Nanoco Group (LSE:NANO) — Full Year Results

0:01 Good morning, ladies and gentlemen, and welcome to the NANOCO GROUP PLC full year results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could 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 will review all of the questions that are submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit

0:33 the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Brian Tenner. Good morning, sir. Thanks very much, Jake, and good morning to everyone who's listening. So this is Brian Tenner, CEO of NANOCO. With me, I have Liam Gray, our CFO. And we're gonna run you through the highlights or the main points coming out of the analyst presentation that we gave yesterday. We won't cover everything because there've been quite a lot of questions and a lot of detailed questions submitted today. So I want to use as much of our time as possible answering those questions. So if folk want to have a more detailed run through of the presentation deck that we're using today, the best advice would be to go to our website and listen in on yesterday's, presentation where we turned, every page, whereas today we'll be really drawing out those highlights.

1:25 So without further ado, turning to slide three in our deck, just looking at the highlights of what we've done over the last twelve months. And from an operational point of view, all of this is basically out of momentum so that we're now generating longer term commercial visibility. So just looking at what we've done, we signed a major full year contract with a European customer working on the sensing applications. Previously, we've we've been working on three months, six months type rolling contract. So it was gratifying to get a full year contract extension and not full year. Three of the deliverables, the first two are to get two different materials to a fully validated for production readiness stage before the end of the contract. Contract ends in May 23, but we expect to be ready ahead of that with those two products.

2:17 The third deliverable is actually developing a brand new material based on a brand new material set for that customer. All of which is evidence of their long term commitment to they this aspect and these types of sensors. And you'll see later on, I'll talk about what we've actually done in detail in the sensing area, and we've significantly expanded both the number of customers that we're dealing with, but also in the number of materials and material wavelength combinations. And you'll see that later on. From a litigation point of view, back in May, the patent trial and appeal board validated all five of the patents that we had brought in this case and all 47 of their associated claims.

3:03 And basically, the story of this year from a litigation point of view is we've successfully cleared every single hurdle in front of us and cleared them by quite some margin. Obviously, there's still hurdles ahead. But having not already fallen, we're in a good position to take the last few hurdles. And then finally, again, from an operational point of view, we're almost completely out of our Manchester facility. And the last shutdown and dilapidations of that will happen just before the end of this calendar year. Our operations are already up and running in Runcorn, and we're just recommissioning a couple of more processes. And that process will complete to save us around £700,000 a year one once the consolidation is complete.

3:49 Just very quickly on the financial highlights. Twice during the year, we raised revenue expectations and each time we achieved those expectations. We also delivered further savings during the year, and those will then add to the extra savings we're expecting from the Manchester exit. But it basically means that our cash costs, were around or just above £400,000 a month, They're now actually below £400,000 a month. Then in June, we had an equity issue and that was very significantly oversubscribed. And we took the opportunity to raise or issue the full 5% allowed to us under our AGM resolutions and that raised £5,400,000 net for the company.

4:35 So the combination of that improving commercial outlook that fundraise and reduction in costs and expected further reduction in our costs means that our organic cash runway extends comfortably out into calendar year 2025. And that is actually beyond the point in time at which we expect to be self financing. So actually, assuming we achieve that target of being self financing before calendar year '25, then our cash runway actually will extend indefinitely as long as we can maintain that position of actually being a self financing business. So those are the highlights for the year. Just going over the page, just a very simple summary. We've got three key sources of value in the business. Two of them are organic. One of them is litigation.

5:23 The two organic sources, one is in sensing market sensing applications. That's a lot of stuff I was just talking about in the highlights. And there we are, as I mentioned, getting closer to production and our customer has still got published roadmaps that says they're going to be in commercial production in calendar year '23. So that's why we're confident that we will be in commercial production in calendar year '23 as well. And the other organic side of the business is display. It had been very, very quiet for the last couple of years. Almost all of our organic activity was focused on sensing, but it's been pleasing again this year that actually interest in both coming in free quantum dot solutions, but also specifically in the NANOCO, has been growing. And we have reengaged at an early stage and at a small scale with a number of potential display customers. And of course, people will know the display market. Most of the players are very large and a bit like the sensing market. If you can get designed into a product, if you can get into an application, then it almost immediately presents you with significant volumes. And when I say significant, what I mean is the sort of volumes even at a small scale that would get us to that self financing level of income in the business. And again, just as a reminder, we estimate today our breakeven revenue figures around £5,000,000 a year.

6:46 And lastly, on the litigation, again, I mentioned we cleared all the hurdles. I'll say more about it later. There's a couple of detailed slides on it. But again, you know, we want all our IPRs, the nature of the decision by the p tab in reject rejecting Samsung's applications for those IPRs gives us confidence actually that even though Samsung are appealing those, we're in a good position to resist those appeals and actually win them and have our IP fully validated thereafter. I'm just gonna now skip a slide. You'll see slide six, there's a little bit about market and market opportunities. That's the kind of thing if you want a more detailed picture and just listen to yesterday's webcasts, some of the information in there is repeats from previous years. So what I'm focusing on is slide seven. So this is what's explaining the things that we have done and the things we've achieved in the last twelve months with regard to our sensing product portfolio.

7:43 Again, you'll have seen a similar graphical analysis before. And what this is emphasizing back in early twenty eighteen, we were a one product, one customer company. The numbers inside the circles you see here are the number of customers that we're dealing with either on that material or on that wavelength or whatever it happens to be. And again, you can see from the legend, product started development, they move through optimization, they go to scale up, they then go to production validation. And finally, the ultimate goal obviously is to be in production itself. And again, just to clarify, because folk have asked about what does validation mean. You actually have to validate your materials at every step of the way. So if you develop a brand new material, then you have to validate it. What does that mean? It means that you can replicate it and you can make it consistently inside this parameters.

8:33 Then when you optimize it for for an application, you need to validate it again because it needs to stay locked. It needs to stay stable. Then once you put it through, stay at scale up process again, you need to validate it. And if you like the the big ticket validation is right at the end when everything's locked, everything's stable and you're saying you're now, you know, it's it's like in NASA or Cape Canaveral, you're ready to launch. You really are ready to go into commercial production. So when we talk about end product validation, that's what we mean. But just remember, there are various validation steps along the way. And the last point to highlight on this chart is the where you've got the little black boxes outlining some of those circles below. That's where there's been change or progress during the last twelve months. So that's where we've increased the number of customer engagements.

9:20 So for example, if you look at one of those boxes and I got five customers looking at a new material set bay, we deliberately did not define those material sets a, b, c, because some of the chemistry and some of what's in them is confidential, if not trade secret. And again, you can see that there are two products that are significantly further on than all of the other customer product combinations. And that's the near infrared application that's already at the validation stage and has been for for a for a while. But that's the thing that again, the validation for that should complete during the remainder of the one year contract with the European electronics customer. And you can see the second product that's moved from optimization into scale up and that will also go through validation before the end of the current contract with the European customer. So it still remains our goal during twenty twenty three calendar year to actually have one product in production and a second product validated for production.

10:29 And then going to go over the page again, I'll skip the page on the market opportunity for display. Again, if you want to know more about that, just listen into yesterday's webcast. And so now I'm just looking at what have we done during display or what have we seen as changes display during the year. So I mentioned that we've had a lot more inbound inquiries and a lot more interest in specifically in the NANOCO's CFQD quantum dots for for use in displays. That's being driven by a number of factors. We're saying that there's increased awareness of ROHAAS, a restriction of hazardous substances around the world. There are lot of TVs out there that have still got cadmium in them and they're still being made and they're still being sold. We're also aware that with increasing awareness among, you know, the the the big name brands that certainly the big name Western brands about the implications of ESG, the environment, etcetera, that they are not waiting.

11:24 They do not want to wait until real house becomes legislation and they're obliged to change their ways. A lot of them are not talking about trying to get ahead of the curve and get into more environmentally friendly CFQD type solutions for displays before they're forced there by RoHS. We also think that getting our core IP validated by USP tab, that's actually raised risks in the minds of a number of players in the market. So we're aware of competitors who regularly threaten people with their IP. But that IP that they're threatening people with has never actually really been tested in court, whereas ours has. And so particularly if we win the, you know, the first round trial with Samsung, think I there are a number of market players, whether manufacturers of quantum dots or consumers of quantum dots and TVs and displays that can expect a polite letter from the NANOCO just pointing out our IP, the quality of that IP, and that it's already been validated in a in a IPR and in a court process.

12:27 You'll also see that there are more devices that are talking about adopting as quantum dots into display. So whether that's tablets, tablets, phones, advertising boards, etcetera, etcetera. So that's why there appears to be some refreshing reenergized new interest in cadmium free quantum dots. So in terms of what that means for our actual activities, we've restarted small scale sampling for some potential customers. We're discussing potential technical development agreements. And the thing to remember about display is we already have fully validated from our perspective quantum dots for use in display unlike sensing where we're actually starting with the materials where the development end. So if I was referring back or referring to display in the same ways that we talk about, and the sensing materials have to go from, you know, development through optimization, etcetera.

13:22 For the display dots, they're already through development. They're already through optimization. A number of generations are already successfully through scale up. And actually from our perspective, they're ready for final production validation. So if a customer did decide to go for a NANOCO CFQD solution, you would not be looking at a two, three, four year development cycle that you see in sensing. It could be anywhere between twelve, maybe fifteen months just to get into the final device. So it's encouraging. The one thing to emphasize, it's still early days and we'll see where it goes from here. Just turning over the page then, you'll find if you go to this deck on the website, there's a recap of some key points about the litigation in the appendices.

14:17 I'm not going to go through all that today just in the interest of time or or yesterday for that matter. So key events in f y twenty two. Well, I already mentioned about p tab validating the NANOCO's IP, all five patents, all 47 claims. We know that Samsung have lodged notices to appeal those. The appeals are expected to be filed in November 22. We know that because they got Samsung asked for an extension to the deadline to file those appeals, and that three month extension was granted. So November 22 for their actual appeals, around the end of twenty twenty three, maybe early twenty four for the outcome of those appeals. As I mentioned earlier, the way in which Samsung's original claims were rejected makes us confident, but purely from a statistical point of view. And again, just to emphasize, think we've always told people, know, if 90% of people win and 10% of people lose, that's interesting statistically until you find out whether or not you are in the 90% or you're in the 10%.

15:17 But purely from a statistical point of view, more than 70% of all p tab appeals, The person the the appellant's case is actually rejected in full. And it's less than 10% where it'd be accepted in full. And the the remaining 20%, some of their cases accepted, some is rejected. So basically, you're saying in 90% of the cases, the person with the patents, in this case, NANOCO comes out either with everything or at least with some of their patents intact. The other big event in f y twenty two was a pretrial conference. Again, Samsung, we're trying to have all of our experts struck out. They were trying to have all of our damages models struck out. They were trying to have all of our damages models experts struck out, and they were also seeking summary judgment to have the whole case thrown out, I e for the judge to say there is no case to answer. It is over.

16:09 And every single one of those was rejected. And I'll answer it now because it's a question that has been submitted. Someone asked the question about the red dots. Yes. We actually believe we do have an infringement read on Samsung and the red dots. But as we've explained before, the twelve hours of a trial, if you have to explain two different processes, two different ways of infringing, etcetera, etcetera, Do cross examinations, do everything else, cover your damages. We were always going to narrow our case. So the fact that Samsung won that one, the Smith case against red dots, we didn't actually argue against it. So that tells you what we think about that. And again, you know, it was important. We didn't think it was a serious or significant risk, but it clearly was a risk that there was a motion for summary judgment to have the whole thing thrown out. Alright. We haven't talked about it that much because we only really talk about what we think are material risks, but it was a real risk. And the judge dismissed that motion.

17:15 And by dismissing that motion, the judge was basically saying, right, this thing is now ready to go to trial. That's And why I

17:21 use the phrase, we are going to trial because the judge said we were because he threw out the motion to dismiss. But all of this is in a lot. Those who are watching the case closely, allowed us to focus our case much more narrower down to just a couple of parent patents and a handful of claims. We've also reduced the number of damages models we're going into court. And again, that is just simply a reflection of the fact to emphasize, you know, we've got twelve hours to cover everything, present everything cross examination. There's a trial typically starts on a Monday, doesn't have to, but they're five days long. And it ends on the Friday with a verdict

17:57 and everything that goes with that, which will come into just over the page. Again, we've been bumped a couple of times from the trial scheduling. Undoubtedly, from the court and the judge's perspective, there is a logic to what's going on. Unfortunately, we're not privy to that. So, you know, we went from being second in the schedule to being sixth in the schedule. We understand now we're fourth in the schedule. That doesn't mean you are going. It doesn't mean you're not going. The worst case scenario, we are advised by local council. The worst they've ever seen or the, you know, the hardest to deal with is being told on the day of the trial when you're there expecting and you're sitting outside the courtroom and being told it's not happening. See you in a month. So normally the court is conscious of people's time and money and they do try to give people advance notice, but they can't always do that. So usually you find out a week or so in advance, whether you were scheduled, you know, second, fifth, sixth, you either get released or you get told you are number one and you're going.

19:05 And we've now told the markets that when we are confident that we are going, that's when we'll do our next update rather than just comment on on on being in a schedule because it doesn't really add up too much. And the last thing we did during the years with filed suit in Germany. And again, as we said, we're reviewing options in in other territories. Just going over the page then, the litigation timetable. And as say, you know, this is an indicative timetable. Some of these processes are more tightly controlled by statute and regulations. Some of them are subject to so many different moving parts and decisions to appeal and then extensions for appeals, etcetera, etcetera. But just in real summary, the the IPR process, so the validity process, the patent trial and appealed lower process, that is a more controlled, more tightly controlled regulated process.

19:55 So as I mentioned earlier, we're expecting the actual appeals by Samsung to be filed in November 2022. And we're expecting then the answer between twelve and fifteen months later. So around the end of twenty three, early twenty four.

20:14 And I've already talked about, you know, statistics and confidence and likelihoods, etcetera, around the p tab process. If you then turn to the trial and the potential appeal timeline. And so jury verdict, we are estimating that could be before the end of this year. We know there are two more trial dates for the end of this year. One is October 31 and one is December 5. But then know that there are two more trial dates in January, two in February, and one or two in March. Again, just to be clear, only one case can be heard each week because there's only one judge dealing with IP cases in in the Eastern District Of Texas or rather, we've only got one judge. We can't go to a second judge or a third judge. So our judge can only hear one case whenever he sits and clearly he's got other stuff to do between trials.

21:05 So it could be before the end of this year, which would be nice, but equally it could spill into the first half of next year. You shouldn't read anything into scheduling. There isn't anything to be read into scheduling. It is just a thing. So you will then get a jury verdict and if that verdict is successful, there will be a damages award. So the jury will specify a number. They will specify if it was deliberate or if it was willful, and they will specify if that covers all damages or just the past. Immediately after the trial, there'll be a whole bunch of post trial motions. So these aren't appeals. These are just, you know, procedural objections, etcetera, try and get things redone or thrown out or started again or whatever it happens to be. They're the normal part of the hurly burly.

21:54 And they're normally a lot of them because people don't want the judge writing certain things in his final report. So we'll be looking to have things struck out, etcetera. So all extremely tactical. Whether it's three months or six months later after the verdict, then the judge will issue their formal written opinion. So if there's been a finding of willfulness, the judge will decide on the multiplier. Again, we've explained that can be up to three times, but in Texas, it's typically around one and a half times multiplier. If the jury have also said that their damages number only applies to the past, then the judge will work out what he thinks is a appropriate running royalty. That running royalty could be based on the verdict for past damages.

22:40 It could be bigger than the verdict for past damages. It could be smaller than the verdict for past damages. There are a whole host of ways of calculating that number. It just has to be done reasonably. And unfortunately, that's all the guidance we can give. Some people say running royalty should include willfulness multipliers because any future infringement is obviously deliberate. If you've been found guilty of infringing. Other people say, no, that's a special one off because you didn't know up until that point. So you shouldn't be penalized for the same basis going forward or whatever it is. So there are arguments both ways. So again, you can't automatically assume that the any running royalty will be bigger or lower or the same. You just know that there will be one. After the judges issued his formal opinion, so again, around q two, q three, twenty three, that's when both parties can submit their formal appeals.

23:30 This is the piece of the process that then I won't say how long it's a piece of string, but it can go on for some time. Now, again, we've got an advantage. We're in Texas, things move relatively fast compared to some other territories. But those appeals could at last, you know, the whole appeal process could take up to three to four years. Why could it take so long? Well, one, come up and appeal as a retrap, go back, start again. You want a jury to give you a decision on a verdict, a decision on willfulness, a decision on damages, etcetera, etcetera. You could have an appeal that says, actually, we're happy with the verdict. We're happy with willfulness, but just we don't like the damages. So go back and have a damages trial only. And if you look at the trial that we were bumped for in early September PNC against USAA, that was a trial justified damages.

24:17 So that's why that process could take a long time. And all of that, I have to emphasize presupposes that there is no early settlement. But of course, any settlement, any early settlement, it's going to be up to Samsung if they're prepared to engage on meaningful discussions about fair value that reflects the global nature of our patents and the lifetimes of our patents. So that one to a large extent is outside of NANOCO's control. The reason that we've highlighted the German injunction on here is that when faced with an injunction, most companies, certainly in Germany will very rapidly enter settlement negotiations because nobody wants to be banned from selling their product. Now this process isn't without risk.

25:06 The potential German injunction could be awarded in 2024, but the actual validity decision won't necessarily be taken for another six months. So if you in if we impose the injunction in March 24, we might have to put up a bond for a loss of profits for Samsung, which, you know, would clearly be a significant amount of money. Whereas would have the option to wait another six months and if validity was confirmed, you've now got injunction, you've now got or sorry, you've now got infringement, you've now got validity. Yes, there'd be appeals processes, but it'd be a much lower risk to put in a bond there if you wanted to to enforce that injunction. And again, all of these things and the extra lawsuits around the world, they're all designed to put pressure on Samsung to be reasonable and actually engage in some sort of sensible settlement discussions.

25:57 So that's it for me. And I'll just hand over to Liam who's gonna do a quick run through on financial highlights. Thank you, Brian. Good morning, everyone. So we'll have the financial highlights for the year ended 07/31/2022. We'll start with the top line. Our revenue and other operating income has increased by 24% on the prior year. The operational leverage in the business, along with the cost savings we've implemented previously, meters has had significant impact on improving the adjusted EBITDA by 26%. And then as we communicated previously, looking forward, we expect our revenue for FY 2023 to increase by about 20% on FY 2022 with a very similar cost base to this year. If we look at our cost base, in early calendar year twenty two, we decided to consolidate our operations into the Roonkorn site and close the Manchester site.

26:47 The closure of the 1st Floor in Manchester was completed in FY twenty two, and we anticipate the completion of the exit of the Ground Floor in q two of FY twenty three. Given the tight cost control over previous years, we are investing more money in our staff and have had the company wide pay rise in addition to other benefits and intend to continue to invest in both our people and the office environment in Runcorn. And then coming to cash, the fundraiser we completed in June 22 raised 5,400,000 net of fees and takes our cash runway out to calendar year '25, which is past our expected breakeven point. Moving on to the income statement for the year. This shows our FY twenty two income statements compared to FY '21. As mentioned, the revenue increased 400,000 to 2,500,000 in the year.

27:35 This increase has been driven by the work we are doing with the European electronic customer with increase in both services revenue and the products sold. In addition, there are a number of other projects in both sensing and display that have contributed to this increase. Other operating income increased year on year due to the completion of the grant relating to the development of a COVID nineteen diagnostic test. Other costs in total have fallen in the year, reflecting our reduced cost base. Moving down the table, our share based payments and associated charge have increased due to the increase in the company's share price year on year. And then we have depreciation and amortization, which largely in line with prior year, but these will fall next year due to the closure of the Manchester site. And finally, we have our r and d tax credit of 500,000 being offset by the full year impact of interest on the low notes taken out in July 21.

28:27 But a key metric for us here is the adjusted EBITDA, which has fallen 700,000 from 2,800,000 in the prior year to 2,100,000 in the current year.

28:38 So the next slide shows our revenue and billings. I'm gonna skip through this one and the next couple and just get the summary so that Brian can do the q and a at the end.

28:55 So financial summary. Regarding f y twenty three, we opened the year with a contracted order book of 2,100,000, which more than doubled the opening order book for FY twenty two. Based on our current pipeline of work, we anticipate revenue being approximately 20% higher than that of FY twenty two. Our cash cost base remains similar with some savings from the reduction of proxy costs being offset by increased elsewhere such as payroll, but that does mean our breakeven revenue point is now around 5,000,000. On capabilities, we now have all staff working on one site, which provides both operational and financial benefits. All staff are working on revenue generating work and the production facility in Runcorn when operating at full capacity can generate around £130,000,000 of revenue. And then on cash, our average net monthly cash burn is now below 200,000.

29:44 As mentioned before, the business has strong operational leverage, so any further commercial wins will have significant impact on both EBITDA Please. And cash. Attention, please. And finally, we believe our current cash resources are enough to sales past expected breakeven point. Have to be tested. Please take no further action. And apologies. We have a firearm's test. Attention, please. Attention, please. We are investigating an unknown condition. It may be necessary to evacuate the building. Please await further announcement.

30:26 Attention, please. Attention, please. Please leave the building immediately. Please leave the building immediately by the nearest exit. Do not use the lids. The weekly test is now complete. If you had any difficulty hearing the message or fire alarm signals, please report to the main reception desk. Please respond to all future fire alarms. Thank you. Apologies for that short interlude. But I think that was me finished on finance. So with that, I'll pass you back to Brian to summarize and then we'll move on to Q and A. Okey dokey. Thanks, Liam. So just a summary of of the year and what Liam has been alluding to in respect of FY '23 as well. So we are still saying, you know, we're participating in global markets for both sensing and display, and the sensing markets are constantly getting bigger.

31:28 More players are coming in. More players are looking at applying quantum dots into their solution stacks. And say it's gratifying that on display things for certainly from the NANOCO's perspective seem to be reenergizing with a number of of new engagements. We by keeping open our run corn facility, we've retained our capability for large scale production in both markets, so in sensing and in display. In sensing, that extends to many hundreds of millions of units or the equivalent hundreds of millions of sensors from our material. And on the display side, it's handfuls of millions of TVs. But when you consider that the entire market out of some outside of Samsung for CFQD TVs is less than a million. We could actually service the entire market if we needed to from the production facility that we do have, and it could be expanded relatively simply at relatively low cost.

32:29 And I just want to emphasize success in either of those markets does get us to that breakeven point. Clearly, that's just a the first goal. We want to get into commercial production, then we want to get to breakeven, but the revenue generating capacity of our facilities is such that we should be able to push on strongly into much higher levels of revenue and profitability heading out, you know, in that medium to longer term. In terms of outlook, we are expecting this year a steady incremental revenue growth as we move into production. You'll see in our actual detailed preliminary results and in our annual report that we have assumed that we have a very small actual commercial production starting at the back end of this financial year. So around summer, around June, July 2023.

33:20 And that's consistent with our expectation of being in commercial production. Again, we're being conservative. We're assuming that is a low volume use case, you know, that it won't involve a mobile phone handset. It's more likely to be, you know, an application and whether it's, you know, headset, glasses, agriculture, just something not not significant volume, but from a substantive and qualitative point of view, absolutely transformational for NANOCO in that it'll be our first actual commercial product being serviced on a on a on a global level since the company started up back in 2003. We already mentioned our organic cash runway extends out to calendar year '25, which is beyond the point at which we expect to be breakeven. So it'll be nice not to have to just constantly be worried about running out of money.

34:10 What over the last few years has felt like every six to twelve months. And both display and sensing market opportunities to our mind and as part of our strategy, they're both a clear path to breakeven in in the short to medium term. And, you know, as I've said, short to medium term means, you know, at the latest by calendar year '25, if not before. So in terms of the value in the business, there's still the transformational potential in the Samsung litigation. We are expecting that trial relatively soon. Still expect visibility in late twenty twenty two on potential sensing production revenue in 2023. Just to be clear, visibility does not mean an actual PO. It does not mean actually in production. It could, but it means more just confidence that actually, yes, we're in the final stages of product validation and then just awaiting customer orders.

35:03 And so effectively, we've got two twin tracks to significant shareholder value growth in the short to medium term. One is the organic business, whether it's through display or sensing, and the other is the sensing business. And that brings me to the end of the presentation. I'll hand you back to Jake for just a second while we gather our ourselves for the questions that we're going to be going through. Brian, Liam, that's great. And thank you very much indeed for your presentation this morning. 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. Just while the team take a few moments to review those questions that were submitted already, I would like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

35:49 Liam, Brian, we did obviously receive a number of presubmitted questions ahead of today's event as well as as you can see in the q and a tab itself, a number of questions have made their way through during today's presentation. So thank you to all of those on the call for taking the time to submit their questions. And if I could just hand back to you to address those where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Okay. Thanks, Jake. Right. So I am going to have to talk faster than normal and apologies if the Irish accent gets in the way, but I think we've got more than 30 questions that we need to answer. So, and we will kick off immediately. So question one, could we seek an injunction against Samsung to stop them selling products with NANOCO's technology as opposed to merely trying to recover damages as that may bring them to the table to negotiate the settlement or agreement if successful?

36:38 Simple answer is it really depends on the jurisdiction. So in The United States, I think we've already explained if we were a direct competitor, I. E. If we made TVs, then you've got a chance of getting a, an injunction. But the truth is The US preferred model is financial compensation. So no, you will not get an injunction in The US. And I say that even though our claim asks for one, you always ask for one and you'll never get it. Okay? So, and so that's The US, whereas in Germany, actually, the only remedy that you seek is an injunction. Damages comes afterwards. If you get an injunction, then you can have a negotiation about money and financial compensation, etcetera. But the standard remedy in Germany is an injunction. Other territories, the simple answer is it depends. There's a whole range. Some of them, it's almost impossible to get an injunction. Some of them like Germany, that's what they give you. Others, it's somewhere in between, others you could get both.

37:34 So it really does depend, but we're absolutely conscious of the fact that a potentially injunction in Germany would persuade Samsung, you know, potentially to change their stance in any discussions or appeals processes going on in other territories such as The United States. Question two, on reading the court papers in the public domain, Samsung appeared to have reasonable grounds to question the NANOCO's patents on validity on sufficient patents validity on sufficiency. And there's an unresolved argument between experts regarding the appropriate level of posita. Please, can you provide investors with more comfort on these points? Okay. The really, really high level answer is, and I think we made this clear at the start of this whole process is we are only gonna comment on material risks and issues.

38:21 If I give you an example, if every time I talked about production coming out of Runcorn, I had to talk about the fact that there's a risk of, you know, the facility being hit by a plane or going on fire or burning to the ground, you know, it'd be a very, very long winded process. So on the specifics of these two, yes, theoretically, they are open issues, but does the company feel any need whatsoever to make any comments on them? No. We don't. So and like the factory point, yes, is a fire risk a real risk? Yes, it is. Of course, it is. But do we feel any need to comment on it every time we talk about production? Absolutely not. Clearly, know that we've got some of the best lawyers in the world working on this. We do follow the advice. Do we think that these are material risks that we need to comment on? No.

39:07 And the last point I'd ask you all to consider is in the same way NANOCO only have twelve hours in this upcoming case, so does Samsung. And if they want to look at, you know, theoretical, highly technical arguments to persuade a jury of lay people of a point, well, that's their choice if they want to do that. And next question, can you provide guidance on the timeline of the German funded lawsuit? I think I may have already covered this, that, expect an infringement decision in March 24. And if we win, we can impose an injunction. And if we deposit a bond for lost profits, alternatively, we could wait until October 24, which is roughly when you get the decision on validity of the patents. So then you've got validity and infringement.

39:53 So again, you could still go for an injunction, obviously, much lower risk there, or you could wait for the appeals processes. And if you win the appeals processes, assuming there are some, then actually you can go and impose the injunction. And obviously you don't need a bond because it's been fully resulted in your favor. So that's the timeline of the German litigation. And you can see that it does interweave with The US litigation. And clearly, we bring actions in any other territories or any of the other territories we're evaluating, one of the factors to consider will be whether or not that positively interweaves with some of those other processes to bring an extra pressure to bear in the process. Question four, looks like it's got about five or six embedded questions in it.

40:44 Question one, I saw the notice that the Samsung litigation will proceed with a focus on Samsung's use of IP for green dots only. Can you say whether we think they infringed on red? So red and green have got different processes. Yes, we do think we have an infringement read on the red dot, but as we've explained previously, we had to narrow our case. And again, having to explain two different processes, two different infringements, bunch of different evidence, expert testimony, etcetera, we were always going to drop down to focusing the case more narrowly. And it's also worth bearing in mind, there are four times more green dots than a red dot in a TV, and it's much, much harder to make a green dot than it is to make a red dot. So if you're talking about the relative value of green or red, you would much rather have an infringing green dot than than an infringing red dot just because there's four times as many and just because one's a lot harder to make meaning actually the person who's adopting the technology has taken even more shortcuts if they've actually copied the really hard method rather than copying the the more simple one.

41:55 And as we said before, the the time that we've got to actually present our case just means that we can't cover everything. So that's why we've narrowed the case. Next question. How does winning all of the patent challenges affect the strength of your position in sensing? So the very, very simple answer is that on material set a, so the products that we're hoping to go into commercial production in calendar year '23, these patents have no connection whatsoever. Yeah? The sensing material set a is not a CFQD. It is completely different. So the idea if you there's any connection between those two materials and the IP sitting behind them, get that out of your head. There is no connection.

42:41 However, material set b and c, and when it comes to d and e are actually very closely related to CFQD. Now commercially, they're further away from us. All of those products are in the development stage. But the simple answer is the patent wins in the UAS, they're on CFQD. They're relevant for display. They're relevant for lighting, etcetera, but they're not relevant for the immediate sensing opportunity, but they are relevant for future sensing opportunities in material sets b and c. So hopefully that answers that part of that question. If your sensor customers were to bring in a second supplier in the case of high demand, we that second supplier need to license the IP from you. And so the truth is if they were using any NANOCO IP, no higher trade secrets, then yes, they would have to have a license.

43:32 However, as we've explained in the past, on material set a, we do not have as much IP there as we do on b and c, and this is a more, broadly known and understood process. So it's theoretically possible that someone could find a way to make the identical product, but in a different way that wasn't infringing our IP. Whether or not that's easy or likely, I don't know. But certainly, our agreement with our customer specifically says, if a second supplier is being brought in, then that second supplier, if they're gonna use any of our IP, they have to take out a license. And it's also worth noting that our contracts with our big customer specify our minimum share of any future volume, which therefore limits the participation of second sources.

44:19 But of course, these supply chains are important enough that there has to be a second source. And so inevitably, there will be a second source. Although, of course, it's always possible for the customer themselves to be the second source and have an in house fallback second source. Next question, should we definitely expect a trial now? Has the window for a negotiated settlement closed? I think you can see in the court papers that have been submitted, they're publicly available, that actually there was an open window before this case even started. You know, we were talking to Samsung for a number of years before Valentine's Day back in 2020 when we actually first filed this suit. The truth is the window is always open, and I mean always open.

45:05 The question is whether or not there are any messages passing through it. That's another question. But the truth is the window never closes. Again, to give you a real life example, one of our advisers had a case that settled while the jury had retired and were considering their verdict. So, you know, there were settlement discussions going on during the first four and a half days of the trial, and while the jury was out, a settlement was was reached. And so there is no cutoff. There is no point of time at which a settlement becomes impossible. It's all just down to whether or not the parties can actually get close enough together to actually make it likely that there will be a settlement. But one thing to remember is, you know, people know, I think they're familiar with only one in twenty cases gets the trial. Well, the ones that do go to trial and then there's a successful verdict or a verdict one way or the other, only a tiny proportion of those actually end up with a legally enforced judgment. The rest settle in some way, shape, or form at some point after that, you know. So, you know, statistically, it wouldn't surprise me if more than ninety nine percent of all cases settle, whether it's before trial, during trial, after trial, and it's only a tiny, tiny percentage where you end up with all the appeals exhausted and the, you know, the US Supreme Court's basically telling someone pay up.

46:25 Next question. I've seen some positive comments recently around the promise of compound semiconductors for infrared sensing. Are we able to comment? Well, effectively, that is what we are working on, a CMOS sensor with quantum dots attached to it. That's putting quantum dots onto a compound semiconductor. A CMOS sensor is complementary metal oxide semiconductor. And there might be more technical aspect to this question that my law degree isn't fathoming. If there is, you ever submitted this one, feel free to write to the company and we can explain in more detail. But basically, this is what we're about. And a CMOS sensor with quantum dots, again, if you look in the the pack we presented today and yesterday, there are significant advantages over naked silicon.

47:12 And also the main advantage against in gas sensors is the fact that they're between 100 and a thousand times cheaper for a CMOS sensor of quantum dots than to go the in gas solution. So fundamentally, that is what we're about applying quantum dots to compound semiconductors for for sensing applications. And next question, what does NANOCO learned most from its ongoing litigation with Samsung? Sort of question that that inspires either rude or hurtled answer. So I'll avoid all of that. I think the thing to be clear about is every single piece of confidential information from Samsung's perspective, NANOCO has never seen. Our lawyers are allowed to see it. But, you know, if I ask our lawyers, so how does Samsung make their quantum dots? They just look at me and said, well, I can't tell you that because because it's confidential. So if someone was thinking that we were learning their secrets through this process, and the same applies in reverse.

48:07 Anything that we marked as secret or confidential, Samsung won't have learned. It's a moot point whether or not Samsung did all their learning during the seven years that we worked together. But the whole point is I'm saying that we haven't learned much, if anything, about Samsung and its process during the ongoing litigation. I think one thing that we can say is that our confidence that Samsung are infringing has grown, and that's why we've carried on with this process, not just because of success at PTAB and other litigation points, but yeah, we are confident through the process and our advisors are confident through the process that, you know, we've got a strong case. And we've also grown in confidence that anyone making CFQD is likely to be infringing our patents. And when I say anyone would mean anyone making carbon free quantum dots because we don't think there there is a an easy way or a way to actually make them at mass scale that doesn't infringe on some of our core seating patents, etcetera.

49:12 I guess the other thing I've learned is that, you know, about The US litigation process, but we'd hopefully well, you never know. We may have to go down this route again with another company, but but we will see. So we we we've learned a lot, but certainly nothing that would be confidential or commercial from a Samsung perspective. Question six, if Samsung wins its lawsuit sorry. If NANOCO wins its lawsuit against Samsung, then the NANOCO expect Samsung and its current display customers to then source from the NANOCO? Simple answer is no. The typical solution in The United States, whether negotiated or imposed, produces a license. So and a license payment. That license is a license to make or have made.

49:57 So it is almost inevitable that if when this case against Samsung in The US ends, that Samsung will be able to legitimately and legally carry on using their current supplier Hansel as a source of quantum dots. As I said before, The US, this is not an injunction territory. So we get financial compensation. It's possible that you could try to negotiate being a supplier, but, you know, equally, Samsung could turn on and say, we've got a well established supply chain and we're happy with the quality standards, etcetera, etcetera. We don't wanna interrupt that, so therefore, we wanna stay with the current suppliers. So the simple answer is no. We don't expect Samsung or its current display customers to have to source from the NANOCO.

50:50 Next question was, so what sales volume is anticipated? Well, same answer. If we're not going to be supplying the NANOCO with quantum or sorry, Samsung with quantum dots, then there wouldn't be a sales volume. What leverage next question. What leverage will NANOCO have to force current customers of this stolen IP to make future purchases from the NANOCO? Well, again, it's the same point. If Samsung have a license to make or have made, then they will be able to carry on selling to the other customers that they've announced that they're selling their QD panels to. The reason that we don't lose sight because of that is those QD panels will be subject to royalty payments that the same so if Samsung are are selling TV directly, we'll have a royalty. If they're selling it to another big OEM, we get a royalty. So we are being compensated for all sales of the infringing units.

51:41 And then the question was what options are available for accommodating this increased production? Well, let's say, on the back of the Samsung decision, there won't be. But as I mentioned earlier, when we're running through the presentation, we have production capacity in our Rumkorn facility for know, between two and three million TVs, which is more than 100% of the non Samsung CFQD TV market today. So it's more than adequate for us to get a toehold whether it's with the number two, number three, number four company in the quantum dot TV markets because their shares are only a couple of percentage points. Question seven, please, can you give us your anticipated timelines on the German litigation? I think we've already talked about that.

52:29 Will there be a patent review in Germany before the court case? Absolutely not. I think, you know, we said the German first decision will be, you know, next did I say November 23? We're expecting the court case, you know, and whether it's, you know, the end of q four this year or q one next year. Next question, are we currently proceeding with litigation in UK and China, and do you have the time scales for these, please? We mentioned in the past, and we named those two markets as markets we're evaluating. And clearly, we had if we were litigating in those territories, that would be material news and we would announce it. And we haven't announced it, so you can take it that we are not litigating in those right now. That does not mean that we are not evaluating it or that we're not taking steps to consider it or to start it. It just means we have not started.

53:21 And question eight, is the delayed court case likely to have an impact on the anticipated placing of commercial order for sense and quantum dots for the fourth quarter twenty twenty two? Absolutely not. As I mentioned, there's no technology or material connection between the court case and material set a or generation one sensing material. That's from our perspective. Our customer might have a different view. Customer might might be waiting to see what happens, but we don't believe that's the case because they're they're wholly unconnected. Question nine, are any or all of the five patents for the p temp decision used in the sensor technology? I've already said not material set a, but yes in sets b and c. Question 10, are there any separate patents to the sensor technology?

54:09 And if so, to what extent are they critical to the sensor application? Are there ways people can get around NANOCO and get to the same results without licenses, etcetera? Again, this is similar to what I said before. For material set a, that material has been around for for decades. Yes. We've perfected it. Yes. We've got some trade secrets. Yes. We've got some know how. We don't have much, if you like, filed patents on material set a, but we do in in the other material sets. And so simply on material set a, other people could try to make that, but we know it's very difficult. It's very challenging. We will learn to love working with The US customer and now on the same product with the European customer.

54:56 So we think we've got, you know, technological lead based on know how preparedness, the existence of a production facility, etcetera. And next question, NANOCO have gone to court on three of the five patent groups. How does this leave the remaining two? For example, could these be taken to court separately? And the ones that we dropped, almost all of them were dropped without prejudice, meaning we can bring them back anytime we want. The only exception to that is in this case, and I do mean this case because Samsung actually had red dots excluded with prejudice and their motion, and we didn't oppose that. We couldn't come back on red against Samsung. But on everything else, it was dismissed or dropped without prejudice. So we could bring it back from the dead.

55:44 Additional litigation action has been taken in Germany. Is this likely to be decided before the case in America? Well, I think when you see the timelines, you'll see we're likely to have a verdict in The US before we get an infringement decision in Germany. However, we're not likely to have an outcome to a final appeal process in America before Germany. So some parts of Germany are ahead, some parts are are are behind. But in general, more of the German decisions are are earlier with the exception of the actual initial verdict because, let's say, end of this year, early next year. And then question 13, what determines where the court action is taken in other countries? At one time, for example, Japan was muted. I mean, they so the markets that we look at, a, Samsung need to be selling a lot of TVs there, and b, we need to have IP coverage there. I think we've explained in the past that we think we cover roughly by volume 80 or 90% of Samsung's global TV sales with our patents.

56:44 I've already talked about you'll take legal action if you think it's gonna be fast, if you think it's gonna be cheap, if you think, you know, it's a patent holder friendly territory, etcetera. So there's a whole bunch of different tactical and strategic factors that decide whether court action is going to be taken. I would like to think we do not have to sue Samsung in every territory around the world. I would like to think whether it's two, three or four key territories that that's enough pressure in in the mixer. Next question, question 14. Mobile phones can be listened into by third parties. People can be located via their use. There's potential for substantial awards in the NANOCO, so the stakes are high. What steps are being taken to ensure the jury is not being nobled?

57:33 So besides our normal our own normal level of security around our own networks, etcetera, I mean, I think this question if Samsung actually I mean, this question almost isn't worth answering. The idea that someone's going to try and noble a jury is a whole different level criminality, you know, that is just it's beyond unconscionable. And so I would put that in the yeah. It's theoretically possible, but the idea that it's gonna happen, call me naive, but anyone engaging in that, you know, the the the repercussion for them would be enormous. So I don't really see that as a a a real risk, but obviously, we're careful with our information, with our communication, with our networks. We do get our offices swept for bugs, etcetera.

58:20 On an infrequent basis to make sure that, you know, our networks aren't uncompromised, so our tactics and our approach are not being compromised. Excuse me. Next question. From the statement you released with the results, are you now saying that The US court case is not likely to go ahead until h one twenty twenty three. No. Not saying that at all. There are two more dates before Christmas. There are those six I mentioned after Christmas. We don't know. And What I can say is when we are told and firmly told that we are going first, we have to announce that to the market immediately. Again, it's something it's something we've noticed in in some communications. The the bad old days of companies being able to hold on to information for, you know, a couple of days to coincide it with a results announcement or I wanna do it tomorrow morning at 07:00, those are long gone. You know, the market abuse regulations, you will have seen, we will announce contracts, you know, at two in the afternoon, at four in the afternoon, and people will ask, why didn't you do it at seven?

59:20 Simple answer is market abuse regulations say you have to do it as soon as humanly possible, which means, you know, sometimes you've got thirty minutes or an hour to announce these things. If the markets are closed, you can probably wait till the next day. But, yes, as soon as we know that we are going to court and we're firm and we're number one, then we will tell the markets. Like, clearly, if the judge got sick on the day of the trial, it would all be off again. That's another of those risks like the the one earlier about sufficiency, etcetera. It won't necessarily comment on those, but no. So we're not saying it's going to be h one twenty three. We're just saying it could be h one twenty three and and and I guess I'm saying q one twenty three and if it's not q four. Next question, are you aware this one was submitted directly to the company actually. So this has come from our our website.

1:00:08 Are you aware of any other CFQD manufacturers that are potentially infringing the NANOCO's patent that IP? I think I mentioned earlier, we do not think it is possible to make CFQDs in any volumes unless you're infringing our IP. Now there aren't many companies around the world that make CFQD in any sizable volume. You've obviously got ourselves. You've got Hansel, who we know we're supplying Samsung. And there's one maybe two others, but that's it. Next question. Are you aware of anyone that is able to legitimately manufacture CFQD that doesn't infringe? I think that's yeah. That is the answer to the previous question. No is a simple answer.

1:00:55 And don't think you can manufacture CFQD at scale without infringing our technology. And rolling through so that was all the pre submitted ones. Jake, you'll have to shout at me if we're supposed to cut off, but I'm gonna try and answer as many of these as we can. Should there be a settlement with Samsung, will the shareholders be informed via an RNS about the total amount of the settlement or about the amount NANOCO receives after deducting the percentage of the funder? I assume that NANOCO has to inform the shareholders of the amount, or is there a scenario where shareholders do not have to be informed? And this one just goes back to the the the simple and very clear rules about market abuse and the release of inside information. There is no world whatsoever in which we could settle this case and not tell shareholders what it means.

1:01:45 Now that does not mean that if the agreement was a 55 inch TV's got a three quarter percent, royalty and a 65 inch TV's got a 1.1%, royalty, you would never see that level of detail, but is absolutely the case that we would as company have to evaluate what we thought that settlement meant, including if there was a payment over five years, we would have to discount it. We'd have to pick a discount rate, but the market would have to be told this is what we think this means because that's the legal obligation in any RNS. We have to tell you all of the important information, all the material information, all the inside information, but not all the commercially sensitive information. So there is no again, I've seen the same question asked where we then just find out in the next set of results. No.

1:02:34 You'd have to find you would find out with near we might take twenty four hours to talk to advisors, particularly if it was over the weekend, but we've got no choice but to inform the market and what it means. You might not get all the detail that you want, but you would get enough to be able to make an informed decision. And if NANOCO wins the legal action against Samsung or a settlement is agreed, will the financial details oh, it's the same question. So no, you will not have to wait and see it in the accounts and you'll be told, you know, it's an x million dollar lump sum and it's what we estimate is going to be y million a year for zed number of years. And it's going to be that level of information. If there are any material risks to it. So for example, if it was a y million a year dependent on the number of sales, then we would estimate without putting it into commercially sensitive numbers, what we think that amounts to. But we, you know, bluntly, as I said, any announcement has to include enough information so the reader of that information can actually figure out what it means.

1:03:36 Next question, you're more or less assuming that we should see visibility of a commercial order in h one f y twenty three by January 31 and probably start production in h two c y twenty three. I'm assuming you have a good idea of what the product is and what the size of the order is. You don't have to give an exact figure, but can give us an idea of what kind of revenue we're talking about, less than 500,000,500,000 a year, etcetera. So the simple answer is we know what our product is. We do not know what the customer's product is. The reason for that is we know that our customer is exploring and they've said it themselves and they're active in a whole host of end markets, all of whom currently use CMOS sensors today and it really is going to be about those end customers.

1:04:22 And again, you can imagine when we were dealing with The US customer, they actually keep some of that information relatively tight to their chest. They do not want, you know, the tail wagging the dog, I e, the idea that NANOCO GROUP announced that some global OEM is about to launch a product because we're a public company and have to make statements. That ain't gonna happen. And and the way that happens is that we didn't know what the actual product is going to be. And that's why we've said it could be a headset. So it could be a couple of million units a year. It could be something in automotive. You're in the tens of millions a year. It could be in consumer goods. If it gets into a mobile phone handset, then you're into the hundreds of millions of units a year. But our assumption, and again, you'll see it in the in the accounts and in the preliminary announcements is that it's a low volume case. And by low volume case, I mean, a few million pounds worth a year of production for that first order. If it ends up being bigger, great. We'll inform people that it's a bigger order.

1:05:26 But as I said before, actually getting into production means you will then grow in that ecosystem. You'll get into more products, you'll get into more applications. And and so it'll be a key event whether or not it's a small volume order or a big volume order. As I say, we've got the capacity to respond to large volume orders, but equally, you can also service small volume orders. It's also worth noting that the smaller the volume, the higher the price, obviously, given that you're recovering a a fixed cost base over a smaller number of units. And we as I think I said earlier, even a low volume initial use case with just one application in a short period of time would get us to a breakeven point. As I mentioned, breakeven revenue for us, and I think Liam reiterated breakeven revenues around £5,000,000.

1:06:17 So whether that's, you know, a combination of the low volume production plus some continued r and d income, that's what you're you're you're talking about as a conservative low volume initial use case assumption. Next question, please. Can you clarify if the German injunction requires an IPR in Germany or if the validity of NANOCO's IP can be proved by the USP tab outcome? Every territory is completely different. Unfortunately, you cannot draw any conclusions from winning in America. You know, the German patent's actually written in German. No one's gonna be surprised by that. I don't mean to be glib. But the German words, the language, the statements, etcetera, they have to be tested in Germany. So you might feel confident if you win in one territory, but it doesn't actually have a direct legal implication. The German court doesn't have to pay attention to what's in The US.

1:07:12 In Germany, you file a an infringement claim a bit like America. Samsung, if they want, can invoke the equivalent of an IPR. And that's why I was saying we could end up with an infringement decision before validity in Germany, which will be the reverse of what we got in America. Next question. In the past, we have heard very often that this time there will actually be commercial orders and unfortunately, investors have been disappointed in this regard. What makes you more confident this time that NANOCO will get its first commercial order in FY twenty three on a scale of one to 10, where 10 is a 100% sure. And so freely admit, I think we referred to this, we've been to the altar before.

1:07:58 So back in 2015, we were at the altar, thought we were at the altar with Samsung and we got jilted. So I know there's an in house joke that actually we have commercialized our technology. Unfortunately, it's branded Samsung, and that's why we've got the lawsuit. We then have The US customer, and again, we've made clear they changed the design of their end use device, which is why we were, you know, tilted at the altar that time. Nothing to do with us, nothing to do with the product or its capability. It was just the end user changing the design of their device. This time around, am I confident? So I am the basis for those confidence. So it's definitely more than five. Yeah. I there is no way I'd put it up at ten because having been jilted twice before and I was only here for one of those, things can always change. You do not know what is going to happen. But if you take the fact that our customer just signed up for a full year contract, they've already scheduled in the design of material set b, which is part of the product life cycle, I e a will go into production and b will one day replace that.

1:09:03 So they're taking a very long term view of this. They are a huge significant player in the market. And I've already mentioned all of those other commercial customers that we're dealing with on on a sensing perspective. So yes, some you're asking me to put numbers on this. So whether it's a six, whether it's a seven, whether it's an eight, I don't think I'd go to nine or 10 because I'm a conservative sort of person. But I'd say on balance of probabilities for me, it feels like a yes, it's going to happen, but of course, you know, there are all those those risks out there, so it doesn't have to happen. But we're working very hard diversifying away from one customer, one product. That's why we've got, you know, seven or eight distinct customers, 12 distinct products and reengaging on display.

1:09:50 So we've we've got a lot more arrows or a lot more bullets, whatever you want to call it to shoot at the target. So that's why I'd be more confident or hopeful that something will will hit, but obviously no guarantees until you're actually in production. Next question, will you be working with companies that are developing compound semiconductors, I I q e PLC? So, again, there might be a technical aspect to this question. There's a bit about compound semiconductors. I can't believe make pixel lasers. Pixel lasers tend to be paired up with sensors because laser emits and the sensor absorbs, etcetera. Again, we work directly with the sensor companies. So depending on our European customer, in fact, yes, three or four of the companies that we're working with, I would describe as compound semiconductor companies.

1:10:45 So the European customer is a compound semiconductor company. We're also working with, you know, that our Asian customer is not a compound semiconductor company. They're a material science or or or chemical company, but we know their customer is the largest semiconductor company in the world. So hopefully that answers that question, but no direct read across to IQE. And if NANOCO think other players are infringing their IP, why not notify them immediately? Why wait until the course case completes? I'm I'm gonna strain the metaphor here and I'm somewhat wary of this because in the past, you know, whether metaphors get misconstrued or whatever, but you don't wanna fight too many wars and too many fronts all at the same time. A, you stretch your team, b, you stretch your advisors, and b, it costs a lot of money.

1:11:37 Actually, notifying people, again, you can do that. We may well have done it in some cases. Won't be drawn on that at the moment. But of course, if you put the dragon or the tiger and the tiger decides to stand up and and bite back, then you've got on your fight on your hands whether you wanted one or not. So declaring war on all fronts at the same time, it would be a strategy. Some companies do that. Clearly, NANOCO with our resources, we've much out there have a focused approach to get the win. And frankly, as we've explained before, Samsung is 90% of the QD TV market. So the others financially, particularly in The US, well, the money might not even be worth it. And get an injunction to stop someone selling 50,000 TVs in, you know, I don't know, Africa wouldn't be worth even trying to do. So that's our strategy. Get the win on the single biggest target there is by far. And then once you've got that, because frankly, if you go to other people and you say, hey, my my IP is valid. You need to stop infringing. They'll say, well, prove it because you haven't actually had a court case yet and your IPRs are up for appeal.

1:12:48 So why should we pay any attention to you? So so we will get to them in time. Yeah. The idea of outcome is you win Samsung and actually everybody else then up volunteers to surrender before you even have to fire a shot, which is a plausible outcome as well. Next question, does DOI still have a working CFQD factory in Korea? And they still have a facility. And our understanding is it's been mothballed for some time, so I don't know how quickly it could be turned on. Multiple factories do have a way of deteriorating equally. They sometimes get cannibalized for parts, but our understanding is and certainly our agreement with Dai is still in place. That, yes, they still have a facility, but whether or not they're spitting out any CFGDs even at the sample size, I couldn't comment on that.

1:13:40 Excuse me. Focus on the organic business seems to be to get to breakeven. What's the size of the revenue opportunity a few years out? And I think the reason we target break even is, you know, and and there's almost three steps here. So step one is get into commercial production, which if you didn't have any r and d or anything else, and it was a low use case might not on its own get you to break even. So job number one, our job number two, after you're in commercial production, get to break even. The reason that we highlight that is that that's not our goal. That's not where we want to end up. But given the funding challenges the businesses had over the last number of years and the fact that, you know, we still are loss making, we still run out of money. That's a a big, again, qualitative milestone or threshold to achieve.

1:14:27 After that, then you can start focusing on more aggressively pushing out the volume. And again, I think we've explained that working a single shift in our run corn sensing facility can deliver anywhere between 15 and £20,000,000 a year of revenue with roughly 25%, you know, material cost, gross margins, you know, around forty, fifty percent, you know, healthy EBITDA numbers. If you can get to that sort of $1,520,000,000 revenue number on a single shift. If you run rumcorn sensing twenty four seven, you're closer to a $100,000,000, a £100,000,000 are of income. And then on the display side, it's smaller. It's about a quarter of that size at full volume loaded. So if it is running twenty four seven, you might be able to generate $2,025,000,000 of revenue.

1:15:20 So clearly, is a lot of upside after you get to that 5,000,000 breakeven number. We haven't set any targets after that, you know, what would be a useful three or five year target. I think once we get into commercial production and certainly once we're getting closer to that breakeven revenue figure, that's when we'd be revising targets because it'll be easier to plan forward, plan further out and and set what we would see as a a sensible goal for a three year revenue figure after we've got to breakeven. But clearly, no one would be satisfied just with getting to breakeven. The job then would be to push on and go further into the ecosystem, more devices, more customers. Simon, l, I think we've already addressed this.

1:16:06 Will there be legal arguments of validity in the text and trialers? This all been addressed at the p tab. So yes, theoretically, it is possible that there could be arguments of validity at the text and trial, but I think as a you know, I don't think I could have been cleaner. We only comment on risks that we think are material or that folks need to know about, We haven't chosen to comment on those validity risks. So draw your own conclusions from that on whether or not you think you should pay attention to it or consider it if we're not feeling the need to talk about it at length. Next question, will there be an RNS from NANOCO when there's visibility of production only when there's an official commercial order?

1:16:56 I think that is gonna be the latter in official commercial order, you know, without necessarily just hiding behind the rules. Inside information has to be sufficiently precise. I should tell you, you know, it's ancient history, but we actually had a contract signed by us with The US customer three years ago for another product. If we'd announced that as visibility of production order, people would have got awfully excited. But the truth is six weeks later, The US customer customer decided, no. I don't want to push forward, so I'm not going to sign it. So it's always a judgment when is something sufficiently firm. Because I don't think anyone would would thank me for saying, yes. I'm really confident. You know, I might sound like, you know, know, other CEOs and other companies, you know, saying, oh, yes, this time tomorrow, we're all going to be millionaires or, you know, next month there'll be production, next month there'll be production.

1:17:48 That's why, you know, we're using conservative or careful language around visibility of production. But when we get an actual commercial order, even if it's a relatively small one, because of the substantive importance or qualitative importance of us actually being in commercial production, you know, I think it's reasonable to assume that there would be an RNS. It wouldn't we wouldn't be able to go into commercial production and not tell people. And, Andrea, has there been any further progress on the COVID test? And simple answer is not really. Again, we are focusing focusing our efforts and resources. So we got through to a fully functioning prototype. We actually tested it against other pathogens. But again, if that one's gonna move forward, a, if we had more financial resources, then we might consider it b, it's definitely gonna require partners to go forward in that area because you're starting to move away from our core competencies around, you know, electronics uses and applications for our CFQ days.

1:18:53 Then And the next question, this might be the last one, I apologize for overrunning with people. Simplistic, I know, but if you don't know how Samsung manufactured their dots, how can you know they are infringing your IP? And okay. You have to differentiate between us and our lawyers and between the NANOCO and our lawyers, between the NANOCO, our lawyers and our expert witnesses. The information inside each of their heads is different, so we can use all the available public information. And I'll give you an example. Samsung in their external presentations refer to something as a magic cluster.

1:19:41 Okay? And that's one of their key parts of making a cabin free quantum dot. We and our patents refer to something called a molecular cluster compound. I can say the use of the word cluster. Hang on. What exactly does that mean? So you can actually interrogate some of the publicly available information because no one actually publicly announces their full actual production processes. But you can get enough clues. You can get enough hints. You can get enough evidence of what they're saying publicly that actually you could legitimately infer that a magic cluster actually just is a molecular cluster component, but by a different name. And, you know, no doubt that will be one of the debates that will happen in front of the jury.

1:20:29 But so I think that's answering your question. Clearly, you can't be absolutely sure, but, you know, by now, if Samsung had a recipe that meant that it was clear they were not infringing our IP that would have been submitted. And actually, we looked at and said, well, it's obviously they're not there, you know, they're making CFQDs using marshmallows and sugar. And then you drop your pace pace pretty quickly because you know you're going to lose. So the fact that none of that has come out through discovery and that we're still, you know, confidence in the merits of our case and our advisors confidence in the merits of our case that, you know, we'll we'll go in front of the jury and ultimately the jury will make the the final decision on whether they have or or they haven't.

1:21:16 So I understand the the rationale behind the question and and hopefully, those answers or comments I've made explain it rather than make it more complex or murky. And so that I think is the end, Jacob. Brian, yeah, absolutely. Thank you very much indeed for addressing all of those questions that came in from investors this morning. And of course, if any more questions do come through, we'll make these available to you immediately after the presentation has ended for you to review and then add any additional responses where it's appropriate to do so. Brian, perhaps before redirecting 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 to wrap up with, that'd be great. Okey dokey. And so I think just to just to close, you know, financial year twenty two, it was a big year for us. We knew we were gonna have the PTAB outcome, you know, everything could have ended on the litigation there, which would have had serious implications for the value of our IP, the value of our display business, and for for the company itself.

1:22:19 So so that was a big deal getting through those IPRs and and getting the outcome that we got. It was a big deal, the pretrial conference. It was also a big deal on the organic business, getting that full year contract extension from a from a customer. And again, you know, if people are looking for signs of confidence, that's their confidence. So one that if they're confident, we can be confident. So f y twenty two was definitely a big year lockup delivered. And f y twenty three, we've got, you know, even more to look forward to, you know, the jury trial when it happens by the end of this year, early next year, you know, that is it's not the last hurdle. You still got appeals. There's still stuff to happen. As I mentioned, you know, this could drag on for a while, but that's gonna be a big, big deal. And obviously, the further on you are and the more successes you gather as you go along, your position negotiating position, if you want to call it that, just get stronger as you go.

1:23:10 The fact that, you know, we we are expecting certainly our products to be production ready. We're still expecting to be in commercial production even if it's low low volume initial use case before the end of this financial year. So f f y twenty three, if you like, you know, f y twenty two was a big year. F y twenty three is gonna be a bigger year again. And our whole team's working hard to deliver in both of those, not just for, you know, the team itself, our internal stakeholder holders, but also for all of our shareholders. Thank you very much for for your time today and all those questions that have been submitted. Brian, that's great. And Liam as well, thank you once again for taking the time to update investors today. Could I please ask investors not to close this session? It shall now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations.

1:24:02 This won't 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 NANOCO GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.