U.S. Markets open in 6 hrs 28 mins

Edited Transcript of AQMS earnings conference call or presentation 28-Feb-19 9:30pm GMT

Full Year 2018 Aqua Metals Inc Earnings Call

ALAMEDA Mar 14, 2019 (Thomson StreetEvents) -- Edited Transcript of Aqua Metals Inc earnings conference call or presentation Thursday, February 28, 2019 at 9:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Judd B. Merrill

Aqua Metals, Inc. - CFO & Company Secretary

* Stephen Cotton

Aqua Metals, Inc. - CEO, President & Director

================================================================================

Conference Call Participants

================================================================================

* Bhakti Pavani

Alliance Global Partners, Research Division - Senior Research Analyst

* Colin William Rusch

Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

* Ilya Grozovsky

National Securities Corporation, Research Division - Senior Equity Analyst

* Alison Ziegler

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Thank you for standing by. This is the conference operator. Welcome to the Aqua Metals Fourth Quarter 2018 Corporate Update Conference Call. (Operator Instructions) And the conference is being recorded. (Operator Instructions) I would now like to hand the conference over to Alison Ziegler, Managing Director of Darrow Associates. Please go ahead.

--------------------------------------------------------------------------------

Alison Ziegler, [2]

--------------------------------------------------------------------------------

Thank you, operator. Welcome to Aqua Metals' year-end 2018 conference call. Earlier this afternoon, Aqua Metals released financial results for the year ended September 30, 2018. 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 annual report on Form 10-K filed today 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.

And with that, I would like to turn the call over to Steve Cotton, CEO of Aqua Metals. Steve, go ahead.

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [3]

--------------------------------------------------------------------------------

Thanks, Alison. Good afternoon, and welcome. As you read in today's press releases, we have made significant progress readying the company to scale our AquaRefining operations at our McCarran, Nevada facility. And with the help of our new strategic partner, we are positioning Aqua Metals to expand on a global basis.

Let me first update everyone on today's announcement of our new strategic partnership with Veolia North America Regeneration Services. Veolia is a multibillion dollar global leader in operations management known for their commitment to sustainability and a circular economic business model. Today's announcement comes after months of mutual due diligence, including engineering process review, map (inaudible) of the plant which identifies all material flows detailed financial modeling. Under the terms of the initial 2-year agreement, Veolia will provide operational and technological expertise and organizational capabilities with an aqueous-based process in chemistry, and will also take on responsibilities for operation, supply chain, off-take, and management of the plant. The agreement has been structured to ensure that both companies' interests are aligned in reaching our goal of scaling plant operations to 16 modules of AquaRefining capacity by the end of 2019 and future rate increases in 2020. Veolia teammates will officially begin working on site beginning on March 4th.

Longer term, we believe that having Veolia manage operations at the McCarran plant will also enable them to provide go-to-market support as we seek to deploy our technology on a global basis, facilitating our transition to the next phase of our business strategy to become a capital-light technology licensing organization. Veolia's size and technical regeneration capabilities are expected to provide valuable and additive expertise that we execute in our business plan. We chose to partner with Veolia for its well-deserved reputation as a global leader in operations management and its commitment to sustainability in a circular economy business model.

Turning to progress at the plant, the Phase 1 plant upgrades to recycle and reuse electrolyte in order to increase our contribution margin are nearly complete. We chose to operate the plant 24 hours x4 days a week for portions of Q4 and through Q1 to date, to safely complete the Phase 1 upgrades and Phase 2 piloting. We are still in the process of commissioning the large new filter press we have successfully installed on its new concrete and steel platform and plan to commence commissioning next week and hand over to production by the end of March. This should allow us to scale the production of the concentrate that feeds all of our AquaRefining modules.

The full-size centrifuge replacing the pilot unit arrives by the second week of March and is slated for commissioning by early April. We need the larger centrifuge for getting concentrate production beyond four modules, so at this point, its commissioning schedule, albeit delayed, is not on the critical path for our scaling time line. With the new filter press and centrifuge in service, we expect to pick up the remaining electrolyte recovery to get the full 75% target from the 67% that we've already accomplished.

Moving on to AquaRefining modules, we have made tremendous progress and have demonstrated that the AquaRefining modules can consistently achieve steady-state production with each of the initial four modules for weeks at a time, not days. We have also commissioned and run our fifth module with additional updates that we believe will significantly reduce the labor requirement, including automated controls that we plan to roll out to the remaining modules, once dialed in.

With these and other process improvements complete, we expect to be in a position to begin scaling by the end of Q1 and expect to achieve full-scale production of our initial four modules, including returning to 24x7 staffed operations, by the beginning of the second quarter. With the 100-kilogram per hour parameters we have set for the modules, this should enable us to achieve the target production of 2.3 to 2.4 metric tons per day, per module.

Our ingot line became operational in the fourth quarter, and truckloads of AquaRefined lead have been shipping directly to battery manufacturing facilities, with these facilities already building and testing batteries made from AquaRefined lead. As we've previously reported, we also achieved official lead vendor approval from Johnson Controls, which is a major accomplishment for the company. We have completed installation of an additional kettle to process the hard lead from the batteries we break, and those operations have also begun. We expect a new kettle to result in up to a 25% increase in finished lead ingot, which can then be sold for more than we are currently receiving for [uningoted] hard metallic lead, further aiding our contribution margin.

On the human health and safety front, in Q4 we completed the comprehensive safety and process audit by WorleyParsons (inaudible) group, a global leader in health and safety engineering and consulting, and we have been implementing recommendations systematically. Ensuring a safe environment for our people is critical, and we've made major enhancements over the last year. Additionally, under the guidance of our VP of HR, Terri Bradfield, we also implemented formal performance and incentive compensation systems to attract, retain, and motivate employees.

Terri was also instrumental in recruiting our new CFO, Judd Merrill, who has already strengthened our finance and accounting functions and initiatives. Judd and his team have implemented multiple cash-saving efforts over the last several months, anticipated to conserve $2 million to $2.5 million in 2019. Judd was also instrumental in executing the equity offering in January, which raised net proceeds of $9.1 million. This funding gave us the flexibility to pay off our convertible note due May 19 with Interstate Batteries, saving approximately $300,000 in the first and second quarters. We also continue to strengthen our board of directors, most recently adding Gayle Gibson, a former leader of DuPont Central Engineering.

On the patent front, we continue to strengthen our already comprehensive patent portfolio and recently received our first patent grant in the European Union, an additional grant from the Ministry of Economic Development and Trade of Ukraine and the Korean Intellectual Property Office. This brings the total number of grants to 13, and our allowances now stand at 2. In addition to the new European Union patent, we had one U.S. patent as well as international patents and allowances in Korea, Japan, China, Europe, Australia, Canada, African Intellectual Property Organization, Mexico, South Africa, and the Ukraine. We also have over 90 patents pending in the United States, along with 20 additional jurisdictions. Since our long-term vision is to co-locate our refineries alongside smelters around the world, implementing an aggressive global patents strategy to protect our first-of-kind technology is key to supporting our business plan.

I will now turn the floor over to Judd Merrill, Chief Financial Officer, to review our Q4 and 2018 financials. Judd?

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [4]

--------------------------------------------------------------------------------

Thank you, Steve. For the year ended December 31, 2018, we recognized revenue of $4.4 million, more than double the reported revenue of $2.1 million in 2017. Increased sales of AquaRefined lead in our product mix, as well as having a full year of operations in 2018 versus approximately an 8-months during 2017, led to the increased revenues for the year.

For the fourth quarter of 2018, revenue was $1.1 million, comparable to $1.2 million reported in the third quarter of 2018. As we stated previously, in order to conserve capital, we have limited our AquaRefining operations to 1 or 2 modules at a time while we complete Phase 1 process improvement. AquaRefined lead comprised [60%] of total revenues during the fourth quarter of 2018, with the remainder from the sales of metallic lead compound and plastics from lead acid batteries.

In 2018, cost of product sales remained above target levels and can be attributed to a number of items, including but not limited to a greater loss of electrolyte in the AquaRefining process. This is being addressed with Phase 1 and 2 process improvements that are being brought online during 2019.

General and administrative expense more than doubled in 2018 to $14.2 million due to various non-operational items that totaled approximately $6.5 million and should not be repeated in 2019. These include a $2.5 million accrual of [key man] penalties, $0.9 million in legal, proxy, and solicitation fees related to the shareholder proxy contest settled in April 2018, $1.8 million of severance accruals, a net $0.4 million noncash charge associated with modifying a warrant in connection with our settlement agreement with Interstate Batteries, and a $0.8 million noncash write-off of leasehold improvements at our former California location. We also spent $0.6 million on increased legal fees associated with shareholder lawsuits in 2018. Without these one-time costs, general and administrative expenses would have increased a more modest 11% in 2018.

For the year ended December 31, 2018, we had a operating loss of $37 million, including an operating loss of $12.4 million for the fourth quarter. This compares to an operating loss of $24.9 million for 2017 and an operating loss of $6.5 million in the fourth quarter of 2017. The net loss for 2018 was $40.3 million, or a negative $1.18 per diluted share, compared to a net loss of $26.6 million, or a negative $1.31 per diluted share in 2017. The net loss for the fourth quarter 2018 was $13.5 million, or a negative $0.35 per diluted share, compared to $7 million, or a negative $0.32 per diluted share the year-ago quarter.

As of December 31, 2018, the company had $20.9 million in cash and cash equivalent. In January, we raised an approximately $9.1 million of net proceeds from a public offering of common shares, of which $6.7 million was used to pay all amounts owed under a credit agreement between the company and a subsidiary of Interstate Battery Systems International, Inc. The loan was due to mature on May 24, 2019, and with interest accelerating, the early payoff saves $300,000 of cash, spread across the first and second quarters in 2019.

To preserve cash, multiple cost-saving efforts have been put in place, designed to reduce expenses by $2 million to $2.5 million in 2019. These include eliminating several redundant positions, relocating our headquarters, and adding procurement processes and organizational capabilities. While it is early in the year, we are tracking in line with these cost savings goals.

Looking at 2019, we anticipate capital expenditures in the range of $5.5 million to $6 million. We continue to prioritize our capital expenditures to drive improved margins. While our current burn rate was approximately $7 million in the fourth quarter, we look to reduce this in the first quarter and expect to see further reductions as we scale production and generate growing revenues AquaRefined lead. We currently anticipate that we have the capital in place to scale the plant to 16 modules by the end of 2019.

With that, I will turn it back to Steve.

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [5]

--------------------------------------------------------------------------------

Thanks, Judd. This is indeed a very exciting time for Aqua Metals. Phase 1 of our capital program is nearly complete, and we remain on track to conserve 75% of our target for electrolyte recovery, which will boost contribution margins significantly to allow for rational scaling of production starting at the end of Q1 and continuing into the second quarter and beyond.

The company has already run a successful pilot program for the Phase 2 solution of its capital improvement program, which along with conserving an additional 25% of the electrolytes, should generate higher yield for the AquaRefining process, further improving contribution margin. With final designs related to Phase 2 complete, the full-size [dryer] equipment has been ordered, with benefits likely being realized in the third quarter of 2019, given the long lead time for delivery.

After our first four modules are up and running in Q2, our plan is to bring additional AquaRefining production online, four modules at a time over the remainder of 2019. Our partnership with Veolia should provide significant support, as we look to scale production. Our relationship is structured so that Aqua Metals and Veolia are aligned to reach our target 16 modules in production by 2019 year-end, and additional modules in 2020. And with our recent fundraising, we have the capital in place to allow us to direct our focus on operations and achieve our 2019 goals.

Regarding Johnson Controls' power systems division, with the pending acquisition by Brookfield Capital, we have strengthened this relationship by instituting project management and transparency and making progress on key milestones. Having received formal vendor approval, we are now regularly shipping AquaRefined lead that exceeds their specs and continue to work closely with their team, as we prepare to visit the nominated first site and enter negotiations for our joint development agreement in April 2019, with a date to enter into the development program no later than June 30, 2019.

We also see opportunities for additional partnerships, given the growing demand for high purity lead, to improve product performance and lifecycles. We are working with prospective lead buyers in and beyond the battery industry who are seeking ultra-pure lead, for which we could receive a higher premium.

Finally, before I open up the call to questions, I want to publicly thank all of our employees. While there will always be challenges in scaling a first-of-kind facility, we could not be more proud of the hard work and dedication of our employees to get us to where we are today, producing high-quality AquaRefined lead. Our team is confident that 2019 will continue to be a transformational year for Aqua Metals, and we thank you for your continued interest in Aqua Metals.

We are now ready to take questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Colin Rusch with Oppenheimer & Co.

--------------------------------------------------------------------------------

Colin William Rusch, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [2]

--------------------------------------------------------------------------------

Congratulations on the positive progress here, particularly with Veolia. You know, we'd love to understand some of the financial arrangement with Veolia at this point. What are the puts and takes here? You mentioned that you wanted to align all the parties, so can you give us a sense of what the financial agreement is and how that alignment is actually in place?

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [3]

--------------------------------------------------------------------------------

Colin, yes, thanks for the congratulations. It's been a lot of hard work. So on the Veolia front, the nature of the relationship is to start off with a cashless model where we work with them in the form of equity, and details of that can be found in the 10-K. But the alignment part of it is really about, over time, with Veolia getting more involved with the business and taking a stake in the business through that methodology, we feel that we are well aligned as we continue to work together to get the AquaRefining to where it needs to be and beyond.

--------------------------------------------------------------------------------

Colin William Rusch, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [4]

--------------------------------------------------------------------------------

Okay, I'll take the rest of that offline. And then, with JCI, obviously with the transition of (inaudible) battery business, there's a lot of questions around the strength of the relationship and how active it's been with a new owner. Can you just speak to the interactions that you've had with them, you know, kind of the consistency of those and how close that is at this point, as you start to enter into those final negotiations?

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [5]

--------------------------------------------------------------------------------

Yes, Colin, the JTI relationship is strong. We have plenty of interaction with them, especially as described in the call how we got through the certification with them of AquaRefined lead, so that was quite a bit of work that we had to do together to get through the quality audits and environmental audits, and everything associated with that.

So the main -- just on going forward with Johnson Controls at this point is progressing towards that joint development agreement, and April is when we will commence the discussions for the joint development agreement. It is already planned, and we'll begin that by visiting the [dominated] site. We can't say what the site is, but we'll be working together between April and June. And as per the agreement, we'll come out the end of the month of June with our joint development move-forward agreement. So plenty of engagement, plenty of conversation on many fronts, both in the lead offtake from the plant as well as the joint development agreement.

So we feel really good about that relationship, and we think that also with the addition of Brookfield coming in, acquiring Johnson Controls' power systems division, there's going to be even more opportunity as we progress and they become basically their own entity and move forward in 2019 and beyond. So we're really excited and bullish about that relationship.

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

The next question comes from Ilya Grozovsky with National Securities.

--------------------------------------------------------------------------------

Ilya Grozovsky, National Securities Corporation, Research Division - Senior Equity Analyst [7]

--------------------------------------------------------------------------------

So just on the housekeeping side, what was the share count at the end of the quarter?

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [8]

--------------------------------------------------------------------------------

At the end of the year, we had 38.9 million shares outstanding. (inaudible) we had about 44 million.

--------------------------------------------------------------------------------

Ilya Grozovsky, National Securities Corporation, Research Division - Senior Equity Analyst [9]

--------------------------------------------------------------------------------

Right, right, right, no, I know. And then, if you back out -- were there any one-time items in the fourth quarter expenses? Because those were -- the explanation was for the year. Out of the $14 million, you identified about $6-something million, but what was the -- were there any one-time items in Q4?

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [10]

--------------------------------------------------------------------------------

Yes, a lot of the one-time items were in Q4. The $2.5 million accrual, [key man] accrual that we talked about was in Q4. There was a $0.8 million severance accrual, the write-off of our tenant improvement of about $0.8 million was in the fourth quarter. I think that makes up most of the fourth-quarter items.

--------------------------------------------------------------------------------

Ilya Grozovsky, National Securities Corporation, Research Division - Senior Equity Analyst [11]

--------------------------------------------------------------------------------

Okay, great. And then, just trying to get a better understanding of this agreement with Veolia. So are you paying them? Are they paying you? How is this working? Or it sounded like, based on the previous question, you've given them some equity. You've given them some shares, or just kind of -- I mean, because I don't have the 10-Q in front of me, the 10-K rather, so given that that'll take time to get out there, kind of wanted to get a better understanding between now and then.

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [12]

--------------------------------------------------------------------------------

Yes, so Ilya, this is Steve. So it's a operations, maintenance, and management agreement, and the way that remunerating them is in a cashless form, and that will progress towards that alignment that we were talking about. So the details are in that 10-K. It gets into all the details, if you take a look there.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

(Operator Instructions) Our next question comes from Bhakti Pavani with Alliance Global Partners.

--------------------------------------------------------------------------------

Bhakti Pavani, Alliance Global Partners, Research Division - Senior Research Analyst [14]

--------------------------------------------------------------------------------

Just a quick one on the improvement in contribution margin. You did mention that at the end of the Phase 1, you expect the contribution margin to improve to 75%. Just kind of getting my thought process here, do you plan to, or do you intend to test this four modules for some time to see if you are actually generating 75% of contribution margin before you bring along -- before you implement Phase 2 and bring along additional modules? What's kind of the thought process here?

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [15]

--------------------------------------------------------------------------------

So in terms of the contribution margin driving the decision to scale, I assume that's what you're asking?

--------------------------------------------------------------------------------

Bhakti Pavani, Alliance Global Partners, Research Division - Senior Research Analyst [16]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [17]

--------------------------------------------------------------------------------

Yes, so we are measuring contribution margin throughout the months as we're getting into Q1 and we're getting more and more confident in the positive direction of that contribution margin getting very close to our target, which is why we're planning the scaling that we've announced as we get to the end of the quarter and into Q2.

So the addition that you'll see in the press release with the earnings announcement, you'll see some pictures of the facility and the improvements that have been made there, all of which contribute to the contribution margin. One of the big ones is that filter press that you'll see a picture of, which required a lot of concrete and steel and everything associated with it, and that's the rest of the Phase 1 part of the electrolyte recovery. That will get us to the 75% as well as get us enough concentrate production to feed multiple modules so we can continue to scale the facilities from a volume perspective. So we're pretty much there in terms of our confidence in scaling the plant with a reasonable target contribution margin commencing late this quarter.

--------------------------------------------------------------------------------

Bhakti Pavani, Alliance Global Partners, Research Division - Senior Research Analyst [18]

--------------------------------------------------------------------------------

Thank you so much. The other would be a housekeeping question. You did mention that there were about one-time $6.5 million I guess nonrecurring expense in the G&A, and so to get a clear understanding, those expenses will not be repeated in 2019? So I guess the G&A is going to be around about $8 million, on an average. Is that correct from the modeling point?

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [19]

--------------------------------------------------------------------------------

So, I mean, if you look at last year's $14.2 million of G&A and you take out the one-time expenses, that does get us in that $7 million to $8 million range, and that's consistent kind of with the last year or two, and probably consistent with where we're going for 2019.

--------------------------------------------------------------------------------

Operator [20]

--------------------------------------------------------------------------------

The next question comes from David [Green] with (inaudible) Fund.

--------------------------------------------------------------------------------

Unidentified Analyst, [21]

--------------------------------------------------------------------------------

Hi. You guys said the details of the Veolia transaction are in the K. When will the K file?

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [22]

--------------------------------------------------------------------------------

The K has been filed, and so it's out on our -- on the SEC's website, I think for --

--------------------------------------------------------------------------------

Unidentified Analyst, [23]

--------------------------------------------------------------------------------

I'm actually on EDGAR now, and it's not there. At least I don't see it.

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [24]

--------------------------------------------------------------------------------

All right, I've got my notice that it's been filed and accepted, so let me find out what's holding that up.

--------------------------------------------------------------------------------

Unidentified Analyst, [25]

--------------------------------------------------------------------------------

Well can you -- again, same question, can you guys describe the nuts and bolts of the deal with Veolia?

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [26]

--------------------------------------------------------------------------------

The nuts and bolts portion of it is better read from the K because it's too much detail and too many numbers to put out here. But it's not a -- it's a single-digit percentage of equity earned over time, as you'll see when you read it, with some performance initiatives that are well aligned with my performance initiatives with my share options, David. So it's paid over time, and the nice thing about the relationship from the starting point is that it does not consume cash, since the company is doing everything it can to preserve and extend the cash runway. So we get the additional resources from Veolia without expending the cash to reap the benefit of their expertise over that 2-year period. So for those first 2 years, (inaudible) direct cash impact on the company at all.

--------------------------------------------------------------------------------

Unidentified Analyst, [27]

--------------------------------------------------------------------------------

Got it, okay.

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [28]

--------------------------------------------------------------------------------

So we're pretty pleased with that because, again, in our view and in their view, it aligns the companies towards the objectives of getting the plant to scale and then progressing to propagate AquaRefining globally, and we're very happy with the way that we've made those arrangements together, and we are really pleased that they were putting some skin in the game that way.

--------------------------------------------------------------------------------

Operator [29]

--------------------------------------------------------------------------------

The next question comes from [David Brown], a private investor.

--------------------------------------------------------------------------------

Unidentified Participant, [30]

--------------------------------------------------------------------------------

Yes, in your press release on the Phase 1 equipment includes a filter press and a centrifuge system. Are these standard, off-the-shelf equipment, i.e. not a special design for you?

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [31]

--------------------------------------------------------------------------------

David, yes, it's pretty pedestrian, standard equipment that's off-the-shelf. They do have longer lead times, and as you'll see in the pictures -- you'll see in the picture of the filter press in the press release itself, the earnings press release -- it's quite a bit of customization around that standard piece of equipment in terms of your own electrical, your own plumbing, your own human-machine interface and the like, including the concrete platform and the specific steel platform, et cetera. But the actual technology itself is well known and well used throughout the world, even in (inaudible).

--------------------------------------------------------------------------------

Unidentified Participant, [32]

--------------------------------------------------------------------------------

So the specifications you've asked for are just standard specifications with respect to performance of what's --

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [33]

--------------------------------------------------------------------------------

Yes, so we're not really -- what you're getting at, we're not really inventing anything there; we're implementing.

--------------------------------------------------------------------------------

Unidentified Participant, [34]

--------------------------------------------------------------------------------

Okay, and you feel (inaudible).

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [35]

--------------------------------------------------------------------------------

So there's -- the execution risk of the technology side of it's low.

--------------------------------------------------------------------------------

Unidentified Participant, [36]

--------------------------------------------------------------------------------

Okay, that's what I was getting to. Okay. And one other question: when will you be cash-flow positive?

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [37]

--------------------------------------------------------------------------------

We're not projecting exactly when we're going to reach cash-flow positive at a plant level and a company level at this point in time, but I'll allow Judd to contemplate that.

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [38]

--------------------------------------------------------------------------------

Yes, we haven't given any guidance on cash-flow positive, but last year we had a cash kind of burn rate of about $7.25 million. As we head into 2019 and with this positive improvement, the news that we're moving into, we'll see that come down. And as we get closer to the 16 modules, we'll see quite a big improvement. But we haven't given any guidance kind of on how that's going to play out this quarter.

--------------------------------------------------------------------------------

Unidentified Participant, [39]

--------------------------------------------------------------------------------

But you've got enough money for the next four quarters to keep going?

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [40]

--------------------------------------------------------------------------------

Yes, so with the $21 million at the end of the year, even after -- and we raised the net of $9.1 in January, even after we paid of the Interstate Batteries note, it puts us in a strong cash position to do what we need to do this year.

--------------------------------------------------------------------------------

Unidentified Participant, [41]

--------------------------------------------------------------------------------

Okay, because I've been with other companies where the technology was good, but the money ran out, and not a good thing. So, okay, thanks very much.

--------------------------------------------------------------------------------

Operator [42]

--------------------------------------------------------------------------------

(Operator Instructions) We have a follow-up question from Ilya Grozovsky.

--------------------------------------------------------------------------------

Ilya Grozovsky, National Securities Corporation, Research Division - Senior Equity Analyst [43]

--------------------------------------------------------------------------------

Just one quick one, given that we have the opportunity for new CFO here, what is the thought process right now on when the 16 modules are up and running, what do you think the plant can generate on a quarterly basis when it's fully operational from a revenue perspective? Thanks.

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [44]

--------------------------------------------------------------------------------

Yes, so I don't think we've given any guidance on that yet as well. We've put together some models internally, and so it's -- 16 is a good place to be in terms of just -- in terms of generating revenue. And along with that come all the improvements that were put in in this year, including the electrolyte improvements and equipment improvements. And so, once we've reached that, we'll have a better idea of kind of where we're at, but we have some expectations and they all look very, very positive and are where we want to be.

--------------------------------------------------------------------------------

Ilya Grozovsky, National Securities Corporation, Research Division - Senior Equity Analyst [45]

--------------------------------------------------------------------------------

I'm not asking you, actually, in terms of guidance or timing; I'm just asking in terms of the math and the throughput. What does the math say it can generate, given the current price of lead, if it was today for example, just from a revenue perspective?

--------------------------------------------------------------------------------

Judd B. Merrill, Aqua Metals, Inc. - CFO & Company Secretary [46]

--------------------------------------------------------------------------------

So, you know, that varies based on the cost of batteries, cost of lead, our (inaudible), things like that. And so, you know, all I can say right now is it's a positive outlook and that we're very excited to get to the 16.

--------------------------------------------------------------------------------

Operator [47]

--------------------------------------------------------------------------------

This concludes the question-and-answer session. I would like to turn the conference back over to Steve Cotton for any closing remarks.

--------------------------------------------------------------------------------

Stephen Cotton, Aqua Metals, Inc. - CEO, President & Director [48]

--------------------------------------------------------------------------------

Well thank you all for your time today, and we appreciate everybody's support as we get ready to scale up our operations. And a reminder for everyone that this is a $20-plus billion market, and with the partners we have in place, including the partnership we announced today with Veolia and our longstanding partnership with Johnson Controls, we really have the bandwidth now to target this large market.

And as a reminder, if you haven't seen the pictures of the recent plant upgrades that we've been working on for a little bit here, I encourage you to go to our website in the Press Release section, and you will see the pictures there with descriptions of what it is that you're looking at, because they're quite significant projects that we're very proud of having those mostly behind us.

Thanks again, everybody, for your continued confidence in Aqua Metals, and we definitely look forward to updating you as we make further progress.

--------------------------------------------------------------------------------

Operator [49]

--------------------------------------------------------------------------------

This concludes today's conference call. You may disconnect your line. Thank you for participating, and have a pleasant day.