Ilika Plc (ILIKF) This fall 2023 Profits Name Transcript

Ilika Plc (OTCQX:ILIKF) This fall 2023 Profits Convention Name July 13, 2023 11:30 AM ET

Corporate Members

Graeme Purdy – Leader Govt Officer

Jason Stewart – Leader Monetary Officer

Operator

[Abrupt Start] the presentation, traders will likely be in listen-only mode. Questions are inspired and will also be submitted any time through the Q&A tab positioned in the correct hand nook of your display, simply merely sort on your questions and press ship. The corporate is probably not ready to reply to each and every query that gained within the assembly itself, alternatively, the corporate will evaluate questions submitted as of late and post responses when it’s suitable to take action. Earlier than we start, I’d love to publish the next ballot.

I’d now like handy you over to Graeme Purdy, CEO. Excellent afternoon, sir.

Graeme Purdy

Hi and plenty of due to everybody who has taken the time to dial-in for this annual effects replace for the monetary 12 months that completed on the finish of April 2023. I’m joined as of late with our CFO, Jason Stewart. Beautiful to fulfill you all this afternoon. We’re simply going to modify the digital camera off whilst we pop in the course of the slides in order that we don’t distract you. And lots of thank you once more for becoming a member of.

So, we’re going to communicate for the following half-hour or so about Ilika and forged state batteries. As a handy guide a rough reminder, we’ve got two product strains, to start with, the Stereax miniature cells, which we’ve designed basically for miniature scientific gadgets and likewise for commercial IoT programs. After which alternatively, we’ve got were given our Goliath massive structure cells, that are designed for EVs and for cordless client home equipment. I assume the object that units aside our Goliath cells is that we use an oxide electrolyte with a silicon anode. And this reduces uncooked subject matter prices and provides us an larger mobile existence relative to a couple of our different forged state battery competition. We will be able to move into that during slightly extra element in a while within the presentation.

We’re going to get started with a evaluate of the place we’re with Stereax. We will then proceed with a evaluate of Goliath ahead of wrapping up with an ESG abstract and our budget. So, there may be bit extra details about Jason and myself, It’s not that i am going to head thru this now, as a result of in fact, you’ll be able to in finding the similar knowledge on our web page. And we’ve got nonetheless were given the similar NEDs supporting us, so Keith Jackson, our Chairman and Monika and Jeremy as NEDs.

So, the Ilika industry style is an asset-light licensing style. And this units us except different forged state battery builders, who possibly aiming to construct and perform giga factories to offer the EV marketplace. We’re a generation developer and our style is that we increase our forged state batteries. We then reveal that they are able to be manufactured the usage of a scalable procedure. And we do a tech switch and licensing deal or offers to ensure that they’re to be had within the required amounts for our goal markets. The deal that we can discuss with Cirtec is a actually excellent instance of the way we’ve got put this technique into motion. And we goal to do just the similar with our Goliath generation.

So Stereax, those are our miniature batteries. And actually, those are the engine that’s powering the revolution this is overtaking the scientific implant trade as we transfer from prescribed drugs to electroceuticals. You’ll be able to see probably the most M300s in that central image, put along some usual paracetamol and aspirin capsules, very small batteries, they’d are compatible very easily for your fingertip. And so they get built-in into small gadgets which can be then surgically implanted. So in the event you have been unfortunate sufficient to wish this type of surgical intervention, you obviously desire a battery that used to be as compact as conceivable. So those have were given very prime power density they usually permit small instrument designs. They have got additionally were given enhanced protection relative to standard lithium ion. There’s no poisonous fluid that might leak out. And they’ve additionally were given a prime energy density, which means that that they are able to provide energy pulses to give a boost to the electroceutical treatment or certainly to power conversation chips akin to small Bluetooth chips which could be used to percentage information from the implant to the clinician.

With regards to the programs, we’ve got a actually fascinating portfolio of objectives that can then fortify through going thru our record of consumers that we’re interacting with. So we begin with neuromodulation. So a excellent instance of this is in fact ache aid, decrease again ache. We have now were given some consumers which can be growing implanted sensors, steadily for blood power tracking, good orthopedics, that are used for monitoring the physiotherapy that sufferers go through when they’ve had a surgical intervention and are being used to their new hip or knee implant. Small surgical tools, an instance of those are utilized in robot platforms that are more and more being deployed for sporting out regimen surgical procedure. Sensible touch lenses, I assume this is among the frontiers of generation innovation that’s being pioneered in Silicon Valley. This complete interface with the metaverse the place there may be the concept we will substitute video monitors, laptop monitors, like those that we’re having a look at now, with a projection from a wise touch lens. And naturally, those want extremely compacts power assets in an effort to energy the projection of that knowledge.

A excellent instance, there in fact is our spouse in Israel blink power that’s mentioned a few of their programs as they harvest power from the blink reflex in an effort to energy gadgets like those. After which in the end, at the proper hand aspect of this slide, good orthodontic programs of good dental programs, the place you place a powered sensor directly to an aligner or a retainer as they’re also known as, to start with, in fact, to verify compliance to ensure that the retainers are being worn, as they’ve been designed, however more and more additionally to permit salivary diagnostics, as a result of in fact, you’ll be able to harvest numerous fascinating details about the well being of a affected person through tracking the chemical compounds which can be of their saliva. A excellent instance of a buyer there may be Lura Well being, our companions within the U.S. who’ve designed an leading edge generation platform for simply these kinds of programs.

So, we’re beneath a duty to retain the names of numerous our consumers as confidential, just because they see our generation as being an enabler for his or her aggressive positioning. However what we will say is that we’re interacting with a variety of businesses that adjust in measurement from being smaller startups. In fact, if you’re a U.S. founded startup, you’ll be able to be rather well financed. So, a few of these firms are massive in their very own rights, even if most likely they’re nonetheless growing the generation. And we begin with them and move throughout to publicly indexed multinationals which can be already really extensive enterprises and feature really extensive business momentum.

You’ll be able to see that a lot of them are in fact U.S. headquartered in the case of the appliance spaces they’re those that we have got simply been thru at the earlier slide. Very massive addressable markets, multibillion greenback addressable markets and we do that research to figure out the accessible, the serviceable accessible marketplace for our merchandise and that permits us to construct our forecasts and in fact have interaction with probably the most analysts who quilt Ilika to offer them steering on what ranges of earnings those other programs would possibly neatly permit.

And what’s transparent is that in fact, no longer all of those other concepts or merchandise gets regulatory approval, however it doesn’t take very a lot of them in an effort to generate an important go back at the capital that we’re deploying to deal with those markets. So once we combination all of this knowledge, we see that in fact we’ve got were given 24 orders from 21 firms. Over part of the orders are for energetic implantable scientific gadgets or AIMDs as they’re every so often referred to within the trade. In addition they quilt a few of these wearable programs akin to good dental and good lenses. And a few quarter of the alternatives pertains to commercial IoT programs in aerospace and a few commercial situation tracking.

At the proper hand aspect regardless that, that you’ll be able to see that over 3 quarters of the orders originate from the U.S. And that’s why in fact we’ve got labored very exhausting to spouse with a U.S. founded group to finish the commercialization of our Stereax generation. So in January, we entered right into a memorandum of working out with Cirtec Scientific, which is a huge Tier 1 producer of scientific instrument generation platforms, gadgets and parts. I feel in the case of what the advantages are to Ilika, they come with the validation of our Stereax merchandise and the producing procedure that we’re the usage of. If truth be told, there is superb fit between the method that we use in our facility right here in the United Kingdom and the skinny movie processes that Cirtec has at its disposal in Lowell in Massachusetts. It’s additionally a scalable production platform. So they’ve an economic system of scale, as a result of they’re already production for enormous OEMs, specifically within the U.S. and they’ve an area and the ambition to extend the scope in their actions and ramp manufacturing. And likewise after all, they have a bigger industry construction workforce, the place there are very sturdy synergies between the generation and platforms that they’re these days promoting and the Stereax providing. So, for example, through combining the Stereax batteries, with the facility control, circuitry, and different instrument platforms, they are able to be offering a extra entire bundled option to the buyer.

With regards to the place we’re the stars had aligned, we would possibly have finished this contract through our annual effects, however after all, it’s hardly ever the case that you’ll be able to finesse the timing of those discussions completely. So we predict in an effort to finalize the contract over the following few weeks after which transfer ahead with the tech switch after which the ramp of earnings related to gross sales in 2024.

So allow us to trade gears just a little bit and discuss Goliath about EV batteries generation. In order that once more, it is a forged state providing you understand the fabrics are other however no longer utterly dissimilar to what we use in Stereax, however we use a miles higher scale production platform for making EV batteries. While, the Stereax cells are miniaturized so far as conceivable and made compact the usage of photograph lithographic and, and micro fabrication tactics. With EV batteries, we use massive scale printing approaches in an effort to lead them to. We’re providing the shopper additional vary for his or her automobiles through the usage of a mixture of chemistry that we really feel is especially helpful offers a actually excellent aggregate of vary and weight, very protected, a forged state electrolyte this is more secure than the liquid electrolytes choice which is flammable. A prime power density so in a position to pushing against that upper theoretical power density threshold at 500 Watt hours consistent with kilo, a discounted mobile degradation so it’s no longer topic to the similar forms of dangers related to dendrites.

And naturally what’s turning into more and more essential is the improved recyclability of forged state cells the place you don’t want to drain the poisonous and flammable liquid electrolyte you principally simply strip off the encapsulation. After which you’ll be able to put the ceramic right into a granulating procedure and extract the metals and put them again into the provision chain. After which in the end, I must point out lithium potency. So, during the last couple of years, in fact the cost of lithium has soared. And now in fact, decreasing the lithium content material in batteries is actually essential. And in fact, probably the most different forged state battery choices akin to sulphide founded choices use way more lithium than oxide and silicon founded choice.

So I most certainly don’t want to persuade you that we’re in the midst of an EV revolution. However the information indisputably helps that conclusion. Within the EU, after all, there’s a goal of adopting EVs for all new car gross sales through 2035. Right here in the United Kingdom, it’s 5 years previous in 2030. And obviously, there’s a international pattern against ensuring that EVs turn into the car of selection. There may be a pattern against deploying more-and-more charging stations, that are making the selection for EV a lot more simple.

On the other hand, there are nonetheless a couple of explanation why shoppers are hesitant to in fact purchase an EV. One in all them is vary nervousness, and our form of forged state battery can move a ways against relieving this through doubling the variability that you could see from an EV. Battery existence generally is a worry, will my battery nonetheless be running in 10 years time, some other folks stay their automobiles for that duration of time they don’t desire a quick lifespan for the car that they pay for. And in fact battery existence is enhanced in forged state. And likewise there are some issues round batteries. Now batteries that move into EVs are generally very protected. EV automobiles, generally have an out of this world protection profile. However that comes thru enhanced engineering, and protection engineering, and subsequently weight and price related to packaging the cells right into a battery pack. And in case you have a forged state battery this is intrinsically protected, it signifies that the engineering and the prices related to sporting out the ones actions is lowered.

With regards to the objective markets, we can to begin with be running with prime efficiency car producers, others manufacturers that most likely have a efficiency line of their providing. In order that’s why you notice us related to firms like JLR and McLaren and latterly BMW, it’s no longer as a result of forged state is intrinsically costlier. If truth be told, the other is the case, there was numerous research just lately that demonstrates that forged state will deliver down battery prices is as a result of within the first example, when forged state batteries are manufactured at restricted scale, we received’t have the similar economies of scale that you simply these days get with the in large part commoditized usual lithium-ion cells. So we want to ensure that the preliminary markets that we’re offering batteries to, aren’t too value delicate.

So in abstract, our Ilika’s generation for EVs has a number of benefits beginning at 11 o’clock right here. The number 1, our selection of fabrics we use an oxide electrolyte that’s very strong in air, a lot more strong than the sulphide electrolyte choices that a few of our competition have selected. We have now were given a mobile chemistry, which has an extended cycle existence and few degradation mechanisms. We have now were given a mobile structure that gives progressed power density and riding vary. It’s additionally a particularly protected chemistry. We don’t have any lithium steel and no flammable liquid electrolyte in there. We have now additionally were given a better thermal capability. And what that actually method in fact is that our batteries can perform at an increased temperature. And that’s specifically essential in fact if you find yourself deploying EVs, whether or not as a prime ambient temperature. All EVs have a cooling gadget related to their pack, generally, to stay the pack beneath 40 levels C. And if you’ll be able to permit the pack to perform at a better temperature, in reality, our packs can move as much as 80 levels C, and we’ve got even demonstrated some evidence of concept efficiency at upper temperatures than that, then you’ll be able to scale back the volume of cooling that’s wanted. And that, once more, is a discount in weight and price. And subsequently it provides you with a extra compact battery pack after which after all, recyclability that we have got already spoken about.

So a handy guide a rough review of the aggressive panorama, that there are greater than whether or not there may be quite a few possible choices that may be made in forged state batteries. There’s no longer only one form of forged state battery, you’ll be able to make a selection other electrolytes. So we’ve got selected oxide electrolytes, however sulphide electrolytes also are another, you’ll be able to make a selection several types of anode. So you’ll be able to make a selection to not have one in any respect, no less than to begin with when the battery is first assembled, or you’ll be able to have a lithium steel founded anode. And in fact, some analysts even name forged state, lithium steel batteries. However in reality, forged states too can use structured anodes like silicon anode. And we’ve got selected that as a result of it’s an manner that provides you with an extended cycle existence and may be a more cost effective selection than the usage of lithium steel.

What I’d argue is that in fact going ahead; we’re going to see a range of forged state answers available in the market. In the similar means that we see a range of ordinary conventional lithium-ion battery chemistries, at the moment. So your cellphones and your laptops all use an LCO founded cathode, while in automobiles, generally you notice NMC or NCA founded cathodes, or if you’re in China and LFP founded manner. So those are all acronyms that pertains to the chemistry of the cathode. And whilst you take a look at forged state, there are other possible choices each in fact for the ones cathodes, but in addition for the electrolytes and the anodes. And I feel that forged state for EV will likely be advanced relying at the imperatives. Is it finished for price? Is it finished for efficiency? Is it finished for particular ambient prerequisites? And subsequently, there will likely be multiple resolution this is used for that deployment.

So the place are we with production? Neatly, we constructed our first pre-pilot line right here in the United Kingdom quite a few years in the past, 2 years in the past we raised £25 million to increase that construction program and in fact to automate that pilot line. We’re neatly thru that implementation. Now, we’ve already taken supply of positive apparatus pieces in an effort to improve our productiveness. And we’ve were given extra arriving against the top of this 12 months and into subsequent 12 months. And we’ve additionally performed quite a few feasibility research to evaluate how we will paintings with companions in an effort to build up the capability of our manufacturing capacity to what the automobile trade calls, B samples and C samples. So an A pattern is successfully a prototype mobile that meets positive efficiency standards, however doesn’t essentially need to be manufactured on manufacturing, intense apparatus. However a B pattern is identical mobile that’s manufactured on manufacturing, intense apparatus, most likely no longer within the quantity that’s wanted for a car platform release. After which a C pattern is an enhanced quantity manufacturing capacity as a precursor to a giga manufacturing facility deployment. What we received’t be doing goes past A pattern. If truth be told, we’ve already interacted with quite a few OEMs, who’ve made it transparent to us that in fact A samples so far as they’d be expecting us to head. And if we paintings with firms to head past that, then that will likely be on a collaborative foundation and it received’t be Ilika this is development the giga manufacturing facility in an effort to provide the ones higher volumes of batteries.

So here’s a abstract of the place we’re going with our generation and the way we’re going to scale it up. At the left hand aspect, you notice us transferring thru a knowledge level that we name D4, which is in fact a lab scale precursor to creating a prototype product P1, so P1 has the similar efficiency as the information issues D4. However after all, ahead of the OEMs settle for samples of their amenities, they in fact need us to have finished some initial checking out of the ones samples. In order that we will be sure that we don’t motive any difficulties to these OEMs. When they’re going in the course of the check regime, we principally desire a strong manufacturing batch in order that they get the consequences that they look forward to. We will be able to undergo power density lithium-ion equivalents against the top of the 12 months, after which push thru to our MVP, a minimal viable product, which in fact correlates to A samples that you simply see plotted at the backside proper. So we can be increase an automatic pilot line in an effort to give us A samples, which can then be a precursor to scaling up for B and C samples past that. And our industry style signifies, after all, that we’re going to have our licensing alternatives actually from 2025 onwards. So just about to the purpose the place we’ve were given our A samples as organizations take an possibility to make use of our generation after which deploy it on a bigger scale.

So, one of the crucial highlights that I wish to flag that has took place since part 12 months is that we’ve been awarded a considerable grant of simply over £8 million through the Faraday battery problem to guide an out of this world consortium of businesses. One of the most companions concerned as Nexeon which is a silicon anode producer. Primarily based in Abingdon, no longer a long way from the place we’re in Southampton at the south coast of the United Kingdom, they’ll be offering knowledge and an anode that we will combine right into a prototype cells. After which we’re the usage of a actually nice constellation actually, of college and lab founded companions in an effort to improve the improvement of those cells beneath the oversight of a guidance committee that comes to BMW, and likewise WAE, which was referred to as Williams Complex Engineering, now a part of Fortescue, and it is a program that actually helps the core construction of our Goliath batteries thru that roadmap that you simply noticed ahead of, it’s no longer a unique program, it’s successfully non-dilutive grant give a boost to for our endeavors.

So at this level, I’m going handy over to Jason who’s going to discuss a few of ESG projects. I do know that they’re crucial to our stakeholders and a few of our shareholders particularly. So Jason, over to you.

Jason Stewart

Thank you, Graeme. So the environmental, social and governance side may be very as regards to the guts of the corporate as a complete. However as Graeme stated, more and more so around the stakeholder base, whether or not this is traders on a retail foundation or institutional foundation, governments, but in addition the provision chain that we purchase from and have interaction with, and our possible consumers within the OEM area. So it’s crucial that we’re totally compliant with all our necessities, but in addition from which we’re, but in addition our point of view is we wish to be forward of the necessities for a small corporate. So we’re proceeding to paintings forward of the timeline to take a look at and be sure that the entirety we do is compliant, and we’re as aligned as conceivable with our possible consumers in order that any transition into licensing is as simple as conceivable as we then have interaction with our possible subsequent level consumers. So, from an environmental perspective, we’re ISO 14001 qualified. We have now carbon footprint accreditation for each Scope 1 and Scope 2. And we’re already running on our merchandise carbon footprint, internet carbon impartial making plans and Scope 3 emission information assortment, which will likely be required one day, however we’re running forward of that already. From a social perspective, clearly, many of us may have heard within the information probably the most demanding situations across the provide chain of probably the most minerals which can be utilized in production. So we’re totally compliant and with complete transparency from a cobalt provider perspective, and to verify there’s no battle mineral. And that’s very a lot essential to us. We wish to ease up to conceivable once we do have interaction, as Graeme stated with the OEM. So Tier 1 providers that we’re already handing to them a product that may be sourced simply from the present provide chain community.

We focal point very a lot on equality, range inside of our personal group and are proud that we have got each a excellent unfold of gender but in addition quite a lot of nationalities collaborating within the medical construction. And from a central authority’s perspective, clearly, we’re totally compliant with all regulations, laws, well being and protection is at the leading edge of the entirety that we do. And we be sure that we regularly problem ourselves to support and transfer ahead.

We have now performed during the last 12 months first materiality review, so enticing with a complete vary of stakeholders, invested legislative, provider, buyer, and workers to be sure that we perceive the entire subjects that can have an effect on the corporate, rating the ones for significance, after which making sure that we react to these as we move ahead. And that’s a part of the adventure for making sure that we’re repeatedly reflecting on our ESG adventure and staying forward of the demanding situations that we see coming.

In spite of everything, simply transferring directly to the consequences, we’ve got introduced our complete audited effects. So general source of revenue of £0.8 million, as Graeme stated, we gained £2.8 million used to be the percentage of the historical past funded grant general £8 million as Graeme stated, in order that’s a 2-year program. So the beginning of that investment has come thru within the source of revenue that we’ve observed this 12 months, and can proceed thru into 2024 and into the early a part of 2025. As a result of that, we’ve got had an EBITDA loss except share-based bills of £7 million. In order that loss build up from the prior 6-months for actually at the again of the dimensions of the Stereax task, as we constructed thru our small scale fab plant to turn out out that generation and the improvement of the Goliath program, however as Graeme stated, when speaking in regards to the MOU with SIR tech, we’ve already taken steps to mitigate that build up in price, in the course of the expectation and close to crowning glory of that contract, in order that we scale back the continuing price of the Stereax aspect of the industry. After which we will redeploy the capital that we do have throughout to the improvement of the Goliath aspect as then the producing base for Stereax transfers over. And that leads us to a money stability of just below £16 million on the finish of the monetary 12 months, which may be very a lot consistent with expectancies and signposting that we gave in previous RNS and demonstrates our affordable money control as we move ahead.

And we glance out into the longer term we predict money intake from operational actions to cut back fairly. As I stated, I’m a part of that restructuring of task between Stereax and Goliath. However as we deploy, as Graeme stated, probably the most capital that we have got against the extra production intent apparatus for the Goliath aspect of the industry, we can see our capital spend larger fairly, in the long run giving our expectation that money intake will proceed at more or less at similar stage as we move ahead into the following 12 months.

Graeme Purdy

Thank you, Jason. So little bit of a type of ahead having a look remark to wrap up with. Neatly, what are we able to sit up for? Cirtec dating has kicked off effectively with some joint advertising and marketing you might have observed a few of that thru our advertising and marketing channels. However we are actually as regards to a freelance crowning glory. And that can hearth the beginning pistol for our generation switch, which we can be doing thru the rest of 2023 to be able to being able for earnings era in 2024. We will be able to proceed to mature our Goliath generation with probably the most companions that we’ve mentioned throughout this presentation. And we can be hitting some outlined technical milestones just like the D4 level and the lithium-ion power density equivalence level as this 12 months progresses. And naturally, there’s extra grant give a boost to that we will sit up for receiving there are some nice alternatives in fact for collaboration in the course of the automobile transformation fund and the Faraday battery problem right here in the United Kingdom. And we’ll be maximizing the good thing about the ones, in addition to attracting business earnings thru partnering.

Many thank you to your time as of late, guys. We’re now going to transport throughout into the Q&Part of the presentation.

Query-and-Solution Consultation

Operator

Graeme and Jason, thank you very a lot to your presentation. [Operator Instructions] However simply each Graeme and Jason take a couple of mins to view the ones questions which were submitted as of late. I’d love to remind you {that a} recording of this presentation, in conjunction with a replica of the slides and the printed Q&A will also be accessed by way of your investor dashboard. Graeme and Jason, as you’ll be able to see, gained quite a few questions during as of late’s presentation. And if I may just simply ask you to learn out the ones questions and provides responses the place it’s suitable to take action. What I’ll do is I’ll select up from you on the finish.

Graeme Purdy

Excellent. Alright. Neatly, let’s take it from the highest and notice what number of we will get thru. So the primary query I’ve were given here’s when will Ilika move on a significant inventory change just like the NASDAQ. So I feel our view on that is for the instant, we imagine that LSE goal is the precise inventory change for the dimensions of the corporate. However as we keep growing, we can believe different choices such because the LSE major record, and likewise NASDAQ.

So the following query is which automobile firms are critically taking into account the usage of your battery? So we’re in conversation with lots of the international’s automobile OEMs. So our contemporary £8.2 million grant funded challenge from FBC from the Faraday battery problem comes to BMW and WAE within the guidance committee. So there are two examples of people who find themselves taking an passion in our generation.

The following query is, what about Toyota? So are you able to supply some observation at the contemporary information that Toyota has claimed a battery step forward round its forged state batteries and the way it would have an effect on a take a look at?

Neatly, lots of the automobile OEMs have a said passion in forged state battery now. It’s indisputably turn into authorized mainstream subsequent era generation. I feel Toyota’s newest remark confirms that SSBs are firmly on their roadmap. And Ilika continues to carry joint patterns with Toyota masking some key fabrics for SSBs. So we see that as an overly certain validation of the forged state battery manner that we’re taping.

So the following query I’ve were given right here, are you anticipating to any extent further pattern shipments of your M50 or M300s? And can you announce those to marketplace?

So we proceed to make small shipments of M50, M300s from our UK facility. We will be able to announce the ones shipments which our consumers let us publicize. So that you’ll have observed for example, that we have got introduced shipments thru to Blink Power and Lura Well being and likewise Dice Works. And the place conceivable, we can proceed to replace you at the forms of programs that we’re delivery those batteries for. And as soon as the Cirtec deal is finalized, we can give a boost to generation switch thru to the U.S. and supply knowledge on cargo volumes as they ramp up subsequent 12 months.

The following query we’ve were given here’s what sort of information drift are we able to be expecting within the subsequent 365 days? So at the Stereax entrance, we will be expecting information in terms of the crowning glory of the Cirtec deal and graduation of tech switch. And, relating to Goliath, we can announce that, we can hit important construction milestones and we can additionally publicize to any extent further grant give a boost to and business partnerships as they mature.

Subsequent query is how would the Cirtec deal affects manufacturing functions and would we see a shift in UK focal point? So the Cirtec deal will see joint manufacturing capability larger to about 100,000 batteries consistent with 12 months at the crowning glory of that tech switch and procedure validation having the ability to ramp up additional as required. The United Kingdom workforce will proceed to concentrate on roadmap construction and customized battery methods.

Proper, let’s take a look at probably the most different ones which can be coming in. There’s some other query right here on Toyota’s introduced step forward. So I feel we’ve replied that one. There’s a query right here at the settlement with Cirtec scientific, and experiences a switch of apparatus turns out to suggest a reversal of technique for Stereax producer, have you ever deserted your individual production intent, please give a extra detailed knowledge?

Jason Stewart

Perhaps if I take that one. In order we noticed inside of the United Kingdom, particularly during the last 365 days, there used to be an overly prime inflationary atmosphere. The United Kingdom specifically nonetheless is in that even if power costs have began to return backpedal, and running a small scale, fab or production facility inside of UK may be very tough to be price efficient, it’s really easy for price to extend exponentially. Sadly, we don’t have probably the most similar give a boost to that you’d see within the U.S. with the IRA Regulation, the Inflation Aid Acts that prohibit the price that probably the most production base within the U.S. has been so actually our task in rushing up the licensing style, and this can be a rushing up of that task. So the plan used to be at all times to license the generation. However we needed to turn out out that we have been succesful, it used to be in a position to being produced on manufacturing intent apparatus. So, very a lot the reason for accelerating the Stereax licensing is to benefit from that higher production capacity, the safety that’s supplied to restrict price runaway. And likewise actually, we’ve got known that we’re professionals within the construction of the generation, however we’re at the Stereax aspect, no longer a mass marketplace producer and at the Goliath aspect, nor are we’re giga manufacturing facility producer or builder. So, we’ve got known the place our strengths are. However we additionally see that there are strengths in an effort to do this ever so common relief in price that’s wanted within the production to actually power the price base efficiency of any new generation. So, that actually is the motive force in the back of the acceleration of the Stereax tech switch MOU settlement that we’re pursuing these days.

Graeme Purdy

Thank you Jason. So, the following one says the previous couple of years had been a bumpy highway for shareholders. What courses will also be realized from the Stereax adventure to be sure that Goliath doesn’t be afflicted by an identical problems and delays at the trail to scale up and commercialization. So, I’d say that the previous couple of years have observed a mix of components past the corporate’s keep an eye on, such because the macroeconomic scenario. And ones associated with the dimensions up of the generation that we have got selected for Stereax, I’d say for Goliath in the case of the issues which can be in our keep an eye on, we’re spending much more effort and time in de-risking the scale-up generation that we’re the usage of for Goliath. So, we flagged in our effects RNS this morning, that during the last six months or so, we’ve got finished numerous scale-up research that contain distributors, and likewise our companions on the UKBIC to be sure that in fact, the scale-up direction is as possibility loose as conceivable. And once we make a selection generation platforms for procedure scale up, that we have got finished as a lot validation of the ones platforms as conceivable. Subsequent query here’s when do you suppose the optimum time is to herald a big OEM spouse to do the heavy lifting on Goliath? Sure. I feel it is a excellent query. And we’re partnered with OEMs these days. So, one who’s within the public area is the guidance committee function that BMW has generously stuffed at the Goliath historical past program that we have been simply speaking about. We will be able to be sharing samples with OEM companions subsequent 12 months when our P1 product is able. And so you could be expecting a more in-depth collaboration to be catalyzed through that interplay.

Operator

The following query is how distinctive is your battery generation? Who’re your major competition in this kind of battery marketplace?

Jason Stewart

I feel Graeme replied that during an inexpensive element at the Goliath aspect within the slides previous. However to near that out at the Stereax aspect, there are not any specifically similar competition within the forged state aspect, even if clearly, there are a variety of incumbents, small mobile producers who’re these days feeding into that marketplace. So, this can be a a lot wider alternative with much less competition available in the market, even if there are nonetheless clearly other folks supplying into that marketplace already, so much less festival and doubtlessly an more straightforward path to access.

Operator

So, the following query is, Apple’s just lately introduced VR Headset used to be criticized for its unpleasant heavy battery pack? Are you in discussions with client electronics firms relating to such programs?

Graeme Purdy

Sure. So, I feel that the good touch lenses are a possible option to the unwillingness of that VR headset. And the perfect resolution is that you’ve got a wafer skinny touch lens with very skinny batteries that let you have a type of heads up show, a VR show. So, I feel within the coming period of time, you’re going to see that the ones VR headsets get a lot lighter, and in fact, in the long run, that they be replaced through micro electronics answers that may be miniaturized a lot additional than what we’ve got observed to this point. So, sure, it’s an overly thrilling alternative. We have now were given some other query right here on whether or not listening to aids could be some other possible marketplace. So, we’ve got checked out listening to aids, even if the important thing query that we need to ask ourselves is, can forged state batteries actually be offering a differentiated resolution? And there may be numerous rather compact answers for listening to aids and earbuds. It will neatly be that once the price level for Stereax begins to return down as volumes of producing build up, that that opens up a possibility for listening to aids and earbuds. However these days, that’s no longer a concern marketplace, just because in fact in the case of the price get advantages may not be as sturdy as it’s for implanted scientific answers.

Operator

Subsequent query is, will Stereax be the spouse of option to manufacture Stereax batteries that can serve non-medical markets like aerospace and commercial or will you search some other production spouse?

Graeme Purdy

Neatly, within the first example, we’re going to be very involved in making the Stereax dating good fortune. And the batteries which can be manufactured thru that dating will likely be to be had on the market into commercial IoT programs. If the quantity of producing of the programs will get to the purpose the place in fact it’s past the appetites of Stereax then we can take a look at different production choices. One of the massive scale markets that require extraordinarily low price issues could also be higher fitted to different production environments. And we predict to have the versatility within the dating in an effort to deal with the ones accurately.

Operator

So, we’ve got were given a query right here regarding Stereax gross sales, are you able to point out quantity and price and are all gross sales these days for construction prototypes, or are there any business merchandise but?

Graeme Purdy

So, the – as we went thru previous, we’ve got quite a lot of other merchandise that our batteries had been asked in terms of and we dangle orders from the ones consumers as we stated previous. This present day, all of the ones are in early developmental phases. So, none of the ones are transferring thru into the later trials very a lot, we want to conclude the Stereax settlement and transfer the – switch at tempo in order that we will then build up the provision at quantity to then fulfill the ones as they transfer in the course of the regulatory approvals. Very a lot we’ve got mentioned that as being centered across the med-tech sector. However as we transfer out to that upper quantity of throughput, clearly, there may be the broader alternative of the economic Web of Issues programs, which would possibly reopen up as we paintings with Stereax to deliver the cost level of the Stereax batteries down and open up that secondary marketplace, which as they aren’t implanted gadgets would possibly include a shorter approval time or time to marketplace in an effort to fill probably the most hole that we’d be expecting to peer as pieces move in the course of the regulatory duration for implanted elegance two or elegance 3 scientific gadgets.

Operator

So, there may be query right here on money burn, so the money burn may be very prime. Money runway is ready 11 months? And are you having a look at decreasing it, particularly with development of Goliath challenge? Jason, do you need to touch upon that?

Jason Stewart

So, I’d say that we indisputably have greater than 11 months of money runway. The task that we have got already taken and discussed previous with the MOU signed, and with the quickly optimistically to be closed contract with Stereax, we’ve got taken the chance to cut back our spend at the Stereax aspect of the industry. And that used to be very a lot being price motive force from an operational perspective. As we mentioned previous, the power depth of working a small scale fabrication web site in the United Kingdom is rather painful. So, we’ve got taken motion to restrict that. And thru doing in order that has allowed us to cut back the spend total and redeploy team of workers the place we want to, thus fending off recruitment and taking over further price throughout to the Goliath aspect of the industry to ensure that we’re supporting the velocity of construction of that task. So, we in fact be expecting that we can have lowered the operational prices of the industry as we sit up for the following 12 months. However as we are saying, we wish to deploy the probably the most capital that we do have available to the manufacturing apparatus that permits us to turn out that the Goliath cells are manufacturable at the massive scale apparatus that the automotives and their Tier 1 production companions want to see us reveal to validate that the ones Goliath cells can’t be manufactured in mass scale.

Operator

Excellent. So, the following one is does your dating with BMW transcend that position at the guidance committee on the Faraday challenge?

Graeme Purdy

Neatly, glance, officially, the connection with BMW is documented as being a member of the guidance committee of that historical past program. We get numerous casual give a boost to from BMW. There, they’re an overly supportive spouse. And we’re very thankful for that. However to any extent further formalization of that dating is one thing most likely for the longer term. We were given some other one right here. With regards to Goliath alternatives within the client merchandise, markets, do you might have any energetic relationships or alternatives? Sure. So, we’ve got mentioned the usage of Goliath for cordless client home equipment. So, we’ve got quite a few discussions which can be ongoing to company up the usefulness and software of Goliath for programs akin to hand held vacuum cleaners, and good looks merchandise, and different family gadgets. You are going to have observed that there’s a pattern in the ones sectors for an expanding use of hand held gadgets. Obviously, there may be not anything formal these days, however we predict that that is a fascinating marketplace phase that we would possibly select up alongside the way in which because the Goliath generation matures. Subsequent query is how does your SSB trends timing when compared with the contest? So, I’d say that’s in fact, all of our festival is growing prototype cells. There are not any forged state batteries which can be these days available on the market and to be had in mass manufacturing automobiles. The place we’ve got observed forged state battery packs used. Usually, they’ve been in very restricted numbers in type of motor display automobiles. So, I imagine that in fact we’re nonetheless in that main cohort of battery builders. And in fact thru Stereax cells, we’re one of the crucial early commercialization pioneers. And if that’s the case, in fact, we’re forward of the sphere. However I feel your query principally pertains to automobile SSBs. And I feel as I’ve stated, lots of the festival remains to be at prototype stage.

Operator

And our subsequent query here’s what’s the capability of your Stereax product line? What is going to be the price of Stereax line B, and what is going to its capability be?

Jason Stewart

So, the capability that we have got in our present facility is sufficient to fulfill the call for that we have got demonstrated in the course of the desk that we went thru previous. And since as we talked in regards to the volumes in the course of the regulatory approval procedure are moderately low, additionally envisaged inside the MOU and tech switch. We will be able to be shifting a big share of that production line over to Stereax in The united states in order that we will quick circuit and velocity the method of them getting as much as complete production. So, through the usage of the apparatus that we have got already qualified as being in a position to generating the Stereax batteries, that shortens the period of time to get again as much as upper quantity. The cause of going with any individual like Stereax is that as a $500 million, U.S. founded corporate with experience on this area, they’re very best positioned to deploy further capital when had to scale up that line to deal with the extra call for as the ones merchandise transfer thru against complete legislation and to the marketplace. However to offer context, if one or two of the ones alternatives have been to transport thru to complete certification, they’d doubtlessly be sufficient to take in the entire capability that we these days have. So, obviously there’s a a lot of alternative for maximizing the go back from the apparatus set that already is deployed and underpinning the industry case for Stereax to place in position additional capability in an effort to benefit from that quantity.

Operator

Excellent. So, subsequent query is, is the five hundred watt-hour consistent with kilo power density a difficult prohibit or will you be running on bettering it additional?

Graeme Purdy

So, in fact, that may be a theoretical power density prohibit in accordance with the combo of fabrics that we have got at our disposal. It’s conceivable that new fabrics will likely be advanced that can permit that to be larger additional. However these days with – to the most efficient of our wisdom, that may be a theoretical prohibit.

Operator

Subsequent query, have you ever in fact had paid for gross sales of Stereax and what number of Stereax are you able to manufacture through month?

Jason Stewart

So, sure, we’ve got had paid for gross sales of Stereax. So, once we checked out that chart, they’re again orders, paid for gross sales for Stereax, for which we obtain financial repayment and as we’ve got made some deliveries within the early a part of this 12 months, that has began to satisfy that order e-book. And the plan is that after we switch the generation to Stereax, we can manufacture 100,000 batteries consistent with 12 months. So, the following one here’s are you able to as soon as once more outline the specifications of your Stereax cells, are M50 and M300, the one two usual sizes and the way it compares with scientific trade micro battery choices akin to the ones from Vata? How does zinc air batteries evaluate in capability and density. So, to start with, the M50 is a 50 micro-Amp hour battery. The M300 is a 300 micro-Amp hour battery, which is made through taking six M50s and stacking them and connecting them in parallel. They’re the 2 type of MVP development blocks that we have got manufactured to-date. We think in an effort to build up the capability of our Stereax cells to 1000 micro-Amp hours, which means that a one milli-amp hour. And we’ve got that because the state of construction goal with Stereax. Numerous the present coin cells, you discussed Vata there. They’re after all higher than the Stereax cells. However a few of them have were given higher capacities as neatly. So, every so often they’re in fact extra appropriate for various programs reasonably than those that we’re chasing. As an example, you couldn’t believe a coin mobile being caught directly to a touch lens, and that being specifically comfy. So, there are indisputably other goal markets that we’re chasing. With regards to zinc air, zinc air batteries aren’t normally recyclable. So once more, they’re for various programs to those that we’re opting for for Stereax.

Graeme Purdy

I feel we’ve got were given most certainly time for yet another query. So, remaining query here’s what gross sales and advertising and marketing useful resource do Cirtec proposed to signal for promoting Stereax, are they centered solely at the scientific gadgets marketplace? So, I feel simply to take a step again, the order e-book of consumers and orders that we mentioned previous, had been advanced with an overly, very small workforce at Ilika. And that has introduced obviously some nice possible. And a part of the good thing about the Stereax dating is they’re already providers to quite a few the ones consumers. So, obviously they’re already in that marketplace, and feature a miles higher business workforce having a look to increase gross sales task. So, that can optimistically open up a wider vary of alternatives for us. Along with that, we’ve got observed during the last couple of years actually because the pandemic that businesses had been spotting that having an extended prolonged provide chain is actually opening them as much as possible disruption. If there’s a downside inside of that provide chain because the pandemic after which the provision chain problems we noticed after that demonstrated. So, having the producing base inside the U.S. the place the foremost marketplace these days seems to be, must be an actual merit for serving to to herald new possible orders and other folks the place they won’t had been so enamored with having a look at a smaller corporate founded over in the United Kingdom. So, that obviously must open up additional alternatives. Whilst Stereax are centered across the med-tech sector, they’re open to promote into any discussion board and we can proceed to perform our personal business workforce to search for different alternatives and be sure that we don’t fail to notice the rest that’s not med-tech focal point to be sure that we’ve got the most important conceivable vary of latest consumers that we will establish and paintings with.

Operator

Graeme and Jason, thanks very a lot for having been very beneficiant together with your time. We have now in fact long gone over the hour and I feel you might have addressed all the ones questions you had from traders. And naturally the corporate will evaluate all of the questions submitted as of late. And we can post the ones responses at the Investor Meet Corporate platform. However simply ahead of redirecting traders to offer with their comments, which used to be specifically essential to you each. Graeme, can I simply ask you for a couple of remaining feedback?

Graeme Purdy

Neatly, I’d similar to to thank everybody for taking their time to dial-in as of late. It’s been an overly colourful Q&A consultation. And I sought after to simply ascertain that Jason and I can make an effort to paintings thru the rest questions, and we can give you the solutions as suitable. So, as soon as once more, many thank you guys.

Operator

Easiest. Graeme and Jason, thanks as soon as once more for updating traders as of late. May I please ask traders to not shut the consultation, as you understand, will likely be mechanically redirected to offer your comments so that the workforce can higher perceive your perspectives and expectancies, so it will take a couple of mins to finish, which will likely be a great deal valued through the corporate. On behalf of the control workforce of Ilika plc, we want to thanks for attending as of late’s presentation and excellent afternoon to you all.