Good afternoon, ladies and gentlemen, thank you for standing by. And welcome to the Aqua Metals Third Quarter 2017 Corporate Update Conference Call. [Operator Instructions] This conference is being recorded today, November 9, 2017. Before we get started I would like to turn the conference over to Greg Falesnik, Managing Director of MZ North America, the company's Investor Relations firm, who will read a disclaimer about forward-looking statements.

Thank you, Operator. Welcome everyone to Aqua Metals third quarter 2017 earnings call. Earlier this afternoon, Aqua Metals released financial results for the quarter ended September 30, 2017. The release is available on the Investor section of the company's website at www.aquametals.com. This earnings call will include forward-looking statements concerning Aqua Metals Inc. forward-looking statement they may include, but are not limited to our plans, objectives, expectations, intentions and other statements that contain words such as “expects,” “contemplates,” “anticipates,” “plans,” “intends,” “believes” and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters. The forward looking statements in this earnings call include the strength and efficacy of Aqua Metals' portfolio of patent applications and issued patents, the lead acid battery recycling industry, the future of lead acid battery recycling via traditional smelters, the Company's development of its commercial lead acid battery recycling facilities and the quality and efficiency of the Company's proposed lead acid battery recycling operations. These forward-looking statements involve known risks and unknown risks, uncertainties and other factors that could cause actual results to differ materially. Among these factors are one, the risk that the Company has not be able to produce and market AquaRefined lead on a commercial basis or, if it achieves commercial operations, that such operations will be profitable, two, the fact that the Company has not recently commenced production and has not generated any significant revenue to date, thus subjecting the Company to all of the risks inherent in a pre-revenue start-up; three, the risk no further patents will be issued on the Company’s patent applications or any other application that the Company may file in the future and that any patents issued to date or in the future will be sufficiently broad to adequately protect the Company’s technology, the risk that the Company’s initial patents and any other patents that may be issued may be challenged, invalidated, or circumvented, risks related to Aqua Metals’ ability to raise sufficient capital, as and when needed, to develop and operate its recycling facilities and fund operating losses as we endeavor to achieve profitability; 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 those and other risks disclosed in the section “Risk Factors” included in the Company's Quarterly Report on Form 10-Q filed today November 9, 2017. Aqua Metals cautions readers 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. Aqua Metals Chairman and CEO Steve Clarke is your host today and he will introduce the rest of the team joining him on this call. So with that I'll turn the call over to you Steve.

Thank you, Greg. Joining me today on our call is our Chief Financial Officer, Mark Weinswig. So I would like to start by welcoming Mark to his first earnings call with Aqua Metals. We’re excited to have him on board as we begin to expand our business. When we started, the accepted wisdom we faced was that electrochemical recycling of lead acid batteries had been proven not to work, and that the lead acid industry was waning. There was also doubt that we would be able to get our permits and/or that we would get any patents. During these short four years, we have developed the technology, attracted strategic partners, and built the world's first AquaRefining facility. We prevailed on permits and we prevailed on patents. And the lead acid battery industry continues to show robust growth with expectations that sales will reach $85 billion by 2025. That said, we’re significantly behind schedule still ramping production and expect this to continue into 2018. However, and this for me is a critical point. Every individual process step has now been taken out of the laboratory and operated at scale at our first facility in Nevada. There is more to do and I’ll expand on this later, but first I want to put where we are into context. Where I co-founded this company, when I wrote checks from my savings accounts to get it started, I had a simple vision. It was for the lead acid battery industry to continue to grow, it would need a better way to recycle its products and to produce higher purity lead than it is possible with smelting alone. That's why we set out to develop and commercialize the technology we call AquaRefining. To really make a difference, we always expected that a major part of…

Thank you, Steve. In the third quarter of 2017, we recognized revenues of $0.6 million compared to $0.6 million of revenue in the second quarter. This was the second consecutive quarter the company had generated revenue. The revenue consisted primarily of plastics and lead compounds. For the three months ended September 30, 2017, we had an operating loss of $5.8 million. The current quarter loss was primarily driven by low production at our TRIC facility and ramp up costs. In addition, we continued to invest in technology developments and process improvements. Net loss for the third quarter of 2017 was $6.2 million or $0.28 per share. We had over $17.5 million in cash and cash equivalents as of September 30. In the third quarter, net cash used was $4.5 million and included significant payments for capital expenditures, which were approximately $1.1 million. For the fourth quarter, we expect to see similar levels of cash outflows from operations. In addition, we expect our CapEx to be in the range of $2 million to $3 million. As we have discussed before, as we expand our business, we will need additional capital. As we increase production in 2018, we believe that our operating results will improve as we ramp up production of our AquaRefining modules and begin selling high purity lead. With that, I will now turn the call over to Steve to discuss the revenue outlook for Q4.

Thank you, Mark. Now looking at the fourth quarter. We expect our revenues to be in the range of $1.2 million to $1.8 million. Sales will continue to include metallic lead, lead compounds and recovered plastic. This will be the first quarter that we expect to ship lead ingots. These will include some amount of lead produced from our AquaRefineries. Before we move on to the Q&A portion of the call, I'd like to leave you with some thoughts. Overall, we've made tremendous progress and excited about what we can accomplish in the future. We've also learned some important lessons. One of the things that runs through my earlier comments, and in many ways it's an important lesson, is that we are far more like a chemical and chemical equipment company than a traditional smelter. It took some time for this important distinction to become apparent, and it took time to adjust the management team and the core skill sets to this reality. With these and other changes, I believe that we have now made an important transition, and I'm proud of the team that we have in place. I'm confident in their ability to ramp up production at TRIC and to continue to expand our battery recycling operations in line with the scale and an opportunity that we've secured. Another important thing is that we're transitioning to the supply of equipment and services to third parties. We've made an exceptional start with our agreements with JCI. To have a partner of such scale and credibility as our launch customer is far beyond our expectations. To be able to fully realize the potential of that relationship, we believe that there is scope for additional strategic partners to help provide equipment and services. With those thoughts, we thank you for your interest in Aqua Metals and in joining today’s call. We are now ready to take questions. Operator?

[Operator Instructions] We'll take our first question from Colin Rusch with Oppenheimer.

I just wanted to make sure that I heard this right. So part of the revenue guidance for the fourth quarter includes AquaRefined lead that would be coming out of the full process, is that correct?

That’s correct.

And then you indicated that you would be…

Let me just - I need to qualify that. We're not going to be selling it as ingots solely consisting of AquaRefined lead. We're going to start by selling ingots of bullion that will include AquaRefined lead.

That's good enough, as long as going through the full process, I think. At stake and was concerning for investors was around commercial production. So I think that's the benchmark we wanted to understand. And then the comments around additional capital needing -- to scale the business, obviously that could be in the form of financing for additional facilities, but this pivot towards the licensing model. I guess, how do you think about the puts and takes of ramping up capacity, moving those licensing and module sale agreements down the road and in terms of the strategic kind of proliferation of the technology? Where are the puts and takes and when can we see some more concrete decisions around those things coming out into the public markets?

To take the last point first, it's very difficult for us to provide some of the level of detail that you and all of our investors want around exactly where are we with JCI, what's going to be the first facility, how big is it going to be and how many more are we going to do. Quite honestly, we're not going to able to provide the level of granularity that people want because we're talking about highly commercially sensitive matters that neither we or JCI particularly want all of our competitors to know about. But what I can say is that we're thrilled with the relationship we have with JCI, and we're somewhat overwhelmed by the scale and scope of what we could do in rolling out and providing equipment to them. That process has started. It will include engineering and other services as well as providing just AquaRefining modules. And I can't really say too much about that. But in terms of providing capital to the company, it certainly adds another dimension.

And then, last one is just around necessary staffing for the initiatives that you have. Do you have enough folks on the team at this point? Or are we going to see some of the OpEx spend growing as we go through the balance of next year? Are we going to see that happening fairly soon? How should we think about that?

Well, actually, yes. So the first part is, the equipment supply business essentially will use the same people that helped develop and build the equipment for TRIC. So we ramped up early, part of the reason that our expenses are high is because we -- when we took the decision to bring on board and build an exceptional team of engineers that could support the business going forward. I wouldn't like to pretend that we've hired everybody we'll ever need. I don't think we're even close, but we've certainly got sufficient staff on board now to continue the ramp-up at TRIC and simultaneously service the opportunity that we have in equipment supply.

And we’ll take our next question from Bhakti Pavani with Euro Pacific Capital.

Quickly, on some of the details of the current operations, could you maybe provide some additional color on -- as to how many tons per day are you guys currently running through the battery breaking system and through the entire process?

No, this time we provided all the color that we’re willing to provide at this point.

With regards to modification or the changes to the existing equipment, I know you guys have been working through a lot of issues with the battery breaking system, which are behind you. At this point, what do you anticipate or what process or what stage do you think will require modification when it comes to production of lead ingots or bullions?

Actually the issues that we faced and resolved with the battery breaker were quite unexpected. But we've got that behind us, and we consider that bit of a surprise, but a serious win. We're now pretty pleased with where we are in meeting the projections we made of having all of the equipment on site and ramping up 16 modules that we've got. I think the simple way to put it is we're solving problems faster than we're finding them, and that's an important inflection point to get through.

Just a follow-up to that. You mentioned in your prepared remarks that four AquaRefine modules are currently being used. Just kind of wondering what kind of utilization rate is with regards to those four modules? Are they being operated 24/7? Or are you still running in batches? How is it going?

We're not providing individual tonnage per day, utilization rates or any of that data. What we are saying is that we've got 16 on site. We've got 8 fully assembled. We achieved that. We put four on site and assembled them in less than a month, it was a tremendous effort. I'm confident we'll have all 16 assembled by the end of the year. The work to resolve the issues around sticky lead has borne fruit. We're not only -- do we -- we've not got just one way of resolving it, we've got three different ways. So we've now got a surplus of technologies to deploy. None of them are particularly difficult. There's no major redesigns, they're relatively minor adjustments. And we're confident in what we've planned and I'm proud of the team's efforts.

[Operator Instructions] And we will take our next question from Amit Dayal with H.C. Wainwright.

Steve, just a question in regards to the sort of evolution from lead bullion to AquaRefined lead. Why are these steps sort of necessary? And how much time do you think it will take to go from lead bullion to full AquaRefined lead?

It's pretty standard starting up any metals business, whether it's lead or copper or anything else, to start off with the high-volume, lowest grade first just to get everything working, and then to increase sequentially -- or move sequentially into alloys and then higher purity grades. We're doing nothing particularly unusual in that regard. And the reason everybody does it and the reason we do it is it is the fastest way of generating revenue with the lowest risk. So it makes total sense to start with bullion and then move last two AquaRefined lead. We're not providing guidance on the timescales we expect for that to take.

Are you making any margins on the $1.2 million to $1.8 million sort of guidance you're giving for the fourth quarter?

As we ramp up capacity, we do expect our gross margins and our margins to improve. But we're still in the early stages of production. And as we ramp up in 2018, we do expect our margins will continue to increase with the ramp-up in overall operations and with the increased production of AquaRefined lead, which we expect will have higher margins for the organization.

And in regards to JCI. How is the progress you guys are making in terms of perfecting the parameters, et cetera, meeting their expectations? Were they expecting you to have a model ready by this time? Or are they showing some flexibility and patience, et cetera, as you perfect things on your side before you move on to the next steps with them?

We're not going to provide specifics, but I can give you an anecdote. Just a few short weeks ago, I -- we were at the facility standing next to an early prototype of a method for removing the -- or dealing with the sticky lead with a very senior delegation from JCI, who were very pleased with what we were doing and very complimentary in what we'd achieved. And we're thrilled to have them as partners, and I really can't say much more than that.

And this does conclude the question and answer session. I'd now like to turn the call back over Steve Clarke for any closing comments.

Okay, thank you everybody for joining us today. We look forward to updating on our progress as we work to start operations at the world's first Clean Lead Recycling facility. Thank you very much.

And that does conclude today's conference. Thank you for your participation. And you may now disconnect.