Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-213501
and
462(b) MEF 333-231355
PROSPECTUS
SUPPLEMENT
(to the Prospectus dated September 26, 2016)
Shares
of Common Stock
We
are selling 11,000,000 shares of our common stock. Our common stock is listed on the NASDAQ Capital Market under the symbol
“AQMS.” On May 8, 2019, the last reported sales price of our common stock on the NASDAQ Capital Market was $2.59 per
share.
Investing
in our securities involves a high degree of risk. Before making an investment decision, you should carefully review and consider
all of the information set forth in this prospectus supplement, the accompanying prospectus and the documents incorporated by
reference herein and therein, including the risks and uncertainties described under “Risk Factors” beginning on page S-7
of this prospectus supplement and the risk factors incorporated by reference into this prospectus supplement and the accompanying
prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
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Per Share
|
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Total
|
|
Public Offering Price
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$
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2.00
|
|
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$
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22,000,000
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Underwriting Discount (1)
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$
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0.13
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$
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1,430,000
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Proceeds to Us (Before Expenses)
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$
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1.87
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$
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20,570,000
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(1)
|
See “Underwriting”
for additional information about the underwriter compensation arrangements.
|
We
have granted the underwriters an option to purchase up to an additional 1,650,000 shares of common stock from us at the
public offering price less the underwriting discounts and commissions, and on the same terms and conditions as set forth above,
for 30 days after the date of this prospectus supplement. If the underwriters exercise the option in full, the total public
offering price will be $25,300,000, the total underwriting discounts and commissions will be $1,644,500, and the
total proceeds, before expenses, to us will be $23,655,500.
The
underwriters expect to deliver the shares against payment through the facilities of the Depository Trust Company on or about May
14, 2019.
Sole
Book-running Manager
Oppenheimer
& Co.
Co-Manager
National
Securities Corporation
The
date of this prospectus supplement is May 10, 2019.
TABLE
OF CONTENTS
Prospectus
Supplement
Base
Prospectus
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying base prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission (the “SEC”) utilizing a “shelf” registration process. Each time we conduct
an offering to sell securities under the accompanying base prospectus we will provide a prospectus supplement that will contain
specific information about the terms of that offering, including the price, the amount of securities being offered and the plan
of distribution. The shelf registration statement was initially filed with the SEC on September 2, 2016, and was declared
effective by the SEC on September 26, 2016. This prospectus supplement describes the specific details regarding this offering
and may add, update or change information contained in the accompanying base prospectus. The accompanying base prospectus provides
general information about us and our securities, some of which, such as the section entitled “Plan of Distribution,”
may not apply to this offering. This prospectus supplement and the accompanying base prospectus are an offer to sell only the
securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making offers
to sell or solicitations to buy our common stock in any jurisdiction in which an offer or solicitation is not authorized or in
which the person making that offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an offer
or solicitation.
If
information in this prospectus supplement is inconsistent with the accompanying base prospectus or the information incorporated
by reference with an earlier date, you should rely on this prospectus supplement. This prospectus supplement, together with the
base prospectus, the documents incorporated by reference into this prospectus supplement and the accompanying base prospectus
and any free writing prospectus we have authorized for use in connection with this offering include all material information relating
to this offering. We have not, and the underwriters have not, authorized anyone to provide you with different or additional information
and you must not rely on any unauthorized information or representations. You should assume that the information appearing in
this prospectus supplement, the accompanying base prospectus, the documents incorporated by reference in this prospectus supplement
and the accompanying base prospectus and any free writing prospectus we have authorized for use in connection with this offering
is accurate only as of the respective dates of those documents. Our business, financial condition, results of operations and prospects
may have changed since those dates.
You should carefully read this prospectus supplement, the accompanying base prospectus
and the information and documents incorporated herein by reference herein and therein, as well as any free writing prospectus
we have authorized for use in connection with this offering, before making an investment decision. See “Incorporation of
Certain Documents by Reference” and “Where You Can Find More Information” in this prospectus supplement and
in the accompanying base prospectus
.
This
prospectus supplement and the accompanying base prospectus contain summaries of certain provisions contained in some of the documents
described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in
their entirety by the full text of the actual documents, some of which have been filed or will be filed and incorporated by reference
herein. See “Where You Can Find More Information” in this prospectus supplement. We further note that the representations,
warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference
into this prospectus supplement or the accompanying base prospectus were made solely for the benefit of the parties to such agreement,
including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to
be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as
of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing
the current state of our affairs.
This
prospectus supplement and the accompanying base prospectus contain and incorporate by reference certain market data and industry
statistics and forecasts that are based on Company-sponsored studies, independent industry publications and other publicly available
information. Although we believe these sources are reliable, estimates as they relate to projections involve numerous assumptions,
are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under “Risk
Factors” in this prospectus supplement and the accompanying base prospectus and under similar headings in the documents
incorporated by reference herein and therein. Accordingly, investors should not place undue reliance on this information.
Unless
otherwise stated or the context requires otherwise, all references in this prospectus supplement to the “Company,”
“we,” “us,” “our” and “Aqua Metals” refer to Aqua Metals, Inc., a Delaware corporation,
and its wholly-owned subsidiaries. We own the trademark applications for our corporate name “Aqua Metals” and the
terms “AquaRefining”, “AquaRefinery” and “AquaRefine”. All other trademarks, trade names and
service marks included or incorporated by reference into this prospectus supplement, the accompanying base prospectus and any
applicable free writing prospectus are the property of their respective owners.
PROSPECTUS
SUPPLEMENT SUMMARY
This
prospectus summary highlights information contained elsewhere in this prospectus supplement, the accompanying base prospectus
and the documents incorporated by reference herein and therein. This summary does not contain all of the information that you
should consider before deciding to invest in our securities. You should read this entire prospectus supplement and the accompanying
base prospectus carefully, including the section entitled “Risk Factors” beginning on page S-7 and our consolidated
financial statements and the related notes and the other information incorporated by reference into this prospectus supplement
and the accompanying base prospectus, before making an investment decision.
In
February 2017, we entered into a series of agreements with Johnson Controls Battery Group, Inc. and commenced discussions and
negotiations with Johnson Controls to develop an appropriate program blueprint, and enter into a definitive development program
agreement reflecting that blueprint, pursuant to which we will provide to Johnson Controls and certain strategic partners of Johnson
Controls certain licensing, sale and services of our AquaRefining technologies and equipment. In May 2019, the assets and operations
of Johnson Controls Battery Group, Inc., including our agreements and collaboration with Johnson Controls, were sold to Clarios,
a newly-organized battery and power solutions company formed by Brookfield
Business Partners LP.
In this prospectus supplement, we refer to Clarios, as the successor to
Johnson Controls Battery Group, Inc., when referring
to agreements, actions or discussions between us and Johnson Controls Battery Group, Inc., whether prior to or following the latter’s
transfer of assets to Clarios.
Our
Company
We
are engaged in the business of recycling lead through a novel, proprietary process that we developed and named “AquaRefining”.
Lead is a globally traded commodity with a worldwide market value in excess of $20 billion. Lead acid batteries, or LABs, are
the primary consumer use of all lead produced in the world. Because the chemical and metallurgical properties of lead allow it
to be recycled and reused indefinitely, LABs are also the dominant feed source for lead production across the world. As such,
LABs are almost 100% recycled for purposes of capturing the lead contained therein for re-use. Our proprietary AquaRefining process
provides for the recycling of LABs and the production of a high purity lead with fewer environmental and regulatory issues than
is possible with conventional methods of lead production.
In
recent years, recycled lead has become increasingly important to LAB production. Recycled lead surpassed mined lead in the 1990s
and now represents more than 60% of the lead content in new LABs. Whether it is produced from lead ore or recycled LABs, lead
has historically been produced by smelting. Smelting is a high-temperature, metallurgical/chemical reduction, energy intensive
and often a highly polluting process. As a consequence of the environmental and health issues, lead smelting has become increasingly
regulated in many countries. In the U.S., regulatory non-compliance has forced the closure of large lead smelters in Vernon, California,
Frisco, Texas and Herculaneum, Missouri over the last several years. In response to increasing environmental regulation over the
past three decades, there has been an expansion of LAB smelting capacity in Mexico and other less regulated countries. The resulting
transportation of used LABs from where they originate in the U.S. to smelters in Mexico, South Korea, the Philippines and elsewhere
is an increasingly significant logistical and global environmental cost.
LAB’s
require two forms of lead. High purity lead is required for the active material and lead alloy is required for the lead grids
which support the active material. Conventionally, lead for use as the active material was produced from lead ore which is known
as “primary lead”. The Herculaneum smelter was the last US-based producer of primary lead. This closure is part of
a worldwide trend in which production of primary lead is failing to keep up with demand as primary lead ore bodies become worked
out and lead ore (galena or lead sulfide) is supplemented with lower purity lead concentrates produced as a byproduct of other
metal production (typically zinc and copper).
Conventional
lead recycling produces a grade of lead of moderate purity, known as “secondary lead”. Secondary lead can be further
processed to reach a level of purity suitable for use as the active material in a LAB or alloyed before it can be used as grid
material in a LAB. The additional processing requires additional cost and brings further inefficiency, loss of material and the
potential for further environmental impact. As applications for LABs develop and expand, beyond their use simply as engine starter
batteries, factors such as energy storage capacity, depth of discharge and cycle life become increasingly important. The more
advanced LABs typically require higher purity lead. In turn, this has started to drive increasing worldwide demand for lead previously
supplied as primary lead, produced from galena.
AquaRefining
uses a novel, proprietary and patented process which first produces a water-based and bio-degradable lead rich electrolyte, from
which lead is electro-plated. The combination of the electrolyte production and the electro-plating processes produces lead of
a purity which is equivalent to primary lead (i.e., higher than 99.99% purity). As such, we believe that AquaRefining reduces
environmental plant emissions, health concerns and permitting needs compared with lead smelting. We believe that the combined
advantages offered by AquaRefining represent a potential step change in lead recycling technology and recovered product quality,
one that can deliver advantages in footprint and logistics while reducing the environmental impact of lead recycling.
The
modular nature of AquaRefining makes it possible both to start LAB recycling at a smaller scale than is possible with a typical
smelter setup, and to add AquaRefining to existing battery recycling operations to expand production capacity or to reduce smelting
processes. Our plan is to pursue two complementary business streams. The first is to supply AquaRefining and supporting equipment
to third parties to supplement or replace smelting in their battery recycling operations. We intend to pursue this at least initially
through our relationship with Clarios, a newly formed battery and energy solutions company that is the successor to Johnson Controls
Battery Group Inc., with which we are in discussions centered on the addition of AquaRefining to one of its existing battery recycling
operations, and intend to pursue similar arrangements with other companies operating recycling operations. The second is to expand
our own lead recycling operations at the Tahoe Regional Industrial Center, McCarran, Nevada, or TRIC, subject to our receipt of
additional capital following this offering.
We
completed the development of our first LAB recycling facility at TRIC and commenced production of battery breaking and limited
operations during the first quarter of 2017. The TRIC facility now produces varying products for commercial sale primarily consisting
of ingoted AquaRefined lead, ingoted lead bullion, lead compounds and plastics. In April 2017, we commenced the shipment of products
for sale, consisting of metallic lead, lead compounds and plastics. In April 2018, we commenced the limited production of cast
lead bullion, representing a mixture of lead purchased to prime our kettles and AquaRefined lead from our AquaRefining process.
In June 2018, we commenced the sale of pure AquaRefined lead in the form of two tonne blocks, and in October 2018 we commenced
the sale of AquaRefined lead in the form of battery manufacturing ready ingots. In November 2018, we received official vendor
certification from Clarios for our AquaRefined lead and in December 2018 we commenced shipments directly to Clarios- owned and
partner battery manufacturing facilities.
As
of the date of this prospectus supplement, we have installed 16 AquaRefining modules at TRIC. Commencing in June 2018, we adopted
an operational strategy of limiting the operation of the AquaRefining modules to one or a few at a time as we continued to adjust
the AquaRefining modules to enhance their operation. Since we had been operating at a negative contribution margin, we believed
this operational strategy would allow us to continue AquaRefined lead production for the Clarios certification process and control
costs, while enabling the remaining components of the plant to be upgraded in support of planned increases in production at improved
margins due to these upgrades. Between June 2018 and March 2019, we operated the first four of the 16 modules from time to time
and made continuous improvements which led to individual modules running in a steady state producing 100Kg/hour for several days
at a time. Between October and December 2018, we operated one or two AquaRefining Modules at a time on a 24/7 basis. During
the first quarter of 2019, we ran one or two modules at a time 24-hours a day, four days a week to allow safe times for some of
the key work to be completed for our contribution margin improvement projects. During the first quarter of 2019, we installed
a new filter press and a new centrifuge to provide continuous production of the concentrate to the AquaRefining modules, which
should also lower our cost of production.
As
of the date of this prospectus supplement, we are operating up to four of our initial modules on a 24-hour, seven days a week
basis, and have begun the process to roll out modules five through eight to achieve up to 50% of total current plant capacity.
This process will be repeated until full production is reached with all 16 modules. Our goal is to operate all 16 modules on a
24/7 continuous basis by the end of 2019. However, due to the delays and unforeseen issues in the completion of the AquaRefining
production line we have experienced to date, there can be no assurance that we will not encounter additional delays and issues.
As
we endeavor to bring the AquaRefining modules online, we continue our efforts to complete and commission infrastructure and operational
improvements intended to improve the contribution margin for our AquaRefined lead production. These infrastructure
and operational improvements are expected to allow us to recover and recycle our chemical feedstock more efficiently, which should
further improve our contribution margin. In March 2019, we announced that we completed Phase One of our two-phase capital improvement
program. Electrolyte recovery is critical to achieving positive contribution margin and during the first quarter of 2019 we were
conserving 67% of our target for electrolyte recovery. From the capital improvements made in phase one we expect to conserve 75%
of our target for electrolyte recovery starting in second quarter of 2019 and conserve 100% of our target when we complete Phase
Two sometime during the second half of 2019. We have already run a successful pilot program for the Phase Two solution of our
capital improvement program, which, along with conserving additional electrolyte, should generate higher lead yields for our AquaRefining
process, also improving contribution margin.
Our
plan of operations for the 12-month period following the date of this prospectus supplement is to complete the commercial roll-out
of all 16 AquaRefining modules installed at TRIC and to ramp up the production of AquaRefined lead. We also intend to install
an additional 16 AquaRefining modules at TRIC, subject to the receipt of additional capital and any design improvements that
are recommended based on the operation of the first 16 modules. Additionally, we plan to further improve the plant economics by
processing a growing proportion of the metallic lead we recover from breaking batteries within the AquaRefinery and by
utilizing the third of our six kettles in the refining area commissioned in the first quarter of 2019. We believe the continuation
of this program will improve contribution margin by enabling us to finish a growing proportion of these materials in-house. We
announced in March 2019, the first full production run of lead bullion from our newly commissioned third kettle.
In
parallel with our efforts to commercialize our existing AquaRefining operations, our 12-month plan of operations also includes
our proposal to license our technology and to provide planning, engineering, technical assistance, equipment and other services
in support of the addition of an AquaRefining facility to a battery recycling facility owned by Clarios. Licensing could take
the form of either a co-processing arrangement whereby we operate our technology in conjunction with an existing smelter or our
licensee operates directly by utilizing our technology. We are currently discussing with Clarios an appropriate program blueprint,
and we intend to enter into a definitive development program agreement reflecting that blueprint, pursuant to which we will provide
to Clarios and certain strategic partners of Clarios certain licensing, sale and services of our AquaRefining technologies and
equipment. However, there can be no assurance that we will be able to conclude a definitive development agreement with Clarios
on terms that benefit us, if at all. See “Risk Factors – Risks Related to Our Business.”
Our
12-month plan of operations also includes the pursuit and evaluation of additional strategic relationships, in addition to our
recently announced relationship with Veolia, and the licensing of our technology and the provision of equipment and services to
other potential strategic partners. However, there can be no assurance that we will be able to effect any of these additional
partnerships in the future on commercially reasonable terms, or at all.
Recent
Developments
Veolia
Agreement
After
several months of engaging in extensive diligence and engineering evaluations, on February 26, 2019, we entered into an Operations,
Management and Maintenance Agreement with Veolia North America Regeneration Services LLC, or Veolia, to provide operations, maintenance
and management services at our AquaRefining facility in McCarran, Nevada.
Veolia
contributes operational and technological expertise and organizational capabilities in aqueous-based process chemistries and electrolysis
along with assumption of responsibility for operations, supply chain, offtake and management of the plant. Veolia employees began
working onsite starting March 4, 2019 at the McCarran facility. In addition to receiving expertise and support from Veolia overall,
the agreement provides for Veolia to relocate up to six full-time employees with operations, process engineering and management
expertise to join the Aqua Metals team at AquaRefinery in McCarran, Nevada. Veolia has assumed the primary responsibility for
scaling the facility through the remainder of 2019 to the goal of operating 16 modules on a continuous basis. The agreement also
provides for Veolia and Aqua Metals to work together to plan in 2019 and complete the expansion of the TRIC facility to 32 AquaRefining
modules in 2020.
We
believe the Veolia agreement will allow us to leverage off Veolia’s supply chain and offtake and waste stream buying power
and expertise. The intention of the parties is to grow the relationship where Veolia will serve as our go-to-market execution
partner to staff and manage AquaRefining facilities with mutually agreed performance metrics for Aqua Metals and our partners.
We expect this will begin with the first facility we deploy with Clarios.
2019
Stock Incentive Plan
At
our annual meeting of stockholders held on March 27, 2019, our stockholders approved our 2019 Stock Incentive Plan, or the 2019
Plan. The 2019 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of our
common stock and for the grant of restricted and unrestricted share grants and restricted stock units. We reserved 4,500,000 shares
of our common stock under the 2019 Plan. The purpose of the 2019 Plan is to provide eligible participants with an opportunity
to acquire an ownership interest in our company. All officers, directors, employees and consultants to our company are eligible
to participate under the 2019 Plan. The 2019 Plan provides that options may not be granted at an exercise price less than the
fair market value of our common shares on the date of grant. As of the date of this prospectus supplement, we have granted options
to purchase 1,510,000 shares of common stock under the 2019 Plan.
Clarios
Key-Man Penalties
On
April 19, 2018, Stephen Clarke resigned as our president and chief executive officer and on December 3, 2018 Selwyn Mould
resigned as our chief operating officer. As a result of their resignations, Clarios claimed that we became obligated to
pay up to $2 million to Clarios, payable, at our option, in cash or shares of our common stock. We have agreed to settle the Clarios
key-man penalty claim through our issuance of 807,436 shares of our common stock, which we intend to issue during the week of
May 13, 2019. The key-man penalty claim was previously accrued on our financial statements.
Charter
Amendment
At
a special meeting of stockholders held on May 9, 2019, our stockholders approved an amendment to our Amended and Restated Certificate
of Incorporation to effect an increase in the number of authorized shares of our common stock from 50,000,000 to 100,000,000.
On May 9, 2019, we effected the increase in authorized common stock through our filing of the amendment with the Delaware Secretary
of State.
Our
principal executive offices are located at 2500 Peru Drive, McCarran, Nevada 89437, and our telephone number is (775) 525-1936.
Our website is www.aquametals.com. Information contained in, or accessible through, our website does not constitute part of this
prospectus supplement and inclusions of our website address in this prospectus supplement are inactive textual references only.
The
Offering
The
following is a brief summary of some of the terms of the offering and is qualified in its entirety by reference to the more detailed
information appearing elsewhere in this prospectus supplement and the accompanying base prospectus. For a more complete description
of the terms of our common stock, see “The Securities We May Offer” in the accompanying base prospectus.
Common
stock offered by us
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|
11,000,000
shares of our common stock (12,650,000 shares if
the underwriters exercise their over-allotment option in full).
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Offering
price
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$2.00 per share of common stock.
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Common
stock to be outstanding after this offering
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55,727,697
shares (57,377,697 shares if the underwriters exercise
their over-allotment option in full).
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Use
of proceeds
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We
estimate that our net proceeds from this offering will be approximately $20,220,000 (or approximately $23,305,500
if the underwriters exercise their over-allotment option in full), after deducting the underwriting discount and the estimated
offering expenses payable by us. We expect to use the net proceeds from this offering for working capital, which
could include capital expenditures related to addressing operational efficiencies and the expansion of production activities
at TRIC, and general corporate purposes. See “Use of Proceeds” on page S-19.
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Risk
factors
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Investing
in our common stock involves a high degree of risk. These risks include all of the risks typically relating to an early
stage company, including our ability to develop and commercialize novel and unproven technologies, bring modules online, ramp
up production and profitably operate our AquaRefining process on a commercial scale, securities class action lawsuits and
shareholder derivative lawsuits and our ability to conclude a development agreement with Clarios or other strategic partners. They
also include our need to raise additional funds, claims by Interstate Battery that we are in breach of a negative covenant,
and our ability to comply with our debt service covenant with Green Bank. See “Risk Factors” beginning
on page S-7 and the other information included or incorporated by reference in this prospectus supplement and the accompanying
base prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.
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NASDAQ
Capital
Market
symbol
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“AQMS”
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The
number of shares of our common stock expected to be outstanding after this offering is based on 44,727,697 shares of common stock
outstanding as of March 31, 2019, and excludes the following:
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●
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3,440,437 shares
of common stock issuable upon exercise of options outstanding as of March 31, 2019, which have a weighted average exercise
price of $3.94 per share;
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●
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244,785 shares of
common stock issuable upon vesting of restricted stock units as of March 31, 2019;
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●
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24,584 shares of
common stock reserved for issuance and available for future grant under our 2014 Stock Incentive Plan as of March 31, 2019;
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●
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2,990,000 shares
of common stock reserved for issuance and available for future grant under our 2019 Stock Incentive Plan as of March 31, 2019;
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●
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242,835 shares of
common stock reserved for issuance under our Officer and Director Share Purchase Plan as of March 31, 2019; and
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●
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2,444,328 shares
of common stock issuable upon exercise of warrants outstanding as of March 31, 2019, which have a weighted average exercise
price of $7.08 per share.
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Unless
otherwise stated or the context requires otherwise, all information in this prospectus supplement assumes that the option to purchase
up to 1,650,000 additional shares of common stock that we have granted to the underwriters is not exercised.
RISK
FACTORS
Investing
in our common stock involves a high degree of risk. Before purchasing our common stock, you should read and consider carefully
the following risk factors as well as all other information contained and incorporated by reference in this prospectus supplement
and the accompanying base prospectus, including our consolidated financial statements and the related notes. Each of these risk
factors, either alone or taken together, could adversely affect our business, operating results and financial condition, as well
as adversely affect the value of an investment in our common stock. There may be additional risks that we do not presently know
of or that we currently believe are immaterial, which could also impair our business and financial position. If any of the events
described below were to occur, our financial condition, our ability to access capital resources, our results of operations and/or
our future growth prospects could be materially and adversely affected and the market price of our common stock could decline.
As a result, you could lose some or all of any investment you may make in our common stock.
Risks
Related to Our Business
Since
we have a limited operating history and have only recently commenced revenue producing operations, it is difficult for potential
investors to evaluate our business
. We formed our corporation in June 2014 and only commenced revenue producing operations
in the first quarter of 2017. From inception through March 31, 2019, we generated a total of $6.9 million of revenue, all
of which was derived primarily from the sale of lead compounds and plastics and, to a lesser extent, the sale of lead bullion
and Aqua Refined lead. To date, our operations have primarily consisted of the development and testing of our AquaRefining process,
the construction of our initial LAB recycling facility at TRIC, the continuing development of our LAB recycling operations at
TRIC and limited revenue producing operations as we bring those LAB recycling operations online. Our limited operating history
makes it difficult for potential investors to evaluate our technology or prospective operations. As an early stage company, we
are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays in a new
business, including, without limitation:
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the
timing and success of our plan of commercialization and the fact that we continue to
experience delays in ramping up our LAB recycling operations at TRIC;
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●
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our
ability to bring modules online and ramp up production on a commercial scale;
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●
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our
ability to profitably operate our AquaRefining process on a commercial scale;
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●
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our
ability to realize the expected benefits of our strategic partnerships with Clarios and
Veolia;
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●
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our
ability to procure LABs in sufficient quantities at competitive prices; and
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●
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our
ability to receive proper certification from and meet the requirements of our customers
regarding the purity of our AquaRefined lead.
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Investors
should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive environment.
There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability.
Our
business is dependent upon our successful implementation of novel and unproven technologies and processes and there can be no
assurance that we will be able to implement such technologies and processes in a manner that supports the successful commercial
roll-out of our business model
. While much of the technology and processes involved in our lead recycling operations are
widely used and proven, the AquaRefining component of our lead recycling operations is largely novel and unproven. While we have
shown that our proprietary technology can produce AquaRefined lead on a small scale, we have only recently completed, and put
into limited operation, the processes that we believe will support the production of AquaRefined lead on a commercial scale. Further,
as we complete our AquaRefining production line, we continue to encounter unforeseen complications that have delayed the ramping
up of our AquaRefining modules and the integration of our AquaRefining process with the traditional lead recycling operations.
There can be no assurance that we will be able to overcome these production and performance issues in a timely manner or that
we will not encounter additional unforeseen complications that will cause further delays in our planned commercial roll-out of
all 16 AquaRefining modules installed at TRIC and to ramp up the production of AquaRefined lead.
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 March 31, 2019, we had total cash of $15.3 million and working capital
of $9.9 million. As of the date of this prospectus supplement, and after giving effect to the net proceeds of this offering, we
believe that we have working capital sufficient to fund our current level of operations at TRIC over the next twelve months. However,
we will require additional capital in order to increase production of AquaRefined lead at TRIC beyond the planned 16 modules,
to work with Clarios on equipment integration and licensing to third parties and to fund our continued losses from operations
until such time as we are able to achieve positive cash flow from operations. There can be no assurance that we will be able to
acquire the necessary funding on commercially reasonable terms or at all. There can also be no assurance we will be able
to conclude the proposed development agreement with Clarios. We intend to seek additional funds through various financing sources,
including the sale of our equity and debt securities, licensing fees for our technology, joint ventures with capital partners
and/or project financing of our recycling facilities. However, there can be no assurance that such funds will be available on
commercially reasonable terms, if at all. 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.
Veolia
currently plays a substantial role in the operation and management of our TRIC facility and will potentially play a substantial
role in any future facilities we may develop, and there can be no assurance that we will realize the intended benefits of our
relationship with Veolia or, if we do, that we will not develop a dependency on Veolia
. In February 2019, we entered into
an Operations, Management and Maintenance Agreement with Veolia North America Regeneration Services, LLC, or Veolia. Pursuant
to the Agreement, Veolia will provide operations, maintenance and management services at our AquaRefining facility at TRIC. We
expect Veolia to contribute operational and technological expertise and organizational capabilities in aqueous based process chemistries
and electrolysis along with taking on responsibility for operations, supply chain, offtake and management of the plant. While
we believe the Agreement will allow us to leverage Veolia’s operations and process engineering expertise and supply chain,
offtake and waste stream buying power and expertise, there can be no assurance that we will realize the expected benefits our
agreement with Veolia. In addition, we have agreed to potentially grant Veolia the right of first refusal to operate and manage
any future facilities developed or licensed by us. It is our expectation that Veolia will serve as our go-to-market execution
partner to staff and manage AquaRefining facilities with mutually agreed performance metrics for Aqua Metals and our partners.
In the event Veolia is successful in operating and managing the recycling facilities developed by us and our licensees, there
is a risk that we will become dependent on Veolia for the operational and managerial expertise and labor. There can be no assurance
that Veolia will be successful in managing our recycling facilities and those of our partners. There can also be no assurance
that Veolia will continue to provide such services in the future, in which case the loss of Veolia as our service provider could
cause a serious disruption in our operations.
There
can be no assurance that we will be able to negotiate a long-term agreement with Veolia, in which case we may lose Veolia’s
services at the end of the two-year term of our initial agreement
. Our Operations, Management and Maintenance Agreement
(the “Agreement”) with Veolia is for a two-year term. Pursuant to the Agreement, we have agreed to enter into good
faith negotiations for a longer-term version of the Agreement that will provide for Veolia’s management and operation of
the TRIC facility for a ten-year term, including expanding our TRIC facility to 32 AquaRefining modules. We have agreed with Veolia
to use our good faith commercial best-efforts to conclude negotiations for the long-term agreement by September 30, 2020. We have
also agreed to enter into good faith negotiations with Veolia for a long-term agreement concerning Veolia’s participation
in the commercial licensing and management of our future AquaRefining facilities developed by licensees of Aqua Metals. We have
agreed with Veolia to use our good faith commercial best-efforts to conclude negotiations for the long-term licensing and future
facilities agreement by June 30, 2020. There can be no assurance that we will be able to negotiate and conclude definitive long-term
agreements with Veolia on commercially reasonable terms, or at all. If we are unable to conclude long-term agreements with Veolia
by the designated dates, it is likely that we will lose Veolia as the operator and manager of our TRIC facility.
Additionally,
pursuant to the Agreement, Veolia may elect to terminate the Agreement in the event that we fail to secure sufficient financing
by September 30, 2019. The purpose of the financing is to implement the expansion of our TRIC facility to 32 AquaRefining modules.
There can be no assurance that we will be able to secure sufficient financing by September 30, 2019. If we are unable to do so,
we may not only lose Veolia as our partner to manage the TRIC facility, but we also may not be able to expand our TRIC facility
to 32 AquaRefining modules by 2020.
We
are subject to restrictive debt covenants that may limit our ability to run our business, finance our capital needs and pursue
business opportunities and activities
. As of the date of this prospectus supplement, we are indebted to Green Bank for
approximately $9.5 million, which is secured by liens on substantially all of our assets. The credit agreement governing such
indebtedness contains covenants that limit our ability to take certain actions. These covenants could limit our ability to finance
our future operations and capital needs and our ability to pursue business opportunities and activities that may be in our interest.
If we breach any of these covenants, the debt holder could declare a default under the credit agreement, in which case all of
the indebtedness may then become immediately due and payable. If the debt under the credit agreement is accelerated, we may not
have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, since all of the indebtedness to
Green Bank is secured by substantially all of our assets, a default under the credit facility could enable the debt holder to
foreclose on its security interest and attempt to seize our assets. The affirmative and negative debt covenants could materially
adversely impact our ability to operate and finance our business. In addition, our default under any of these covenants could
subject us to accelerated debt payments or foreclosure proceedings that could threaten our ability to continue as a going concern.
Additionally,
we were not in compliance with the minimum debt service coverage ratio covenant on our loan from Green Bank as of the fiscal quarter
ends between March 31, 2017, and March 31, 2019. We received a waiver for the minimum debt service coverage ratio covenant
for those periods. While we expect to continue to receive waivers from Green Bank for non-compliance with such covenant, there
is no guarantee that we will receive such waivers. If Green Bank determines not to grant us a waiver for non-compliance in the
future, we would be in default of the loan and Green Bank would be able to accelerate the payment of all amounts under the loan.
In
the event of the acceleration of the Green Bank loan, we will need additional financing to satisfy our obligations under the loan,
which additional financing may not be available on reasonable terms or at all
. As noted above, as of the date of this
prospectus supplement, we are indebted to Green Bank for approximately $9.5 million. The credit agreement governing such indebtedness
contain various affirmative and negative covenants and if we breach any of these covenants, the debt holder could declare a default
under the credit agreement, in which case all of the indebtedness may then become immediately due and payable. If the debt under
the credit agreement is accelerated, we may not have sufficient funds to make the accelerated payments, in which case we would
be required to seek additional funds through various financing sources, most likely through the sale of our equity or debt securities.
However, there can be no assurance that such funds will be available on commercially reasonable terms, if at all. Further, any
sale of our equity or equity-linked securities will result in additional dilution to our stockholders.
Our
outstanding debt may make it difficult for us obtain additional financing using our future operating cash flow.
We currently
owe approximately $9.5 million to Green Bank as of the date of this prospectus supplement. Such indebtedness could limit our ability
to borrow additional funds to fund operations or expansion or increase the cost of any such borrowing, or both. Our inability
to conduct additional debt financing could:
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limit
our flexibility in developing our business operations and planning for, or reacting to,
changes in our business;
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increase
our vulnerability to, and reduce our flexibility to respond to, general adverse economic
and industry conditions; and
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place
us at a competitive disadvantage as compared to our competitors that are not as highly
leveraged.
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Any
of these or other consequences or events could have a material adverse effect on our ability to finance our business and our operations.
Our
business model is new and has not been proven by us or anyone else. We are engaged in the business of producing recycled lead
through a novel and unproven technology
. While the production of recycled lead is an established business, to date all
recycled lead has been produced by way of traditional smelting processes. To our knowledge, no one has successfully produced recycled
lead in commercial quantities other than by way of smelting. In addition, our lead recycling production line at TRIC is the first-of-its-kind
and neither we nor anyone else has ever successfully built a production line that commercially recycles LABs without smelting.
While we have commenced limited lead recycling operations at our TRIC facility, through March 31, 2019 all of our revenues have
been derived primarily from the sale of lead compounds and plastics and to a lesser extent, the sale of lead bullion and AquaRefined
lead. In April 2018, we commenced the limited production of cast lead bullion (mixture of lead purchased to prime the kettles
and AquaRefined lead from our AquaRefining process), and in June 2018 we commenced the sale of AquaRefined lead in the form of
two tonne blocks. In addition to the general risks associated with a novel and unproven technology, our business model is subject
to a number of related risks, including:
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our
ability to acquire sufficient quantities of used LABs at competitive prices;
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our
ability to produce AquaRefined lead that is priced competitively with lead produced by
traditional smelting;
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our
ability to produce AquaRefined lead on a commercial scale and at an adequate gross profit;
and
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our
ability to sell our AquaRefined lead at prices and in quantities that provide an adequate
net profit from operations.
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Further,
there can be no assurance that we will be able to produce AquaRefined lead in commercial quantities at a cost of production that
will provide us and our proposed licensees with an adequate profit margin. The uniqueness of our AquaRefining process and our
production line at TRIC presents potential risks associated with the development of a business model that is untried and unproven.
As of the date of this prospectus supplement, we have begun to ramp up our existing AquaRefining modules into commercial operation,
however we have experienced performance and production issues and there can be no assurance that we will be able to overcome these
production and performance issues in a timely manner or that we will not encounter additional unforeseen complications that will
cause further delays in our planned commercial roll-out of our AquaRefining modules and the ramp up the production of AquaRefined
lead.
Certain
industry participants may have the ability to restrict our access to used LABs and otherwise focus significant competitive pressure
on us
. We believe that our primary competition will come from operators of existing smelters and other parties invested
in the existing supply chain for smelting, both of which may resist the change presented by our AquaRefining process. Competition
from such incumbents may come in the form of restricted access to used LABs. We believe that LAB manufacturers who also maintain
their own smelting operations control a significant part of the market for used LABs. We will require access to used LABs at market
prices in order to carry out our business plan. If those LAB manufacturers and others involved in the reverse supply chain for
used LABs attempt to restrict our access to used LABs, that may adversely affect our prospects and future growth. There can be
no assurance that we will be able to effectively withstand the pressures applied by our competition.
Even
if we are successful in recycling lead using our processes, there can be no assurance that the AquaRefined lead will meet the
certification and purity requirements of our potential customers
. A key component of our business plan is to produce recycled
lead through our AquaRefining process of the highest purity (at least 99.99% pure lead), which we refer to as AquaRefined lead.
We believe that our AquaRefined lead will provide us with a revenue premium over the market price of lead on the London Metal
Exchange, or LME, and, more importantly, our ability to produce AquaRefined lead will be vital to confirming the efficacy and
relevancy of our proprietary technology. Our customers will require that our AquaRefined lead meet certain minimum purity standards
and, in all likelihood, require independent assays to confirm the lead’s purity. As of the date of this prospectus supplement,
we have produced limited quantities of AquaRefined lead and in November 2018 Clarios confirmed its approval of the purity of our
AquaRefined lead by providing to us official vendor approval to receive finished lead at its manufacturing facilities. However,
we have not produced AquaRefined lead in commercial quantities and there can be no assurance that we will be able to do so or,
if we are able to produce AquaRefined lead in commercial quantities, that such lead will continue to meet the required purity
standards of our customers.
While
we have been successful in producing AquaRefined lead in small volumes, there can be no assurance that we will be able to replicate
the process, along with all of the expected economic advantages, on a large commercial scale either for us or our prospective
licensees
. As of the date of this prospectus supplement, our commercial operations have primarily involved the production
of lead compounds and plastics from recycled LABs and, to a lesser extent, the sale of lead bullion and Aqua Refined lead. In
April 2018, we commenced the limited production of cast lead bullion (mixture of lead purchased to prime the kettles) and AquaRefined
lead from our AquaRefining process, and in June 2018 we commenced the sale of pure AquaRefined lead in the form of two tonne blocks.
While we believe that our development, testing and limited production to date has validated the concept of our AquaRefining process,
the limited nature of our operations to date are not sufficient to confirm the economic returns on our production of recycled
lead. There can be no assurance that the commencement of commercial production of AquaRefined lead at our TRIC facility will not
incur unexpected costs or setbacks that might restrict the desired scale of our intended operations or that we will be to produce
AquaRefined lead in commercial quantities at a cost of production that will provide us and our proposed licensees with an adequate
profit margin.
We
have completed the construction of our initial LAB recycling facility at TRIC, however we have been delayed in the ramping up
of our lead recycling operations at TRIC and we may encounter further delays
. We completed the construction of our initial
LAB recycling facility at TRIC in August 2016 and commenced the limited production of recycled lead in the first quarter of 2017.
However, we only recently commenced the limited commercial production of AquaRefined lead. We have encountered production and
performance issues that have impaired and delayed our ability to ramp up the production of AquaRefined lead. There can be no assurance
that we will not encounter additional production and performance issues in the future or, if we do, be able to overcome them in
a timely manner. In addition, since our lead recycling production line at TRIC is the first-of-its-kind, neither we nor anyone
else has ever built a facility of this nature and there can be no assurance that we will not experience additional operational
delays and issues, including significant downtime from time to time, as we progress into the commercial production of AquaRefined
lead. There can be no assurance that the commencement of commercial AquaRefining operations at our TRIC facility will not incur
unexpected costs or hurdles that might restrict the desired scale of our intended operations or negatively impact our projected
gross profit margin.
We
were able to successfully staff our operations 24/7 in April 2019, supporting continuous production of one to four AquaRefining
modules at any given time. However, as we begin to roll out modules five through eight, we may face additional delays and incur
more costs that could restrict our ability to maintain 24/7 capabilities. Such setbacks could also delay our ability to reach
our target of having 16 AquaRefining modules in operation by the end of 2019.
Our
business may be negatively affected by labor issues and higher labor costs. Our ability to maintain our workforce depends on our
ability to attract and retain new and existing employees
. As of the date of this prospectus supplement, none of our employees
are covered by collective bargaining agreements and we consider our labor relations to be acceptable. However, we could experience
workforce dissatisfaction which could trigger bargaining issues, employment discrimination liability issues as well as wage and
benefit consequences, especially during critical operation periods. We could also experience a work stoppage or other disputes
which could disrupt our operations and could harm our operating results. In addition, legislation or changes in regulations could
result in labor shortages and higher labor costs. There can be no assurance that we may not experience labor issues that negatively
impact our operations or results of operations.
Our
intellectual property rights may not be adequate to protect our business
. As of the date of this prospectus supplement,
we have secured granted/allowed patents in the following countries/regions: U.S. (9837689, allowed 14/957026 and 15/527749), Canada
(2930945), China (105981212, allowed 201680041675.8), Europe (3072180), Eurasia (allowed 201691047), South Africa (2016-04083),
Korea (101739414, 101882932, 101926033), Japan (6173595), Mexico (357027), OAPI (17808), Ukraine (118037), and Australia (2014353227,
2015350562, allowed 2017213449).
We
also have further patent applications pending in the United States and numerous corresponding patent applications pending in 20
additional jurisdictions relating to certain elements of the technology underlying our AquaRefining process and related apparatus
and chemical formulations. However, no assurances can be given that any patent issued, or any patents issued on our current and
any future patent applications, will be sufficiently broad to adequately protect our technology. In addition, we cannot assure
you that any patents issued now or in the future will not be challenged, invalidated, or circumvented.
Even
patents issued to us may not stop a competitor from illegally using our patented processes and materials. In such event, we would
incur substantial costs and expenses, including lost time of management in addressing and litigating, if necessary, such matters.
Additionally, we rely upon a combination of trade secret laws and nondisclosure agreements with third parties and employees having
access to confidential information or receiving unpatented proprietary know-how, trade secrets and technology to protect our proprietary
rights and technology. These laws and agreements provide only limited protection. We can give no assurance that these measures
will adequately protect us from misappropriation of proprietary information.
Our
processes may infringe on the intellectual property rights of others, which could lead to costly disputes or disruptions
.
The applied science industry is characterized by frequent allegations of intellectual property infringement. Though we do not
expect to be subject to any of these allegations, any allegation of infringement could be time consuming and expensive to defend
or resolve, result in substantial diversion of management resources, cause suspension of operations or force us to enter into
royalty, license, or other agreements rather than dispute the merits of such allegation. If patent holders or other holders of
intellectual property initiate legal proceedings, we may be forced into protracted and costly litigation. We may not be successful
in defending such litigation and may not be able to procure any required royalty or license agreements on acceptable terms or
at all.
Our
business strategy includes licensing arrangements and entering into joint ventures and strategic alliances, however as of the
date of this prospectus supplement we have no such agreements in place and there can be no assurance we will be able to do so
.
Failure to successfully integrate such licensing arrangements, joint ventures, or strategic alliances into our operations
could adversely affect our business
. We propose to commercially exploit our AquaRefining process, in part, by licensing
our technology to third parties and entering into joint ventures and strategic relationships with parties involved in the manufacture
and recycling of LABs, including Clarios, among others. However, as of the date of this prospectus supplement, we have not entered
into any such licensing, joint venture or strategic alliance agreements, apart from our equipment supply agreement with Clarios,
and there can be no assurance that we will be able to do so on terms that benefit us, if at all. In addition, licensing programs,
joint ventures and strategic alliances may involve significant other risks and uncertainties, including distraction of management’s
attention away from normal business operations, insufficient revenue generation to offset liabilities assumed and expenses associated
with the transaction, and unidentified issues not discovered in our due diligence process, such as product quality, technology
issues and legal contingencies. In addition, we may be unable to effectively integrate any such programs and ventures into our
operations. Our operating results could be adversely affected by any problems arising during or from any licenses, joint ventures
or strategic alliances.
There
can be no assurance that we will be able to negotiate our key agreement with Clarios on commercially reasonable terms, or at all
.
In February 2017, we entered into a series of agreements with Clarios, including an equipment supply agreement pursuant to which,
among other things, we agreed to work with Clarios on the development of a program for the conversion of Clarios and certain strategic
partners of Clarios’ existing lead smelters throughout North and South America, China and Europe to a lead recycling process
utilizing our AquaRefining technology and equipment, know-how and services. The equipment supply agreement discusses the development
of the conversion program in general terms and contemplates that the parties will enter into a definitive development program
agreement that is based on the general terms set forth in the equipment supply agreement and provides more detailed terms and
conditions, including the economic obligations and rights of each party. We have agreed not to license our AquaRefining technology
and equipment to third parties in the aforementioned regions until such time as we and Clarios have agreed on certain matters
relating to the initial conversion of a Clarios facility. Clarios and we have agreed to use good faith, commercial best-efforts
to conclude the discussion and negotiation of a development program agreement no later than April 30, 2019. Although we have passed
the specified deadline, we are continuing to work with Clarios to conclude the discussion and negotiation of the development program
agreement. The equipment supply agreement may be terminated by either party upon 60 days’ prior written notice if the parties
have not entered into the development program agreement by June 30, 2019, however we are currently discussing with Clarios an
appropriate extension to that deadline. There can be no assurance that we will be able to negotiate and conclude a definitive
development program agreement with Clarios on commercially reasonable terms, or at all.
The
division of Johnson Controls with which we interact was recently sold and there can be no assurance that the new owners of the
division will maintain the same level of interest in and commitment to the proposed joint development of our AquaRefining technologies
.
On May 1, 2019, Johnson Controls International plc announced that it had completed the sale of its battery group assets, formerly
held by Johnson Controls Battery Group, Inc., to Brookfield Business Partners L.P. The acquired battery group assets will operate
under the name Clarios. Based on our conversations with Johnson Controls, it is our understanding that the agreements and proposed
business projects between us and Johnson Controls Battery Group, Inc. are now under the control of Clarios, and that certain members
of the former management of Johnson Controls Battery Group, Inc. will be employed in similar capacities by Clarios. We have also
been advised that Clarios and Brookfield Business Partners L.P. have expressed their interest in continuing the collaboration
initiated by us and Johnson Controls Battery Group, Inc. While we have no reason to believe that Clarios and Brookfield Business
Partners L.P. do not have the same level of interest in our joint collaboration as that held by Johnson Controls Battery Group,
Inc., there can be no assurance that Clarios currently has, and will maintain, the same level of interest in our joint collaboration,
either due to their lack of interest in our technologies or the existence of competing priorities. In addition, the change of
control of the battery group may cause disruptions and distractions that adversely affect its ability to further the collaboration
initiated by us and Johnson Controls Battery Group, Inc. For these and other reasons, there can be no assurance that Johnson Controls’
sale of its battery group assets to Brookfield Business Partners L.P. will not have a material adverse effect on the collaboration
initiated by us and Johnson Controls Battery Group, Inc.
We
are dependent on a limited number of suppliers of certain materials used in our AquaRefining process and our inability to obtain
these materials as and when needed could cause a material disruption in our operations
. Our AquaRefining process involves
a significant number of elements, chemicals, solvents and other materials, in addition to used LABs. There are a limited number
of suppliers of certain materials used in our AquaRefining process and we have no agreements in place for our supply of such materials.
Our ability to conduct our AquaRefining process on a commercial scale will depend significantly on obtaining timely and adequate
supply of these materials on competitive terms. Our inability to source these materials on a timely and cost-efficient manner
could interrupt our operations, significantly limit our revenue sales and increase our costs. This factor could also impair our
ability to meet our commitments to supply our customers. Our inability to obtain these materials as and when needed could cause
a material disruption in our operations.
If
we are unable to manage future expansion effectively, our business, operations and financial condition may suffer significantly,
resulting in decreased productivity
. If our AquaRefining process proves to be commercially viable, growth and expansion
activities could place a significant strain on our managerial, administrative, technical, operational and financial resources.
Our organization, procedures and management may not be adequate to fully support the expansion of our operations or the efficient
execution of our business strategy. If we are unable to manage future expansion effectively, our business, operations and financial
condition may suffer significantly, resulting in decreased productivity.
We
may experience significant fluctuations in raw material prices and the price of our principal product, either of which could have
a material adverse effect on our liquidity, growth prospects and results of operations
. Used LABs are our primary raw
material and we believe that in recent years the cost of used LABs has been volatile at times. In addition, we believe that the
cost of used LABs can be seasonal, with prices trending lower in the winter months (as automobile owners increase their purchase
of new LABs, thereby putting a greater number of used LABs on the market) and trend higher in the spring (as the purchase of new
LABs, and supply of used LABs, decreases). Our principal product, recycled lead, has also experienced price volatility from time
to time as well. For example, the market price of lead on the LME during 2018 ranged from approximately $1,900 to $2,700 per tonne.
While we intend to pursue supply and tolling arrangements as appropriate to offset any price volatility, the volatile nature of
prices for used LABs and recycled lead could have an adverse impact on our liquidity, growth prospects and results of operations.
Global
economic conditions could negatively affect our prospects for growth and operating results
. Our prospects for growth and
operating results will be directly affected by the general global economic conditions of the industries in which our suppliers,
partners and customer groups operate. We believe that the market price of our principal product, recycled lead, is relatively
volatile and reacts to general global economic conditions. Lead prices decreased from $2,139 per tonne on May 5, 2015 to
a low of $1,554 per tonne on November 23, 2015 because of fluctuations in the market. A month later, the price per tonne
increased back up to $1,801 per tonne; the price per tonne on March 31, 2019 was $2,034. Our business will be highly dependent
on the economic and market conditions in each of the geographic areas in which we operate. These conditions affect our business
by reducing the demand for LABs and decreasing the price of lead in times of economic down turn and increasing the price of used
LABs in times of increasing demand of LABs and recycled lead. There can be no assurance that global economic conditions will not
negatively impact our liquidity, growth prospects and results of operations.
We
are subject to the risks of conducting business outside the United States. A part of our strategy involves our pursuit of growth
opportunities in certain international market locations
. We intend to pursue licensing or joint venture arrangements with
local partners who will be primarily responsible for the day-to-day operations. Any expansion outside of the US will require significant
management attention and financial resources to successfully develop and operate any such facilities, including the sales, supply
and support channels, and we cannot assure you that we will be successful or that our expenditures in this effort will not exceed
the amount of any resulting revenues. Our international operations expose us to risks and challenges that we would otherwise not
face if we conducted our business only in the United States, such as:
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increased
cost of enforcing our intellectual property rights;
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heightened
price sensitivities from customers in emerging markets;
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our
ability to establish or contract for local manufacturing, support and service functions;
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localization
of our LABs and components, including translation into foreign languages and the associated
expenses;
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compliance
with multiple, conflicting and changing governmental laws and regulations;
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foreign
currency fluctuations;
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laws
favoring local competitors;
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weaker
legal protections of contract terms, enforcement on collection of receivables and intellectual
property rights and mechanisms for enforcing those rights;
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market
disruptions created by public health crises in regions outside the United States;
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difficulties
in staffing and managing foreign operations, including challenges presented by relationships
with workers’ councils and labor unions;
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issues
related to differences in cultures and practices; and
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changing
regional economic, political and regulatory conditions.
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U.S.
Government regulation and environmental, health and safety concerns may adversely affect our business.
Our operations
in the United States will be subject to the Federal, State and local environmental, health and safety laws applicable to the reclamation
of lead acid batteries. Our facilities will have to obtain environmental permits or approvals to operate, including those associated
with air emissions, water discharges, and waste management and storage. We may face opposition from local residents or public
interest groups to the installation and operation of our facilities. In addition to permitting requirements, our operations are
subject to environmental health, safety and transportation laws and regulations that govern the management of and exposure to
hazardous materials such as the lead and acids involved in battery reclamation. These include hazard communication and other occupational
safety requirements for employees, which may mandate industrial hygiene monitoring of employees for potential exposure to lead.
Failure to comply with these requirements could subject our business to significant penalties (civil or criminal) and other sanctions
that could adversely affect our business.
In
August 2018, the Nevada Occupational Safety and Health Administration, or Nevada OSHA, delivered to us a citation and notification
of penalty. The citation listed a number of items related to our compliance with Nevada OSHA’s Lead Standard.
We reached a settlement agreement with Nevada OSHA on the amount of penalties associated with the citation. We also agreed
to engage a lead compliance expert to audit our facility at TRIC for compliance with all provision of the Lead Standard and to
generate a written report with findings of any noncompliance, recommended corrective actions, and a timeframe to correct the findings
of noncompliance. We agreed with Nevada OSHA to correct all findings of noncompliance within the timeframe proposed by the
lead compliance expert in their report. The lead compliance expert has been engaged, has visited the facility at TRIC and
is in the process of completing the written report. We intend to correct any findings of noncompliance in a timely manner.
In
the event we are unable to present and operate our AquaRefining process and operations as safe and environmentally responsible,
we may face opposition from local governments, residents or public interest groups to the installation and operation of our facilities.
The
development of new AquaRefining facilities by us or our partners or licensees, and the expansion of our operations at TRIC, will
depend on our ability to acquire necessary permits and approvals, of which there can be no assurance.
As noted above,
our AquaRefining facilities will have to obtain environmental permits or approvals to operate, including those associated with
air emissions, water discharges, and waste management and storage. In addition, we expect that our planned expansion of AquaRefining
operations at TRIC will require additional permitting and approvals. Failure to secure (or significant delays in securing) the
necessary permits and approvals could prevent us and our partners and licensees from pursuing additional AquaRefining facilities
or expanding operations at TRIC, and otherwise adversely affect our business, financial results and growth prospects. Further,
the loss of any necessary permit or approval could result in the closure of an AquaRefining facility and the loss of our investment
associated with such facility.
Our
business involves the handling of hazardous materials and we may become subject to significant fines and other liabilities in
the event we mishandle those materials
. The nature of our operations involves risks, including the potential for exposure
to hazardous materials such as lead, that could result in personal injury and property damage claims from third parties, including
employees and neighbors, which claims could result in significant costs or other environmental liability. Our operations also
pose a risk of releases of hazardous substances, such as lead or acids, into the environment, which can result in liabilities
for the removal or remediation of such hazardous substances from the properties at which they have been released, liabilities
which can be imposed regardless of fault, and our business could be held liable for the entire cost of cleanup even if we were
only partially responsible. We are also subject to the possibility that we may receive notices of potential liability in connection
with materials that were sent to third-party recycling, treatment, and/or disposal facilities under the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), and comparable state statutes,
which impose liability for investigation and remediation of contamination without regard to fault or the legality of the conduct
that contributed to the contamination, and for damages to natural resources. Liability under CERCLA is retroactive, and, under
certain circumstances, liability for the entire cost of a cleanup can be imposed on any responsible party. Any such liability
could result in judgments or settlements that restrict our operations in a manner that materially adversely effects our operations
and could result in fines, penalties or awards that could materially impair our financial condition and even threaten our continued
operation as a going concern.
We
will be subject to foreign government regulation and environmental, health and safety concerns that may adversely affect our business
.
As our business expands outside of the United States, our operations will be subject to the environmental, health and safety laws
of the countries where we do business, including permitting and compliance requirements that address the similar risks as do the
laws in the United States, as well as international legal requirements such as those applicable to the transportation of hazardous
materials. Depending on the country or region, these laws could be as stringent as those in the US, or they could be less stringent
or not as strictly enforced. In some countries in which we are interested in expanding our business, such as Mexico and China,
the relevant environmental regulatory and enforcement frameworks are in flux and subject to change. Compliance with these requirements
will cause our business to incur costs, and failure to comply with these requirements could adversely affect our business.
In
the event we are unable to present and operate our AquaRefining process and operations as safe and environmentally responsible,
we may face opposition from local governments, residents or public interest groups to the installation and operation of our facilities.
Risks
Related to Owning Our Common Stock
A
securities class action lawsuit and shareholder derivative lawsuit are pending against us and could have a material adverse effect
on our business, results of operations and financial condition
. A putative consolidated class action lawsuit and shareholder
derivative lawsuit are pending against us and certain of our current and former directors and officers. These lawsuits may divert
financial and management resources that would otherwise be used to benefit our operations. Although we deny the material allegations
in the lawsuits and intend to defend ourselves vigorously, defending the lawsuits could result in substantial costs. No assurances
can be given that the results of these matters will be favorable to us. An adverse resolution of any of these lawsuits could have
a material adverse effect on our results of operations and financial condition. In addition, we may be the target of securities-related
litigation in the future, both related and unrelated to the existing class action and shareholder derivative lawsuits. Such litigation
could divert our management’s attention and resources, result in substantial costs, and have an adverse effect on our business,
results of operations and financial condition.
We
maintain director and officer insurance that we regard as reasonably adequate to protect us from potential claims; however, we
are responsible for meeting certain deductibles under the policies and, in any event, we cannot assure you that the insurance
coverage will adequately protect us from claims made. Further, as a result of the pending litigation the costs of insurance may
increase and the availability of coverage may decrease. As a result, we may not be able to maintain our current levels of insurance
at a reasonable cost, or at all, which might make it more difficult to attract qualified candidates to serve as executive officers
or directors.
Our
common stock is thinly traded and our share price has been volatile
. Our common stock has traded on the Nasdaq Capital
Market, under the symbol “AQMS”, since July 31, 2015. Since that date, our common stock has at times been relatively
thinly traded and subject to price volatility. There can be no assurance that we will be able to successfully maintain a liquid
market for our common shares. The stock market in general, and early stage public companies in particular, has experienced extreme
price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies.
If we are unable to develop and maintain a liquid market for our common shares, you may not be able to sell your common shares
at prices you consider to be fair or at times that are convenient for you, or at all. In addition, following periods of volatility
in the market price of a company’s securities, litigation has often been brought against that company and we may become
the target of litigation as a result of price volatility. Litigation could result in substantial costs and divert our management’s
attention and resources from our business. This could have a material adverse effect on our business, results of operations and
financial condition.
We
are an “emerging growth company” under the JOBS Act of 2012 and we cannot be certain if the reduced disclosure requirements
applicable to emerging growth companies will make our common stock less attractive to investors
. We are an “emerging
growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not
“emerging growth companies” including, but not limited to:
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not
being required to comply with the auditor attestation requirements of Section 404 of
the Sarbanes-Oxley Act;
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reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy
statements;
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exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments; and
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extended
transition periods available for complying with new or revised accounting standards.
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We
have chosen to “opt out” of the extended transition periods available for complying with new or revised accounting
standards, but we intend to take advantage of all of the other benefits available under the JOBS Act, including the exemptions
discussed above. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common
stock and our stock price may be more volatile.
We
will remain an “emerging growth company until 2020, although we will lose that status sooner if our revenues exceed $1.07
billion, if we issue more than $1.07 billion in non-convertible debt in a three-year period, or if the market value of our common
stock that is held by non-affiliates exceeds $700 million as of any June 30.
Our
status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when
we need it
. Because of the exemptions from various reporting requirements provided to us as an “emerging growth
company,” we may be less attractive to investors and it may be difficult for us to raise additional capital as and when
we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our reporting
is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it,
our financial condition and results of operations may be materially and adversely affected.
We
have not paid dividends in the past and have no plans to pay dividends
. We plan to reinvest all of our earnings, to the
extent we have earnings, in order to develop our recycling centers and cover operating costs and to otherwise become and remain
competitive. We do not plan to pay any cash dividends with respect to our securities in the foreseeable future. We cannot assure
you that we would, at any time, generate sufficient surplus cash that would be available for distribution to the holders of our
common stock as a dividend. Therefore, you should not expect to receive cash dividends on our common stock.
You
will experience immediate dilution in the book value per share of the common stock you purchase
. Because the price per
share of our common stock being offered is substantially higher than the book value per share of our common stock, you will suffer
substantial dilution in the net tangible book value of the common stock you purchase in this offering. If you purchase shares
of common stock in this offering, you will suffer immediate and substantial dilution of $0.76 per share in the net tangible
book value of the common stock you purchase in this offering. See “Dilution” for a more detailed discussion of the
dilution you will incur if you purchase shares of our common stock in this offering.
Our
management will have broad discretion over the use of the net proceeds from this offering, and we may not use these proceeds effectively
or in a manner with which you agree
. We intend to use the net proceeds from this offering for working capital and general
corporate purposes. Our management will have broad discretion in the application of the net proceeds we receive from this offering,
and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used effectively
or in a manner with which you agree. The net proceeds may be used for corporate purposes that do not increase our operating results
or market value. Until the net proceeds are used, they may be placed in investments that do not produce income or that lose value.
Shares
eligible for future sale may adversely affect the market for our common stock
. Of the 44,766,883 shares of our common
stock outstanding as of the date of this prospectus supplement, approximately 40,861,114 shares are held by “non-affiliates”
and are freely tradable without restriction pursuant to Rule 144. In addition, in August 2016, we filed with the SEC a Registration
Statement on Form S-3 for purposes of registering the resale of 3,711,872 shares of restricted common stock sold to Interstate
Battery in May 2016, including 3,009,625 shares of common stock issuable to Interstate Battery upon exercise of its warrants and
conversion of its convertible note, and in February 2017, we filed with the SEC a Registration Statement on Form S-3 for purposes
of registering the resale of the 939,005 shares of restricted common stock we sold to Clarios in February 2017. Both registration
statements were declared effective by the SEC and the shares registered thereunder are eligible for sale without restriction.
Any substantial sale of our common stock pursuant to Rule 144 or pursuant to any resale prospectus may have a material adverse
effect on the market price of our common stock.
Our
charter documents and Delaware law may inhibit a takeover that stockholders consider favorable
. Provisions of our certificate
of incorporation and bylaws and applicable provisions of Delaware law may delay or discourage transactions involving an actual
or potential change in control or change in our management, including transactions in which stockholders might otherwise receive
a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. The provisions
in our certificate of incorporation and bylaws:
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limit
who may call stockholder meetings;
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do
not permit stockholders to act by written consent;
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do
not provide for cumulative voting rights;
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establish
an advance notice procedure for stockholders’ proposals to be brought before an
annual meeting, including proposed nominations of persons for election to our board of
directors; and
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provide
that all vacancies may be filled by the affirmative vote of a majority of directors then
in office, even if less than a quorum.
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In
addition, Section 203 of the Delaware General Corporation Law may limit our ability to engage in any business combination with
a person who beneficially owns 15% or more of our outstanding voting stock unless certain conditions are satisfied. This restriction
lasts for a period of three years following the share acquisition. These provisions may have the effect of entrenching our management
team and may deprive you of the opportunity to sell your shares to potential acquirers at a premium over prevailing prices. This
potential inability to obtain a control premium could reduce the price of our common stock.
Our
bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may
be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes
with the Company
. Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the
Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought
on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees
to us or our stockholders, (iii) any action asserting a claim against us or any our directors, officers or other employees arising
pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws, or (iv) any action
asserting a claim against us or any our directors, officers or other employees governed by the internal affairs doctrine. This
forum selection provision in our bylaws may limit our stockholders’ ability to obtain a favorable judicial forum for disputes
with us or any our directors, officers or other employees.
FORWARD-LOOKING
STATEMENTS
This
prospectus supplement, the accompanying base prospectus and the documents we have filed with the SEC that are incorporated by
reference herein and therein contain 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”). In addition, from time to time we or
our representatives have made or will make forward-looking statements in various other filings that we make with the SEC or in
other documents, including press releases or other similar announcements. Forward-looking statements concern our current plans,
intentions, beliefs, expectations and statements of future economic performance. Statements containing terms such as “will,”
“may,” “believe,” “do not believe,” “plan,” “expect,” “intend,”
“estimate,” “anticipate” and other phrases of similar meaning are considered to be forward-looking statements.
Forward-looking
statements are based on our assumptions and are subject to known and unknown risks and uncertainties that could cause actual results
to differ materially from those reflected in or implied by these forward-looking statements. Factors that might cause actual results
to differ include, among others, those set forth under “Risk Factors” in this prospectus supplement and those discussed
in “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in our most recent
Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and in our future periodic reports filed with the SEC,
all of which are incorporated by reference herein. Readers are cautioned not to place undue reliance on any forward-looking statements
contained in this prospectus supplement, the accompanying base prospectus or the documents we have filed with the SEC that are
incorporated by reference herein and therein, which reflect management’s views and opinions only as of their respective
dates. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes
in other factors affecting such forward-looking statements, except to the extent required by applicable securities laws. You are
advised, however, to consult any additional disclosures we have made or will make in the filings we make with the SEC, including
reports on Forms 10-K, 10-Q and 8-K. All subsequent forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained in this prospectus supplement, the accompanying
base prospectus or any related issuer free writing prospectus.
USE
OF PROCEEDS
We
estimate that our net proceeds from this offering will be approximately $20,220,000 (or approximately $23,305,500
if the underwriters exercise their over-allotment option in full), after deducting the underwriting discount and estimated
offering expenses payable by us.
We
expect to use the net proceeds from this offering for working capital, which could include capital expenditures related to addressing
operational efficiencies and the expansion of production activities at TRIC, and general corporate purposes. This represents our
best estimate of the manner in which we will use the net proceeds we receive from this offering based upon the current status
of our business, but we have not reserved or allocated amounts for specific purposes and we cannot specify with certainty how
or when we will use any of the net proceeds. Amounts and timing of our actual expenditures will depend on numerous factors, including
our success in the large-scale recycling of used LABs, operational decisions concerning the expansion of production of recycled
lead at our TRIC facility and the amount of cash we use in our operations. Our management will have broad discretion in applying
the net proceeds from this offering.
Pending
the uses described above, we intend to invest the net proceeds from this offering in short-term, investment-grade interest-bearing
securities such as money market accounts, certificates of deposit, commercial paper, and guaranteed obligations of the U.S. government.
DILUTION
If
you invest in our common stock, you will experience immediate dilution to the extent of the difference between the price per share
you pay in this offering and the net tangible book value per share of our common stock after this offering.
Our
net tangible book value as of March 31, 2019 was approximately $49.1 million, or approximately $1.10 per share. Net tangible book
value is determined by subtracting our total liabilities from our total tangible assets, and net tangible book value per share
is determined by dividing our net tangible book value by the number of outstanding shares of our common stock. After giving effect
to the sale of 11,000,000 shares of our common stock in this offering at the public offering price of $2.00 per
share, and after deducting the underwriting discount and estimated offering expenses payable by us, our adjusted net tangible
book value as of March 31, 2019 would have been approximately $69.3 million, or approximately $1.24 per share. This
represents an immediate increase in net tangible book value of approximately $0.14 per share to our existing stockholders
and an immediate dilution in net tangible book value of approximately $0.76 per share to investors participating in this
offering. The following table illustrates this calculation on a per share basis:
Public offering price per share of common stock
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$
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2.00
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Net tangible book value per share as of March 31, 2019
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$
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1.10
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Increase per share attributable to investors participating in this offering
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$
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0.14
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Adjusted net tangible book value per share after giving effect to this offering
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$
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1.24
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Dilution per share to investors participating in this offering
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$
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0.76
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If
the underwriters exercise in full their option to purchase an additional 1,650,000 shares of common stock at the public
offering price of $2.00 per share, our adjusted net tangible book value as of March 31, 2019, after giving effect to this
offering, would have been approximately $1.26 per share, representing an increase in net tangible book value of approximately
$0.16 per share to existing stockholders and immediate dilution in net tangible book value of approximately $0.74
per share to investors participating in this offering.
The
above discussion and table is based on 44,727,697 shares of common stock outstanding as of March 31, 2019, and excludes the
following:
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3,440,437 shares
of common stock issuable upon exercise of options outstanding as of March 31, 2019, which have a weighted average exercise
price of $3.94 per share;
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244,785 shares of
common stock issuable upon vesting of restricted stock units as of March 31, 2019;
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24,584 shares
of common stock reserved for issuance and available for future grant under our 2014 Stock Incentive Plan as of March 31, 2019;
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2,990,000 shares
of common stock reserved for issuance and available for future grant under our 2019 Stock Incentive Plan as of March 31, 2019;
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242,835 shares of
common stock reserved for issuance under our Officer and Director Share Purchase Plan as of March 31, 2019; and
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2,444,328 shares
of common stock issuable upon exercise of warrants outstanding as of March 31, 2019, which have a weighted average exercise
price of $7.08 per share.
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The
above illustration of dilution per share to investors participating in this offering assumes no exercise of outstanding options
or warrants to purchase our common stock. The exercise of outstanding options or warrants having an exercise or conversion price
less than the offering price would increase dilution to investors participating in this offering. In addition, we may choose to
raise additional capital depending on market conditions, our capital requirements and strategic considerations, even if we believe
we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through our
sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
UNDERWRITING
We
entered into an underwriting agreement with the underwriters named below on May 10, 2019. Oppenheimer & Co. Inc.
is acting as representative of the underwriters. The underwriting agreement provides for the purchase of a specific number of
shares of common stock by each of the underwriters. The underwriters’ obligations are several, which means that each underwriter
is required to purchase a specified number of shares, but is not responsible for the commitment of any other underwriter to purchase
shares. Subject to the terms and conditions of the underwriting agreement, each underwriter has severally agreed to purchase the
number of shares set forth opposite its name below:
Underwriter
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Number
of Shares
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Oppenheimer & Co. Inc.
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8,800,000
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National Securities Corporation
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2,200,000
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Total
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11,000,000
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The
underwriters have agreed to purchase all of the shares offered by this prospectus (other than those covered by the option described
below) if any are purchased.
The
shares of common stock offered hereby are expected to be ready for delivery on or about May 14, 2019 against payment
in immediately available funds.
The
underwriters are offering the shares subject to various conditions and may reject all or part of any order. The representative
of the underwriters has advised us that the underwriters propose to offer the shares directly to the public at the public offering
price that appears on the cover page of this prospectus supplement. After the shares are released for sale to the public, the
representative may change the offering price and other selling terms at various times.
We
have granted the underwriters an option to purchase additional shares. This option, which is exercisable for up to 30 days after
the date of this prospectus supplement, permits the underwriters to purchase a maximum of 1,650,000 additional shares from
us. If the underwriters exercise all or part of this option, they will purchase shares covered by the option at the public offering
price that appears on the cover page of this prospectus supplement, less the underwriting discounts and commissions. The underwriters
have severally agreed that, to the extent the option is exercised, they will each purchase a number of additional shares proportionate
to the underwriter’s initial amount reflected in the foregoing table. Additionally, in connection with our January 2019
public offering of common stock, we issued to National Securities Corporation and its designees a warrant to purchase 103,500
shares of our common stock.
The
following table provides information regarding the amount of the discounts and commissions to be paid to the underwriters by us,
before expenses:
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Per Share
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Total Without Exercise of Underwriters’ Option
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Total With Full Exercise of Underwriters’ Option
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Public offering price
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$
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2.00
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$
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22,000,000
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$
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25,300,000
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Underwriting discounts and commissions
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$
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0.13
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$
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1,430,000
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$
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1,644,500
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Proceeds, before expenses, to us
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$
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1.87
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$
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20,570,000
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$
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23,655,500
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We
estimate that our total expenses of the offering, excluding the estimated underwriting discounts and commissions, will be approximately
$350,000, which includes the fees and expenses for which we have agreed to reimburse the underwriters, provided that any
such fees and expenses in excess of an aggregate of $150,000 will be subject to prior written approval by the Company.
We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933.
We
and our officers and directors have agreed to a 90-day “lock-up” with respect to shares of our common stock and other
of our securities that they beneficially own, including securities that are convertible into shares of common stock and securities
that are exchangeable or exercisable for shares of common stock. This means that, subject to certain exceptions, including the
sale of up to an aggregate of 16,000 shares of our common stock to cover tax obligations with respect to shares of our common
stock that are vesting, for a period of 90 days following the date of this prospectus supplement, we and such persons may not
offer, sell, pledge or otherwise dispose of these securities without the prior written consent of Oppenheimer & Co. Inc.
Rules
of the Securities and Exchange Commission may limit the ability of the underwriters to bid for or purchase shares before the distribution
of the shares is completed. However, the underwriters may engage in the following activities in accordance with the rules:
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Stabilizing transactions
— The representative may make bids or purchases for the purpose of pegging, fixing or maintaining the price of the shares,
so long as stabilizing bids do not exceed a specified maximum.
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Over-allotments
and syndicate covering transactions — The underwriters may sell more shares of our common stock in connection with this
offering than the number of shares than they have committed to purchase. This over-allotment creates a short position for
the underwriters. This short sales position may involve either “covered” short sales or “naked” short
sales. Covered short sales are short sales made in an amount not greater than the underwriters’ over-allotment option
to purchase additional shares in this offering described above. The underwriters may close out any covered short position
either by exercising its over-allotment option or by purchasing shares in the open market. To determine how they will close
the covered short position, the underwriters will consider, among other things, the price of shares available for purchase
in the open market, as compared to the price at which they may purchase shares through the over-allotment option. Naked short
sales are short sales in excess of the over-allotment option. The underwriters must close out any naked short position by
purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned
that, in the open market after pricing, there may be downward pressure on the price of the shares that could adversely affect
investors who purchase shares in this offering.
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Penalty bids —
If the representative purchases shares in the open market in a stabilizing transaction or syndicate covering transaction,
it may reclaim a selling concession from the underwriters and selling group members who sold those shares as part of this
offering.
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Passive market making
— Market makers in the shares who are underwriters or prospective underwriters may make bids for or purchases of shares,
subject to limitations, until the time, if ever, at which a stabilizing bid is made.
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Similar
to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales or to stabilize the market
price of our common stock may have the effect of raising or maintaining the market price of our common stock or preventing or
mitigating a decline in the market price of our common stock. As a result, the price of the shares of our common stock may be
higher than the price that might otherwise exist in the open market. The imposition of a penalty bid might also have an effect
on the price of the shares if it discourages resales of the shares.
Neither
we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have
on the price of the shares. These transactions may occur on The NASDAQ Capital Market or otherwise. If such transactions are commenced,
they may be discontinued without notice at any time.
Electronic
Delivery of Preliminary Prospectus: A prospectus supplement in electronic format may be delivered to potential investors by one
or more of the underwriters participating in this offering. The prospectus supplement in electronic format will be identical to
the paper version of such preliminary prospectus supplement. Other than the prospectus supplement in electronic format, the information
on any underwriter’s website and any information contained in any other website maintained by an underwriter is not part
of this prospectus supplement, the accompanying prospectus or the registration statement of which this prospectus supplement and
the accompanying prospectus form a part.
Notice
to Non-U.S. Investors
Canada
.
The common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors,
as defined in National Instrument 45-106
Prospectus Exemptions
or subsection 73.3(1) of the
Securities Act
(Ontario),
and are permitted clients, as defined in National Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant
Obligations
. Any resale of the common stock must be made in accordance with an exemption from, or in a transaction not subject
to, the prospectus requirements of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this
prospectus supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission
or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s
province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s
province or territory for particulars of these rights or consult with a legal advisor.
Pursuant
to section 3A.3 of National Instrument 33-105
Underwriting Conflicts
(NI 33-105), the underwriters are not required to
comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
United
Kingdom.
Each of the underwriters has represented and agreed that:
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it has not made
or will not make an offer of the securities to the public in the United Kingdom within the meaning of section 102B of the
Financial Services and Markets Act 2000 (as amended) (FSMA) except to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities
or otherwise in circumstances which do not require the publication by us of a prospectus pursuant to the Prospectus Rules
of the Financial Services Authority (FSA);
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it has only communicated
or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in
investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating
to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005
or in circumstances in which section 21 of FSMA does not apply to us; and
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it has complied
with and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the securities
in, from or otherwise involving the United Kingdom.
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Switzerland.
The securities will not be offered, directly or indirectly, to the public in Switzerland and this prospectus does not constitute
a public offering prospectus as that term is understood pursuant to article 652a or 1156 of the Swiss Federal Code of Obligations.
European
Economic Area.
In relation to each Member State of the European Economic Area (the “EEA”) which has implemented
the European Prospectus Directive (each, a “Relevant Member State”), an offer of our shares may not be made to the
public in a Relevant Member State other than:
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to any legal entity which is a qualified investor,
as defined in the European Prospectus Directive;
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to fewer than 100
or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or
legal persons (other than qualified investors as defined in the European Prospectus Directive), subject to obtaining the prior
consent of the relevant dealer or dealers nominated by us for any such offer; or
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in any other circumstances
falling within Article 3(2) of the European Prospectus Directive, provided that no such offer of our shares shall require
us or any underwriter to publish a prospectus pursuant to Article 3 of the European Prospectus Directive or supplement prospectus
pursuant to Article 16 of the European Prospectus Directive
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For
the purposes of this description, the expression an “offer to the public” in relation to the securities in any Relevant
Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the
securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the expression
may be varied in that Relevant Member State by any measure implementing the European Prospectus Directive in that member state,
and the expression “European Prospectus Directive” means Directive 2003/71/EC (and amendments hereto, including the
2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure
in each Relevant Member State. The expression 2010 PD Amending Directive means Directive 2010/73/EU.
Israel.
In the State of Israel this prospectus shall not be regarded as an offer to the public to purchase shares of common stock
under the Israeli Securities Law, 5728 – 1968, which requires a prospectus to be published and authorized by the Israel
Securities Authority, if it complies with certain provisions of Section 15 of the Israeli Securities Law, 5728–1968, including,
inter alia, if: (i) the offer is made, distributed or directed to not more than 35 investors, subject to certain conditions (the
“Addressed Investors”); or (ii) the offer is made, distributed or directed to certain qualified investors defined
in the First Addendum of the Israeli Securities Law, 5728 – 1968, subject to certain conditions (the “Qualified Investors”).
The Qualified Investors shall not be taken into account in the count of the Addressed Investors and may be offered to purchase
securities in addition to the 35 Addressed Investors. The company has not and will not take any action that would require it to
publish a prospectus in accordance with and subject to the Israeli Securities Law, 5728 – 1968. We have not and will not
distribute this prospectus or make, distribute or direct an offer to subscribe for our common stock to any person within the State
of Israel, other than to Qualified Investors and up to 35 Addressed Investors.
Qualified
Investors may have to submit written evidence that they meet the definitions set out in of the First Addendum to the Israeli Securities
Law, 5728 – 1968. In particular, we may request, as a condition to be offered common stock, that Qualified Investors will
each represent, warrant and certify to us and/or to anyone acting on our behalf: (i) that it is an investor falling within one
of the categories listed in the First Addendum to the Israeli Securities Law, 5728 – 1968; (ii) which of the categories
listed in the First Addendum to the Israeli Securities Law, 5728 – 1968 regarding Qualified Investors is applicable to it;
(iii) that it will abide by all provisions set forth in the Israeli Securities Law, 5728 – 1968 and the regulations promulgated
thereunder in connection with the offer to be issued common stock; (iv) that the shares of common stock that it will be issued
are, subject to exemptions available under the Israeli Securities Law, 5728 – 1968: (a) for its own account; (b) for investment
purposes only; and (c) not issued with a view to resale within the State of Israel, other than in accordance with the provisions
of the Israeli Securities Law, 5728 – 1968; and (v) that it is willing to provide further evidence of its Qualified Investor
status. Addressed Investors may have to submit written evidence in respect of their identity and may have to sign and submit a
declaration containing, inter alia, the Addressed Investor’s name, address and passport number or Israeli identification
number.
We
have not authorized and do not authorize the making of any offer of securities through any financial intermediary on our behalf,
other than offers made by the underwriters and their respective affiliates, with a view to the final placement of the securities
as contemplated in this document. Accordingly, no purchaser of the shares, other than the underwriters, is authorized to make
any further offer of shares on our behalf or on behalf of the underwriters.
LEGAL
MATTERS
The
validity of the securities offered by this prospectus supplement will be passed upon for us by Greenberg Traurig, LLP, Irvine,
California. White & Case LLP, New York, New York, is acting as counsel for the underwriters in connection with this offering.
EXPERTS
The
consolidated financial statements of Aqua Metals, Inc. and its wholly-owned subsidiaries included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2018 have been audited by Armanino LLP, an independent registered public accounting
firm, as stated in their report which is incorporated by reference herein, and has been so incorporated in reliance upon such
report and upon the authority of such firm as experts in accounting and auditing.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC permits us to “incorporate by reference” the information and reports we file with it. This means that we can disclose
important information to you by referring to another document. The information that we incorporate by reference is considered
to be part of this prospectus supplement, and later information that we file with the SEC automatically updates and supersedes
this information. We incorporate by reference the documents listed below, except to the extent information in those documents
is different from the information contained in this prospectus supplement, and all future documents filed with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act (other than the portions thereof deemed to be furnished to the SEC pursuant to
Item 9 or Item 12) until we terminate the offering of these securities:
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Our Annual Report on Form 10-K for the fiscal
year ended December 31, 2018, which was filed on February 28, 2019;
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Our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2019, which was filed on May 9, 2019;
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Our Current Report on Form 8-K, which was filed
on March 29, 2019;
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The description of our common stock in our Form
8-A12B, which was filed on July 24, 2015, and any amendments or reports filed for the purpose of updating this description;
and
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All documents we file with the SEC under Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this prospectus and prior to the termination of this offering
made by way of this prospectus.
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To
the extent that any statement in this prospectus supplement is inconsistent with any statement that is incorporated by reference
and that was made on or before the date of this prospectus supplement, the statement in this prospectus supplement shall supersede
such incorporated statement. The incorporated statement shall not be deemed, except as modified or superseded, to constitute a
part of this prospectus supplement or the registration statement. Statements contained in this prospectus supplement as to the
contents of any contract or other document are not necessarily complete and, in each instance, we refer you to the copy of each
contract or document filed as an exhibit to our various filings made with the SEC.
You
may request a copy of these filings, at no cost, by writing or telephoning us at the following address or telephone number:
Aqua
Metals, Inc.
Attn: Investor Relations
2500 Peru Drive
McCarran, Nevada 89437
(775) 525-1936
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement under the Securities Act (SEC File No. 333-213501) that registers the securities
offered hereby. The registration statement, including the exhibits and schedules attached thereto and the information incorporated
by reference therein, contains additional relevant information about the securities and our Company, which we are allowed to omit
from this prospectus supplement pursuant to the rules and regulations of the SEC. In addition, we file annual, quarterly and current
reports and proxy statements and other information with the SEC. You may read and copy any document that we file at the SEC’s
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information
on the Public Reference Room. Our SEC filings are also available on the SEC’s website at www.sec.gov. Copies of certain
information filed by us with the SEC are also available on our website at www.aquametals.com. We have not incorporated by reference
into this prospectus supplement the information on our website and it is not a part of this document.
PROSPECTUS
$100,000,000
AQUA
METALS, INC.
Common
Stock
Warrants
Units
Debt
Securities
We
may issue securities from time to time in one or more offerings of up to $100,000,000 in aggregate offering price. This prospectus
describes the general terms of these securities and the general manner in which these securities will be offered. We will provide
the specific terms of these securities in supplements to this prospectus. The prospectus supplements will also describe the specific
manner in which these securities will be offered and may also supplement, update or amend information contained in this document.
You should read this prospectus and any applicable prospectus supplement before you invest.
We
may offer these securities in amounts, at prices and on terms determined at the time of offering. The securities may be sold directly
to you, through agents, or through underwriters and dealers. If agents, underwriters or dealers are used to sell the securities,
we will name them and describe their compensation in a prospectus supplement.
Our
common stock is listed on The NASDAQ Capital Market under the symbol “AQMS”. On August 31, 2016, the last reported
sale price of our common stock on The NASDAQ Capital Market was $9.24 per share.
Investing
in these securities involves significant risks. See “Risk Factors” included in any accompanying prospectus supplement
and in the documents incorporated by reference in this prospectus for a discussion of the factors you should carefully consider
before deciding to purchase these securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is September 26, 2016
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, which we refer to as
the “SEC,” utilizing a “shelf” registration process. Under this shelf registration process, we may from
time to time sell any combination of the securities described in this prospectus in one or more offerings for an aggregate initial
offering price of up to $100,000,000.
This
prospectus provides you with a general description of the securities we may offer. From time to time, we may provide one or more
prospectus supplements that will contain specific information about the terms of the offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read both this prospectus and any accompanying prospectus
supplement together with the additional information described under the heading “Where You Can Find More Information”
beginning on page 15 of this prospectus.
We
have not authorized anyone to provide you with information different from that contained in or incorporated by reference in this
prospectus, any accompanying prospectus supplement or in any related free writing prospectus filed by us with the SEC. We do not
take any responsibility for, and cannot provide any assurance as to the reliability of, any information other than the information
contained or incorporated by reference in this prospectus, any accompanying prospectus supplement or in any related free writing
prospectus filed by us with the SEC. This prospectus and any accompanying prospectus supplement do not constitute an offer to
sell or the solicitation of an offer to buy any securities other than the securities described in the accompanying prospectus
supplement or an offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer
or solicitation is unlawful. You should assume that the information appearing in this prospectus, any prospectus supplement, the
documents incorporated by reference and any related free writing prospectus is accurate only as of their respective dates. Our
business, financial condition, results of operations and prospects may have changed materially since those dates.
Unless
the context otherwise indicates, references in this prospectus to “we,” “our” and “us” refer,
collectively, to Aqua Metals, Inc., a Delaware corporation and its subsidiaries.
ABOUT
AQUA METALS, INC.
We
are engaged in the business of recycling lead through a novel, proprietary and patent-pending process that we developed and named
“AquaRefining”. Lead is a globally traded commodity with a worldwide market value in excess of $20 billion. Lead acid
batteries, or LABs, are the primary use of all lead produced in the world. Because the chemical properties of lead allow it to
be recycled and reused indefinitely, LABs are also the primary source of all lead production. As such, LABs are almost 100% recycled
for purposes of capturing the lead contained therein for re-use. We believe that our proprietary AquaRefining process will provide
for the recycling of LABs and the production of a pure grade lead with a significantly lower cost of production, and with fewer
environmental and regulatory issues, than conventional methods of lead production.
In
recent years, many lead mines have become exhausted and recycled lead has become increasingly important to LAB production. Recycled
lead surpassed mined lead in the 1990s and now represents more than 50% of the lead content in new LABs. Whether it is produced
from lead ore or recycled LABs, lead has historically been produced by smelting. Smelting is a high-temperature, endothermic chemical
reduction, making it inefficient, energy intensive and often a highly pollutive process. As a consequence of its environmental
and health issues, lead smelting has become increasingly regulated in developed countries. In the US, regulatory non-compliance
has forced the closure of large high-capacity lead smelters in Vernon, California, Frisco, Texas and Herculaneum, Missouri over
the last three years. Herculaneum was the last remaining primary lead-mine operation (i.e., smelting lead from ore) in the US,
though secondary lead smelters that process recycled lead continue to operate in the US. In response, there has been an expansion
of LAB smelting capacity in Mexico and other less regulated countries. The resulting transportation of used LABs from where they
originate in the US to smelters in Mexico, the Philippines and elsewhere is an increasingly significant logistical and global
environmental cost.
AquaRefining
uses an aqueous solvent and a novel electro-chemical process to produce pure lead (i.e., higher than 99.99% purity). We believe
that AquaRefining can significantly reduce production costs as compared with alternative methods of producing pure lead. This
cost reduction is partly because our novel electro-chemical process requires less energy than the endothermic high temperature
(1400°C) chemical reduction that is at the core of smelting. It is also partly because our process does not generate toxic
high temperature dust and gas, or the lead containing slag and dross that are unavoidable byproducts of smelting, and which require
capital and energy intensive processes to meet environmental compliance. We also have the potential to locate multiple smaller
recycling facilities in areas closer to the source of used LABs, thereby reducing transport costs and supply chain bottlenecks.
AquaRefining is a water-based ambient temperature process. On this basis, we believe that it significantly reduces environmental
emissions, health concerns and permitting needs as compared with lead smelting. We believe that the combined advantages offered
by AquaRefining represent a potential step change in lead recycling technology, one that can deliver advantages in economics,
footprint and logistics while greatly reducing the environmental impact of lead recycling.
The
modular nature of AquaRefining makes it possible to start LAB recycling at a much smaller scale than is possible with smelters,
thereby significantly reducing the investment risk associated with building a lead production facility. Our plan is to actively
explore distributed recycling in the US by establishing our own initial recycling operation near Reno, Nevada. This plan is based
on our belief that Reno has become a significant hub of the West Coast’s LAB distribution infrastructure and yet is very
poorly served by the LAB recycling industry. From our initial recycling facility near Reno, we intend to expand first throughout
the US and then overseas. We will seek to own our own recycling facilities but will also evaluate joint ventures and licensing
in respect of our technologies.
Our
principal executive offices are located at 2500 Peru Drive, McCarran, Nevada 89437, and our telephone number is (775) 525-1936.
RISK
FACTORS
Investing
in our securities involves significant risks. You should carefully consider the risks and uncertainties described in this prospectus
and any accompanying prospectus supplement, including the risk factors in our most recent Annual Report on Form 10-K, any subsequently
filed Quarterly Report on Form 10-Q or Current Report on Form 8-K,
together with all of
the other information appearing in or incorporated by reference into this prospectus and any applicable prospectus supplement
,
before making an investment decision pursuant to this prospectus and any accompanying prospectus supplement relating to a specific
offering.
Our
business, financial condition and results of operations could be materially and adversely affected by any or all of these risks
or by additional risks and uncertainties not presently known to us or that we currently deem immaterial that may adversely affect
us in the future.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains, and any accompanying prospectus supplement will contain, forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
the Private Securities Litigation Reform Act of 1993. Also, documents that we incorporate by reference into this prospectus, including
documents that we subsequently file with the Commission, will contain forward-looking statements. Forward-looking statements are
those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally
identify forward-looking statements as statements containing the words “may,” “will,” “could,”
“should,” “expect,” “anticipate,” “intend,” “estimate,” “believe,”
“project,” “plan,” “assume” or other similar expressions, or negatives of those expressions,
although not all forward-looking statements contain these identifying words. All statements contained or incorporated by reference
in this prospectus and any prospectus supplement regarding our business strategy, future operations, projected financial position,
potential strategic transactions, proposed participation or casino projects, projected sales growth, estimated future revenues,
cash flows and profitability, projected costs, potential outcome of litigation, potential sources of additional capital, future
prospects, future economic conditions, the future of our industry and results that might be obtained by pursuing management’s
current plans and objectives are forward-looking statements.
You
should not place undue reliance on our forward-looking statements because the matters they describe are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Our forward-looking statements are based on the information currently
available to us and speak only as of the date on the cover of this prospectus, the date of any prospectus supplement, or, in the
case of forward-looking statements incorporated by reference, the date of the filing that includes the statement. Over time, our
actual results, performance or achievements may differ from those expressed or implied by our forward-looking statements, and
such difference might be significant and materially adverse to our security holders. Except as required by law, we undertake no
obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
We
have identified some of the important factors that could cause future events to differ from our current expectations and they
are described in this prospectus and supplements to this prospectus under the caption “Risk Factors,” as well as in
our most recent Annual Report on Form 10-K, including under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and in other documents that we may file with
the Commission, all of which you should review carefully. Please consider our forward-looking statements in light of those risks
as you read this prospectus and any prospectus supplement.
THE
SECURITIES WE MAY OFFER
We
may offer and sell, from time to time in one or more offerings, any combination of common stock, warrants, units and debt securities
having an aggregate initial offering price not exceeding $100,000,000. In this prospectus, we refer to the common stock, warrants,
units and debt securities that we may offer collectively as “securities.”
We
are authorized to issue 50,000,000 shares of $0.001 par value common stock. Holders of shares of common stock are entitled to
one vote per share on all matters to be voted upon by the stockholders generally. Stockholders are entitled to receive such dividends
as may be declared from time to time by the board of directors out of funds legally available therefore, and in the event of liquidation,
dissolution or winding up of the company to share ratably in all assets remaining after payment of liabilities. The holders of
shares of common stock have no preemptive, conversion, subscription rights or cumulative voting rights.
This
prospectus provides a general description of the securities we may offer other than our common stock. Each time we sell any of
our securities under this prospectus, we will, to the extent required by law, provide a prospectus supplement that will contain
specific information about the terms of the offering. The prospectus supplement may also add, update or change information in
this prospectus. For more information, see “About this Prospectus.”
DESCRIPTION
OF DEBT SECURITIES
We
may offer and sell, from time to time in one or more offerings, any combination of common stock, warrants, units and debt securities
having an aggregate initial offering price not exceeding $100,000,000. In this prospectus, we refer to the common stock, warrants,
units and debt securities that we may offer collectively as “securities.”
We
may offer debt securities which may be senior or subordinated. We refer to the senior debt securities and the subordinated debt
securities collectively as debt securities. The following description summarizes the general terms and provisions of the debt
securities. We will describe the specific terms of the debt securities and the extent, if any, to which the general provisions
summarized below apply to any series of debt securities in the prospectus supplement relating to the series and any applicable
free writing prospectus that we authorize to be delivered.
We
may issue senior debt securities from time to time, in one or more series under a senior indenture to be entered into between
us and a senior trustee to be named in a prospectus supplement, which we refer to as the senior trustee. We may issue subordinated
debt securities from time to time, in one or more series under a subordinated indenture to be entered into between us and a subordinated
trustee to be named in a prospectus supplement, which we refer to as the subordinated trustee. The forms of senior indenture and
subordinated indenture are filed as exhibits to the registration statement of which this prospectus forms a part. Together, the
senior indenture and the subordinated indenture are referred to as the indentures and, together, the senior trustee and the subordinated
trustee are referred to as the trustees. This prospectus briefly outlines some of the provisions of the indentures. The following
summary of the material provisions of the indentures is qualified in its entirety by the provisions of the indentures, including
definitions of certain terms used in the indentures. Wherever we refer to particular sections or defined terms of the indentures,
those sections or defined terms are incorporated by reference in this prospectus or the applicable prospectus supplement. You
should review the indentures that are filed as exhibits to the registration statement of which this prospectus forms a part for
additional information.
None
of the indentures will limit the amount of debt securities that we may issue. The applicable indenture will provide that debt
securities may be issued up to an aggregate principal amount authorized from time to time by us and may be payable in any currency
or currency unit designated by us or in amounts determined by reference to an index.
General
The
senior debt securities will constitute our unsubordinated general obligations and will rank pari passu with our other unsubordinated
obligations. The subordinated debt securities will constitute our subordinated general obligations and will be junior in right
of payment to our senior indebtedness (including senior debt securities), as described under the heading “—Certain
Terms of the Subordinated Debt Securities— Subordination.”
The
debt securities will be our unsecured obligations unless otherwise specified in the applicable prospectus supplement. Any secured
debt or other secured obligations will be effectively senior to the debt securities to the extent of the value of the assets securing
such debt or other obligations.
The
applicable prospectus supplement and any free writing prospectus will include any additional or different terms of the debt securities
or any series being offered, including the following terms:
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whether
the debt securities will be senior or subordinated debt securities, and, with respect to debt securities issued under the
subordinated indenture the terms on which they are subordinated;
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aggregate principal amount of the debt securities;
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the
price or prices at which we will sell the debt securities;
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the
maturity date or dates of the debt securities and the right, if any, to extend such date or dates;
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the
rate or rates, if any, per year, at which the debt securities will bear interest, or the method of determining such rate or
rates;
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the
date or dates from which such interest will accrue, the interest payment dates on which such interest will be payable or the
manner of determination of such interest payment dates and the related record dates;
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right, if any, to extend the interest payment periods and the duration of that extension;
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the
manner of paying principal and interest and the place or places where principal and interest will be payable;
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provisions
for a sinking fund, purchase fund or other analogous fund, if any;
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any
redemption dates, prices, obligations and restrictions on the debt securities;
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the
currency, currencies or currency units in which the debt securities will be denominated and the currency, currencies or currency
units in which principal and interest, if any, on the debt securities may be payable;
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conversion or exchange features of the debt securities;
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whether
and upon what terms the debt securities may be defeased;
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any
events of default or covenants in addition to or in lieu of those set forth in the indenture;
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whether
the debt securities will be issued in definitive or global form or in definitive form only upon satisfaction of certain conditions;
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whether
the debt securities will be guaranteed as to payment or performance;
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if
the debt securities of the series will be secured by any collateral and, if so, a general description of the collateral and
the terms and provisions of such collateral security, pledge or other agreements; and
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any
other material terms of the debt securities.
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The
applicable prospectus supplement will also describe any applicable material U.S. federal income tax consequences. When we refer
to “principal” in this section with reference to the debt securities, we are also referring to “premium, if
any.”
We
may from time to time, without notice to or the consent of the holders of any series of debt securities, create and issue further
debt securities of any such series ranking equally with the debt securities of such series in all respects (or in all respects
other than (1) the payment of interest accruing prior to the issue date of such further debt securities or (2) the first payment
of interest following the issue date of such further debt securities). Such further debt securities may be consolidated and form
a single series with the debt securities of such series and have the same terms as to status, redemption or otherwise as the debt
securities of such series.
You
may present debt securities for exchange and you may present debt securities for transfer in the manner, at the places and subject
to the restrictions set forth in the debt securities and the applicable prospectus supplement. We will provide you those services
without charge, although you may have to pay any tax or other governmental charge payable in connection with any exchange or transfer,
as set forth in the indenture.
Debt
securities may bear interest at a fixed rate or a floating rate. Debt securities bearing no interest or interest at a rate that
at the time of issuance is below the prevailing market rate (original issue discount securities) may be sold at a discount below
their stated principal amount.
We
may issue debt securities with the principal amount payable on any principal payment date, or the amount of interest payable on
any interest payment date, to be determined by reference to one or more currency exchange rates, securities or baskets of securities,
commodity prices or indices. You may receive a payment of principal on any principal payment date, or a payment of interest on
any interest payment date, that is greater than or less than the amount of principal or interest otherwise payable on such dates,
depending on the value on such dates of the applicable currency, security or basket of securities, commodity or index. Information
as to the methods for determining the amount of principal or interest payable on any date, the currencies, securities or baskets
of securities, commodities or indices to which the amount payable on such date is linked.
Certain
Terms of the Senior Debt Securities
Covenants.
Unless we indicate otherwise in a prospectus supplement, the senior debt securities will not contain any financial or restrictive
covenants, including covenants restricting either us or any of our subsidiaries from incurring, issuing, assuming or guaranteeing
any indebtedness secured by a lien on any of our or our subsidiaries’ property or capital stock, or restricting either us
or any of our subsidiaries from entering into sale and leaseback transactions.
Consolidation,
Merger and Sale of Assets.
Unless we indicate otherwise in a prospectus supplement, we may not consolidate with or merge into
any other person, in a transaction in which we are not the surviving corporation, or convey, transfer or lease our properties
and assets substantially as an entirety to any person, in either case, unless:
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the
successor entity, if any, is a U.S. corporation, limited liability company, partnership or trust (subject to certain exceptions
provided for in the senior indenture);
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the
successor entity assumes our obligations on the senior debt securities and under the senior indenture;
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immediately
after giving effect to the transaction, no default or event of default shall have occurred and be continuing; and
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certain
other conditions are met.
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No
Protection in the Event of a Change in Control
. Unless we indicate otherwise in a prospectus supplement with respect to a
particular series of senior debt securities, the senior debt securities will not contain any provisions that may afford holders
of the senior debt securities protection in the event we have a change in control or in the event of a highly leveraged transaction
(whether or not such transaction results in a change in control).
Events
of Default
. Unless we indicate otherwise in a prospectus supplement with respect to a particular series of senior debt securities,
the following are events of default under the senior indenture for any series of senior debt securities:
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failure
to pay interest on any senior debt securities of such series when due and payable, if that default continues for a period
of 90 days (or such other period as may be specified for such series);
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failure
to pay principal on the senior debt securities of such series when due and payable whether at maturity, upon redemption, by
declaration or otherwise (and, if specified for such series, the continuance of such failure for a specified period);
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default
in the performance of or breach of any of our covenants or agreements in the senior indenture applicable to senior debt securities
of such series, other than a covenant breach which is specifically dealt with elsewhere in the senior indenture, and that
default or breach continues for a period of 90 days after we receive written notice from the trustee or from the holders of
25% or more in aggregate principal amount of the senior debt securities of such series;
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certain
events of bankruptcy or insolvency, whether or not voluntary; and
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any
other event of default provided for in such series of senior debt securities as may be specified in the applicable prospectus
supplement.
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Unless
we indicate otherwise in a prospectus supplement, the default by us under any other debt, including any other series of debt securities,
is not a default under the senior indenture.
If
an event of default other than an event of default specified in the fourth bullet point above occurs with respect to a series
of senior debt securities and is continuing under the senior indenture, then, and in each such case, either the trustee or the
holders of not less than 25% in aggregate principal amount of such series then outstanding under the senior indenture (each such
series voting as a separate class) by written notice to us and to the trustee, if such notice is given by the holders, may, and
the trustee at the request of such holders shall, declare the principal amount of and accrued interest on such series of senior
debt securities to be immediately due and payable, and upon this declaration, the same shall become immediately due and payable.
If
an event of default specified in the fourth bullet point above occurs with respect to us and is continuing, the entire principal
amount of and accrued interest, if any, on each series of senior debt securities then outstanding shall become immediately due
and payable.
Unless
otherwise specified in the prospectus supplement relating to a series of senior debt securities originally issued at a discount,
the amount due upon acceleration shall include only the original issue price of the senior debt securities, the amount of original
issue discount accrued to the date of acceleration and accrued interest, if any.
Upon
certain conditions, declarations of acceleration may be rescinded and annulled and past defaults may be waived by the holders
of a majority in aggregate principal amount of all the senior debt securities of such series affected by the default, each series
voting as a separate class. Furthermore, prior to a declaration of acceleration and subject to various provisions in the senior
indenture, the holders of a majority in aggregate principal amount of a series of senior debt securities, by notice to the trustee,
may waive an existing default or event of default with respect to such senior debt securities and its consequences, except a default
in the payment of principal of or interest on such senior debt securities or in respect of a covenant or provision of the senior
indenture which cannot be modified or amended without the consent of the holders of each such senior debt security. Upon any such
waiver, such default shall cease to exist, and any event of default with respect to such senior debt securities shall be deemed
to have been cured, for every purpose of the senior indenture; but no such waiver shall extend to any subsequent or other
default or event of default or impair any right consequent thereto. For information as to the waiver of defaults, see “—Modification
and Waiver.”
The
holders of a majority in aggregate principal amount of a series of senior debt securities may direct the time, method and place
of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee
with respect to such senior debt securities. However, the trustee may refuse to follow any direction that conflicts with law or
the senior indenture, that may involve the trustee in personal liability or that the trustee determines in good faith may be unduly
prejudicial to the rights of holders of such series of senior debt securities not joining in the giving of such direction and
may take any other action it deems proper that is not inconsistent with any such direction received from holders of such series
of senior debt securities. A holder may not pursue any remedy with respect to the senior indenture or any series of senior debt
securities unless:
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the
holder gives the trustee written notice of a continuing event of default;
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the
holders of at least 25% in aggregate principal amount of such series of senior debt securities make a written request to the
trustee to pursue the remedy in respect of such event of default;
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the
requesting holder or holders offer the trustee indemnity satisfactory to the trustee against any costs, liability or expense;
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the
trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and
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during
such 60-day period, the holders of a majority in aggregate principal amount of such series of senior debt securities do not
give the trustee a direction that is inconsistent with the request.
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These
limitations, however, do not apply to the right of any holder of a senior debt security to receive payment of the principal of
and interest, if any, on such senior debt security in accordance with the terms of such debt security, or to bring suit for the
enforcement of any such payment in accordance with the terms of such debt security, on or after the due date for the senior debt
securities, which right shall not be impaired or affected without the consent of the holder.
The
senior indenture requires certain of our officers to certify, on or before a fixed date in each year in which any senior debt
security is outstanding, as to their knowledge of our compliance with all covenants, agreements and conditions under the senior
indenture.
Satisfaction
and Discharge
. We can satisfy and discharge our obligations to holders of any series of senior debt securities if:
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we
pay or cause to be paid, as and when due and payable, the principal of and any interest on all senior debt securities of such
series outstanding under the senior indenture; or
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all
senior debt securities of such series have become due and payable or will become due and payable within one year (or are to
be called for redemption within one year) and we deposit in trust a combination of cash and U.S. government or U.S. government
agency obligations that will generate enough cash to make interest, principal and any other payments on the debt securities
of that series on their various due dates.
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Under
current U.S. federal income tax law, the deposit and our legal release from the senior debt securities would be treated as a taxable
event, and beneficial owners of such debt securities would generally recognize any gain or loss on such senior debt securities.
Purchasers of the senior debt securities should consult their own advisers with respect to the tax consequences to them of such
deposit and discharge, including the applicability and effect of tax laws other than the U.S. federal income tax law.
Defeasance
.
Unless the applicable prospectus supplement provides otherwise, the following discussion of legal defeasance and discharge and
covenant defeasance will apply to any senior series of senior debt securities issued under the indentures.
Legal
Defeasance
. We can legally release ourselves from any payment or other obligations on the senior debt securities of any series
(called “legal defeasance”) if certain conditions are met, including the following:
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We
deposit in trust for your benefit and the benefit of all other direct holders of the senior debt securities of the same series
a combination of cash and U.S. government or U.S. government agency obligations that will generate enough cash to make interest,
principal and any other payments on the senior debt securities of that series on their various due dates.
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There
is a change in current U.S. federal income tax law or an IRS ruling that lets us make the above deposit without causing you
to be taxed on the senior debt securities any differently than if we did not make the deposit and instead repaid the senior
debt securities ourselves when due.
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We
deliver to the trustee a legal opinion of our counsel confirming the tax law change or ruling described above.
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If
we ever did accomplish legal defeasance, as described above, you would have to rely solely on the trust deposit for repayment
of the debt securities. You could not look to us for repayment in the event of any shortfall.
Covenant
Defeasance
. Without any change of current U.S. federal tax law, we can make the same type of deposit described above and be
released from some of the covenants in the senior debt securities (called “covenant defeasance”). In that event, you
would lose the protection of those covenants but would gain the protection of having money and securities set aside in trust to
repay the senior debt securities. In order to achieve covenant defeasance, we must do the following (among other things):
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We
must deposit in trust for your benefit and the benefit of all other direct holders of the senior debt securities of the same
series a combination of cash and U.S. government or U.S. government agency obligations that will generate enough cash to make
interest, principal and any other payments on the senior debt securities of that series on their various due dates.
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We
must deliver to the trustee a legal opinion of our counsel confirming that under current U.S. federal income tax law we may
make the above deposit without causing you to be taxed on the senior debt securities any differently than if we did not make
the deposit and instead repaid the senior debt securities ourselves when due.
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If
we accomplish covenant defeasance, you can still look to us for repayment of the senior debt securities if there were a shortfall
in the trust deposit. In fact, if one of the events of default occurred (such as our bankruptcy) and the debt securities become
immediately due and payable, there may be such a shortfall. Depending on the events causing the default, you may not be able to
obtain payment of the shortfall.
Modification
and Waiver.
We and the trustee may amend or supplement the senior indenture or the senior debt securities without the consent
of any holder:
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to
comply with the requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust
Indenture Act of 1939, as amended, or the Trust Indenture Act;
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to
convey, transfer, assign, mortgage or pledge any assets as security for the senior debt securities of one or more series;
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to
evidence the succession of a corporation, limited liability company, partnership or trust to us, and the assumption by such
successor of our covenants, agreements and obligations under the senior indenture;
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to
add to our covenants such new covenants, restrictions, conditions or provisions for the protection of the holders, and to
make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions
or provisions an event of default;
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to
cure any ambiguity, defect or inconsistency in the senior indenture or in any supplemental indenture or to conform the senior
indenture or the senior debt securities to the description of senior debt securities of such series set forth in this prospectus
or any applicable prospectus supplement;
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to
provide for or add guarantors with respect to the senior debt securities of any series;
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to
establish the form or forms or terms of the senior debt securities as permitted by the senior indenture;
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to
evidence and provide for the acceptance of appointment under the senior indenture by a successor trustee, or to make such
changes as shall be necessary to provide for or facilitate the administration of the trusts in the senior indenture by more
than one trustee;
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to
add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms, purposes of issue,
authentication and delivery of any series of senior debt securities;
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to
make any change to the senior debt securities of any series so long as no senior debt securities of such series are outstanding;
or
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to
make any change that does not adversely affect the rights of any holder in any material respect.
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Other
amendments and modifications of the senior indenture or the senior debt securities issued may be made, and our compliance with
any provision of the senior indenture with respect to any series of senior debt securities may be waived, with the consent of
the holders of a majority of the aggregate principal amount of the outstanding senior debt securities of all series affected by
the amendment or modification (voting together as a single class); provided, however, that each affected holder must consent
to any modification, amendment or waiver that:
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extends
the final maturity of any senior debt securities of such series;
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reduces
the principal amount of any senior debt securities of such series;
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reduces
the rate or extends the time of payment of interest on any senior debt securities of such series;
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reduces
the amount payable upon the redemption of any senior debt securities of such series;
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changes
the currency of payment of principal of or interest on any senior debt securities of such series;
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reduces
the principal amount of original issue discount securities payable upon acceleration of maturity or the amount provable in
bankruptcy;
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waives
a default in the payment of principal of or interest on the senior debt securities;
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changes
the provisions relating to the waiver of past defaults or changes or impairs the right of holders to receive payment or to
institute suit for the enforcement of any payment or conversion of any senior debt securities of such series on or after the
due date therefor;
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modifies
any of the provisions of these restrictions on amendments and modifications, except to increase any required percentage or
to provide that certain other provisions cannot be modified or waived without the consent of the holder of each senior debt
security of such series affected by the modification; or
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reduces
the above-stated percentage of outstanding senior debt securities of such series whose holders must consent to a supplemental
indenture or to modify or amend or to waive certain provisions of or defaults under the senior indenture.
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It
shall not be necessary for the holders to approve the particular form of any proposed amendment, supplement or waiver, but it
shall be sufficient if the holders’ consent approves the substance thereof. After an amendment, supplement or waiver of
the senior indenture in accordance with the provisions described in this section becomes effective, the trustee must give to the
holders affected thereby certain notice briefly describing the amendment, supplement or waiver. Any failure by the trustee to
give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplemental
indenture or waiver.
No
Personal Liability of Incorporators, Stockholders, Officers, Directors.
The senior indenture provides that no recourse shall
be had under any obligation, covenant or agreement of ours in the senior indenture or any supplemental indenture, or in any of
the senior debt securities or because of the creation of any indebtedness represented thereby, against any of our incorporators,
stockholders, officers or directors, past, present or future, or of any predecessor or successor entity thereof under any law,
statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise.
Each holder, by accepting the senior debt securities, waives and releases all such liability.
Concerning
the Trustee.
The senior indenture provides that, except during the continuance of an event of default, the trustee will not
be liable except for the performance of such duties as are specifically set forth in the senior indenture. If an event of default
has occurred and is continuing, the trustee will exercise such rights and powers vested in it under the senior indenture and will
use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct
of such person’s own affairs.
The
senior indenture and the provisions of the Trust Indenture Act incorporated by reference therein contain limitations on the rights
of the trustee thereunder, should it become a creditor of ours or any of our subsidiaries, to obtain payment of claims in certain
cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The trustee is
permitted to engage in other transactions, provided that if it acquires any conflicting interest (as defined in the Trust Indenture
Act), it must eliminate such conflict or resign.
We
may have normal banking relationships with the senior trustee in the ordinary course of business.
Unclaimed
Funds.
All funds deposited with the trustee or any paying agent for the payment of principal, premium, interest or additional
amounts in respect of the senior debt securities that remain unclaimed for two years after the date upon which such principal,
premium or interest became due and payable will be repaid to us. Thereafter, any right of any holder of senior debt securities
to such funds shall be enforceable only against us, and the trustee and paying agents will have no liability therefor.
Governing
Law.
The senior indenture and the senior debt securities will be governed by, and construed in accordance with, the internal
laws of the State of New York.
Certain
Terms of the Subordinated Debt Securities
Other
than the terms of the subordinated indenture and subordinated debt securities relating to subordination or otherwise as described
in the prospectus supplement relating to a particular series of subordinated debt securities, the terms of the subordinated indenture
and subordinated debt securities are identical in all material respects to the terms of the senior indenture and senior debt securities.
Additional
or different subordination terms may be specified in the prospectus supplement applicable to a particular series.
Subordination.
The indebtedness evidenced by the subordinated debt securities is subordinate to the prior payment in full of all of our senior
indebtedness, as defined in the subordinated indenture. During the continuance beyond any applicable grace period of any default
in the payment of principal, premium, interest or any other payment due on any of our senior indebtedness, we may not make any
payment of principal of or interest on the subordinated debt securities (except for certain sinking fund payments). In addition,
upon any payment or distribution of our assets upon any dissolution, winding-up, liquidation or reorganization, the payment of
the principal of and interest on the subordinated debt securities will be subordinated to the extent provided in the subordinated
indenture in right of payment to the prior payment in full of all our senior indebtedness. Because of this subordination, if we
dissolve or otherwise liquidate, holders of our subordinated debt securities may receive less, ratably, than holders of our senior
indebtedness. The subordination provisions do not prevent the occurrence of an event of default under the subordinated indenture.
The
term “senior indebtedness” of a person means with respect to such person the principal of, premium, if any, interest
on, and any other payment due pursuant to any of the following, whether outstanding on the date of the subordinated indenture
or incurred by that person in the future:
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all
of the indebtedness of that person for money borrowed;
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all
of the indebtedness of that person evidenced by notes, debentures, bonds or other securities sold by that person for money;
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all
of the lease obligations that are capitalized on the books of that person in accordance with generally accepted accounting
principles;
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all
indebtedness of others of the kinds described in the first two bullet points above and all lease obligations of others of
the kind described in the third bullet point above that the person, in any manner, assumes or guarantees or that the person
in effect guarantees through an agreement to purchase, whether that agreement is contingent or otherwise; and
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all
renewals, extensions or refundings of indebtedness of the kinds described in the first, second or fourth bullet point above
and all renewals or extensions of leases of the kinds described in the third or fourth bullet point above;
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unless,
in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing it or the assumption
or guarantee relating to it expressly provides that such indebtedness, renewal, extension or refunding is not superior in right
of payment to the subordinated debt securities. Our senior debt securities constitute senior indebtedness for purposes of the
subordinated debt indenture.
DESCRIPTION
OF WARRANTS
We
may issue warrants for the purchase of shares of common stock, debt securities, and/or units from time to time. We may issue warrants
independently or together with common stock and/or debt securities, and the warrants may be attached to or separate from those
securities. If we issue warrants, they will be evidenced by warrant agreements or warrant certificates issued under one or more
warrant agreements, which will be contracts between us and the holders of the warrants or an agent for the holders of the warrants.
We encourage you to read the prospectus supplement that relates to any warrants we may offer, as well as the complete warrant
agreement or warrant certificate that contain the terms of the warrants. If we issue warrants, the forms of warrant agreements
and warrant certificates, as applicable, relating to the warrants will be filed as exhibits to the registration statement that
includes this prospectus, or as an exhibit to a filing with the SEC that is incorporated by reference into this prospectus.
DESCRIPTION
OF UNITS
We
may issue units comprised of one or more of the other securities described in this prospectus in any combination from time to
time. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus,
the holder of a unit will have the rights and obligations of a holder of each included security. If we issue units, they will
be evidenced by unit agreements or unit certificates issued under one or more unit agreements, which will be contracts between
us and the holders of the units or an agent for the holders of the units. The unit agreement under which a unit is issued may
provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before
a specified date. We encourage you to read the prospectus supplement that relates to any units we may offer, as well as the complete
unit agreement or unit certificate that contain the terms of the units. If we issue units, the forms of unit agreements and unit
certificates, as applicable, relating to the units will be filed as exhibits to the registration statement that includes this
prospectus, or as an exhibit to a filing with the SEC that is incorporated by reference into this prospectus.
PLAN
OF DISTRIBUTION
We
may sell our securities from time to time in any manner permitted by the Securities Act of 1933, as amended, or the Securities
Act, including any one or more of the following ways:
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through
agents;
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to
or through underwriters;
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to
or through broker-dealers (acting as agent or principal);
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in
“at the market” offerings, within the meaning of Rule 415(a)(4) of the Securities Act, to or through a market
maker or into an existing trading market, on an exchange or otherwise; and/or
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directly
to purchasers, through a specific bidding or auction process or otherwise.
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The
securities may be sold at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices
relating to the prevailing market prices or at negotiated prices.
Offers
to purchase offered securities may be solicited by agents designated by us from time to time. Any agent involved in the offer
or sale of the offered securities in respect of which this prospectus is delivered will be named, and any commissions payable
by us will be set forth, in the applicable prospectus supplement. Unless otherwise set forth in the applicable prospectus supplement,
any agent will be acting on a reasonable best efforts basis for the period of its appointment. Any agent may be deemed to be an
underwriter, as that term is defined in the Securities Act, of the offered securities so offered and sold.
We
will set forth in a prospectus supplement the terms of the offering of our securities, including:
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the
name or names of any agents, underwriters or dealers;
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the
purchase price of our securities being offered and the proceeds we will receive from the sale;
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any
over-allotment options under which underwriters may purchase additional securities from us;
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any
agency fees or underwriting discounts and commissions and other items constituting agents’ or underwriters’ compensation;
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the
public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers; and
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any
securities exchanges on which such securities may be listed.
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If
offered securities are sold to the public by means of an underwritten offering, either through underwriting syndicates represented
by managing underwriters or directly by the managing underwriters, we will execute an underwriting agreement with an underwriter
or underwriters, and the names of the specific managing underwriter or underwriters, as well as any other underwriters, will be
set forth in the applicable prospectus supplement. In addition, the terms of the transaction, including commissions, discounts
and any other compensation of the underwriters and dealers, if any, will be set forth in the applicable prospectus supplement,
which prospectus supplement will be used by the underwriters to make resales of the offered securities. If underwriters are utilized
in the sale of the offered securities, the offered securities will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including:
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transactions
on The NASDAQ Capital Market or any other organized market where the securities may be traded;
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in
the over-the-counter market;
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in
negotiated transactions; or
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under
delayed delivery contracts or other contractual commitments.
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We
may grant to the underwriters options to purchase additional offered securities to cover over-allotments, if any, at the public
offering price with additional underwriting discounts or commissions, as may be set forth in the applicable prospectus supplement.
If we grant any over-allotment option, the terms of the over-allotment option will be set forth in the applicable prospectus supplement.
We
may authorize agents or underwriters to solicit offers by certain types of institutional investors to purchase securities from
us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment
and delivery on a specified date in the future. We will describe the conditions to these contracts and the commissions we must
pay for solicitation of these contracts in the prospectus supplement.
We
may indemnify agents, underwriters and dealers against specified liabilities, including liabilities incurred under the Securities
Act, or to contribution by us to payments they may be required to make in respect of such liabilities. Agents, underwriters or
dealers, or their respective affiliates, may be customers of, engage in transactions with or perform services for us or our respective
affiliates, in the ordinary course of business.
Unless
otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no established
trading market, other than our common stock, which is traded on The NASDAQ Capital Market. We may elect to list any other class
or series of securities on any exchange and, in the case of our common stock, on any additional exchange. However, unless otherwise
specified in the applicable prospectus supplement, we will not be obligated to do so. It is possible that one or more underwriters
may make a market in a class or series of securities, but the underwriters will not be obligated to do so and may discontinue
any market making at any time without notice. We cannot give any assurance as to the liquidity of the trading market for any of
the offered securities.
Any
underwriter may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance
with Regulation M under the Securities Exchange Act of 1934, as amended. Over-allotment involves sales in excess of the offering
size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing
bids do not exceed a specified maximum price. Syndicate-covering or other short-covering transactions involve purchases of the
securities, either through exercise of the over-allotment option or in the open market after the distribution is completed, to
cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities
originally sold by the dealer are purchased in a stabilizing or covering transaction to cover short positions. Those activities
may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue
any of the activities at any time.
To
comply with the securities laws of certain states, if applicable, the securities offered by this prospectus will be offered and
sold in those states only through registered or licensed brokers or dealers.
In
compliance with guidelines of the Financial Industry Regulatory Authority, or FINRA, the maximum consideration or discount to
be received by any FINRA member or independent broker dealer may not exceed 8% of the aggregate amount of the securities offered
pursuant to this prospectus and any applicable prospectus supplement.
LEGAL
MATTERS
The
validity of the issuance of the securities offered by this prospectus has been passed upon for us by Greenberg Traurig, LLP, Irvine,
California.
EXPERTS
The
financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December
31, 2015 have been so incorporated in reliance on the report of Armanino LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and current reports and other information with the SEC. You may read and copy any document we file at the
SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation
of the public reference room by calling the SEC at 1-800-SEC-0330. Our filings with the SEC also are available from the SEC’s
internet site at http://www.sec.gov, which contains reports, proxy and information statements, and other information regarding
issuers that file electronically.
This
prospectus is part of a registration statement that we filed with the SEC. As permitted by SEC rules, this prospectus and any
accompanying prospectus supplement that we may file, which form a part of the registration statement, do not contain all of the
information that is included in the registration statement. The registration statement contains more information regarding us
and our securities, including certain exhibits. You can obtain a copy of the registration statement from the SEC at the address
listed above or from the SEC’s website.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC permits us to “incorporate by reference” the information and reports we file with it. This means that we can disclose
important information to you by referring to another document. The information that we incorporate by reference is considered
to be part of this prospectus, and later information that we file with the SEC automatically updates and supersedes this information.
We incorporate by reference the documents listed below, except to the extent information in those documents is different from
the information contained in this prospectus, and all future documents filed with the SEC under Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act (other than the portions thereof deemed to be furnished to the SEC pursuant to Item 9 or Item 12) until
we terminate the offering of these securities:
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Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed on March 28, 2016;
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Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, which was filed on May 19, 2016;
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Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which was filed on August 10, 2016;
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Our
Current Reports on Form 8-K, which were filed on March 25, 2016 and May 24, 2016;
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The
description of our common stock in our Form 8-A12B, which was filed on July 24, 2015, and any amendments or reports filed
for the purpose of updating this description; and
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All
documents we file with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this prospectus
and prior to the termination of this offering made by way of this prospectus.
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To
the extent that any statement in this prospectus is inconsistent with any statement that is incorporated by reference and that
was made on or before the date of this prospectus, the statement in this prospectus shall supersede such incorporated statement.
The incorporated statement shall not be deemed, except as modified or superseded, to constitute a part of this prospectus or the
registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily
complete and, in each instance, we refer you to the copy of each contract or document filed as an exhibit to our various filings
made with the SEC.
You
may request a copy of these filings, at no cost, by writing or telephoning us at the following address or telephone number:
Aqua
Metals, Inc.
Attn: Investor Relations
2500 Peru Drive
McCarran, Nevada 89437
(775) 525-1936
Shares
of Common Stock
PROSPECTUS
SUPPLEMENT
Sole
Book-running Manager
Oppenheimer
& Co.
Co-Manager
National
Securities Corporation
May
10, 2019
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