1.        Organization and Operations

Aqua Metals, Inc. (the "Company") was incorporated in Delaware and commenced operations on June 20, 2014 (inception). On January 27, 2015, the Company formed two wholly-owned subsidiaries, Aqua Metals Reno, Inc. (“AMR”) and Aqua Metals Operations, Inc. (“Subsidiaries”), both incorporated in Delaware. The Company has developed an innovative process for recycling lead acid batteries. The Company intends to manufacture the equipment it has developed, and will also operate lead acid battery recycling facilities. Construction of the first recycling facility is in progress in McCarran, Nevada (“NV”).

Liquidity and Management Plans

As of December 31, 2015, the Company had not yet completed the development of its facility and had not yet recorded any revenues. Since inception, the Company’s primary activities have consisted of developing its technology, developing its business plan, raising capital, constructing a new facility, and recruiting and hiring its workforce and executive team. To date, these activities have been funded primarily through the sale of convertible notes (“Convertible Notes”) (see note 8 - Private Placement), And the funding of the Company’s initial public offering (“IPO”), which was consummated on July 31, 2015 (see note 12 – Stockholders’ Equity (Deficit)).

The Company has not generated revenues since its inception and had net losses of $12,331,637 and $2,373,751 for the year ended December 31, 2015 and the period ended December 31, 2014, respectively. The Company expects that cash on hand as of December 31, 2015 will be sufficient to fund the Company’s operations into positive cash flow from the first recycling plant in McCarran, NV.