Good morning ladies and gentlemen and thank you for standing by. Welcome to the Aqua Metals’ Second Quarter 2016 Corporate Update Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. [Operator Instructions]. This conference is being recorded today August 10, 2016. Before we get started, I’d like to turn the call over to Greg Falesnik from MZ North America, the Company's Investor Relations firm who will read a disclaimer about forward-looking statements. Please go ahead.

Thank you, Operator. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the Federal Securities Laws regarding Aqua Metals. Forward-looking statements include statements about plans, objectives, goals, strategies, future events and performance and underlying assumptions and other statements that are different than historical fact. In the forward-looking statements during this conference call include statements concerning our intentions, expectations and believes regarding anticipated growth; market penetration and trends in our business; the timing and success of our plan of commercialization; our ability to operate our AquaRefining process on a commercial scale; our ability to maintain our competitive technological advantages against competitors in our industry; our ability to have our technology solutions gain market acceptance; our ability to maintain, protect and enhance our intellectual property and our expectations concerning our relationships with suppliers, partners and other third parties. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that and may result in expectation not being realized, and may cause actual outcomes to differ materially from expectations reflected in these forward-looking statements. Potential risks and uncertainties include the fact that the company has not yet commenced revenue producing operations or developed its initial commercial recycling facility, thus subjecting the company to all of the risks inherent in a pre-revenue start-up; risk related to Aqua Metals’ ability to raise sufficient capital as when needed; to develop and operate its recycling facilities; changes in the federal, state and foreign laws regulating the recycling of lead-acid batteries, the company’s ability to protect its proprietary technology, trade secrets and know-how and other risks disclosed in the risk factors included in the Annual Report on Form 10-K filed with the SEC on March 28, 2016. All such forward-looking statements whether written or oral made on behalf of the company are expressly qualified by the cautionary statements and such forward-looking statements are subject to risks and uncertainties, and we caution you not to place undue reliance on these. At this time, I’d like to turn the call over to Dr. Stephen Clarke, the Company’s Chairman and CEO. Steve, the floor is yours.

Thank you, Greg and welcome everybody to the Q2 earnings call for Aqua Metals. The thing I wanted to talk about today is what we have done and what we’re going to do and it's very incredible to realize it just precisely, a year and 12 days we completed our IPO and raised the funds to build the world's AquaRefinery and that’s what I'm going to talk about today. So really of the point, the earnings call that we have done so far have been about our plans and what are we going to do and starting with this one, this earnings call, the thing really is what have we done and how do we expand from there. So that’s basically the two things that we’re going to be talking about today. What have we achieved and how do we go to business beyond this. So with that said I will just move ahead to the Safe Harbor statement and just wait a couple of seconds to just make sure you’re all aware and that you heard Greg read to you most of it. So moving on, as I said earlier it's almost exactly 12 months ago we had just completed our IPO and Tom [indiscernible] Steve and I and about 50 other people standing on a 12 acre patch of dirt in the desert and that photograph is taken exactly the same spot. I think [indiscernible] summed it up when he gave a look at [Technical Difficulty] the other said, wow, just wow look at what fileld. I think it's pretty incredible. It's hard to imagine the speed of development that we have achieved anywhere even in China and I think it's a testament of the hard work of everybody involved not only in the Aqua Metals but the…

Thank you, Steve. Good morning everybody. I'm going to give a brief recap of the second quarter 2016 results. For the three months and year-to-date ended June 30, 2016, we had an operating loss of $2.8 million and $5 million. Calculated on a non-GAAP basis removing stock option compensation, depreciation and amortization in the first quarter of 2016 our operating loss was $1.8 million, in the second quarter it was $2.1 million and the primary reason for the increase in operating loss is a ramp up of the AquaRefinery plant primarily staff and also one-off charges related to the staff including head-hunt and relocation cost. The net loss for 2016 was $2.9 million and $5.1 million for the year-to-date. We had $26 million in cash and cash equivalents as of June 30, 2016 compared to $31.8 million as of December 31, 2015. I’d like to point out a few key highlights of the last year since our IPO which was just in July 31, 2015, and on that date, we listed on the NASDAQ as AQMS with a total of 7.24 million shares at $5 per share for $36.2 million gross proceeds. In conjunction with the IPO, our convertible notes were redeemed for $2.5 million shares of stock. In August 17th, less than a year ago just short of -- we broke ground on the construction of our McCarran recycling plant and continue to complete equipment installation and commissioning. In November of last year, we received a $10 million loan through a Green Bank in Houston, Texas. This loan was made in conjunction with the 90% loan guarantee from the Rural Business Cooperatives Service of the U.S. Department of Agriculture. We signed a lease for over 20,000 square foot of mixed office and manufacturing space in Alameda, California. Tenant improvements…

So I'm just going to wrap this up now. The thing that I'm going to talk about are some of the obstacle that we overcame and the lessons we learned along the way and then I'm going to talk about some key takeaways and wrap it up and move onto questions and answers. So basically one of the things that I'm talking about here is permitting, now that we have got the permitting exercise completed. One of the ironies, permitting our California headquarters is actually harder than permitting our Nevada facility and sadly that speaks to some of the inefficiencies and contradictions in permitting in the State of California. Sadly and somewhat frustration, this caused about six months delay in our 11 [ph] engineering work which we have overcome and it was a very significant delay and we were pretty creative in how we worked around that and managed to overcome that and get back on schedule. The next point is -- as I said in slide there was a concerted interference with our air permitting application. I'm not going to identify the party and I'm not going to speculate why but it did cause a significant delay to our air permitting and it put back some actions on site, and also established typically for precedent because it was the objection around the fact that we didn’t need to be permitted on the niche up [ph] and the subsequent escalation of that decision process from country to state to Federal regions and Federal level that ultimately caused -- are result is in getting a really, really powerful precedence. So in a way thank you very much for objecting. It helped us in the end. In a point is we would like to have been able to experience battery recycling industry…

[Operator Instructions]. And we will go first with Collin Rusch with Oppenheimer.

Guys you’ve talked a little bit about potential partners at your -- you’re looking at working with -- for the next facilities, can you talk a little bit about the criteria that you’re planning to work with in the process area and go through in terms of evaluating those opportunities particularly I think there has been some questions around or from equity holders about how you might be able to bring money in your prepayments or other arrangements. I know you guys have thought through a bunch of those issues but I would love to just get an update on your criteria and your processing going forward?

So there are two things that we’re looking at, one is building our own facilities and the other one licensing our technology. With respect to building our own facilities as I’ve mentioned a couple of times we’re at very advanced stage in terms of looking at non-dilutive sources of capital and all of the things that you’ve just mentioned are in discussion. We don’t see a major challenge in building -- expanding the full facility and building the next one. In terms of licensing we’re incredibly protective of the brand that we’re building. So the criteria that we have are really about -- is this a credible party, have they got a track record of doing the right thing and are they willing to do business our way which is we will bring their staff on to our site, we will train them, we will assess them. If we don't think that they capable of operating an AquaRefinery that the relationship will end. We absolutely serious about a global roll-out but there is a real requirement that people who license our technology really understand and are committed to it's success. Does that answer your question?

Yes that sounds great, and then just in terms of the to do -- to get up and running, which piece are you guys most concerned about or pieces as you turn out this equipment may have some hiccups along the way.

There isn't a single piece, we have now got all of the three systems on site. We will be surprised that’s a given, that’s how commissioning works, that’s why you [indiscernible] and then very definition of a surprise is you don’t expect it. So everything we think we might have problem with we have got contingency plans in place. So I don’t have a single thing that we’re worried about, it's really about the commissioning process itself.

All right. Excellent guys, thanks so much.

And next we will go to Jeff Grampp with Northland Capital Markets.

Good morning. Thank you for taking my questions. First just kind of wanted to get your thoughts Steve as you guys talking about having a second refinery here. As you guys kind of build the business, how do you think about leveraging your existing relationships with an Interstate and Battery Systems versus kind of diversifying the supply chain that you guys could have.

Well our process, sorry our goal, stated goal is to displace smelting globally within the fastest timeframe that we can and if we’re going to displace smelting globally then we’re going to be both leveraging the relationships we have but also building new ones. So in terms of to get any deeper into that would involve getting into commercially sensitive considerations about who we’re doing with what. So it would be a bit of a stretch and we need to go much beyond -- of course we will be working with everybody.

From a [indiscernible] we don’t want to put all of our eggs in one basket, no matter how good a relationship we have with those individual companies.

All right. Great that’s helpful color. And then with this second facility that you guys are kind of working through, how should we think about from a timeline perspective given that you guys are going to highlight today you know permitting and getting through this process really gives you I think a core competency and having a seemingly very quick timeline with it's first facility, is that a good benchmark to think about going forward, do you think that’s maybe a little bit accelerated given how you guys have worked with the State of Nevada and the various agencies there. How would you kind of characterize your future build outs.

It's a work in progress. I wouldn’t be crazy enough to say that was the hard one, obviously it will faster because we know we will be surprised and to some extent the regulatory environment various from state to state. That said we have built our first facility in 12 months and we will have it commissioned in a couple of three months afterwards, so realistically a 12 to 18 month timeframe for roll out is we believe is quite reasonable. The important point is that with the permits that we have got in place right now, would not only set the precedence but we have got a much deeper understanding of the challenges and indeed the level of support within the regulatory environment and it's permitting is often -- permitting is the longest lead time.

Perfect. That’s helpful. And then just kind of maybe a quick housekeeping one, last one for me. In terms of kind of CapEx or expenditures over the reminder of the year, what's kind of a good number that we should be thinking about to get that thing kind of started up?

We’re not really outlook on that.

Okay. Fair enough. I will follow-up offline maybe. Thanks for the time guys.

[Operator Instructions]. And next we will go to Bhakti Pavani with Euro Pacific Capital.

Good morning, guys. Thanks for taking my questions.

Thank you. Good morning.

Thank you for the detailed presentation. It was really very helpful. Just a quick one on the permitting, the Class 2 air permit that you obtained, does that also include the user operation permit?

No this is multiple permits. I think something like 8 or 9 permits in total, ranging from what you do with the waste paper through -- simplistic level through to the air permit. The use permit and the air permit are the important ones. The use permit in Nevada is separate. So the air permit covers discharge of airborne pollutants. The water permit covers discharge of water pollutants and the use permit is basically it -- covers our ability to occupying and use the building.

So for the California facility you already have the use permit then correct?

Not for California. No we don’t have a California -- although our assembly area we have all of the permit for California yes, but that we manufacture our modules and do our design work. For our Nevada facility, yes we have all of the permits.

Okay. So from the commissioning and the testing standpoint if I understand correctly. The commissioning has -- testing will begin in September?

It's -- already, what was showed on that timeline was the major events.

Okay. Thank you. With regarding to licensing, I know in the presentation you did mention that you’ve a very strong interest from the potential customers. Just kind of curious from the signing of the licensing agreement to the deliver, what kind of time lag does it take? How much time does it take you in order to supply the modules if you’re ridden to that--

We can produce one module per week right now, we can produce upto a 160 tons a year capacity within -- so it's really it's not about building modules, it's about understanding the licensing specific needs. Often we’re looking at if more typically than not we’re looking at smelters that don’t have most of the processes that I outlined in the earlier slide, you know I presented an idolized version of the best in class smelters, sadly the vast majority are not anyway close to best in class and many don’t have even rudimentary desulphurization or backhouses. So sometimes it's not a case of just supplying the AquaRefinery modules, we have to supply additional equipment to basically make them comply them with their own environmental role. So and that really depends country to country, the timeline is really all about -- we’re in negotiations with people right now, we will be selecting partners for China and India for the next few months. Then we will begin training and roll out planning and then the last thing we will be doing is actually shipping, install and commissioning modules and any required support equipment.

Perfect. Okay. Just the last one on the operating side, I'm assuming you would be adding staff over the next two quarters. How should we see the operating expense going forward for the remaining year?

You should see it increasing. We’re are not providing guidance -- we haven't given specifics but that capacity once we have all the ships operating in Reno, we will have about 60 to 70 employees by the end of the year, but the higher end employees the supervisors and management staff we pretty much already hired. What we can say is that when we started this business I mean a year before we did even the IPO we did a lot of fairly intense modeling on the profitability of individual facility, the profitability of the business as we scale it up and so far we have validated or in some cases improved on pretty much all of those planning assumptions.

Okay. Thank you very much. That’s it from my side.

Thank you.

And next we will go to Eric Richardson with ER Capital Partners [ph].

Hey, guys congratulations on getting to the facility where it's gone. I just had a question on the permitting of the importation of batteries, is that not done yet or where is that and how does that supply look from just getting it in state or where does that stand?

So understanding your question correctly, permitting to receive batteries?

Yes. What I understood you needed, if I'm correct the way I understood that you and a permit to receive batteries to recycle from other states or no?

So right now our plan is to startup from using the warehouse that is next door to us, it's a 200,000 square foot facility where we would actually, battery is in there already to support us. We don’t require any permitting for that at all and we don’t require any permits to receive batteries from states that don’t classify used lead acid batteries as record waste [ph]. Couple of states do, one of which California. There is an additional permit we’re just closing now that will allow us to receive -- from them but in terms of what we need to do right now and get up to a -- plan 80 tons a day by the end of the year we’ve every permit that we need in place.

Great. That’s good news. Thanks for clarifying that.

Okay. So I just got to address some questions that we got from the webcast. So one that we get a lot is how many batteries does it roughly take to produce a metric ton of lead? Well it's a really how long pieces to a string [ph]. There is no fix number for that because lead acid batteries come in all shapes and sizes from [indiscernible] size not much bigger [Technical Difficulty] fill this entire room that we sat in. What I can tell you is that to produce 80 tons a day of lead we are bringing in roughly a 150 tons of dead batteries and the additional 70 tons of material there is plastic, sulpuric acid and water. The second part of that question is we will be selling LME spot price or discounted? No we are almost certainly if we’re selling lead we will selling it at premium because we’re producing ultra-pure lead. LME spot price is secondary lead which is kind of a [indiscernible] lead that’s neither pure -- ultra-pure lead or a specific alloy. So secondary lead produced by smelter needs to be further refined and alloyed into usable product, so it is typically the lowest cost lead -- so we’re actually going to be selling at premium. There is a question that says that what is the status of the recent shareholder offering? I'm not quite share, we have not had a shareholder offering.

I mean the recent offering we had with the private placement associated with Interstate battery deal that we did in mid-May which was again a private placement and those shares bolstered through an S3 on August 1.

Second one was, can we provide any guidance on gross margin or expenses to 2016, 2017? No we don’t provide guidance on that. It's really not modeling. Question four, can we repeat the exercised price of the once granted to Interstate batteries?

There are two different warrants and two different prices. The average price I believe it was $8.43 but if -- in our 10-Q that we will be filing this afternoon close will be included copies of both warrants.

And then there is two questions patents, I didn’t mention patents, you’re correct. So we have got -- we believe we have an exceptionally strong patent position. We’re not the first by any means to have looked to producing lead through an electrochemical process but we have taken a fundamentally different approach. So we have something like 22 patents in play, we expect to have about 13 play. None have been granted that’s a decision that we have made. One of the biggest mistakes of many technology companies make particularly in applied science is the patent and seek to have their patents granted too soon because the moment a patent is granted it's starting to expand it's life. So that and a number of other reason which we’re not going to go into, we believe it's highly advantageous to make sure that you’ve got no -- you’re not going to infringe on anybody's patents and we have extensive work on that and we clearly don’t and then make sure that you can manage to have the longest life possible in portfolio so that’s patents. And final question, is it really a concern that the modules are in-count upon is well-employed on mass scale. Have you done any testing? No we haven't done any testing in the facility because we’re not allowed to until the facility was permitted and number one it just got to the point but we have been operating a single full scale electrolyze for 12 months now that was pre-production prototype then nearly four months ago now we took a single electrolyzer off the production line installed in our full scale test facility and have been operating that ever since and we don’t anticipate any issues operating at full scale. Full scale is just essentially 96 of the same thing. And I think there was another final question. Is there a cost associated with acquiring these lead acid batteries? Absolutely. That’s the thing about the lead asset industry. The reasons that lead acid batteries are 100% recycled is that they have an economic value and so yes if we put -- there are essentially two ways of operating as a battery recycler, one is called tolling in which the third party retains title to the battery and you just essentially charge a fee for turning the battery into lead and the other one is where you buy batteries and turn them into lead and sell the lead and that’s called merchanting. Both of those are essentially traded communities, there are indexes for those. What typically happens is as the price of lead increases and decreases or ebbs and wanes, the associated price of a dead lead acid battery pretty much tracks it on average. So I think that’s it, unless there are any more questions, I propose we close the call at this point.

And we have no further questions over the phone.

Okay. Thank you. Thank you very much.

Thank you.

And now we will conclude today's conference call. Thank you everyone for your participation. You may now disconnect.