Advent Technologies Holdings, Inc.

technology second quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session open to Advent's analysts. On the call today, we are joined by Dr. Vasily Grigorio, Advent's chairman and CEO, and Kevin Brackman, Advent's CFO. Before we begin the prepared remarks, we'd like to remind you that Advent issued a press release announcing its second quarter 2023 financial results shortly before market open today. You may access the materials on the investor relations section of the company's website, www.advent.energy. I would also like to remind everyone that during the course of this conference call, Advent's management will discuss forecasts, targets, and other forward-looking statements regarding the company's future customer orders and the company's business outlook that are intended to be covered by the safe harbor provisions of the private securities litigation reform act of 1995 for forward-looking statements while these statements represent management's current expectations and projections about future results and performance as of today athens actual results are subject to many risks and uncertainties that could cause actual results to differ materially from those expectations. In addition to any risks highlighted during this call, important factors that may affect Advent's future results are described in its most recent SEC reports, followed with the Securities and Exchange Commission, including today's earnings press release. Accept as required by applicable law. The company undertakes no obligation to update any of these forward-looking statements for any reason after the date of this call. Lastly, information discussed on this call concerning the company's industry competitive position in the market in which it operates is based on information from independent industry and research organizations, other third-party sources, and management estimates. Management estimates are derived from publicly available information released by independent industry analysts, analysis, and other third-party resources, as well as data from the company's internal research and are based on assumptions made upon reviewing such data and with the knowledge of such industry and markets, which it believes to be reasonable. These assumptions are subject to uncertainties and risks, which could cause results to differ materially from those expressed in the estimates. Please note that this call is being recorded. Kicking off the call will be Dr. Vasili Gregorio. Dr. Gregorio, I now turn it over to you.

Thank you, operator. Good morning to everyone listening in, and thank you for joining us on Advent's second quarter 2023 earnings call. On today's call, I will provide an update on the business. I will then hand over to Kevin, who will give a review of our financial performance and outlook in more detail. During my last update on May 15, I highlighted that Aden has further consolidated its business operations and was focusing on the core sectors of mobility and stationary power. This has continued in the second quarter, with a gradual improvement in our cash burn as various non-costs are eliminated. We remain focused on expanding and executing on commercial pipeline with a view to embedding our technology and product portfolio in this key power sector. We also maintained our capital investment program in state-of-the-art equipment that's required to complete a scaling of production capacity. We intend for this progress to continue towards large-scale manufacturing as soon as our green hippo project commences. We believe that the future demand for ADMIN's high-temperature PEM technology and related products will create a significant opportunity, and we believe ADMIN will be ideally positioned to capitalize on these two suitable partners. We look forward to growing our commercial activities and achieving long-term profitable growth. Our business focus is on the production of advanced fuel cell materials and the development of advanced fuel cell systems, leading to direct sales. In addition, joint development agreements with OEMs will enable us to enter into long-term licensing and supply agreements. I will now give an overview of our recent business updates. BASF Environmental Catalyst and Metal Solutions, a global leader in precious metals and catalysts, in Advent concluded the terms of a new agreement to join efforts in building a full loop component supply chain for fuel cells. For the past 20 years, BE7 Environmental Catalyst and Metal Solutions has been a leader in membrane MEA technology for high temperature PEM fuel cells with a strong foundation in precious metal services and catalysts. ADVEN is a significant manufacturer of high temperature PEM fuel cell systems targeting emerging markets in the field of sustainable and decentralized energy, such as stationary power that can replace diesel generators, maritime power for in-methyl fuel cells, and heavy-duty mobility. High-temperature fuel cells operating at 120 to 100 degrees Celsius offer a broad operating window and can tolerate impurities in the hydrogen fuel gap. These fuel cells also enable simplified cooling and no required humidification. ADDEN offers competitive fuel cell systems for stationary and portable applications based on methylene and on-site reforming. Looking ahead, high-temperature PEM fuel cells will also be available for heavy-duty mobility and maritime power. The scope of the agreement includes BASF's role in scaling up MEA production at ADDEN's state-of-the-art manufacturing facility in Western Macedonia, Greece, while offering Advent its full portfolio of products and services to enable circularity in key materials. Both companies will cooperate on BASF's latest membrane development, TELTEX-Z, and the new ion-pair MEA membrane by Advent, aiming for improved performance, lifetime, and cost competitiveness. In the airspace sector, ADVENT signed a memorandum of understanding with Safran Power Systems, a leader in auxiliary power systems and turbojet engines. Leveraging ADVENT's propriety around per-MEA technology and Safran's aerospace knowledge and capabilities, the new collaboration will seek to advance the development of next-generation high-temperature PEM fuel cell technology specifically for the aerospace sector. High-temperature PEM enables more efficient heat management versus low-temperature PEM. High-temperature PEM is more adapted for applications requiring high amounts of power combined with strong degradation constraints as in aviation. High-temperature PEM is more robust and can withstand tougher variation conditions such as extreme temperatures and pollution versus low-temperature PEM. The collaboration further supported by a strong research consortium included the Research and Technology Center of Safran Group, the French Alternative Energies and Atomic Energy Commission, Fraunhofer Institute, the French National Center for Scientific Research, the University of Strasbourg, and the IMDEA Energy Institute. Led by Safran Power Assist Units and with the support of ADVEN, the consortium shall secure the grant for the Clean Hydrogen Permissive Nymphaea project. Running from 2023 to 2026, the project is funded by Hydro Horizon Europe, and the project's main objective is to develop an aircraft-compatible next-generation high-temperature PEM-MEA. This involves optimizing and enhancing various components, such as the catalyst layer, membrane, and gas diffusion layer. Adenchion PEM-MEA technology serves as the foundation for this advancement. As part of the newly signed MOU, Advent and Safran Power Units are exploring a joint development agreement for the advancement of high-temperature Penn fuel cells in aviation and for enhancing Advent's supply capability. In May, Advent announced a contract with a prominent fuel cell manufacturer specializing in track application in the East Asian market. Under this contract, Advent will supply high-temperature Penn MPAs to support the deployment development of advanced fuel cell solution for trucks. The contract has a combined value of $1.1 million and comes after a highly successful testing phase of ADVAN's proprietary MBA technology conducted by our customers. ADVAN will deliver high-temperature PEM MBAs with a projected continuation of deliveries aligned to the customer's specific time frame. The use of ADVAN MBA technology in fuel cell Power tracks is a critical and substantial enhancement to EV technology, effectively tackling the challenges associated with charging infrastructure and the limited range of pure EVs. MEAs are the critical component of fuel cell systems and have a pivotal role in determining the overall performance, durability, efficiency, weight, and cost effectiveness of the electrochemical products they empower. Advanced electrochemistry components business include electrodes, membranes, and MEAs. These components are critical for fuel cell electrolyzers and for long-duration energy storage, such as low batteries. In June, Adam participated in the second European Electrolyzer Summit held in Brussels. I was part of a delegation of 30 CEOs representing the European electrolyzer manufacturing sector in a meeting with European Commissioner Thierry Breton. The primary purpose of the meeting was to discuss and address the objective outlined in the joint declaration of the May 2022 EU Electrolyzer Summit. The meeting, jointly organized by the European Commission on Hydrogen Europe as part of the Electrolyzer Partnership, brought together approximately 44 companies actively involved in the European electrolyzer supply chain. Following the second European Electrolyzer Summit, the industry remains steadfast in its commitment to achieve the ambitious goals set out in the RepowerEU communication. The objective is to accomplish 10 million tonnes of domestic hydrogen production and import 10 million tonnes of hydrogen by 2030. As part of this commitment, the industry is planning to significantly increase electrolyser production in the EU, aiming to ramp up capacity by a factor of seven within seven years. This will involve scaling up from the current 3 gigawatt production capacity to approximately 21 gigawatt by 2025. In a recently published document, the partnership members and the European Commission provided an update on the progress that has been made one year after the sign of the joint declaration. The document highlights the industry's continued efforts to expand its European footprint as the regulatory framework works closer to completion. Notable developments include the renewable energy directive, delegated acts of additionality, and the hydrogen bank. For Advent Green HIPPO project, we provided an update in May on its status. This update highlighted the recent milestone achieved so far, emphasizing the collective dedication of the entire Advent team towards decarbonization and the transformation of the clean energy landscape increase in Europe. Most notably, one, ADVAN successfully acquired the ownership rights to a prime parcel of real estate located in Kozani, Greece, where its planned state-of-the-art facility for the Green Hippo IPCI project is expected to be located. This land acquisition underscores ADVAN's unwavering dedication to establishing a robust infrastructure that will effectively and strategically support the objectives of the Green Hippo IPCI project. ADVIANS has also set up a coordination and planning office in the center of Kozani, which will serve as the operational hub for the Green HIPAA-PCI project. Second, ADVAN has initiated the process of identifying and hiring key professionals, such as scientists, engineers, and managers, who will play integral roles in the new state-of-the-art facility in Kozani. These individuals will drive critical functions, such as research and development, first industrial deployment, and supply chain management. Their expertise will be instrumental in the development, design, and manufacture of innovative fuel cell systems and electrolyzer systems. ADRON's careful selection process will ensure that top-tier talent is recruited to support the successful execution of the Green Hippo IPCI project, thereby ensuring the project's success and innovation. On August 4, 2023, ADRON was informed by the Ministry of National Economy and Finance that the Greek state is currently reviewing the financing of IPCI I2Tech. Accordingly, and as a prerequisite for unlocking the state aid funding for GreenHippo, the Greek state is examining and planning ways to implement actions and to strengthen initiatives that will contribute to the transition of the productive and growth model of the Greek economy towards climate neutrality. Parameters for the planning of such actions include implementing projects at specific times, the availability of the completely proposed plan, as well as compliance with regulatory obligations and guidelines regarding the management of European funds. We will provide further updates on GreenHippo at an appropriate time. AVEN is suitably positioned to take advantage of the growth focus on clean energy. We will continuously advance our technology and consolidate our operations to address new and key opportunities. We have a product portfolio that's focused to enable a green economy, one that will reduce the reliance on fossil fuels and will decentralize the energy supply market, therefore providing energy security to communities and economies. With that, I would like to hand over to our CFO, Kevin Brackman.

Thank you, Vasili, and good morning, everyone. Thank you, Vasili, and good morning, everyone. Turning to our financials, we delivered revenue of $1.1 million in the second quarter, and income from grants of $0.7 million for a total of $1.8 million. R&D expenses were $2.9 million in the second quarter, primarily related to internal R&D costs incurred in each of our businesses, as well as our Cooperative Research and Development Agreement with the Department of Energy. Administrative and selling expenses were $8.3 million in the second quarter, combined with R&D Total operating expenses were $11.2 million, a year-over-year increase of $0.6 million, primarily related to an increase in research and development costs, as well as expenses related to our new Hood Park facility in Charlestown, Mass. We recognized $9.8 million of asset impairment charges in the second quarter, mostly related to the assessment of goodwill and other intangible assets from the company's acquisitions in 2021. Net loss in Q2 was $21.8 million, or 41 cents per share. Unrestricted cash reserves were $10.1 million as of June 30, 2023, a decrease of $9.5 million from March 31, which includes $3.4 million of cash that we raised from the company's equity line of credit with Lincoln Park Capital, $1.9 million paid to complete the acquisition of the fuel cell systems business in Denmark, Germany, and the Philippines, $0.8 million paid to acquire land in Kazani, Greece for the Green Hippo project, and $0.4 million paid for the build-out of the Hook Park facility. Our existing cash balances and projected operating cash flows are not expected to be sufficient to support planned operations for the next 12 months. However, in addition to the potential funding from the pending GreenHippo project, we finalized an agreement in April this year for an equity line of credit with Lincoln Park Capital which gives us the option to access up to $50 million of capital over the three-year term. The utilization of this equity line of credit is at Advent's discretion and provides us with an effective buffer that may be used alongside other funding routes. As I mentioned earlier, we raised $3.4 million in the month of June using this equity line of credit, sufficient to cover our current monthly run rate for operating and capital expenses. We also implemented in June an at-the-market equity program with HC Wainwright as sales agent, under which we may sell up to 50 million of shares of the company's common stock through the agent without any commitment from Advent. We did not utilize this ATM facility during the second quarter. Aside from raising capital, we will continue to manage our cost structure closely and capitalize on opportunities to reduce costs where possible. Let me now turn to our outlook. Advent has a strong pipeline of opportunities. As we all know, however, not every opportunity in the pipeline will transpire due to factors that are beyond Advent's control. Opportunities may not materialize or could be delayed. Due to the long-term contract nature of our business model, the timing of our revenue can also be difficult to predict. Due to the level of uncertainty caused by these factors, as well as the fact that GreenHippo is still under review by the Greek state, we are not providing an outlook for revenue and income from grants for 2023 on this call. With that, I will hand back to Vasili for closing remarks.