Highlights:
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, 2018.
“During the quarter, we took the first step to move beyond
“proof of concept” and transitioned into commercialization of what
we believe is truly a revolutionary and greener way to recycle
lead,” commented Steve Cotton, Aqua Metal’s newly appointed
President. “During the quarter, our strengthened management team
and board have conducted a thorough assessment of the business.
Together we have revised our strategic vision on how to move ahead,
increased our focus on reducing costs and have strengthened our
strategic partnerships. We have also seen progress in the
production of high purity AquaRefined lead and, during the quarter,
we made initial shipments of this material to Johnson
Controls.”
During the three months ended June 30, 2018, the Company
recognized revenue of $0.5 million, which includes initial
production and sales of AquaRefined lead. This compares to sales of
$0.6 million in the second quarter of 2017 and sales of $1.7
million in the first quarter of 2018. In addition to sales of
AquaRefined lead in the quarter, the company continues to sell lead
compounds and plastics from lead acid batteries that had little or
no processing. Sales of these constituent components of lead acid
batteries (“LABs”) began in April 2017 as the company began testing
its non-AquaRefining infrastructure.
The Company had an operating loss of $9.2 million for the three
months ended June 30, 2018 compared to an operating loss of $8.0
million for the three months ended June 30, 2017. Included in
expenses for the second quarter of 2018 were $0.8 million
associated with the recent proxy fight, $0.9 million related to the
resignation of the company’s former CEO, as well as a net $0.4
million charge related to amendments to its agreement with
Interstate Battery. The second quarter also saw additional expenses
associated with the expansion of the AquaRefining process.
The net loss for the second quarter of 2018 was $9.9 million, or
($0.33) per diluted share, compared to a net loss of $8.4 million,
or ($0.42) per diluted share, in the second quarter of 2017.
For the six months ended June 30, 2018, the Company recognized
revenue of $2.2 million and had an operating loss of $16.2 million
compared to $0.6 million of revenue and an operating loss of $12.5
million in the prior year period. The net loss for the first six
months of 2018 was $17.5 million, or ($0.59) per diluted share,
compared to a net loss of $13.3 million, or ($0.69) per diluted
share for the first six months of 2017.
As of June 30, 2018, the company had $36.8 million in cash and
cash equivalents. This includes the net $26.6 million from the
capital raise in June.
“Management continues to be optimistic on the future of
AquaRefining, as demonstrated by management’s and the board’s
participation in the most recent equity raise,” added Cotton. “We
are realistic, however, that there will continue to be operational
and mechanical challenges in scaling up a-first-of-its-kind
facility. Our immediate priority is to increase the uptime of our
modules, which we intend to do as part of our goal of initially
running a limited number of modules for 24 hours a day and
achieving modules running in a steady state. This is critical to
scaling up. It also gives us the flexibility to continually
incorporate our experiential learnings and modify the modules to
improve performance and enables the remaining processes of the
plant to mature and synchronize in order to support increased
AquaRefining.”
“Parallel to our efforts to increase production, we are also
focused on improving contribution and gross margins. We are in the
process of implementing a number of planned capital improvement
projects that will allow us to increase utilization rates and limit
downtime as we work on improving contribution margins, which we
believe is necessary before we scale up to 16 modules.”
Conference Call and Webcast
Aqua Metals will hold a conference call today, Wednesday August
8, 2018 at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss these results
and corporate developments. Interested parties are invited to
listen to the call live over the Internet at
https://ir.aquametals.com/ir-calendar. The live call is also
available by dialing (855) 327-6837 or for international callers
(778) 331-2160. A replay of the teleconference will be available on
https://ir.aquametals.com/ir-calendar. A replay will also be
available until September 8, 2018 by dialing (844) 512-2921 or
(412) 317-6671 and using pin number 10005351.
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 recycling
production capacity by licensing the AquaRefining technology to
partners. This would meet growing demand for lead to power new
applications including stop/start automobile batteries which
complement the vehicle’s main battery, Internet data centers,
alternative energy applications including solar, wind, and grid
scale storage. Aqua Metals is based in Alameda,
California, and has built its first recycling facility in
Nevada’s Tahoe Reno Industrial Complex. To learn more, please
visit www.aquametals.com.
During the second quarter of 2018, the Company appointed Steve
Cotton to serve as President of the Company. Pursuant to his
Employment Agreement with the Company, Mr. Cotton will be eligible
to receive annual performance-based bonuses payable in shares of
the Company’s common stock. Mr. Cotton will also be eligible to
receive a one-time bonus of 100,000 shares of the Company’s common
stock subject to and contingent upon the volume-weighted average
price of the Company’s common stock trading on the Nasdaq Stock
Market equaling or exceeding $7.00 per share over any 30
consecutive trading days during the first 12 months of his
employment. Mr. Cotton was also awarded options to purchase up to
840,000 shares of the Company’s common stock, subject to certain
time and vesting requirements. The equity awards granted to Mr.
Cotton are subject to the terms and conditions of the Company’s
Amended and Restated 2014 Stock Incentive Plan ("2014 Plan") but
were not issued under the 2014 Plan in reliance on with Nasdaq Rule
5635(c)(4), which exempts certain inducement grants from the Nasdaq
Listing Rules general requirement that equity compensation be
subject to stockholder approval.
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” and variations of
such words or similar expressions that predict or indicate future
events or trends, or that do not relate to historical matters. The
forward looking statements in this release include the strength and
efficacy of Aqua Metals’ portfolio of patent applications and
issued patents, the lead acid battery recycling industry, the
future of lead acid battery recycling via traditional smelters, the
Company’s development of its commercial lead acid battery recycling
facilities and the quality and efficiency of the Company’s proposed
lead acid battery recycling operations. 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 the Company may not be able to
produce and market AquaRefined lead on a commercial basis or, if
the Company achieves commercial operations, that such operations
will be profitable, (2) the fact that the Company only recently
commenced production and has not generated any significant revenue
to date, thus subjecting the Company to all of the risks inherent
in a pre-revenue start-up; (3) the risk no further patents will be
issued on the Company’s patent applications or any other
application that it may file in the future and that those patents
issued to date and any patents issued in the future will be
sufficiently broad to adequately protect the Company’s technology,
(4) the risk that the Company’s initial patents and any other
patents that may be issued to it may be challenged, invalidated, or
circumvented, (5) risks related to Aqua Metals’ ability to raise
sufficient capital, as and when needed, to develop and operate its
recycling facilities and fund continuing losses from operations as
the Company endeavors to achieve profitability; (6) changes in the
federal, state and foreign laws regulating the recycling of lead
acid batteries; (7) the Company’s ability to protect its
proprietary technology, trade secrets and know-how and (8) those
other risks disclosed in the section “Risk Factors” included in the
Company’s Quarterly Report on Form 10-Q filed on August 8, 2018.
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)(unaudited) |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018 |
|
December 31,
2017 |
|
|
|
|
|
Current
assets |
|
|
|
|
Cash and
cash equivalents |
|
$ |
36,759 |
|
|
$ |
22,793 |
|
Accounts
receivable |
|
|
360 |
|
|
|
882 |
|
Inventory |
|
|
1,247 |
|
|
|
1,239 |
|
Prepaid
expenses and other current assets |
|
|
218 |
|
|
|
770 |
|
Total
current assets |
|
|
38,584 |
|
|
|
25,684 |
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
|
46,492 |
|
|
|
45,733 |
|
Intellectual property, net |
|
|
1,366 |
|
|
|
1,461 |
|
Other
assets |
|
|
1,564 |
|
|
|
1,564 |
|
Total
non-current assets |
|
|
49,422 |
|
|
|
48,758 |
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
|
88,006 |
|
|
$ |
|
74,442 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
1,692 |
|
|
$ |
1,436 |
|
Accrued
expenses |
|
|
1,634 |
|
|
|
1,801 |
|
Deferred
rent, current portion |
|
|
200 |
|
|
|
192 |
|
Notes
payable, current portion |
|
|
347 |
|
|
|
405 |
|
Convertible note payable, current portion |
|
|
2,286 |
|
|
|
- |
|
Total
current liabilities |
|
|
6,159 |
|
|
|
3,834 |
|
|
|
|
|
|
|
|
|
|
Deferred
rent, non-current portion |
|
|
671 |
|
|
|
771 |
|
Asset
retirement obligation |
|
|
722 |
|
|
|
701 |
|
Notes
payable, non-current portion |
|
|
8,700 |
|
|
|
8,839 |
|
Convertible note payable, non-current portion |
|
|
- |
|
|
|
1,332 |
|
Total
liabilities |
|
|
16,252 |
|
|
|
15,477 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Common
stock and Additional paid-in capital |
|
|
144,055 |
|
|
|
113,807 |
|
Accumulated deficit |
|
|
(72,301 |
) |
|
|
(54,842 |
) |
Total
stockholders' equity |
|
|
71,754 |
|
|
|
58,965 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
88,006 |
|
|
$ |
74,442 |
|
|
|
|
|
|
|
|
|
|
|
Aqua Metals, Inc.Condensed
Consolidated Statements of Operations(in
thousands, except share and per share
data)(unaudited) |
|
|
|
Three months ended June 30 |
|
Six months ended June 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Product
sales |
|
$ |
483 |
|
|
$ |
603 |
|
|
$ |
2,209 |
|
|
$ |
603 |
|
|
|
|
|
|
|
|
|
|
Operating cost and
expense |
|
|
|
|
|
|
|
|
Cost of
product sales |
|
|
4,600 |
|
|
|
2,531 |
|
|
|
10,036 |
|
|
|
2,531 |
|
Research
and development cost |
|
|
1,203 |
|
|
|
2,184 |
|
|
|
2,678 |
|
|
|
5,171 |
|
General
and administrative expense |
|
|
3,913 |
|
|
|
1,444 |
|
|
|
5,688 |
|
|
|
2,972 |
|
Impairment charge |
|
|
- |
|
|
|
2,411 |
|
|
|
- |
|
|
|
2,411 |
|
Total
operating expense |
|
|
9,716 |
|
|
|
8,570 |
|
|
|
18,402 |
|
|
|
13,085 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(9,233 |
) |
|
|
(7,967 |
) |
|
|
(16,193 |
) |
|
|
(12,482 |
) |
|
|
|
|
|
|
|
|
|
Other income and
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(719 |
) |
|
|
(408 |
) |
|
|
(1,306 |
) |
|
|
(796 |
) |
Interest
and other income |
|
|
25 |
|
|
|
10 |
|
|
|
42 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
Total
other expense, net |
|
|
(694 |
) |
|
|
(398 |
) |
|
|
(1,264 |
) |
|
|
(775 |
) |
|
|
|
|
|
|
|
|
|
Loss
before income tax expense |
|
|
(9,927 |
) |
|
|
(8,365 |
) |
|
|
(17,457 |
) |
|
|
(13,257 |
) |
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
(2 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,927 |
) |
|
$ |
(8,365 |
) |
|
$ |
(17,459 |
) |
|
$ |
(13,259 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding, basic and diluted |
|
|
30,134,995 |
|
|
|
20,123,041 |
|
|
|
29,389,459 |
|
|
|
19,231,667 |
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share |
|
$ |
(0.33 |
) |
|
$ |
(0.42 |
) |
|
$ |
(0.59 |
) |
|
$ |
(0.69 |
) |
|
|
|
|
|
|
|
|
|
Contact: Alison Ziegler, Darrow Associates (201)
220-2678aziegler@darrowir.com
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