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Date
Aug. 13, 2025 at 4:30 p.m. ET
Call participants
Chief Executive Officer — Steve Cotton
Chief Financial Officer — Eric West
Director, Communications and ESG — Bob Meyers
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Takeaways
Cash position-- Cash and cash equivalents stood at approximately $1,900,000 at the end of Q2 2025 and rose to approximately $3,200,000 immediately after the call, reflecting recent asset divestitures.
Debt elimination-- All company debt was retired during Q2 2025, including paying off the $3,000,000 Summit building loan, which also ended related interest expenses.
Plant operations expenses-- Quarterly plant operations expenses declined to $800,000 from $2,400,000 a year ago, mainly due to workforce reductions.
General and administrative expenses-- General and administrative expenses were $2,200,000, down from $3,400,000 in 2024 as a result of lower payroll and related costs.
Net loss-- The company reported a net loss of approximately $6,800,000 for Q2 2025, including non-cash charges for asset impairments and disposals totaling $3,800,000 and $9,000,000 year-to-date from the CRR transaction.
Interest and other income-- Other income included $500,000 in interest and $800,000 in non-cash gain from warrant liability remeasurement.
Cash used in operations-- Year-to-date cash used in operating activities was $5,300,000. An improvement driven by cost reduction and workforce actions.
Investing cash flow-- Investing activities provided $4,900,000, primarily from the sale of facilities and equipment.
Financing activities-- Financing activities used $1,800,000 year to date, reflecting $2,700,000 raised via ATM, $100,000 from Lincoln Park, and $4,500,000 in principal repayments.
Reverse stock split-- On Aug. 4, the company executed a one-for-10 reverse stock split to support compliance with Nasdaq listing requirements.
Lithium carbonate quality-- Management reported production of lithium carbonate with fluorine content below 30 parts per million and stated, "This meets and exceeds the strict specifications of cathode active material producers."
NMC output for sampling-- Over one metric ton of high-purity nickel manganese cobalt (NMC) mixed hydroxide cake was produced for partner qualification sampling.
Feedstock flexibility-- The company successfully tested nickel refinery residue as a new feedstock and is preparing to test undersea nodules rich in nickel and cobalt.
Sodium sulfate regeneration-- Trials began on sodium sulfate regeneration technology to potentially convert waste into recirculating reagents for PCAM producers.
Commercial facility design-- A modular and scalable ARC facility is in design, targeting processing capacity of 10,060 metric tons of black mass annually.
Cost competitiveness-- CEO Steve Cotton stated, "AquaRefining in the US is cost competitive with Chinese hydrometallurgical recycling and operates at roughly half the cost of traditional US hydrometallurgical methods."
Patent allowance-- Management announced receipt of a US patent allowance covering foundational AquaRefining technology for lithium-ion battery recycling.
Strategic engagement-- The company is in discussions with partners regarding phased facility build-outs, licensing, joint ventures, and offtake agreements, enabled by recent patent developments.
Industry event outreach-- The recent technology showcase hosted around 100 attendees, resulting in new strategic conversations and increased industry validation as cited by Steve Cotton.
Summary
Aqua Metals(AQMS 2.43%) significantly reduced operating and administrative costs through substantial workforce cuts and asset sales, resulting in a leaner balance sheet and debt elimination. Production of high-specification lithium carbonate and flexible NMC formats positioned the company for direct engagement with battery supply chains. Modular ARC facility designs and patent milestones underpin evolving business models targeting both in-house operations and enabling partner ventures across domestic and international markets. Enhanced financial resources and strategic patent protection have generated active dialogues with prospective technology licensees and operators, signaling a tangible pathway to commercialization.
The sodium sulfate regeneration initiative may further differentiate the firm's process by reducing chemical use and waste for PCAM producers.
CFO Eric West articulated a near-term focus on financial discipline, optimizing partner structures, and supporting multi-path commercial opportunities by leveraging a strengthened cash position.
Management stressed the importance of forthcoming supply and offtake partnerships as critical steps before large-scale commercial facility investment.
US policy developments, such as potential incentives for domestic black mass sales and government critical minerals stockpiling, were described as possible future tailwinds but remained undetermined in impact.
Industry glossary
Black mass: Crushed, processed electrode material from spent lithium-ion batteries containing valuable metals such as lithium, cobalt, and nickel.
PCAM (Precursor Cathode Active Material): Intermediate chemical product used as a feedstock for manufacturing lithium-ion battery cathodes.
AquaRefining: Aqua Metals’ proprietary aqueous-based electrochemical process for recycling critical battery metals.
ARC facility: Aqua Metals’ term for its modular, scalable recycling plant platform designed to process battery materials at commercial scale.
NMC (Nickel Manganese Cobalt cake): A type of battery-grade compound produced from recycled or mined sources, used as cathode material in lithium-ion batteries.
ATM (At-the-Market) offering: A financing mechanism that allows a company to raise capital by selling shares directly into the open market at prevailing prices.
Full Conference Call Transcript
Steve Cotton, president and chief executive officer, and Eric West, chief financial officer. Before we begin, I would like to remind participants that during the call, management will be making forward-looking statements. Please refer to the company's report on Form 10-Q filed today, August 13, for a summary of the forward-looking statements and the risks, uncertainties, and other factors that could cause actual results to differ materially from those forward-looking statements. Aqua Metals cautions investors 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.
As a reminder, after the formal remarks, we will be taking questions. Questions will be accepted on the call from analysts, and all other investors can submit a question using the webcast portal provided in today's and earlier press releases. We will take as many questions as we can in our available time slot. With that, I'd like to turn the call over to Steve Cotton, CEO of Aqua Metals. Steve, please go ahead.
Steve Cotton: Thank you, and good afternoon, everyone. This past quarter has been a defining period for Aqua Metals. We advanced our commercialization roadmap, achieved new technical milestones, and strengthened our financial position, all of which position us for successful market entry. First, on the technology front. We produced lithium carbonate with fluorine content below 30 parts per million, which is likely a best-in-class result globally for recycled lithium. This meets and exceeds the strict specifications of cathode active material producers, and we've already produced approximately 100 kilograms for strategic counterparties to evaluate. We produced over one metric ton of high purity NMC or nickel manganese cobalt mixed hydroxide cake for qualification sampling with potential partners.
We believe this material could integrate directly into the value chain at the PCAM step or precursor cathode active material step, creating efficiencies over producing independent sulfate streams. We continued exploring alternative feedstocks, successfully testing nickel refinery residue and preparing to test undersea nodules rich in nickel and cobalt later this year. We also began trials for sodium sulfate regeneration technology, an innovative process that could help PCAM producers convert sodium sulfate waste into sulfuric acid and sodium hydroxide, which can be recirculated back into their process. This not only reduces chemical costs but also minimizes waste streams. Second, on scalability.
We began designing a modular scalable commercial ARC facility capable of processing between 10,060 metric tons of black mass annually. This design will serve as a clear blueprint for scaling AquaRefining to meet growing demand. We are already in discussions with potential strategic partners who could support a phased build-out. Third, on cost competitiveness. Our internal analysis shows that AquaRefining in the US is cost competitive with Chinese hydrometallurgical recycling and operates at roughly half the cost of traditional US hydrometallurgical methods. This is a critical milestone proving that the state's competitiveness can go hand in hand. Finally, we continue to engage with potential strategic partners.
We believe collaboration among recyclers, CAM producers, and technology innovators will be essential to building a fully domestic closed-loop battery material supply chain, something still largely absent at commercial scale in the United States. Our progress this quarter shows that Aqua Metals is not just preparing to participate in that market. We are positioning ourselves to help define that. With that, I will turn the call over to our CFO, Eric West, to review the financials. Go ahead, Eric.
Eric West: Thanks, Steve. Let me start my comments with our balance sheet. We ended the quarter with cash and cash equivalents of approximately $1,900,000. After this call, we have approximately $3,200,000. During June, we completed the sale of the Sierra Arc facility and related equipment, generating roughly $4,300,000 of cash growth. These proceeds were used to retire the $3,000,000 Summit building loan, which also eliminated the associated interest expense going forward. With the payoff of this note, the company now has no debt. As a reminder, on 08/04/2025, we effected a one-for-10 reverse stock split. All per share figures we referenced today reflect that split. I will now move to the income statement.
Operating expenses reflect prudent cost control and workforce reduction implemented to conserve cash while we pursue necessary capital funding. For the quarter, plant operations expenses were $800,000, down from $2,400,000 a year ago. And G&A was $2,200,000, down from $3,400,000 in 2024. The decline in both categories was driven primarily by lower payroll and related costs following workforce reductions. We do not expect these actions to materially impact current pilot operations or ongoing R&D. Q2 2025 net loss also includes non-cash items associated with the CRR transaction, specifically an impairment and loss on the disposal of property and equipment of approximately $3,800,000 in the quarter and $9,000,000 recognized year to date as we exited the site.
Other income benefited from $500,000 of interest in other income and $800,000 of non-cash gain from the warrant liability remeasurement. Net loss for the quarter was approximately $6,800,000. On a per share basis, basic and diluted net loss per share was negative $7.44 for 2025 versus negative $9.94 in 2024. Now moving to the cash flow statement. Year-to-date cash used in operating activities was $5,300,000, an improvement versus the prior year, reflecting prudent cash management and cost reduction actions, including workforce reductions taken to conserve cash while we work toward the capital funding path. Investing activities provided $4,900,000, driven primarily by the building and equipment sales proceeds received in Q2. Financing activities used $1,800,000 year to date.
This comprised of $2,700,000 raised through our ATM and $100,000 via the Lincoln Park e-lock. And we applied $4,500,000 to principal repayments, including the payoff of the Summit loan and bridge note. We are continuing to focus on capital solutions and partnering structures that support our long-term strategy while strengthening our cash position to ensure an adequate runway. That concludes my comments on the company's financials. I'll now turn the call back to Steve.
Steve Cotton: Thanks, Eric. So to summarize, in Q2, we delivered best-in-class lithium quality, validated our cost competitiveness, expanded our feedstock potential, and initiated the design of this scalable ARC facility. We also strengthened our balance sheet and extended our cash runway, giving us a solid financial platform as we move towards commercialization. We are proud of the progress we've made, and we believe Aqua Metals is well-positioned to play a defining role in building a resilient, fully domestic battery material supply chain in the United States. With that, let's open the call for questions. Thank you. We'll now conduct our question and answer session. To ask a question via the phone, press star 1 on your telephone keypad.
The confirmation tone will indicate that your line is in the question queue. You can press star 2 to remove yourself from the queue. To ask the question on the webcast, simply type it in the ask a question field on your screen. One moment, while we pull for questions. And your first question comes from Mickey Legg with The Benchmark Company. Please state your question.
Mickey Legg: Congrats on the quarter. Welcome to the team, Eric. You maybe talk a little bit more about the progress on the technology side of things? You know, maybe just break that down a little bit more for someone who's not an engineer. You know, I think the China comp was pretty compelling saying that it's, you know, 50% of the cost of the current US. How you know, could you break that down a little bit? And what are the implications of that, and how are, you know, your potential customers viewing the progress on that side? And what sort of things are they looking for? Thanks.
Steve Cotton: Yeah. Great. Well, thanks, Mickey. Great question. And yeah, it's a tough one because it's definitely been a productive quarter for innovation. But I guess if I had to just pick one thing that really stands out, it's the progress that we announced that we made on the quality of our lithium carbonate. And that mainly being that we've reduced the fluorine content to under 30 parts per million, which is incredibly low. And based on the feedback that we're getting from the partners that we're working on, it may be the highest spec lithium carbonate not just from recycled sources, but period, even compared to many mine sources. I think that's huge.
And it shows that sustainable recycling can meet or even exceed the standards of traditional supply chains and that's gotten real traction with our prospective partners reviewing our samples. But I'll tell you, though, Mickey, the other piece that I'm really excited about is the flexibility that we're building into our flow sheet and the ARC facility's designs. So with our developing partner network, we're taking this sort of have it your way approach. Where some partners may want nickel metal, others may prefer something like a nickel carbonate, and others may want their nickel in the form of high purity NMC or nickel manganese cobalt cake.
So we're designing our flow sheets and the arc plants to deliver what each developing partner needs. So that level of flexibility paired with our strategic pillars about licensing and or building plants, allow us to do the build, own, and operate model as well as an enabler and partner model and gives us the optionality to really meet the market where it is and where it ultimately will be in The US and beyond to enable others to succeed alongside of us. And I think that's a real powerful position for us to be in.
Mickey Legg: Great. Great. Yeah. That's exciting to hear. You know, I definitely like the optionality aspect of that. Maybe, you know, if you could give us a little more color on the tech showcase you just hosted with NAT battery. You know, just dig into that a little bit. You know? How are discussions going, you know, there? Is there any traction that you were able to generate from there? From that?
Steve Cotton: Yeah. We've seen a really encouraging wave of engagement coming out of that event. First off, I'd say it was a real honor to host so many of the leading players in the battery and the automotive OEM space. And to have that level of turnout, which was around 100 attendees in total for the event and also some private tours that took place around the event. And to receive such strong feedback was incredibly validating.
What stood out in my mind, was the feedback in how many visitors called out the cleanliness and safety and organization of our innovation center in our demonstration plant operations as well as the quality of materials that we're producing the thoughtful design of our overall flow sheet. And those comments really meant a lot to us because they came from some of the top minds in the industry. And if you haven't seen it yet, anyone listening or reading the transcript, our August 6 press release includes a direct link to the event recap and that's complete with photos, testimonial videos from industry leaders who were there, and I really encourage folks to check that out.
You can also find it under the media tab on our website in our blog, which we call the Current. So you just click on media blog The Current, and you'll get there. And the videos there are brief, but I think they're powerful, and they make it clear that we really do have something special here. And in terms of outcomes, we believe the event did a few things. Per your question. It helped push forward some of the ongoing conversations we were already having with some of these strategic prospective partners. And it also opened the door to some brand new discussions we've been having with players that we hadn't yet engaged.
And maybe most importantly, though, for the duration and the durability of the event is that it left a lasting impression on the industry. After the visit, the industry now does have irrefutable firsthand evidence that Aqua Metals has developed a truly sustainable and economically competitive recycling process. And we can help stand up the closed-loop battery mineral supply chains in The US and other China markets, and that's a major differentiator to me. And this event really helped cement that message.
Mickey Legg: Great. Great. To hear that. You know, it really looks like a pretty impressive event. And, you know, I think, you know, more of these tangible touch points, you know, with industry leaders is very valuable. Then if I get I could squeeze in a couple more here. Sure. One on the side. You know, there's just there's a lot going on with regulations and incentives and trade policies out there. Can you just give us your view on, you know, how you think potential incentives or trade policy in the future could, you know, impact your competitiveness?
Steve Cotton: Yeah. So that's a great question. Kind of the area that we can't directly control, but we could certainly influence and help benefit from. And one of the things that we took a lot of time, being proactive about during the national battery conference get together is that we feel like we got a lot of support for, the industry telling, the government administration, the various groups within the government, that what we really need to stand up The US market here is a policy that encourages producers of black mass.
So those that collect the lithium batteries and then preprocess them, which is the input to recyclers, that rather than be a net material to sell through Korea or other locations at very high payables, that you can't make as much money in The US on. If there was a tax incentive, for example, in place, to encourage and reward those preprocessors to sell those materials domestically so we can begin to produce and stand up an actual recycling set of infrastructure in The US, that would be something that everybody in the industry seems to be able to get behind.
And we spoke with the National Battery Organization themselves, and got support and some vehicle OEMs as well as the preprocessors themselves. And so we're greatly encouraged as that being one of the areas that industry, is going to try to influence our senators and congresspeople and, various groups within the administration on encouraging, that type of, incentive. And that is an ongoing effort, and we hope to see things there. We're still in an uncertain period in terms of, other policies, and we're awaiting, what we see from the DOE as well as, we are encouraged on what the DOD has done. For example, I'll call out that there was, an announcement recently of stockpiling.
I believe it's $2,500,000,000 worth of cobalt. Our technology is the only recycling technology that can produce cobalt in the form of cobalt rounds, and that's an industry standard material. And we believe that a policy setting like that can really help, to stand up recycling in The US by, showing government support for the, outbound materials could come out of the recycling infrastructure if it were to be developed because let's remind everybody, right now there is about zero tons per year of commercial quantities of recycling, collectively in the industry. And we need to get to a number far beyond that.
And these kinds of policies and other things that we're working on with the industry and the, trade organizations, we believe, could really make a difference and an impact in, coming years.
Mickey Legg: Great. Great. Alright. And then last one here. You know, you made some good progress being prudent with your cash and on the balance sheet. Side of things. You know? So with no more long-term debt, you know, can you just talk about sort of what flexibility you have to structure partnerships, whether that be through equity or royalties or maybe licensing? You know, which do you see as likely? And you know, maybe of the breathing room you've bought yourself because you just get into that. Thing.
Steve Cotton: Yeah. So, fortunately, because of the great work that Eric has done, to develop, a stronger cash position through some asset divestiture that was nonessential assets and, other tools to increase our cash. We do have that runway to be able to work towards some of these strategic partnerships and developing the right with the right players. And so we're really fortunate that we feel like we've got a significant amount of runway and time to see through those discussions.
And, that's a really important aspect of keeping this business moving along and, frankly, keeping the whole industry moving along is that all the companies in this space need to be collaborating and working together versus try to go it alone strategy. And, making sure that our, balance sheets allow us the time to be able to establish those relationships is just absolutely critical. And I think we took a really good step in this past quarter in that direction.
Mickey Legg: Yeah. Yeah. Agreed. Alright. Thanks. That's all for me.
Steve Cotton: Thanks, Mickey.
Mickey Legg: Thank you.
Bob Meyers: And I'll now hand the floor over to Bob Meyers for any web questions.
Bob Meyers: Yes. Thank you. First question, can you elaborate on the patent allowance you received and how it is supporting discussions with potential partners?
Steve Cotton: Yeah. I'm happy to. So just a few weeks ago, we announced that we received a US patent allowance that covers foundational aspects of our AquaRefining technology for the lithium-ion battery recycling space. And that's really a big deal. Beyond just protecting our IP, it really activates a key part of our business model that we've been talking about. You know, we've always had two strategic pillars. One is the build, own, and operate model where we develop and run our own recycling campuses. Which as everybody knows is capital intensive. But the other part of, what we call our, our business model is the enabler and partnering pillar. And this patent is really the unlock for that.
And with this allowance in hand, we can now pursue further high-margin licensing, joint ventures, and other tech enablement types of deals with partners, who want to build cost-competitive, clean, domestic, battery recycling capabilities without reinventing the wheel. So this isn't just a win for IP. It's a revenue enabler for us. And we're already seeing that in our conversations with these potential partners. The patent does give us a tangible defensible foundation to point in those discussions. And it's clear, it's validated, and it shows the value, I think, we bring to the table, not just technically, but also commercially.
Bob Meyers: Great. Thank you. The next question. This week has been interesting with a surge in lithium prices. As a major producer in China closes a plant. Can you offer your take on market activity?
Steve Cotton: Yeah. Absolutely. It's definitely been a noteworthy week for the lithium markets and for lithium-related stocks. And I think what sparked that, primarily was, in a surge thing there was CATL or contemporary amberic one of the world's largest battery makers shutting down operations at a key lithium mine in China's Echun region. That facility accounts for solely for around 6% of global lithium output. And that move really reverberated through the market immediately, and lithium carbonate prices in China popped around 3% and lithium stocks around the world rallied. And that really underscores, though, how thinly stretched supply chains have become and why prices need to rebound enough to make production viable outside of China.
And oversupply and lackluster demand in recent years has driven prices down to levels that made it nearly impossible for non-China producers to even compete. But at Aqua Metals, our goal has always been to help enable a US and global solution through an economically viable but also sustainable supply chain. That means making lithium carbonate and indeed really all the battery critical materials from recycled sources and even mined ones competitive on price and on quality. And we view this market movement not just as a short-term bump, but I view it as a signal that more rational prices could be returning and that's essential for building a resilient localized set of capabilities.
So, yeah, this week's surge is a reminder that it's not just about recycling tech. It's really just about the economics. And we're building towards both sides, the superior specs here at Aqua Metals and strong margins so that ex-China markets actually do have a chance to become and then remain more independent.
Bob Meyers: Great. Thank you. Next question. In addition to the commentary in your opening remarks, what are the next steps and milestones we can watch out for?
Steve Cotton: Great. So our focus right now is on securing the right supply and offtake partner. That will enable financing for our first commercial ARC facility. But the market has shifted for sure, and we're in a mode of we'll build it when they come, versus build on spec. And we believe that we now have the financial runway to pursue the right deals with the right economics in the months ahead. I'm gonna point out again that the recent IP allowance and our flexible offtake model being able to deliver nickel as metal or carbonate or nickel manganese cobalt cake, has opened up meaningful new discussion.
And revenue opportunities, and that furthers our chances at the right deal or even deals. While still early, it's also notable that we're testing new feedstocks like refinery residues and undersea nodules, which could greatly expand our reach beyond battery recycling. And we look forward to sharing more on those developments as we continue to progress them through LabBench and pilot scale.
Bob Meyers: Thank you. Next question. Eric, as the new CFO, can you offer a few more insights about your key objectives in the coming weeks and months ahead?
Eric West: Yes. I can. So my top priority is to continue the strong momentum that we've built on the physical side. We already made real progress improving the balance sheet eliminating the long-term debt, and raising liquidity. I'll be focused on keeping that trend going. The financial discipline is what gives us the ability to pursue the exciting opportunities Steve's been talking about. Whether it's building our first commercial ARC enabling others through partnerships. The other big area of focus for me is on the financial modeling and partner interface side.
We've got active conversations happening around feedstock, offtake, licensing, and JV opportunities, and I'll be spending a good amount of time on the modeling the economics structuring support supporting those decisions. It's all about making sure we optimize every opportunity while keeping the company on solid financial footing.
Bob Meyers: Thank you. Next question. Why did Aqua Metals execute the reverse stock split?
Eric West: That's a good question. So the primary reason for the reverse stock split was to support our efforts to regain full compliance with the Nasdaq listing requirements. We've had an ongoing conversation with the Nasdaq, and this is to move the part of working through those final steps. We view the Nasdaq listing as a strategic asset. It brings the real benefits to our shareholders. From both liquidity and visibility. Staying listed also gives us access to the larger pool of institutional and retail investors. Especially those that prioritize the transparency good governance, and emerging growth stories like Aqua Metals.
So while these moves are never taken lightly, we see this as an important step in positioning the company for long-term opportunity.
Bob Meyers: Thank you. And the next question. You discussed a cost comparison study of AquaRefining. Can you explain that a bit more?
Steve Cotton: Yes. I can. This is something that we're pretty excited about. Because as we've said from the beginning, if The US and other markets want to truly compete with China in battery recycling, we need to change the game. We can't just match it. The study we completed internally compared the cost structure of AquaRefining to both traditional US and Chinese hydromet plants. And we have found what we found was really compelling. Our process is cost competitive with China and actually runs at about half the cost of traditional US hydromet recycling. One of the key drivers is that Aqua Metals eliminates the need to manage and dispose of huge volumes of single-use chemicals.
And we use electricity instead to regenerate those needed chemicals. That's both a CapEx and an OpEx savings and especially in ex-Chinese markets, the disposal of a byproduct like sodium sulfate is extremely expensive. Our process avoids producing and then crystallizing that sodium sulfate waste stream on the back end which exceeds the valuable lithium, nickel, and cobalt minerals combined. Which is a big deal from both a cost and a sustainability standpoint. So when you put all that together, we believe that Aqua Metals refining gives us and our partners a much better shot at building a viable critical minerals recycling industry here in The US and other markets.
Because at the end of the day, price matters with commodities. And AquaRefining is designed to compete where it counts.
Bob Meyers: Thank you. And ladies and gentlemen, that is all the time we have for questions. I'll now hand the floor back to Steve Cotton for closing remarks.
Steve Cotton: Well, thanks, everybody, for attending. And we are very proud of the accomplishments in the past quarter. From a financial perspective, operational and commercial and kind of some new strategies in addition to battery recycling. And, we've done what we can do to, continue to keep the stock listed. Through the Nasdaq and expect those conversations at, compliance to be productive. And, our cost comparison has really made an impact in our conversations with potential partners in The US. They're seeing that it is, as Eric said, that price matters. With commodities, and we think that we've got the right set of tools not only for ourselves, but to help enable others.
And we appreciate all the support from our shareholders, and we look forward to reporting updates ad hoc in between now and the next quarterly call. I wish everybody a great day, a great week, and a great quarter. Thanks.
Operator: Thank you. And with that, we conclude today's conference call. All parties may now disconnect. Have a good day.