Aqua Metals, Inc.

Good day and welcome to the Aqua Metals first quarter 2020 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Glenn Axelrod, Investor Relations. Please go ahead.

Thank you, Operator. Welcome to Aquamentals' first quarter 2020 conference call. Earlier today, Aquamentals released financial results for the quarter ended March 31, 2020. The release is available on the Investor Sections of the company's website at www.aquamentals.com. Joining us for today's call from management is Steve Cotton, President and CEO, as well as Judd Merrill, the company's Chief Financial Officer. During today's call, management will be making forward-looking statements. Please refer to the company's quarterly report on Form 10Q filed today, April 30th, for the 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. AlkaMetals 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. And with that said, I would like to turn the call over to Steve Cotton, CEO of AlkaMetals. Steve, please go ahead.

Thanks, Glenn. Good afternoon, everyone, and welcome. Despite the constraints on Aqua Metals and all businesses in the face of COVID-19 global pandemic, I am happy to report that all Aqua Metals employees are safe and we are operating our company utilizing collaborative technologies quite effectively. We, like most businesses, are dealing with unexpected constraints that began in late Q1 in regards to the physical aspects of our operations. Assuming the state of Nevada allows us to return to the Aqua Refinery in May, The expected net impact is a slight delay in deployment of our first V125 electrolyzer. We expect to begin operating the first V125 electrolyzer within six weeks after we are able to return to the facility, albeit later than we had originally targeted. Despite the devastating fire on November 29, COVID-19 and our current uncertain economic times, management has worked diligently to continue to implement our business plan in order to achieve future success for our shareholders. I would like to spend a couple of minutes to highlight a few of the specific foundational items Aqua Metals has already accomplished that will be the underpinnings for our go-forward capital life equipment and licensing strategy. First, $180 million has been invested to date to commercialize aqua refining. We have already successfully demonstrated that our aqua refinery ran 24 hours a day, seven days a week, and with our electrolyzers running smoothly for a month at a time. which consistently produced 35,000 ultra-pure and cleanly manufactured ingots. These certified ingots were shipped to our partner, Clarios, the world's largest battery manufacturer, who then made production runs of batteries with aqua-refined lead metal. Therefore, we believe that we will not need to build another demo plant and duplicate what has already been proven. In fact, if we had chosen to rebuild the plant, Today, we may have been in a position to raise new capital while dealing with the business-challenged COVID-19 environment. The fact that we do not need to and we're able to cut down on the burn rate significantly pre-COVID is already proving that our chosen strategy is resilient and correct. Second, we have also established and continue to invest hundreds of thousands of dollars a year in strengthening our already very strong patent portfolio. a portfolio with global reach that is critical to protect and ultimately monetize as we accelerate our efforts towards deploying and licensing operations of aqua refining technology. Third, despite the setbacks of the fire and in the face of COVID-19, we believe that we have a plan for successfully securing the cash position of the company. We project that our cash balance will continue to grow between insurance proceeds and smart asset disposition. Thus, We believe that we will have well over a year of runway to fund our continued efforts to get op refining deployed into our first revenue-producing customer location. We expect this will be a major value inflection point for our shareholders. Fourth, as Judd will describe in more detail, we have vastly reduced and have plans to further reduce our cash burn rate to further extend our runway on our path to customer revenues and self-reliance. Lastly, we have put into motion our efforts to take the valuable learnings from our operations at the off-refinery in the past to build a better, more efficient, higher throughput, and cheaper electrolyzer with improved conversion costs per ton of lead produced. We believe that these key incremental and not fundamental improvements will further improve the electrolyzer's reliability, throughput, cost to deploy, and cost to operate. We believe this will illustrate that aqua refining is a robust, compelling offering for the marketplace and customers to consider as we anticipate beginning the upgrading of the $20-plus billion lead recycling industry as a result in the near future. The industry badly needs to become greener, cleaner, and more sustainable, and aqua metals has the potential to truly impact the energy storage marketplace through improved battery performance and life that our ultra-pure aqua refined base metal can provide. This is why our employees, shareholders, partners, and potential licensing partners have shown tremendous historical excitement about our company, and these fundamentals have not changed. Previously, our communications mentioned what an equipment supply and licensing package would mean for AquaMetals, but at this time, I want to take the opportunity to walk everyone through our proposed revenue plan. We expect it to start with engagement and meaningful discussions with existing operators in the marketplace, which we've already accomplished with Clarios, other partners, and several other qualified candidates that currently operate battery recycling facilities. The next step would be a sales proposal coupled with the base technical package. Once the prospect agrees with the proposal and technical package, we would expect to move on to a paid-for engineering package. Similar to architectural plans where a portion of the revenues could be recognized. This engineering package would be the first revenues we record for our licensing business, potentially range up to significantly over $1 million, depending, of course, on the size and scope of the application. Once the engineering package is accepted, the next step would be to move forward with an equipment supply and licensing and services agreement. This agreement provides specific cost breakdowns of engineering, furnishing, installing, and commissioning of the AquaMetals-provided equipment and third-party equipment from AquaMetals supplier partners, such as the kiln and briquetting systems. We expect revenues for equipment supply to potentially range from millions to tens of millions of dollars and with healthy margins, the total value of which is, of course, dependent upon the size of the deployment. Once the equipment arrives on site, we would expect there to be services, Thank you. Thank you. which has already commanded up to a 10% premium over standard London Metals exchange pricing for millions of dollars of lead sold from our own aqua refinery. For a modest 15,000 ton a year aqua refining facility, we can expect to see over $1 million of running royalty per year. It's important to note that a large deployment of aqua refining into an existing facility could exceed 100,000 tons a year of production. I would also like to point out that due to the modular nature of our technology, our technology is compatible with smaller deployments that are below 15,000 tons per year. Day two of production and beyond could yield additional value, add to other customer revenue opportunities. Potential additional revenue streams could include services, maintenance contracts typical for equipment suppliers, future hardware upgrades to improve throughput, cost to operate, product quality, purity, capacity expansion, unwarranted parts, and equipment replacement over time that are all opportunities for additional revenue and supporting our customers in the long run. When we model baseline goals of achieving our first licensee deal expected by 2021, with additional expected licensees ramping up at a one, two per year clip for the coming few years, we see a significant opportunity to grow our top line revenue, profitability, and cash generation which should contribute greatly to future shareholder value. In addition to a licensed equipment supply model, there are other scenarios of monetizing our technologies, which we are also pursuing, inclusive of master licensing by a country or even a geography. Fortunately, as this was always our long-term plan, we already built a significant multi-opportunity funnel of potential licensees in the latter half of 2019 pre-fire. We have seen a significant acceleration in interest from these and new potential licensees and possible new strategic relationships after announcing our accelerated strategy earlier this year. Lastly, I also want to point out that this management team has a proven track record of gritty, lean, entrepreneurial successes throughout our careers that we draw from. And with the support of our board and partners and shareholders, we are seeking another successful outcome for Aqua Metals by drawing from our successes to date, coupled with our sheer determination to see through our vision of commercializing our innovative, market, and planet-changing offer refining technology. I'll now hand it over to Judd to review our Q1 financials. Go ahead, Judd. Thank you, Steve.