Fusion Fuel Green PLC

Ladies and gentlemen, thank you for standing by and welcome to the FusionFuel Green Q1 podcast. At this time, all participants are on a listen-only mode. If you require operator assistance during the program, please press star then zero. I would now like to turn the call over to your host, Ben Shores, head of investor relations. You may begin.

Thanks so much. Hello, everybody, and welcome to FusionFuel Green's 2021 first quarter update call. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements, including but not limited to The company's expectations or predictions of financial and business performance, which are based on numerous assumptions about sales, margins, competitive factors, industry performance, and other factors which cannot be predicted. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions, and they are not guarantees of performance. I encourage you to read the disclaimer slide in the investor presentation for discussion of the risks that may affect our business or may cause our assumptions to prove incorrect. The company is under no obligation and expressly disclaims any obligation to update alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise except as required by law. In terms of how the next hour will proceed, we'll have a brief presentation by management before opening up the floor for Q&A. Please submit your questions in writing. If you joined online, you can do so on the webcast platform. And if you've dialed in, you can email your questions to ir.fusion-fuel.eu. So at this point, I'd like to turn the call over to Fusion Tools CFO, Federico Figueroa de Chavez.

Great. Thank you so much, Ben. And thank you, everyone, for joining us today. Today's a very exciting day for us. It's our first Call to the Update call as a public company. So you have on the call with me today also Joao Vannon, our head of business development, and Jaime Silva, our CTO. So we'll be doing the event, the three of us, providing different updates, and then we'll all be here for Q&A as well. In addition, we have also our chairman, Jeffrey Schwartz, on the call as well in case anyone has questions for him as we go. So first, what we will do is we have a few new joiners on this call. I'll start by briefly recapping what it's about HART, HART Fusion Fuel. And then we'll go on to provide a brief financial update before going into more detail on the latest developments of the fund. So then if we can go to the next slide. And the one up there. Okay. So on... Sorry, my apologies. focus on fusion side. So just to remind everyone on the fusion fuel story, we are a green hydrogen technology and industrial player. We provide both the technology for clients to produce their own green hydrogen, and also we will sell and provide green hydrogen as a product to industrial players. Our origin comes from the solar concentration industry. And at the start of 2018, we began the R&D process of creating our own electrolyzer solution. Through that, in essence, what was created was an integrated concentrated solar to hydrogen solution that is off-grid. We use a revolutionary miniaturized electrolyzer technology. You see an image there on the left-hand side. We have modular and scalable units. miniaturized electrolyzers attached, a couple of hundred of them, attached to the back of that solar panel you see on the left. And each of those units can produce around one ton of green hydrogen per year using solar radiation, up to two tons with day and night production. And therefore, it's a very modular and scalable solution for our clients. With it, we've been able to deliver one of the leading green hydrogen production costs in the industry. We have a team with a high degree of experience in this space and one of the highest Penn-based electrolyzer efficiencies in the market. And this is what, at the core, is a fusion fuel. So everything stems from this core technology that I've mentioned. And the two business lines that we have are both selling the technology and selling hydrogen as a product. Going forward, we'll provide quarterly financial updates along the lines of the tables in this presentation. Given our size currently and activity levels, we won't provide full quarterly financial results, but instead make sure that all key financial data is shown on a regular basis so that you can track our progress and see where the company is at any point in time. Currently, we're not showing debt levels in the charts that you will see in a few slides. As the company has no debt, business developers will introduce these elements into our financial updates, along with the production quantities as well. What you can see on the slide here is some highlights of the quarter. I will cover the financials in more detail in the coming slides. But I want to note that the first quarter was an incredibly busy start of the year, right from the first few weeks. We've already mentioned some of the projects here in our investor day in January, but I'll recap the main highlights. During Q1, we entered into two different MOUs to explore synthetic fuel plants using fusion fuel hydrogen in Portugal. One was with Grupo Industrial CL. which operates a steel mill and looking to use the carbon emissions from that steel mill. The other was with Magnesitas de Rubian in Spain as well, looking at the carbon emissions from the mining activities to also make then synthetic fuel plants. We established a partnership with CEES in Spain. That is the Association of Server Stations in Spain to actually look at introducing green hydrogen fueling infrastructure and supply across Spain. Linked to that one was the MOU with Zoilo Rios to develop green hydrogen for the first integrated green hydrogen refueling stations in Spain. And then lastly, we also announced the partnership with BGR Energy Systems in India to build a demonstration plant and start the business development activities in India. We've had some more recent business development updates, but I know João will dive into those a little bit deeper in a few minutes, so I will let him cover those. Next slide, Ben. Financial overviews, I want to note that we have revenues of around 500,000 euros related to the purchase and then subsequent sales of custom-made components to our production partner. So what you're seeing there is the revenues and the cost of sales effectively netting each other out, as this is the way that we are securing these custom-made components and securing the stock of these and then making them, putting them at the disposal of the production partner to then build the final HIPO solar unit. We expect that this back and forth will continue throughout the year. And this is of strategic importance to us because it makes sure that we are actually in control of the stock for these core components throughout 2021. Cash and cash equivalent at the end of Q1 was around 62 million, just shy of 62 million euros, up from 58 million at the end of the year. The increase was mainly driven by capital inflows from the conversion of around 1.1 million warrants, leading to inflows of 12 million US dollars throughout the quarter, I should say. The operating losses of around $6.5 million are effectively driven by a charge of $4.9 million related to share-based payment expenses that were part of the transaction. So these are charges related to the potential share and warrant issue obligations that was part of the business continuity agreement. These are not cash expenses. I think it's important to recognize the same way that we had as can be seen at the end of 2020, large transaction listing expenses, which were also not cash expenses. These are all related to the transaction. We'll note that these expenses are actually expected to continue throughout the year, and they will continue until end of June 2022, the 4.9 roughly $4.9 million each quarter. Other expenses beyond, so the net of that, roughly about $1.6 million, are related to, I would call our fixed costs of payroll, lease, insurance, and so on, of around $250,000 per month. Intellectual property transfer charges, again, part of the of the legacy sort of contracts pre-Business Combination Agreement of 250,000. We have two more quarters of those payments to go. And then project production upfront payments of around €1 million. So these are in order to secure the production units, a portion of the product charges we pay upfront. Then we start paying the remainder of the materials as we take delivery within a success fee at the end of the production projects. Lastly, the pre-tax income was positively impacted by around $15 million of positive movement based on the changes of the fair value of the outstanding warrants. This is simply reflecting the lower valuation of the warrant price versus the end of December, which then we can release those $15 million. So we will see that that will continue to move until the warrants are fully converted. And we will always break that out for you so that it's clear. Again, this has no cash expense, not a cash impact. But we'll transparently always carve this out so that people can follow and understand where the numbers are coming from. Next slide, Ben. So we currently have 13.1 million shares outstanding. The increase was driven by what I mentioned before, the conversion of around 1.1 million warrants during the first quarter. Currently, the firm has around 5.5 million tradable warrants that are outstanding, in case anyone wants to keep a track on that figure. If all of those 5.5 million warrants were converted, that would represent around a $64-65 million U.S. dollar capital increase. So as I mentioned before, we will look to provide this sort of financial overview every quarter. We'll also go adding items as the firm sort of grows. So when we take on debt, when we have substantial assets to show as well, we'll start including these and building these out. So as a foreign issuer, we're not required to do the very intense full quarterly financial results. but we still want to make sure that our shareholders have all the information needed to keep an eye and a track on how they're doing. So with that, I'll move on to the business updates and our 2021 milestones. So as we mentioned in our investor update in January this year, We have three core priorities and strategic priorities for the year. The first is the go-live of the Evera plant and the installation of that Evera plant. The second is the signing of strategic MOUs partnerships as well as hydrogen purchase agreements so that we are well on our way to execute and deliver on the business plan we presented. The third is the build out, then installation, and then subsequent go-live of our fusion fuel production facility in order to be able to manage with the expected much larger production numbers that we are targeting in the business class. So those are the three core priorities for the year. We'll now give you an update on how we are in each of those, and then towards the end, finish. So, as well.