1. Organization

Aqua Metals (NASDAQ: AQMS) is engaged in the business of applying its commercialized clean, water-based recycling technology principles to develop the clean and cost-efficient recycling solutions for both lead and lithium-ion (“Li”) batteries. Our recycling process is a patented hydro- and electrometallurgical technology that is a novel, proprietary and patented process we developed and named AquaRefining. AquaRefining is a low-emissions, closed-loop recycling technology that replaces polluting furnaces and hazardous chemicals with electricity-powered electroplating to recover valuable metals and materials from spent batteries with higher purity, lower emissions, and with minimal waste. The modular “Aqualyzers” cleanly generate ultra-pure metal one atom at a time, closing the sustainability loop for the rapidly growing energy storage economy.

We are in the process of demonstrating that Li AquaRefining, which is fundamentally non-polluting, can create the highest quality and highest yields of recovered minerals from lithium-ion batteries with lower waste streams and lower costs than existing alternatives.

Our focus for the lead market is providing equipment and licensing of our lead acid battery recycling technologies in an enabler model which allows us to work with anyone in the industry globally and address the entire marketplace. Our focus for the lithium market includes operating our first-of-a-kind lithium battery recycling facility, utilizing electricity to recycle instead of intensive chemical processes, fossil fuels, or high-temperature furnaces and licensing.

Liquidity and Going Concern Assessment

For the quarters ended  March 31, 2024 and 2023, the Company reported a net loss of $5.8 million and $4.6 million, respectively, and negative cash from operations of $4.3 million and $2.9 million, respectively. As of  March 31, 2024, the Company had cash and cash equivalents of approximately $8.3 million, current liabilities of $8.5 million and an accumulated deficit of $229.0 million. The Company's current liabilities of $8.5 million include the note payable with Summit Investment Services, LLC in the amount of approximately $3 million due on February 1, 2025 as disclosed in Note 10. The Company has not generated revenues from commercial operations and expects to continue incurring losses for the foreseeable future.

Management believes that the Company does not have sufficient capital resources to sustain operations through at least the next twelve months from the date of this filing. Additionally, in view of the Company’s expectation to incur significant losses for the foreseeable future it will be required to raise additional capital resources in order to fund its operations, although the availability of, and the Company’s access to such resources, is not assured. Accordingly, management believes that there is substantial doubt regarding the Company’s ability to continue operating as a going concern through the next twelve months from the date of this filing.

The accompanying condensed consolidated financial statements have been prepared under the assumption the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that  may result from uncertainty related to the Company’s ability to continue as a going concern.

Reclassification of Prior Period Financial Statements

For the quarter ended March 30, 2023, the gain on disposal of property, plant and equipment was presented in the Condensed Consolidated Statement of Operations within loss from operations. This reclassification  was made for the year ended December 31, 2023 and presented in the Annual Report on Form 10-K for the year then ended.

We have reclassified the prior period Condensed Consolidated Statement of Operations included in this filing to conform to the current period presentation, as shown in the following table:

Correction of an immaterial error to prior period financial statements

For the quarter ended March 31, 2023, we identified a correction of an immaterial error to prior period financial statements relating to number of common stock shares presented in the condensed consolidated balance sheet and condensed consolidated statements of stockholders' equity. The effect of this error was to overstate the number of common stock shares issued to employees and directors for RSU vesting during the three months ended March 31, 2023 by 510,632 shares. The error did not have an effect on the monetary balance of common stock presented or any other amounts reported in the condensed consolidated balance sheet, condensed consolidated statement of operations, condensed consolidated statements of stockholders' equity, or condensed consolidated statement of cash flow for the related periods. Based upon our evaluation of both quantitative and qualitative factors, we believe that the effect of this error was not material to any previously reported quarterly period.

The following sets forth the effects of the correction on the previously reported condensed consolidated statement of stockholders’ equity.