10-K: Aqua Metals Faces Going Concern Doubt Amid Lithium Recycling Push

Aqua Metals, Inc. reported significant losses and a going concern warning in its 2025 annual report, despite advancing its lithium-ion battery recycling technology and pursuing a non-binding acquisition of Lion Energy, LLC.

Summary

• Aqua Metals, Inc. reported a net loss of $22.646 million for the fiscal year ended December 31, 2025, following a $24.555 million net loss in 2024.
• The company had cash and cash equivalents of $10.810 million and working capital of $8.977 million as of December 31, 2025.
• Management believes there is substantial doubt about the company's ability to continue as a going concern within one year due to continuing losses and expected cash requirements.
• The company is focused on developing and commercializing its proprietary AquaRefining process for lithium-ion battery recycling, having demonstrated bench-scale and pilot-scale recovery of critical minerals.
• In 2025, Aqua Metals refined its commercialization strategy to prioritize lithium carbonate and mixed hydroxide precipitate (MHP) to reduce capital requirements and accelerate deployment.
• The company sold previously acquired real estate intended for a recycling campus in 2025, resulting in a non-cash impairment and loss on disposal of $9.114 million.
• On February 6, 2026, Aqua Metals entered into a non-binding term sheet to acquire Lion Energy, LLC for up to $94.9 million in cash, common stock, and contingent earn-out consideration, aiming to expand into energy storage systems.
• The company raised significant capital in 2025, including $5.931 million from an At-the-Market (ATM) offering, $903,000 from an equity-line-of-credit (ELOC), and $11.939 million from an October 2025 registered direct offering and warrant placement.
• A lawsuit against Johnson Controls Fire Protections, LP, related to a 2019 fire, was dismissed, and the defendant is seeking approximately $3.5 million in litigation-related costs and legal fees, which Aqua Metals intends to vigorously defend.
• The company effected a one-for-20 reverse stock split on November 5, 2024, and a one-for-10 reverse stock split on August 4, 2025.
• As of December 31, 2025, the company employed 11 full-time people and had no outstanding indebtedness.
• NEOs voluntarily forfeited and canceled all outstanding Performance Stock Units (PSUs) on January 7, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with a negative sentiment due to the explicit 'going concern' warning, continued significant losses without commercial revenue, and the substantial dilution risk associated with the proposed Lion Energy acquisition, despite positive technological advancements.

Positives

• Successful demonstration of bench-scale and pilot-scale recovery of lithium, nickel, cobalt, copper, and manganese from lithium-ion battery black mass using the AquaRefining process.
• Completion of a multi-week continuous 24-hour operating campaign at the pilot facility in late 2024, validating system performance.
• Refined commercialization strategy in 2025 to prioritize lithium carbonate and mixed hydroxide precipitate (MHP), aiming to reduce capital requirements, improve early-stage operating economics, and accelerate deployment timelines.
• Significant capital raises in 2025, including $5.931 million from an ATM offering, $903,000 from an ELOC, and $11.939 million from a registered direct offering and warrant placement, bolstering liquidity.
• The proposed acquisition of Lion Energy, LLC, if consummated, aims to expand the company's participation in energy storage systems, energy management software, and battery cell production.
• The AquaRefining process is described as a cleaner, electricity-powered, closed-loop alternative to smelting and chemical-based recycling, with potential for higher yields, higher purity products, and lower emissions.
• Strong intellectual property protection with 4 US patents, 1 international patent, and 24 US and foreign patent applications pending for various battery chemistries.

Negatives

• Incurred a net loss of $22.646 million for the year ended December 31, 2025, and $24.555 million for 2024.
• The company has not generated revenues from commercial operations over the two years ended December 31, 2025 and 2024, and expects to continue incurring losses for the foreseeable future.
• There is substantial doubt about the company's ability to continue as a going concern within one year after the financial statements are issued.
• A non-cash impairment and loss on disposal of property, plant and equipment of $9.114 million was recognized in 2025 due to the sale of a facility intended for a recycling campus.
• The proposed acquisition of Lion Energy, LLC involves significant stock issuances (up to $25.8 million at closing and up to $65 million in earn-out consideration), which will be highly dilutive to pre-closing stockholders.
• The company has no prior experience in managing a battery system developer/manufacturer or integrating a business the size of Lion Energy, posing integration risks.
• A legal claim from Johnson Controls Fire Protections, LP, seeking approximately $3.5 million in attorneys' fees and costs, could have a material adverse effect on financial condition if awarded.

Risks

• Limited operating history and revenue-producing operations, making it difficult for investors to evaluate the business.
• Uncertainty regarding the successful application and commercial scale-up of AquaRefining technology for lithium-ion batteries.
• Need for additional financing to execute the business plan and fund operations, which may not be available on reasonable terms or at all, potentially leading to inability to continue operations.
• No assurance that the non-binding acquisition of Lion Energy, LLC will be consummated or, if completed, will positively impact stockholder value due to dilution and integration challenges.
• Potential material adverse effect on financial condition from the legal claim by Johnson Controls Fire Protections, LP, seeking $3.5 million in fees and costs.
• Unproven business model for commercial-scale, non-smelting battery recycling, with no assurance of adequate profit margins.
• Intellectual property rights may not be adequate to protect the business, and processes may infringe on others' IP, leading to costly disputes.
• Vulnerability of internal computer systems and those of collaborators to security breaches, potentially causing disruption, loss of proprietary information, and financial/reputational harm.
• Adverse effects from unfavorable geopolitical and macroeconomic developments, including global economic uncertainty, inflation, interest rate changes, supply chain disruptions, and geopolitical tensions.
• Negative impact from labor issues and higher labor costs, including workforce dissatisfaction or work stoppages.
• Risks associated with conducting business outside the United States, such as increased costs of enforcing IP, compliance with conflicting regulations, and foreign currency fluctuations.
• U.S. government regulation and environmental, health, and safety concerns, including permitting requirements and potential liabilities for handling hazardous materials.
• Market price fluctuation and volatility of common stock, potentially leading to substantial losses for investors.
• Increased risk of securities class action litigation due to stock price volatility.
• Future sales of substantial amounts of common stock could adversely affect the market price due to dilution.
• Company charter documents and Delaware law may inhibit a takeover that stockholders consider favorable.
• Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation, potentially limiting stockholders' ability to obtain a favorable judicial forum.

Future Outlook

Aqua Metals intends to continue its focus on advancing its Li AquaRefining technology, qualifying products, and evaluating commercial deployment opportunities, including site selection, strategic partnerships, and financing alternatives. The company aims to become a critical minerals recovery player, generating commercial wins and potentially government grants. The proposed acquisition of Lion Energy, LLC, if completed, is intended to expand the company's participation in energy storage systems and energy management software. The company expects to continue incurring losses for the foreseeable future and will require additional capital to fund ongoing operations and pursue its business strategy.

Management Comments

• Management believes that Aqua Metals is in a position to become one of the few critical minerals recovery players for which our environmental and economic value proposition should generate both great commercial wins and potentially government grants to accelerate our credibility and progress.
• Management believes that there is substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued.
• Management believes that we have a strong defense to Defendant's claim for recovery of fees and costs, especially with regard to Defendant's claim for legal fees, and we intend to vigorously defend against Defendant's motion.

Industry Context

StockSavvy.ai notes that Aqua Metals operates in the rapidly expanding lithium-ion battery recycling market, driven by significant global demand for batteries in electric vehicles and energy storage systems. Industry forecasts project global battery demand to grow from approximately 2 terawatt-hours (TWh) in 2025 to around 4.2 TWh by 2030. While mining is currently the primary source of battery materials, recycling is expected to become an increasingly important secondary supply source, especially post-2030. Aqua Metals' AquaRefining process positions itself as a cleaner, electricity-powered alternative to conventional smelting and chemical-intensive hydrometallurgy, aiming to address environmental concerns and regulatory restrictions on emissions. The company's focus on high-purity lithium carbonate and MHP aligns with the growing demand for battery-grade materials. The proposed acquisition of Lion Energy, LLC, indicates a strategic move to integrate vertically or horizontally into the broader energy storage ecosystem, potentially leveraging synergies with its recycling technology.

Comparison to Industry Standards

• Aqua Metals' AquaRefining process is presented as a unique electro-hydrometallurgical method, contrasting with the currently commercially proven pyrometallurgy (smelting) and other hydrometallurgical approaches under development.
• The company claims its process can produce higher yields of higher purity, and thus higher value product than that derived from primary smelters with product from secondary sources, and requires fewer chemicals, generates less waste, and produces higher-purity products at a lower cost compared to both smelting and standard hydrometallurgy.
• Unlike lead markets where recycled mineral content achieves up to 90% of new LAB batteries, lithium and related metals recycling currently achieves only 1-3% recycled mineral content of new LiB batteries, highlighting Aqua Metals' opportunity in a nascent industry.
• AquaRefining recovers all valuable materials, including Lithium Hydroxide, Lithium Carbonate, and Manganese Dioxide, which are not recovered by competing smelting methods.
• The company states its process is the only Li-ion recycling method with a pathway to net-zero operations, setting a high environmental benchmark compared to traditional methods.

Management Changes

Corporate Governance

Legal Proceedings

• In October 2021, Aqua Metals filed an action against Johnson Controls Fire Protections, LP (Defendant) relating to its involvement in the November 2019 fire at the former TRIC facility.
• On March 25, 2025, the Court dismissed Aqua Metals' complaint in response to a motion for summary judgment filed by Defendant.
• On May 12, 2025, Defendant filed a Memorandum for Costs seeking approximately $300,000 in litigation-related costs.
• On May 29, 2025, Defendant filed a motion to recover its attorneys' fees and costs in the aggregate approximate amount of $3.5 million, including $300,000 of costs and $3.2 million of legal fees.
• Aqua Metals believes it has a strong defense to Defendant's claim for recovery of fees and costs and intends to vigorously defend against the motion, concluding that a loss is not probable as of December 31, 2025.

Related Party Transactions

• On February 1, 2023, Aqua Metals Reno, Inc. entered into a $3,000,000 loan agreement with Summit Investment Services, LLC. Eric Gangloff, founder and CEO of Summit Investment Services, LLC, was appointed as a member of the Board of Directors in February 2025. This loan was repaid in full on June 11, 2025.
• On December 18, 2024, the company entered into a Securities Purchase Agreement with eight accredited investors, including certain officers and directors of the company, for a private placement of secured promissory notes in the aggregate principal amount of $1,500,000 and common stock purchase warrants. Certain officers and directors purchased notes totaling $1,250,000, including a director appointed in February 2025. These notes were repaid in full by May 5, 2025.

Stakeholder Impact

• **Shareholders**: Face significant dilution from past and potential future equity raises, including the proposed Lion Energy acquisition. The 'going concern' warning indicates substantial risk to investment value. Stock price volatility is high.
• **Employees**: Workforce reductions in late 2024 and early 2025 impacted payroll. The supplemental retention program and stock incentive plans aim to retain key talent. NEOs forfeited PSUs, impacting their potential future compensation.
• **Customers/Partners**: The company's focus on commercializing Li AquaRefining and pursuing strategic partnerships aims to provide cleaner recycling solutions and high-purity materials for the battery supply chain.
• **Creditors**: Existing debt arrangements were repaid in 2025. The company's need for additional capital and going concern doubt present risks for future lenders.
• **Regulatory Bodies**: Aqua Metals emphasizes its AquaRefining process as environmentally friendly, potentially reducing regulatory burden compared to traditional methods, but remains subject to extensive environmental, health, and safety laws.

Next Steps

• Further advancing Li AquaRefining technology and qualifying products.
• Evaluating commercial deployment opportunities, including site selection, strategic partnerships, and financing alternatives.
• Negotiation and execution of a definitive acquisition agreement for Lion Energy, LLC, subject to due diligence, regulatory and stockholder approvals, and other closing conditions.
• Lion Energy's closing of a fully executed and funded asset-based lending facility of not less than $25 million simultaneously with the acquisition closing.
• Execution of a supply and offtake agreement between Aqua Metals and American Battery Factory Inc. as part of the Lion Energy acquisition.
• Vigorously defending against Johnson Controls Fire Protections, LP's motion for attorneys' fees and costs.
• Seeking additional capital through debt financing or the sale of equity to fund ongoing operations and business strategy.

Key Dates

Recommendation

The explicit 'substantial doubt about its ability to continue as a going concern' is a critical red flag for any investor. Coupled with persistent significant net losses, no commercial revenue for two years, and the highly dilutive nature of the proposed Lion Energy acquisition, the company faces severe financial challenges. While the technology shows promise, the immediate financial viability and the high risk of further capital raises (which will dilute existing shareholders) make this a 'strong sell' for seasoned investors. The legal claim for $3.5 million further exacerbates the financial uncertainty.

Keywords

Lithium-ion battery recycling, AquaRefining, Critical minerals, SEC 10-K, Going concern, Capital raise, Lion Energy acquisition, EV batteries, Black mass, Electro-hydrometallurgy, Corporate governance, Cybersecurity, Intellectual property, Stock split, Financial performance