MYCELX Technologies Corporation (MYX) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the MYCELX Technologies Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish responses where it is appropriate to do so. Before we begin, I would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from MYCELX Technologies. Connie, good afternoon.

Good afternoon, and thank you for the introduction. Good afternoon, everyone. I am Connie Mixon, the CEO of MYCELX Technologies. And with me today is Kim Slayton, our CFO; and Jim Weidler, our PFAS Business Director. I appreciate you joining us today, and we appreciate your time. I'll just jump right in. MYCELX is a technology-driven water treatment company with a patent web of over 70 issued patent or in progress patents based on our core technology, which is a unique polymer. We specialize in treating difficult contaminants in specific large, high-margin markets such as PFAS remediation and enhanced oil recovery. Our technology is disruptive. It offers sustainable environmental impact, which is extremely important to all of our customers. And our customer base includes some of the largest global corporations that are involved in either oil production or as we look at the PFAS market, it will be much more geared to environmental engineering companies, et cetera. To talk about our technology differentiator, which is our MYCELX polymer. The polymer was invented by our Chief Science Officer. It is covered by a patent web of 70 patents, they are U.S. and international. And the sequence of this picture that you see at the bottom is a simple illustration of where the MYCELX polymer comes into contact with contaminants. This is how we use our technology and industry to not only support the oil and gas industry, but multiple other industries that need boosted performance. So what you're seeing in a lab tech is actually pouring crude oil into a beaker. He is putting the MYCELX, actually it's the MYCELX polymer on top, which is just kind of a liquid form of it. And then he stirs it up. And then you see that he's able to pull out an entire, really, blob of the crude oil. That looks like it could -- well, that's maybe something that anyone can do. But actually, what is happening there is that our polymer is causing all of those contaminants to bind together. And crude oil is made of a myriad of contaminants. So this technology not only does it work very, very well in removing oil from water, we leverage this technology and other applications such as PFAS in our treatment trials so that we get the best performance out of our systems. Our strengths are that we are #1 at this point, very laser-focused on 2 markets. They're both large, they're long term and they're very high margin, both the PFAS remediation market and the enhanced oil recovery market. We will get into both explaining those and giving you much more detail around that as we move forward. These are -- we have technology that is -- that works in these specialized applications, and the awareness is growing in PFAS as well as our profile in the EOR market. We have the ability to use our polymer technology in a very -- which is very timely at this point because of the awareness of PFAS. They're looking for better technology that is -- that has gaps in performance that we can fulfill. And then in the EOR market, to be able to use this method of production, which is very, very timely, they need to be able to have clean water. And they're unable to get clean water for the production process with current technology. Our technology is proven, and it is also secured by a very, very tight patent web. Our recurring revenue model is very, very powerful. We can actually sell or we lease equipment and then we sell -- we continue to sell the media that goes inside that equipment over and over again. It is a very powerful model, and it has very high margins, especially in the media. We also have we also have very high gross margins. Most of the margins -- our margins have slipped recently because of -- and it will when we have more equipment sales than we do more -- than we do media sales. But of course, the equipment is like the razor and with the razor blade, we get the much higher margins once we install the equipment and they start using the media, which they do over time. We have a blue-chip client base. The names that you see there are customers that we have had for quite a while. One is a strategic partner with us. So we have been able to engage them directly and actually become, in a way, a partner to them to some of their activities as they -- as they've grown their processes as well. I want to touch on and say a word about recent events because we'll be talking about some of these as we go along through the presentation. The first one is that we have realized several of the [ robust ] strategic plan that we put in place 2 years ago. And probably the most important this year has been the sale of our Saudi operations and transitioned it into an exclusive distributorship. It is now run by -- owned by a Saudi consortium and run by legacy MYCELX employees. So that was something that we felt, that we saw a couple of years ago that it was something that we needed to be moving toward, and we were able to realize that this year, and that has done a very -- that has been very important to the company. Also, we have also installed recently an EOR installation using our retrofit package, which you're going to hear more about that as well. So that market, we are already installing and we have, shall we say, circumvented somewhat the time lines of the oil and gas industry by having our own retrofit package. You'll hear more about that as well. We had a small fund raised recently, where we were looking to -- we needed capital to buy more trial equipment. We have a lot of trials going on in both markets, and we needed to not turn down a trial at this point in our growth. So we were able to raise a little over $900,000 to get us to where we needed to be able to get this trial equipment. Also, we did have a project revenue recognition that is moving from -- that is moving from '24 to '25, just on now, but we are still -- but we will get milestone payments throughout this project. So those are some recent events that you will hear either some through Jim, some through me and of course, some through the financials with Kim. Okay. I'm going -- we're going to talk about PFAS remediation and enhanced oil recovery now. And I'm going to turn it over to Jim to present on the PFAS remediation, the forever chemical threat.

Thank you, Connie. Thank you, everyone, for joining today. I'm going to run through our PFAS product strategy. So if you're not familiar with PFAS, I don't know where you've been for the last couple of years, it's been very well documented publicly in all of the media. PFAS are commonly referred to as forever chemicals. They are persistent in the environment. They're extremely difficult to degrade. They are bioaccumulative, so they accumulate in the human body. Actually, 98% of Americans have detectable levels of PFAS in their bodies. Very ubiquitous throughout the world. They've actually found PFAS in the Arctic, in rain and, obviously, all different types of groundwater. So it is a worldwide problem and extremely toxic at relatively low levels compared to other contaminants. So we have a big problem on our hands, and it's a great opportunity for MYCELX to address and remediate. In terms of the awareness, there's a lot of public sites out there that you can visit, we've referenced them here. Dark Waters is a really good documentary on actually how the PFAS was discovered in the U.S. through DuPont. So these are different sites that you can visit, a little more about the PFAS problems throughout the United States and worldwide. So where does MYCELX position itself when dealing with PFAS? So what you're looking at on the screen are different technologies for removal or remediation of PFAS and actually destruction in some cases. So working from your left to your right, I would say, would be the most common applications or technologies to the emerging technologies on the far right. So granular activated carbon and ion exchange resin are by far the most common technologies used for removal of PFAS from aqueous water streams. There are newer novel absorbents being developed and introduced into the market. Those might be corn-based, they could be a clay-based or actually a metallic based. And there is also cartridge filtration technology. And the 2 highlighted are, so the granular activated carbon and the cartridge filtration are the products, the technologies that MYCELX integrates into our PFAS systems. Moving into column 3, there are also separation technologies where they actually remove the PFAS from the water but they're not necessarily destroying it. And then those technologies are typically paired with a destruction technology. So column 3 and 4 are typically in tandem to remove and destroy PFAS whereas the first 2 columns are more of the removal process. So MYCELX is uniquely positioned in the first 2. The advantage is that we have a technology that is very widely accepted. It is very commonly utilized for PFAS. So there are fewer barriers to entry. We have a proprietary media blend that we use. And what we've seen from the media based on our data is that it improved -- it has improved efficacy and treatment of available. So easier for us to pivot into the marketplace. So I'll walk through the market verticals, what are the verticals that we're targeting to develop: landfill leachate; industrial and municipal wastewater; municipal drinking water and then residential use, commonly known as point of entry systems. So these are the 4 verticals that we have identified as the most optimistic and developed a strategy into each of these. So diving into the landfill leachate market, there are about 3,000 active landfills in the United States alone and 10,000 inactive. Most of those landfills have a landfill leachate collection system. The leachate is essentially just the water that accumulates through the landfill during rain events. And because of the waste in the landfill is highly contaminated with PFAS chemicals, the leachate is typically highly concentrated with PFAS. So there is a problem in the industry that needs to be addressed. That leachate is PFAS laden and needs to be treated. So we are currently working with different consulting engineers and strategic partners to develop a solution for the landfill leachate market. Worth noting that our partner in Australia, Oleology, has been extremely successful in tackling landfill leachate and we are leveraging their experience to develop and introduce those solutions in the United States. So super optimistic about the landfill leachate vertical. In the industrial and municipal wastewater space, this segment or this vertical is not officially regulated in the United States. And what I mean is it is -- PFAS for industrial and municipal wastewater is not on the NPDES permit. That's the discharge permit. So what you see is a little bit of a lag in this vertical but the -- all indicators are that the regulation is coming. So we're starting to see an uptick in interest in PFAS for this particular vertical. Worth noting that we will be part of a treatability pilot study starting in Q1 of next year in the United States funded by the EPA comparing the MYCELX technology to other incumbent technology. So super excited about that opportunity to showcase our technology and how we're superior to the other technologies. So this is certainly a market we know is going to expand quickly and that we are positioning ourselves accordingly. Moving on to the drinking water market, municipal drinking water, arguably the largest market for MYCELX there are over 155,000 public water systems in the United States. And the majority of these are smaller utilities. It's kind of counterintuitive. You would think that they would be larger, but the majority of the systems are actually smaller. It is a more competitive vertical. GAC and ion exchange resins are by far the most commonly utilized technologies. And as of April of this year, the EPA is -- did issue regulations for drinking water. So there are drinking water standards known as MCLs in the United States that have to be met. There is a 5-year grace period for utilities to get into compliance. So the initial step is testing and understanding the problem, and then the second step is implementing a treatment system solution. So the first year will be a little slower because there's a lot of investigation on PFAS problem ongoing, and then that will quickly morph into projects and a pretty robust pipeline of PFAS projects throughout the United States. Worth noting the U.S.. Government EPA has allocated over $10 billion in funding for the PFAS remediation. So robust funding, a big problem, there's a need, so a really strong vertical for us. We are positioned well with our technology. We have the NSF certifications that are required and we are in the process of starting our sales channel partnerships, and I will go into that in a little more detail in a future slide. On the residential side. So let's say you're at your house in a rural area and maybe you're not going to have PFAS-free water for many, many years. Then you do have the opportunity to install a house system, so this would be a whole house system. So our strategy for this market is to partner with an existing distributor or supplier of home systems. In lieu of trying to start from scratch, we have aligned ourselves with U.S. Water Systems who has a huge distributor network throughout the United States and have already ordered the initial lot of MYCELX media/products for their home PFAS system, and they are close to launching their new PFAS POE systems in the United States. So again, another vertical that we are well positioned. Regarding the funding, I mentioned there's over $10 billion just from the EPA. This is a breakdown of the $28 billion of funding that is available to various utilities and actually sometimes homeowners have access to some of this funding as well on the POE side. So very robust funding, which makes my job much easier when projects are adequately funded. So how do we penetrate the drinking water market? And what does the strategy look like? So this table is an extraction from an AWWA published report and working from left to right, the size category is actually the size of the utility. So these are small drinking water utilities. So size category 1 is 0 to 100 people in population. And that equates to a treatment system of 21 gallons per minute. So let's look at the highlighted category example. Category to 100 to 500 people in population. There are about 5,000 sites throughout the U.S. Each one of those sites has a flow rate of 104 gallons per minute. That is equivalent to a treatment system of about USD 274,000. So you can see the total addressable market is quite large. And how does that break down on a project-by-project basis? So this is a detailed breakdown of this size 2 category small project. Again, 104 gallons per minute. This would be a 4-cartridge housing MYCELX treatment system, a total of 88 cartridges in the system. Total price, just around $274,000, of which $250,000 of that is equipment and $24,000 approximately is cartridge filtration. And that is the recurring revenue piece and that would occur approximately every 6 months. They have to replace the cartridge filters. So on the small side, this would be for smaller utilities. Let's take a look at a midsized utility, so category 4. Now we're up to 3,300 people in population. You can see that there are fewer of these large sites, but the flow rate is much larger, 688 gallons per minute. That equates to about $1 million worth of equipment on the conservative side for MYCELX. Actually, it's closer to $2 million based on the flow rate. So what does that project individually break down and look like? That would be 4 media vessels that are actually 12-foot in diameter full of 68,000 pounds of our media. It's about a $2 million, $1.9 million project. The equipment is $1.3 million of that and the media is approximately USD 600,000. Again, there is a recurring media revenue piece to all of our projects. This one has a longer life cycle, so anywhere from 18 to 24 months. So just in summary, there's a lot of projects out there that have to be addressed. So our strategy for the sales distribution and the channel partners is working through area representatives. There's a lot of information on this slide. But step 1 is let's identify the highly populated PFAS areas. So with the red stars, you can see the Eastern United States has the biggest problem of PFAS contamination in drinking water. So what we will do, our plan is to engage independent sales representatives. So located throughout the United States, there are sales representatives in every state. And those representatives have a Rolodex of customers that they call on. So immediately, we would extend ourselves through our distribution and sales channel partners. So let's say we sign up a representative in Georgia, so they would have access to all the projects in Georgia and then we do that in every state. So it's a model that I've done for -- gosh, I'm showing my age, almost 30 years now. I'm very comfortable implementing, signing these channel partners, onboarding the partners, supporting them and then building a robust pipeline. So super optimistic about the municipal drinking water channel partner model. Just -- I'll just say in summary that, all 4 of the verticals have great potential and we've made great progress over the last 2 years introducing MYCELX into the marketplace. Connie, I'll turn it back to you.

Thank you, Jim. Okay. We're going to -- I'm going to talk about the enhanced oil recovery market, which is our second large core market. Enhanced oil recovery is a specialized production method that is utilized by large oil companies all over the world. But to be successful at this production method, they have to have clean water. They're pretty -- the cleaner the water, they boost their production and it saves them money. So these are -- and they're used in such large mature fields that when you have a mature field, you've got more water to treat than you do in a new field. So these are very mature fields, so they have a tremendous amount of water to treat. Sometimes, up to -- for every barrel of oil, they've got to treat 10 barrels to 14 barrels of water. So that's -- the need for water treatment in this market is tremendous. To address this need in the oil and gas market, we innovated a media that's called REGEN and it is a media that is -- that we use in this -- particularly in this market. And it has the ability to boost the removal of oil and solids from the water to give them the clean water they need. When you're looking -- this picture that you're looking at right now is an installation in Africa. All of this -- this is the total REGEN -- actual REGEN project and what you're seeing is, to the far right, that is the REGEN vessels. So the vessels are very, very large, and they're filled with this REGEN media. So they pump -- when the water comes out of the production hole, just like the oil does, it's pumped here and it goes to a coalescer, which is that -- was designated as a [ MAC ], then through the REGEN. And then if it needs to go through polishers to get it even cleaner, and that depends on what the producer wants, then it will go through our polishing technology. So that gives you an idea of what -- I wish there were a person or a figure there. You could kind of get -- build a scale of this. But this is a fairly large project. So why REGEN media? The first thing is that they need to recover as much oil as they can in existing assets, what they already have, so that they don't have to build large infrastructure to manage their water. And of note, 50% of oil is still underground in some of these largest fields in the world, a lot of them are in the Middle East. And they want to be able to get this -- the additional 50% that's still under the ground. But they can't get it because there's no pressure left in the -- within the formation. So they use these technologies such as the enhanced oil recovery. They want better technology so that they'll be more commercially successful. So this REGEN media is really a disruptor in that it not only allows them to be able to produce more, they can do it at less cost. So we have -- we do have installations of this. Time lines to adopt technology and oil and gas are generally long because it's -- because the oil and gas industry when they adopt a process or technology, their intention is to use it for anywhere from 15 to 25 years. Because that's the way -- they don't change technologies often and they certainly don't change processes because it's too expensive and too disruptive to their production. So this is a big step because we already have now installations in EOR. The EOR market is large. All the big players are involved in it, whether they're doing it in the U.S., whether they do it in the Middle East and it's all at different stages depending on how desperate they are to get their -- actually to replace what they have now, which is nutshell-based media, and it really is nutshell-based media, which has been in service for probably 30 years in the oil and gas industry. It's kind of outrun its time. The production methods are much more sophisticated now and nutshell media filtration for the water is insufficient. But you see the names here. We are involved with all these customers, most of these we sell direct or along with them as a strategic partner. So I wanted to say -- want to talk about displacing incumbent technology, which is the nutshell filtration media that I was talking about. Since it is slow to adopt, and there's long time lines, we innovated in 2020 a retrofit package whereby they don't have to replace vessels to be able to use our technology because our technology is, even though it's a [ bead ] media, it is different from nutshells. So we just -- we actually designed this retrofit package and it is patent pending, and they can basically drop that into their existing vessels on site and immediately use our technology. That has shortened the time line on procuring vessels. They don't have to -- it saves them OpEx, it saves them CapEx because they don't have to buy new vessels. If they want to upgrade, this is what they do. If they want to expand, then they will buy new vessels. And we are in conversations with NOCs, national oil companies, as we speak along those lines of upgrading, of using the retrofit package. And in fact, we just installed our -- the first of 3 retrofit packages in the Middle East recently. So this technology, while it was a long -- you could say a long time coming because we innovated REGEN probably 7 years ago, that was probably our first installation. This has continued to take hold. We have got good sponsorship and we've got reference projects, which makes a very big difference when it comes to convincing other producers that you've got the technology that they need. Outside of the -- another use for REGEN outside of enhanced oil recovery is I'm going to mention here is a new market in the U.S., but this has got -- this also is going to have a very big impact. There's a -- they are limiting saltwater disposal well licenses. Now you can't get one, basically. And so they're going to start shutting down saltwater disposal wells because they are reinjecting, basically, nasty water back down a well and it's causing seismic activities in Odessa and Midland, all the places where in the Permian, where people live. But some of the producers, in particular, Chevron, Exxon, who now are the biggest landowners, lease owners in the Permian Basin now are dedicated to looking at beneficiaries. And when I say that it's beneficial, using the water, cleaning the water well enough that it can be either resold. It can be resold to townships around where they will do further treatment to it or they can use it for nonconsumable agriculture like switch grass, which is used for biochar and that sort of thing. So it's -- since they're going to -- this is, again, back to my timely comments. This is very timely because Texas, when they close down saltwater disposal wells, they are not going to have that ability to use what they're using anymore, so they're going to have to make a change. So making a change to -- if they're going to have to make a change, making a change where they can get water quality that they can use for beneficial reuse, then that's the way they're going to go. And to do that, you have to have excellent technology, which we do with this region, and it is proven in the field. The growth strategy for this market does rely on strategic partnerships and very good relationships. I would say that when you look at this list of producers and the service providers that we are, some we can name, some we cannot name, that we are engaged with have been, still are or on the cusp of, these are all very high profile. We have cultivated these companies on our own. We did this direct. And that was not our first -- that was not really our first choice. But it became that way because with disruptive technology or technology that can change that will be -- you'll need some change into your process to take them on board, then they -- it becomes much harder sale and you need technical and we've been able to do that with all the names that you see listed here. And right now, our strategy is to continue with strategic partnerships because that helps us. As we get these large producers, the NOCs, global oil companies to adopt this, then the next best step is leverage someone else's marketing and sales platform to really go do it and scale it on a global scale. So that's the strategy that we are employing with our EOR. And I think we are very far up the adoption curve now with the products now we need to leverage strategic partnerships and which we are doing now. We have a clear path forward because we're looking at overcoming slow growth. Slow growth is a byproduct of being tied to the oil and gas industry for a long time. Oil and gas, as you know, they have very long time lines, as we've discussed. And with lack of, I would say, adequate balance sheet required to bridge project to project, even though we were successful, we had successful years in that it is an industry that is made for large balance sheets because you do have to bridge between projects, during projects, et cetera. So we've moved -- so basically, what we did when we sold our Saudi business is to move back to where we know that we have got our best foothold where we can make our path more productive and higher margin. And it's clearly with these 2 right now, with REGEN and PFAS. So we've identified with PFAS that, as Jim has pointed out, that we've got the channel partner model, which is -- which I believe is -- which we all know can be very, very productive. And Jim has done that model several times in his career. For EOR, what we've done is we've cut the time lines back by having our own retrofit package. So they don't have to build equipment. They can just drop it in and we've got product in the marketplace. So we do believe we have a path that will shorten our time lines and that we will be successful with these because we've got the right technology at the right time. So what do we have in store for 2025? Our plan for 2025 is to achieve profitability. We all know profitability can actually -- I don't know why this is changing on its own. I'm sorry. We know -- I'm just going to keep going, although I don't know why this is doing that. Okay. So our 2025 plan, achieving profitability is our #1 aim. And we know that changing profitability covers a lot of things that have to go right and they have to be done correctly. So for us, we are looking at our EOR market because it's -- as I was saying, is further up the adoption curve. When you look at the EOR market that we're looking at on the front equipment sales or retrofit package sales, equipment or anything that has to -- that falls under equipment, the margins are not nearly what they are in the media. So we will have equipment sales associated with our EOR and -- but we will have media sales as well. And we will have with our PFAS, we'll have excess 50-plus margin there. And our media, generally, if it's just a pure media sale, will be roughly between 60% and 70% margin. So the way that however our projects shake out for the year, a lot of our profitability does depend on how much media -- how much of our overall sales are media, that high-margin media, and how much is equipment-based. So we're looking to be profitable this year, and we believe that we can do that. So with that, I'm going to turn it over to Kim, and she will go through the financials.

Thank you, Connie. Good afternoon, everyone. Maybe just take a second and run through. These are interim results that we released last week. Looking at the P&L. Our revenue for the first half of the year was $3.5 million. This was down from 37% from the same period last year. That was due to the sale of our KSA operations. That $3.5 million includes about $1.6 million from Saudi Arabia. We did have that business in January and February. That was around $700,000. And then the other $800,000 related to the inventory that was in that warehouse that we sold with the business there. The inventory and assets. The total purchase price was $7.15 million. That was $3.125 million paid at closing and then there's a 2-year earn-out period for the remaining $4 million. The gross margin for the first half of the year was a little over 28%. That's a bit lower than we would have expected, but the ancillary services that we provided in KSA, the expenses associated with those services were escalating significantly in the last half of last year and then the beginning of this year. And that was causing us to actually start losing money in January and February, which reduced our overall margins and they had a large impact. The margin has been improving since the end of Q1, and I would expect that by the end of this year, we'll be upwards of 30%, 31%. The operating expenses, SG&A and then depreciation and amortization are down year-over-year. They decreased 18% compared to H1 of '23. That is mostly because of the sale of the Saudi business, we were able to shed about 1/3 of our overhead. And so you see that impact there in that reduction. There is a gain of $838,000. That's on the sale of the fixed assets, again, not from the sale of the equipment that was in Saudi Arabia. That equipment had a net book value of $2.2 million and we were able to recognize that gain of $838,000. We did realize a net loss of $1.36 million. That does include the gain on that sale of fixed assets. Without that gain, it would have been a loss of around $2.2 million. EBITDA was negative in the first half of the year, negative $1.1 million, compared to negative $900,000 in the first half of 2023. That negative $1.1 million does include the gain. If it did not include the gain, then EBITDA would have been a negative $1.9 million for the first half of the year. Moving ahead to the balance sheet. The largest assets on our balance sheet at June 30 are cash and cash equivalents of $2.1 million and then we had inventory of $2.7 million. That's a decrease from year-end primarily related to the sale of the Saudi inventory. And then you'll see PP&E and operating lease assets. That is, PP&E is $1.1 million. There is a right-of-use asset of $1.3 million. That is offset by the operating lease liability that you see down below. There's current and long-term liability and those amounts do offset. Total liabilities were $2.9 million on June 30. A little over $1 million of that relates to contract liability. That's basically deferred revenue, and it's related to milestone payments and then prepayment fund orders that customers have paid for. Payroll and accrued expenses is significantly down from year-end. And again, that all relates to the Saudi business. We had large accruals on our balance sheet at every month related to the vendor payments and then payroll for that branch office. And without that, the accruals are significantly less. Stockholders' equity was $5.8 million at the end of the period. Looking at the cash flow statement. The company used 100 -- I'm sorry, $500,000 in operations in the first half of the year. That's compared to $100,000 in the first half of 2023. We did generate $2.2 million from investing activities. That represents the proceeds from the sale of the fixed assets in Saudi. Of that initial consideration of $3.1 million that we received, $2.3 million, that was allocated to fixed assets and $825,000 was allocated to inventory and is in the operating activities of the P&L. There were no financing activities in H1. But as Connie has already mentioned, in September, we did raise gross proceeds of $900,000 in a capital raise. Those proceeds are being used to build EOR and PFAS trial equipment. Looking ahead to H2 and year-end, our original revenue forecast for 2024 was $9 million to $10 million. We just recently reduced that to $4.5 million to $5 million. That was, as Connie has explained, due to changes in the customer's time line. And the factory acceptance testing that was scheduled for the very end of the year has now been pushed to early 2025. So there's less than a 50% chance that, that would happen in 2024, so that was the reason to move it to 2025. I can say that we are on track to receive at least $1 million of the first earn-out payment from the sale of the Saudi business. It could be more. The amount that we are able to recognize by year-end will be reflected in the gain on the P&L at the end of the year. PBT is expected to be around negative $4.3 million at year-end. That is adjusted to exclude all gains on the KSA sale. And EBITDA would be negative $3.9 million. In comparison, PBT for the end of 2023 was negative $3.3 million. So there's only a $1 million variance despite the revenue being more than 50% lower in 2024. I think the cash balance at year-end is going to be around $1 million. It is going to dip a little bit and then rebound in Q1 of 2025. But I think we'll stay right around that $1 million mark. And then as Connie has just explained, looking ahead to 2025 revenue, we are forecasting $15.5 million. And at that level, EBITDA would be positive and we should be profitable, which is, again, as Connie has already mentioned, it's our goal for next year. With that, I will conclude the presentation, and we can move forward to questions.

[Operator Instructions] I'll just like to remind you that a recording of the presentation along with a copy of the slides and the published Q&A can be accessed via the investor dashboard. Guys, as you can see there in the Q&A tab, we have received a number of questions throughout your presentation this afternoon. And thank you to all of those on the call for taking the time to submit their questions. But guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you.

Thank you. Okay. So the first one is frustration over the share price over the last 3 years and what is going to be the catalyst to get our share price up. We believe that the share price is directly tied to the execution and -- which is directly tied to revenue. So we have laid out a course for ourselves in the PFAS market on how we're going to be able to execute, and we've laid out a course that is already coming to fruition in the EOR market. It is -- I wish it could go faster, but we are doing everything that we can, and we have made enormous strides this year toward getting to our goals of being profitable, and that in itself is going to indicate the health of the business and our strategy. We do -- do we have enough -- do we have a big enough balance sheet? We have -- the way that we run the business is run even with our -- with the projects, our large projects that are multimillion-dollar projects is that we have milestone payments so that we are cash neutral or positive throughout a project. And we also believe that we can manage because we would like to get to this critical mass of installed base with references where we can start to look to raise more money if we wanted to, but I believe that we want -- but we need to get further down the adoption curve and did a few more EOR projects under our belt. Jim, there is a question about TRS and what they're doing in PFAS, but I don't see the same communication about from MYCELX. Are you familiar with TRS? I think it's -- I apologize I don't know why we're having some issues with the sound.

Yes. Connie, I guess the question really is in terms of communication or my inference to the question is do we have adequate information on our website to explain our technology. We've just updated our website as of this year. We have multiple case studies on there. We have new literature. We have new data sheets on our media. So I do feel like we have adequate information on our website in terms of our technology and how we apply it. But it is very unique. So it does typically require some one-on-one conversations with clients and with engineers. But we're constantly building our data. And as we get more data from the field or from our lab, we then, in turn, will publish new information. We just recently published an article on our cartridge filtration technology that was published on Water Online. So we are definitely very active in educating the community on our technologies.

And not to mention the numerous trade shows that you attend and actually lots of leads.

There is a question about the $5.4 million deferred revenue for the large project. And do we expect to have -- how much do we expect to have received by the end of the year? I expect that we will have received probably 60% of that by the end of this year, maybe a little less, but I would expect about 60%. And it says -- the question says, under GAAP accounting, you can't recognize until the last installment has been received. And that is correct. The entire amount because of the way that this contract is written, title transfers to the customer at factor rate acceptance testing, and that is the trigger for revenue recognition. So on this particular contract and the terms under this agreement, the revenue for this project cannot be recognized until that title transfers at that point.

Correct. I see a question here from me. Jim, how quickly can you start to get commercial traction on PFAS? Good question. We're already getting traction on PFAS. I think -- the Google Ad campaign has been extremely beneficial. We had no presence on the Internet until we started Google Ads and now we have a routine or regular flow increase coming in probably more on the rental side. A lot of interest in rental systems. We have multiple proposals outstanding in our pipeline that we feel like are going to come to fruition. So I feel those are going to happen rather quickly. On the drinking water side, where we're working with channel partners, that can happen very fast. We'll be attending the -- and exhibiting at the WEFTEC this month, actually next week. And all of the channel partners will be there so we will be having multiple conversations and meeting with those channel partners. Once the agreements are in place, literally, it's instantaneous. Not to exaggerate, but we can sign an agreement with a channel partner and get an inquiry the next day. So it can happen rather quickly.