Greetings, and welcome to AquaMetal's fourth quarter 2025 conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dan Scott. Thank you. You may begin.
Thank you, Operator, and thank you, everyone, for joining us today.
Earlier today, AquaMetals issued a press release providing an operational update and discussing results for the full year ended December 31, 2025. This release is available in the Investor Relations section of the company's website at aquametals.com. Hosting the call today are Steve Cotton, President and Chief Executive Officer, and Eric West, Chief Financial Officer. Before we begin, I would like to remind participants that during this call, management will be making forward-looking statements. Please refer to the company's report on Form 10-K filed today 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. Aquametals 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 conduct a question and answer session. With that, I'd like to turn the call over to Steve Cotton, President and CEO of Aquametals.
Thank you, Dan, and good afternoon, everyone. I appreciate you joining us for AquaMetal's fourth quarter and full 2025 earnings call. Today, I'll walk through what was an active and milestone-filled year for our company, covering how we evolved our technology, what we accomplished on the product side, how our strategic partnerships developed, and the financial foundation we built heading into 2026. Eric will then follow with a detailed financial review. Let me start with the overall frame for 2025. It was a year in which discipline and execution went hand-in-hand. We made deliberate adjustments to our commercialization approach as market conditions evolved, cleared important technical hurdles, extended our platform with new strategic initiatives, and put the balance sheet in meaningfully better shape. On the technology and product front, I would call 2025 the most expansive year in Aquametals history in terms of what the aqua refining process demonstrated that they can do. We grew the product portfolio. We raised the bar with product specs, improved the feedstock flexibility of our platform in ways that matter commercially, and allowed us to address the variability of material, not only in the battery recycling market, but beyond to include other markets like rare earths and undersea mining, for example. One of the most important strategic decisions we made this year was to sharpen the commercial scope of our first ARC facility. With the auxiliary finding platform, it's capable of producing a broader range of outputs. We made the deliberate decision to simplify the first commercial plant around two core feedstock streams, NMC black mass and LFP black mass. From those inputs, our initial commercial focus will be on three primary outputs, battery grade lithium carbonate, nickel cobalt, mixed hydroxide precipitate, or MHP, and iron phosphate. We have already successfully produced these materials at our innovation center, which gives us confidence that this is the right first decision. That decision is expected to reduce execution risk, shorten time to market, lower upfront capital requirements, and support attractive unit economics and a stronger payback profile. In short, we are intentionally designing the first commercial arc to be simpler, faster, and more capital efficient to deploy, while preserving the flexibility to expand the product slate over time as we scale. We believe that it is the right disciplined approach to commercialization and long-term shareholder value creation. On product quality, our team delivered results that we believe set a new benchmark for recycling industry. Our lithium carbonate achieved fluorine levels under 30 parts per million, a specification that to our knowledge places us at or above the quality standard for any recycled lithium source global material meeting this threshold has been produced at meaningful scale and distributed to strategic counterparties for evaluation. The responses have been substantive and encouraging. On the broader product side, we generated product qualification representative volumes of multiple products and advance those materials through partner qualification processes. We also developed nickel carbonate, reducing initial samples calibrated to specific downstream partner requirements, which opens additional product pathways and gives us greater optionality as partner discussions mature. Now in LFP, or lithium iron phosphate battery chemistry, which is cobalt and nickel free, I want to give this attention it deserves because I consider proving that we can economically recycle this type of material as one of the most significant technical achievements in this company's history. We moved from engineering analysis and bench scale work on lithium iron phosphate recycling all the way through to processing an entire metric ton of LFP cathode scrap at our pilot facility, recovering battery-grade lithium carbonate that was validated by OEM and third-party testing. That is not a lab result. That is demonstration at commercially meaningful scale. And because LFP chemistry is capturing an increasing share of both EV and stationary storage deployments, the ability to handle it gives our platform a decisive competitive advantage in terms of addressable feedstock. We also initiated trials on sodium sulfate regeneration, a process that could allow PCAM producers to convert a problematic waste stream back into a usable chemical inputs, creating cost and sustainability advantages. And we extended our alternative feedstock testing to include nickel refinery residue alongside polymetallic nodule materials, rare earth bearing magnets, and e-waste, which underscores the core flexibility built into our electrochemical. It stands out beyond the problem. We were central to producing the first cathode active material made entirely from recycled nickel sourced within the United States. That material has now entered qualification at a tier one battery manufacturer. This matters not just as a technical accomplishment for aqua metals, but as a demonstration that a fully domestic closed-loop battery material supply chain is not a theoretical goal. It is something that can actually be built. As the field of players in this market continues to consolidate, we intend to be at the center of it. On the commercial development side, we advanced our ARC facility design to support a processing range of 10,000 to 60,000 metric tons of black mass input feedstock annually. That flexibility is intentional. It allows us to size the first commercial facility to the specific partner configuration and capital structure we ultimately bring together, rather than being locked into a single predetermined scale. We also conducted structured due diligence on several candidate sites for the first commercial arc, working through factors like feedstock proximity, offtake accessibility, utility infrastructure, permitting pathways, and the strategic alignment of potential. The process has been thorough and we are in a good position to move forward with final site selection later this year as the remaining commercial. And I want to be direct about the build decision because I think our approach is sometimes misread and hesitation. In fact, this is exactly the opposite. We are not going to build before we are ready. And what ready means is committed offtake and project financing that is genuinely bankable. Our posture is simple. Build once, build right, and execute from a position which protects shareholders and gives us the best possible path. We engaged in diligence with Lion Energy around a transaction structure that we believe could be highly strategic and meaningfully additive. This opportunity would not only provide immediate commercial revenue and extend our reach downstream into branded energy storage systems across portable, with energy storage, and domestic LFP. Through Lion's existing relationship with an equity stake in American Battery Factory, or ABF, this transaction would also bring with it a meaningful equity interest in ABF, creating exposure to the emerging U.S. gigafactory build-out and LFP cell production market. We view this as a compelling strategic fit that could broaden our platform, advance our long-term circularity vision, enhance our commercial relevance, and create additional pathways for shareholder value creation. We remain disciplined and thoughtful in our process, and we look forward to updating the market in the near term. Let me now turn to our partnership activity in 2025, which was broad and meaningful. I'll walk through the key relationships because the pattern they reveal is important. With 6K Energy, we formalized a multi-year supply agreement that establishes the commercial terms under which we would deliver battery-grade nickel metal and lithium carbonate into their domestic cathode active material manufacturing operations. This moves the relationship beyond technical collaboration and into a defined commercial framework, positioning Aquametals as a named supplier into a domestic cam production chain. With Westwind Elements, we entered a non-binding LOI outlining terms for a potential supply of recycled nickel carbonate that would support Westwind's efforts to build a domestic nickel supply chain. What makes this relationship particularly interesting is the downstream implication. We believe that a Westwind-Aqua Metals commercial partnership and relationship can help stand up nickel production and refining capability on U.S. soil that simply does not exist. Serial collected responsibly from the seafloor, feedstocks that contain nickel, cobalt, copper, manganese, and robotics evaluates whether aqua refining can be applied to polymetallic nodules with the potential to recover true rare earth earth, extend our platform well beyond battery recycling and into strategic areas of focus on critical minerals into. I want to address the strategic logic here directly. These are not departures from our mission. The chemistry underlying aqua refining, electrochemical refining of dissolved critical mineral streams is the same whether the feedstock originates from black mass, refiner residue, e-waste, or deep sea nodules. intellectual property travels. What these agreements do is extend our total addressable market and create optionality that a licensing and partnership-oriented business model can monetize without heavy incremental capital. Battery recycling remains our primary commercial path. These adjacencies add strategic depth. We also continued active industry engagement at our Tahoe Reno-based innovation center and demonstration plant throughout the year, hosting the National Battery Conference, automotive OEMs, battery manufacturers, recyclers, and upstream materials suppliers for facility tours and technical reviews. The consistency of the feedback about the quality of our output and the operational sophistication of our pilot plant continues to build credibility in commercial discussions, and you can see some of that feedback on our blog, The Current, on our website. On the governance front, we made targeted additions to the board of directors, bringing in directors with specific expertise in growth strategy, commercialization, and financial markets. These additions reflect where we are in our development, a company that is transitioning from technology validation to commercial execution, and the board now reflects that stage appropriately. We also completed a CFO transition with Eric West stepping into the role and bringing both deep aqua metals institutional knowledge and a fresh financial perspective. On intellectual property, the U.S. Patent Office granted allowance of a foundational patent covering key elements of our lithium battery recycling process. This is a significant addition to an already substantial IP estate and reinforces the long-term defensibility of the aqua refining platform at commercial scale. We also filed a provisional application covering a novel, low-cost leaching approach applicable to mined manganese ores and deep sea nodule feedstocks, which is further evidence of the expanding reach of our IP program. As we enter 2026, our priorities are well defined. We are advancing engineering and permitting work to support site selection for our first commercial arc. We are deepening commercial negotiations with supply, offtake, and project financing partners. And we are moving strategic partner qualifications for our lithium carbonate and MHP forward in a deliberate milestone-oriented way. The broader environment for domestic critical minerals has continued to shift in our direction. The policy and geopolitical case for building domestic battery material production capability has never been stronger. And we are increasingly recognized as a technically validated, credibly financed player in that space. We have the process, the people, the operating demonstration plant, and the strategic relationships to move from validation to commercial. Now it is about refining that momentum into commercial results, and I am confident in our team's ability to deliver. With that, I will turn it over to Eric for the financial review. Eric, over to you.
We will now provide an overview of our full-year 2025 financial results and balance sheet position. Given this is our fourth quarter and full-year call, I will focus primarily on annual figures while noting fourth quarter specifics. Let me start with the balance sheet. We ended the year with cash and cash equivalents of approximately $10.8 million. The significant capital raise activity in 2025 is the most important context for understanding our year-end position. In October, we closed a $13 million investment from a leading institutional investor, combined with approximately $7 million raised through our ATM and equity line programs. Our total new capital raised in 2025 was approximately $20 million. This was a proactive raise made from a position of strength and strategic momentum, and it provides us with multiple quarters of operating runway and the resources needed to advance engineering, permitting, and site selection work for our first commercial-scale aqua refining facility. I also want to highlight a key balance sheet improvement that I'm particularly proud of. We ended the year with no long-term debt. This is the result of the deliberate financial management decisions made throughout 2025, including the completion of the Sierra Arc asset sale in the second quarter and the associated retirement of the $3 million dollars summit building loan. Having fully eliminated our debt we entered 2026 with a cleaner more flexible capital structure than we have had in years. Now moving to the income statement I will cover the full year 2025 results with prior year comparisons where described. Total operating expense for the full year 2025 was approximately 23.3 million dollars compared to approximately 23.8 million dollars for the full year 2024. While total expenses were relatively consistent year over year, 2025 included approximately 9.1 million dollars of impairment and loss on the disposal charges compared to approximately 3.1 million dollars in 2024. These impairment charges are non-routine and non-cash in nature. Excluding these items, Underlying operating expenses declined meaningful year over year, reflecting the sustained cost discipline we have maintained throughout 2025, including the benefit of workforce reductions implemented in the prior periods while continuing to support our key technical and commercial development programs. We are running a lean, mission-focused operation. General and administrative administrative expenses for the full year were approximately $10.5 million, down from approximately $12 million in the prior year. The decline was driven primarily by lower payroll and related cost following prior year workforce reductions, reduced professional fees, and broader overhead efficiencies. For the fourth quarter, specifically G&A came in at approximately 3.8 million dollars. Research and development expense for the full year totaled approximately 1.3 million dollars reflecting our continued investment in process optimization and product expansion including lithium carbonate quality improvement, MHP production, nickel carbonate development, and LFP processing capability. For the fourth quarter, R&D was approximately $4 million while we maintain discipline costs controlled we are intentional about funding the technical work that de-risks commercialization and advances partner qualification every dollar spent in our full year 2025 net loss was approximately 22.6 million dollars or negative 15 dollars and 15 cents per basic and diluted share compared to a net loss of approximately $24.6 million or negative $38.25. For the fourth quarter, our net loss is approximately $4.4 million or negative $2.97 per share. These figures reflect the pre-revenue development stage of our business and they continue to trend in the right direction as our cost structure matures. I want to take a moment on the year-over-year net loss comparison because the 2025 figures also reflect some non-cash items that are worth noting for investors evaluating our underlying operating trajectory. Our 2025 results include non-cash items associated with warrant liability remeasurement, impairment on disposal of property plant and equipment, and other non-cash adjustments. So we are pleased that the core operating cash consumptions continue to trend lower year over year, which is a direct reflection of the cost discipline we have discussed. Moving to the cash flow statement, that cash used in operating activities for the full year 2025 was approximately $10.3 million compared to approximately $13.6 million in 2024. This improvement, a reduction of more than 24.8% year over year, reflects our disciplined overhead management and the lower cost structure we have built over the past 18 months. Investing activities for the year primarily reflect the CRR building and equipment sale proceeds received in Q2 are fully offset by minor fixed asset activity. In December of 2025, we also provided approximately $2.1 million of short-term financing to Lion Energy, which remained outstanding at the year-end as a note receivable. Subsequent to year-end, in February of 2026, we entered into a non-binding term sheet contemplating the potential acquisition of Line Energy and contributed the outstanding note along with an additional $2 million to acquire a subordinated position interest in its senior secured credit facility in connection with our evaluation of the potential transaction. On the financing side, the year was characterized by meaningful capital inflows from our October institutional raise and ongoing ATM and equity line activities, partially offset by debt repayment activity completed earlier in the year. Looking ahead as Steve outlined, we anticipate a measured increase in cash usage as we ramp engineering, process optimization, and site readiness activities in support of our first commercial facility. We will continue to manage our spending with rigorous discipline. Every dollar invested must focus remains on maintaining gaining adequate liquidity, aligning investment pace with commercialization, improvements we achieved in 2025, eliminating debt, raising $20 million in new capital, and continuing to reduce our operating cash burden, has positioned AquaMetals to approach 2026 from a place of genuine finance. We have the runway we need, and we intend to use it wisely. That concludes my prepared remarks, I will now turn the call back to the operator for the question and answer session.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. One moment, please, while we poll for questions. Our first question comes to Mickey Legg with The Benchmark Company. Your line is now live.
Hey, guys. Congrats on another quarter. Thanks for taking my questions. Just a couple here on the Lion Energy acquisition. Assuming that it does get approved and closes, just what are your main areas of focus near term and some of the most natural areas of synergy you see for aqua metals?
Thanks. yeah hey bickie uh good question and um yeah so first off we're really um been very deep in due diligence across all the key work streams associated with this acquisition you know that's like inclusive of financial legal operational and commercial uh and that's included everything from auditing the financials to completing a detailed independent market product assessment across Lion's revenue, generating portable, residential, commercial, industrial, and data center offerings. So we've had the team spending a lot of time talking about synergies with each other in each other's facilities and working closely through all the discussions. So on the process, it's been very active, very substantive, and we expect to bring it to a conclusion in the near term and update the market accordingly. And in a greater sense, what we see with the synergies is an integrated battery materials and battery energy storage company is much stronger than those that stand on their own. And that's because of the synergies you can get with the circularity with the ingredients that go into the batteries, the production of the batteries, inclusive of the ownership that Lion Energy has in American and Battery Factory with their planned gigafactory in Tucson, Arizona, and being able to put that all together and expose the shareholder, frankly, to the optionality of having a stock they can buy that is really a combination of energy storage, battery materials, and gigafactory production. It's much how it's done in China, and the one reason that China has been successful helpful, is by integrating these solutions and creating those kinds of synergies to reduce costs, increase efficiency, and have a better story about the overall solution. So we're really excited about that opportunity to work everything out with Lion Energy and come out swinging as what we think will be the first integrated energy solution provider and battery materials provider in North America.
Great.
Okay. very helpful. And then just one more on the acquisition, and I want to understand a little bit better the equity sake it could bring in American Battery Factory. How does that fit in there? Does it just sort of align with your closing remarks there, your ending remarks about fitting into the domestic end-to-end battery ecosystem? Thanks.
Yeah, so definitely the equity stake in American Battery Factory is a huge value creator and a huge synergistic opportunity, but American Battery Factory is planning a first gigafactory in Tucson, Arizona. They've already secured the land, about 270 acres, where we see synergistic opportunities as one of the sites we're considering to deploy our arc facility at a commercial grade, plus Lion Energy having some battery fabrication. So if you can think of like a single location that would have cells being generated, the agreement that we already have with American Battery Factory in an MOU form today, which is that we would take the scrap from that Gigafactory as an input to our recycling facility and get lithium carbonate right back to that Gigafactory. While right in that same area, you've got Lion Energy putting together really innovative battery energy storage products for the various segments of the marketplace I was talking about earlier. So the Gigafactory plays are large plays, and what American Battery Factory is seeking is the final phase of financing to get that Gigafactory started this year, later this And those are, you know, hundreds of millions of dollars of investment based on project we think our equity position would still be still quite meaningful post-financing. And a gigafactory produces a heck of a lot of revenue and a heck of a lot of product that also adds to those synergies. So we really see that as a key aspect of our relationship with Lion Energy and American Battery Factories, kind of tying that all together.
Okay. Okay. That's very helpful. That's all for me today. And congrats again on the quarter, guys.
Thanks.
Appreciate it, Mickey.
Thank you. I would now like to turn the call back to Dan to facilitate questions that were submitted online.
All right. Thank you very much. First question for Steve. Could you give us a site selection update? Where does the process stand, and when can we expect an announcement?
Sure, sure. So the biggest gating factors now are really site selection, project structure, lining up the right capital and commercial partners. And as we've already mentioned, we're in active due diligence on two specific potential sites, looking at things like feed stock access, logistics, utilities, permitting, and of course the overall economics of the project in that particular type of location and our goal is to settle on and secure the lead site and then spend the balance of the year making real progress on site-specific fel2 engineering and that's really basically the stage where you move from concept uh into a much more defined and specific uh plant design down to every nut and bolt for that particular location uh cost estimate and the execution plan to begin executing a bond.
Excellent. The second question, Steve, is what is the status of the feedstock market? There's been a lot of volatility in battery metal prices. How does that affect your commercial position?
Yeah, great question. So today, effectively, all of the black mass produced in the United States and really North America is being exported offshore for, simply because there really aren't yet commercial scale refining options here domestically. And that's exactly the opportunity we're pursuing with the first build of our commercial arc. The market does demand competitive payables for feedstock, but we believe our lithium aqua refining process puts us in a very strong position because of its potential capex and op-ex advantages. And importantly, we're already working to diversify through both end-of-life batteries and gigafactory scrap, as I mentioned earlier. And that includes our announced MOU, like I mentioned earlier, with American Battery Factory in Tucson. So we can take end-of-life and beginning-of-life batteries that didn't make it, and that's about half of the overall material is gigafactory scrap at this point in time. It's also important to note that the overall economics around refining black mass have improved meaningfully over the last year. A number of projects across the industry, which including ours, slowed or paused when lithium carbonate prices fell to around $8,000 a ton in 2024. With pricing now having recovered to roughly the $20,000 plus or minus range per ton, we think that creates a much healthier backdrop. And that's in turn a real opportunity for the remaining U.S. players and especially for aqua metals given the stage that we're at today.
Thanks, Steve. The next one we got is, can you talk about the LFP breakthrough in more detail? Why is it significant and what does it mean for your business model?
Yeah, great. As I mentioned in my prepared remarks, the LFP breakthrough is really about our ability to economically recover lithium while also recovering the iron phosphate into a reusable form, and that's really a big deal. LFP does not have nickel or cobalt to support the economics, so you really have to run an efficient process. And that's exactly where our lithium-lock refining technology stands out. That matters not just for future end-of-life batteries, but for the growing volume of LFP gigafactory scraps such as American Battery factory are already being generated today, and what we expect from American battery factory is they come online. As LFP continues to scale across energy storage and EVs, we really think that puts us in a strong position to be a leader in the new LFP batteries.
All right, thanks. Eric, next one's for you.
Can you expand on your liquidity position coming out of 2025, and how long is the current capital and how long your current capital supports your operations yeah definitely happy to expand on that um you know pointing to you we ended the year with 10.8 million dollars of cash no long-term debt and a lower operating burn um you know this has put us in a pretty strong position as it compared to prior periods we continue to exercise cost discipline as you know as we continue to progress and just to add some additional context you know the capital raised during 2025 was about 20 million dollars in total which really helped us to strengthen the balance sheet and put us in a position to fund all of the work that we're doing now so really that gives us the solid flexibility as we continue to move forward on the overall engineering site selection and our partnerships that we've discussed that really lead us to our first commercial facility. So overall, we feel good about where we are. The focus now is just continuing to be disciplined and making sure that we deploy the capital against the right milestones.
All right, a couple more. Steve, you've announced MOUs with Impossible Metals and Mobi Robotics for deep-sea mineral applications, and also an LOI with Westwind Elements. How do these partnerships fit with AquaMetals' core business, and what do they look like commercially?
Yeah, so at a high level, all of these partnerships are about applying our core aqua refining platform to new sources of critical minerals, and importantly, opening up to a very large high TAM market set access to that where we can really monetize that capability. So we view them as directionally aligned and not a distraction at all. Whether it's black mass or gigafactory scrap or primary resources like deep sea nodules or refining intermediates from partners like Westwind, the common thread is our ability to process these complex materials efficiently and with a lower environmental footprint and have access to the TAM of those gigantic markets in addition to battery recycling in our sites.
The last question we have is, Steve, how do you view the ongoing consolidation in the battery recycling industry, and does it create opportunity or risk for aqua metals?
So we view the consolidation overall as a net positive for aqua metals. The reality is that the lithium price collapse that happened in 2024 exposed which models were resilient and which were not. And at the same time, the industry is learning that simply copying China's chemical-intensive hydro approach into North America is really a very tough economic proposition. That's why we built Opry Fining differently from the beginning, and that is inclusive, again, as a reminder of vastly lower chemical intensity and cost, lower waste because we don't produce sodium sulfate waste streams, Whereas the incumbent China hydro process produces more sodium sulfate waste stream than product, we produce zero sodium sulfate waste stream and don't have all the costs associated with it. And it's a process that we believe is much better suited to North American permitting and operating realities with safe jobs and a much more clean type of an operation without the cost in those waste streams. So as the weaker models fall away, we think that our position does become increasingly and interestingly more differentiated and stronger.
Okay, thank you. There are no further questions at this time. I'd like to pass the call back over to Steve for any closing remarks.
All right. Well, thank you, everybody, for listening in. And for those of you that are reading the transcript in the future, we look forward to continuing communicating our updates in the near future as we continue to develop aqua metals and the rest of 2026. We're really excited to keep everybody in the loop. Thanks again.
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