I-Tech AB

This morning, itech published a report for the second quarter of 2026, and standing beside me is the company CEO, Markus Jansson. Welcome. Thank you very much. Good to see you again, Mike. It's good to have you here with a smile on your face. It's a very strong report, and I can't wait to hear more. You will give us a presentation, so go ahead.

Thank you very much. All right, so first, a very brief introduction for those of you who may be encountering us for the first time today then. But ITech, which industry are we operating in? It's actually in the maritime business. And usually we say, this is our intro statement, so what if one third of the global fleet of 110,000 commercial vessels were using 36% more fuel than needed, even for one day? What would that mean for operating costs and emissions? and actually the truth is the picture is this bad, right? We have had data where you actually look at the conditions of ship when they come into dry dock after a service period and it's actually full of biofouling and that's a serious problem for the international shipping community. So I-Tech then, we have a solution for part of this problem. So our product Select Hope helps actually to prevent barnacles, which is hard fouling organism to settle onto the ship's hulls. And this helped the shipping companies then to reduce fuel costs and also reduce the emissions to air. Also, it helps to protect sensitive coastal environments because fouling is actually one of the number one vector for spreading of invasive aquatic species. So having a clean hull is very important also from a preservation purpose on the ecosystem. and also then reducing emissions to the oceans because Select Hope is a very very effective and efficient product so you need very little of it to get a good effect. So iTech has been built around the product of Select Hope. Our customers are the top coating manufacturers that are making then anti-fouling coating which is coated then on the underwater surface area of ships. And it's a quite consolidated market. We have commercial relationships with the majority of the customers and working very actively with additional coding manufacturers to get Select Hope into their formulations and products. So it's quite a unique technology. We are a company based, you could say, on intellectual property and formulation know-how. Our production is outsourced. The penetration of Celectope is still rather low. We estimate that it's today on approximately 3,500 chips then out of a global fleet of 110,000. So much more to do as well in terms of penetrating the market with Celectope. iTech was introduced to the Nasdaq Stock Exchange in 2018, and since then we've had a tremendous, nice growth journey, so nearly 30% year-on-year growth. And that continues at least for the first half of this year, so it's very good developments. And now we come in then to the quarterly results, and then I would like to hand over to Magnus Hanell, the CFO and Head of Operations. Here you go.

Thank you very much, Marcus. It's really nice being here today to talk to you about the quarter report. And as you can see in the picture in front of us, we have a tremendous development for this quarter. Of course, compared to last year, it's a huge development. But on the other hand, we are compared with quite weak numbers in Q2. be very open to say that, but given the fact that we are comparing to weak numbers, last year we still have almost 10% growth compared to our best quarter so far, which was the previous quarter, Q1 in 2026, which means that this is, of course, the best quarter we have had on the sales side as well as the results side. And we have done this by increasing the volume both with almost all our existing customers. It's very much based on the top two customers where the top one has had very nice growth as well as the second one, which come back quite much better than previous year when they have a significant drop. And we can come back to that later on, maybe in the Q&A as well. So, given the hard facts, we have an 86% growth compared to previous year, almost 60 million in excess for the quarter, which is very nice. If we look on the volume side, it's roughly 100% growth. And the main difference here is mainly the volume price list that we have. We have customers who have taken the next step in their pricing, which means that they have reduced the price a little bit, but also the general mix and as well as the currency effect, of course. Previous quarter, we were talking a little bit about gross margin and that we were a little bit afraid that we should drop a little bit for this quarter and the coming quarters. We have so far been able to manage all of these risks. There are still a small risk that we for the coming quarters will reduce the gross margin a little bit. But for now, we see that we have managed the sort of large risks in this together with our suppliers and our customers, of course. So the effect of this growth in top top line as well as the continued high gross margin is of course that we coming into a quarter with very nice EBITDA. We have a EBITDA level of 40%. We have an EBIT level of 36%. which is very strong. And of course, we are comparing it to weak numbers last year, where they were significantly lower. But on the other hand, we have had the same EBIT and EBITDA level for the first two quarters this year. And we show that we have a stable cost base, even though we have this significant cost for the EU regulation, et cetera, still hanging over us. But we are growing, but we are also growing on a stable cost base. Finally, maybe I should point out that we still have a very nice cash conversion, almost in line with the EBITDA level. Of course, this is not something that we can keep on for eternity, but as long as we have these sort of one-time effects every year for the tax for the previous years, then we will continue for at least three out of four quarters have almost the same cash conversion as the EBITDA. When looking into the different market, of course, Asia is still very much the highest model. We have taken even further step, 96% this quarter compared to the 4% in Europe. We have very small also to the rest of the world, but not shown on this screen. To point out here maybe is that Korea has significantly improved compared to previous quarters. And that is main to the two largest customers that I was talking about there. And a large part of their increase was in Korea when we are comparing quarter by quarter. So to summarize the Q2, the highlights are, of course, we have 100% volume growth. which is then the strongest quarterly volume so far. We are continuing to diversify and we have a Korea that is really strong for the quarter and strength in this position. And we need to point out again, we did point out last quarter as well, but we have a stable high gross margin, 59%, and which then results in a very strong EBITDA and EBIT on 40 respective 36%. So now, having that said about the numbers, I think Markus will talk a little bit about the upcoming events and other development in the company.

Thank you, Magnus. Really strong results indeed and happy to see that we are able to preserve the margins as well. All right, looking then a little bit into the future and starting with the outlook. So those of you who know us, you've seen this slide many times, right? But this is essentially the market that we are operating in, right? So we were mentioning a fleet of roughly 110,000 commercial vessels. There are approximately 2,000 vessels being built each year. That number will go up this year because output is increasing. But there are more importantly than around 20,000 dry docking events happening, right, where fresh anti-fouling paint is applied. So we estimate sort of the opportunity for SelectOpe and for other premium anti-fouling components to be around 3 to 500 million US dollars. So China has really further strengthened their dominating position within the shipbuilding but also ship service market. It's a very, very important market and it's also a key growth market for iTech going forward. But you can see also then Japan and Korea, where we do have a very strong position, is also very, very important. So that's the market, right? If we look at sort of recent developments then, I think geopolitically, shipping has been on the front line for the good part of this year with the Strait of Hormuz issues, right? But despite actually that loss of volume, you could say, from the trade through the Strait of Hormuz, The shipping industry, if you just look at the macro, is actually doing quite well, right? Because as an effect of this squeeze in the Strait of Hormuz, the charter rates have actually gone up significantly this year. So at this stage, the Clark C index, which is sort of the average charter rates that the shipping companies can exert from the market, is up 61%. And of course, that cash, that fuels, you could say, their future investment into their business as well. So we see that also panning out because there has been a really high uptick in the ordering of new ships or new vessels as a consequence of this also. So you could say that a large part of the fleet is old. It needs to be renewed. And also, up until recently, we had a consensus, you could say, on the climate ambition and the decarbonization of shipping. This is still a factor as well, right? But now we see that recent events is actually spiking the new orderings as well, right? So shipyard output continues to increase as well. It's up 14% year on year. And then Chinese shipbuilding and shipyards in particular have been growing their capacities. Also, as a consequence, you could say of the Strait of Hormuz, we have very elevated fuel costs, right? And that really continues to underscore the value of premium antifouling. So you could see here the graph in the bottom here, you know, the bunker fuel price has increased by 70% so far this year. So, of course, every liter or every ton of fuel that you can save means a huge thing, right, for the shipping company's bottom line. So we see geopolitical issues is a major risk to the business, but it's also actually one of the underlying drivers to our growth momentum in the company, because shipping is doing sort of kind of okay, or really good actually, as a result of these various geopolitical issues. So that's sort of the market context. For iTech then, and for those of you who have attended the number of this meeting, you know that our ongoing re-registration process in Europe is a sort of re-occurring item of discussion, right? And then to give you the latest update, we know now that in the June meeting of the Standing Committee on Biocidal Products in Europe, You could say where the member states and the EU Commission meets to discuss various renewal processes and market approvals of biocides. They actually discussed the draft proposal for non-renewal that we actually made a press release from in December last year. So that suggestion was now on the table and was discussed. We also know that they have started, you could say, the last formal step of this re-registration process, which is the so-called WTO TBT process. So it's World Trade Organization's technical barrier to trade. And this is a 60-day process where other members of the WTO other member states outside Europe have the chance and opportunity then to comment on new proposed legislation in Europe, right? So they have then you could say the opportunity to comment on this non-renewal proposal. So as I said, this is a 60-day process. So the earliest that you could see that the standing committee on biocidal products could vote on this proposal then would be sort of end September. Theoretically, it's a possibility maybe at their meeting in end of September, but more likely than the voting can take place either at their December meeting or between the meetings with the so-called written procedure. So if I mean, until then, you could say I take continues, of course, to to advocate and to have a close dialogue with the member states and also with the commissions regarding this re-registration case. So if there would be a negative decision in the end, then I want to stress that we are ready then with the appeal process to simply make a legal case out of this, which is on one hand good because it's the first opportunity then we have to challenge actually the recommendation or the conclusion that Medetomedine or Celecto should be viewed as an endocrine disruptor. So that is ready, that legal case. The current approval in any case expires in December 31st this year and it was extended, you could say, from mid-year until end of the year during the March meeting. So this is the latest status on the EU process. We have also talked about our business development pipeline and I'm happy to say that there is a lot of momentum and good progress here but essentially we are looking at you could say complementing technologies and products to our existing customers but also then looking at other marine markets such as aquaculture and yacht market where we are not so present today and also looking into various new technologies and new business models. but essentially with the aim then of broadening itex product offers and also our focus markets but we will really we are intending to stay within the marine space and of course anti-fouling that's where we have our expertise right um so today we're going to talk a little bit about aquaculture and this is a very busy slide so um forgive you for forgiveness for that but is I think what is important here to actually state that, you know, fisheries and aquaculture is a substantial business, right? Almost as much as the trade, you could say of terrestrial meat products, right? So the fish and crustaceans, et cetera, coming from the sea is really, really important. you could say for food security and sort of for poverty alleviation and for nutrition actually for the world's population and I think what is important is actually the graph in the bottom left on this slide is that you know aquaculture which is you could say the farming of fish and various aquatic animals has increased a lot during and it's actually the majority today of the volumes that are coming out. It's being actually farmed and produced in aquatic farms, both inland and coastal farms. And actually, this is also where all the growth in the future is set to come, mainly from expansion of various aquacultures. And if you look at the graph next to that one in the bottom, you see, OK, who are the leading producers? And here again, Asia is really dominating. China, almost two thirds. India, Indonesia, Vietnam, et cetera. And this is, of course, in terms of produced volume. But you also have to look into the value and sort of the export patterns. And here, our neighboring country, Norway, they're actually the second biggest in the world in terms of export value. And that's largely thanks to their salmon production and salmon business. So it is also an important business, you could say, close here in Europe. also in other places like Scotland and also in the Mediterranean. So aquaculture we see as a very interesting market segment for iTech to explore further. And what is the link between what we are doing and aquaculture? Well, in reality you could say that the problem with biofouling also exists in aquaculture. And you can see here to the right, there is actually a picture of one farm. And you can see then, in this case, the fish, they are kept in these large, large nets, net cages that are anchored to the bottom of the sea, but really out, in this case, in the fjords of Norway. and these the protective cages and the nets they also get fouled right because it's even worse you could say than for ships because they are not moving through the water they are sitting still and in the summer period you know there is plenty of nutrition available so a lot of fouling species can settle onto the net This affects, you could say, the operating costs very negatively, but also it affects the animal health and welfare and results in a lot of yield loss. Essentially, fishes and crustaceans, they die as a consequence of fouling. and also to manage this fouling is a compliance issue, right? So you want to sort of be compliant with the various local regulations around the production of aquatic organisms and here fouling is really presenting itself with a big challenge for the for the producers so one popular strategy today then is to actually impregnate these net cages with an a sort of impregnation coating right and that's the graph here to the right where we are showing you could say the market size roughly in million liters in sort of the western hemisphere which is sort of an area that we are focusing on from the beginning you can see there In total, we estimate this to be around 20 million liters, and that should be compared to anti-fouling coatings for ships where we are operating today, which we estimate to be around 75 million liters. So a little bit smaller in terms of the number of liters, but I think also the market characteristics are somewhat different from anti-fouling for ships. So actually the life cycle of these nets is much shorter. It's essentially one season around one year that the coating has to survive. So you have a much quicker replacement of the coatings and it's also you could say then quicker qualification periods and quicker way to turn around to test your innovation which is an interesting feature compared to the markets where we're in today then. So we actually announced then two days ago that iTech has acquired new technology and this is a natural inspired or nature inspired technology so it's a naturally occurring microorganisms that it's actually producing then a biological additive that can be used as an additive for these net impregnation coatings, for example, to modify the surface characteristics. And this really then reduces the fouling settlement. So it's a quite neat and nice technology if you want to create sustainable anti-fouling solutions. And I think the market where we have come the furthest here is actually within aquaculture. But you could say over time, it also opens up new opportunities for other areas such as yachts, but also traditional, you could say, commercial shipping and various industrial applications as well. So we see this as a very nice technology that we now bring in to the portfolio and that we will be working to qualify them with customers. And you could say commercial sales is probably or likely a few years into the future. But we are quite excited as iTech to take this technology on board. All right, so we come to the final, the business outlook then. So you could say next to this business development opportunity, we are also working then to extend other strategic partnerships. So that continues to be a focus area for us to really work on the business development pipeline. and also then as you imagine advocacy then linked to regulations in Europe but also other places we didn't talk about you could say the new registrations that we are doing in the USA and New Zealand and so on today but these continues to be active projects that we are running you could say within the regulatory space and of course then business development, to continue to work on expanding the business for Select Hope and then also for these new technologies that we have then to actually create successful future businesses of this. So that will be the focus in the coming period. All right, thank you very much.

Thank you as well, Marcus. And Magnus will also be joining us here for the Q&A. I will not be opening this Q&A. I will turn to one of the analysts who are joining us here on call, Lara Moutade, who will ask their questions from ABG Sundar Collier. Welcome.

Thank you very much. I just have a couple of questions. My first one is regarding the recovered customer that, well, essentially contributed to, well, I don't know if it was nothing, but not a lot of volumes in Q2 2025. and now they're back to more normal levels. Are they now at a stable run rate or would you say that this is some sort of catch up that may not repeat in the coming quarters?

I think it's fair to assume that we are on a more stable run rate as of now. And if they have catched up fully or a little bit more than previously, that won't be said. But we should assume that we are on a stable path moving forward.

Okay. And CMP, they grew 21% in volume in 2025. And you said that they grew 35% organically for the first part of this year. Could you comment a little bit about CMP? Are they really accelerating? Maybe if you can comment a little bit about its total share of sales, if you're comfortable with that?

Actually, I don't have that figure on top of mind, Laura. But since they have been growing so nicely this first half, since they represent such an important part of the overall business being number one, I would assume that they have extended actually the total share a little bit then during the first half. But to comment on the reason for that, I believe that C&P has had a really good first half as well, right? We look forward, of course, to read their next report as well to see how their business develops. But we believe that they have been successful, you could say, with the products then containing SelectOpe in particular, and actually have been able then to expand their business as well as a consequence of sort of where the shipping industry is today.

Okay, very clear. And in this quarter, personnel costs were up a little bit year in year. And I think you mentioned something about bringing on three new full-time employees this year. Where are you in that hiring? How should we sort of think about operational costs through the second part of the year? Is this a new base level or is there more to come?

No, I think we are done with the three new recruitments, Laura, that we referred to during the last quarter calls. So they are now part, you could say, of the permanent pool of employees. And we're happy to have them on board as well and contributing to the team. So that's really great. So there are no major expansions now in the plan. So you should see this as sort of the new base then going forward.

Maybe just come back to that because we have indicated earlier that we might start a quite large regulatory study in the fall. That could have an effect on the total fixed cost.

Yes, indeed.

So we don't forget that part.

That was actually my follow-up question. I was going to ask how you're, well, it might be hard for you to tell now, but how you're going to book those costs?

This regulatory study, if we're going to do it, we're going to conduct it in line with the EU renewal process, which means that this is a project where we have an existing approval, so to speak. It's nothing new. So it's just defending cost for our existing approval, which means then that we will take the cost on the profit and loss as a normal just study cost. It's not a new investment, so we won't put anything in the balance sheet. We will take it over the P&L.

Okay, and half of the cost will be this year and half of the cost will be next year, in 2027?

Yeah, maximum half the cost this year, I would say. Depends on when and if we are able to start it.

Okay. And the costs associated to the regulatory process you wrote in your report, well, these aren't any one-off costs because you've had them for a longer period of time. And usually these are around 2 million kroners per per quarter? Was it in line this quarter too or was it slightly elevated?

No, it's been a little bit up and down, but that level is quite a good assumption. And of course, these costs have differed between lobbying costs or legal costs. preparing the legal case, etc. But now, depending on what happened, at least we shouldn't elevate those kind of costs anymore. But let's see what's happening moving forward.

Very clear. And I have a few questions on the newly acquired technology. Very exciting, obviously. Can you maybe tell us a bit more what's the moat here? There is already conventional copper-based net coatings and you said there are some other technologies. Why use this technology?

I would say, Laura, from an iTech perspective, the motive is really then to, you could say, on one hand, broaden our available portfolio of solutions that we can offer the customers and also look into adjacent markets, right? So new markets like aquaculture and so on to complement the focus that we have today on commercial shipping, right? So that you could say from a strategic point of view. From the customer's perspective, it's a very interesting technology. It is biologically derived, it's readily biodegradable, and it comes from nature, it goes back to nature. So it is potentially a very interesting technology then to build new sustainable net coatings on, for instance. Today, like you mentioned, copper and other biocides are also used in net coating. But we also see that some producers, they choose to go biocide free and then have more of a cleaning or net exchange approach. So there is definitely, we see an opportunity for new sustainable technology also in this space. So there's definitely, you could say, a positive momentum for that in the aquaculture market.

And just to follow-ups on that, from the strategic point of view, do you see this as, if I understood you right, you can maybe use this as a complementary technology alongside Meditomedine or is this a standalone alternative and can you use this in the commercial shipping space as well?

There has been tests, you could say, also in traditional or commercial anti-fouling formulations, to our knowledge, that have been positive. In theory, you could say that this may have a broader effect than Celectope. Celectope is very specific, you could say, to prevent the barnacles. And here you could say we can address maybe more fouling types with this type of technology. But I think it's too soon to say. It won't be a one-to-one competitor to Select Hope. I think that we can say with certainty, right? But exactly how we can complement Select Hope or sort of offer other benefits to the customer, I think we still need to validate. I think the market that we are the furthest to develop here is aquaculture, right? And that's also our initial focus for this product.

Very clear. And is this similar to Select Hope, also seen as a premium coating?

Most likely, yes.

And just a last one here on the technology and does it bring you sort of to a different customer base or is it this because in them well for the commercial shipping you have nine major coating manufacturers and in other words will you be selling to these existing customers or we're looking at a whole different customer base?

It's partially overlapping, you could say, Laura. So some of our current customers, they also have business in aquaculture. CMP, for instance, to mention one. However, it's also like you say, there are new customers to us, right? That sort of specialize in aquaculture coding formulations. So it is a bit of both here in this case.

Okay, very clear. That was all from my end. Thank you very much.

Thank you very much, Laura. We have a lot of questions from the chat as well, so I'll read them up. And Laura, if you have any more questions, you need only raise your hand and make yourself known and we'll get to you shortly. Following up on the acquisition, there is a viewer who asks, for the recent acquisition, can you describe the purchase consideration, payment structure and expected return on invested capital?

Yeah, I mean, we were talking a little bit about the rationale, right? The strategic fit for this product, right? So I won't repeat that, right? But I mean, exactly the return on investments, I would say we describe it as medium maturity. So there's still validation work to be done, right? So when we have actually, you could say, sized and defined the opportunity, we will come back, you could say, with more firm numbers on that. It's not really possible to say that at this stage.

The same viewer also asks, given ITEC's 165 million crown net cash position, why do you need authorization to issue up to 10% new shares? And under what circumstances would you use it?

Well, that is just a standard procedure that repeatedly every year and that is the only reason why we would use it is if we come up with a very nice M&A proposal where we need to sort of issue shares in order to finance that. To be honest, we don't have any such case on the radar right now where we need those kind of money and need to use this authorization. We should really see it as a standard procedure in order to have the maneuverability for management and the board.

to be ready really if the opportunity arises.

Some more questions then. You said in Q1 that there were higher sales to Korean distributors. Given that there are so few paint makers, why do you even need a distributor in Korea? Do you use distributors in other countries?

We do use distributors, you could say, in different various markets and they perform, you could say, services that are sort of asked for by the customers, right? Sort of really local market services that they do better than we do.

Another question here from Henrik. Your top priority is to further penetrate the maintenance market in China. What are you doing specifically to address this segment?

Actually, both new build and maintenance in China. We don't discriminate. We want to further penetrate both of these markets. It's important to us, Mike. And what we are doing now, we are looking into various ways to boost and strengthen our presence. We announced, you could say, in December that we have initiated the dialogue with a local company called Highway or Havay, which is a binder producer. And sort of these discussions are also progressing, right, in terms of finding new ways to collaborate specifically on the Chinese markets, right? So we are having various initiatives to say how can we strengthen and boost sort of our access to the market in China.

You and Lara talked a lot about the costs relating to the EU regulatory and there is a question here in the chat about that, but I believe this one asks the question a little bit more concretely. What was the level of cost in both Q1 and Q2 this year relating to the process?

We've been talking about it and it is roughly 1.5 to 2 million per quarter.

So 4 million in that sort of ballpark, yes. Moving on then, Henrik asks, I assume that you have started making price adjustments to compensate for higher raw material costs. What's the order magnitude? When will they feed through into your sales?

Yeah, as I was talking about in the presentation, we have so far managed the threat of increased cost from our producers and the increased raw material cost. So actually, we haven't introduced, well, slight increases of the production costs so far. We are continuing to work together with our producers in order to find a way either through yield or through other means by other suppliers, sub suppliers and sort of that to reduce and keep the raw material cost level. So far we have managed to control it.

And also on the top line part, right? We talked about it in the last quarterly call, right? That we have We have been adjusting prices as well right to accommodate for this and I think that's it's one of the great achievements besides you could say all the other financial goodies right is actually we are able to preserve the gross margin so it is of course thanks to Magnus and the hard-working team for the operation side but also I think you know also from sales right to actually achieve price adjustments.

Henrik continues, if I understand correctly, you have four sizable customers. Are any of the others planning to scale up in a more meaningful way during 2026 and 2027?

I would say our customers do not have full transparency with us in terms of their future plans. So, of course, we have a continuous dialogue, you could say, on the forecasts and their offtake, etc. I would say that we are not expecting any unusual development this year. I think that would be fair to say.

Another question from the chat. How much order visibility do you currently have into the second half of this year and 2027? And should we expect any pull forward of customer stocking into Q3?

Very good question. Normally, we don't have very much visibility in the future, a month or two. Actually, when we talk about real orders, of course, we have discussions with our customers. fairly well how they look on the coming half year, I would say. But as we have never done it before and we will not do it today, we will not talk about the future looking statements. But when you're talking about stocking, of course, there could always be a small part of stocking between quarters because since we are delivering quite large volumes in every shipment, if a shipment ends up before or after the sort of the quarterly break that could be quite significant change so but that is the only sort of stocking that we see today at least and that we that we know of that was the final question so far from the chat so I'll ask a few more in waiting for potentially more questions

So to begin with, Magnus, you mentioned in the presentation that you had high cash conversion in line with EBITDA. And while it was high, you also mentioned that this can't go on forever. But just for how long do you expect it to?

No, no, but of course, since we're also on the EBITDA level, you don't have any tax costs, for example, no effect of tax. And of course, we are in a tax position in Sweden. We reported last previous quarter that we took the cash flow of the tax cost for 2025 in one quarter. And most likely we will take the cash cost for 2026 in the first quarter of 2027. But at a certain point, we will come up with a more even flow of also the cash effect of the tax cost. I would say from 2027 and forward, I would say we need to be in a more normal prepayment status as well. But we don't need to do it, so then we don't do it.

Something else that you mentioned in the presentation was the Strait of Hormuz. Despite the challenges there, you managed to deliver a very strong quarter. Charters were one explanation behind that. But I'm curious to how we should see iTech's value. Should we look to the number of holes in the water or miles traveled?

I think it's more the sort of how many square meters of undersurface area to some extent you could translate our opportunity to, right? I think that's more appropriate. You know, when it comes to the dry docking, right, the ships, you know, to be compliant, they have to come in at least every five years, right? So it's a very regular and steady service business, right? And of course, then who of the coating companies wins the contract and what coating products end up on the ship, right? That also, to some extent, decides sort of if we have a part of that cake, right? The share of that. So, but I think it's more fair than to compare it to the total underwater surface area, right? That needs to be recoated. I saw a few more questions from the chat here. So I imagine that I will end up

And with those, has any customer indicated that a final question was removed? So instead, I will ask, tell us more about the EU regulatory process right now. We're considering that the approval has been extended, but only short term towards the end of 2026. Has that caused some uncertainty among your European clients?

Yes, but I think this is the environment that we have been in since 2023. So I mean, regarding the future of the EU market, it is uncertain. As you can see in our numbers, it's varying between 2 to 4% of the total sales. But of course, if Select Hope does not get a renewed approval for the EU, It will not be possible for our coating customers to produce and sell the product to be used in the EU. They most likely could still produce but export the product. So exactly the impact we will have to see. But it does create uncertainty, right? And it definitely has had a cooling effect, I think, for some global customers to adopt the technology as well, right? There has been a preference, you could say, to work with globally approved technologies. This becomes harder and harder for the coating companies because also other markets, you could say, like South Korea, for instance, are developing their own more strict regulation, which takes a different approach than the EU, for instance. So it becomes difficult, you could say, to have products that are globally compliant going forward. So I think we can definitely see a scenario where you have more regional anti-fouling products in the future.

What's the contingency plan if the approval gets delayed or doesn't arrive?

Yeah, as I mentioned, I think that if there was a vote and that was negative, right, that Select Hope would not secure, you could say, a renewed approval, the first thing that we would do is to appeal that decision, right? Of course, we believe that we have, you could say, strong legal arguments for why the conclusion that melatonin is an endocrine disruptor is not correct at this stage, right? We also believe that the process as such has not been conducted in the most optimal way. So we of course would like to appeal such a decision in that case. So that's the first step. Then Magnus was talking also about the additional TOCS study that we are preparing to start. That is the next level because of course we have the opportunity to generate new data around, you could say, the effect of Selektopen. Hopefully, such new studies then will be able to remove uncertainties regarding how Selektopen and Etomidine affect the endocrine system. So that is the next level of battlefield with Europe, if a legal case wouldn't be unsuccessful.

We have more questions in the chat, and I will address them shortly. But before that, could you answer very briefly the new technology that you have in biofouling in regards to aquaculture? Is the EU regulatory process relevant there?

To some extent, but not the biocide legislation, right? So it's more the natural or normal chemical regulation that is effective, right? But this is what we see so far is a physical effect, you could say, rather than the biocidal effect.

Looking at the chat then, some more questions. With inventories down 48%, is this mainly better efficiency or sign of tighter supply?

No, it's just a normal effect. If you look on the inventory levels that we have, they are very small compared to the sales. And the inventories, we only keep them in Sweden in order to have swift deliveries to certain customers. So all the normal deliveries are run through our suppliers warehouse, which never ends up in our inventory. So you shouldn't focus too much about the current inventory levels or not.

Another question, has the Hormuz situation generated any useful comparison data between select top formulations and conventional ones?

To this date, I mean, we are still waiting to have, you could say, the black or white proof. I mean, there has been a lot of articles published around how challenging this situation has been for the ship who have been stuck, you could say, on the inside of the Hormuz Strait, right? We have seen pictures and videos of ships that are completely covered in barnacles and other types of biofouling, right? So definitely we know that this has had a huge impact, you could say, on the ship stuck there. And we are, of course, looking for having comparative cases where we can see the relative value of SelectOpt in this case. So if we get that, we will definitely come back.

And finally, a chat from the viewer wishes to congratulate you and the IoTeX team on a great quarter. And with that, I think it's a good place to end this broadcast. Thank you very much for being here, presenting and answering our questions. Thank you very much.

Thank you very much. Have a good day.