Good day and thank you for standing by. Welcome to the Aqua Metals announce a schedule for Third Quarter Financial Results Conference Call. At this time, all participants' line are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand over the conference over to your speaker for today, Mr. Glen Akselrod. You may begin.

Thank you, Operator. And welcome everybody to Aqua Metals Third Quarter 2021 Conference Call. Earlier today Aqua Metals released financial results for the quarter ended September 30, 2021. This release is available on the Investors section of the company’s website at www.aquametals.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 report on the Form 10-Q filed today, November 4, for a 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. Aqua Metals 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. As a reminder, after Steve’s and Judd’s formal remarks we will take questions. Questions will be accepted over the telephone from analysts and all other investors can submit a question using the online webinar portal provided in today's and last week's press releases. We will take as many questions as we can in our available time slot. And with that, I would like to turn the call over to Steve Cotton, CEO of Aqua Metals. Steve, please go ahead.

Thank you, Glen. And welcome everybody to today's quarterly call. I’m going to start with Slide number 1, which is our title slide which is that Aqua Metals is truly leading a revolution in lead and lithium battery recycling. And today, we're going to be talking about our third quarter results. If you would like to have more in-depth view of our Aqua Metals, you can refer to our investor website and play back, register for and play back the presentation that we made last week which has more in-depth information. Today's call is focused on our quarterly results. Slide number 2, you will see the Safe Harbor that Glen just read, which I won't reread back to you and that's there in writing for your reference. Moving on to Slide 3, our mission. And our mission is to provide sustainable metal recycling for materials that are strategic for energy storage applications be it lead or lithium. Our proven breakthrough technology which we'll talk about today are to refining returns raw materials to the manufacturing supply chain in a clean way and in an economical way, it will help vastly reduce the reliance on mining to meet the growing demand for the lead asset and be it lithium-ion industries. Moving on to Slide 4. Change has really impaired us in the way that the industrial processes need to electrify and get away from fossil fuels and become the clean processes that support the clean initiatives. As you see in the right, the U.S. Department of Energy themselves has said that the vision is for global production of metals using just air, water, and clean energy as inputs. That's the only way we're going to drive towards net zero emissions which is quite the topic these days as we talk about…

Thank you, Steve. I will share a few comments related in each of our financial statements. First on Slide 12, on the balance sheet. As in September 30, 2021 cash and working capital balances were $11.7 million and $10.3 million respectively. Over the last three quarters, we have consistently maintained cash balances over $10 million. This ability for us to maintain a stable cash balance is partly due to the sale of the building insurance proceeds and our reduced cash spend. We've accounted for certain items, asset items, with the net book value of $3.2 million at asset held for sale these are non-core assets and are no longer necessary for future operating plans. As mentioned in the prior quarter, we accounted for the lease-to-buy agreement with LiNiCo at the sales type lease. As a component of the accounting for this agreement, we recognized the estimated fair value of the land and plant of approximately $70 million as a leased receivable. Subsequent to the quarter end, LiNiCo made their first required deposit of $1.25 million. The deposit is non-refundable, however, it will be applied to the purchase price of the building at the time the amount is paid in full. Lastly, accrued liabilities includes approximately $2.3 million in remaining cost to repair the plant from the fire damage and again very close to completing the restoration of the plant from the damage and it's looking very good and we're pleased with the progress. Most of the building is ready for LiNiCo to start moving equipment in. And we anticipate that by the end of the year, the whole building will be available for their use. Moving on to the next slide, the income statement. Cost and product sales increased approximately 2% and 23% for the three and nine months ended…

Thank you. [Operator Instructions] Here first question comes from the line of Amit Dayal from H. C. Wainwright. Please go ahead.

Thank you. Good afternoon, everyone. Thank you for taking my questions. So Steve, with respect to your shipments and deployments at ACME, are these guys getting the third generation solution or are they getting a prior version of the Aqualyzer?

So, ACME Taiwan to get the latest incarnation of the technology and we'll continue to work with them to even further improve technology over time.

And you -- should we expect Aqua Metals to receive something from this shipment or deployment in the fourth quarter of '21 in terms of the release?

The materials are going to be shipping by the end of the fourth quarter and need to get across the et cetera and get there and get installed and we're working towards what I've characterized before as a modest amount of payment ultimately for the equipment as well as we will be once we get the equipment installed and commissioned be receiving payments for the material that is produced. But again the guide on that is not going to be a material amount of revenue for the company in the early phase, the key is to get the material coming off of the equipment and the large battery manufacturers to work on that direct offside building.

Understood. And with respect to other potential customers are dividing on bids in terms of any pilots or any other progress not made in terms of securing new contracts with new customers with this?

Yes. So we, as I mentioned in the call, I'll have a good sales funnel and we are very pleased with the global nature of the sales funnel and are intending to add one to two additional licensees in the coming year. And Aqua Metals is going to be certain that we select and a licensee that selects us, whereas a good match for both parties. And that is what we're really solving for and we work through in, would ask everybody to stay tuned for updates on that.

And with respect with the LiNiCo partnership, are there any near-term milestones that we should be looking for or and then maybe it's an adjacent question to that is -- what kind of resources as do we now have to commit, it looks like it's becoming a more serious effort to compare to the announcement earlier in the year. Do we need to allocate more resources as this picks up or should we think about the CapEx or the investment requirements to bring this to market?

Yes. So, as Judd mentioned, we're shifting our cost structure from the transition of the AquaRefinery to LiNiCo that's taken over the AquaRefinery and applying some of those towards the or that capability enhancements from what we've already enhanced within the organization from an engineering science designed, process engineering, et cetera, perspective as well as even commercial resources and other consultative resources that we're working with to develop the lithium space. But still, not as Judd characterized, not really of that bill amount of uptick in our burn rate to do so. Because we're transitioning those costs. And you asked also about the milestones expected in the near-term. As we continue to develop our technology now with the sourcing of the black mass material which is post broken and separated with used lithium-ion batteries that become a black mass which has those high-grade metals in that. We'll be receiving that material soon and will be able to process that material through our pilot sales and begin to share with the market place. In summary, what we've been able to create and what kind of purity of what metals we've plated show that and obviously get into more details with LiNiCo in terms of this specifications, the evaluations, those materials that come off of our machines. And that will happen on really if you look at the timeline on our website, as we round the bend and to the next couple of quarters, you'll one more evidence of that progress of that technology. I'll like to remind everybody that nobody's really shown hydrometallurgical processing for lithium-ion batteries, a substantial amount of material to-date. And we think that with our partnership with LiNiCo, together we are going to be ahead of the general curve of the industry. Because there is a building, there is plant and equipment going in and we have our innovation center, we could begin moving materials practically upon commencement of the signing of our agreement. So, we're very excited about that. And then as you look at our timeline in the website, you'll see through the process of the year we'll have further full-size pilot sales running towards the end of the year with the intent to begin deploying them as we round the bend into 2023 for production scale.

Understood. And that's all I have, I'll take my other questions offline. Thanks, Steve.

Thank you, Amit.

Your next question comes from the line of Colin Rusch from Oppenheimer. Please go ahead.

Hey guys, this is Brandon on for Colin. First and formally, is an $11.7 million of cash on hand. Please walk us through your plans to fund the business for the end of '22?

Yes. So, we did have the $11.7 million scenario quarter, we did receive another $1.25 million in the building sale. There's another deposit of $2 million that's due next year, so there was some additional funds from the building sale that's coming in. LiNiCo doesn’t have the option to pay that off sooner, so it's another $12 million plus $13 million or so that we could receive next year that you have the option to wait till the first quarter of 2023. So, there is some additional funds coming in from that. So, that's the funds we have on hand and some of the revenue that we expect towards the end later part of next year the current spend rate that we're on in terms of our needs for G&A and for the operating in R&D costs that we have in front of us. We thought we have enough funds to take us through and into you 2020, 2022.

Aright, thanks. I'll then just as a follow-up. I know you touched on the of data segment now. If you could provide just and a little bit more incremental color on the pace of the lithium recycling process development. And then maybe kind of a target in terms of what we expect as the present commercial process on that front?

So, yes. The pace is rapid with the lithium recycling technology. One thing we really learned in 2020 was without the distractions of operating the plant of the full-size AquaRefinery to demonstrate in the proving grounds of our technology. We were able to focus and tactically 100% of our engineering efforts towards innovating and as evidenced by iterating our Aqualyzer product twice for doubling and tripling of capability, let alone the Pure Metrics software and monitoring and connectivity in automation and controls. So, we've taken that towards our capital-light model of rapidly innovating application of AquaRefining technologies towards multi metal recovery for lithium. And that's why we're doing that in the innovation which is a relatively much lower capital risk that took focus on innovation and then work with LiNiCo and other industry to take our technologies evaluate the output and the integration with their processes and put them in their more capital-heavy throughput place of taking business model or taking in feedstock and producing metals and selling those metals where we monetize and really unbound geographically through our equipment supply services and licensing business where we can work with multiple parties. But we're very pleased with our evolving partnership with LiNiCo that we can hit the ground running and really make 2022 a banner year for the progress not only for Aqua Metals but also lithium-ion recycling in general. So, that's a real strong innovation deep focus on that innovation side of the business which is what our business model is related, became capital-light model.

Okay, thanks so much.

[Operator Instructions] Your next question comes from the line of Shawn Severson from Water Tower Research. Please go ahead.

Hi, thanks. Good afternoon, everyone. Steve, I wanted -- are there any real technology for this black to lithium-ion recycling, these AquaRefining refining technology. And then, if we're looking at and kind of getting from where you are today to really implementation and commercial scale. What is left to be done from a technology standpoint?

Yes, Shawn. So, really kind of what we've done before with AquaRefining for lead and the extraction of lead through AquaRefining technologies where -- you have to de-risk the technology by operating on smaller units and then going to a full-size unit and then getting those at operating in a full-scale facility. And one thing that we learned from our development of Aqua Metals is we spent $200 million building a full-size plant and getting that scaled and having those distract, we think that by removing some of that distraction in capital-heavy focus, we can continue to de-risk the technologies we offer the process engineering and design is there and it's we're very confident in our ability to extract the metals that we've named that we would be extracting. And we've done some very significant metal separation and extraction already. And now it's taking that and giving that into this pilot sales and getting those operating and getting everybody comfortable with the process flow and going towards the full-sized scale. So, there is still de-risking to do as the lead technology has been de-risked because we commercially produce 35,000 ingots. That's further along and that's really our workforce in our licensing deployments. But we really do see a rapid path for us to do our on-core, do it much more quickly through the things that we've learned in the past.

Well, next question. If you can look in a crystal ball, maybe a little bit here and I know it's a tough question. But when you look at lithium battery industry related to lead batter industry, look at adoption rates and focus on carbon reduction and things like that. Do you think that they'll, how do you think it'll unfold in lithium-ion relative to how it did and driven as billion I should say in the lead side and maybe then twist and say grow much faster or is it kind of through the same process or what are your thoughts?

Yes. Its two very different industries, look Shawn. So, one is the existing lead acid industry where we're working with the industry players that are leading in that space to upgrade from a hydrometallurgical fossil fuel based method recycle. But a mature recycling closed-loop which is a great thing that the industries accomplished but really taking that towards an electrified clean process that protects workers, the environment creates ultra-pure products. In the lithium space, it's a nascent industry and it's growing in a very much more quick tune with annual growth rate by mid-to-date decade, it will certainly become a larger industry than the lead recycling industry. But there is a lot of work to begin between now and we're looking forward to working with everybody in the lithium recycling industry to make sure that we build together the best possible solutions there. Because as I mentioned in our presentation, if we don’t get this right as an industry and really as a global effort to electrify our processes throughout the world, we're not going to succeed in addressing global climate change at a fundamental level. That's why we're doing these, that's why we're electrifying industrial processes, which is exactly what we're trying to do with our methodology and techniques. So, it's really a difference where you see an industry that is looking at an upgrade in the lead space and industry that is getting built really from the ground up in the lithium recycling space. Hopefully that answers your question?

Yes, it does. And when you look at -- when you look these customers in the lithium-ion space, and obviously you're looking at electric vehicles and sort of related products. But if you're looking at the carbon footprint focus, I would think it'll be very high there. So, my question is if you, how well if somebody do fit in adopt this AquaRefining technology for this, what else would be other solutions or that they will be looking at. Is this something where one adopts it everybody has to adopt it to kind of keep pace with keeping carbon reduction on track?

Yes. So, in order to reduce carbon output and decarbonize, you can't burn things. And so, that the smelting methodologies will likely yield to the hydrometallurgical methodologies. And there are kind of standard hydro as we characterize it, that's available which is precipitation based and ours is more about metals plating. And recycling the chemical that you use to do the recycling which also has a de-carbonization benefit in and of itself. And so, we do see that the less things that we burn that are fossil fuels equals better and we see that our application of AquaRefining in our methodologies of the hydrometallurgical can really be an enabler for everyone that's in the industry whether you're recycling today through a hydrometallurgical technology that could be complemented through ours or a pyro technology or smelting with we can literally attach and bolt-on and are ultimately replace this smelting capabilities with a much cleaner way of doing this as we go into the future.

Okay, thanks. I'll take the rest of my questions offline.

There are no further questions over the phone at this time. I would like to turn the call over back to Mr. Glen Akselrod. Go ahead, Sir.

Thank you, Erica. Steve, is there some questions that have come in online. So, I know much of them have already been addressed in this call but I'll ask some which you could comment on. Has BASF aided Aqua with other potential global prospects for lead refining?

Yes, so our work with BASF has in fact built up our sales funnel and helped us with the engagements. And so, we're enjoying working with BASF to continue to promote AquaRefining into the lead asset industry. We'll obviously be also working with BASF with the system till of the key chemical in our AquaRefining electrolyte which is the other aspect of our agreement as we ship and deploy and get the Taiwan operation up and running. So, we'll begin to transact with BASF in that front. And then lastly, we're constantly exploring technological opportunities which was the third element of our partnership with BASF not only to improve AquaRefining for lead but even to potentially explore AquaRefining applications for other things and obviously BASF has interest in lithium recycling and so is Aqua Metals. And therein lies opportunities for the company's to discuss additional possibilities of ways to work together. So, all-in-all we're very pleased with our relationship thus far with BASF and our partnership with them.

Super, thank you. One more question here. How does AquaRefining ignore non-targeted metals in the feed?

So, what we do with AquaRefining as we go for lead for example, is that there are some metals that with that will dropout from that and then end up in the residue a very small amount because lead acid batteries for example are very much lead-centric in terms of the mineral that's in those batteries. But there are things like silver and bismuth and a couple of other items that we don’t plate and it's because we don’t plate them. And will apply the same when we look at what we do plate in the lithium multi-metal recoveries is that we will plate in a pure form the metals that we're going after and any metals that we're not going after we'll ultimately is messing the residue but that'll be a very small percentage when you look at the added effect of the metals that we are going after.

Thank you. One more question here. I guess in 2022, when do you first expect to start to receive the licensing payments, is it a quarterly annual basis?

So, we expect to receive that the first running royalties on the Taiwan installation relatively soon after we turn the equipment on. Again, the volumes won't be a large amount but the binary did Aqua Metals collect running royalties or not, answer will be yes. And we'll begin collecting those revenues in that form. So, we definitely in near first half of '22 certainly will be receiving those payments and be able to report that we have received those payments.

Super, thank you. I have no further questions in the online queue, Steve. So, maybe some closing comments and then we'll end the call.

Yes. I appreciate everybody's time here and I'll reemphasize that the Aqua Metals business model is really to enable all the battery recyclers whether it's lead or lithium-ion battery recyclers with key and core technology. And as we demonstrated with our lead efforts that's far to date in our first licensing in Taiwan, that gives us a good opportunity to enhance that further as we've evidenced today with our relationship with LiNiCo which the both parties intent to lead towards the licensing and enable us the LiNiCo to be successful. And we want to be the suppliers of the best-in-class and best available technologies for all battery recycling. And we feel that we are in a great business model, great cash position, great organizational capability to achieve new goals and really work with the industry to make the world a better place through the electrification and de-carbonization efforts that we're all trying to do here. So, I appreciate everybody's time and support and look forward to further updates in the near future.

This concludes today's conference call. Thank you all for joining. You may now disconnect.