Aqua Metals, Inc. (NASDAQ:AQMS) (“Aqua Metals” or the “Company”),
which is reinventing lead recycling with its AquaRefining™
technology, today announced financial and operational results for
its second quarter ended June 30, 2020.
Steve Cotton, President and Chief Executive
Officer, commented “The Aqua Metals team made substantial
operational progress during the second quarter. Our V1.25L
electrolyzer program commenced ahead of schedule, even with the
significant limitations resulting from COVID-19. Through ongoing
test runs, we have already seen very encouraging results from the
first iteration of this program – V1.25a. Automation enhancements
have been implemented and lead produced per hour results have been
very encouraging due to improved electrical efficiency. In
addition, the groundwork is in place for the fabrication of the
second electrolyzer iteration of the program – V1.25b. The design
of a new, more cost-effective tank has been completed and a more
efficient electrical rectifier is on order as we prepare for
installation of our V1.25b iteration. Early indications of the
program are very positive, and we believe the results will solidify
a robust value proposition for future licensing partners.
Financially, we continue to make progress as well. We have
collected $15.0 million from our insurance provider, with
significantly more expected. We have reduced expenses and have
established plans to sell unneeded assets, which we anticipate will
supplement our financial position. Overall, I am pleased with the
progress we have made, and believe Aqua Metals is well positioned
for a successful future.”
Second Quarter 2020 Financial
Results
The Company did not recognize revenue during the
quarter ended June 30, 2020, as a result of the plant fire and the
acceleration of the licensing strategy. During the quarter ended
June 30, 2019, the Company recognized revenue of $1.5 million.
Product sales for the second quarter of 2019 consisted of
high-purity lead from the AquaRefining process, as well as lead
bullion, lead compounds and plastics.
Cost of product sales decreased by approximately
82% for the quarter to $1.3 million, compared to $7.2 million for
the second quarter of 2019. Cost of product sales were lower in
2020 due to the suspension of production resulting from the
fire.
General and administrative expenses for the
second quarter of 2020 decreased approximately 48% to $2.2 million,
from $4.3 million in the second quarter of 2019. The decrease is
attributed to the suspension of operations and expenses under the
Operations, Maintenance and Management Agreement with Veolia,
reduced Company payroll and efficiencies in nearly all other
expense categories.
Interest expense for the second quarter of 2020
was approximately $0.2 million, consistent with $0.2 million for
the second quarter of 2019.
For the quarter ended June 30, 2020, the Company
had an operating loss of $3.8 million compared to an operating loss
of $10.4 million for the second quarter of 2019. The net loss for
the second quarter of 2020 was $4.0 million, or $0.07 per basic and
diluted share, compared to a net loss of $10.5 million, or $0.21
per basic and diluted share, in the second quarter of 2019.
The net loss for the second quarter of 2020 was
impacted by non-cash items including $0.6 million in stock-based
compensation. By comparison, non-cash stock-based compensation
totaled $0.9 million for the second quarter of 2019.
Insurance proceeds receivable totaled $4.9
million as of June 30, 2020. This balance reflects a decrease of
$12.5 million from December 31, 2019, as a result of insurance
payments received. The $19.9 million of insurance proceeds
receivable recorded during the fourth quarter of 2019, was limited
by GAAP accounting standards to the net book value of assets
written off as a result of the fire. It is anticipated that actual
total insurance collections, reflecting actual asset replacement
cost and business interruption coverage, will be significantly more
than the net book value of damaged assets.
As of June 30, 2020, the Company had $4.8
million in cash and cash equivalents. In addition, the Company has
$4.9 million in escrow, to be used for the retirement of the
Veritex loan.
Outlook for 2020
The Company has accelerated its transition to a
capital light business strategy designed to optimize shareholder
value through focusing on equipment supply and licensing
opportunities, which has always been a core part of Aqua Metals’
business plan. This direction is anticipated to be far less capital
intensive than rebuilding the plant and is expected to be funded
primarily from a combination of cash on hand, insurance proceeds
and the disposition of unnecessary assets. The strategy focuses on
building new partnerships and pursuing licensing opportunities
within the lead battery recycling marketplace. The Company’s cash
burn rate has improved significantly as a result of management’s
swift cost reduction steps taken following the plant fire. It is
anticipated that the rate of spend will continue to improve in the
latter half of 2020. The Company is pursuing opportunities to
dispose of certain assets that are not essential to the capital
light licensing strategy. Further, the V1.25L electrolyzer program
has successfully begun. It is anticipated that this program will
continue with three iterations through the end of 2020. The goal of
the V1.25L program is to build upon past success and demonstrate
improved electrolyzers that will further decrease manufacturing
costs and improve operating efficiency. Aqua Metal’s capital light
business strategy is expected to require less space and equipment
and promote cash preservation, all while focusing on the needs of
future licensees.
Aqua Metals has used, and intends to continue
using, its investor relations website (https://ir.aquametals.com),
in addition to its Twitter, LinkedIn and YouTube accounts at:
https://twitter.com/AquaMetalsInc (@aquamatalsinc),
https://www.linkedin.com/company/aqua-metals-limited and
https://www.youtube.com/channel/UCvxKNWcB69K0t7e337uQ8nQ respectively,
as means of disclosing material non-public information and for
complying with its disclosure obligations under Regulation
FD.
Conference Call and Webcast
Aqua Metals will hold a conference call on
Tuesday, Aug. 4, 2020 at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss
second quarter results and corporate developments. Interested
parties are invited to the live call by dialing 1-855-327-6837 toll
free or 1-631-891-4304 for international callers. Participants have
the option of listening to the conference call online by accessing
the following link: http://public.viavid.com/index.php?id=141009. A
live webcast or replay of the conference call is also available via
the Company website, and can be found at the following link:
https://ir.aquametals.com/ir-calendar. A telephone replay will be
available until Sep. 4, 2020 by dialing 1-844-512-2921 or
1-412-317-6671 and using pin number 10010547.
About Aqua Metals
Aqua Metals, Inc. (NASDAQ: AQMS) is reinventing
lead recycling with its patented AquaRefining™ technology. Unlike
smelting, AquaRefining is a room temperature, water-based process
that emits less pollution. The modular systems are intended to
allow the Company to vastly reduce environmental impact and scale
lead acid battery recycling production capacity by licensing the
AquaRefining technology to partners. This could help to meet
growing demand for lead to power new applications including
stop/start automobile batteries which complement the vehicle’s main
battery, lead acid batteries which are in electric vehicles,
Internet data centers, alternative energy applications including
solar, wind, and grid scale storage. Aqua Metals is based in
McCarran, Nevada. To learn more, please visit
www.aquametals.com.
Safe Harbor
This press release contains forward-looking statements
concerning Aqua Metals, Inc. Forward-looking statements include,
but are not limited to, our plans, objectives, expectations and
intentions and other statements that contain words such as
“expects,” “contemplates,” “anticipates,” “plans,” “intends,”
“believes,” “estimates,” “potential” and variations of such words
or similar expressions that convey uncertainty of future events or
outcomes, or that do not relate to historical matters. The
forward-looking statements in this press release include our
expectations for the development and completion of our V1.25
electrolyzer, the benefits of the V1.25 electrolyzer, our receipt
of additional insurance proceeds or cash from assets sales and the
future of lead acid battery recycling via traditional smelters.
Those forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause actual results to
differ materially. Among those factors are: (1) the risk that we
may not be able to complete the development of our V1.25
electrolyzer; (2) the risk that we may not realize the expected
benefits from our V1.25 electrolyzer; (3) the risk that our
insurance recovery from our claims relating to the November 2019
fire at our TRIC facility and proceeds from the sale of legacy
assets will not be sufficient to fund our accelerated licensing
strategy; (4) the risk that we may not be able to satisfactorily
demonstrate to potential licensees the technical and commercial
viability of our V1.25 electrolyzer and AquaRefining process; (5)
the risk that licensees may refuse or be slow to adopt our
AquaRefining process as an alternative to smelting in spite of the
perceived benefits of AquaRefining; (6) the risk that we may not
realize the expected economic benefits from any licenses we may
enter into; (7) the risk that we will have to engage in additional
sales of our equity securities in order to fund our future
operations; (8) the risk that further funding, by any means, may
not be available at all; (9) the risk that our common stock may be
delisted from the Nasdaq Capital Market due to our inability to
regain compliance with Nasdaq’s audit committee composition
requirements; (10) the fact that we have not generated any
significant revenue to date, thus subjecting us to all of the risks
inherent in an early-stage company; (11) the risk that our patents
and any other patents that may be issued may be challenged,
invalidated, or circumvented; (12) the risk that we may not realize
the expected benefits of our relationship with Veolia; (13) the
risk that we may not be able to successfully conclude our proposed
joint development agreement with Clarios or, if we do, realize the
expected benefits of such agreement; (14) changes in the federal,
state and foreign laws regulating the recycling of lead acid
batteries; (15) our ability to protect our proprietary technology,
trade secrets and know-how and (16) those other risks disclosed in
the section “Risk Factors” included in our Quarterly Report on Form
10-Q filed on August 4, 2020 and subsequent SEC filings. Aqua
Metals cautions readers not to place undue reliance on any
forward-looking statements. The Company does not undertake, and
specifically disclaims any obligation, to update or revise such
statements to reflect new circumstances or unanticipated events as
they occur, except as required by law.
AQUA METALS, INC.Condensed Consolidated Balance
Sheets(in thousands, except share and per share amounts)
|
June 30, 2020 |
|
December 31, 2019 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
4,776 |
|
|
$ |
7,575 |
|
Accounts receivable |
— |
|
|
244 |
|
Insurance proceeds receivable |
4,946 |
|
|
17,446 |
|
Inventory |
1,209 |
|
|
1,257 |
|
Prepaid expenses and other current assets |
248 |
|
|
981 |
|
Total current assets |
11,179 |
|
|
27,503 |
|
|
|
|
|
Non-current assets |
|
|
|
Property and equipment, net |
37,614 |
|
|
37,643 |
|
Intellectual property, net |
909 |
|
|
999 |
|
Other assets |
7,923 |
|
|
3,309 |
|
Total non-current assets |
46,446 |
|
|
41,951 |
|
|
|
|
|
Total assets |
$ |
57,625 |
|
|
$ |
69,454 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
1,883 |
|
|
$ |
4,829 |
|
Accrued expenses |
2,174 |
|
|
4,133 |
|
Lease liability, current portion |
585 |
|
|
552 |
|
Notes payable, current portion |
485 |
|
|
296 |
|
Total current liabilities |
5,127 |
|
|
9,810 |
|
|
|
|
|
Lease liability, non-current
portion |
561 |
|
|
861 |
|
Asset retirement
obligation |
814 |
|
|
790 |
|
Notes payable, non-current
portion |
8,408 |
|
|
8,404 |
|
Total liabilities |
14,910 |
|
|
19,865 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
Common stock; $0.001 par
value; 100,000,000 shares authorized; 60,274,096 and 57,997,780
shares issued and outstanding as of June 30, 2020 and December 31,
2019, respectively |
60 |
|
|
58 |
|
Additional paid-in capital |
190,956 |
|
|
189,422 |
|
Accumulated deficit |
(148,301 |
) |
|
(139,891 |
) |
Total stockholders’ equity |
42,715 |
|
|
49,589 |
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
57,625 |
|
|
$ |
69,454 |
|
AQUA METALS, INC.Condensed Consolidated
Statements of Operations(in thousands, except share and per share
amounts)(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Product sales |
$ |
— |
|
|
$ |
1,483 |
|
|
$ |
18 |
|
|
$ |
1,920 |
|
|
|
|
|
|
|
|
|
Operating cost and
expense |
|
|
|
|
|
|
|
Cost of product sales |
1,306 |
|
|
7,185 |
|
|
2,760 |
|
|
11,866 |
|
Research and development cost |
217 |
|
|
338 |
|
|
459 |
|
|
958 |
|
General and administrative expense |
2,245 |
|
|
4,335 |
|
|
4,630 |
|
|
8,351 |
|
Total operating expense |
3,768 |
|
|
11,858 |
|
|
7,849 |
|
|
21,175 |
|
|
|
|
|
|
|
|
|
Loss from operations |
(3,768 |
) |
|
(10,375 |
) |
|
(7,831 |
) |
|
(19,255 |
) |
|
|
|
|
|
|
|
|
Other income and
(expense) |
|
|
|
|
|
|
|
Insurance proceeds net of related expenses |
(52 |
) |
|
— |
|
|
(255 |
) |
|
— |
|
Interest expense |
(164 |
) |
|
(203 |
) |
|
(347 |
) |
|
(3,092 |
) |
Interest and other income |
3 |
|
|
77 |
|
|
25 |
|
|
140 |
|
|
|
|
|
|
|
|
|
Total other expense, net |
(213 |
) |
|
(126 |
) |
|
(577 |
) |
|
(2,952 |
) |
|
|
|
|
|
|
|
|
Loss before income tax
expense |
(3,981 |
) |
|
(10,501 |
) |
|
(8,408 |
) |
|
(22,207 |
) |
|
|
|
|
|
|
|
|
Income tax expense |
(2 |
) |
|
— |
|
|
(2 |
) |
|
(2 |
) |
|
|
|
|
|
|
|
|
Net loss |
$ |
(3,983 |
) |
|
$ |
(10,501 |
) |
|
$ |
(8,410 |
) |
|
$ |
(22,209 |
) |
|
|
|
|
|
|
|
|
Weighted average shares
outstanding, basic and diluted |
60,136,374 |
|
|
50,757,448 |
|
|
59,859,493 |
|
|
47,441,219 |
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.07 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.47 |
) |
Contact: Glen Akselrod, Bristol Capital (905) 326-1888, Ext.
1glen@bristolir.com
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