Invinity Energy Systems (LSE:IES) — HY23 Results

0:00 Good afternoon, and welcome to the INVINITY ENERGY SYSTEMS PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Larry Zulch, CEO. Good afternoon, sir.

0:32 Good afternoon. I'm thrilled to be with you. Welcome, everyone, and, to INVINITY's, investor presentation. Happy today to be able to talk about what, progress we've made and what's going on, starting with, an overview of our company. Many of you are familiar with us. We were formed out of the merger of two companies, AIM listed Red T Systems and Avalon Battery of Canada, and that occurred right in 2020. We have presence globally and are, what we now consider to be, and I think we'll be able to show today why we consider that the leader in vanadium flow batteries and in nonlithium energy storage in general.

1:18 And that leads us to our thesis, our view of why we will be successful in the market. It starts out with the incredible requirement for renewable energy to use storage. Without storage, we can't depend on that renewable energy, and yet there's a huge shift toward that. So what is that energy storage? Some of it will be gravity based, water, many other ways to store energy. But batteries are absolutely the one of the lead areas for energy storage. And, of course, whenever we hear batteries, we think of lithium batteries, the ones that are in our cell phones, the ones that we have, in our cars. These are not the perfect battery for stationary energy storage, putting them in boxes in in fields, to deteriorate.

2:10 As we all know, they wear out. They catch fire. There was another big fire in Australia, a Tesla battery just a day before yesterday. These are being used widely because there's so much requirement for energy storage. The need is so strong that, even a product that is not the perfect product for the use is is the one

2:34 until now. That's what we're starting to develop. We have been developing, and we're now proving. And that's what we'll talk about today. And so what I'd like to do is, first, tell you about the financial results and turn it over to our now CFO, and chief development officer, Jonathan Martin. Jonathan?

3:03 Jonathan, you're on mute or appear to be on mute. Okay. Thank you, Larry. Can you hear me now? Excellent. Excellent. Well, thank you, Darwin. Likewise delighted to be presenting these half year results. And maybe if I start with what's at the top of the strapline, which we've said significant progress on the pathway to profitability. And for those who heard me present the final results a few months ago, that's updated where at that point we said INVINITY is making progress on the pathway to profitability. And, hopefully, I'll demonstrate in the next few slides exactly what that significant progress is and one of the reasons that we're very happy to be presenting these these results. So if I start at the top, we've recorded total income revenue of £14,800,000.

3:53 That is a 10 tenfold increase on on this time last year. That is also, importantly, in excess of the 13,000,000, which we indicated a couple of months ago as the the base level of revenue for for the half year. And clearly, for any business, the first step on the route to profitability is to post post significant revenue, and that's exactly what we've what we've done here. That revenue has come from four projects. The vast bulk of that is from from the three, which we've referenced just below. And that is what's sort of contributed when you look further down to to the gross margin and and the gross loss of 3.3. The two projects which you see at the top, Chappas Lake and Spencer Energy, so the Australian and the Canadian project, We previously disclosed those were loss making, and that's those costs or the p and l elements elements of those costs finally being booked.

4:45 And those projects were important, if you remember, in terms of proving the commerciality of the of the projects and the fact that we could deliver that deliver these projects to market, and we've done that in a very important set of projects setting the business up. So, you know, that loss has come through, but there was a very good reason to invest in that loss. We talked about the projects we signed last year, all but one being rather than one small one being at positive, product gross margin, and that's exactly what we've seen on, the Californian project. And, again, that is another very, very important step on that pathway to profitability. You know, you need to start with a gross margin profit. And clearly with Mistral, the level of those gross margins will improve, and that's what covers your OpEx from a cash perspective. It also ends up delivering delivering you delivering you profits in in the long run.

5:37 Further down the p and l, you'll see we've made a an operating loss broadly the same as last year at £12,600,000. That is, again, with a very significant uptick in in revenue. So you can see there, there's quite a lot of operational gearing within that, and you can see therefore with with when gross margin does come through from increased increased revenue and that product mix that that will be able to cover our OpEx, which won't grow proportionately with it. Maybe on some of the nonfinancial metrics, the deliveries, we've delivered 26 and a half megawatt hours in the first half versus 3.4 in the last period. You know, a seven and a half times increase. That's because of those projects. Perhaps more importantly is the manufacturing base. That's actually what has gone through our factories from a manufacturer perspective, I. Not delivered from inventory.

6:27 That's from 5.94 megawatt hours this time last year to 15.6 megawatt hours. That's a two and a half fold increase. So that's showing our delivery expertise, our manufacturing expertise, and really demonstrating our credibility with customers as we look towards the future. And then just a highlight of the revenue backlog for this year, that 24,900,000, that does include the revenue booked as well. So that's a metric for the full year including what's booked at the half year, and that's what's sat there in in orders capable of being delivered. There's a reference there to total inventory, net working capital, and also period on period end cash, but I will cover those in the next couple of slides.

7:17 So from a profit and loss perspective, the first two bullet points on revenue and project gross margin, I've I've covered those, I think, in a in a in a good good level of detail there. This slide is maybe more looking at the the OpEx side. You'll see staff costs have, have have gone up. That's as we forecast and as we increase. That is the investment we are putting into headcount, and, that is making sure, you know, our staff are the key know how of the business as well as the IP that sits alongside that. And as I as as we need to and as you'd expect, we are investing in those to make sure that we we retain and grow that level of expertise within the business. R and D costs, when you first look at that, look look like they've dropped quite significantly.

8:03 What you're seeing within that, the accounting treatment, again, one of the the interesting things about IFRS, we net off the receipts from Gomesa Electric, which they are helping us with when they're in the the co funding on the the development agreement. So that's on a net basis, and there were more receipts this first half than there were last time. Hence, that net net number has gone down. But broadly, those r and d costs are are the same.

8:29 Professional fees is down. There is no netting there. For those that know me, I I I really do dislike signing engagement letters and to advisers. I know there are some advisers on the call, so I I do apologize for that. But I like to make sure that we spend our money judiciously and where where we need to. So there is a a very strong focus to make sure we we are careful as to how we're spending money there. And the rest of the cost there are are broadly as you would see. There are some noncash items in there. You can see that if you through the cash flow, there is share based payments where and it's the the accounting calculation there. That's about 300,000, depreciation about 700,000. So that's in excess in excess of 1,000,000 there, and there are about 500,000 of nonrecurring costs within the within there as well, at least that if not if not more.

9:24 And then finally, not on this slide, but you'll see there is finance income and finance cost. For those who listened before, there was some interesting accounting treatment as to how we we booked through the Riverfork facility. That was obviously paid off in the period. The unwinding of that goes through that line. That was, again, all noncash other than, obviously, the element of of paying that paying that debt facility back.

9:52 So moving on to to the balance sheet. Again, I've got a slide here where I've I've turned net working capital position, and I like to look at what's effectively tied up within the business in relation to work done to deliver projects for customers. And you'll see on a gross basis, the total inventory line has dropped from 10.8 to 6,800,000, but you really need to take account of what sat elsewhere on the balance sheet to get a true view on the on the net position. So that's actually up 3,600,000 from where it was at the half year. At the at the full end of the full year, it was about a million or so lower than that. So, again, the trajectory is upwards. And as you would expect from a from a from a growing business as we invest in that in that working is that working capital. Now from a a cash basis, we've stated before, that we've got sufficient cash, to last us to, at least March, April on what the accountants call a severe but plausible basis. We had nearly 13,000,000 at this, at this at this half year. And what I would say is there's been absolutely no change in our view on cash over that period. We are trading exactly in line with where I'd forecast, we would be.

11:03 The other thing that is not possible to do is to extrapolate from one month's cash balance to another month's cash balance. As you would expect with revenues that come through and payments to suppliers, those are inherently quite lumpy. And so what you do not do is get a view on sort of, you know, what people term the the cash burn the cash burn of the business. If you do want a proxy for cash burn of the business, then go back to the previous slide on OpEx, and you'll see that our OpEx was about 9,200,000. At least a million of that was noncash. That broadly gets you to eight. Divide that by six, you know, you can get to about 1.35 of month monthly cash OpEx. If you look at our cash balance, you divide that by the 1.3, you get to broadly nine months. That's past the end of March.

11:52 And, again, that is not taking account there with the fact that we can exploit that net position on working capital which sits within the business. On top of that, we have 1,700,000 shares which were effectively held in treasury. They are capable of being sold. 97% of those funds would be to our benefit. If you remember those sort of other the hangover from the Riverfort transaction, those are entirely within the company's control as to what we do with those. We do, of course, have the short term warrants that are outstanding. There are 14,000,000 of those, which are exercisable at 50 p by about mid December. And then when you're considering our cash position, again, I would I would urge you to look carefully and read all the discussions about strategic investors.

12:37 We will undoubtedly talk about that, coming up, but, you know, those discussions with strategic investors have been going on for some time, and it's not as if we keep losing strategic investors and putting more in to talk to. The same discussions are ongoing. Those discussions take time because strategic investors want to evaluate the business properly. But what I would say is the the number of conversations we are having has grown over time. The people we're talking to are still there. They are very good discussions, and they are there and very supportive of the industry and the business. And that is very much where we see, the near term, view of financing for the business. Those strategic investors are very supportive, and very keen to get involved because, they've looked across the industry and they see us as the the leader in vanadium flow and also on the wider, longest just longer energy storage space, the business they need to be involved.

13:38 Thanks so much, Jonathan. With the with the finances firmly in hand, let's move to what's new in the business and current trading. The past few months have seen us been extremely excited at progress across both the short, medium, and long term aspects of the path that we are treading towards being a global significant player in the world of energy storage. In approximate more approximately, we've got traction and and commercial momentum into delivering our v s threes. Jonathan talked about the fact that we are actively delivering against a £25,000,000 backlog. We've closed contracts for six megawatt hours of v s threes year to date, and we are continuing development of the the DESNAS funded LOTEMS program that will see us build a £22,000,000 project in The UK. We expect within twenty twenty four.

14:35 In the medium term, the thing we are, of course, most excited about is our MISTRAL, our development program and new product with we're developing alongside Siemens Gamesa. We are thrilled to have received a 100 megawatt hours of launch projects committed to over the last few weeks. That is a small part of a strong overall sales pipeline that we are putting together ahead of formal launch of that project sorry, that product in 2024. Beyond that, those things are only so good as we can turn around and deliver them, and we've made tremendous progress on the long term vision for how we will deliver against these opportunities. Both we and our partners have been significantly expanding manufacturing operations, and increasingly, INVINITY are at the forefront of setting the stage for the right kind of policy and the right kind of storage markets that will see our products supported well into the future.

15:34 Diving into every one of those in a little bit of detail. Over the past six months, we've been thrilled to have delivered a significant number of projects that are in each one in each case, the largest of their kind in the geographies where they're being delivered. We've delivered a 10 megawatt hour project to our partners at INDIENERGY in the in The United States for the Viejas microgrid. We have delivered and now fully installed our solar and storage project with Spencer Energy in Australia. This project will be will be dispatching PV generated electricity onto the electric grid on demand and when it's most valuable as well as providing regulation services. And we announced last week that we are thrilled that the Chapese Lake Solar and Storage that we've built alongside our partners at Elemental Energy here in Canada has not only been fully up become fully operational, but has become begun merchant trading on the electric grid.

16:30 The day of this ribbon cutting, we were looking at the production rates for solar farms in Alberta at 08:00 at night. 08:00 at night, electricity prices were over $500 per megawatt hour. There was a single plant producing, and it was ours because we have the ability to take that energy from middle of the day and deliver it in the evening when it is most valuable over the grid.

16:57 When we look into the medium term, everything we are focused on is around MISTRAL. For those of you who've been following us for a while, you know that this is the product we are developing alongside Siemens Gamesa. It expands on our core technology. It expands on our existing industrial strategy, but it incorporates some new techniques and and and new architectures to achieve far lower total costs. The efficiency on this product is significantly up from, where we've looked at, from our existing product. The number of these, of megawatt hours you can put in a in a given size is far down, and significant other improvements in the overall architecture mean that the levelized cost of these products, the total cost of ownership, if you wanna call it that, are nearly half of where we were with VSC. This is a game changing product from our customers' perspective, and their interest in signing up to very early deals even ahead of product launch is indicative of that of that of that fact.

18:02 Of course, we can be excited as excited as we want, but it's only when the rest of the world get excited that there's there's there's proof that we're really on the right path. We were thrilled earlier this week to announce that the United States Department of Energy has chosen to fund 84 megawatt hours of these early MISTRAL projects. Some of you who follow the industry will know that the DOE had announced about a year and a half ago, $350,000,000 for long duration storage to be demonstrated and deployed in The US. INVINITY are the only company who won more than a single solicitation within that project. We were selected both in the LDAS lab call, which is to demonstrate the capabilities that that that long duration storage has in the grid, really pushing the envelope for what LDES can do.

18:52 And we were selected under the demonstration program

18:55 that will see us deliver a MISTRAL array to five sites with our partner, NERCO, the National Renewables Cooperative, to to deliver five of those arrays to five sites across the country. So proof positive that we are not only developing the right product, but because of the durability and flexibility and capability that our project that our that our technology embodies, the DOE is viewing us as the standard

19:25 bearer for working alongside groups like PNNL and really exhibiting exactly what long duration storage can do for our future grid. Aside from the DOE project, we've seen some other very positive developments on, MISTRAL. We have received funding, here in, in British Columbia, for the demonstration of the early prototypes of that product, really making sure that we've got the funding, on a non dilutive basis to go and fully test and evaluate how these products are

19:57 going to operate. And further, our our our our partners over in Taiwan, Everdure, have fully committed to this product. They are fully committed to helping us not only deploy Mistral inside Taiwan, but also help with some of the manufacturing steps that are required to deliver it effectively and efficiently, and we're thrilled to be looking forward to delivering that first Mistral battery to them. We expect, shipping late next year.

20:28 All of that excitement is indeed manifested manifesting itself in our commercial pipeline. What we've seen over the past, the past, since we announced our annual results in June is a few deals moving in and out of base. You know, we talked about the six megawatt hours that had closed. There are other deals that have come into to to fill that gap. You know, the most significant movements, Moe, though, are in those longer term deal categories. Advanced, where we've been selected as the supplier and

20:59 and and site engineering is underway. That move from 73 megawatt hours up to a 137 megawatt hours is largely related to those DOE funded projects. And in the qualified group, we're up almost 50%. Again, this is because of the tremendous volume of inquiries and tremendous bond interest that people have for taking definitive actions towards developing projects with me straw. So across every one of these projects, everyone is we are seeing enormous, changes, enormous interest in everything that we are doing. What What we wanna be able to do though, of course, is deliver against all those opportunities, and that delivery planning, that manufacturing ramp up takes a significant amount of time.

21:48 We announced earlier this year that we that our factory in Vancouver is now fully operational. That allows us to deliver over 200 megawatt hours per year into North America. And even when we look to the future and look to meeting the domestic

22:04 supply constraints of the The US inflation reduction act, we still think that factory will be a significant part of the overall supply chain. Over in Asia, we are continuing to expand our our our relationship with our strategic supplier, Baojia. They are currently delivering projects to both the products to both Vancouver and Bathgate. They are doing final deliveries for us for Asia Pacific, including our recent projects in Australia, and they're gonna be a big supporter of ours as we move towards new strong manufacturing. Finally, talked a little bit about our relationship with Everdura on one of the previous slides.

22:41 Because we have a we have a an economic imperative to be able to deliver these projects in country if pass if possible, We are continuing to work with them to figure out how we can best operationalize deliveries into the country and through that relationship.

22:58 Finally, all of this is only so good as we can shape the future for what longer duration storage is going to do. And, fortunately, we've been we we we're starting to get exactly the sort of regulatory and governmental attention that is going to have us at the forefront of driving that longer duration storage agenda. We've had Scottish Energy Minister visiting our facility in Bathgate. We had the Canadian Minister for Energy,

23:26 announcing a major policy initiative on the future of Canada's electric grid from our shop floor back in August. And I was recently called to present evidence, for a second time to to the House of Lords on, for their science and technology committee on how longer duration storage can accelerate our path to net zero.

23:46 Do these things need lead to immediate sales? No. Of course not. But by bending the future of regulation and the future of electricity markets to the path that we know is the fastest way to net zero using our products, we will see accelerated commercial progress into the medium and longer term.

24:08 With that, I'll pass it back to Larry and give you some of the view of our overall strategy. Thank you. Thank you, Matt. We've shown this strategy slide before, and the reason is because our strategy has been consistent, and we've been delivering on it. The where it says deliver on backlog, That may sound simple, but it isn't. And we are the only nonlithium battery system connected to the grid at the scale that

24:39 we can can deliver on multiple continents. I mean, we could go further than that. We are delivering product now. We're getting revenue now, and we're demonstrating that. We are doing that with the current product. It's a compelling product, but it doesn't make us enough money. That's really the issue. Our profitability will come out of Mistral and being able to deliver a product that is fundamentally less expensive and fundamentally more capable, able to scale,

25:10 to sizes that our current product can't achieve. So when many other companies in the nonlithium battery space are struggling to deliver anything connected to the grid, we are starting to sign or get funding for deals that use our next generation product and promise an ability to deliver a product that works right out of the gate. That's critical for us. So we've been working on, on MISTRA, and it's been a large effort, and we're very grateful to Gomesa Electric and Siemens Gomesa Renewable Energy for their support in this process. We don't talk about that a lot because it's a development effort that's entirely internal. You'll hear a lot more next year when we, are able to, publicly announce the results of our partnership, but it's a strong partnership and going very well.

26:08 And then close new deals. We have to close deals for the current v s three product, and we are. At the scale that we are

26:17 deploying that product, there's a lot of opportunity, and we are making positive gross margin on the new prod on the new projects we sign, even though it isn't sufficient to, make us profitable. And the last one is operational excellence. I think all of, everyone knows and all of you know if you from this presentation and other, indications, we're looking to grow dramatically. We're looking to scale to meet this very large opportunity in front of us. And for us to do that successfully does require that our systems, processes, procedures, people, structure, supply chain, everything be working together and working well. And I'm very proud of our team for their ability to to, to be prepared for that, to get the work done that needs to get work done now, and also be thinking about the future.

27:12 Our last slide,

27:14 this summary slide, really has the three major points down the left side. The market is vast, and there's plenty of room for multiple players in this market. Whenever any credible organization looks at the size of battery storage, stationary battery storage, of any duration, it's billions, billions and billions of any currency you wanna name, from pounds to dollars to Canadian dollars to euros, enormous market. And we are in the lead position for the nonlithium portion of that. And that and that comes a lot because we are developing, the right product for economics and scalability.

28:03 That's the constant watchwords, that we use in the development of MISTRAL is scalability and economics, and it's being proven. That Department of Energy,

28:15 awards those awards didn't happen without a tremendous amount of due diligence and investigation on the part of the DOE and our team putting a lot of effort into demonstrating to them that we are in the position we're in. They didn't just look around and randomly give, those awards out. What they did was an extensive process, and sometimes there were 20 people from the Department of Energy on on a Teams call with three people from INVINITY answering being peppered with and answering questions. So this is something we're very, very

28:52 comfortable with that Mistral is does not have a great deal of technology risk with it. And then the last thing is the support of partnerships that we have. We can't do this alone. We need support and are getting support not only in the commercial and deployment area and in the development area, as you know, but also in areas of supply chain, and there'll be more to talk about in the future. So with all of that, I will now turn it over to Joe who will be allowing questions at this point, and we're looking forward to answering them.

29:27 Perfect. Larry, Jonathan, Matt, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. And, Joe, if I could just hand over to you just to share the q and a, that'd be great. And then I'll pick up from you at the end.

29:56 Thanks very much, Alessandro. And yes, as as said, I think we're nearly 30 questions and counting. So I will try to we'll we'll try to get through as many as as possible and any that aren't answered, I will do my best to follow-up with you afterwards.

30:14 There's there's plenty of questions here around Mistral. The first question, I think I'm gonna put to you, Larry, and other execs, please jump in as appropriate. Just talking around the the the motivations behind the the Mistral development. Was it was was it it a motivation towards cost saving or technical or technical enhancements? Can you talk a bit about that and how successful it's been? Yeah. So I I mentioned that the two watchwords were economics and scalability. And to be specific on the economic side, we wanted to drop our cost of providing a kilowatt hour of storage capability by over 30%, and we are on track for doing that. That 30% or more is able to allow us to bring the price to the customer down and also have

31:04 a profitable product out on the market. So that was pretty much number one. But then all of the things that add in to form that are technological improvements and improve efficiency and capabilities all in an incremental fashion. We're not trying to create a radical new system. It's our current v s three system scaled up. But we also wanted to make sure that it was scalable. Our partners have wind farms and have other applications for this where the requirements are in fractional and full gigawatt hour. Gigawatt hours, a thousand megawatt hours, 10 times what we've signed gigawatt hours, 10 times what we've signed and are proud of signing or or been awarded in the last few weeks. To be able to get to that requires some different architecture of the product, and and we have developed that architecture and are very confident in its ability to scale up to this larger size.

32:07 Thanks, Larry. And and, Matt, I'm gonna follow-up. There's another question here, but I think it's more more towards you on the commercial side. Just regards to the the the pipeline and the and the deals that we're working on for for MISTRELL, are these all INVINITY driven, or is there an element of of of of GEMASA within those? And can you sort of talk about that that split and the involvement? Yeah. The vast majority are INVINITY driven at this stage. There are a very small number of early pilots in there that that have CAMMESA involved, but 99% plus is is INVINITY. Those of you who following the industry will know that Siemens Gamesa have have have announced recently that they're they feel that they went to market too early with some of their more advanced wind turbine designs.

33:01 And so because of that, they are being even more cautious and and and and on on their new product launches. So, you know, they are not going to they're gonna be very cautious in terms of putting new deals into our pipeline until we've gotten through some of these some of the development steps that are ahead of us in the next six months. And let me note, if I can jump in, that that their their sales teams are not free to sell Mistral at this point. It hasn't been put into the internal system. So we are achieving those measures that they are looking for to make sure that it's not a high risk product, but they also are waiting before they can sell it. Thanks. And and just just to follow-up, I mean, obviously, announcing a 100 megawatt hours in in a little over two weeks is quite an achievement.

33:55 I mean, Matt, can you give any comment on on sort of what's driven that? If there's any sort of external factors or anything that's that's really pushing that that's suddenly changed things or any color you can give? I I don't think it's suddenly changed anything. You know, the with respect to those 50 84 megawatt hours with with the funded by the DOE, you know, we have been front and center with the DOE in their longer duration storage efforts that have gone back over a few years now. It's only now that we are seeing the fruits of those efforts come to come come to be, you know, some of the some of the engagement that we've had with the DOE in terms of targeting their long term storage targets.

34:43 A lot of the work that we've done to them with them to prove that our technology has the fastest and most credible path to the twenty thirty l cost target of below $50 a megawatt hour. You know, that storage that storage shot, that moonshot goal that they have is one that we have been very involved in in crafting and that we have as is now in the public domain, a tremendous amount of support from them of our leadership in making that happen. Thanks. There's a there's a question here around sort of core core commercial markets. Obviously, there's been talk around some of the Asian markets that we've we've moved into. Specifically, you know, have we have we considered moving into large developing countries such as India, Indonesia, Pakistan, Turkey?

35:34 Could you give a give a comment on that on perhaps maps? Absolutely. We are extremely interested in the kind of opportunities that especially countries like India have in front of them. India has a tremendous amount of vanadium appeal, and they have a tremendous need to decarbonize their their electricity system, especially as their overall electricity demands grow and as the impacts of climate change on their country in particular become ever more painful. With that said, we do not intend to be everywhere. And to the degree that we will go and do projects in some of these further flowing markets will be entirely related to the degree to which we are able to attract the right kind of partners to lead us into those markets and to work with us to fully exploit them.

36:30 Thanks, Matt. Another And question going back to Mestral to to to to either of you, I I I guess. There's there's a number of questions here asking about the crossover between Mestral and v s three, what the what what the strategy is around that and offering which product. And also, there's another question I think we can answer at the same time around, are we seeing cannibalization from from one product into another? Are we seeing people defer orders from v s three into Mistral? Larry, do you wanna take the question on on crossover, and then I'll take the part on cannibalization? Certainly. But, you know cannibalization. The bite size of of Mistral is 14.4 megawatt hours, which if you note is larger than the largest flow batteries in any of the four countries where we have have placed the largest flow battery in that country.

37:24 14.4 megawatt hours and up. So, therefore, everything that is smaller than that, you know, is potentially v s three. Of course, we are gonna be adding capabilities and and improving economics over time of our offerings in the sub 14.4 area. But, really, in certain ways, these are separate markets. See, I knew if I let Larry go first, I would he would answer the question for Look. We see some minor degree of cannibalization, but really they're separate products intended for separate markets. The industry was never intended to be a product deployed in the high tens or hundreds of megawatt hours. And so because of that, while there are a small number of projects on the margin where especially if they are being delayed out to 2025 or 2026, those b s three opportunities might flip over to to Mistral. But by and large, the two opportunities of the two pipelines are are are largely separate from one another.

38:29 Great. Thanks. And and I think you mentioned that word margin there, and I I think in a slightly different context, another question is asking around what's the the margin growth between between v s three and and and MISTRASL. I'm sure you two can can answer can this question. We unfortunately, we've lost our CFO for the time being due to time, I hope. Yeah. I mentioned that we were looking at 30% lower cost, all of that on a per kilowatt hour basis, you know, that that would largely go to margin. We're able to sell products at close to our v s three price and and are able to then have significant improvement in margin, which then allows us to answer the other question, which is when are you gonna be profitable?

39:23 And our projection is 2025. Matt, what would you add to what I just said? Nothing, Larry. I mean, I think that the the the good news that we've seen over the last year is that from when we launched Mistral, you know, in the shadows two and a half years ago and and and publicly shortly thereafter, you know, we had some very aggressive targets in terms of where we thought we the product cost needed to be based on where we saw the market going. What we've been very encouraged by over the last two years is that the relative cost of the incumbents has gone up and the relative value that we are able to deliver with a product that is able to cycle almost continuously has also significantly increased. So, you know, our view is that from a competitive position, we remain in a very, very good position, and and and and we'll be able to achieve exactly the kind of margins that Larry is talking about.

40:19 Thanks. And and just to clarify the the that breakeven point obviously is up is the analyst the analyst forecast as sort of the the consensus point. Sorry. I meant that analysts are forecasting 2025. Yeah. Yes. Thank you. So so another interesting point on the subject of product development. Will there be an updated version of v s three created, which has been deemed a v s three plus in the in the question, that might work for smaller projects below Mistral's target, or will INVINITY fully move into Mistral in time? Mistral will be is our primary focus at this point. And v s three is a completed product, and where we're able to sell it on a profitable basis, we'll keep doing that. But it addresses a market that over time, we believe our technology can address quite well.

41:07 So I I think, you know, like all product development processes, it's an ongoing process. First, MISTRAL, and then we will be looking at derivative products that expand the market beyond that. And there's some significant opportunities for a product that is addressing that area where v s three is addressing, but doing so in a more profitable way. Thank you. There's a there's a question here around our our shareholder register, which I think I can answer as the director of of of IR. What's the percentage of your shareholding that you would guesstimate are held by UK private shareholders? I And I can say I think we're we're probably, in total, maybe 75 to 80% of our register is in The UK.

41:55 And of that, probably 25% is is is UK retail with the remainder being, obviously, the our strong institutional support we've we've got and and we enjoy over time. And welcome back to our our CFO as well. So can can I I'm gonna move on to there's a there's a corporate question here around o t the ROTC listing, which, Larry, I might direct to you as you're sat in in The US. We satisfied with the level of trading on OTC, and what are our plans moving forward on on that front? Are there any unseen benefits to the company? I mean, we're not at all happy with the level of trading on the OTC relative to the potential that we see in front of us.

42:42 We see that there's a lot of opportunity. But as news unlocks that and it goes up, we'll get additional interest. And I went with one of our lead brokers with VSA on a roadshow around San Francisco in The around The United States in the last few weeks, ended up in Vancouver, which is, I realize, Matt, not part of The United States. And and, you know, saw a tremendous amount of interest in long duration energy storage, but also some challenges looking at an OTC market that is relatively thinly traded. So there's a certain chicken and egg quality to it, You know, as we are able to get more traction in that arena, we will also get more interest, which will drive more traction. It will go in that cycle. So we're looking to unlock that. What what we're not prepared to do is to talk about any further sort of strategy at that level, you know, other than to say it's no secret, you know, that ultimately unlocking large capital markets through you know, that that we don't currently have a strong presence in is clearly in our interest and something we'll continue to consider as we move forward.

43:59 Thanks, Larry. As as Jonathan's here now, I'm gonna I'm gonna there's a there's a number of questions here just I know this was covered in the in the presentation, but just asking clarify for clarification around the the short to medium term, your cash flow scenarios, how they expected it to play out, what are the the the plans and and and strategies around funding, and specifically, you know, contingencies should, for example, the short term warrants expire without being subscribed for. So, Jonathan, could I ask you just to go through that one last time? Yes. Of course. Just checking you can hear me. Apologies for my technological fail, but I've managed to recover. Good. Thank you, Matt. So as you've as you've set out, Joe, that we I have given a lot of information on cash and working capital in the in the statement we have. But but, equally, I I totally understand the question.

44:52 And I don't so you don't mind being asked the question. And as I say, for for by by the sudden, the the shoes are shattered, I'd asking the same question. So I do totally understand. The statements we have made have been very well thought out, so I I would urge someone to read them because, yeah, we we have to say how we feel we will progress, and that's exactly what we've done. And being, you know, being a public company does restrict to an extent what we are able to say. You know, we we we must make sure that we give information to all. So I you there's only so much I can do and say and draft mistakes. I try I try to give as much information as I as I could do. And I'm also conscious that giving negative assurances at one point in time does, you know, to an extent, create a hostage fortune in the future if you're not able to do that. So I'm gonna be cautious. So please don't read in read anything into me not saying something. I'm just being very cautious, and perhaps that's just my sort of my my background getting there.

45:47 But I am also conscious that, you know, being a public company, the key one of the key reasons to be a public company is access to capital. So, you know, at points in time, we will look to access the capital markets and wouldn't expect any company to say that or ever suggest that. That being said, hopefully, we've made it clear our absolute number one priority is to get a strategic investor who would look to bring some capital with us to the business. You know? That would not be coming back to the capital markets. That is going to an external strategic investor that would not only give us some strategic leg up, be it on the supply of vanadium side, be it on possibly the project development side, be it on the manufacture side, elsewhere in the supply chain. It's not just come someone coming with a checkbook. It is someone coming with someone who can help us out strategically.

46:35 But, you know, I've got two hats on, the CFO and the CEO hat on. You know? This the checkbook is very useful, and that is absolutely our number one goal. You know, it will be our number one goal at the moment even if the capital markets were very buoyant. Yeah? But I think we all know the capital markets are not buoyant at the moment, and we've all seen where share prices have gone. So that being said, we are alive to that. We are absolutely focusing our time on that, and that's where I'm spending an awful lot of time on that. Look. From a personal perspective, I've invested a lot of capital over the years. I'm certainly looking at red numbers when I look at my portfolio, so I am very aware of dilution as well. So, hopefully, that'll give you some confidence that we are aligned on this front. We are absolutely trying to do the right thing by shareholders.

47:20 And, you know, the assumption that clearly the company's out there raising raising money, and we're gonna do a deeply discounted issue is absolutely would not align very well with what we've said there. But I'm absolutely giving no assurances at any point in the future that things can change. But, absolutely, our number one priority is where we are now, and I wouldn't be able to say that if that wasn't exactly where we are. Thanks, Jonathan. Okay. I'm while I'm on time, I'm gonna try and take sort of four more questions, I think. There's there's a question here around manufacturing. There's a few questions asking around sort of manufacturing scale and and and that sort of stuff. But but but specifically, you know, there's a question that's saying, changes are being made behind the scenes to to reflect the success in generating orders and and how to scale up manufacturing?

48:12 Larry, maybe do you wanna take that one? I mean, we're putting in a tremendous amount of effort in that area, and and we have to. There's the IRA, the inflation reduction act in The United States. It's providing financial incentives. There's, you know, and domestic content requirements. There's the fact that we successfully moved to a manufacturing partner in China who is able to dramatically increase their capabilities, and they have sites that are outside of China that we can ramp up on. All of these things are coming together, plus the need for very large amounts of vanadium electrolyte, which, by the way, is a commodity now that is not where the capabilities the supply capabilities are not fully utilized. So there's a lot of excess capacity in electrolyte production because there was an anticipation that vanadium flow batteries would accelerate faster than they did. But now that they are, we're gonna be able to take advantage of that excess capacity, and then that won't be enough some years down the line. Fortunately, there is a pure enough time to to to change that by the time we get to the point where we've used up global capacity. And make no mistake, we, INVINITY, are looking to use up global capacity. We don't see the other players in this market with a significant

49:43 impact on the vanadium supply on the global vanadium supply outside of China. Thanks, Larry. And then I think this one probably for Jonathan. There's a question here asking when when when shareholders will see the sort of we've we've said we're making positive gross margins on on on sales. I mean, when when will shareholders start seeing that flowing through onto the into the numbers? I mean, I think if I if I take a slight step step back and make a sort of a a a sensible statement from a UK perspective, UK markets and and US markets are slightly different. UK markets are very focused on companies delivering profits, and that tends to be what drives share prices. So, you know, I am I am very clear to to the board and internally, and I can see Larry Larry nodding. It is all about delivering bottom line profits.

50:36 And, yeah, if we were in the I suspect if we look at our peers, our peers seem to be spending a lot more money than us. They seem to have lower revenues than us, and they have a greater market cap. That's one of those things. We're in The UK. We need to deliver profits to our shareholders, and then our share price will appreciate or at once we demonstrate, as I think we are, that pathway to there, then we'll have that that appreciation in in share price. Mistral does exactly that, and that will do that. You know, the the the industry standard margins we talk about happen when Mistral ships, and Mistral is shipping in volume in 2025. So, you know, as we sit here in the autumn of twenty twenty three, you know, that is absolutely visibly in sight because we we know where we are from a price point with customers. I think we set out in the recent announcement that, you know, the price point we had got on those DOE sales is exactly where we expect it to be. It's almost in entirely in line with where my model was.

51:28 And and we know where we are from a cost perspective on Mistral having sort of we we we know where we are on the development side. We know what is needed on the supply chain side, and we work through that. So, you know, we are very confident those margins are coming through on Mistral. It is the journey to get there, and you will see that start to transition through 2024. So I'm not gonna forecast exactly when we are hitting profits because I I can't do that. But Mistral, which is, you know, shipping a volume early twenty twenty five, is where you start to see that coming through, and that is pretty soon. Thanks for that. The next question is is always a a a fair question I think we see asked, but I I think it's always worth making sure it's asked is what what what do you see as the biggest challenge to get into profitability for for INVINITY? So perhaps I'll come to the all three of you maybe, but start starting with Larry.

52:17 You know, we we have ambitious plans, and we have to execute against those plans. I put up our strategy with four simple components to it, But the reality is each one of those turns into a great deal of effort and work areas where, you know, I'm very proud of our team and what they are accomplishing, but we also are limited in our capabilities. Fortunately, we don't have to build gigafactories. That would be a huge risk if there was a real complexity the way there is in a lithium system. But there still is significant manufacturing requirements, significant development requirements still left to do, though we're not seeing technical risk implementation issues.

53:03 So I would say I if we identify an area that is an impediment to getting the profitability, it becomes our focus, and we we do whatever we can to overcome that. So I can't point to any specific thing other than to say that it is a complex business. It's taken a while. We know that, and it will take some time longer. Right now, we're on track. I'm happy to jump in because I think I'm just gonna reinforce some of what Larry said. Look. The vector towards which we will progress towards that profitability is already set. We are progressing with the right product. We are progressing with the right partners. We are progressing with the right operations and industrialization strategy.

53:51 All we need to do is make sure that we continue to tread that path. The the the comment I would make is that there's been a lot of discussion over the last since our since our results came out about, you know, future funding scenarios, and, you know, that is absolutely something that, we are actively considering. But I will say that as we are ticking off these boxes that materially demonstrate success, validation by DOE of our future path, validation by of the that we're doing the right things, validation by our customers that they believe in what we can do, the avenues through which we will be able to unlock that funding in manners that are incremental to the value that our shareholders hold in our company is only getting significantly larger and significantly more compelling.

54:42 You want anything? Yeah. I I think it certainly, the risk of not wishing to to repeat to repeat both of you, taking a step. But my my in my experience, I've I've been working with small mid cap companies for for well over well over twenty years, and I have I've not seen a similar opportunity that is so almost obvious near term and so vast. It is it is true truly quite extraordinary when you look at it, and that's what really excites me. But equally getting there is is complex. It is challenging. There is a there are a lot of things for us to get right, and we are looking at some significant growth. So I think us just making sure that we have the time to plot that sensibly, I is probably one of the biggest challenges. We've got some fantastic people within the within the organization all of whom are committed. It's making sure that we look look after them, make sure that they are they are supported, that we invest in them, and then we invest in the infrastructure around them so that we can deliver it. That that for me, I think, is the biggest challenge to deal with.

55:41 Thank you very much. I'm gonna just do one quick question that's just coming because I think it's it's it's relevant and important, and we'll do the final question. Question to Matt. Just regarding these these the recent DOE news, can you just briefly talk through what steps are required sort of we we said this sort of there's the the final negotiation, which we're hoping to occur by the end of the year. Can you just briefly talk through what that means? Look. I would say the price is the easy part. You know, it's the rest of the the rest of the the contracts both between the DOE and our partners and then between our partners and us. That is the that is the work that is yet to be done. On the between our between the DOE and our partners, those contribution agreements are always fairly significant because they talk not only about the amount of money to flow to the partnership, but also the the degree to which that partnership will engage with the DOE and and and and really make the most use of the successful results from the projects.

56:44 And then on on on our side, you know, it's really around the commercial details of the pro those projects. How we make sure that, you know, notwithstanding a price that's acceptable to us, that the rest of the stipulations around how the project will be built, how it will be delivered against, and how it will be operated are consistent with what we know is best for not only the company, but for the operation of the product itself. Thanks. And and somewhat related, the the sort of final question, which I think is always a good final question to end on is what can shareholders expect from us, you know, by by the end of the year? What what what are the big things to be looking out for as an INVINITY shareholder? Larry? You know, we are always looking to follow those four strategic points that I talked about. So we wanna be able to talk about new deals as we sign them, new deliveries as we make them, energizing products as we as we energize them, progress with Mistral, not just on the development side, but also on the partnership and and support side. So all of those things are things that we are actively working on to be able to make public as soon as possible and look forward to doing that as whenever we are able to get any of those those goals accomplished.

58:12 Perfect. Joe, and I might might just jump in there. Larry, Jonathan, Matt, thank you very much for addressing those questions from investors. And, of course, the company will review all the questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which is particularly important to the company, Larry, could I just ask you for a few closing comments? We all depend on a reliable electrical grid. We take it for granted. But as we move to renewable energy, we can't take it for granted without energy storage. And that energy storage will be you will be provided by a number of companies, but we see ourselves in a leading position to provide the energy storage required to stabilize the grid and stabilize, the the use of renewable energy.

59:02 We appreciate greatly the patience, that our shareholders have shown, the support that we have seen. We appreciate our cuss our customers, and we appreciate our staff. All of those together have put us in an extraordinary position in terms of potential, and we are delivering on what we said. So thank you for your time today, for your attention. Do give us feedback. Do ask us questions. We are, very much interested in the interactions we have with you as shareholders and potential investors, and we look forward to continuing to deliver on the promises we make. So thank you very much. Perfect. Alright. Thanks for those closing comments. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better and better understand your views and expectations?

59:54 This will only take a few moments to complete, but I'm sure you'll be greatly valued by the company. On behalf of the management team of INVINITY ENERGY SYSTEMS PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.