit losses under the CECL model. As of June 30, 2026, we recorded an allowance for credit losses of approximately $2,496,000 related to the Lion Energy exposure. The estimate requires significant management judgment, including judgments regarding the probabilities and estimated recoveries associated with potential full, partial, and no-recovery outcomes.
Actual credit losses could exceed the recorded allowance due to changes in collateral values, recovery costs, market and operating conditions, the availability and enforceability of credit support, the senior lender’s priority claim, the outcome of commercial or legal recovery efforts, the unavailability of additional information regarding Lion Energy's financial condition and operations, and other circumstances beyond management’s control. If actual recoveries are lower than estimated, we may be required to record additional material provisions for credit losses in future periods, which could materially adversely affect our financial condition, results of operations, and liquidity.
| Other Information |
During the quarter ended June 30, 2026, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
| Exhibit |
Description |
Method of Filing |
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| 3.1 |
First Amended and Restated Certificate of Incorporation of the Registrant |
Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 9, 2015. |
| 3.2 |
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on January 21, 2022. |
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| 3.3 |
Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 25, 2015. |
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| 3.4 |
Certificate of Amendment to the First Amended and Restated Certificate of Incorporation |
Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2019 |
| 3.5 | Certificate of Amendment to the First Amended and Restated Certificate of Incorporation | Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q filed on July 21, 2022 |
| 3.6 | Certificate of Amendment to the First Amended and Restated Certificate of Incorporation | Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q filed on August 13, 2025 |
| 31.1 |
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Filed electronically herewith |
| 31.2 |
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Filed electronically herewith |
| 32.1 |
Filed electronically herewith |
|
| 101.INS |
Inline XBRL Instance Document |
Filed electronically herewith |
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
Filed electronically herewith |
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
Filed electronically herewith |
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
Filed electronically herewith |
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
Filed electronically herewith |
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
Filed electronically herewith |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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AQUA METALS, INC. |
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| Date: |
July 30, 2026 | By: |
/s/ Stephen Cotton |
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Stephen Cotton, |
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President, Chief Executive Officer and Director |
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| Date: |
July 30, 2026 | By: |
/s/ Eric West |
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Eric West, |
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Chief Financial Officer |
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(Principal Financial Officer) |