Mycelx Technologies (LSE:MYX) — Investor Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the MYCELX TECHNOLOGIES Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish those responses where it's appropriate to do so. Before we begin, I would just like to submit the

0:32 following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from MYCELX TECHNOLOGIES. Connie, good afternoon. Good afternoon and thank you for the introduction. Good afternoon everyone. I am Connie Mixon, the CEO of MYCELX Technologies and with me today is Kim Slayton, our CFO and Jim Weidler, our PFAS Business Director. I appreciate you joining us today, and we appreciate your time.

1:06 I'll just jump right in. MYCELX is a technology driven water treatment company with a patent web of over 70 issue patent or in progress patents based on our core technology, which is a unique polymer. We specialize in treating difficult contaminants in specific large high margin markets such as PFAS remediation and enhanced oil recovery. Our technology is disruptive. It offers sustainable environmental impact, which is extremely important to all of our customers. And our customer base includes some of the largest global corporations that are involved in either oil production or as we look at the PFAS market, it will be much more geared to environmental engineering companies, etcetera.

2:00 To talk about our technology differentiator, which is our MYCELX polymer. The polymer was invented by our chief science officer. It is covered by patent web of 70 patents. They are U. And international. And the sequence of this picture that you see at the bottom is a simple illustration of where the MYCELX polymer comes into contact with contaminants. This is how we use our technology and industry to not only support the oil and gas industry, but multiple other industries that need boosted performance. So what you're seeing at the lab tech is actually pouring crude oil into a beaker. He is putting the MYCELX actually, it's the MYCELX polymer on top, which is just kind of a liquid form of it. And then he stirs it up, and then you see that he's able to pull out an entire, really, glob of the of the crude oil.

2:59 That looks like it could that that's well, that's maybe something that anyone can do. But, actually, what is happening there is that our polymer is causing all of those contaminants to bind together, and crude oil is made of of of a myriad of of contaminants. So this this technology, not only does it work very, very well in in, removing oil from water, We leverage this technology and other applications such as PFAS in our treatment trains so that we get the best performance out of our systems. Our strengths are that we are number one at this point very laser focused on two markets.

3:44 They're both large, they're long term and they're very high margin. Both the PFAS remediation market and the enhanced oil recovery market. We will get into both explaining those and giving you much more detail around that as we as we move forward. These are we have technology that is that works in these specialized applications and the awareness is growing in PFAS as well as in as well as our profile in the EOR markets. We have the ability to use our polymer technology in a very in which is very timely at this point because of the awareness of PFAS. They're looking for better technology that is that has gaps in performance that we can fulfill. And then in the EOR market, they to be able to use this method of production, which is very, very timely, they need to be able to have clean water and they're unable to get clean water for their production process with current technology.

4:47 Our technology is proven and it is also secured by a very tight patent web. Our recurring revenue model is very, very, very powerful. We can we actually sell or we lease equipment and then we sell we continue to sell the media that goes inside that equipment over and over again. It is a very powerful model and it has very high margins, especially in the media. We also have a we also have very high gross margins. Most of the margins our margins have slipped recently because of and it will when we have more equipment sales than we do more than we do media sales. But, of course, the equipment is like the razor and with the razor blade, we get the much higher margins once we install the equipment and they start using the media, which they do over time.

5:41 We have a blue chip client base. The names that you see there are customers that we have had for quite a while. One is a strategic partner with us. So we have been able to engage them directly and and actually become in a way partner to them to some of their activities as they've been as they've grown their processes as well.

6:08 I wanna touch on and say a word about recent events because we'll be talking about some of these as we go along through the through the presentation. The first one is that we have realized several of the part of a strategic plan that we put in place two years ago and probably the most important this year has been the sale of our Saudi operations and transitioned it into an exclusive distributorship. It is now run by a owned by Saudi consortium and run by legacy MYCELX employees. So that was something that we felt that we saw a couple of years ago that it was something that we needed to to be moving toward, and we were able to realize that this year and that has been a very that has been very important to the company.

6:59 Also, we have also installed a recently an EOR installation using our retrofit package, which you're gonna hear more about that as well. So that market, we are already installing and we have, shall

7:12 we say, circumvented somewhat the timelines of the oil and gas industry by having our own retrofit package. You'll hear more about that as well. We had a small fund excuse me, a small fundraise recently where we were looking to we needed a capital to buy new more trial equipment. We have a lot of trials going on in both markets, and we need enough to not turn down a trial at this point in our in our growth. So we were able to raise a little over $900,000 to to to get us to where we needed to be to be able to get this trial equipment. Also, we did have a project revenue recognition that is moving from that is moving from 24 to 25 just on my but we are still but we will get milestone payments throughout this project.

8:02 So those are some recent events that you will hear either some through Jim, some through me, and, of course, some through the financials with Kim.

8:13 Okay. I'm going to do we're going to talk about PFAS remediation and enhanced world recovery now, and I'm gonna turn it over to Jim to present on the PFAS remediation, the forever chemical threat. Thank you, Connie. Thank you everyone for joining today. I'm gonna, run through our PFAS product, strategy. So if you're not familiar with PFAS, I don't know where you've been for the last couple years. It's it's been very well documented publicly in all of media. PFAS are commonly referred to as forever chemicals. Excuse me. One second.

8:59 They are persistent in the environment. They're extremely difficult to degrade. You know, they are bioaccumulative, so they accumulate in the human body. Actually, ninety eight percent of Americans have detectable levels of PFAS in their bodies. Very ubiquitous throughout the world. They've actually found PFAS in the Antarctic, in rain and, obviously, all different types of groundwater. So it is a worldwide problem and extremely toxic at relatively low levels compared to other contaminants. So we have a big problem on our hands, and it's a great opportunity for MYCELX to, address and remediate.

9:45 In terms of the awareness, there's a lot of public sites out there that you can visit. We've referenced them here. Dark Waters is a really good documentary on actually how the PFAS was, discovered in The US, through DuPont. So these are different sites that you can visit, learn more about PFAS problems throughout The The United States and worldwide. So where does MYCELX position itself when dealing with PFAS? So what you're looking at on the screen are different technologies for removal or remediation of PFAS and actually destruction in some cases.

10:30 So working from your left to your right are, I would say, would be the most common applications or technologies, to the emerging technologies on the far right. So granular activated carbon and ion exchange resin are by far the most common technologies used for removal of PFAS from aqueous water streams. There are newer novel absorbents being developed and introduced into the market. Those might be corn based. They could be a clay based or actually a metallic base. And there is also cartridge filtration technology, and the two highlighted are, so the granular activated carbon and the cartridge filtration are the products, the technologies that MYCELX integrates into our PFAS systems.

11:21 Moving into column three, there are also separation technologies where they actually remove the PFAS from the water, but they're not necessarily destroying it. And then those technologies are typically paired with, a destruction technology. So column three and four are typically in tandem to remove and destroy PFAS, whereas the first two columns are more of the removal, process. So MYCELX is uniquely positioned in the first two. The the the advantage is that we have a technology that is very widely accepted. It is very, commonly utilized for PFAS, so there are fewer barriers to entry.

12:07 We, have a proprietary media blend that we use. And what we've seen from the media based on our data is that it improved it has improved efficacy and treatment available. So easier for us to pivot into the marketplace.

12:25 So I'll walk through the market verticals. What are the what are the verticals that we're targeting to develop? Landfill leachate, industrial and municipal wastewater, municipal drinking water, and then residential use, commonly known as point of entry system. So these are the four verticals that we have identified as the most optimistic, and developed a strategy into each of these. So diving into the landfill leachate market, there are about 3,000 active landfills in The US United States alone and 10,000 inactive. Most of those landfills have a landfill leachate collection system. The leachate is essentially just the water that accumulates through the landfill during rain events.

13:19 And because of the waste in the landfill is highly contaminated with PFAS chemicals, the leachate is typically highly concentrated with PFAS. So there is a problem in the industry that needs to be addressed. That leachate is PFAS laden and needs to be treated. So we are currently working with different consulting engineers and strategic partners to develop a solution for the landfill leachate market. Worth noting that our partner in Australia, Oleology, has been extremely successful in tackling landfill leachate, and we are leveraging their experience to develop and introduce those solutions in The United States. So super optimistic about the landfill leachate vertical.

14:12 In the industrial and municipal wastewater space, this segment or this vertical is not officially regulated in The United States. And what I mean is it is PFAS for industrial and municipal wastewater is not on the NIPTIS permit. That's the discharge permit. So what you see is a little bit of a, lag in this vertical, but the all indicators are that the regulation is coming. So we're starting to see an uptick in interest in PFAS for this particular vertical. Worth noting that we will be part of a treatability pilot study starting in q one of next year in The United States funded by the EPA comparing the MYCELX technology to up to other incumbent technology. So super excited about that opportunity to showcase our technology and how we're superior to the other technologies.

15:18 So this is certainly a market we know is going to expand quickly and that we are positioning ourselves accordingly. Moving on to the drinking water market. Municipal drinking water, arguably the largest market, for MYCELX. There are over a 155,000 public water systems in The United States, and the majority of these are smaller utilities. It's kind of counterintuitive. You would think that they would be larger, but the majority of the systems are actually smaller. It is a more competitive vertical. GAC and ion exchange resins are by for by far the most commonly utilized technologies.

16:04 And as of April of this year, the EPA is did issue regulations for drinking water. So there are drinking water standards known as MCLs in The United States that have to be met. There is a five year grace period for utilities to get into compliance. So the initial step is testing and understanding their problem, and then the second step is implementing a treatment system solution. So the first year will be a little slower because there's a lot of investigation on PFAS problem, ongoing, and then that will quickly morph into projects and a pretty robust pipeline of PFAS projects throughout The United States. Worth noting, the, US government, EPA, has, allocated over $10,000,000,000 in funding for the PFAS remediation.

17:04 So robust funding, a big problem. There's a need. So a really strong vertical for us. We are positioned well with our technology. We have the NSF certifications that are required, and we are, in the process of starting our sales channel partnerships. And I will go into that in a little more detail in the future slide. On the residential side. So let's say you're at your house in in a rural area and maybe you're not gonna have PFAS, clean free water for many, many years, then you do have the opportunity to install a a house system. So this would be a whole house system.

17:51 So our strategy for this market is to partner with an existing distributor supplier of home systems. In lieu of trying to start from scratch, we have aligned ourselves with US Water Systems who has a huge distributor network throughout The United States and have already ordered the initial lot of MYCELX media slash products for their home PFAS system, and they are close to launching their new PFAS POE systems, in The United States. So, again, another, vertical that we are well positioned. Regarding the funding, I mentioned there's over $10,000,000,000, just from the EPA.

18:38 This is a breakdown of of the 28,000,000,000 of funding that is available to various utilities. And, actually, sometimes homeowners have access to some of this funding as well on the POE side. So very robust funding, which makes my job much easier when projects are adequately funded.

19:04 So how do we penetrate the drinking water market, and what does the strategy look like? So this table is, an extraction from an AWWA published report. And working from left to right, the size category is actually the size of the utility. So these are small drinking water utilities. So size category one is zero to a 100 people in population, and that equates to a treatment system of 21 gallons per minute. So let's look at the highlighted category example. Category two, one hundred to 500 people in population. There are about 5,000 sites throughout The US.

19:51 Each one of those sites has a flow rate of 104 gallons per minute. That is equivalent to a treatment system of about 274,000 US dollars. So you can see the total addressable market is quite large. And how does that break down on a project by project basis? So this is a detailed breakdown of this size two category small project. Again, a 104 gallon per minute. This would be a four cartridge housing MYCELX treatment system, a total of 88 cartridges in the system. Total price is just around 274,000, of which 250,000 of that is equipment and 24,000 approximately is cartridge filtration, and that is the recurring revenue piece. And that would occur approximately every six months. They have to replace the cartridge filters. So on the small side, this would be for smaller utilities.

20:58 Let's take a look at a midsize utility. So category four, now we're up to 3,300 people in population. You can see that there are fewer of these large sites, but the flow rate is much larger, 688 gallons per minute. That equates to about a million dollars worth of equipment, on the conservative side for, MYCELX. Actually, it's closer to $2,000,000, based on the flow rate. So what does that project individually break down and look like? That would be four media vessels that are actually 12 foot in diameter, full of 68,000 pounds of our media. It's about a $2,000,000 $1,900,000 project.

21:44 The equipment is 1,300,000 of that, and the media is approximately $6.66100000 US dollars. Again, there is a recurring media, revenue piece to all of our projects. This one has a longer life cycle, so anywhere from eighteen to twenty four months. So just in summary, there's a lot of projects out there that have to be addressed. So our strategy for the sales distribution and the channel partners is working through area representatives. So there's a lot of information on this slide. But step step one is let's identify the highly populated PFAS, areas. So with the red stars, you can see the Eastern Union is United States has the biggest problem of PFAS contamination in drinking water.

22:46 So what we will do, our plan is to engage independent sales representatives. So located throughout The United States, there are sales representatives in every state. And those representatives have a a Rolodex of customers that they call on. So, immediately, we would extend ourselves, through our distribution and sales channel partners. So let's say we sign up a representative in Georgia so they would have, access to all the projects in Georgia, and then you do that in every state. So it's a it's a model that I've done for, gosh, I'm showing my age almost thirty years now. Very comfortable implementing, signing these channel partners, onboarding the partners, supporting them, and then building a, robust pipeline.

23:38 So super super optimistic about the municipal drinking water channel partner model. Just I'll just say in summary that all four of the verticals have great potential, and we've we've made great progress over the last two years introducing MYCELX into the marketplace. Connie, I'll turn it back to you. Thank you, Jim. Okay. We're going to I'm going to talk about the enhanced oil recovery market, which is our second large core market. Enhanced oil recovery is a specialized, production method that is utilized by, large oil companies all over the world. But to be successful at this production method, they have to have clean water. They're pretty cleaner the water, it boosts their production and it saves them money.

24:33 So these are this and they're used in such large mature fields that when you have a mature field, you've got more water to treat than you do in a new field. So these are very mature fields, they have a tremendous amount of water to to treat. Sometimes up to for every barrel of oil, they've got to treat 10 barrels to 14 barrels of water. So that's the the need for water treatment in this market is is tremendous. To address this need in the oil and gas market, we innovated a media that's called Regen and it is a media that we use in this particularly in this market in this market, and it has the ability to boost the boost the removal of oil and solids from the water to give them the clean water they need.

25:32 When you're looking at this picture that you're looking at right now is an installation in Africa. All of this, this is a total region, actual region project. And what you're seeing is to the far right, that is the regen vessels. So the vessels are very, very large, and they're filled with this regen media. So they pump when the water comes out of the production hole, just like the oil does, it's pumped here and it goes to a coalescer which is that was designated as a MAC, then through the regen and then if it needs to go through polishers to get it even cleaner and then that depends on what the producer wants, then it will go through our polishing technology. So that gives you an idea of what I wish there were a person or a figure there. You could kinda get the feel the scale of this, but this is a this is a fairly large project.

26:30 So why why region why region media? The first thing is is that they need to recover as much oil as they can in existing assets, what they already have so that they don't have to build, large infrastructure to, manage their water. And, of note, 50% of oil is still underground in some of these largest fields in the world. A lot of them are in The Middle East. And they want to be able to get this, the additional 50% that's still under the ground, but they can't get it because there's no

27:04 pressure left in the, you know, in the within the formation. So they use these technologies such as the enhanced oil recovery. They want better technology so so that they'll be more commercially, commercially successful. So this region media is really a disruptor in that it not only allows them to be able to produce more, they can do it at less cost. So we have we do have installations of this. Timelines to adopt technology in oil and gas are are generally long because it's a bit because the oil and gas industry, when they adopt a a process or technology, their intention is to use it for anywhere from fifteen to twenty five years because that's the way that they don't change technologies often, and they certainly don't change processes because it's too expensive and too disruptive to their production.

28:00 So this is a big step because we already have now installations in EOR. Our deal the EOR market is large. All the big players are involved in it, whether they're doing it in The US, whether they're doing it in The Middle East. And it's all at different stages depending on how desperate they are to get their to get rid to actually to replace what they have now with which is nutshell based media, and and it really is nutshells based media, has been in service for probably thirty years in the oil and gas industry. So it's kind of outrun its time. The production methods are much more sophisticated now and nutshell media filtration for the water is insufficient.

28:49 But you see the names here, we are involved with with all of these with all these customers. Most of these we sell direct or along with them as a strategic partner.

29:04 So I wanna say, of what talk about displacing incumbent technology, which is the nutshell filtration media that we were that I was talking about. Since it is slow to adopt and there's long timelines, we innovated in in, 2020 a retrofit package whereby they don't have to replace vessels to be able to use our technology because our technology is even though it's a bed media, it is different from nutshells. So we divide we just we actually designed this retrofit package, and it is patent pending. And they can basically drop that into their existing vessels on-site and immediately use our technology.

29:51 That has shortened the timeline on on procuring vessels. They don't have to it saves them OpEx. It saves them CapEx because they don't have to buy new vessels. If they want to upgrade, this is what they do. If they want to expand, then they will buy new vessels. And we are in we are in conversations with NOCs, national companies, as we speak along those lines of of upgrading, of using the retrofit package. And in fact, we just installed our a the first of three retrofit packages in The Middle East recently. So this technology, while it was a a long you could say a long time coming because we innovated Regen, probably seven seven years ago.

30:38 That was probably our first installation. This has continued to take hold. We have got good sponsorship, and we've got reference projects, which makes a very big difference when it comes to, convincing other producers that you've got the technology that they need.

30:58 Outside of reach of another use for region outside of enhanced oil recovery is, I'm going to mention here, it's a new market in The US. But this has got this also is gonna have very big impact. There's a they're they are limiting saltwater disposal well licenses now. You can't get one, basically. And so they're gonna start shutting down saltwater disposal wells because they are reinjecting basically nasty water back down a well and it's causing seismic activities in Odessa and Midland, all the places where in the Permian where people live. And but some of the producers in particular Chevron, Exxon, who now are the biggest landowners, lease owners in the Permian Basin now are dedicated to looking at beneficial reuse.

31:54 So when I say that, it's beneficial using the water, cleaning the water well enough that it can be either resold, it can be resold to townships around where they will do further treatment to it or they can use it for non consumable agricultural like switchgrass, which is used for biochar and that sort of thing. So it's since they're going to this is again back to my timely comments. This is very timely because Texas when they closed down saltwater disposal wells, they are not going to have that ability to use what they're using anymore. So they're going to have to make a change. So making a change to if they're going to have to make a change, making a change where they can get water quality that they can use for beneficial reuse then that's the way they're going to go. And to do that, you to have excellent technology, which we do with this region and it and it is proven in the field.

32:54 The growth strategy for this market does rely on strategic partnerships and and very good relationships. I would say that we when you look at this list of producers and the service providers that that we are some we can name, some we cannot name, that we are engaged with, have been, still are,

33:16 or or on the cusp of. These are all, you know, very high profile. We have cultivated these these companies on our own. We did this direct. And that was not all that was not our first that was not really our first choice. But it became that way because with disruptive technology or technology that can that can change that will be require you'll need some change into your process to take to take them on board. Then they you know, it becomes much harder sale, and we they need you need technical. And we've been able to do that with all the names that you see listed here. And right now, our strategy is to continue with with strategic partnerships because that helps us as we get them to get these large producers, NOCs, global oil companies to to adopt this. Then the next best step is leverage someone else's marketing and sales platform to really go it,

34:18 do it, and scale it on a global scale. So that's the strategy that we that we are that we are employing with our EOR. And I think we are very far up the adoption curve now with the with the products. Now we need to leverage strategic partnerships and which we are doing now.

34:40 So we have a clear path forward because we're looking at overcoming slow growth. Slow growth is a byproduct of being tied to the oil and gas industry for a long time. Oil and gas, as you know, they have very long timelines as we discussed. And with lack of a, I would say, adequate balance sheet required to bridge project to project, even though we were successful, we had successful years in that it is a industry

35:13 that is made for large balance sheets because the because they you you do have to bridge between projects, during projects, etcetera. So we've so we've moved so, basically, what we did when we sold our Saudi business is to move back to where we know that we have got our best foothold where we can make our make our path more productive and higher margin. And it's clearly with these two right now with Regen and and with Regen and PFAS. So we've identified with PFAS that, as Jim has pointed out, that we've got the channel partner model, which is which I believe is which we all know can be very, very productive. And Jim has done that model several times in his career.

36:14 For EOR, what we've done is we've cut the timelines back by having our own retrofit package so they don't have to build equipment. They can just drop it in and we we're we've got product in the marketplace. So we do believe we have a path that will shorten our timelines and that we will be successful with these because we've got the the right technology at the right time.

36:41 So what do we have in store for 2025? Our plan for 2025 is to achieve profitability. We all know profitability can actually, I don't know why this is changing on its own. It's odd. We know that I'm just gonna keep going, although I don't know why this is doing that. Okay. So our 2025 plan, we all achieving profitability is our number one aim, and we know that achieving profitability covers a lot of, things that

37:15 have to go right and that have to be done correctly. So, for us, we are looking at our EOR market because it's, as I was saying, it's it's further up the adoption curve. When you look at the EOR market though, we're looking at on the front equipment sales or retrofit package sales, equipment or anything that has to that falls under equipment, the margins are not are not nearly what they are in the media. So we we will have equipment sales associated with our EOR and but we will have media sales as well. And we will have with with our PFAS, we'll have excess 50 plus margin there. And our media, generally, if it's just a pure media sale, will be roughly between 6070% margin.

38:04 So the way that, however, our, you know, projects shake out for the year, a lot of our our profitability does depend on how much media how much of our overall sales or media, that high margin media, and how much is, equipment based. So, we're looking to be profitable this year and that we believe that we can do that. So with that, I'm gonna turn it over to Kim, and she will go through the financials. Thank you, Connie. Good afternoon, everyone. Let me just take a second and run through. These are interim results that we released last

38:45 week. Looking at the p and l, our revenue for the first half of the year was $3,500,000. This was down 37% from the same period last year. That was due to the sale of our KSA operations. That 3,500,000 includes, about 1,600,000 from Saudi Arabia. We did have that business in January and February. That was around $700,000. And then the other 800,000 related to the inventory that we that was in that warehouse that we sold with the business there.

39:18 The inventory and assets, the total purchase price was $7,125,000 That was 3.125 paid at closing, and then there's a two year earn out period for the remaining $4,000,000. The gross margin for the first half of the year was a little over 28%. That's a bit lower than we would have expected, but the ancillary services that we provided in KSA, the expenses associated with those services were escalating significantly in the last half of last year and then the beginning of this year. And that was causing us to actually start losing money in January and February, which reduced our overall margins. So they had a large impact. The margin has been improving since the end of Q1, and I would expect that by the end of this year, we'll be upwards of 31%.

40:13 The operating expenses, SG and A and then depreciation and amortization are down year over year. They decreased 18% compared to H1 of 'twenty three. That is mostly because of the sale of the Saudi business. We were able to shed about a third of our overhead, and so you see that impact there and that reduction. There is a gain of $838,000. That's on the sale of the fixed assets. Again, that's from the sale of the equipment that was in Saudi Arabia. That equipment had a net book value of 2,200,000, and we were able to recognize that gain of $838,000 We did realize a net loss of $1,360,000 That does include the gain on that sale of fixed assets. Without that gain, it would have been a loss of around $2,200,000 EBITDA was negative in the first half of the year, negative $1,100,000 compared to negative $900,000 in the first half of twenty twenty three.

41:18 That one point that negative 1.1 does include the gain. If it did not include the gain, then EBITDA would have been negative 1,900,000 for the first half of the year. Moving ahead to the balance sheet. The largest assets on our balance sheet at June 30 are cash and cash equivalents of $2,100,000 and then we had inventory of $2,700,000 That's a decrease from year end, primarily related to the sale of the Saudi inventory. And then you'll see PP and E and operating lease asset. Is PP and E is 1,100,000. There is a right of use asset of 1,300,000. That is offset by the operating lease liability that you see down below. There's current and long term liability, and those amounts do offset.

42:12 Total liabilities were 2,900,000 on June 30. A little over 1,000,000 of that relates to contract liability. That's basically deferred revenue, and it's related to milestone payments and then prepayments on orders that customers have paid for. Payroll and accrued expenses is significantly down from year end. And, that all relates to the Saudi business. We had large accruals on our balance sheet at every month related to the vendor payments and then payroll for that for that branch office. And without that, the accruals are significantly less. Stockholders' equity was 5,800,000 at the end of the period. Looking at the cash flow statement, the company used a 100 or I'm sorry, $500,000 in operations in the first half of the year. That's compared to $100,000 in the first half of twenty twenty three.

43:11 We did generate 2,200,000 from investing activities, though that represents the proceeds from the sale of the fixed assets in Saudi. Of that initial consideration of 3,100,000 that we received, dollars 2,300,000 of that was allocated to fixed assets and $825,000 was allocated to inventory and is up in the operating activities of the P and L. There were no financing activities in H1, but as Connie has already mentioned, September, we did raise gross proceeds of $900,000 in a capital raise. Those proceeds are being used to build EOR and PFAS trial equipment. Looking ahead to h two and year end, our original revenue forecast for the for 2024 was 9 to $10,000,000.

44:04 We just recently reduced that to 4.5 to 5,000,000. That was, as Connie has explained, due to changes in a customer's timeline. And the factory acceptance testing that was scheduled for the very end of the year has now been pushed to early twenty twenty five. So there's less than a 50% chance that that would happen in in 2024, so that was the reason to move it to 2025. I can say that we are on track to receive at least $1,000,000 of the first earn out payment from the sale of the Saudi business. It could be more. The amount that we are able to recognize by year end will be reflected in the gain on the P and L at the end of the year. PBT is expected to be around negative $4,300,000 at year end. That is adjusted to exclude all gains on the KSA sale.

44:54 And EBITDA would be negative 3,900,000 In comparison, PBT for the end of twenty twenty three was negative 3,300,000. So there's only a $1,000,000 variance despite the revenue being more than 50% lower in 2024. I think the cash balance at year end is gonna be around $1,000,000 It is gonna dip a little bit and then rebound in Q1 of twenty twenty five, but I think we'll stay right around that $1,000,000 mark. And then as Connie has just explained, looking ahead to 2025 revenue, we are forecasting $15,500,000 And at that level, we EBITDA would be positive, and we should be profitable, which is, again, as Connie has already mentioned, it's our goal for next year. With that, I will conclude the presentation, and we can move forward to questions.

45:46 Perfect. Kim, Connie, Jim, if I may just jump back in there. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions that were submitted already, I'd just like to remind you that a recording presentation along with a copy of the slides and the published Q and A can all be accessed via your investor dashboard. Guys, as you can see there in the Q and A tab, we have received a number of questions throughout your presentation this afternoon. And thank you to all of those on the call for taking the time to submit their questions. But guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you. Thank you.

46:33 Okay. So the first one is frustration over the share price over the last three years and what is going be the catalyst to get our share price up. We believe that the share price is directly tied to the execution and which is directly tied to revenue. So we have laid out a course for ourselves in the PFAS market on how we're going to be able to execute and we've laid out a course that is already coming to fruition in the EOR market. It is, you know, I wish it could go faster, but we are doing everything that we can and we have made enormous strides this year toward getting to our goals of being profitable and that in itself is going to indicate the health of the business and our strategy.

47:27 We do do we have enough do we have a big enough balance sheet? We have we the way that we run that the business is run even with our with the projects, our large projects that are multimillion dollar projects is that we have milestone payments so that we are so that we are cash neutral or positive throughout a project. And we also believe that we can manage because we would like to get to this critical mass of install base with references where we can where we can start to look to raise more money if we wanted to, but I believe that we want to but we need to get further down the adoption curve and get a few more EOR projects under our belt.

48:15 Jim, there is a question about TRS and what they're doing in PFAS, but I don't see the same communication about from MYCELX. Are you familiar with TRS? I think it's I think it's I apologize, everyone. I don't know why we're having some issues with the sound. Yeah. Connie, I guess the question really is, in terms of communication or, my, inference to the question is, are do we have adequate information on our website to explain our technology? We've just updated our website as of this year.

49:02 We have multiple case studies on there. We have new literature. We have new data sheets on our media. So I do feel like we have adequate information on our website in terms of our technology and how we apply it. But it is very unique, so it does typically require some one on one conversations with clients and with engineers. So but we're constantly building our data. And as we get more data from the field or from our lab, we then, in turn, will, publish new information. We just recently published an article on our cartridge filtration technology that was published on water online. So we are definitely very active in educating the community on our technologies.

49:49 And not to mention the numerous trade shows and that that you attend and get actually lots of leads. There is a question about the 5.4 deferred revenue for the large project. And do we expect to have how much do we expect to have received by the end of the year? I expect that we will have received probably 60% of that by the end of this year, maybe a little less, but I would expect about 60%. And it says the question says under GAAP accounting, you can't recognize until the last installment has been received, and that is correct. The entire amount, because of the the way that this contract is written, title transfers to the customer at factory acceptance testing, and that is the trigger for revenue recognition.

50:38 So on this particular contract in the terms under this agreement, the revenue for this project cannot be, recognized until that title transfer is at that point. Correct. I see a question on here for me. Jim, how quickly can you start to get commercial traction on Good question. We're already getting traction on PFAS. I think the Google Ad campaign has been extremely beneficial. We had no presence on the Internet until we started Google Ads, and now we have a a routine or regular, flow of inquiries coming in. Probably more on the rental side. Lot of interest in rental systems. We have multiple proposals outstanding in our pipeline that we feel like are gonna come to fruition.

51:28 So, I feel those are gonna happen rather quickly. On the drinking water side, where we're working with channel partners, that can happen very fast. We'll be attending the an exhibiting at the LefTech this this month, actually, next week. And all of the channel partners will be there, so we will be having multiple conversations and meeting with those channel partners. Once the agreements are in place, literally, it's instantaneous. It it it not to exaggerate, but we could sign an agreement with a channel partner and get an inquiry the next day. So it can happen rather quickly. Okay. I have one. What are you doing to better get MYCELX name better known in the investment world? What we, as a company, are doing are going are dedicated to and committed to doing more things such as investment company because we know that that's something that is that's extremely important. We need to get out there more, and we are going to make changes in in how we how we manage that. So you can just be assured that we are well aware of that, the lack of recognition, and that we are going we are addressing it.

52:46 Looks like another question regarding PFAS and revenues. What are the expected time scales to material PFAS revenue? Good question. Fair question. You know, we are seeing, I think we have an uptick in the revenue this year from last year, if I'm not mistaken. Kim can confirm that. We certainly anticipate it happening. You know, if I had to guess probably q two next year, q three. I mean, it's gonna take some time to get the channel partners in place and then, you know, bid the project, secure the project. So it's gonna be the latter part of twenty twenty five before we actually see something, meaningful, but I think the $2,000,000 forecast is very, very doable and realistic. Could you say something about the competition?

53:33 Jim, you wanna start with you first and then I'll answer for sure. You know, on the PFAS side of things, there's a lot of PFAS companies there. But what the broad majority of people don't understand is that there are a lot of nuances in all of these companies. Just because they're a PFAS company doesn't mean they're a competitor to MYCELX. So when you talk about our competitors, we're almost looking at technology versus actual individuals. So we're competing on a technology basis more so than on an individual basis, if that makes sense. But we are very well positioned. We have a lot of value in our products, a lot of uniqueness, particularly the ability to remove co contaminants that are typical in these waste streams. All of the other technologies and companies struggle with those co contaminants. Our technology through our cartridge filters is extremely advantageous, and that is a big differentiator for us.

54:37 And we're seeing that in projects, specifically in these rentals where these other companies cannot compete. They just don't have the ability to handle the waste streams where we can deal with those complex waste streams. And that correlates throughout all of the verticals. So I think, it it's a it's a long answer. It's something we can I could talk about for hours, the differentiators? But I feel like we have enough differentiation to have good success. And I would say, in EOR, unusual. The by far, the big competitor is the nutshell media that which has been in use for years, and the nutshell media is failing. So our competition, is really the producer themselves. How long are they going to hang on to failing, technology?

55:31 And, reality is for them now that it's gotten to the point where their downtime is so large using the nutshell media and that which is which is the most expensive issue they have is downtime. And the more that increases, the more pressure it puts on them to switch over, and then we've got the retrofit package for them. It's just a drop in. So it's not like that they have to really do a lot to make a change. So I think that we've got the I think the competition for us is really just getting the for the producer to get to the point where they just can't take it anymore because we've got the answer. Another question on here for PFAS. How much progress is your DoD partner making?

56:18 So the DoD partner relationship is relatively new, And the reality is that the DOD does not have an abundance of active projects bidding right now, but they're in the process of generating those. They just released a document this week regarding the DOD and specifically small drinking water systems that are going to be required and they're going to focus on. So we're anticipating an uptick in those opportunities in, q one of next year, and we're regularly monitoring the sam.gov website. So there's multiple places you can go and look for yourself and see what opportunities are out there. Keep in mind that we are focusing on AA and HUBZone projects because that's our partner's minority status that gives us the best opportunity.

57:12 Now that being said, outside of the DOD partner, we have multiple projects reporting to other companies for DOD work. That doesn't mean that we're working exclusively with them. That just means we're exclusive with them on the eight eight and the HUBZone projects. Hopefully, that makes sense. Let's see if there's anything else. I believe that that is all of the questions. Perfect. Connie, Kim, Jim, if I may just jump back in there. And thank you very much indeed for being so generous for your time then addressing all of those questions that came in for investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, when it's appropriate to do so. And we'll publish all those responses out on the platform. But, Connie, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great.

58:21 Yes. Sure. Yes. Thank you again for joining us. So I'll leave you with with a couple of thoughts about the company in our core markets. PFAS is a health threat that is not going away, and it is a long term long term, problem. There's mounting regulations and there's media exposure that's gonna drive that market, and we are going to be positioned. We have chosen markets where we think we can be that we can be, successful faster because we are we understand how critical it is to get to get projects in the field. So we are work so all the work is going toward that, and I've and we will be successful with that. We are pushing it as hard as we can. In ELR, we've got projects installed, so we have our references, which is very, very important. So and that has created a robust opportunity pipeline for us. So we've got strong strategic partnership there, and, we've we've got, the the, the momentum now in that market, and it's only fueled by the fact that we have a competitor that's that is failing more and more in the field. So I believe that the company is on the path to overcome our slow growth, that we have experienced over the last few years and to catapult ourselves into where we need to be to get to the level that where we can really start scaling the company through partnerships, etcetera. So thank you very much for your time and thank you Kim and Jim. I

59:52 appreciate your efforts as well. Perfect. Connie, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of MYCELX TECHNOLOGIES, we would like to thank you for attending today's presentation. That now concludes today's session. Good afternoon to you all.