Greetings and welcome to the Aqua Metals First Quarter 2018 Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to Greg Falesnik, Managing Director of MZ North America, Aqua Metal’s Investor Relations firm. Thank you. You may begin.

Thank you, Operator. Welcome everyone to Aqua Metals first quarter 2018 earnings call. Earlier this afternoon, Aqua Metals released financial results for the first quarter ended March 31, 2018. 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 statements include, but are not limited to our plans, objectives, expectations and 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. Those 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 did 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. The fact that the Company will only recently commenced production has not generated any significant revenue to date, thus subjecting the Company to all of the risks inherent in a pre-revenue start-up. The risk said no further patents will be issued on the Company’s patent applications or any other application that the Company might file in the future, 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 to the company and 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 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 May 9, 2018. 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 Chief Operating Officer, Selwyn Mould is your host today and he will introduce the rest of the team joining him on this call. And with that, I'll turn the call over to you, Selwyn.

Thanks, Greg. Joining me today’s call is our Interim Chief Financial Officer and one of the founders of Aqua Metals, Thomas Murphy. On today’s call I will be providing a brief over view of the history of Aqua Metals for those of you who maybe new to this story, followed by an update on our progress since the beginning of the year as well as a full update on the status of our operations today. Afterwards, I’ll turn the call over to Tom, to discuss the financial results and recent enhancements to both the management and board before wrapping up with some milestones to track our progress for the remainder of the year and a Q&A session. I’d like to start out today’s call by thanking Steve Clarke, the former President, CEO and Chairman of Aqua Metals for his considerable contribution to the Company. Steve was one of the co-founders of the Company and a driving force in its creation. We all wish Steve well and success in the future. Steve’s departure came as a result of the planned board refreshment and CEO’s succession that was planned since late 2017. As you may know, I am the Chief Operating Officer of Aqua Metals and one of the six founders. As some of you will know the history of Aqua Metals is quite extra ordinary, starting with six guys in the garage who came together to create the Company with little more than an idea and a lab experiment. In 2013, we built our first lab scale unit and after many months of trial and error, we developed the unit to a state where we earned our first investment and received funding. With the initial funding, we were able to design and build a full scale unit and to develop and…

Thank you, Selwyn. In the first quarter of 2018, we recognized revenues of $1.7 million compared to $900,000 of revenue in the fourth quarter of 2017. This was the fourth consecutive quarter the company generated revenue with all the revenue during the period generated by the sale of plastics and lead compounds. For the three months ended March 31, 2018 we had an operating loss of $7 million compared to an operating loss of $4.5 million in the first quarter of 2017. While we had higher revenues during the period, the current quarterly loss was primarily driven by lower production at our current facility, product mix and production ramp up cost primarily associated with installation of retrofit piston and modules. In addition, we continue to invest in technology, developments and process improvements. Net loss for the first quarter of 2018 was $7.5 million or $0.27 per diluted share compared to a net loss of $4.9 million or $0.26 per diluted share in the first quarter of 2017. We had $17.5 million in cash and cash equivalents as of March 31, 2018. In the first quarter, the company received approximately $2.1 million from the underwriters exercising their overallotment option from the December 2017 capital raised. Capital expenditures were over $1.6 million all for the plant in TRIC. For the second quarter, while we expect to see slightly less cash used in operating the plant, overall cash flow will be similar to the first quarter due to the added cost associated with the proxy fights. In addition, we expect our CapEx will be in the $2 million to $2.5 million range. As we have discussed before, as we expand our business we will need additional capital. As we increase our production in 2018, we believe that our operating results will improve as…

Thank you, Tom. As noted earlier, we're satisfied with our progress to-date and the continued derisking of our technology as we work to scale operation. That said, there are several milestones that we are working to deliver on as we move through 2019 and beyond. Our ultimate goal of getting 16 AquaRefining modules running 24 hours a day is still our top priority. To accomplish this, milestones to track are as follow; getting the first four modules running for 24 hours a day, bringing new additional modules online in batches of four into total 16 running 24 hours a day. Continued shipments of lead bullion blocks to partners such as JCI, and production of pure lead blocks and shipments to JCI. Clearly, we expect our revenues do increase as we ramp of our operation. Now before we move on to the Q&A portion of the call, I'd like to leave you with some thoughts. Overall, I would like to summarize by saying, we continue to make solid progress with the technology as shown by the four modules that are in production. Our relationships with key partners such as JCI remain strong. The fortification to the board and management structure will bring real benefits in the future. We will seek to provide more regular updates between earnings calls. With those thoughts, we thank you for your interest in Aqua Metals and joining today's call. We are now ready to take questions.

Thank you. We will now conduct a question and answer session. [Operator Instructions] Our first question comes from Colin Rusch with Oppenheimer Company. Please go ahead.

Thanks so much, guys. Can you talk a little bit about your expectations for ramp expenses as we go through the second quarter and into the back half of the year? With the COGS running a little bit higher, just want to understand kind of where you at in terms of utilization in yield and how we should think about that trending as we go through the quarter and into the back half?

Well, I don't think in the past we've gone into detail exactly on what are utilization in yields have been. So I can't get really any more specific on that. Again as we do ramp up and the modules are producing, the AquaRefined lead that we will be able to start selling that. So the product mix up to now have been up through the first quarter has been just lead compounds and plastics. And so we have started made our first deliver shipments to JCI with lead bullion and that will continue. And so the lead products and type of lead that we will be producing and selling will increase in values as the year progresses.

Okay. And then, how should we think about OpEx as we through the second quarter, obviously there's been some management change. Are there any unusual items that we should think about in terms of the recognition of expenses in the second quarter?

Really, the unusual expense that we will have in the second quarter is the cost of the proxy fight that we have with Kanen and was successfully negotiated and came to – I think a good resolution for all concerns, but there were certainly cost – extraordinary cost associated with that. Other than that there shouldn't be any other extraordinary expenses for the quarter.

And how much should we expect for the second quarter with that proxy fight?

We have – in the proxy we've said that total cost is 950,000 for the proxy's fight. There was probably about a 150,000 of that was incurred in the first quarter.

Okay.

Yes. It was in the first quarter. So the balance will be hit in the second quarter.

Thanks a lot. Thanks so much guys.

Thank you.

Our next question comes from Ilya Grozovsky with National Securities. Please go ahead.

Thanks guys. Thanks. Just a couple of questions on the four modules; what are the gating factors to get the four modules up to 24 hours a day, and kind of what type of a timeframe do you think that happens in?

At the moment we are working through training operators, so that we can put these things to running 24 hours a day, that's the critical items at the moment. It's bringing these machines, so they can operate with our standard operators 24 hours with no technical support and through the day. So we expect that to happen reasonably quickly.

So, I'm just not clear. In terms of the gating factors between -- if you decided to run it for 24 hours, let's say next Monday, what needs to happen for that to happen? Another word is it a headcount issue right now. You need to hire more people to run the full three shift? Is it the people or is it some technical question or is it just a level of comfort?

It's need to – we need to train the operators to a sufficient standard so that they can run the machines for 24 hours. We've recruited the people there undergoing training at this moment.

Got it. And then if I look at the cash, so obviously you guys did raise. But if I look at the cash at ending Q1 here at $17 million. That is the second lowest cash position that you guys have had in the last probably three years at this point. What's the thought process there in terms of – you obviously, Tom, you said you will need additional cash, but if you can kind of layout the thought process in terms of timing; what level are you comfortable going down to? Thanks.

Yes. We're currently evaluating multiple alternatives for the future growth of the business and that includes strategic relationships and non-dilutive forms of financing if we can – if we need it. It’s a process that we are continually evaluating that and that we have several alternatives that we have been talking with over the past and some of them a long period of time. But its' something that's been evaluated by the Board and with the new members and with Steve Cotton coming on board, but it's – again its something we're evaluating. We don't have a definitive number that if it gets below that we would definitely need money. I do think $10 million is kind of a base in my mind that we wouldn't want to get below.

Okay, great. Thank you. I'll pass it on.

Okay.

Our next question is from Amit Dayal with H.C. Wainwright. Please go ahead.

Thank you. What's the timeline to get to the 16 module? Is it going to take six months or year? Where do you think you could be in terms of getting these first four modules up to 24 hours? And then from there does it accelerate, like how do these works or play out in terms of the ramp?

We want to bring the first four to 24 hours which should happen in a relatively short timeframe as we join the stuff. We didn't want to run those for period of time to learn as many lessons as we can about the challenges of running 24 hours. And when we satisfy ourselves with that we will then extend that out to eight and 12 and then 16. We don't – certainly don't expect to take as long as six months.

So sooner than six months?

I would expect so.

Okay, perfect. My last I guess is, your additional need for capital, just trying to get a sense of how much capital you will need if we are looking to ramp up all six modules running 24 hours a day, and at the same time trying to fulfill whatever commitments we have in JCI within a one year period. How much capital do you see that you need, obviously some of this will come from cash flows as you ramp up, but any idea in terms of what your needs on that front are going to be?

We haven't given specific guidance on exact amounts that we may need and so I hesitate to state anything at this point?

All right. I'll make sure that I get back in the queue and follow-up offline.

Thank you.

Our next question is from Bhakti Pavani with Euro Pacific Capital. Please go ahead.

Good afternoon, guys.

Good afternoon.

Just a quick question, while you going for bringing the 16 or the remaining modules on line and hopefully, it is done by Q2. Should we see a production of AquaRefined lead which is 40 tonnes immediately or do you think you would be able to produce some AquaRefined lead while you are bringing these modules on line?

We expect to move to producing the 100% pure lead later this quarter as we sort of build out the priming lead from the first kettle. So, we will be gradually diluting that away and we should be in the next month or so moving to a pure lead grade of.

We don't have – we won't receive a premium for any AquaRefined lead in the second quarter. That wouldn't start until some time in the third quarter.

Okay. One more from my end. Given that the price of lead has improved over the last years, internally how has it – I mean have you guys projected taking into consideration the price of lead increase and how has it impacted your model from the operational profit and you know from that point?

That's goes almost hand in hand with the increase in lead prices, also the increase in price of the dead batteries that we're recycling. So there is again little bit of tail usually when it goes either way on pricing of one catching up with the other. But in our model we're trying to use an average price so that we'll try to be as consistent as possible. And there is volatility but again it's reflected in both the revenue and the cost of goods sold.

Okay. I'll take my other questions offline. Thank you.

All right. Thank you.

There are no further questions registered at this time. I would like to turn the call back over to Selwyn Mould for closing remarks.

Thank you everyone for joining us today. We look forward to updating you on our progress as we work to scale up operation at the world's first AquaRefining facility. Thank you.

This concludes today's conference call. Thank you for participating and have a pleasant day.