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Steakholder Foods Ltd.
5/21/2024
It is now my pleasure to introduce your host, John Mills with ICR. Thank you, sir. You may begin.
Good afternoon, everyone, and thank you for participating on today's business update call for Stakeholder Foods. Today's call is being recorded. Joining us today is Stakeholder Foods co-founder and CEO, Arif Kaufman, and Stakeholder Foods Vice President of Finance, Mehran Attar. Certain comments made on this call include forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1985. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to a number of assumptions, risks, and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to the company's filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements made today. Following prepared remarks, management will take questions from the investment community. Now, I'd like to turn the call over to the CEO of Stakeholder Foods, Mr. Arik Kaufman. Please go ahead, sir.
Good morning, everyone, and welcome to today's call. Our goal is to start hosting these calls on a semi-annual basis in order to provide our investors in the United States and globally increased transparency into our activities and regular updates. 2023 was a transformative year for our company, marked by significant technological breakthroughs, key strategic partnerships, substantial progress toward commercialization, and a strategic shift in our business model that has positioned us for long-term growth and success. We made a decision to pivot the focus of our business model to target B2B food companies and specifically meat manufacturers by offering them the ability to produce in commercial scale an alternative protein product that aims to closely mimic the taste, texture, and appearance of traditional meat. Our business model focuses on selling our 3D printers and premixes. We believe that providing 3D printing production methods that are capable of closely mimicking meat and fish texture, alongside with the premixes to B2B clients, positions us to become a key supplier that enables the production of products that consumers desire and expect. The recognition and accolades we received throughout 2023 are a testament to the quality of our cutting edge technology and the potential of our new offerings. One of the most noteworthy highlights was having the Prime Minister of Israel visit our facility to experience our 3D printing capabilities firsthand. This high-profile visit garnered significant attention and validation from respected voices with our sector. However, our achievements extend beyond mere recognition. The true measure of our success lies in our ability to translate these milestones into tangible results. In the first half of 2024, we made a crucial transition from R&D into commercialization. This significant step from R&D to revenue generation is a validation of our strategic pivot and represents a powerful shift, not just for stakeholder foods, but for the future of food production around the world. With our proprietary technology and production processes now being implemented at commercial scale, we are making significant progress towards bringing these products to consumers in collaboration with our strategic partners. I'll now share the highlights from this past year and provide an update on our recent activities and future outlook. On the technology front, since the beginning of 2022, the company's development of its proprietary 3D printer has led to exciting achievements in terms of new products, capabilities, and development milestones. In 2023, we continue this path with groundbreaking achievement of our 3D printed ready to cook cultivated grouper fish product. Unlike fully cultivated meat products which still require incubation and maturation after printing, the grouper fish product is ready to cook after printing thanks to our unique technology that allows the mimicking of flaky texture of cooked fish. This product validated our printing technology and premixers technologies as a sophisticated production platform capable of creating structured hybrid and cultivated products across multiple species. Importantly, this versatile platform also opens up opportunities for strategic partnerships with various companies and industry players looking to bring cultivated products to market at the next generation of plant-based products. At the end of 2023, we launched the world's first plant-based 3D-printed eel. Not easy feat, given the complex texture of eel and the game-changer for fish and seafood producers, enabling them to generate vast quantities at competitive prices compared to traditional products. And more recently, in January 2024, we further expanded our 3D-printing capabilities with the world's first plant-based 3D-printed shrimps. Complementing the rollout of these new products was a significant upgrade made to our industrial scale 3D printer in 2023, substantially enhancing our production capabilities. The upgrade allows for faster printing speeds, increased reliability, and the ability to create more intricate designs, all with a view to ensuring a stronger competitive edge in the market. Additionally, we launched our state-of-the-art light CAD editor, heralding a new era of 3D modeling customization. And concluding our technological strides was the introduction of stakeholder foods beef steak premix, formulated for use with our meat printing technology. This groundbreaking premix is poised to set new benchmarks in the alternative protein market and helps broaden the company's production portfolio. Each of these technological milestones signaled our shift from a primary R&D orientation to robust commercial readiness. We solidified our B2B approach in 2023 through a significant partnership with a Persian Gulf governmental entity, setting the stage for our entry into new markets, intensifying our R&D and commercialization agenda. In July 2023, we've entered into a memorandum of agreement with the GCC governmental body, to be our strategic partner in advancing food security using our 3D printing technology. This agreement marked a huge step forward for bringing our transformative technology to commercial scale. This momentum carried out into 2024 with our first private sector commercialization deal in February 2024, a multi-million dollar agreement with Weiler Farms, a leading alternative protein producer, a premier tofu producer in Israel. Viola Farms signed an MOU to acquire our 3D meat printer along with subscription to our stakeholder food software platform and our pre-mix blend for plant-based meat production. Installation of the printer is expected between the fourth quarter of 2024 this year and first quarter of 2025. The momentum with Viola Farms accelerated further with the signing of the first commercial cooperation agreement with Viola Farms in May 2024, officially marking our transition from the R&D stage to the commercialization stage of our life cycle. This pivotal deal expands the scope of our partnership with Viola Farm. Viola Farm will manufacture plant-based minced meat and burgers products at commercial scale using our stakeholder foods premixes and proprietary know-how, paying us royalties on sales. The production of new plant-based products is expected to begin in 2024 using stakeholder foods meat premixes. Viola Farms will leverage their market strength to manufacture and sell these products widely with a modest initial commercial revenue contribution expected by year end 2024. Looking ahead, we are actively negotiating a follow-on deal for Viola Farms to produce our flagship 3D printed beefsteaks and other products using our revolutionary 3D printing technology. This commercialization path validates years of cutting edge R&D by our team reinforces our leadership in plant-based and cultivated food innovation and exemplifies the immense growth opportunities as we extend our higher versatile technologies across new product categories and markets worldwide. Importantly, it opens the door for more transformative commercialization deals like this across multiple species and product categories. This positive trajectory continues with yet another major commercial agreement Earlier this week, we announced a partnership agreement with the Industrial Technology Research Institute, ITRI, a world-leading applied technology research institute in Taiwan. The purpose of this partnership is to develop and commercialize a range of food products utilizing our advanced 3D printing technology and plant-based premixes, but tailored specifically for the Taiwanese cuisine. Our company, in collaboration with ITRI, will develop high-quality plant-based meat alternatives that empower Taiwan to independently produce meat substitutes. ITRI is a perfect partner for us due to their cutting-edge food technologies, expertise in material science, and deep understanding of the Taiwanese market. By uniting our pioneering 3D printing technology with ITRI's invaluable regional consumer insights and local operations, we are uniquely positioned to introduce alternative meat as a sustainable and locally sourced protein option for Taiwan's consumers. We believe it's crucial to collaborate with leading local partners that intimately understand their markets. Equally important are partners with an R&D component where we can benefit from reduced cost of production through sharing innovations. On the heels of Viola Farms, this new E3 deal provides further validation that food industry leaders are embracing our platform as a key enabler. Moving into the regulation front, we are extremely pleased in 2023 and 2024 to have received confirmation from a highly regarded consultant on the use of our stakeholder food meat and stakeholder fish ingredients in the United States and the United Arab Emirates markets. As recommended by this consultant, we are working to ensure the production process meets the requirements of FSMA and good manufacturing practices and any other required regulations. Now that we have this approval, we are actively working to seek collaborative partnerships with companies and producers already established in the plant-based meat and fish alternative sectors in the United States and UAE, as well as traditional meat and fish producers looking to diversify and expand their product portfolios. Alongside with these achievements, we raised 12.5 million United States dollars, U.S. dollars in two rounds of public offerings, 6.5 million in January 2024, another 6 million in July 2023 to fuel our ambitious corporate trajectory. On the financial front, we were honored to receive the $1 million grant from the Singaporean Israel Industrial R&D Foundation in 2024, sorry, reflecting confidence in our technology process from innovation authorities in both countries. In March 2024, we received the first payment of $220,000 after achieving initial milestones related to this grant. In addition, we've raised, in January 2024, $6.6 million. Looking ahead, we've already achieved significant milestones by 2024 by signing our first commercialization agreement with Vyla Funds and another agreement with ITRI. validating our decision a year ago to shift our business strategy to a B2B model. With a robust pipeline of additional partnerships incubating, we expect this momentum to continue throughout 2024 and 2025 as more companies and countries embrace alternative protein, a sector that is rapidly growing cultured meat industry. A key part of our commercialization strategy is helping foster widespread adoption by getting people familiar with our products and overcoming any hurdles around taste perception, which is why we found our taste testing facility in Israel to be beneficial. We plan to establish similar facilities in other countries to help DICE drive wider acceptance as we scale globally. In addition, we are currently at the final stages of completion of our commercial scale demo center, which will broaden our commercialization possibilities with potential third parties. I'm now going to turn it over to our VP Finance, Ms. Morana Tarr.
Thank you, Ark. To date, we have not granted any revenue since we commenced our culture meets operations. With the recent significance of commercial cooperating agreements with Weiler Farm and ITRI, we accepted and granted the company's first commercial revenues by the end of 2024. Our financial results for 2023 demonstrate our continued investments in R&D to drive innovation with R&D expenses increasing to $7 million from $6.5 million in 2022. While our net loss increased slightly to $15.5 million due to this investment, we saw improvements in other areas such as decreased marketing expenses contributing to $1.4 million reduction in net loss after adjusting for not-cash items. Our net loss per share decreased to 0.07 compared to 0.11 in the prior year. In April 2023, the company announced the closure of its wholly owned subsidiary, Piece of Meat, as a means to optimize its fund and investment strategy. The closure of Piece of Meat is expected to reduce stakeholder food expenses by about $4.5 million annually relative to 2022, showcasing strategic financial management and streamlining of operations. Our cash management was strong. with net cash used in operating activities decreasing to $12.7 million from $14.8 million in the prior year. We saw a $5.3 million, or 91%, increase in the net cash provided by financial activities to $11.2 million in 2023, compared to $5.8 million in 2022. This was driving by higher proceeds from our shells and warrants issuance. We ended 2023 with $4.2 million in cash equivalent. Together with the $6.6 million raised in January 2024, we have sufficient capital resources to fund our upcoming commercialization plans and continue driving our strategic innovative forward. Lastly, I would like to note that we recently adopted U.S. GAAP accounting standards as of 2019. and have received confirmation from NASDAQ, and we have complied with their listing requirements. Now I will return the call back to Arik for closing remarks.
Thank you, Moran. In closing, 2023 was a transformative year that demonstrated stakeholder foods, technological leadership, and commercial readiness in the alternative protein space. With our innovative printing technologies, diverse product portfolio, and milestone commercialization deals, we are incredibly excited about the future. Stakeholder Foods is well positioned to capitalize on the growing global demand for sustainable, delicious protein alternatives. We look forward to providing further updates as we continue executing on our vision to revolutionize how meat and seafood are produced. Thank you very much for your support and interest in Stakeholder Foods. And with that, I would like to open it up to any questions. Thank you.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you each keep to one question and one follow-up. One moment, please, while we poll for questions.
Once again, it is star one to join the question queue.
Mr. Kaufman, I show no questions at this time. I'll turn the floor back to you for any final comments.
I just wanted to thank everyone that joined this call. Good morning to any investor that has joined from the United States. Good evening to any investor that has joined from APAC. I wanted to thank you for the support. We are planning to conduct these calls on a semi-annual basis, as I said before, so I hope to update you soon with exciting news. Thank you very much.
Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.