Annual report pursuant to Section 13 and 15(d)

Notes Payable

Notes Payable

12 Months Ended

Dec. 31, 2019


12.			Notes Payable

Aqua Metals Reno, Inc. (“AMR”), a subsidiary of Aqua Metals Inc., entered into a $10,000,000 loan with Green Bank on November 3, 2015. The term of the loan is twenty-one years. During the first twelve months, only interest was payable and thereafter monthly payments of interest and principal are due. The interest rate adjusts on the first day of each calendar quarter to the greater of six percent (6%) or two percent (2%) per annum above the minimum prime lending rate charged by large U.S. money center commercial banks as published in the Wall Street Journal. The terms of the Loan Agreement contain various affirmative and negative covenants. Among them, AMR must maintain a minimum debt service coverage ratio of 1.25 to 1.0 (beginning with the twelve-month period ending March 31, 2017), a maximum debt-to-net worth ratio of 1.0 to 1.0 and a minimum current ratio of 1.5 to 1.0. AMR was in compliance with all but the minimum debt service coverage ratio covenant as of and for each of the calendar quarters in the period March 31, 2017 through December 31, 2019. AMR has received a waiver for the minimum debt service coverage ratio covenant for each of the aforementioned calendar quarters.

The net proceeds of the loan were used for the construction of the Company’s lead acid recycling operation in McCarran, Nevada. Collateral for this loan is AMR’s accounts receivable, goods, equipment, fixtures, inventory, accessions and a certificate of deposit in the amount of $1,000,000. The certificate of deposit is reported in "Other Assets" in the condensed consolidated balance sheet.

The loan is guaranteed by the United States Department of Agriculture Rural Development (“USDA”), in the amount of 90% of the principal amount of the loan. The Company paid a guarantee fee to the USDA in the amount of $270,000 at the time of closing and is required to pay to the USDA an annual fee in the amount of 0.50% of the guaranteed portion of the outstanding principal balance of the loan as of December 31 of each year.

The costs associated with obtaining the Green Bank loan were recorded as a reduction to the carrying amount of the note and are being amortized as interest expense within the condensed consolidated statements of operations over the twenty-one year life of the loan.

Notes payable is comprised of the following (in thousands):


	December 31,
	2019		2018

Notes payable, current portion
Capital equipment leases, current portion	$	—	$	16
Green Bank, net of issuance costs	296		295
	$	296	$	311

Notes payable, non-current portion
Capital equipment leases, non-current portion	$	—	$	31
Green Bank, net of issuance costs	8,404		8,569
	$	8,404	$	8,600

The costs associated with obtaining the Green Bank loan of $0.8 million were recorded as a reduction to the carrying amount of the note and are being amortized as interest expense over the twenty-one year life of the loan. Amortization of the deferred financing costs was $36,000 and $35,000 for the years ended December 31, 2019 and December 31, 2018, respectively. The principal payments detailed below are excluding the effect of the reduction in the carrying amount related to the deferred financing costs.

The future principal payments related to the Green Bank note obligations are as follows as of December 31, 2019 (in thousands):


2020	$	296
2021	320
2022	343
2023	368
2024	394
Thereafter	7,585
Total loan payments	$	9,306