Greetings, and welcome to Aqua Metals Fourth Quarter 2025 Conference Call. [Operator Instructions] 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, Aqua Metals 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. Aqua Metals 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 Aqua Metals.

Thank you, Dan, and good afternoon, everyone. I appreciate you joining us for Aqua Metals 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 than where we started the year. On the technology and product front, I would call 2025 the most expansive year in Aqua Metals' history in terms of what the AquaRefining process demonstrated that it can do. We grew the product portfolio. We raised the bar with product specs and proved the feedstock flexibility of our platform in ways that matter commercially and allow 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 AquaRefining platform that's capable of producing a broader range of outputs, we made the deliberate decision to simplify the first commercial plant around 2 core feedstock streams, NMC black mass and LFP black mass. From those inputs, our initial commercial focus will be on 3 primary outputs: battery-grade lithium carbonate, nickel, cobalt mixed hydroxide precipitate or MHP, and iron phosphate. We…

Thanks, Steve. We'll 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 where relevant. 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 AquaRefining 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 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 compared to approximately $23.8 million for the full year 2024. While total expenses were relatively consistent year-over-year, 2025 included approximately $9.1 million of impairment and loss on the…

[Operator Instructions] Our first question comes from Mickey Legg with The Benchmark Company.

Congrats on another quarter. 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?

Yes. Mickey, good question. And yes, so first off, we're really been very deep in due diligence across all the key work streams associated with this acquisition. That's like inclusive of financial, legal, operational and commercial. 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 is 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 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 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 is what we think will be the first integrated energy solution provider and battery materials provider in North America.

Great. Okay. Okay. That's very helpful. And then just one more on the acquisition. And I want to understand a little bit better the equity stake 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?

Yes. 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 year. And those are hundreds of millions of dollars of investment -- based on project finance, 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.

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 2 specific potential sites, looking at things like feedstock 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 into a much more defined and specific plant design down to every nut and bolt for that particular location, 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?

Yes, great question. So today, effectively all of the black mass produced in the United States and really North America is being exported offshore, 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 AquaRefining process puts us in a very strong position because of its potential CapEx and OpEx 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 scrap 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. 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?

Yes, 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 AquaRefining technology stands out. That matters not just for future end-of-life batteries, but for the growing volume of LFP GigaFactory scrap such as American Battery Factory already being generated today and what we expect from American Battery Factory as 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. Eric, next one is 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?

Yes, definitely happy to expand on that. Point to, we ended the year with $10.8 million of cash, no long-term debt and a lower operating burn. This has put us in a pretty strong position as compared to prior periods. We continue to exercise cost discipline as we continue to progress. And just to add some additional context, the capital raised during 2025 was about $20 million 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 Moby Robotics for deep sea mineral applications and also an LOI with Westwin Elements. How do these partnerships fit with Aqua Metals core business? And what do they look like commercially?

Yes. So at a high level, all of these partnerships are about applying our core AquaRefining 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 Westwin, 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.

Okay. 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 AquaRefining differently from the beginning. And that is inclusive, again, as a reminder of vastly lower chemical intensity and costs, 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 0 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 continued 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.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.