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 third quarter ended September 30, 2020.
Steve Cotton, President and Chief Executive
Officer, commented “I continue to be pleased with Aqua Metals’
progress as we focus on our low capital, equipment supply and
licensing business model. The V1.25L program is moving forward and
remains ahead of schedule. The redesign of the frame and tank
utilized for V1.25b validated our expectations regarding improved
build and maintenance costs, among other enhancements. These
improvements have simplified the overall electrolyzer design and
improved the maintenance efficiency. In addition, development of
further advancements that will be utilized for the final iteration
of the program, are well underway. We remain very encouraged by the
results of the V1.25 program and believe the results will continue
to fortify Aqua Metals’ game changing technology that will be
utilized by our future licensees. Additionally, I believe Aqua
Metals is well positioned financially. We have significantly
reduced our rate of cash spend and we have made substantial
progress collecting insurance proceeds and anticipate more payments
are on the way. At the end of the quarter we had a cash balance of
$5.6 million, not including the escrow balance we have built up to
$7.9 million that will be utilized to pay off the $8.5 million net
balance on the Veritex loan – which we anticipate happening prior
to year-end, reducing our monthly debt service cash burn by
~$74,000 or nearly $0.9 million annually. We also have begun the
process of monetizing non-core assets through the sale of plant
equipment and have engaged with multiple interested parties after
placing the McCarran facility for sale.”
Third
Quarter 2020 Financial
Results
The Company recognized minimal revenue during
the third quarter ended September 30, 2020, because of the plant
fire and the focus on its licensing strategy. The revenue earned
during the quarter resulted from the sale of inventory consisting
of lead compounds that were generated during pre-fire operations.
By comparison, during the quarter ended September 30, 2019, the
Company recognized revenue of $2.4 million. Product sales for the
third 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
80% for the third quarter of 2020 to $1.6 million,
compared to $8.2 million for the third 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
third quarter of 2020 decreased approximately 68% to $1.7
million, from $5.1 million in the third 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.
For the quarter ended September 30, 2020, the
Company had an operating loss of $3.4 million compared to an
operating loss of $11.3 million for the third quarter of 2019,
and a negative cash flow from operations of only $0.7 million for
the third quarter of 2020 compared to $8.3 million for
the first half of 2020. The net loss for the third quarter of
2020 was $1.8 million, or $0.03 per basic and diluted share,
compared to a net loss of $11.3 million, or $0.20 per basic and
diluted share, in the third quarter of 2019.
As of September 30, 2020, the Company had $5.6
million in cash and cash equivalents. In addition, at the end of
the third quarter, the Company had $7.6 million in escrow, to
be used for the retirement of the Veritex loan. The increase in
other assets during the third quarter of 2020 to $10.6
million, from $7.9 million at the end of the second quarter, was
driven by the growth of escrow balance. Subsequent to quarter end,
as a result of an additional insurance payment, the escrow total
grew to $7.9 million.
Aqua Metals received insurance proceeds of $6.8
million during the third quarter of 2020. The insurance
proceeds receivable balance has now been reduced to zero as
insurance payments have exceeded the total established insurance
proceeds receivable amount. 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. Any amounts received in excess
of that total are reported as other income. It is anticipated that
additional insurance collections will be received, reflecting
actual asset replacement cost and business interruption
coverage.
Conference Call and Webcast
Aqua Metals will hold a conference call on
Thursday, October 22, 2020 at 4:30 p.m. Eastern Daylight Time (1:30
p.m. Pacific Daylight Time) to discuss third quarter results
and corporate developments. The call may be accessed by dialing:
1-855-327-6837 (toll free) or 1-631-891-4304 for international
callers. A simultaneous webcast of the conference call will be
available at: http://public.viavid.com/index.php?id=142036. In
addition, the live webcast or a replay of the conference call will
be available via the Company website
at: https://ir.aquametals.com/ir-calendar. A telephone replay
of the conference call will be available until November 22, 2020 by
dialing 1-844-512-2921 (toll free) or 1-412-317-6671 and using pin
number 10011537.
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 meet the
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.
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.
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 sale of the land and building at our McCarran
facility; the sufficiency of any sale proceeds coupled with any
further insurance recovery to fund our operations and the
development and completion of our V1.25 electrolyzer; the benefits
of the V1.25 electrolyzer; 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 sell the
land, building and non-core equipment at our McCarran facility on a
timely basis, (2) the risk that we may not realize the sale
proceeds we hoped for from the sale of the land, building and
non-core equipment, (3) the risk that the terms of any such sale
may include indemnities or other provisions that pose potential
contingent liability to Aqua Metals, (4) the risk that we may not
be able to complete the development of our V1.25 electrolyzer; (5)
the risk that we may not realize the expected benefits from our
V1.25 electrolyzer; (6) 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; (7) 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; (8) 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; (9) the risk that we may not realize the expected
economic benefits from any licenses we may enter into; (10) the
risk that we will have to engage in additional sales of our equity
securities in order to fund our future operations; (11) the risk
that further funding, by any means, may not be available at all;
(12) 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; (13) the risk that our patents and any other
patents that may be issued to it may be challenged, invalidated, or
circumvented; (14) 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; (15)
changes in the federal, state and foreign laws regulating the
recycling of lead acid batteries; (16) our ability to protect our
proprietary technology, trade secrets and know-how and (17) those
other risks disclosed in the section "Risk Factors" included in our
Quarterly Report on Form 10-Q filed on October 22, 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)
|
|
|
|
|
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
5,635 |
|
|
$ |
7,575 |
|
Accounts receivable |
|
— |
|
|
|
244 |
|
Insurance proceeds receivable |
|
— |
|
|
|
17,446 |
|
Inventory |
|
1,135 |
|
|
|
1,257 |
|
Prepaid expenses and other current assets |
|
489 |
|
|
|
981 |
|
Total current assets |
|
7,259 |
|
|
|
27,503 |
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
Property and equipment, net |
|
37,266 |
|
|
|
37,643 |
|
Intellectual property, net |
|
864 |
|
|
|
999 |
|
Other assets |
|
10,554 |
|
|
|
3,309 |
|
Total non-current assets |
|
48,684 |
|
|
|
41,951 |
|
|
|
|
|
|
|
|
|
Total assets |
$ |
55,943 |
|
|
$ |
69,454 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable |
$ |
1,714 |
|
|
$ |
4,829 |
|
Accrued expenses |
|
2,179 |
|
|
|
4,133 |
|
Lease liability, current portion |
|
602 |
|
|
|
552 |
|
Notes payable, current portion |
|
364 |
|
|
|
296 |
|
Total current liabilities |
|
4,859 |
|
|
|
9,810 |
|
|
|
|
|
|
|
|
|
Lease liability, non-current
portion |
|
403 |
|
|
|
861 |
|
Asset retirement
obligation |
|
827 |
|
|
|
790 |
|
Notes payable, non-current
portion |
|
8,456 |
|
|
|
8,404 |
|
Total liabilities |
|
14,545 |
|
|
|
19,865 |
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
Common stock; $0.001 par
value; 100,000,000 shares authorized; 61,117,926 and 57,997,780
shares issued and outstanding as of September 30, 2020 and December
31, 2019, respectively |
|
61 |
|
|
|
58 |
|
Additional paid-in capital |
|
191,475 |
|
|
|
189,422 |
|
Accumulated deficit |
|
(150,138 |
) |
|
|
(139,891 |
) |
Total stockholders’ equity |
|
41,398 |
|
|
|
49,589 |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
55,943 |
|
|
$ |
69,454 |
|
|
|
|
|
|
|
|
|
AQUA METALS, INC.Condensed Consolidated
Statements of Operations(in thousands, except share and per share
amounts)(Unaudited)
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
$ |
90 |
|
|
$ |
2,361 |
|
|
$ |
108 |
|
|
$ |
4,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cost and
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales |
|
1,635 |
|
|
|
8,231 |
|
|
|
4,395 |
|
|
|
20,097 |
|
Research and development cost |
|
210 |
|
|
|
282 |
|
|
|
669 |
|
|
|
1,240 |
|
General and administrative expense |
|
1,656 |
|
|
|
5,107 |
|
|
|
6,286 |
|
|
|
13,458 |
|
Total operating expense |
|
3,501 |
|
|
|
13,620 |
|
|
|
11,350 |
|
|
|
34,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(3,411 |
) |
|
|
(11,259 |
) |
|
|
(11,242 |
) |
|
|
(30,514 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and
(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance proceeds net of related expenses |
|
1,722 |
|
|
|
— |
|
|
|
1,467 |
|
|
|
— |
|
Interest expense |
|
(166 |
) |
|
|
(142 |
) |
|
|
(513 |
) |
|
|
(3,234 |
) |
Interest and other income |
|
18 |
|
|
|
85 |
|
|
|
43 |
|
|
|
225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income (expense), net |
|
1,574 |
|
|
|
(57 |
) |
|
|
997 |
|
|
|
(3,009 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
expense |
|
(1,837 |
) |
|
|
(11,316 |
) |
|
|
(10,245 |
) |
|
|
(33,523 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(1,837 |
) |
|
$ |
(11,316 |
) |
|
$ |
(10,247 |
) |
|
$ |
(33,525 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding, basic and diluted |
|
60,998,971 |
|
|
|
57,053,982 |
|
|
|
60,242,093 |
|
|
|
50,491,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.03 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.66 |
) |
Contact:
Glen Akselrod, Bristol Capital(905) 326-1888,
Ext. 1glen@bristolir.com
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