Aqua Metals, Inc. 8-K

What Happened
Aqua Metals, Inc. (AQMS) announced on Feb. 6, 2026 (amended Feb. 10, 2026) that it entered into a term sheet to acquire all issued and outstanding equity of Lion Energy, LLC, subject to a definitive acquisition agreement and customary closing conditions. Aggregate consideration at closing will not exceed $94.9 million and is planned to be a mix of (i) $4.1 million in cash/previous investment (already advanced), (ii) $25.8 million of Aqua Metals equity (common stock and, if needed, a new Series X preferred), and (iii) up to $65.0 million in performance‑based earn‑out payments. Aqua Metals also purchased a $4.1M subordinated, last‑out participation interest in Lion Energy’s credit facility (funded Feb. 6, 2026) to provide Lion Energy working capital.

Key Details

• Transaction structure: up to $94.9M total — $4.1M cash/advances, $25.8M equity (Base Share Number determined by 20‑day VWAP), and up to $65M earn‑out.
• Earn‑out: payable only if Lion Energy achieves > $55M revenue over any 12 consecutive months post‑close; formula: Earn‑Out = $65,000,000 × ((RF×0.70) + (EF×0.30)), with RF = (Revenue − $55,000,000) / $85,000,000 and EF based on EBITDA margin (detailed thresholds and caps in the term sheet). Revenue and EBITDA measured under U.S. GAAP.
• Equity dilution/caps: if Base Share Number would exceed 45% of Aqua Metals’ outstanding common stock post‑close, Members instead receive up to 45% common stock and Series X Preferred Stock for the remainder; Series X automatically converts 1:1 to common stock on the third anniversary, is generally non‑voting, and includes anti‑dilution protections. The largest Lion Energy member’s common stock issuance would be capped at 40% post‑close.
• Conditions & timeline: parties agreed to use commercially reasonable efforts to sign a definitive agreement by March 31, 2026. Closing is subject to multiple conditions including a satisfactory fairness opinion, quality‑of‑earnings and diligence, a funded credit facility providing ≥ $25M committed availability at closing, a supply/offtake agreement with American Battery Factory Inc., Nasdaq approval of issued shares, and all required board and stockholder approvals. Exclusivity for Lion Energy runs through May 31, 2026 (breach carries a $1M break‑up fee).
• Financing support and exposure: Aqua Metals purchased a 100% subordinated, last‑out participation interest of $4.1M in Lion Energy’s senior loan (funded with $2.0M cash + $2.1M product). That participation is fully subordinated (paid only after senior obligations) and carries no voting/consent rights.

Why It Matters
This term sheet, if completed, would be a material acquisition for Aqua Metals and could substantially affect its capitalization and business profile. The deal mixes immediate equity issuance (potentially up to 45% of common stock), a multi‑year earn‑out tied to Lion Energy’s revenue and EBITDA performance, and a preferred share backstop that converts after three years — all of which carry dilution and execution risk for current shareholders. Aqua Metals has already provided $4.1M of working capital via a subordinated participation, exposing the company to junior credit risk until senior obligations are repaid. The transaction remains subject to many conditions and approvals and is not guaranteed; Aqua Metals said it will file a proxy statement and related materials when available for shareholder review. Investors should read those filings carefully for full details.