Itaconix (LSE:ITX) — Interim results for the six months ended 30 June 2020

0:04 Good afternoon, ladies and gentlemen, and welcome to the ITACONIX PLC Interim Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Just simply type in the question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. These will be available via your Investor Meet company dashboard.

0:35 I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. I'd now like to hand over to John Shaw, CEO of ITACONIX. Good afternoon, John. Good afternoon, Mark, and great to talk. We are actually located in our main production facility in Stratham, New Hampshire. So we're, producing away today. Having a very strong week of production, but happy to be, live, live back to The UK. Sorry that we can't be there be there. It's been quite some time, but we're happy to be live with you today. In terms of what to to cover today, first, we'd like to welcome both current investors and any new shareholders to take a look at ITACONIX.

1:27 It's been a great year to date. I look forward to updating you in terms of our progress. We did release our first half results this morning. I hope you've had a chance to take a look at them. We'll be adding some color to that today. There is a cautionary statement and disclaimer regarding the standard one regarding any statements today being forward looking on it. Most important about ITACONIX, if you aren't familiar with us or to remind you is, there's three aspects. One is we produce key ingredients that are disruptive products in a new generation of consumer goods that are, emerging onto the market that meet a new generation of buyer behavior requirements.

2:13 From that, we're generating excellent high excellent growth into a very high revenue potential and making progress into that. And since July, we've been in a very strong cash position after completing a $2,100,000 gross proceeds of a fundraise back in July. In terms of what we are as a company and the opportunity, we really try to deliver three things to customers. We need to deliver them new product claims that help them win market share, out on the very competitive consumer market shells. We try to lower the cost so that they, have attractive, attractive margins for them and create additional incentive to use our ingredients.

3:01 And, increasingly important is the sustainability that we bring, through our ingredients to the end products. And in a perfect situation, we get all three of those working together, and that's where the great growth has come this year is when we get all of those working together for our customers. We are a worldwide leader in proprietary technology for our itaconic acid polymers. The facility that we're here is the only one of its kind in the world. We have a proprietary production process to produce proprietary polymers that are high value added ingredients. The overall addressable market that we're in is greater than $3,000,000,000 when you think of all the potential applications for our itaconic acid polymers.

3:48 The our current product line is focused on $700,000,000 in addressable market within the consumer goods area. We have in looking at that going into that potential, we validated a very broad range of applications for our ingredients in in the end product formulations as high value added key ingredients that really created disruptive claims to help our customers win market share. And we've really validated in a broad range of formulations and really all the formulations that we need to succeed in the coming years. We have active customer projects, which I'll get into a little bit more, which are give us both in the process of getting towards breakeven profitability and far beyond, and those active projects are advancing.

4:42 We are global in scale. Although we produce here, we ship our product throughout the world. We have significant sales in North America, significant sales in Europe. And then through our blue chip collaborations with Neurion and Croda, we actually get global scaling through our collaborations in with Neurion in personal care and with Croda in odor control and home care. We have excellent revenue growth as we reported this morning, narrowing losses and really strengthening the balance sheet. And really important and we're something we are going to start talking about a little bit more is our credentials in terms of, the benefit to the environment, in terms of reducing the depletion of natural resources, increasing the use of safer chemicals, and reducing the release of chemicals out into the environment. And we have, tremendous capabilities that when customers use our products, that they're getting all three of those benefits on it.

5:46 I wanna start and take a few, talk a little bit about the global drivers behind the next generation of consumer goods because we, we really play into that extremely well. There there's a number of, global imperatives that are driving chemical innovation. First and foremost is the depletion of natural resources and how that relates to climate change, a very increasing focus on reducing c o two emissions and see it in greenhouse gas emissions to improve climate change, continuing focus on environmental and human toxicity and waste management. All of these are key drivers that are driving reformulation of consumer products where they're looking for new ingredients, and that's where we come into play.

6:35 When you look at what, the brands are looking for when they go to reformulate their products and generate a new, new products, going forward, we have some unique selling points. First of all, we deliver new performance claims, whether it's excellent spotting and filming and automatic dish detergents to weightless hairstyling and personal care to residue free odor control, in personal care and home care. These are basic new performance claims that our customers could put on their packaging to capture market share. As I said before, we also wanna make sure when we do that, that we're lowering the overall cost of their formulations in their ingredients. At the same time, that we're putting safer chemicals and the overall formulation has more safer chemicals in it and that they have a higher level of bio based content, increased use of renewable chemicals in it. And then really, that's what we play into and have unique selling points.

7:37 How we do it is, first of all, to step back into what we have at our facility here and what comes in out back here is we get container loads of idaconic acid, shipped in here, that, is actually produced by fermentation, with a close partner that we have in China. They're that's really where the only commercial production is. That process involves the the growing of corn, which actually captures carbon. So remember, all the carbon in our products is coming in in the majority in our in our products is coming from carbon that's been captured in the air by a plant. It's been delivered through as a as a sugar into the fermentation process to produce iodiconic acid.

8:27 Again, that's not something that we do right now. We buy it in. But remember, all of the carbon all of the carbon and iodiconic acid is plant based that's been captured out of the atmosphere in to to the CO2. We bring it here. In in back, we have with our production, we bring it here. We run it through our proprietary production process, which is really the breakthrough that we have in terms of producing these polymers, is the tremendous economics that we have to make these commercially available. So we have unique excellent unique selling points using ingredients that capture carbon out of out of the atmosphere for renewable carbon in it, with excellent economics.

9:18 To look at how we're monetizing this our product portfolio, we have a number of active projects projects going across all of our applications that really fit into the wish list that customers have, for ingredients. And these are advancing through, and that's what's generating our new revenues on it. To go through a little bit of what the, how that process works, you know, a formulator, you know, whether it's a carpet cleaner or a laundry detergent, a a personal care product, they have a wish list of everything that they would what the perfect ingredient would be. You know, they'd like it, you know, to, reduce the the the cost, allow compact formulations, have bio based content, be non GMO, no animal testing.

10:05 They have a wish list, some of which they can't get all of it, but they try to get as much of it as possible. What we do is we promote our products against those desired attributes, and we send samples out to customers, hundreds of samples a year, both into home care and to personal care, both directly ourselves and through our partners, Neurion and Croda. Those samples work their way through. A sample comes in, it gets evaluated. A formulator decides that they want to formulate with our ingredient. They like it. It gets put into some formulations. The formulations get evaluated. They get finalized. Then they get produced, and end up ultimately, we get a purchase order at the end of the process when they go to produce that product to put it on the shelf. And that's what we're experiencing right now is, projects progressing their way through that process into more purchase orders, from activity, some of it, which started, two, three, or four years ago that are finally maturing and coming onto the market. And that's where we get very nice recurring revenues because every time they go reproduce that product, we get another order that goes off to the blending to a blending facility, you know, to, you know, to produce more of the end product going on the shelf.

11:24 So when you get in, it can take a long time to get in, but there's very high recurring revenues each time that you're in there. So they're very high quality revenues that take some time to progress through. If you look at why are we disruptive ingredients, disruptive ingredients creating disrupt disruptive consumer products, a big area for us is nonphosphate detergents, in particular in that is automatic dish detergent pods. We allow very high performing dish washer detergent pods and tablets, that are very compact because of the, unique functionality and value of our products. So we can displace, multiple grams of product in that ingredient with just, let's say, a gram or a little bit more than a gram of our product.

12:13 So, it makes it more compact. You reduce the cost, and you get excellent performance. And that's really the lot of the progress that we've made this year is some with some major brands, that have been launched, around new formulations, that are doing very well on the shelf. Second of all is the area in hairstyling. We have bio based bio based, weightless hairstyling. You can see the picture there of a woman, with excellent curls. They're very soft curls. They have excellent, retention curl retention under all conditions, humidity, frizz control. And you really can't get that look, that particular look, without using, our polymers and ingredient. And it's getting used in increasing number of hairstyling products, particularly doing well in Europe with some some brands that are very aggressively growing, with that sort of hairstyle.

13:09 And then finally, when we start looking in the odor control, an opportunity that we want to be developing, and we've really just got our first initial success on that area, is aluminum free underarm deodorants. Aluminum is being taken out of underarm deodorants because of the perceived risk as being carcinogenic. And when you that's the aluminum products tend to be highly related to odor control and antiperspiration. So when you take those out, you need to put another ingredient in that has excellent odor odor neutralization, and our product does. And because of where where it's being applied, you don't want the deodorant to leave a residue on your clothing. And that's one of really one of the strengths of our odor neutralizers that we do not leave residues on fabric.

14:00 That's creating opportunities, for example, on laundry detergents, but also in areas like underarm underarm deodorants. So those are three kind of examples of how in each one of these areas were a key functional ingredient where you can't get the breakthrough product that you want in the market without our ingredient. And that's where we work closely with customers, you know, to develop those formulations. We have a range of formulations ourselves to work with them in there to make sure that they get the breakthroughs that they need. As I mentioned earlier, our revenues have been advancing. We hit about £1,100,000, about $1,300,000 last year.

14:46 We hit $1,100,000 already in the first half of this year. So you can see that we've already been proven as an ingredient, in a broad range of, of end product applications, whether it's hair sprays, mousses, shampoos, pet shampoos, baby baths. We're already been established. So there's somewhere out there, there's a brand that's already validated the use and value of our ingredient in one of these end products. And even more so, in some of the home care areas, particularly automatic dish detergent. So we already have the base of validated use in all of the formulations that we need to grow to be a significant significant company.

15:33 That's why we have a near you know, in our five to ten years by ten years out, just with what we're doing right now, we see as, you know, greater than a $50,000,000 revenue opportunity just with what we're doing, you know, I think closer more to 70, maybe maybe to a 100,000,000, just with scaling up what we have right now. That doesn't mean we're stopping there, but that that's what we have to date. I wanna go a little bit specifically into our pipeline for nonphosphate detergents, and particularly where we are in our automatic dish program. This is some data that I think I've we shared some, some months ago in terms of how we look at our pipeline. And there's really three segments that we look at. First of all, there's a formula formulations that we already have out there that are already being used, or exist or or new customers are adopting similar formulations. So the formulation is already done.

16:32 We've proven the formulations and either existing customers are growing those the volumes in those formulations or new customers are coming in. And that we believe, you know, out for the next few years is at least a $10,000,000 opportunity in terms of what we're already in right now. And I would say from June until now, we've really made some excellent progress in terms of scaling revenues in those areas. Our existing customers are doing extremely well. Our volumes are growing with our existing customers. Those formulations of products are getting out into more and more retail outlets, particularly in North America, and we're doing very well there. That's driving a lot of growth. The second area is is the, new detergent formulations that are being out there where people are introducing them, and those we're making advancements in also.

17:25 We already have two new formulations that will be launched, next year that they're completed. They're in process, for some for some brands here in North America. So we already believe starting next year that we'll, you know, we'll continue to progress in this. So from June until today, we're really making tremendous progress in accelerating our our, growth, into these into these potentials that you see here. And that's probably what I'm most excited about. It's been many, many years in development. We've modified our polymers to have particular performance. I think we've hit a sweet spot on that. We've gotten formulations out there that utilize the unique value of our polymers.

18:12 Those are making it out there, and they're succeeding in the market. And we want to expand that success in into as many brands as we can.

18:24 In terms of drivers for the second half growth, as I was just saying, success by brands is generating more success. When you, when when people see that, there are formulations that are succeeding on the shelf, based on your formulations and your product, more brands come to you and look, for help in terms of getting, similar type products onto it, and, we're doing, very well there. Second of all, COVID nineteen, it's very unfortunate situation. We hope, everyone's families, and and loved ones and friends are safe. But it has generated kind of a permanent new high usage level in home care products. We were already I I think if we look at the revenues that we have to date, you know, these were projects that were well underway a year ago, and that's what's really it's really the new products that are driving it. But clearly, COVID nineteen has set a new new, and I think for quite some time, a new higher usage level, for home care products.

19:29 And then the last one is that the concern on the environment and how that's getting translated into brands is real, and it's happening now. I think you see more and more major global consumer goods companies making large mandates around redoing their product lines, around the environmental aspect of it, and it is happening now. You know, we've talked about it for ten years or so. It is happening now in terms of the selections they're making. You know, everyone's asking about what's the bio based content, of this formulation. Everyone wanting to increase it, and we have some great

20:13 great new achievements, to enter the market along those lines, with some great great new brands. In terms of major momentum we have going on, as I said, we, in the first half of this year, we did get a major new brand launched, in North America that's doing very well. There was a we've also reformulated some products on it. And then we have more, new brands emerging, in North America and Europe in the coming in the in the coming year, as we progress on that. In in hairstyling, we have, both recurring orders and new orders around new hairstyling products that are getting out there using the unique functionality of it. And we are getting kind of new volumes really we expect to be emerging as Nurion progresses with its efforts, sales and marketing efforts over the next year.

21:14 In order control, we've had continued growth in the form in home care through Croda that's progressing very well on it. Continued use of certain brands, particularly really understanding the value, that our Xinadore product, brings and adopting it across their platforms, which is very exciting. And then, we are making a new effort to focus on new home care new personal care products, through our own direct efforts into the market. So what all this has added up to is 1,100,000, in revenue growth, for the first half of the year. That was 80% over the first half of twenty nineteen, 67% growth over the second half of twenty nineteen.

22:04 So it's really getting into dramatic growth, we could we expect to continue on. We've really brought our with our efforts, I think, if you look at our 2019 full report that was published about a month ago, you'll see that the the full year effects of the restructuring efforts we undertook in 2018. And those are really coming to bear here as we as we grow our revenues, bringing our profitability, you know, bringing our losses down dramatically. As you can see in the first half, losses of 600,000, after about 1,200,000 in losses, in each half of last year. So making dramatic growth, progress there. And then, cash, the official cash numbers at the end, end of June, was, $500,000.

22:56 But, as we have announced, we did complete a $2,200,000, gross proceed, fundraise in July. So we actually have a very strong balance sheet going forward to continue our growth.

23:12 So in summary, before we get to some questions, which I look forward to, we are increasing our revenues really pretty dramatic growth through the progress in active projects where success is breeding success. There's strong underlying demand for our existing products. When we look over the next year or two years, we really have all the products that we need, the proof of those products in formulations, and we're just scaling up from there. It's a large market opportunity with everything moving favorably in our direction in terms of the desire for performance, cost, and sustainability. And we now we can do it with a strengthened balance sheet. We can with the increased revenues, distribute our fixed costs that we have, particularly at the production facility here. We can distribute those fixed costs over a much larger volume.

24:08 It really gives gives us a very strong pathway to profitability,

24:14 and beyond. And beyond that, we we really are gonna focus a little bit more, not only with our customer because our customers are looking for it in terms of the environmental aspects of what we do, but also, within the investment community. You know, we have a production process that doesn't that uses water as the only solvent, that doesn't have any discharge, that uses very little electricity, that's does not require a lot of capital. We have products that are high bio based content, that are that are safe for discharge into the environment, have low, you know, low toxicity for it. And then when then when they get into formulations, they allow, companies to have more compact formulations so they don't have to have as much shipping. They don't have as much packaging.

25:04 And you actually bring the absolute amount of chemicals in a formula down. So you're saving in the use of chemicals. You're saving in the chemicals that gets discharged in, into the environment. And then within the chemicals, the the ingredients that are in those formulations, the amount of carbon that is coming from renewable carbon versus fossil based carbon is increasing. So you put all that together, and we have a tremendous impact beneficial impact to the environment when our customers adopt our the use of our products for their performance and cost for for their cost cost

25:40 performance of it. So we're very excited excited about the future right now. We have a lot of work to get done in the coming few months to finish off a very strong year and get set up for a strong next year for it. We tremendously appreciate the support that we received from both, existing shareholders in the in The UK and The United States, and new shareholders, that came in in both, The UK and The United States in our last fund round funding. We're tremendously grateful for the support that they're given, to our vision and our plans and our progress. So thank you. We look forward to continuing to report a great progress, over the coming months. That's brilliant, John. Thank you. Thank you very much.

26:31 If I could just ask you to turn your volume down on your computer, John, there's just a small amount of feedback coming through. Just the overall volume. Perfect. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. But just whilst John takes a few moments to review questions that have been submitted today, I'd like to remind you that a recording of this presentation, along with the published Q and A can be accessed via your Investor Meet company dashboard. I'd also like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback for And we'll have a number that have come through the live event, which I will then move on to. But if I could start with these pre submitted questions, the first being with current production running double shifts, do you see the need to expand the current size of HQ to meet demand?

27:30 Are you limited in the orders of size by its current size?

27:36 Yeah. I know people have been very perceptive of picking up that we've been advertising for production help locally here. We have we do have a new production crew, two full production crews. Most of that is so that we can run twenty four hours a day. We have a continuous production process. So if every time we shut down, we lose an hour and a half to two hours of production. So we're trying to optimize the use of our assets and our costs. So what we've done is we're gonna revert to twenty four hour production for some number of days during the week. That still gives us a huge amount of capacity both with our existing product line with our existing production line and with some minor relatively minor amounts of capital investment to to debottleneck a couple areas, we can double that capacity.

28:31 So, we really have all the capacity that we need here, right now. We've increased, we've increased our run rate, by running twenty four hours a day. We can continue to extend that, continue to extend it, and we can put some relatively small investments to debottleneck debottlenecks a couple steps on the in the process to continue it continue increasing it. So we, you know, we we don't expect any very we don't expect any huge capital investment requirements to meet our production needs for the coming,

29:06 the coming years. Thank you. The last q and a, you mentioned you had a meeting regarding biodegradable plastic packaging. Do you have any further update on this? We do. We are working in that area. We're starting to work more in our bio Asterix line that functional additives. We they were not they've not been in our revenue projections of what we've discussed in our fundraise at all, but we hope to put those start getting some of those as as active projects coming through sometime next year. What we're looking at is being an additive to add certain functionality to expand the properties and use of biodegradable plastics.

29:56 We it's something we would expect to be a very you know, relatively minor to a small percentage to get a certain property that that that a a biodegradable plastics producer is looking for. So we are continuing to make some progress in that area. We are not projecting any

30:16 major revenues yet. Those will those projects will take a couple years to develop, but we are actively working on them. Thank you, John. A kind of a generic question, but could you just really just give a a brief explanation of your ESG credentials is the question that's been asked? Yes. I think the the key part, as I've said, is that when customers use our prod our ingredients in a product to get the the performance and cost that they want, They get the additional benefit of increasing the bio based content of it, but even with bio based content, which reduces the depletion of natural of of fossil based natural resources of it.

30:59 Because our product has has excellent toxicology, human and aquatic toxo toxicology, we're really a safe chemical. In fact, we now, I think, have all three of our detergent polymers on the safer choice list here in in The US on it. So we're increasing the use of safer chemicals when we displace other ingredients of it. And then we are just reducing the discharge of chemicals out into the environment through the compaction that we can do. So when you look at it, I look at it in terms of the amount of the the metric we're gonna start looking at is how much how much plant based carbon are we are we using in displacing fossil based carbon?

31:47 And we're gonna start highlighting that to our customers in terms of, you you know, the the when you replace that carbon, you're really getting your greenhouse gas emissions down when you're supplanting it. And we're doing it both by both replacing fossil the fossil based carbon with our plant based carbon. But when we get compact, when we can customers use our ingredients to get a more compact formulation, now you're getting a double or triple effect, in terms of the reduction of what of what you're using in terms of chemicals and

32:18 even packaging in it. So, it's a great question. I think it's something we we're gonna highlight more, both, to our customers going forward and in our product development efforts. Mark, do have additional question? Yes. My apologies. Sorry about that. We've got a question here from now these are the live questions that have been submitted, John, just directing you to those. First question here is from Tim G. Tim asks, do you anticipate that your cash runway is now sufficient to reach profitability? I think that was our the statement we made back in in June and July that our fundraise was intended to go through there.

33:12 We do have a very strong balance sheet. We have growth, and we do not need we do not see a need for cash in the in the immediate future on it. As we get as we get through into the second half of next year, and as we start approaching with continued sales growth, I think it'd really

33:36 be a question about our working capital requirements. I think the open question is the working capital requirements that we have for our inventories and our receivables against our payables is probably the biggest question that we have going into next year and continue to manage that well. Thank you, John. Just sorry, I think your computer has got a mind of its own in terms of increasing its volume. Pardon? Your volume is increasing slightly on your PC, which is bringing just a little bit of feedback in. But if you could just put that volume down slightly on the PC, that would be very good. Okay. Thank you. We've got a couple of questions here around competition. The first question was from Tim who asks, who do you consider to be your biggest competitor?

34:24 Are you the only group working on itaconic acid derived ingredients for soaps personal care products? And then there is a further question from David, who asks, please, can you discuss your market share and identify your principal competitors? So perhaps you could address those at the same time. So our I hope I'm not getting the feedback, Stilana. But in in terms of our competition, our our biggest competition is people not willing to reformulate. When we so if people aren't reformulating their their products, we we just do not get an opportunity. When they do reformulate, there's a they're the the really competing builder system that we have in the automatic dish world is a combination

35:17 of a small molecule chelate with an acrylate polymer or acrylate sulfonated copolymer. And that's a that's a traditional replacement for phosphates of it. So our we're really competing against those two ingredients being used to replace r one in it. And and there's being some there's been some advancements in some of the specialty polymers that are used in those areas. There are some competitors out there, that are starting to put some itaconic acid in, you know, twenty, thirty to 40% to get some of the benefits of idaconic acid into those specialty polymers. But we can put more idaconic acid in per gram because when you get above 50% idaconic acid within a polymer, that's our IP space.

36:10 So, I think other competitors are seeing the benefit of putting idaconic acid into a polymer to get some of the benefits that we get, but they can't put as much in. And when they do put it in, I don't think there's really a huge cost advantage that they have over how we produce the product. So I think that's why we're seeing continued success is that if you want that functionality,

36:33 we're really the only choice to come to. We have a much we have a big competitive advantage in that. I think also we have a competitive advantage in that in hairstyling. If you want that particular type of hairstyle, you you have to use you have to use our our our polymer to get that. And then in odor control, there's a number of odor control technologies that are being used. I think it goes very specifically by application of whether you want the fabric you don't want the fabric residue and you want a very good control of fresh odor, we really have a unique position there. So a lot of it kind of depends on the specification of the product.

37:19 But what we're trying to do as a company is focus our products into areas that when you get into a certain space and

37:25 you want a certain end product with certain characteristics and attributes, that we're the only one that can deliver that as an ingredient. And that's really, you know, how how we address the competitive side of it is to focus our application work of whether we're we're the disruptive product that you need to ingredient to be able to get the end product that you want. That's brilliant. Thank you. We've a question here from Duncan. Duncan asks, he has two questions. I'll I'll split these in and give you a chance to to absorb them. The first question is, can you split the 1,100,000 of revenue by product so we can get a sense of the dependency, etcetera? And how would you see that mix developing over the next twelve months?

38:10 I don't have a specific split of the 1,100,000. We actually look at it ultimately by profitability. It's a mix of profitability. As you could see, we get some very nice gross margins improvements from 2018 to twenty nineteen in the first half of this year. We now have our overall gross profit margins, kind of where we wanna be, you know, varying a little bit on mix of business of somewhere, you know, 32, you know, 32 to 38% depending on the variability of the detergent. The detergent products have a tend to be higher volume and a little bit lower in margin. The personal care and odor control products are are higher margin in it, so it can be a mix of it. But we're really trying to get a pretty even mix of gross profit across those lines once you take into account the varying profitability of it. I don't have a specific breakout of it, but we don't expect any major change in the distribution that we had in our revenues, in in the near future. We expect all of our areas to grow, to grow well.

39:20 Some of it we have more control over. In the detergent side, we we can you know, we have direct responsibility over that customer pipeline versus, with our partners, run their own pipelines on it. But we expect to have a kinda equal success across our applications on it. Thank you. And and and the second part of, Duncan's question. Duncan, thank you very much for your question. Is in your presentation a few months back when, showing, the growth to 75,000,000 of revenue in five years, you showed 2021 would be a revenue of around 5,000,000. A, are you still confident on that? And b, is it deliverable from your current agreements or do you need new agreements in place and new products? I don't believe we I'm not sure I the five that I'm sure I that we ever gave a specific projection. I think he might be referring to a Duncan might be referring to the chart we talked about on the pipeline that we have on our detergent in our our detergent pipeline of it. Those are pipeline that's a pipeline of opportunities that was not a revenue projection on it.

40:29 But I think and I believe the 75,000,000 was more in the seven year range, not the five year range. I think we talk about it five to ten years. Picking seven is kind of a intermediary point on it. So, we do yeah. I if you we we know we know how big you know, with our current products, we have a very clear idea of what we expect our success rate to be within our current pipeline. We think it's profitability in in in in far beyond that. The timing of it is always is always a little bit difficult of it. As I've said in the past, you know, when we have a truckload of detergent polymers going out, that could be a $100,000 worth of of product.

41:16 And in our small revenues of whether, you know, when trucks are leaving in certain periods of time, you know, last fall, we had a customer launch that got delayed by a few months so that pushed off some of our revenue growth. The key part is that the the opportunity never changes. I mean, the projects lots of these are projects that we know are going to happen. We just don't know whether they're gonna do it in the first half of next year, second half of next year. They're thinking about doing it sometime in 2022. There are already customers working on 2023 projects. So when those revenues actually hit, we don't know. We have a high confidence in in in a number of those projects that they will be successful.

42:02 How that turns into annualized revenues is a little bit more difficult to estimate. And I think that's why, you know, the enthusiasm we have is we know we we know what the probabilities are on the on a larger number. It's just a question of how, you know, how long it takes to get there. Thanks ever so much, John. Got a question from Tim, and thank you very much, Tim. Are there any other naturally occurring small molecules that could be used in a similar way to itaconic acid to make ingredients with similar properties to your functionalized polyitaconic assets for use in soaps, personal care products, etcetera? If so, is anyone else working on them? I think there are in each one of our areas, there's lots of activity being done on the chemistry side of it. In terms of a bio based polymer bio based monomer that can be polymerized like Ionic acid, we do not I think the only competition there would be if people produce a bio based acrylic acid.

43:07 And there have been a number of efforts in the past. Some very large companies have pursued bio based, acrylic acid. We do not see any of those progressing right now in any major way. And although I'm sure in some, you know, in some period of time, we will find that there's bio based acrylic acid on it. When there is, again, our chemistry has unique functionality relative to acrylic acid, so that we still think there'll be a differentiation and we're and we expect expect there'd be a differentiation in performance of it. So I think bio based acrylic is probably the, probably would be the probably the most important development that would happen. In terms of other monomers that could be polymerized to make polymers like Iaconic acid, I think that's that's the main the main competition there.

44:00 When you get into the small molecule side of it, you know, citric acid has been out there for years. It's, you know, it's a pretty good it it can it can work reasonably well. It usually needs to be supplemented with some some other ingredient to make it to make the overall performance work well on it, but it's been out there for many years. It's a very good product on it. There there's there's some small molecule keylets. There's some keylets that are coming out that are biodegradable. I think there'll be some small molecule bio based ones. Again, when we get into an ingredient, we're trying to take out both the chelation side of it and the polymeric side of it.

44:45 So if there is a small molecule chelant that comes out, that's good, but we're covering the functionality in two different areas on it. So I I'm sure there are areas that we've looked at where there would be more competition from all alternative polymers out there. There's certain areas of scale inhibition, industrial scale inhibition, for example. But in the in the areas that we've picked out for ourselves, we really don't see that much competition. And that's part of our work is to make sure we find application areas where where we are utilizing every aspect of the advantages of the of the technology that we have on it. Thank you very much indeed, John. We've a number of questions. Sid, thank you for for for the question. How do you mitigate your China centric supply risks?

45:39 Can you ferment corn, sugar yourself in different geographies if needed? And there are a number of similar questions of the vein around the supply chain. So I guess, if you could give some, I guess, some context around the supply chain and any risks and and how you mitigate those really. On the supply of itaconic acid, you know, when we founded the company in 2008, we actually used domestically produced idaconic acid. It was produced by one of the large citric acid producers. You can produce you can ferment idaconic acid in a citric acid fermentation facility, And there are at least four very large citric acid fermentation facilities in North America that could potentially be used to produce itaconic acid.

46:30 What happened in 2009 is that the Obama administration put antidumping tariffs in on citric acid that raised the price of citric acid, and the domestic producers of itaconic acid that were commingling the production of itaconic acid called us up and said, yeah. We're not making itaconic acid anymore. Those are all of those facilities are are potential facilities to produce itaconic acid going forward if the market conditions were attractive. And I'm sure if the market conditions were attractive that we would get interest from any of those producers. But, really, we're still a relatively small part of the idaconic acid market.

47:20 We have a very close relationship with our produce with our Chinese producer on it. And instead, what we're doing right now is working directly with the Chinese producers to make sure that there's a high security in the supply of it. And it there's not a risk in terms of the production of it. I think what we perceive is more the shipping risk, and that's a fairly easy risk to get around, in terms of maintaining some inventories, here in here in North America. And I I don't you know, we don't need to raise this concern to our, to the chemical suppliers. They're well aware of it right now. So I I think it's really the true risk right now is anything on the shipping side of it, and there are measures that we're gonna take to manage to mitigate the the the the shipping risk to make sure we have a constant supply. But there there I mean, we're still a relatively small user. We're high growth, but relatively small user of itaconic acid. It is used at a low percentage in a broad range of of of polymers, like at two to 3% in a in in some very high volume polymers.

48:32 So it's a it's readily available on that. And and that's really you know? But we are keeping an eye on. It's a good question, and we keep a very close eye on it going forward. I mean, perhaps, John, just to slightly expand on that, Tim asks how many different suppliers are there for it's a common asset, and are they all based in China? Just perhaps just to give a little bit of clarity on that. I believe there's, at least three producers, two large ones, and we have one that we prefer using on it. We're a preferable one, but we we do qualify from adiconic acid from multiple suppliers on it. They have massive excess capacity out there.

49:20 So we and again, we don't think there's that much of a risk in terms of the supply of it. Thank you very much indeed. David David, thank you very much for your question. The growth 2022 growth over '21 seems modest. Can you comment on that, please? I'm not sure what if they're referring if I can go back to, like, I I if it's the chart I mean, just to be clear, the chart I put up was around active projects. This is not a revenue projection. I I don't have control over it. The can you get to this chart? Just to because we've had two questions on this chart.

50:11 Just wanna make sure we're clear what's being what's being said on this chart. Yeah. Sorry. That one. That chart, just to be this is not a revenue projection. This is absolutely not a revenue projection. It shouldn't be interpreted that way in any me any any form. What this is is our estimate of the of the projects that we have in our pipeline within this particular area of what the potential revenues are. This is not a specific one. So, you know, this this was just an estimate we made back in June in terms of whether that that that when we looked at all the projects we had of whether where it might come on it. The timing of those projects that I said earlier could vary dramatically on it.

51:01 What we focus on is what the what the near term potential is for getting to sizable revenues and sizable profitability of it. You know, the time the in in because one is we just wanna make sure we stop consuming cash on it. So I I think we have very good growth prospects to penetrate into this. But to be clear, this is not a revenue projection. This is just a a snapshot of what our pipeline looks like. And and this this one, even this is some number of months old. This this continually evolves with some you know, we're always working on new, to try to create new opportunities and to grow, all of these projects and potential.

51:48 Thank you, John. Next question. Are all your products patent protected? Have you had problems with patent infringement or patent infringement? In terms of the, in terms of our polymers, our core polymers, we have protection on the process to produce them. It usually one or there's usually one or two patents around the the the how we produce them. We usually have one or two patents around the composition of them. And then we have additional layer in terms of the application of them. So we have a general patent in terms of the use of our of of producing our polymers. So just to produce our polymers is usually about three different patents to get through.

52:34 In terms of getting using our polymers at the range of itaconic acid that we have to use them in in certain applications. You'd have to get around that. And then further, we've actually protected some of the formulate the formulations of it. And we that's the only place we've run into. We have to we're very vigilant on it because, there are consumer goods companies who will take a sample of your of your product, go figure out how to use it in a formula, and go go patent the formula. So we make sure before we hand the samples out that we've already protected our position around the use of our polymer in a formulation. And I think that's what we announced in January, is that we got an important new patent around the use of our TSI three twenty two and CHT one twenty one twenty two products in automatic in specific automatic detergent formulations that take us out to 2037.

53:38 So to get that that high value added use in automatic dish detergent, we have that protected out into 2037. That's great. Thank you very much indeed. We've got a question here from Zukman who asks, well, he says, hi, John. Thanks for developing green products, and congratulations with the business progress. What is your time scale for achieving financial breakeven? And what sales revenue will you reach your manufacturing capacity before you have to expand in terms of equipment and space? Reaching very high levels of you know, far beyond our our breakeven in what we have here right now.

54:25 We have a pipeline that will get us get us to breakeven and beyond right now that we're having increasing success working our way through it. The specific timing of it, you know, it's, you know, that really determines how much, the existing products grow, in in the adoption of new formulations. I think we're making good progress on that, and I'm and I I'm pretty pleased that we'll, you know, that we'll be able to achieve that in the in the coming in the coming years here. Thank you very much. I have a question here from Monica. Monica, thank you for your question. What level of profit margins does the company target? We we have a very we we have specific profit margin targets that we have for each one of our product lines.

55:18 The pricing that we do is based on the value that you know, the perceived value that we are delivering within the formulation. So we're trying to do value pricing of how our ingredient fits into the formulation and how valuable that formulation is. So our pricing varies across across our product lines, and our profitability varies. The detergent ones, because they're detergents are just more little more tighter margin products, you know, tend to be a little bit lower where some of the other ones are higher. Overall, I think in the gross profit margin range, we wanna be, you know, above 30. We probably won't get quite to 40 on it. It would vary depending on the mix of business in any particular period of time, somewhere in that range.

56:12 I think when you look through to ultimate profitability as we get to scale, I think, you know, for a specialty ingredient company, you know, I would I would would look at that we ought to have EBITDA margins in the kind of 10 to 15% range, you know, as as a specialty ingredient company on it. Thank you. We got a question here from Paul. Paul asks effectively, are ITACONIX gonna stay on AIM or perhaps consider listing elsewhere? We looked at a number of options when we got into a cash crunch back in March. We had to look at, you know, every option. I think you we concluded, obviously, by the placement that we did in June, we concluded that AIM was the best place for us. There's many favorable aspects to being on the AIM market.

57:07 I I really like the the the kind of high integrity that that the AIM regulators keep on on AIM companies. I think some of the smaller, some of the other markets, some of the smaller companies, the the oversight, I think, is not as, not quite as good, on it. And I and it could be concerning as a small cap company like ourselves, to be down in that range. We did we did do a cross listing on the OTC market here in The US, just so that our, we have about 25 to 30, maybe a little bit more percent of our shareholders are US based, and we wanted to make sure they had the ability to readily trade their shares.

57:53 But, with our financing that we did in June, not only, we we really had made the decision, you know, to stay on the AIM you know, we we I like the AIM market. It's been a good market. It's a high integrity market, and that's where, you know, that's that's where we are and that's where we plan to stay. That's great, John. I am mindful. Obviously, we're coming up to the hour, and I guess people may have scheduled meetings that, that, that may follow, this one for them. So perhaps if I can throw a couple more questions at you. For investors whose questions we haven't managed to get around to answer, obviously, we can review those and the company will publish responses where it's appropriate to do so on our website. Ben thank you, Ben, for your question. He asks, is there an option to accelerate the time to market for new products and bring forward the revenue? If so, what level of investment would it take?

58:48 Our our market our revenues are really based on our customers' timelines of the process that they go through to bring a new product to market. You know, there's some major brands we've worked with where they they'll start a project and have a new project a new product out on the market less than a year. Some companies will take three years to get there. We have no control over our customers' timeline of bringing new products to market on it. So, we really don't we're we're kind of beholden to the process that they have. That's a little bit of the issue that we had last year at this time is a major new product took a little bit longer to get, onto the shelves on it. But there's no, if there was a way to that that we could spend money to assure that our customers' projects would go faster, we certainly would do it.

59:43 That's great. Thank you very much. And the the final question from David. David, thank you for your question. With all this positive news, when does John think the share price will react? So I'll throw that one in last. Well, if I if I knew that, I wouldn't be running a specialty chemical company. I'd be out, having a different career on it. I think our job is just to keep delivering value, keep delivering financial results, and and waiting for to attract new new more investors in. I was really pleased with the new investors that we brought in in our fundraise. Very exciting about how our share holder register has developed over the last year. We did have some challenges with our shareholder register a little over a year ago that affected our stock price.

1:00:32 We're just gonna keep working, keep delivering, performance, keep growing the business, and the market will respond. I really like the base of shareholders that we've created over the last year. I'm particularly excited about, some of the developments that we had in our last fundraise. Thank you very much, John. And perhaps, obviously, with those remaining questions that we haven't got around to, we will review those post this meeting. Perhaps I could just ask you just to wrap up, and then I know investor feedback is important to you, We will redirect investors to provide you a feedback after you've concluded. Excellent. We really appreciate this opportunity. Sorry that we couldn't be face to face in London and The UK like we have been in the past, But this also makes it, gives us a little bit more time to go work harder to grow the business on it.

1:01:21 We appreciate everyone's support. Wanna make sure everyone stays safe out there, and we're gonna continue to work hard. Please submit your questions. We will, mark even the ones that we didn't get to happy to address those. Want to make sure that we give all the information that you need to remain as excited as we are about the company. Thank you very much indeed, John. That wraps that up. Could I please ask investors not to close this session as we will now automatically redirect you for the opportunity to provide feedback? If you access this meeting from the website, the feedback page will appear. If you access this via the link sent to you by email, you'll be asked to log in and to provide your feedback. It would take a few seconds for that to appear, but would very much encourage you to provide the company with your views and your expectations.

1:02:12 On behalf of the management team of ITACONIX, I'd like to thank you very much for attending today's presentation. That now concludes today's session. Good afternoon to you all, and good morning to you, John. Thank you, guys.