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 first quarter ended March 31, 2019.
“I am very pleased with our operational progress, including
safely completing installation of our Phase One capital program and
achieving 24x7 production, utilizing our initial four modules,”
stated Steve Cotton, President and Chief Executive Officer. “During
the first quarter we installed a new filter press and a new
centrifuge to provide continuous production of concentrate to the
AquaRefining modules at improved costs. While we ran one or two
modules 24-hours a day, four days a week during the first quarter
to allow safe times for some of the key work to be completed for
our contribution margin improvement projects, we began to scale
production on April 15th and are now achieving weekly production
records.”
First Quarter 2019 Financial Results
During the quarter ended March 31, 2019, the Company recognized
revenue of $0.4 million compared to $1.7 million in the first
quarter of 2018. As planned and previously disclosed, the Company
slowed production during the quarter to reduce cash burn and safely
focus on the implementation of plant improvements and enhancement
of process efficiencies as it completed Phase One of its capital
program prior to ramping operations.
Included in general and administrative expenses for the first
quarter of 2019 were several non-cash expense items including $1.0
million of expense related to the Veolia agreement for operations,
maintenance and management services, and $0.9 million in non-cash
stock-based compensation. The Company also incurred $0.2 million
for professional service fees associated with the sublease of the
Alameda facility. These items resulted in general and
administrative expenses in the first quarter of 2019 of $4.0
million compared to $1.8 million in the first quarter of 2018.
The increase in interest expense for the quarter was driven by a
one-time $2.6 million non-cash amortization expense resulting from
the recent payoff of the convertible note held by a subsidiary of
Interstate Battery System International, Inc., which provided the
benefit of approximately $0.3 million in interest savings. The
non-cash amortization resulted in interest expense in the first
quarter of 2019 increasing to $2.9 million compared to $0.6 million
in the year ago period. Interest expense without the one-time item
was approximately $0.3 million for the first quarter of 2019.
For the quarter ended March 31, 2019, the Company had an
operating loss of $8.9 million compared to an operating loss of
$7.0 million for the first quarter of 2018. The net loss for the
first quarter of 2019 was $11.7 million, or ($0.27) per diluted
share, compared to a net loss of $7.5 million, or ($0.27) per
diluted share, in the first quarter of 2018. The net loss for the
first quarter of 2019 was negatively impacted by non-cash items.
These non-cash items include a one-time $2.6 million amortization
expense recorded in conjunction with the payoff of the Interstate
Battery convertible note, $1.1 million in stock-based compensation
and $1.0 million of expense related to the Veolia agreement.
Weighted average shares outstanding for the quarter was 43.5
million.
As of March 31, 2019, the Company had $15.3 million in cash and
cash equivalents. As previously announced, in January 2019, the
Company received approximately $9.1 million of net proceeds from a
public offering of common shares of which $6.7 million was used to
pay all amounts owed for the convertible note held by a subsidiary
of Interstate Battery System International, Inc. The Company also
recently announced that it has reached an agreement with its
primary lender, Green Bank, the primary lender in the USDA-backed
loan, to waive certain covenants and allow the Company to enter
into capital and/or operating leases in the total amount of up to
$5.0 million.
Outlook for 2019
As the Company continues to scale concentrate production, we
expect to continue to roll out modules into operation, positioning
us to set regular production records moving forward. The Company
has begun the roll out process for modules five through eight,
which would enable the achievement of up to 50% of total plant
capacity. As modules are brought online, plant operations will need
to be further synchronized to meet AquaRefining needs. The Company
remains on track to achieve its target of 16 modules in operation
by the end of 2019.
“While we have put in place the equipment and processes to scale
production, electrolyte recovery remains critical to enhancing our
contribution margin and allowing us to scale further. With
Phase One complete, we are now conserving up to 75% of our target
for electrolyte recovery. We have completed a pilot for Phase Two,
which we believe will increase electrolyte recovery to 100%
of our target and increase yield of the material processed through
the AquaRefinery. Phase Two equipment is anticipated to be
delivered during the summer and installed in the third quarter,
driving further improvements to contribution margin,” added
Cotton.
The Company is also focused on increasing the percentage of lead
metal recovered from battery feedstock and converted into high
value AquaRefined and lead bullion ingot form right at the
AquaRefinery. In particular, there are opportunities to further
process the hard metallic lead, which could bring today’s
approximately 70% conversion to 80% or more by year end, and which
could generate considerable additional plant-wide gross margin for
our AquaRefinery.
Johnson Controls Battery Group Update
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 April, Aqua Metals met with Clarios at the
nominated First Facility to commence discussions of the Equipment
Supply Agreement and Development Program for Aqua Metals to supply
AquaRefining equipment, know-how, licensing and ongoing support
services for that particular location or another alternate first
location. The parties identified specific performance metrics for
the existing AquaRefinery located in McCarran Nevada as conditions
precedent to shipping equipment. These are inclusive of
AquaRefining module performance and uptime, electrolyte usage, feed
rates of AquaRefined material and emissions.
Cotton concluded, “We believe we are on track to achieve the
target performance metrics during 2019 as we complete Phase Two of
our capital program and continue to ramp to our target 16 modules.
There is still plenty of work to do, but together with our
operations partner Veolia, we remain laser-focused on achieving
operational excellence to meet our economic goals, supplying
growing quantities of ultra-pure lead directly to battery
manufacturing facilities and executing on our capital-light
strategy by pursuing strategic relationships including licensing or
co-processing relationships to expand AquaRefining on a global
stage.”
Rescheduled Conference Call and Webcast
Aqua Metals will hold a conference call on Tuesday, May 14, 2019
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
(631) 891-4304. A replay of the teleconference will be available on
https://ir.aquametals.com/ir-calendar. A replay will also be
available until June 14, 2019 by dialing (844) 512-2921 or (412)
317-6671 and using pin number 10006867.
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 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, NV, and has built
its first recycling facility in Nevada’s Tahoe Reno Industrial
Complex. 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” 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 expectations for the Company’s relationships with
Clarios and Veolia, 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 of AquaRefined lead and has not generated any
significant revenue from the sale of AquaRefined lead to date, thus
subjecting the Company to all of the risks inherent in an
early-stage company; (3) the risk that the Company may not be able
to realize the expected benefits of its relationships with Clarios
and Veolia, (4) 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; (5) the risk that the
Company’s initial patents and any other patents that may be issued
to it may be challenged, invalidated, or circumvented, (6) 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; (7) changes in the federal, state and
foreign laws regulating the recycling of lead acid batteries; (8)
the Company’s ability to protect its proprietary technology, trade
secrets and know-how and (9) those other risks disclosed in the
section “Risk Factors” included in the Company’s Quarterly Report
on Form 10-Q filed on May 9, 2019 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.
Contact: Alison Ziegler, Darrow Associates (201)
220-2678aziegler@darrowir.com
AQUA METALS, INC.Condensed Consolidated Balance
Sheets(in thousands, except share and per share amounts)
|
March 31, 2019 |
|
December 31, 2018 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
15,336 |
|
|
$ |
20,892 |
|
Accounts receivable |
426 |
|
|
725 |
|
Inventory |
1,216 |
|
|
765 |
|
Prepaid expenses and other current assets |
1,157 |
|
|
370 |
|
Total current assets |
18,135 |
|
|
22,752 |
|
|
|
|
|
Non-current assets |
|
|
|
Property and equipment, net |
46,589 |
|
|
45,548 |
|
Intellectual property, net |
1,133 |
|
|
1,271 |
|
Other assets |
3,332 |
|
|
1,800 |
|
Total non-current assets |
51,054 |
|
|
48,619 |
|
|
|
|
|
Total assets |
$ |
69,189 |
|
|
$ |
71,371 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
3,035 |
|
|
$ |
2,088 |
|
Accrued expenses |
4,449 |
|
|
5,196 |
|
Lease liability, current portion |
505 |
|
|
121 |
|
Deferred rent, current portion |
— |
|
|
8 |
|
Notes payable, current portion |
274 |
|
|
311 |
|
Convertible note payable, current portion |
— |
|
|
4,075 |
|
Total current liabilities |
8,263 |
|
|
11,799 |
|
|
|
|
|
Deferred rent, non-current
portion |
— |
|
|
27 |
|
Lease liability, non-current
portion |
1,282 |
|
|
110 |
|
Asset retirement
obligation |
756 |
|
|
745 |
|
Notes payable, non-current
portion |
8,610 |
|
|
8,600 |
|
Total liabilities |
18,911 |
|
|
21,281 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
Common stock; $0.001 par
value; 50,000,000 shares authorized; 44,727,697 and 38,932,437
shares issued and outstanding as of March 31, 2019 and December 31,
2018, respectively |
45 |
|
|
39 |
|
Additional paid-in capital |
157,037 |
|
|
145,147 |
|
Accumulated deficit |
(106,804 |
) |
|
(95,096 |
) |
Total stockholders’ equity |
50,278 |
|
|
50,090 |
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
69,189 |
|
|
$ |
71,371 |
|
AQUA METALS, INC.Condensed Consolidated
Statements of Operations(in thousands, except share and per share
amounts)(Unaudited)
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
|
|
|
|
Product sales |
$ |
437 |
|
|
$ |
1,726 |
|
|
|
|
|
Operating cost and
expense |
|
|
|
Cost of product sales |
4,681 |
|
|
5,436 |
|
Research and development cost |
620 |
|
|
1,475 |
|
General and administrative expense |
4,016 |
|
|
1,775 |
|
Total operating expense |
9,317 |
|
|
8,686 |
|
|
|
|
|
Loss from operations |
(8,880 |
) |
|
(6,960 |
) |
|
|
|
|
Other income and expense |
|
|
|
Interest expense |
(2,889 |
) |
|
(587 |
) |
Interest and other income |
63 |
|
|
17 |
|
|
|
|
|
Total other expense, net |
(2,826 |
) |
|
(570 |
) |
|
|
|
|
Loss before income tax
expense |
(11,706 |
) |
|
(7,530 |
) |
|
|
|
|
Income tax expense |
(2 |
) |
|
(2 |
) |
|
|
|
|
Net loss |
$ |
(11,708 |
) |
|
$ |
(7,532 |
) |
|
|
|
|
Weighted average shares
outstanding, basic and diluted |
43,514,225 |
|
|
27,768,008 |
|
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.27 |
) |
|
$ |
(0.27 |
) |
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