Ilika plc

Presentation investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated in the right-hand corner of your screen. Just simply type in your questions and press send. The company may end up in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Graham Purdy, CEO. Good afternoon, sir.

Hello and many thanks to everyone who's taken the time to dial in for this annual results update for the financial year that finished at the end of April 2023. I'm joined today with our CFO, Jason Stewart. Lovely to meet you all this afternoon. We're just going to switch the camera off while we pop through the slides so that we don't distract you. And many thanks again for joining. So, we're going to talk for the next 30 minutes or so about ILICA and solid-state batteries. As a quick reminder, we have two product lines. First of all, the STERIACS miniature cells, which we've designed primarily for miniature medical devices and also for industrial IoT applications. And then on the other hand, we've got our Goliath large format cells, which are designed for EVs and for cordless consumer appliances. I guess the thing that sets apart our Goliath cells is that we use an oxide electrolyte with a silicon anode, and this reduces raw material costs and gives us an increased cell life relative to some of our other solid state battery competitors. We'll go into that in a bit more detail later on in the presentation. We're going to start with a review of where we are with Stereax. We'll then continue with a review of Goliath before wrapping up with an ESG summary and our finances. So there's a bit more information about Jason and myself. I'm not going to go through this now because actually you can find the same information on our website. And we've still got the same NEDs supporting us. So Keith Jackson, our chairman, and Monica and Jeremy as NEDs. So the ILICA business model is an asset light licensing model and this sets us apart from other solid-state battery developers who may be aiming to build and operate gigafactories to supply the EV market. We are a technology developer and our model is that we develop our solid state batteries. We then demonstrate that they can be manufactured using a scalable process and we do a tech transfer and licensing deal or deals to make sure that they are available in the required quantities for our target markets. The deal that we'll talk about with Certec is a really good example of how we've put this strategy into action. And we aim to do exactly the same with our Goliath technology. So, Steriax. These are our miniature batteries. And really, these are the engine that's powering the revolution that is overtaking the medical implant industry as we move from pharmaceuticals to electrocyticals. You can see some of the M300s in that central picture, put alongside some standard paracetamol and aspirin tablets, very small batteries. They would fit comfortably on your fingertip. And they get integrated into small devices that are then surgically implanted. So if you were unlucky enough to need such a surgical intervention, you'd clearly want a battery that was as compact as possible. So these have got very high energy density. and they enable small device designs they've also got enhanced safety relative to normal lithium ion there's no toxic fluid that could leak out and they've also got a high power density which means that they can supply power pulses to support the electrostatical therapy or indeed to drive communication chips such as small bluetooth chips which might be used to share data from the implant to the clinician. In terms of the applications, we have a really interesting portfolio of targets that we'll then reinforce by going through our list of customers that we're interacting with. So we start with neuromodulation. So a good example of that is actually pain relief, lower back pain. We've got some customers that are developing implanted sensors, often for blood pressure monitoring. Smart orthopedics, which are used for tracking the physiotherapy that patients undergo when they have had a surgical intervention and are getting used to their new hip or knee implant. Small surgical instruments and examples of these are used in robotic platforms which are increasingly being deployed for carrying out routine surgery. Smart contact lenses, I guess this is one of the frontiers of technology innovation. that's being pioneered in Silicon Valley, this whole interface with the metaverse, where there's the idea that we can replace video screens, computer screens like the ones that we're looking at now, with a projection from a smart contact lens. And of course, these need ultra compact energy sources in order to power the projection of that information. A good example there actually is our partner in Israel, Blink Energy, that's talked about some of their applications as they harvest energy from the Blink reflex to be able to power devices like these. And then finally, on the right-hand side of this slide, smart orthodontic applications, so smart dental applications, where you put a powered sensor onto an aligner or a retainer, as they're sometimes called. First of all, actually, to ensure compliance, to make sure that the retainers are being worn as they've been designed, but increasingly also to enable salivary diagnostics, because actually you can harvest a lot of interesting information about the health of a patient by monitoring the chemicals that are in their saliva. A good example of a customer there is Lura Health, our partners in the US who have designed an innovative technology platform for just these types of applications. So we are under an obligation to retain the names of a lot of our customers as confidential, simply because they see our technology as being an enabler for their competitive positioning. But what we can say is that we are interacting with a range of companies that vary in size from being smaller startups. Of course, if you're a US-based startup, you can be very well financed. So some of these companies are large in their own rights, even though perhaps they are still developing the technology. And we start with them and go all the way through to publicly listed multinationals that are already substantial enterprises and have substantial commercial momentum. You can see that many of them are actually U.S. headquartered. In terms of the application areas, they're the ones that we've just been through on the previous slide. very large addressable markets, multi-billion dollar addressable markets. And we do this analysis to work out the obtainable, the serviceable, obtainable market for our products. And that allows us to build our forecasts and actually interact with some of the analysts who cover Illica to give them guidance on what levels of revenue these different applications may well enable And what's clear is that actually not all of these different ideas for products will get regulatory approval, but it doesn't take very many of them in order to generate a significant return on the capital that we are deploying to address these markets. So when we aggregate all of this data, we see that actually we've got 24 orders from 21 companies. Over half of the orders are for active implantable medical devices or AIMDs, as they're sometimes referred to in the industry. They also cover some of these wearable applications, such as smart dental and smart lenses. And about a quarter of the opportunities relates to industrial IoT applications in aerospace and some industrial condition monitoring. On the right hand side, though, you can see that over three quarters of the orders originate from the US. And that's why actually we've worked very hard to partner with a US based organization to complete the commercialization of our Stereax technology. So in January, we entered into a memorandum of understanding with Certec Medical, which is a large tier one manufacturer of medical device technology platforms, devices and components. I think in terms of what the benefits are to Illica, they include the validation of our Steriax products and the manufacturing process that we're using. In fact, there's a very good match between the process that we use in our facility here in the UK and the thin film processes that Certec has at its disposal in Lowell in Massachusetts. um it's also a scalable manufacturing uh platform so they have an economy of scale because they're already manufacturing for large oems particularly in the us and they have uh space and and the ambition to increase the scope of their activities and ramp production and also of course they've got a larger business development team where there are very strong synergies between the technology and platforms that they're currently selling and the Stereax offering. So, for instance, by combining the Stereax batteries with the power management circuitry and other device platforms, they can offer a more complete bundled solution to the customer. In terms of where we are, if the stars had aligned, we might have completed this contract by our annual results. But of course, it's rarely the case that you can finesse the timing of these discussions perfectly. So we expect to be able to finalize the contract over the next few weeks and then move forward with the tech transfer and then the ramp up of revenue associated with product sales in 2024. so let's change gear a little bit and talk about goliath about uh ev battery technology um so that again this is a solid state offering um you know the materials are different but not totally dissimilar to what we use in stereax but we use a much larger scale manufacturing platform for making ev batteries whereas the STERIAC cells are miniaturized as far as possible and made compact using photolithographic and micro fabrication techniques. With the EV batteries, we use large-scale printing approaches in order to make them. We're offering the consumer further range for their vehicles by using a combination of chemistry that we feel is particularly useful. It gives a really good combination of range and weight. Very safe, a solid-state electrolyte that is safer than the liquid electrolyte alternative, which is flammable. A high energy density, so capable of pushing towards that higher theoretical energy density threshold at 500 watt hours per kilo. A reduced cell degradation, so it's not subject to the same sort of risks associated with dendrites. And of course, what's becoming increasingly important, is the enhanced recyclability of solid state cells where you don't need to drain the toxic and flammable liquid electrolytes. You basically just strip off the encapsulation and then you can put the ceramic into a granulating process and extract the metals and put them back into the supply chain. And then finally I should mention lithium efficiency. So over the last couple of years actually the price of lithium has soared and now actually lowering the lithium content in batteries is really important. And actually, some of the other solid state battery alternatives, such as sulfide-based alternatives, use far more lithium than are oxide and silicon-based alternatives. So I probably don't need to convince you that we are in the middle of an EV revolution, but the data certainly supports that conclusion. In the EU, of course, there is a target of adopting EVs for all new vehicle sales by 2035. Here in the UK, it's five years earlier in 2030. And clearly, there's a global trend towards making sure that EVs become the vehicle of choice. There's also a trend towards deploying more and more charging stations, which are making the choice for EV much more straightforward. However, there are still a few reasons why consumers are hesitant to actually buy an EV. One of them is range anxiety and our type of solid state battery can go a long way towards relieving this by doubling the range that you might see from an EV. Battery life can be a concern. Will my battery still be operating in 10 years time? Some people keep their vehicles for that length of time. They don't want a short lifespan for the vehicle that they pay for. And actually battery life is enhanced in solid state. And also there are some concerns around around batteries. Batteries that go into EVs are typically very safe. EV vehicles in general have a fantastic safety profile, but that comes through enhanced engineering and safety engineering and therefore weight and cost associated with packaging the cells into a battery pack. And when you have a solid-state battery that is intrinsically safe, it means that the engineering and the cost associated with carrying out those activities is reduced. In terms of the target market, we will initially be working with high performance vehicle manufacturers or those brands that perhaps have a performance line in their offering. So that's why you see us associated with companies like JLR and McLaren and latterly BMW. It's not because solid-state is intrinsically more expensive. In fact, the opposite is the case. There's been a lot of analysis recently that demonstrates that solid-state will bring down battery costs. It's because in the first instance when solid-state batteries are manufactured at limited scale, we won't have the same economies of scale that you currently get with the largely commoditized standard lithium-ion cells. So we need to make sure that the initial markets that were providing batteries to are not too price sensitive. So in summary, ILICA's technology for EVs has lots of advantages, starting at 11 o'clock here. The number one, our choice of materials, we use an oxide electrolyte that's very stable in air, much more stable than the sulfide electrolyte alternatives that some of our competitors have chosen. We've got a cell chemistry which has a long cycle life and few degradation mechanisms. We've got a cell architecture that offer improved energy density and driving range. It's also an extremely safe chemistry. We don't have any lithium metal and no flammable liquid electrolyte in there. We've also got a higher thermal capacity and what that really means actually is that our batteries can operate at an elevated temperature and that's particularly important actually when you are deploying EVs where there is a high ambient temperature, all EVs have a cooling system associated with their pack, typically to keep the pack below 40 degrees C. And if you can allow the pack to operate at a higher temperature, in fact, our packs can go up to 80 degrees C, and we've even demonstrated some proof of efficiency principal performance at higher temperatures than that then you can reduce the amount of cooling that's needed and that again is a reduction in weight and cost and therefore it gives you a more compact battery pack and then of course recyclability that we've already spoken about So a quick overview of the competitive landscape. You know that there are more than whether there's a number of choices that can be made in solid state batteries. There's not just one type of solid state battery. You can choose different electrolytes. So we've chosen oxide electrolytes, but sulfide electrolytes are also an alternative. You can choose different types of anode. So you can choose not to have one at all. at least initially when the battery is first assembled, or you can have a lithium metal based anode. And actually, some analysts even call solid state, you know, lithium metal batteries. But in fact, solid states can also use structured anodes like silicon anodes. And we've chosen that because it's an approach that gives you a long cycle life and is also a less expensive choice than using lithium metal batteries. What I would argue is that actually going forward, we're going to see a diversity of solid state solutions in the market in the same way that we see a diversity of normal traditional lithium ion battery chemistries right now. So your mobile phones and your laptops all use an LCO-based cathode, whereas in vehicles, typically you see NMC or NCA-based cathodes, or if you're in China, an LFP cathode. based approach. So these are all acronyms that relates to the chemistry of the cathode. And when you look at solid state, there are different choices, both actually for those cathodes, but also for the electrolytes and the anodes. And I think that solid state for EV will be developed depending on the imperatives. Is it done for cost? Is it done for performance? Is it done for specific ambient conditions? And therefore there will be more than one solution that is used for that deployment. So where are we with manufacturing? Well, we built our first pre-pilot line here in the UK a number of years ago. Two years ago, we raised 25 million to extend our development program. and actually to automate that pilot line. We are well through that implementation now. We've already taken delivery of certain equipment items in order to enhance our productivity, and we've got more arriving towards the end of this year and into next year. And we've also carried out a number of feasibility studies to assess how we can work with partners in order to increase the capacity of our production capability to what the automotive industry calls B samples and C samples. So an A sample is effectively a prototype cell that meets certain performance criteria, but doesn't necessarily have to be manufactured on production intent equipment. But a B sample is the same cell that's manufactured on production intent equipment, perhaps not in the volume that's needed for a vehicle platform launch. And then a C sample is an enhanced volume production capability as a precursor to a gigafactory deployment. what we won't be doing is going beyond a sample in fact we've already interacted with a number of oems who've made it clear to us that actually a samples as far as they would expect us to go and if we work with companies to go beyond that then that will be on a collaborative basis and it won't be illica that is building the gigafactory in order to supply those larger volumes of batteries for So here's a summary of where we're going with our technology and how we're going to scale it up. On the left hand side, you see us moving through a data point that we call D4, which is actually a lab scale precursor to making a prototype product P1. So P1 has the same performance as the data point D4. But of course, before the OEMs accept samples in their facilities, they actually want us to have done some preliminary testing of those samples so that we can ensure that we don't cause any difficulties to those OEMs when they're going through the test regime. We basically want a stable production batch so that they get the results that they anticipate. We'll go through energy density lithium-ion equivalents towards the end of the year and then push through to our MVP, our minimum viable product, which actually correlates to A samples that you see plotted on the bottom right. So we'll be building up an automated pilot line to be able to give us A samples which will then be a precursor to scaling up for B and C samples beyond that. And our business model indicates, of course, that we're going to have our licensing opportunities really from 2025 onwards. So pretty much at the point where we've got our A samples as organizations take an option to use our technology and then deploy it on a larger scale. So one of the highlights that I want to flag that has happened since our half year is that we've been awarded a substantial grant of just over £8 million by the Faraday Battery Challenge to lead a fantastic consortium of companies. One of the partners involved is Nexion, which is a silicon anode manufacturer. based in Abingdon, not far from where we are in Southampton on the south coast of the UK. They will be providing information and anode that we can integrate into our prototype cells. And then we're using a really great constellation, really, of university and lab-based partners in order to enhance the development of these cells under the oversight of a steering committee that involves BMW and also WAE, which used to be known as Williams Advanced Engineering, now part of Fortescue. And this is a program that really supports the core development of our Goliath batteries through that roadmap that you saw before. It's not a different program, it's effectively non-dilutive grant support for our endeavors. So at this point, I'm going to hand over to Jason, who's going to talk about some of our ESG initiatives. I know that they're very important to our stakeholders and some of our shareholders in particular. So Jason, over to you.

Thank you, Graham. So the environmental, social and governance aspect is very close to the heart of the company as a whole. But as Graham said, increasingly so across the stakeholder base, whether that is investors on a retail basis or institutional basis, governments, but also the supply chain that we buy from and interact with and our potential customers in the OEM arena. So it's very important that we are fully compliant with all our requirements but also from which we are but also our perspective is we want to be ahead of the requirements for a small company so we are continuing to work ahead of the timeline to try and ensure that everything we do is compliant and we are as aligned as possible with our potential customers so that any transition into licensing is as easy as possible as we then interact with our potential next-stage customers. So from an environmental point of view, we're ISO 14001 certified. We have carbon footprint accreditation for both Scope 1 and Scope 2. And we are already working on our product carbon footprint. our net carbon neutral planning and scope three emission data collection, which will be required in the future, but we're working ahead of that already. From a social point of view, obviously many people will have heard in the news some of the challenges around the supply chain of some of the minerals that are used in manufacturing. So we are fully compliant and with full transparency from a cobalt supplier point of view. and to ensure there's no conflict mineral. And that is very much important to us. We want to ease as much as possible when we do engage, as Graham said, with the OEM tier one suppliers, that we're already handing to them a product that can be sourced easily from the existing supply chain network. We focus very much on equality, diversity within our own organisation and are proud that we have both a good spread of gender, but also a wide range of nationalities participating in the scientific development. And from a government's point of view, obviously, we are fully compliant with all rules, regulations, health and safety is at the forefront of everything that we do. and we ensure that we continually challenge ourselves to improve and move forward. We have conducted over the last year first materiality assessment, so engaging with a whole range of stakeholders, investors, legislative, supplier, customer and employees to ensure that we understand all of the topics that may affect the company, ranking those for importance and then ensuring that we react to those as we go forward. And that's part of the journey for ensuring that we are constantly reflecting on our ESG journey and staying ahead of the challenges that we see coming. Finally, just moving on to the results, we've announced our full audited results. So total income of 0.8 million pounds. As Graham said, we received 2.8 million was the share of the history. funded grant, total eight million as Graham said. So that's a two year programme. So the start of that funding has come through in the income that we've seen this year and will continue through into 2024 and into the early part of 2025. Resulting from that, we have had an EBITDA loss excluding share based payment of seven million. So that loss increase from the prior year of 6.4, really on the back of the scale up of the STERIACS activity as we built through our small scale fab plant to prove out that technology and the development of the Goliath program. But as Graham said, when talking about the MOU with Certec, We've already taken steps to mitigate that increasing cost through the expectation and near completion of that contract so that we reduce the ongoing cost of the Steriax side of the business. And then we can redeploy the capital that we do have across to the development of the Goliath side as then the manufacturing base for Steriax transfers over. And that leads us to a cash balance of just under £16 million at the end of the financial year, which is very much in line with expectations and signposting that we gave in earlier R&S and demonstrates our reasonable cash management as we go forward. And we look out into the future. We expect cash consumption from operational activities to reduce slightly. As I said, I'm part of that restructuring of activity between Steriax and Goliath. But as we deploy, as Graham said, some of the capital that we have towards the more manufacturing intent equipment for the Goliath side of the business, we will see our capital spend increase slightly, ultimately giving our expectation that cash consumption will continue at roughly at same level as we go forward into the next year.

Thanks, Jason. So a bit of a sort of forward-looking statement to wrap up with. Well, what can we look forward to? Certec relationship has kicked off nicely with some joint marketing. You may have seen some of that through our marketing channels. But we are now close to a contract completion and that will fire the starting pistol for our technology transfer, which we'll be doing through the remainder of 2023 with a view to being ready for revenue generation in 2024. We will continue to mature our Goliath technology with some of the partners that we've talked about in the course of this presentation, and we'll be hitting some defined technical milestones like the D4 point and the lithium-ion energy density equivalence point as this year progresses. And of course, there's more grant support that we can look forward to receiving. There are some great opportunities actually for collaboration through the Automotive Transformation Fund and the Faraday Battery Challenge here in the UK. And we'll be maximizing the benefit of those as well as attracting commercial revenue through partnering. Many thanks for your time today, guys. We're now going to move across into the Q&A part of the presentation.

Graham, Jason, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab, which is situated on the top right-hand corner of your screen. But just while Graham and Jason take a few moments to review those questions that have been submitted today, I'd like to remind you that recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Graham, Jason, as you can see, we've received a number of questions throughout today's presentation. And if I could just ask you to read out those questions and give responses where it's appropriate to do so, what I'll do is I'll pick up from you at the end.

Very good. All right. Well, let's take it from the top and see how many we can get through. So the first question I've got here is, when will Illica go on a major stock exchange like the Nasdaq? So I think our view on this is for the moment, we believe that LSE AIM is the appropriate stock exchange for the size of the company. But as we continue to grow, we'll consider other options such as the LSE main list and also NASDAQ. So the next question is which car companies are seriously considering using your battery? So we're in communication with most of the world's automotive OEMs. So our recent 8.2 million grant funded project from FBC, from the Faraday Battery Challenge, involves BMW and WAE in the steering committee. So there are two examples of people who are taking an interest in our technology. The next question is one about Toyota. So can you provide some commentary on the recent news that Toyota has claimed a battery breakthrough around its solid state batteries and how it might affect silica? Well, most of the automotive OEMs have a stated interest in solid-state battery now. It's definitely become accepted mainstream next-generation technology. I think Toyota's latest statement confirms that SSBs are firmly on their roadmap. And ILICA continues to hold joint patents with Toyota covering some key materials for SSBs. So we see that as a very positive validation of the solid state battery approach that we're taking. So the next question I've got here are, are you expecting any further sample shipments of your M50 or M300s and will you announce these to market? So we continue to make small shipments of M50, M300s from our UK facility. uh we will announce those shipments which our customers allow us to publicize um so you'll have seen for instance that we have announced shipments through to um blink energy and uh lura health and also CubeWorks. And where possible, we'll continue to update you on the types of applications that we are shipping these batteries for. And once the Certec deal is finalized, we'll support technology transfer through to the US and provide information on shipment volumes as they ramp up next year. The next question we've got here is what kind of news flow can we expect in the next 12 months? So on the Stereax front, we can expect news relating to the completion of the Certec deal and commencement of tech transfer. And regarding Goliath, we'll announce that we'll hit significant development milestones and we'll also publicize any further grant support and commercial partnerships as they mature. The next question is how would the Certec deal impact production capabilities and would we see a shift in UK focus? So the Certec deal will see our joint production capacity increase to about 100,000 batteries per year on the completion of that tech transfer and process validation. with the ability to ramp it further as required, the UK team will continue to focus on roadmap development and custom battery programs. Right, let's have a look at some of the other ones that are coming in. There's another question here on Toyota's announced breakthrough, so I think we've answered that one. There's a question here on... The agreement with Certec Medical and reported transfer of equipment seems to indicate a reversal of strategy for Steriax manufacturer. Have you abandoned your own manufacturing intent? Please give a more detailed information.

Maybe if I take that one. So as we saw within the UK, especially over the last 12 months, there was a very high inflationary environment, the UK particularly, Still is in that, although energy prices have started to come back down and operating a small scale fab or manufacturing facility within the UK is very difficult to be cost effective. It's very easy for costs to increase exponentially. Unfortunately, we don't have some of the same support that you would see in the US with the IRA legislation, the inflation reduction legislation. acts that limit the cost that some of the manufacturing base in the US has been. So really our activity in speeding up the licensing model, and it is a speeding up of that activity. So the plan was always to license the technology, but we had to prove out that we were capable, it was capable of being produced on production intent equipment. So very much the rationale for accelerating the Certec licensing is to take advantage of that larger manufacturing capability, the protection that's provided to limit cost runaway. And also, really, we recognize that we are experts in the development of the technology. But we are, on the Sterilac side, not a mass market manufacturer. And on the Goliath side, nor are we a gigafactory manufacturer or builder. So we recognize where our strengths are, but we also see that there are strengths to be able to do that ever so regular reduction in cost that's needed in the manufacturing to really drive the cost-based performance of any new technology. That really is the driver behind the acceleration of the Certec tech transfer MOU agreement that we're pursuing at the moment.

Thanks, Jason. So the next one says, the last few years have been a bumpy road for shareholders. What lessons can be learned from the StereoX journey to ensure that Goliath doesn't suffer from similar issues and delays on the path to scale up and commercialization? So I'd say that the last few years have seen such as the macroeconomic situation and ones related to the scale-up of the technology that we've chosen for Stereax. I'd say for Goliath, in terms of the things that are in our control, we're spending a lot more time and effort in de-risking the scale-up technology that we're using for Goliath. So we flagged in our results RNS this morning that over the last six months or so, we've completed a lot of scale-up studies that involve vendors, and also our partners at the UK BIC to ensure that actually the scale-up route is as risk-free as possible. And when we choose technology platforms for process scale-up, that we have done as much validation of those platforms as possible. Next question here is, when do you think the optimal time is to bring in a large OEM partner to do the heavy lifting on Goliath? Yeah, I think this is a good question. And we are partnered with OEMs at the moment. So one that's in the public domain is the steering committee role that BMW has generously filled on the Goliath history program that we were just talking about. We will be sharing samples with OEM partners next year when our P1 product is ready. And so you might expect closer collaboration to be catalyzed by that interaction.

The next question is, how unique is your battery technology? Who are your main competitors in this type of battery market? I think Graham answered that in reasonable detail on the Goliath side in the slides earlier. But to close that out, on the Steriax side, there are no... particularly comparable competitors in the solid state side, although obviously there are a number of incumbents, small sale manufacturers who are currently feeding into that market. So it is a much wider opportunity with less competitors in the market, although there are still obviously people supplying into that market already. So less competition and potentially an easier route to entry.

So the next question is Apple's recently launched VR headset was criticized for its ugly heavy battery pack. Are you in discussions with consumer electronics companies regarding such applications? Yeah, so I think that the smart contact lenses are a potential solution to the unwieldiness of that VR headset. And yeah, the ideal solution is that you've got a wafer thin Contact lens with very thin batteries that allow you to have a sort of heads-up display a VR display So I think you know in the coming Time period you'll see that those VR headsets get much lighter and actually ultimately that they get replaced by Micro electronic solutions that can be miniaturized much further than what we've seen so far. So yeah, it's a Very exciting opportunity. We've got another question here on whether hearing aids might be another potential market. So we have looked at hearing aids, although the key question that we have to ask ourselves is can solid state batteries really offer a differentiated solution. And there's a lot of quite compact solutions for hearing aids and earbuds. It may well be that when the cost point for stereo acts starts to come down as volumes of manufacturing increase, that that opens up an opportunity for hearing aids and earbuds. But at the moment, that's not a priority market, simply because actually in terms of the cost benefit is probably not as strong as it is for implanted medical solutions. Next question is, will Certek be the partner of choice to manufacture Steriax batteries that will serve non-medical markets like aerospace and industrial, or will you seek another manufacturing partner? Well, you know, in the first instance, we're going to be very focused on making the Certek relationship a success. And the batteries that are manufactured through that relationship will be available for sale into industrial IoT applications. If the volume of manufacturing of the applications gets to the point where actually it's beyond the appetite of Certec, then we will look at other manufacturing alternatives. You know, some of the large scale markets that require extremely low cost points may be better suited to other manufacturing environments. And we expect to have the flexibility and the relationship to be able to address those appropriately. So we've got a question here referring to Stereax sales. Can you indicate volume and value and are all sales currently for development prototypes or are there any commercial products?

Yes. So as we went through earlier, we have a wide range of different products that our batteries have been requested in relation to, and we hold orders from those customers, as you saw earlier. At the moment, all of those are in early developmental stages, so none of those are moving through into the later trials. Very much we need to conclude the Certec agreement and move the tech transfer at pace so that we can then increase the supply at volume to then satisfy those as they move through the regulatory approvals. Very much we've talked about that as being focused around the med tech sector. But as we move out to that higher volume of throughput, obviously there is the wider opportunity of the industrial Internet of Things applications, which may reopen up as we work with Certek to bring the price point of the Stereax batteries down and open up that secondary market, which, as they are not implanted devices, may come with a shorter approval time or time to market to be able to fill some of the gap that we would expect to see as items go through the regulatory period for implanted Class 2 or Class 3 medical devices.

So there's a question here on cash burn. So the cash burn is very high. Cash runway is about 11 months. And are you looking at reducing it, especially with progression of Goliath project? Jason, do you want to comment on that?

So I'd say that we certainly have more than 11 months of cash runway. The activity that we've already taken and mentioned earlier with the MOU signed and with the soon hopefully to be closed contract with Certec, we've taken the opportunity to reduce our spend on the STERIAC side of the business. And that was very much the cost driver from an operational point of view. As we discussed earlier, the energy intensity of running a small scale fabrication site in the UK is quite painful. So we have taken action to limit that. And through doing so, that has allowed us to reduce the spend overall and redeploy personnel where we need to, thus avoiding recruitment and taking on additional costs. across to the Goliath side of the business to make sure that we are supporting the speed of development of that activity so we actually expect that we will have reduced the operational cost of the business as we look forward to the next year but as we say we are looking to deploy the some of the capital that we do have on hand to the production tent equipment that allows us to prove that the Goliath cells are manufacturable on the large scale equipment that the automotives and their tier one manufacturing partners need to see us demonstrate to validate that those Goliath cells can be manufactured in mass scale.

Very good. So the next one is, does your relationship with BMW go beyond their place on the steering committee of the Faraday project? Well, look, formally the relationship with BMW is documented as being a member of the steering committee of that history program. We get a lot of informal support from BMW. They're a very supportive partner and we're very grateful for that. Any further formalization of that relationship is something perhaps for the future. We've got another one here. In terms of Goliath opportunities in the consumer products markets, do you have any active relationships or opportunities? Yeah, so we've talked about using Goliath for cordless consumer appliances. So we have a number of discussions that are ongoing to firm up the usefulness and utility of Goliath for applications such as handheld vacuum cleaners and beauty products and other household devices. You'll have seen that there's a trend in those sectors for an increasing use of handheld devices. Clearly there's nothing formal at the moment, but we expect that that is an interesting marker segment that we may pick up along the way as the Goliath technology matures. Next question is, how does your SSB development timing compare with the competition? So I would say that actually all of our competition is developing prototype cells. You know, there are no solid state batteries that are currently on the market and available in mass production vehicles. where we have seen solid-state battery packs used. Typically they've been in very limited numbers in sort of motor show vehicles. So I believe that actually we're still in that leading cohort of battery developers. And actually through our STERIAC cells, we are one of the early commercialization pioneers. And in that case, actually, we are ahead of the field. But I think your question mainly relates to automotive SSBs. And I think, as I said, most of the competition is still at prototype level.

Next question here is what's the capacity of your StereoX pilot line? What will be the cost of Certex line B and what will its capacity be? So the capacity that we have in our current facility is enough to satisfy the demands that we've demonstrated through the table that we went through earlier. Because, as we talked about, the volumes through the regulatory approval process are relatively low. Also envisaged within the MOU and tech transfer, we will be transferring a large proportion of that manufacturing line over to companies. to Certec in America so that we can short circuit and speed the process of them getting up to full manufacturing. So by using the equipment that we've already certified as being capable of producing, the Steriax batteries, that shortens the amount of time to get back up to higher volume. The reason for going with someone like Certec is that as a $500 million US-based company, with expertise in this arena, they are best placed to deploy additional capital when needed to scale up that line to cope with the additional demand as those products move through towards full regulation and to the market. But to give context, if one or two of those opportunities were to move through to full certification, they would potentially be enough to take up the full capacity that we currently have. So clearly there is plenty of opportunity for maximising the return from the equipment set that already is deployed and underpinning the business case for Certec to put in place further capacity to be able to take advantage of that volume.

Very good. So our next question is, is the 500 watt hour per kilo energy density a hard limit or will you be working on improving it further? So actually, that is a theoretical energy density limit based on the combination of materials that we have at our disposal. um it's possible that new materials will be developed that will enable that to be increased further but at the moment with to the best of our knowledge uh that is a theoretical limit next question have you actually had paid for sales of stereax and how many stereax can you manufacture by month So yes, we have had paid for sales of Steriax. So when we looked at that chart, they are back orders of paid for sales for Steriax for which we receive monetary compensation. And as we've made some deliveries in the early part of this year, that has started to fulfill that order book. And, you know, the plan is that once we transfer the technology to Certec, we will be able to manufacture 100,000 batteries per year. So the next one here is, can you once again define the specs of your STERIAC cells? Are M50 and M300 the only two standard sizes? And how it compares with medical industry micro battery alternatives such as those from Barta? How do zinc-air batteries compare in capacity and density? So, First of all, the M50 is a 50 microamp power battery. The M300 is a 300 microamp power battery, which is made by taking six M50s and stacking them and connecting them in parallel. They're the two sort of MVP building blocks that we have manufactured to date. We expect to be able to increase the capacity of our STERIAC cells to 1000 microamp hours, which means 1 milliamp hour. And we have that as a stated development target with CERTEC. A lot of the existing coin cells, you mentioned VATA there, they're of course larger than the STERIAC cells, but some of them have got larger capacities as well. So sometimes they are actually more suitable for different applications rather than the ones that we're chasing. For instance, you couldn't imagine a coin cell being stuck onto a contact lens and that being particularly comfortable. So there are definitely different target markets that we're chasing. In terms of zinc-air, zinc-air batteries are not generally recyclable. So again, they're for different applications to the ones that we're choosing for Steriax.

I think we've got probably time for one more question. So last question here is, what sales and marketing resource do Certec propose to a scientist selling Steriax? Are they focused only on the medical devices market? So I think just to take a step back, order book of customers and orders that we talked about earlier have been developed with a very very small team at Illica that has brought clearly some great potential and part of the advantage of the Certec relationship is they are already suppliers to a number of those customers so clearly they are already in that market and have a much larger commercial team looking to develop sales activity so that will hopefully open up a much broader range of opportunities for us in addition to that We've seen over the last couple of years, really since the pandemic, that companies have been recognizing that having a long extended supply chain is really opening them up to potential disruption if there is a problem within that supply chain as the pandemic and then the supply chain issues we saw after that demonstrated. So having the manufacturing base within the US where the major market currently appears to be should be a real advantage for helping to bring in new potential orders and people interested where they may not have been so enamored with looking at a smaller company based over in the UK. So that clearly should open up further opportunities. While Certec are focused around the MedTech sector, they are open to sell into any forum and we will continue to operate our own commercial team to look for other opportunities and ensure that we don't miss out on anything that is not MedTech focused to ensure that we have the biggest possible range of new customers that we can identify and work with.

Graham, Jason, thank you very much for that. You've been very generous with your time. We've actually gone over the hour and I think you've addressed all those questions you can from investors. And of course, the company will review all the questions submitted today and will publish those responses on the Investor Meet company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to you both, Graham, can I just ask you for a few closing comments?

Well, I'd just like to thank everyone for taking their time to dial in today. It's been a very vibrant Q&A session. And I want to just confirm that Jason and I will take the time to work through the remaining questions and we'll provide answers as appropriate. So once again, many thanks, guys. Perfect.

Graham, Jason, thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. It's going to take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Illica PLC, we'd like to thank you for attending today's presentation and good afternoon to you all.