LiqTech International, Inc.

Good day and welcome to the LIC Tech International fourth quarter and fiscal year 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Robert Bloom with Liftham Partners. Please go ahead.

All right. Thanks very much, Operator, and good morning and good afternoon to everyone. Thank you for joining today's conference call to discuss LickTech International's fourth quarter fiscal year 2024 financial results for the period ended December 31, 2024. Joining us on today's call from the company are Fei Chen, Chief Executive Officer at David Kowalczyk, the company's recently appointed chief financial officer and chief operating officer, and Philip Price, the company's recently announced interim chief financial officer. Before I turn the call over to management, let me remind listeners that there will be an open Q&A session at the end of the call. If you dialed into the call through the traditional teleconference line, as the operator just indicated, please press star then one to ask a question. If you are listening through the webcast portal and would like to ask a question, you can submit your question through the Ask a Question feature in that webcast player, and we'll look to take those questions at the conclusion of the call. Before we begin with prepared remarks, we submit for the record the following statement. This conference call may contain forward-looking statements. Although the forward-looking statements reflect the good faith and judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed during the conference call. The company therefore urges all listeners to carefully review and consider the various disclosures made in the reports filed with the Securities and Exchange Commission, including risk factors that attempt to advise interested parties of the risks that may affect our business, financial condition, operations, and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, the company's actual results may vary materially from those expected or projected. The company therefore encourages all listeners not to place undue reliance on these forward-looking statements, which pertain only as the date of this conference call and press release. The company assumes no obligation to update any forward-looking statements to reflect any events or circumstances that may arise after the date of the press release and conference call. With that said, I'd like to turn the call over to Fei Chen, CEO of Lookdeck International. Fei, please proceed.

Thank you, Robert. and good day to everyone on the call. At a high level, the fourth quarter results came in line with expectations we provided back in November with revenues of 3.4 million. This represented a 37% sequential increase from the third quarter. The biggest contributors to the sequential growth was ongoing water filtration pilot programs for lithium Brian Production Pretreatment in the U.S. and another for a petrochemical company for microplastics remover. I will touch momentarily on why these pilots are critical to the long-term adoption in these markets. All told, revenue within our water treatment systems operations was up nearly 750,000 or 108%. sequentially and was a key driver to the improved financial results. The key milestone, however, during the first quarter was clearly the record commercial order we received from Razorback directs for our PureFlow mobile units for customers in the North American energy sector. this order in December and completed it during the current first quarter of 2025. With this order already in hand, we have strong visibility into a much improved first quarter with expectations for revenue to be between 4.3 and 4.7 million, equating to 26% to 38% sequential revenue growth. This landmark commercial oil and gas order in North America is a remarkable milestone for LITSEC as we continue to validate our solutions in the global energy industry. I will come back to this more in a moment. As we mentioned last quarter, another key activity during the fourth quarter was the implementation of a cost reduction strategy aimed at lowering our break-even target. measured on a just EBITDA basis to a quarterly revenue round rate of approximately 5.5 to 6.0 million. These initiatives include a reduction in headcount, basic salary for senior management, and the cash compensation by the board of directors. You will start to see these initiatives flow through the income statement more fully in the first quarter. So with revenue growth expected and the cost savings implemented, we are improving our profitability metrics with the ultimate goal to be profitable later this year. So the high level summary. Improved sequential revenue growth in Q4 lead by a number of water filtration pilots underway. of a record oil and gas order, which completed here in Q1, which will contribute to another quarter of sequential revenue growth. And the implementation of cost savings initiatives aimed at lowering our break-even rate to about 5.5 to 6.0 million per quarter. And as a reminder, with the private placement, we completed back in late September, our balance sheet is strong with more than $10 million in cash at the end of the year. Transitioning back to the record oil and gas order, as we have talked since I joined the company about two years ago, we recognized that there was a large addressable market opportunity for our solutions in a wide variety of markets that can drive growth for Leedsix. These large system solutions in the area of industry water treatment, oil and gas filtration, battery materials purification, and other industry applications are ideally suited for LICTEX solutions. Unfortunately, these markets have much longer sales cycles and often times require initial pilot programs before full commercial implementation occurs. We also recognize the need to work with groups that have strong relationships with end customers. To these two ends, we entered into a distribution agreement to commercialize Littics' produced water treatment filtration solution for reinjection and reuse in February 2024 with Resubac Direct, a Houston-based company providing water treatment solutions consultancy for oil and gas water treatment in the U.S. We followed that initial engagement with respect directly up about a month later with the receipt of a significant order for a containerized pilot system for produced water treatment. The order was shipped shortly thereafter and operated satisfactorily at the customer's site throughout the second half of 2024. With positive results showcased with this customer from the pilot program, it leads to this new record commercial order, which will be deployed at one of Razorback director's customer sites in North America. I remind everyone of this pathway to receiving this order because it highlights the steps needed to penetrate with very large industry opportunities. They oftentimes require pilot programs first that then lead to commercial orders. Now I do believe that the next steps within oil and gas will hopefully become much more accelerated. We now have a commercial level system in place that can be a highlight for future customers reference. It doesn't mean that a different customer may not want to conduct their own pilot programs. But hopefully, this should shorten the timeline to future adoption. I want to thank the team at Razorback Direct for their commitment to delivering demonstrated value to their customers by delivering efficient, reliable, and robust solution for complex water challenges. As the CEO of Razorback Direct stated recently, The results of the pilot exceeded expectations, providing clear evidence of the system's capability to meet the demanding needs of our industry. This order further solidifies our beliefs in LICTEC's ability to drive meaningful advancement in water management. This is a strong testament to what we believe will be a very bright future for us within the oil and gas industry. As the history of progress with Rieseberg Direct within the US oil and gas industry highlighted, the first steps to new application success with our filtration systems often starts with a pilot level program. Currently, we have five systems at the various phases of testing and the piloting, including a pilot unit from a leading technology company For lithium brine production in the US, we announced in November and has recently been extended through the end of April for evaluation. A pilot unit with a US petrochemical company for microplastics remover, which was shifted in quarter three, for which we are currently waiting next steps. One with one of the world's leading integrated energy companies, for produced water treatment in the U.S. was shifted in Q3 for last year. The system is currently active and has been extended through to the end of May, at which time we will await next steps. We also recently commenced a pilot testing with an engine manufacturer in China as part of our CAV, which I will touch on more momentarily. And finally, in the Middle East, We have a pilot with NASA, which was completed in Q2 of last year, and the legacy system in the Middle East, which has now been operational for more than three years. The Middle East continues to be slow in its adoption. Our focus is therefore increasingly directed towards the US markets. Beyond these pilot programs, Within the last year or so, we have also solved units in key end markets, including a unit for MEG recovery for an offshore project in Mediterranean, multiple marine squabble units in China, a wastewater treatment system for the metro processing industry in Denmark. Also, we have solved a number of pool system units over the past two years. Each of the various areas I mentioned represent large addressable market opportunities for Leetech. Our team is highly focused on advancing each of these pilots to successful outcomes that we believe have the ability to lead to large scale commercial orders this year. A market for us that was very strong for a number of years but has slowed down in the past three years has been the marine scrubber and the border marine markets. We still believe this represents a large addressable market for DTIC. We just need to be properly positioned with engine manufacturers and the shipbuilders to regain market share. To that end, a few weeks ago, we received supply approval for our waste treatment water treatment system for the WEN-GD dual fuel engine. For those not familiar, WEN-GD is one of the market leaders in marine engine manufacturing with a focus on advancing the decarbonization of marine transportation. This supplier approval allows us to seamlessly deliver systems to WEN-GD its licensees and their authorized service partners. During the first quarter, we announced the establishment of a GAV in China to expand our focus within the marine market. DTIC will be the majority owner of the GAV, where our partner GeoTree will be a minority owner, contributing facilities and the local support along with initial operational and commercial funding. Since our call in November, we have brought a general manager, technical service manager, two technical sales managers on board. The team has moved quickly to engage with one of the leading engine manufacturers in China with pilot testing. The results are expected in quarter two this year. I recently came back from China and have participated in the pilot test of our water treatment system on the engine side, I have also got the chance to meet and interact with many relevant major stakeholders in China. As most of you are familiar, it is much easier to work with China-based companies by having operations on the ground in the country. With the GAV now up and running and pilot testing underway, I believe that the opportunity to truly expand in this large addressable market is better today than at any point in the past. Before I turn it over to David and Philip, let me quickly touch on a few other key markets with a brief update. First, within the swimming pool market, we shipped two systems during quarter four and have another two systems set to ship here in quarter one. We also signed a distribution agreement this month to expand our focus in Ireland, with the first order under this agreement scheduled for delivery in Q2 2025. Since received NSF approval in November last year, we have been actively searching for potential candidates for distribution in the US. Swimming pools will remain a key contributor And I look forward to more progress made here. Transitioning to other parts of our established markets, starting with DPFs and ceramic membranes, where sales during quarter four were about 1.1 million, which was similar to what they were in quarter three of 2024. These markets contributed to remain consistent contributor for us. We think plastic. We saw a nice uptick during Q4 with revenue of almost 900,000, which was up 13% compared to Q4 of last year and up 34% sequentially. The plastics team continues to do a great job differentiating itself and is generally outperforming our expectations. So with stability in our key established markets, a record oil and gas commercial order in the US, a wide variety of pilot programs underway, which oftentimes is a prelude to much larger orders. And of course, with exciting partnerships, GLE and supply approvers in place, we are well positioned heading into 2025. One other key move we made was the appointment of David Kowalski as the new Chief Financial and Operating Office of Leetec effective March 1st of this year. As you hopefully saw in the announcement we made in January, David brings our 20 years of leadership experience and a proven track record in global industry companies. His expertise spans Finance, Strategy, Equity Analysis, Audit and Operational Management. Let me now turn the call over to David to introduce himself.