Aqua Metals, Inc. Q1 FY2020 Earnings Call

Good day and welcome to the Aqua Metals First Quarter 2020 Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Glen Akselrod, Investor Relations. Please go ahead.

Thank you, operator. Welcome to Aqua Metals’ first quarter 2020 conference call. Earlier today Aqua Metals released financial results for the quarter ended March 31, 2020. The release is available on the Investor 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 this call management will be making forward-looking statements. Please refer to the company’s quarterly report on Form 10-Q filed today, April 30, 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 said, I would like to turn the call over to Steve Cotton, CEO of Aqua Metals. Steve, please go ahead.

Thanks, Glen. Good afternoon, everyone and welcome. Despite the constraints on Aqua Metals and all businesses due to the COVID-19 global pandemic, I’m happy to report that all Aqua Metals’ employees are safe and we are operating our company utilizing collaborative technologies quite effectively. We, like most businesses, are dealing with unexpected constraints that began in late Q1 regarding the physical aspects of our operation. Assuming the state of Nevada allows us to return to the Aqua refinery in May, the expected net impact will be a slight delay in the deployment of our first V1.25L electrolyzer. We expect to begin operating the first V1.25L electrolyzer within six weeks after we’re able to return to the facilities, albeit later than we originally targeted. Despite the devastating fire on November 29, COVID-19, and our current uncertain economic time, management has worked diligently to continue to implement our business plan in order to achieve future success for our shareholders. I would like to spend a couple of minutes to highlight a few of the specific foundational items Aqua Metals has already accomplished that will be the underpinnings for our go-forward capitalized equipment and licensing strategy. First, $180 million has been invested to date to commercialize AquaRefining. We have already successfully demonstrated that our Aqua refinery operates 24 hours a day, seven days a week and our electrolyzers have been running smoothly for a month at a time, consistently producing 35,000 ultra-clear and cleanly manufactured ingots. These certified ingots were shipped to our partner Clarios, the world’s largest battery manufacturer, who then made production runs with batteries using Aqua-refined lead metal. Therefore, we believe that we will not need to build another demo plant and duplicate what has already been proven. In fact, if we had chosen to rebuild the plant today, we may have been in a position to raise new capital while dealing with the business challenges posed by the COVID-19 environment. The fact that we do not need to do so and were able to cut down on the burn rate significantly pre-COVID is already proving that our chosen strategy is resilient and correct. Second, we’ve also established and continued to invest hundreds of thousands of dollars a year in strengthening our already very strong patent portfolio. A portfolio with global reach is critical to protect and ultimately monetize as we accelerate our efforts towards deploying and licensing operations of AquaRefining technology. Third, despite the setbacks from the fire and in the face of COVID-19, we believe we have a plan for successfully securing the cash position of the company. We project that our cash balance will continue to grow between insurance proceeds and smart asset disposition. Thus, we believe that we’ll have well over a year of runway to fund our continued effort to get AquaRefining deployed into our first revenue-producing customer location. We expect this will be a major value inflection point for our shareholders. Fourth, as Judd will describe in more detail, we have vastly reduced and have plans to further reduce our cash burn rate to extend our runway on the path to customer revenues and self-reliance. Lastly, we have put in motion our efforts to leverage the valuable learnings from our operations at the Aqua Refinery in the past to build a better, more efficient, higher throughput and cheaper electrolyzer with improved conversion costs for tons of lead produced. We believe that these key incremental and not fundamental improvements will further enhance the electrolyzer’s reliability, throughput, cost of deployment, and cost to operate. We believe this will illustrate that AquaRefining is a robust, compelling offering for the marketplace and customers to consider as we anticipate beginning to upgrade the $20 billion plus lead recycling industry in the near future. The industry badly needs to become greener, cleaner, and more sustainable, and Aqua Metals has the potential to truly impact the energy storage marketplace to improve battery performance in life that are ultra-pure, Aqua-refined base metals provide. This is why our employees, shareholders, partners, and potential licensing partners have shown tremendous historical excitement about our company, and these fundamentals have not changed. Previously, our communications mentioned what an equipment supply and licensing package would mean for Aqua Metals, but at this time, I want to take the opportunity to walk everyone through our proposed revenue plan. We expect it to start with engagement in meaningful discussions with existing operators in the marketplace, which we’ve already accomplished with Clarios, other partners, and several other qualified candidates currently operating in battery recyclability. The next step will be a sales proposal coupled with a base technical package. Once the prospect agrees with the proposal and technical package, we would expect to move on to a paid engineering package, similar to architectural plans, where a portion of the revenues could be recognized. This engineering package would be the first revenues we record for our licensing business, potentially ranging up to significantly over $1 million depending, of course, on the size and scope of the application. Once the engineering package is accepted, the next step would be to move forward with equipment supply and licensing and services agreement. This agreement provides specific cost breakdowns for engineering, furnishing, installation, and commissioning of the Aqua Metals-provided equipment and third-party equipment from Aqua Metals supplier partners such as the kiln and cutting system. We expect revenues for equipment supply to potentially range from millions to tens of millions of dollars with healthy margins. The total value of course depends upon the size of the deployment. Once the equipment arrives on site, we would expect to add a service element to install, commission, witness tests, and gain customer acceptance. These services could add an additional source of healthy margin revenue. Once the AquaRefining solution is up and running, we expect to collect a running royalty per ton of Aqua-refined lead produced by that operation. The expected royalty would be based upon the inherent value of the clean process and economic and marketing benefit, plus the premium value of the ultra-pure, Aqua-refined lead itself, which is already commanding up to a 10% premium over standard London Metal’s Exchange pricing for millions of dollars of lead sold from our own Aqua Refinery. For a modest 15,000-ton-a-year AquaRefining facility, we could expect to see over $1 million in running royalty for a year. It’s important to note that a large deployment of AquaRefining at an existing facility could exceed 100,000 tons a year production. I would also like to point out that due to the modular nature of our technology, our technology is compatible with smaller deployments that are below 15,000 tons per year. Day two of production could yield additional value added to other customer revenue opportunities. Potential additional revenue streams could include services, maintenance, contracts typical for equipment suppliers, future hardware upgrades to improve throughput, cost to operate, product quality, purity, capacity expansion, and unwarranted parts and equipment replacement. Over time, these are all opportunities for traditional revenue in supporting our customers in the long run. When we model baseline goals of achieving our first licensee deal expected by 2021, with additional expected licensees ramping up to one to two per year for the coming few years, we see a significant opportunity to grow our top-line revenue, profitability, and cash generation, which should contribute greatly to future shareholder value. In addition to a licensed equipment supply model, there are other scenarios for monetizing our technology that we are also pursuing, including master licensing by a country or even geography. Fortunately, as this was always our long-term plan, we have already built a substantial multi-opportunity funnel of potential licensees in the latter half of 2019 pre-fire. We have seen a significant acceleration in interest from these and new potential licensees alongside possible new strategic relationships after announcing our accelerated strategy earlier this year. Lastly, I want to point out that this management team has a proven track record of gritty, lean, entrepreneurial success throughout our careers that we draw from. With the support of our board, partners, and shareholders, we’re seeking another successful outcome for Aqua Metals by drawing from successes to date coupled with our sheer determination to see through our vision of commercializing our innovative market and climate-changing AquaRefining technology. I’ll now hand it over to Judd to review our Q1 financials. Go ahead, Judd.

Thank you, Steve. As of March 31, 2020, cash and working capital balances were $6.4 million and $11.5 million respectively, which includes $9.9 million in insurance proceeds receivable. Actual expected insurance costs are anticipated to be higher. On March 25, 2020, we entered into a memorandum of agreement with Veritex regarding our loan and we have agreed on the allocation ofinsurance proceeds that we used to pay off all outstanding under the loan, which is approximately $8.7 million as of the date of this report inclusive of approximately $500,000 prepayment penalty against $1 million CD collateral. As of March 31, 2020, the company had received a total of $10 million in insurance payments as a result of the fire damage. $2.5 million was received in December 2019 and the remaining $7.5 million was received in Q1 2020. As I stated previously, we’ve recorded an insurance receivable of $9.9 million in line with GAAP accounting regulations which limits the amount of insurance receivable we can recognize on our books. We believe that the replacement value of the equipment and the plant lost due to the fire could be as much as $37 million, excluding any business interruption cost recovery. In Q4 2019, due to the fire, we wrote off approximately $22.4 million in fixed assets that were damaged. No assets were written off in Q1 of 2020. Assets on our balance sheet as of March 31, 2020 that were not affected by the fire totaled approximately $38 million in book value, including the battery breaker, the melting kettle, kiln, filter presses, mixing, storage tanks, water recovery system, and the building, infrastructure, and the land. As of March 31, 2020, Veritex had received $2.7 million in insurance proceeds from our insurance carriers, which has been set aside in an escrow account to be used to pay off the note. This $2.7 million is recognized as another asset on our balance sheet. Upon receiving the remaining insurance proceeds, the loan will be paid off, and we anticipate that this will be completed over the next three to six months. Revenue for the three months ended March 31, 2020 decreased approximately 96% compared to the three months ended March 31, 2019. This decrease is due to the fire that took place and the subsequent shutdown during the first quarter of 2020. The plant will not be in production during 2020 except for limited testing of our improved electrolyzers. Product sales during the first quarter of 2019 consisted of high-purity lead from our AquaRefining process, as well as lead bullion and lead compounds and plastics. The cost of product sales includes raw material supplies or related costs, salaries and benefits, consulting and outside services cost, depreciation and amortization costs, insurance travel, and overhead costs. The cost of product sales decreased approximately 69% for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. The cost of product sales was lower in 2020 due to the suspension of production because of the fire. General and administrative expenses decreased by approximately 41% for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. The most significant drivers of these decreases were non-cash expenses related to the suspension of operation maintenance and management activities associated with the Veolia agreement. We have also reduced other general and administrative expenses such as payroll and services expense. We expect to decrease general and administrative expenses during the year as we accelerate our move to a capitalized strategy. For the three months ended March 31, 2019, we had a $1 million non-cash expense related to the Veolia Agreement. For the three months ended March 31, 2020, the company had a net loss of $4.4 million or a negative $0.07 per diluted share compared to a net loss of $11.7 million or negative $0.27 per diluted share for the three months ended March 31, 2019. Cash flows used in operating activities for the three months ended March 31, 2020, and 2019 were $4.3 million and $6.3 million respectively. Included in cash outflow from operations was approximately $2.3 million for outstanding payables and general working capital purposes. Our monthly cash burn rate, including monthly plant expenses and corporate overhead during the quarter, was approximately $800,000 per month compared to approximately $2 million per month in the prior year. This decrease resulted from significant actions taken following the November 2019 fire event. We anticipate that the cash burn rate will continue to decrease as we move forward in 2020, which will help us improve our cash run rate. Net cash provided by investing activities for the three months ended March 31, 2020, was $3.1 million and consisted primarily of $4.7 million in insurance proceeds offset by $1.6 million in purchases of property, plant, and equipment. As of March 31, 2020, we had collected a total of $10 million in insurance proceeds. Adjusting for this week, the insurance carrier confirmed the intent to make payment of an additional $2.5 million. This completes all payments for insurance layer two, as we discussed in our March 30 press release. We’ve already been rigorously pursuing payment for the third layer of insurance and have been communicating with the fourth layer. We’ve submitted detailed business claims including invoices, assessments, drawings, and pictures to our insurance provider, which represent a significant portion of our insurance claims for equipment and building damage. We will continue to provide additional details and supporting documents in the coming weeks. We’re also submitting a business interruption claim and anticipate that we’ll be settling for additional dollars. We expect to see additional payments in the coming months and we’ll update you as we proceed. We believe we are in a position of strength with respect to leading the company’s future forward goals. We intend to seek funds primarily from insurance proceeds and from the sale of equipment that is not required for accelerating our capitalized strategy. In addition, we have submitted loan applications for funding through the FDA’s Payroll Protection Program. We’re hopeful to receive payment and will report the results of our applications in the near future. Based on these expectations and our current strategy, we do not anticipate any need to seek other sources of cash in the near term future. With that, I’ll turn it back to Steve for closing remarks.

Thanks, Judd. In conclusion, we believe that our accelerated shift to a capitalized equipment supply services and AquaRefining licensing model has put Aqua Metals in a position of strength during these uncertain times with a promising outcome. Based on the production levels of the Aqua Refinery pre-fire, we feel we have derisked the technology execution portion of the investment while we execute on the V1.25 electrolyzers and our partnership licensee discussions. The opportunity for returns for Aqua Metals is significant compared to our past years of capital-heavy efforts, which fortunately put us into our current position of strength. I’ll now turn it over to the operator to facilitate the Q&A session.

The first question comes from Colin Rusch of Oppenheimer. Please go ahead.

As you discuss these inbound license opportunities, are you looking at opportunities outside of the lead recycling market? You know that you certainly have another set of opportunities from different material seekers, like mining related to the process. Can you give me a sense of whether that’s an option or not at this point with these potential customers?

Sure, Colin. We do receive inquiries for things that aren’t requiring lead-acid batteries as feedstock. A couple of them have been interesting, and they’re mining-related, taking a lead molecule based mining product and putting it through our process. But for the most part, all the prospective licensees and targets that we are going after are using lead-acid batteries as the feedstock.

Great. And then, when you look at the V1.25 deposit, do you have all the components on hand to build those tools? Is there any supply chain risk or how are you finding all this? Are you comfortable with mitigation efforts or continuity efforts with all the components that you need to prove out those components?

Fortunately, Colin, we have the materials on site and we, pre-COVID-19 lockdown, were able to get a fair bit of the infrastructure to support the first electrolyzer that we’ll be putting in within weeks after our return. I don’t foresee any parts supply chain problems. There are some additional updates to those electrolyzers that we will make throughout the processes as we bring in another electrolyzer for the rest of the year. Thus far, we haven’t seen any supply chain issues with those items either; everything seems to be dependent more on our getting back into the facility and running them.

Okay, that’s it. And then finally, you’ve been working with some representation related to the insurance companies and appreciate the detail in terms of your progress at this point. Relative to your expectations, where are you and are you still engaged with that person to help us navigate this process and the insurance recovery?

Colin, this is Judd. We’ve hired Greenspan, and they’re still working with us and represent us, helping us with insurance collections. It’s a process and we always want to go as fast as possible, but I think it’s going as good as it could and can; we’ve made progress and delivered a lot of information to them, and they’re processing that. Our teams have actually done a pretty good job of getting through much of that information; that’s why we receive progress payments. So we continue down that path and it seems to be working, and we’ll get additional payments and can provide them with additional details. From our perspective, we’ll move along as expected.

Perfect. Thanks a lot, guys.

The next question comes from David Kennon of KWM. Please go ahead.

A lot of my questions have been answered already, just through the press release and through Colin. But just so I understand correctly the outlook on additional cash proceeds. So we’ve collected $10 million so far, and there’s $27 million remaining under the insurance, and that excludes business interruption, correct?

So the way it worked out is we’ve internally identified up to about $37 million in property and equipment, the plant and cleanup type expenses. We’ve submitted to insurance almost all of that plus $30 million worth of additional details. So additional information that we have to provide them. That’s what they’re currently reviewing, and we submitted some preliminary estimates on the business interruption. We have a lot of detail we can share with you on that, but that’s kind of the next phase as well that we’ll submit to them.

Okay, so about $27 million in insurance proceeds that we estimate we can collect. We don’t know what the business interruption will be and then there’s some asset disposals. Can you just take me through that? When you say asset disposals, I’m assuming potentially the plant and property. Is there any equipment there as well? If you could give me a total number on what that is, just the ballpark.

Sure, Dave. On the asset disposition side, we don’t need, for example, a lot of the chiller systems that we had that were fortunately spared in the right side of the AquaRefining area, which weren’t affected by the fire. There are other assets like that throughout the plant that we won’t need as we progress forward. Fortunately, we’ll be able to run the electrolyzers off of the significant supply of pre-approved batteries and digested AquaRefining concentrates. So there’s other equipment that we won’t necessarily need anytime soon, and as we run the electrolyzers off of that concentrates, we don’t have to run other parts of the plant. That plant and equipment could be worth millions of additional dollars. Furthermore, as we transition towards the capital-light model with the licensees running AquaRefining in production facilities, we won’t need the full-size Aqua refinery after we prove out the V1.25 electrolyzers, which opens up opportunities later in the year and into next year for considering the appropriate asset dispositions of land, plant, and building or some parts of that, depending on how we ultimately decide to do that. So that’s basically when you add it all up, tens of millions of dollars of opportunity for us to harvest that cash and reinvest it into the capitalized business on top of the insurance collections and our current cash position.

Okay. And then I see you made quite a bit of progress in reducing the burn rate in Q1. Now, let’s say at the halfway point or exiting the year, Judd, what will be the burn rate on an annualized basis? If you will, like a year-end run rate once we get into the second half of the year, let’s say?

Yes, the guidance that we’ve been giving is that we’re currently at about $800,000 a month. We haven’t given any guidance on where we’ll end the year, but we expect there are some things contingent on helping reduce that. If there are some costs related to just keeping the plant running and some other things, as we progress throughout the year and we decide kind of where we think fit into our go-forward strategy, we might actually help reduce some of the costs. We haven’t provided specifics on where we think we’ll end up, but we’re doing some things to get that burn rate down and we are being proactive about it.

Okay, so back half of the year, will we be at a lower burn rate than we were in the first half? Is that a safe assumption?

That is what we’re expecting internally and what we’re working towards.

Okay, right now we’re at a burn rate of about $9.5 million annualized. Is it possible to get that down to about $6 million a year once we get into the back half of the year, or is that a little too aggressive?

Well, I think it’s doable. There’s more to do, and we obviously want to try to get it as low as we can because we want to focus primarily on the licensing opportunities. Again, we don’t have any specific guidance other than the $800,000, but I think as we move into summertime and into Q2, we’ll be able to give everybody updates.

Unfortunately, part of the legacy or the history of the company has been a very capital-intensive business, which we are turning the page on with, obviously, moving to licensing and being capital-light. But there was this constant need to raise capital. Is it safe to say that going forward, our capital needs are going to be sufficient? Or do you think that sometime this year we’re going to need to go out and raise capital again?

Dave, this is Steve. I’ll say the latter. We have a significant runway no matter how we model it between the insurance collections and the asset dispositions with the transition to capital-light. Ultimately, over time, when we don’t have that large aircraft carrier at the plant that we won’t need any longer, that will significantly impact reducing the burn because there are just minimum costs associated with like electrical, gas, security, and all those kinds of things. We’ll see likely a reduction in burn rate with a significant step function reduction once we get to the first licensee and can operate by assembling modules at a smaller space with office and assembly space. I’ll note that we did assemble all 16 modules for ourselves back when we were still in Alameda, California, in about a 5,000 square foot area, so it doesn’t take much space. The future appears very positive in terms of the fixed overhead associated with facilities in the long run. But we do need the plant to continue the electrolyzer work to get the product into licensable form. However, while we’re doing that, we still think we can reduce the burn, as Judd was mentioning.

Great. And then, as far as the licensing, I’m sorry to monopolize here, but there was a lot of information. I was kind of surprised that there is a pipeline, if you will. That caught me off guard, which is great. But could you take me through what the pipeline looks like, what kind of interest you’re getting from what kind of entities? Any color on how many? And also, you gave a breakdown earlier in the call about the different components of this licensing strategy that will generate revenue. For example, equipment - I missed part of it. I was multitasking, so my apologies. But if you can just go through the components: there’s an equipment component, what would be the margins there? I’m assuming there are some professional services or engineering that would generate revenue. And based on the size of the plant, you talked about a small plant and a large plant - what the potential is for royalties. Can you just go through that again? I’d appreciate that.

Of course! In terms of the sales funnel and engagement that we have with prospective licensees and partners that will help us achieve licensees through those partnerships has grown in nature. We’ve seen the sales funnel grow from our efforts prior to leading it with the buyer event, where we were already engaged with several players across the globe ranging from the Asia-Pacific market to North America. Of course, Clarios is one, but also opportunities in Europe and South America. We’re talking to various licensees about projects ranging from AquaRefining being deployed at their existing facility to either expand the production or tackle the mission standards and improve the quality of lead. We've had discussions with a couple that are doing greenfield builds of battery recycling facilities in the Asia-Pacific region that would design AquaRefining right into a net new build, which is very interesting. We’re also talking to potential licensees about processing the dust that comes out of the bag houses or the flue systems to build bag houses that produce tens of tons per day at a significant-sized plant. So there are multiple applications on the table, as well as the mining-related applications. Since we announced our acceleration towards the licensing strategy, we’ve actually seen a significant uptick in inquiries in addition to the engagement feed we already have. To answer your other question on licensing, just to break it down: it starts with the engineering package – this is design services for the customer to accept the order for the equipment offer, much like hiring an architect to design a building. There’s a significant fee associated with that, which is high-margin services revenue. Once the customer agrees to that, we build out the bill of materials and details; they procure the equipment, and we provide the equipment from Aqua Metals and from our supply partners and get revenue from that as well as services revenue. Once the equipment is commissioned, witness-tested, and operating, we would seek to recover a recurring royalty, which we believe we can get a significant running royalty due to the premium that’s already in the market and the additional value of the environmental benefits and the performance capacity. That running royalty we believe we can capture is significant recurring revenue. This is just the beginning of the relationship with the client; as typical in any equipment suppliers into industrial plants, day two is where we build on that relationship. There will be future product upgrades, warranty, equipment services associated with that. So it’s the beginning of a journey of revenue and value that we offer to those customers. I hope that boils it down for you.

Yes, I mean could you elaborate a little bit? I’m unclear on— and I don’t know if this is even—if you could disclose this, but let’s say you were deploying modules to start, two modules at a facility. What do you think that equipment would sell for and what kind of gross profit would you get?

It’s all really custom and depends upon each customer facility, so I’m a little reticent to state an actual number, other than any significant deployment is going to be into the seven figures in terms of the value of the equipment. As I mentioned earlier, our facility was 15,000 tons a year of Aqua-refined lead capacity, which is modest. There are larger ones that could go up to 100,000 tons, which should be deep into the seven figures in equipment. There may be some who want to try a smaller setup at least initially or for a particularly specific application, and those might be a smaller number, potentially in the single-digit millions. But it’s going to be significant revenue no matter how we slice it, and it’s dependent upon the size of the client.

Okay, great. Good luck, guys.

Your next question comes from Charles Bellows of White Pine Capital. Please go ahead. Mr. Bellows, your line is open; please go ahead with your question.

Sorry, I was on mute, can you hear me?

Please go ahead, yes sir.

Okay, good. Steve, let’s go to the pipeline again. I’m trying to get things squared away. You said that you have how many modules you need up and running and for how long before you’re going to get an indication from a licensee that they’re willing to go?

The simultaneous effort of us getting the AquaRefining electrolyzers into a licensed, productized version requires us to finalize a lot of that work. We’re about to turn all 16 of them with those upgrades before the fire happened. We’re making a couple of other improvements, and we feel it’s important to run those and collect data this summer. We aim to have data by fall, so we can continue the conversation with realistic numbers around throughput and those things from the updated units and cost factors. This will help support getting a contractual understanding with new partners. As we talk to licensees about applications related to the size, they’ll certainly want to see those finalized metrics before they commit to equipment supply. But I can confirm; we can kick off the engineering package discussion even before the end of the year; we’ll be talking and engaging with these clients about what they need.

Well, but you got to get them to say yes. The other question I had in here is that Clarios had an exclusive with you if they took it, is that now gone?

Yes, so Clarios has the first mover advantage through June 2021 by contract. We’re still, of course, talking to Clarios regularly; in fact, they’re a significant shareholder in the company and are involved in many of the projects we work on. They may still be the first mover, but we’re keeping our options open for whoever else is out there in the marketplace to ensure we’re responding to inquiries as they come in. Ultimately, it will be Aqua Metals’ decision as to which path is right for us. It’s essential to highlight, by the very nature of the calendar, we have to ensure that modules are in their shippable condition as we approach June 2021. There isn’t much time left, and it has been an exciting period for us.

So, if I’m hearing you correctly, the way it looks is you will not have something really announcement-worthy until maybe the fourth quarter or into the first part of 2021 on a licensee who has said go?

In terms of a licensee that is signed up and shipping equipment? Yes, it will take some months for us to get there. You’re correct there. However, there are other types of business development partnerships and possibilities we’re working on that are quite interesting that aren’t like these but can facilitate getting us into the market with licensees. Many of those partnerships can create a synergistic value we’re working on as well. This is more immediate and maturing each day.

Okay. I just wanted you to give me an answer. Why hasn’t Clarios, seeing the whole system work, just bought the lead? They have theoretically identified a site; why aren’t they moving at all?

Clarios continues to engage, and their leadership has been in discussions with us. We’re sharing with them everything we’re doing with these updated versions of the electrolyzers. Key to our contract with Clarios was some performance metrics that were specific to the old plant, where we needed to build out the Aqua refinery to the full 16 modules before they would feel comfortable putting it into a large facility as a finished product. We’re continuing to communicate with them about achievements, such as running 24/7 and generating 2.4 to 2.5 times lead per day per module on a consistent basis, with the same consistent quality they purchased all of from us. While these discussions continue, it’s a matter of either reworking the joint development agreement metrics or having another licensee go in first. One of their partner recyclers might be more comfortable going with AquaRefining first as it represents a more appropriate site. In all these scenarios, we aim to ensure we secure optimal value. We’ll explore what's best for Aqua Metals and our shareholders.

Thank you. I appreciate it.

Thank you. Absolutely, good questions.

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

Okay, well, thank you, operator. Thanks, everybody, for your time today. We do appreciate the continued support from our shareholders as well as our partners as we work towards these go-forward plans. We will continue to update everybody in the coming weeks and months as we deploy and operate our go-to-market Version 1.25 electrolyzers. We’re really looking forward to getting back into the plant and getting that going. In the meantime, we’ll also keep you up-to-date as we harvest cash and insurance proceeds, and as appropriate, the timely asset disposition, and will report on our continued commercial progress with our existing and developing partners. Thanks everybody, and have a great day and stay safe.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.