Stockholders’ Equity

12 Months Ended

Jun. 30, 2023

Equity [Abstract]

Stockholders’ Equity

12. Stockholders’ Equity

Preferred Stock

Our amended and restated articles of incorporation authorize shares of preferred stock and provide that shares of preferred stock may be issued from time to time in one or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without stockholder approval, issue shares of preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors to issue shares of preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management.

To date, the Company has authorized a total of 1,666,667 shares of preferred stock. Of this amount the Company has designated a total of 233,334 shares to three classes of preferred stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. A description of each class of preferred stock is listed below.

Series A Preferred Stock

The Company has 33,334 shares of Series A Preferred Stock authorized with a par value of $0.001. The shares allow the holder to vote the equivalent of 67 common shares for each share of Series A share in any vote of the shareholders of the Company and the Board is authorized to issue such shares as is necessary. On August 25, 2021, the Board approved a resolution to retire all the outstanding Series A Preferred Stock. On January 27, 2022, the Company redeemed all outstanding shares of Series A Preferred Stock. The Company had nil shares of Series A Preferred Stock issued and outstanding at June 30, 2023 and 2022.

Series B Preferred Stock

At June 30, 2023 and 2022, the Company has 133,334 shares of Series B Preferred Stock authorized with a par value of $10.00. The Company had nil shares of Series B Preferred Stock issued and outstanding at June 30, 2023 and 2022.

Series C Preferred Stock

At June 30, 2023 and 2022, the Company has 66,667 shares of Series C Preferred Stock authorized with a par value of $10.00. The Company had nil shares of Series C Preferred Stock issued and outstanding at June 30, 2023 and 2022.

On December 18, 2020, the Company issued 48.29 units of Series C Preferred Stock (16,097 shares of Series C Preferred Stock) at $50,000 per unit for proceeds of approximately $2.4 million. Each unit is comprised of approximately 333 shares of Series C Preferred Stock, each convertible into approximately five shares of common stock, and a warrant to purchase approximately 26,667 common shares of the Company at $3.75 per share until June 30, 2023. On February 2, 2022, the Company issued a Mandatory Conversion Notice to the remaining Series C Preferred stockholders. The notice converts all outstanding shares of Series C Preferred Stock to common stock at a conversion ratio of approximately five shares of common stock for each share of Series C Preferred Stock. Each holder of Series C Preferred Stock was entitled to receive a non-cumulative dividend at an 8% rate per share, per annum. On February 8, 2022, the Company issued $0.1 million in dividend payments to Series C stockholders that held shares from date of issuance to conversion.

Common Stock

At June 30, 2023 and 2022, 80.0 million shares of common stock are authorized, with a par value of $0.001, per share.

Fiscal year ended June 30, 2023

During the period, the Company issued 399,024 common shares with an issuance date fair value of $4.2 million to executives, directors and employees pursuant to share award service and performance achievements. These common shares were under the Company’s Retention Plan.

During the period, the Company issued 733,333 common shares with a fair value of approximately $7.4 million towards the acquisition of its new recycling facility. These shares have recently been registered to be sold under the Company’s shelf S-3, effective August 8, 2023. Considering the lack of marketability at the time of issuance, the shares were issued with approximately a 15% discount. This was in line with the Company’s fair value analysis, given that the shares were restricted at the time of issuance. Pursuant to the terms of the agreement, the Company agreed to acquire 100% of the ownership interests in Aqua Metals Transfer, LLC, a legal entity to transfer real property and equipment, in exchange for a combination of cash and common shares of our common stock. We also agreed to prepare and file a registration statement with the SEC to register the resale of the common shares issued, which will be held by an affiliate of LiNiCo, Comstock Inc., a Nevada corporation, the seller. Pursuant to the original purchase agreement, LiNiCo had an obligation to indemnify us for certain matters and to fund an escrow account for the purposes in the event such indemnification events arise. The seller was required to contribute $1.5 million of the net proceeds it receives from its sale of shares to fund the indemnification escrow account. On June 30, 2023, the Company modified the agreement to nullify the $1.5 million indemnification requirement and reclaim 128,205 shares that it had previously issued to the Selling Stockholder, which it received after June 30, 2023. The Company has recognized a $1.5 million reduction to the carrying value of its long-term deposits and a respective reduction to stockholders’ equity, at June 30, 2023.

In March 2023, the Company entered into a share purchase agreement for the purchase and sale of 952,381 common shares at an issuance price of $10.50 per share. In addition to the issuance of common shares, the Company issued 952,381 Series A warrants that are exercisable into one common share of the Company at $12.00 per share for a period of five years from the date of issuance and 952,381 Series B warrants that are exercisable into one common share of the Company at $10.50 per share for a period of eighteen months from the date of issuance. As part of the financing, the Company engaged a placement agent in connection with the offering and agreed to pay the placement agent a cash fee of 7.5% of the gross proceeds of the offering, a 1% expense allowance, and other reimbursable expenses. In addition, the Company issued 57,143 warrants to the placement agent as a commission fee, which are exercisable at $13.13 per share for a period of five years from the date of issuance. The Company received net proceeds under this share purchase agreement of $8.9 million.

In May 2023, the Company entered into multiple share purchase agreements for the purchase and sale of 476,187 million common shares at an issuance price of $10.50 per share. In addition to the issuance of common shares, the Company issued 476,187 Series A warrants that are exercisable into one common share of the Company at $12.00 per share for a period of five years from the date of issuance and 476,187 Series B warrants that are exercisable into one common share of the Company at $10.50 per share for a period of eighteen months from the date of issuance. The Company received net proceeds under this share purchase agreement of $5.0 million.

On May 12, 2023, the Company entered into the First Amendment to Second Amended and Restated Membership Interest Purchase Agreement (the “Amendment”), which amended the Purchase Agreement, for the purchase of the Recycling Facility. Under the Amendment, the Selling Stockholder required the Company to deliver an additional 66,667 common shares of the Company to LiNiCo, resulting in the Company issuing a total of 733,333 shares of common stock as part of the purchase price under the Agreements and Amendment, though.

On April 2, 2021, the Company entered into a common share purchase agreement with Tysadco Partners, LLC (“Tysadco Agreement”). Pursuant to the Tysadco Agreement, Tysadco had committed to purchase, subject to certain restrictions and conditions, up to $75.0 million worth of the Company’s common stock over a 24-month period, expiring March 31, 2023. The Company shall then have the right to direct Tysadco to buy shares at a purchase price of 95% of the average of the 5-day median share price, with a minimum request of $25,000. Under this agreement and during the period, the Company issued 400,000 common shares for aggregate proceeds of $3.6 million.

Fiscal year ended June 30, 2023

On June 26, 2023, the Company filed a prospectus supplement related to the offer and sale from time to time of up to 1,666,667 common shares directly by the Company at market prices, or to Tysadco Partners, LLC, a Delaware limited liability company, pursuant to the terms of written sales agreement(s) (“June Prospectus”). Pursuant to the June Prospectus, the Company may offer and sell up to 1,666,667 common shares of the Company at a purchase price of 95% of the weighted-average of the 5-day median share price, with a minimum request of 33,333 shares. During the period, the Company issued 33,333 common shares. Proceeds of $2.7 million were received after the consolidated balance sheet date of June 30, 2023.

During the period, the Company issued 10,009 shares to professional service providers with a fair value of approximately $104,000, however, $60,000 relates to services performed during the fiscal year ended June 30, 2022.

On May 17, 2023, the Company reclaimed 58,712 common shares from a former professional service provider. The Company recorded an adjustment to stockholders’ equity for the par value of these shares.

Fiscal year ended June 30, 2022

During the period, the Company issued 1,107,733 common shares pursuant to the conversion of 13,847 shares of Series C Preferred Stock at a conversion ratio of 80 shares of common stock for each preferred share of Series C Preferred Stock.

During the period, the Company issued 1,692,641 units for proceeds of $39.1 million pursuant to a private placement issuance at $23.10 per share. Each unit is comprised of one common share of the Company and one share purchase warrant, where each share purchase warrant is exercisable into one common share of the Company at $26.25 per share, exercisable for a period of five years from the issuance date. As part of the financing, the Company paid $2.2 million of share issuance costs and issued 130,334 warrants as a commission fee, which are exercisable at $23.10 per common share for a period of three years from the date of the issuance. The fair value of the commission warrants was $2.7 million and was determined based on the Black-Scholes option pricing model assuming volatility of 166%, risk-free rate of 0.56%, expected life of three years, and no expected forfeitures or dividends.

During the period, the Company issued 200,000 common shares pursuant to the aforementioned Tysadco Agreement, entered into on April 2, 2021, for aggregate proceeds of $4.0 million. The Tysadco Agreement expired March 31, 2023.

During the period, the Company issued 1.0 million common shares pursuant to the exercise of 1.0 million share purchase warrants for proceeds of $0.9 million.

During the period, the Company issued 958,581 common shares for professional services with a fair value of $20.4 million, including 387,008 common shares with a fair value of $8.7 million to former officers and directors of the Company and 200,749 common shares with a fair value of $4.8 million to current officers and directors of the Company. At June 30, 2022, the Company had shares of common stock with a fair value of $0.1 million for professional services due to non-employees and an executive of the Company.

During the period, the Company issued 126,129 shares with an issuance date fair value of $1.3 million to employees under the Retention Plan.

During the period, the Company and a former executive agreed to reclaim 66,667 common shares, for no consideration. The Company recorded an adjustment to stockholders’ equity for the par value of these shares.

During the period, the Company reclaimed 266,667 common shares from a former executive of the Company, for no consideration. These shares were previously issued via an arms-length transaction between former executives of the Company. The Company recorded an adjustment to stockholders’ equity for the par value of these shares. Contemporaneously, the Company issued 53,334 shares with a fair value of $0.6 million pursuant to a legal settlement with the former executive. The Company has recorded an adjustment to stockholders’ equity for the fair market value at the time of issuance.

During the period, the Company reclaimed 66,667 common shares, pursuant to a legal settlement from a prior year. The share certificate was received and remitted to the transfer agent during the fiscal year ended June 30, 2022. The Company recorded an adjustment to stockholders’ equity for the par value of these shares.