Fusion Fuel Green PLC (HTOO) Q1 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Fusion Fuel Green Q1 Webcast. At this time, all participants are in listen-only mode. [Operator Instructions] I would now like to turn the call over to your host, Ben Schwarz, Head of Investor Relations, you may begin.

Thanks so much. Hello everybody, and welcome to Fusion Fuel Green’s 2021 first quarter update call. Before we begin, I'd like to remind everyone, 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, energy 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 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're joined online you can do so on the webcast platform, and if you're 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 Fuel, CFO, Frederico Figueira de Chaves.

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 quarterly update call as a public company. So, you have on the call with me today also João Wahnon, our Head of Business Development; and Jaime Silva, our CTO. So we’ll be doing the events, the three of us, providing different updates, and then we all be here for Q&A as well. In addition, we have also our Chairman, Jeffrey Schwarz on the call as well in case anyone has questions for him as we go. So first what we will do is, as we have a few new joiners on this call, I’ll start by briefly recapping what is our thought on Fusion Fuel, and then we’ll go on to provide brief financial update before going into more detail on the latest developments on Fusion Fuel. With that, if we can go to next slide. 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 who produce their own green hydrogen, and also we 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 of that on the left-hand side. We have modular and scalable units, so those miniaturized electrolyzers attach a couple of hundred of them attached to the back of that solar panel you see on the bottom 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, they are -- it's a very modular and scalable solution for all types. With that, 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 pan-based electrolyzer efficiencies in the market. And this is what the cause of Fusion Fuel. So everything stems from this core technology that I've mentioned and the two business models that we have are both selling the technology and selling hydrogen as a product. So, 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 how -- where the company is at any point in time. Currently we're not showing debt levels in the chart that you will see in a few slides, as the company has no debts. Business develops will introduce these elements into our financial updates, along with the production quantities as well. So you can see on the slide here, there's some highlights of the quarter. I will cover the financials in more details in the coming slides, but want to note that, the first quarter was an incredibly busy start of the year, right through the first few weeks. We've already mentioned some of the projects here in our Investor Day in January, about recap the main highlights. During Q1, we entered into two different MOUs 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 CEEES in Spain. That is the Association of Service 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 fueling stations in Spain. And then also, we also announced the partnership with BRG Energy Systems in India, to build the 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 would like to cover those. Next Slide. So, on the financial overviews, I want to note that we have revenues of around €500,000, related to the purchase and then subsequent sale of custom made components to our production process. So what you – what you're seeing there is the revenues and the cost of sales effectively letting 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 for the production partner to then build the final HEVO-SOLAR units. 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 equivalents at the end of Q1 was around €62 million, so just shy of €62 million, 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 US$12 million during the quarter, 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 this share based payment expenses that were part of the transaction. So these are charges that are 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 in -- 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. I will note that these expenses are actually expected to continue throughout the year, and they are -- they will continue until end of June, 2022. The €4.9 million -- roughly €4.9 million each quarter. Other expenses beyond service are the net of debt roughly about €1.6 million are related to, I would call our fixed costs of payroll lease, insurance and so on, around €250,000, per month. Intellectual property transfer charges, it was again, after the legacy sort of contracts, pre business combination of limits of €250,000. We had 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 on as we take delivery with then a success fee at the end of the project at the end of meeting the production projects. Lastly, we go into pre-tax income. It was positively impacted by around -- by €15 million of positive movements, 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 would release those €15 million that we had. 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 is not a -- this has no cash expense -- not a cash impact, but will transparently always carve this out, so that people can follow and understand where the numbers are coming from. Move to next slide then. 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. Current, the firm has around 5.5 million tradable warrants that are outstanding, in case anyone is -- wants to keep a track on that. That figure – that -- if all of those 5.5 million warrants were converted, that would lead -- that would represent around US$64 million, US$65 million capital inflow. 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 as we take -- when we take on debt, but we have substantial assets to show as well, versus including these and building these out. So as a foreign issuer, we're not required to do the very intense quarterly -- full quarterly financial results, but we still want to make sure that our shareholders have all the information needed to keep an eye on the track on how we're doing. So, with that, I'll move on to the business updates and our 2021 milestones. So, as we mentioned in our investor updates in January this year, we have three core priorities and strategic priorities for the year. The first is to go live of the Evora Plant and the installation of that Evora Plant. The second is the signing of strategic MOUs, partnerships, as well as hydrogen purchase agreements, so that we are well on a way to execute and deliver on the business plan we presented. The third is the build out and installation and then subsequent go live of our Fusion 2 production facility in order to be able to manage with the expected much larger production numbers that we are targeting in these business plans. So, those are the three core priorities for the year. I will now give you an update on how we are in each of those and then towards the end finish. So, João. João Wahnon: Okay, let me start. So, thank you for attending our quarterly results presentation. The past months were especially active in the pursuit of our strategy to develop green hydrogen projects using our preventive technology called HEVO-SOLAR, which defined as a priority, the negotiations of MOUs and HBA with some of the world's leading companies involved in the oil and gas business as well as ammonia business. In several countries worldwide, the strategy for green hydrogen is already approved and under implementations, but there are a few pending specific relations that will lead to obtain necessary licenses and permits to develop the project. These constraints will lead us to take the decision to anticipate securing the land needed to install our projects in Portugal and Spain, and start the environmental study, that is the most important document for obtaining permits and licenses for construction and operations of green hydrogen projects. Our initial strategy was to develop green hydrogen projects and solidify our presence in Southern Europe, mainly in Portugal and Spain, and at the same time, in the North of Africa in Morocco, but increased interest from several other countries in the world will lead us to anticipate our international growth and start developing business in different geographies. Our HEVO-SOLAR technology has a tremendous advantage when compared to other electrolyzers since we produce green hydrogen directly from the conversion of solar radiation, allow from one side to reach the highest efficiency and the lowest levelized cost of hydrogen, but also allowing us to develop projects in locations of green. This means that we do not need electricity from the electrical grid to produce green hydrogen, allowing us to solve our projects in remote areas that do not have power capacity available. Additionally, our technology is more suitable for the regions of the world with higher levels of solar radiation, which other regions we have been -- we're happy to announce the biggest green hydrogen project such as Australia, Middle East, India, USA, and Chile. Now, can we have the next slide please? The Evora project, the Evora project consists on the installation of deep learning -- will be developed in two phases. Phase one consist from the installation of 15 HEVO-SOLAR units to demonstrate the production of Green Hydrogen directly from the conversion of solar radiation and it also includes purification, compression, storage system and converting the electricity using fuel cells and the necessary injection into the National Electrical Grid. The project using advanced construction, the first HEVO-SOLAR was commissioned recently and is in production -- is producing Green Hydrogen above our conservative expectations. Two additional units are already installed, and the remaining will be installed and commissioned in the next coming weeks. The phase two of the Evora project consist some installation of 40 HEVO-SOLAR units. To demonstrate the ability to produce Green Hydrogen to be injected in the natural gas pipeline from the other city and also supply Green Hydrogen in bottles to industries, and at the same time to hydrogen refueling stations. The Municipality of Evora has finally approved the construction license, and we will start construction during the next week with the aim to finish the installation by the end of July. Now we would like to show you a preview of the current installation of Evora projects. [Video Presentation] I’ll pickup projects overview. Turning to business activity, starting new -- more precisely in Portugal. We are running to commission the phase one of Evora project to invite potential developers to come and visit the plant under operation, and to request an independent engineer report of the performance of the plant. We are moving forward with our initial strategy to develop five Green Hydrogen projects in Sines. And so we are currently developing three projects out of those five, with the aim to produce Green Hydrogen to be injected in the natural gas and the National Strategy for Hydrogen to produce green ammonia to be used as hydrogen carrier to be exported to the north of Europe with historical big bottles supply industry and to supply hydrogen refueling stations, and the development in Portugal. As mentioned before, we are securing more than 300 hectares of land, and we are starting the permitting process. This represents around one-third of the initial seamless project that we expect to install until 2025. In terms of funding for this project, we have submitted the first project to European funding, for which we expect to have an answer until the end of July. We are also part of the Portuguese projects that were submitted to the European Union organization called, IPCEI, Important Projects of Common European Interest, which will give special conditions and grants to the development of green hydrogen projects. Recently in last three months, we started our activity in Spain, where we are under negotiation with some of the most important, oil and gas companies, as well as electrical utilities to develop green hydrogen projects. We are also developing several projects, which are under negotiation for the same use in Portugal, but with additional use in the production of green synthetic fuels. We have two projects, one is the project with the Grupo CL in Badajoz, and the other one is the Magnesitas project in Lugo. Both projects will have the production of green hydrogen to be mixed with CO2 to obtain green ethanol and green jet fuel. The projects -- the two projects, I mentioned will be submitted to European funding programs available for decarburization. We are also under negotiations to secure more than 1,500 hectares of land to install additional projects, most of them to produce the green hydrogen to be injected in the national gas pipelines of Spain. We established a strategic cooperation for the installation of several hydrogen fuels, and we expect to announce the first EPC and HVA contracts soon. At the same time, we started Greece -- in Greece, we started negotiations with the most important oil and gas companies as well electrical utilities to develop green hydrogen projects. We are negotiating the installation of the demonstration plant that will be announced soon. In Morocco, negotiations are undergoing to produce green hydrogen that will be used in the production of green ammonia to be used for fertilizer industry, and to be exported as hydrogen carrier for the north of Europe, where we’ll try to obtain green hydrogen to be mixed with natural gas, and be injected in the natural gas grid. Then we decided to go worldwide. We started in the Middle East, where we signed the cooperation agreement with a company that is one of the leading international contractors in the world who has a strong position in Middle East, negotiations are undergoing to produce green hydrogen in the United Arab Emirates, in Oman, in Qatar, and in Kuwait. More recently we started very important operations in Australia, which is the priority market for our companies due to the stable conditions in terms of solar radiation that allow producing green hydrogen at the lowest level cost of hydrogen in the world. We signed the agreement with the Australian oil company to develop a strong business relation, starting the installation of a demonstration plant. We are under negotiations for the development of several green hydrogen projects, mostly located in Western Australia, which is the region of Australia, with higher solar radiation. At the same time, we started our internationalization in India, where we signed an agreement with an important EPC contractor called BGR Energy to develop green hydrogen, most particularly in the regions of Rajasthan and Gujarat. This cooperation will also be involved in the production of green hydrogen to be mixed with CO2 from several coal-fired plants, owned by the Indian utility called NTPC to produce methanol. We are starting our operations in US and USA is a very promising market for the development of green hydrogen projects. We recently incorporated Fusion Fuel USA, with the aim to start developing projects in the coming years in the USA. Last but not least, we started negotiations in South America, more precisely in Chile to sell hydrogen in the region of Atacama. Chile -- and more precisely the Atacama Desert is the region of the world with highest solar radiation, and consequently will be the place where we will produce the cheapest green hydrogen. Now we want to highlight some of the important agreements we have signed with the following world leading companies. First of all, we have -- we signed an MoU with -- in Spain with one of the leading companies, EPC companies in Spain called Elecnor to develop our HEVO-SOLAR technology. Elecnor is one of Spanish leading business groups in infrastructures and renewable energies. It has an experience of 60 years and has a presence in 55 countries. This partnership with Elecnor is very important not only to develop our EBITDA in the Spanish market, but at the same time to develop projects in the countries that they have some presence. Then next slide. We signed a cooperation agreement with a company called CCC, the name is Consolidated Contractors company. We signed an agreement with this company to develop demonstration plants to produce green hydrogen in Kuwait, Oman and Qatar. CCC is a global diversified company, specialized in engineering and construction, and has become one of the leading international contractors with global commercial footprint. The Middle East represents a significant opportunity for Fusion Fuel with -- because of the high levels of solar radiation that allows to produce green hydrogen at very low cost. Now the next slide, please. Recently we signed HEVO-SOLAR agreement, a fantastic operation we signed with Ampol. We signed HEVO agreements with Ampol to install demonstration projects in Ampol's Lytton refinery site. Installation is expected over the next 12 months, and will lead to joint business development of opportunities in Australia. Ampol is Australia leader in transport fuels and has recently announced its ambitious future energy and decarbonization strategy. Australia abundance of solar energy makes it one of the best locations for our HEVO-SOLAR technology and for the production of very low cost green hydrogen. Now I would like to present you Jaime Silva, the CTO of Fusion Fuel.

Hello, everyone. To take and to be able to produce to the project that business development is making, or expecting. We have to increase drastically our manufacturing capacity. We close very recently the agreement for the facility of our future test manufacturing facility, which is located in the Manuvent [ph] in South of Portugal. It has around 15,000, square meters of area. In 2022, it will have a capacity of delivering around 100 megawatts that it will have space enough and the equipment enough to be scalable to reach the 500 megawatts of capacity to deliver in 2025. This facility are in a location that is able to apply up to 25% of funding support from government on all the investments made in the production and all the renovation. The renovation of the factory of facilities will kick-off immediately. And it will be a fully automated unit to people we expect to have in 2022 working on the manufacturing, it will be around 90, no more than that to reach the objectives of 100 megawatts of capacity to be delivered. So the installation of the production equipments that is being built will start late summer, and we expect to have it to start production, first units to come out in the first quarter of next year. Then, next slide, please. So in terms of research and development, during the first quarter we are planning several projects. Some of them we will be presenting in the end of this year, beginning of next year for the evolution of the technology. We have our research and developments department being increased drastically. And we are also closing partnerships with stronger research institutes for several specific areas like for an offer, the one of biggest research institute in Europe, in Germany, and we are also looking to start a partnership in other more strategic areas like hydrogen storage, that we are starting in Australia.

Thank you, Jaime. So to the final slide then. So, now just to wrap up, I'll finish again with the 2021 milestones, especially in this very important sort of first year across. Just as we heard and you’ve seen the Evora plants is well and truly underway. And within a few weeks, we'll have Phase 1 in the bag, and sort of a couple of months, we will be there in Phase 2 as well. So the initial results we've seen from the units we have up incredibly promising and actually outdoing our expectations. On our sort of second priority that we're using HBAs, you heard from João, we are well and truly underway to put everything that João said in perspective, in January, we said that our entire pipeline, not committed orders, but pipeline was around four times bigger than the -- what the business plan projected. So, we were pretty comfortable on being able to still execute on the business plan. In only about three months that number has gone from four times business plan to around six times the business plan. So, the market is developing very quickly and we're certainly keeping up with it in our business development team as well. Production facility, as you just heard from Jaime, locations set, renovations starting very soon, installation in the summer, we are well into the business on the way to these three core milestones for 2021 setting us up exactly in the right path for the coming years. So, with that I want to thank you for listening to the three monologues and now we hope to hear from some questions from you guys as well. So, Ben I'll pass it you for Q&A.

Yes, thanks Frederico. [Operator Instructions] The first question is, I guess ask for -- perhaps to Jaime to start. Do you see any risks that something that worked well on the small scale might become problematic when deployed at utility or industrial scale? And if so, what problems might -- what might those problems be?

Yes, the units we had -- and we had formulated in the past make the visualization and all the analysis in the last year were individual units, not connected in networks. The question is the HEVO-SOLAR, you saw working in the video is already fully connected and is using the network being supplied at industrial scale in the power plants and the hydrogen is also flow directly to the centralized points and is using centralized point. This means that, in fact, the unit that we have already working on the field is already exactly equal to the unit that will be in the full power plant. The main challenge we had during this first trimester, that in fact, at the challenge from passing from a research unit prototype unit to a power plant unit has being overcome. So, right now we are going to replicate more quantities that is the main challenge has been overcome and we are ready to jump to the next level, so we don't forecast any additional situation than the one that we have overcome this trimester.

Great. Thanks Jaime. Question here, perhaps stick with you, what is -- why is the integrated solar electrolyzer solution better than using a large scale centralized electrolyzer and combining that with renewable energy from the grid. Would you say that a miniaturized electrolyzer is more efficient?

Yes. In fact, when you -- if you take a solar -- a very cheap solar PV power plant. You transport the energy and convert it in -- with -- I will say with Tier 1 19%, 21%, 25% of solar conversion. And then you have to transport the electricity, convert to AC, convert to DC, transport it to a centralized electrolyzer then convert it again. When we have a small miniaturized electrolyzer connecting to the cell and taking advantage of the heat, strong heat generated by the cell, you kill all the inefficiencies on the system. In fact, we are able to have at the HEVO level, solar to hydrogen conversion efficiency of 26.8, is extremely higher then head to fuel chain of levels to transport the energy and convert it to hydrogen. We’ve also another stronger advantage is making it smaller, making it miniaturized and rebuild how the electrolyzer is constructed and designed. It is designed in a completely different approach than the traditional tax. It allow us to have a small unit, completely full out to make it, possible to be able to make it an extremely low cost. So, when we put both things together and you consider the performance of a power plant and in CapEx you have to do to make it work. You reach to a much lower hydrogen cost than compared with the PV or with a centralized electrolyzer.

Thanks, Jaime. Next question for perhaps to João or Frederico in terms of the pipeline growth from 4x to 6x, how much of that is more demand from existing counterparties versus incremental demand coming from new counterparties? João Wahnon: I can answer that, in fact, our business plan was the performance for Fusion Portugal. Let's say for southern Europe and Morocco, demand of Green Hydrogen. Of course, we knew by that time that the world was doing first steps -- more than one year ago. We knew that there would be plenty of opportunities worldwide, but we never reflected them in our business plan. So today, of course most of what we are negotiating comes from, for instance, Australia and Middle East where the opportunities we are negotiating today are really big when compared to the opportunities that we have in Europe according to the initial business plan.

Thanks. Thanks, João. Any plans for projects or initiatives to address the transportation market in the future right and maybe you could talk a little bit about Zoilo Ríos in greater detail or others? João Wahnon: Yes. Today, so hydrogen refueling station for fuel cell electrical vehicle is growing, of course, according with the demand. So, today, there is not too many vehicles in fuel‐cell hydrogen vehicles. And so a lot of our -- we are negotiating with several entities. We made this agreement with CEEES, so it's the association of the gas stations in Spain to install hydrogen refueling station. There is a strategy from European Union to have a green highways, it called Green Highways to connect the cities -- the capital of the countries, imagine from Portugal to Paris, Milan, whatever. And so there is a lot of opportunities, and we are first under NDA, but we are negotiating with several other oil companies to install hydrogen refueling stations in these green highways, apart from smaller installations for more city consumption of future hydrogen vehicles.

Great. Thanks. Question back to João, how many HEVO-SOLAR is 100 megawatts of electrolyzer capacity equates to? João Wahnon: Sorry, can you repeat?

Yeah. It was a question about how many -- so for next year you mentioned that the production facility will have a capacity of 100 megawatts, how many HEVO-SOLARs does that equates to? João Wahnon: Around the 4,800.

Great. Thanks. João Wahnon: Anyway the manufacturing capacity, it will be installed, preparing already for the delivery needs in 2023 and 2024. So with designs for the full manufacturing capacity, but we will not have all the equipment installed. We have just the equipment necessary for 2022, because the line is already designed and installed in thinking of the manufacturing capacity of 2024. This means, then, when we decided to make the additional equipment, it will be a very fast operation, just delivery of equipment, because the line is already -- will be already prepared for the manufacturing capacity of 2024. So the different places for the equipments and the transportation of the materials will be already there and we will jump very fast to the next level of capacity as soon as we have green lights from the business development. So this means that if the business development sells more projects sooner, we will jump sooner to the next level and we will not wait too much time to the increment of capacity.

Thanks. A couple questions here for Frederico around expected revenue. When do you expect to start generating revenue and how much?

Sure. So, in the business plan, we noted that we actually expected to start making revenues in 2022, with a total revenues of around €45 million during that year. We will likely see some modest revenues in 2021, already, even excluding what we've shown today of the revenues due to the production stock and material that's provided to our partners, simply because everything will be up and running, and we'll start generating some modest revenues already in the second half of this year. The reality is that where we expect most of the sales revenues is to be actually towards 2022, with around €45 million. That said, 2022, we still expect to be posting a loss -- operational loss for that year, given the fact that we want to significantly invest in developing our own hydrogen plants. If we were to sell our technology already fully to third-parties, we would be breakeven and likely breakeven in the back already in 2022, but strategically, we are building our hydrogen plants portfolio.

Thanks Frederico. Maybe we'll stick with you here, or Jaime. A question around material impact on the levelized cost of hydrogen coming from increasing poly-silicon prices or perhaps other raw materials. So, just the impact of increasing raw material prices on the levelized cost of hydrogen?

Yes. We are facing in all industry and in all chains, be there from Noble Metals, be there for silicones, be there for steel and electronics, semiconductors steel, aluminum, we are facing a huge -- more than increasing costs what we are facing right now is a shortage of materials. We have big groups saying that they are not able to deliver and they will delay and they do not have to wait for the labor wherever. So, we have reinforces our purchasing departments. We are testing much more alternative for each item to have them available and it's, it's one of our internal objectives to secure raw material -- just secure it to not have a strong delay in the deliveries and in manufacturing. Regarding the impact on cost, I will say that the main components that is bringing some impact is not relevant. It's not huge impact, but is some impact is the idiom -- material idiom that we use in our product. All the product -- all the remaining steel -- the main problems, it secures the deliveries and not properly the impact on cost. But again, the department has been reinforcing and we have an internal task force to increase the number of companies that we have qualified in each item in order to try to reduce the risk of being without material, some of them are very complex and for instance, semiconductors. And we have a lot of the contact no control equipment on the system. Its semiconductors is one of the main issues. They are not so much suppliers, qualified right now, but we are -- we have increased our purchasing department in order to face this problem that is not yet completely understood when is going to -- when is going to reduce the risk we finish.

Great. Thanks Jaime. Question here for Frederico, on our capital requirements, how long is your expected liquidity runway based on current cash position and expected capital need going forward, how much additional runway can capital inflow from warrants provide? What are the biggest risks to the liquidity outlook?

Certainly. So, in terms of the runway, certainly, the warrants are the sort of biggest unknown on that factor. The, I would say, simple way to think about it is that, if the outstanding warrants was convert, we would not require any additional capital in order to execute the business plan exactly as we stated in Jan. If we assume that the warrants do not convert, we have enough operational runway to take this well into 2022. Luckily, even into 2023. The main drag or -- to consumer of capital will be the investments into our own hydrogen farms. That is something that we could always take offers off the accelerator, if the capital positions are required, and instead focus more on the technology sales and making the immediate short term revenues, rather than the longer term -- long term hydrogen sales. So from a capital position for our existing business plan, I would say, we have enough runway, certainly to handle it with the warrants, enough runway time to manage the situation with the warrants are not converted. The only caveat I will note is that, as we saw from all of the exciting developments that João and his team have been up to. When we start going further afield and if we start to look to more aggressively expand into new regions, that capital position could change. So that will be something that we are constantly analyzing and as these strategies for those new emerging markets continues to develop, that will be something that we will be keeping an eye on, on what the capital requirements are.

On the subject of those new markets and new opportunities outside of southern Europe, due to the potential demand from large markets, Australia, India, the US, how quickly can you develop a production facility to supply those markets.

So, the view here is that obviously the most important is the current production facility that we have that being built in the -- during this year. We believe that when we were to take the decision of going live, within one year we would be able to have a production facility in the new region installs. So Jaime, do you want to add.

Yes. The industrialization here has been built in a modularity way. This means that we will take six, eight months to develop each model that you repeated. It will be just the delivery of the equipment. So, this modularity allow us to build a factory. After it is built, tested, and everything fine adjusted, will be very -- will be much faster to duplicate, because the models are already established, finished and approved. So we will not take the same time to build a second factory or to build a second line, like we are taking the first one.

Thanks. Sticking with you, Jaime, you said that the units are actually I think you answered the units ever are exceeding expectations, can you elaborate a bit around that to what extent it is exceeding expectations? What is performing better?

I will say that the results that we are having in Evora, adding line, exceeding expectations. The word of exceeding expectations is that is creating us the possibility after some tests and analysis to increase the throughput of the product. Right now, we have a throughput of each model of 3.90 grams per hour at 1,000 watts per square meter of radiation. And we will probably be able to increase it after the third power plant to be delivered and that will give us an additional small reduction in cost. Right now what is expecting for Evora, even before finishing it, is that we will call independent and auditor to make reports on the two directions. One, the performance of HEVO-SOLAR and their radiation sold for this radiation it will produce this hydrogen. And second one is the security issues, because one of the main – main bottlenecks to the business development side is licensing if the tracker is [indiscernible] is require some sort of certification or not of the location and whatever. And so we want to go through very fast with auditing reports on performance, and on the security issues in order to allow to speed up the business development in some more complex periods like we are facing in south of Europe.

Thanks, Jaime. A couple of questions here about Ampol and the potential foreign joint venture structure in Australia. How are you thinking about commercial opportunities in that region, are you contemplating a partnership with Tesla, which has also partnered with Ampol?

Thanks, Ben. At the moment, we – just early days in our partnership with Ampol. So, still defining on what that comes, and what that brings, we'll just confirm here that we have not had discussions with Tesla, but just I have seen a couple of questions come through on that front. But of course, for us, partnering with Ampol was really the leading transportation fuel player in that market is more than we could have look forward extremely excited about that opportunity. And we see the opportunity in Australia to be significantly broad. So not only in hydrogen for transportation fuels, hydrogen for some of the heavy industry sectors that operates in Australia. Also, hydrogen as a potential ingredient for some of the sort of potential future fuels like ammonia for heavy transportation, be it cargo, trains and boats, and so on. And eventually also hydrogen as a ingredient for other chemicals that will be exported from Australia. So we see the partnerships in Australia incredibly broad. João, is there anything you'd want to add. A – João Wahnon: I just wanted to add that, the design of our hydrogen refueling stations mainly that we are developing for Spanish market and Portugal. And we will develop in the future, in Australia for sure. As mentioned, we produce the hydrogen upgrades and in some hydrogen gas stations far away from grid of the National Electrical Grid, we are designing a solution to produce hydrogen by using solar radiation, and we will start with hydrogen and we have the ability to produce electricity to charge the electrical cars in gas stations where there is no electrical grid available. So this means that our solution is for fuel-cells electrical vehicles using direct hydrogen, but at the same time, we're going to use the hydrogen with fuel cells to supply electrical car -- electrical battery cars such as Tesla.

We’re going to top of the hour here, so one more question before we end the call. Have you -- as Fusion Fuel have expertise with regards to applying for subsidy programs, whether it's the EU Green New Deal or ECB Green Investment Fund for infrastructure projects? A – João Wahnon: Certainly. Thanks, Ben. So definitely this is a very important factor in this industry, and only going to grow in importance not only in Europe, but also in other regions. Also, as we start to see items emerge in the US. Currently, we do have some limited expertise within Fusion Fuel and we are expanding that expertise, as we speak. But in addition, what we have done is we have partnered up with several players, who are, which is their core bread and butter is to actually support firms in navigating, what can be pretty complex submissions for governmental programs. However, one of the points that I would note is that, well two points. First, the business plan that we shared in January did not include and did not assume any subsidies already within it. And I believe it's fair to say that there is no projects that we are looking at where we have built them on the premise of receiving subsidies. The projects we are pursuing are projects that we believe in the validity of the project as a whole. So any program that we can be a part of, will be a -- lets call it, the cherry on top. But what's exciting, that we believe of our current pipeline is that it's robust, regardless of the governmental aid.

Okay. Thanks for responding and with that I think we'll end our Q1 update. There's a lot of engagement in the Q&A session, so if you didn't get your question answered we apologize. So reach out to ir@fusion-fuel.eu and we'll do our best to get back to you. So with that, we'll say goodbye. Thank you for your support and we look forward to speak with you in the future. Good bye.

So ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.