Nanoco Group plc (GXG.DU) Earnings Call Transcript & Summary

Good morning, everybody. My name is Brian Tenner, the Chief Executive of Nanoco, have been in that post since the first of September of this year. To the 2 years prior to that, I served as the Chief Operating Officer, Chief Financial Officer and Company Secretary. So a bit of a mouthful. With me today is Liam Gray, our U.K. FD and Company Secretary. And for the previous 8 month -- [ 18 months ], Liam served as Nanoco's Group Financial Controller, and Liam will be dealing with the financial aspects of today's presentation. So without any further ado, if we could turn to Slide 3 of the presentation for the highlights of the year, please. So taking the operational highlights first. In the second half of the year, we saw a number of new -- significant new business wins. The most important of which was winning a 5-year framework agreement with ST Microelectronics in France, working in the infrared sensing area. That framework agreement was then followed by various individual work packages for services, R&D and also for some materials in a number of different applications and products. Then just after the year-end, we completed the restructuring that we started in March, April of this year. That restructuring, we have managed to retain our core capabilities in R&D, in sensing and display, in scale up and importantly, in our production facilities in Runcorn. Also in the second half of the year, we initiated litigation against Samsung for the willful infringement of our IP, notably citing 5 different patent areas where we believe our IP has been infringed. And subsequent to initiating that litigation against Samsung, we then secured third-party funding for that litigation. That litigation funding protects the group's cash flow as we will only incur any costs if we win the suit. And if we win the suit, then some of the winnings will be used to repay the funders' costs that they've incurred. So those are the operational highlights I wanted to bring out, and I'll just hand over to Liam to quickly talk through the financial highlights of the year.

Thank you, Brian, and good morning, everyone. So the first thing to highlight is that although revenue has declined as a result of the completion of the contract with the U.S. customer, we have realized cost savings in the year, which had more than offset this, which has resulted in a reduction of our adjusted operating loss by around 5%. Our other key area of focus is cash. After our equity fund raise in July 2020, which raised a GBP 3.2 million, net of fees, we finished the year with GBP 5.2 million. This, in addition to the cost savings realized and the restructuring which completed post year-end, has extended our cash runway to December 2022. We've previously disclosed that our cash runway run until July 2020. And I'll pass you back to Brian.

Thanks, Liam. So if we can now turn over the page to Slide 4, I just want to say a little bit more about the impact of the restructuring that we've undertaken and now completed. So if I start with the Board, our Board has reduced in size from 6 members to 5 members. So it's smaller. It's a more tightly focused board, but importantly, it's still providing the strategic leadership to the group. When fully complete, the revised Board structure and plc cost structure, will save in the order of GBP 700,000 per annum. Apologies for the siren in the background, our head office is opposite a hospital. The last point to emphasize about the Board is the 5-man board with 3 nonexecutives and 2 executives, myself and our Chief Technology Officer, Nigel Pickett, maintains good governance, and will do so going forward. Then moving down from the Board into the leadership team, we've a 5 man leadership team, includes myself and Nigel. And on top of that, we have Liam Gray, Kevin Smith and Joss...

Little.

Little. Sorry, Joss Little. The leadership team covers a broad range of skills and functions. It covers technologies, as I've mentioned with Nigel, all of our operations and productions and all supporting functions. And it's an excellent support for executive management. Then moving from the leadership team into the management team. The management team has reduced in size and cost, and that's to match the revised activity levels that we're currently seeing. The team remains a strong functional management team, and most importantly, during the restructuring, we've managed to retain all of our key R&D team leaders, the vast majority of our senior scientists through the restructuring process. Then finally, looking at the capability and the impact on our capability of the restructuring. It's probably more important to emphasize what has not been lost rather than what has been removed. So we still have R&D capability, and we're actively working on R&D projects in both sensing and display. We still have the capability through our scale up team to move from an R&D level of production to a scaled up level of production. And finally, as I've already mentioned, we have retained access to both of our production facilities in Runcorn, which means that we can produce a significant volume of material and earn significant revenues for both sensing materials and for display materials coming out of our Runcorn facility. So that's a summary of the impact of the restructuring that we carried out this year. And now I turn over the page to Page 5. In terms of what is left in the business, I've already mentioned that we've held on to our R&D capabilities. We do have paid for work underway in both areas. And what is important to emphasize in both sensing and display, at least one of the opportunities that's currently being worked in those areas is capable of getting the group as a whole to a breakeven point in the medium term. If we then look at the revenue capacity from our Runcorn facility, we've disclosed these figures before, but just to reiterate, because of the process gains that we've made in the current year, whether that's in our formulations or recipes for our materials or the routings that we put our processors through, we have increased the capacity of both Runcorn facilities. You can see that what that means is in sensing, we can generate, if we fully loaded the plant, to over GBP 100 million a year of revenue from production. In display, it's a smaller figure, but it's still obviously very significant at more than GBP 30 million of production capability in our display facility. Finally, in terms of capabilities and cost base, if you just look at the chart on the bottom left of Slide 5, you can see that in financial year '19, our overhead cost base was in excess of GBP 11 million, closer to GBP 12 million. Our actual estimated cost base for this year ahead on an underlying basis is just under GBP 5 million for financial year '21. So with a cost base of around GBP 5 million, we estimate that our breakeven revenue point is now around GBP 6 million. So it's less than half of what it would have been 18 months ago. And the critical thing, as I've already mentioned, is despite that reduction in breakeven point, despite the restructuring and the reduction in our cost base, we still retained the vast majority of our capabilities. And so we have a medium term goal, and by medium term, we mean within the next 3 years, to achieve recurring breakeven revenue and whether that's delivered through the opportunities in display or sensing, you can see that we have multiple routes to get there. It's not just betting on one application or one customer. So then turn over the page to Slide 6. Very simple graphic, just asking the question or showing the answer to the question. So what are the sources of value inside Nanoco? So the first thing to point to you is sensing. You've already seen the significant revenue that can be generated out of Runcorn. We already have proven technology and proven products there that we developed when we were working with the U.S. customer. So that's one important source of organic value, if you like, from within the business itself. Then on the display side, while the revenue potential is lower than sensing, it's still significant, and we're still working with significant customers where there is the potential to move from an R&D phase through scale up into actual commercial production. So those are the two, what I'd describe as organic sources of value in the business. Then a slightly less organic, more inorganic source of value, is the litigation against Samsung. And I'll say more about all 3 of those areas in the following slides. So if you can now turn the page to Page 7. What we set out here is a little bit more flavor around the IR sensing opportunities, IR for infrared. So the problem in infrared sensing today is that silicon sensors -- and there are billions of silicon sensors in use today, have very poor efficiency in the infrared region. They very quickly actually become blind or no longer receptive to infrared radiation. Current technologies are also subject to interference from natural light because natural light, at the upper end, has a lot of infrared signal in it. So as a result of those two issues, current sensors today require higher laser par, which in turn is an increased power drain on the mobile power source. So what do quantum dots do to solve that problem? Well, the first thing that the quantum dots do when they're literally painted on, not with a brush, but with a very sophisticated process, that they're added to a current silicon sensor, and they actually expand the detection range further into the infrared. So whether that's up to 940 or 1,300 or 1,400 or 1,500 or further nanometers into the infrared spectrum. Nanoco's quantum dots, when applied to an existing sensor, give that range expansion. The longer wavelength then also helps overcome interference from natural sunlight because you can move it beyond natural sunlight so that the infrared radiation and natural sunlight becomes much less relevant, if not irrelevant. What that then does is that it expands the working range of silicon-based devices. And as I've already mentioned, there are billions of applications and devices around the world using silicon today. So adding to the capabilities of that existing infrastructure is a more effective way of extending the life of silicon-based sensors. And finally, that increased efficiency reduces the power need, which has very obvious benefits for any mobile device, which has limited battery life. So how are we differentiated with our products? Well, people will be familiar that in the past, because of the work with the U.S. customer, we actually got all the way through to a certified production facility with a certified product coming out of Nanoco's facilities. That material has proven increase in data capture efficiency of almost 10 fold. So moving data capture from around 6%, 7%, 8% up towards 60%, 70% when Nanoco's quantum dot material are applied to those sensors. QDs are also much cheaper alternative to the very expensive InGaAs sensors, and obviously, InGaAs material is also much harder to get hold of. Our material then will increase the battery life in mobile applications. And the last thing to say about Nanoco's differentiation or the opportunity here for Nanoco is that the work we're doing at the moment, those have the opportunity to move through to scale up and production. If I then go over the page to Slide #8. I will say a little bit more about the value opportunity in the display sector. So today, film-based systems or Generation 1 QD TVs are seeing broader adoption as price points are lowered and a smaller -- small number, but a growing number of manufacturers are starting to investigate the benefits of putting QDs into a film-based display. In parallel with that, there's also momentum building in Generation 2 supply chains, Generation 2 referring to QD-OLED type systems. QD-OLED, as a point of note, actually uses 5 to 10x more quantum dots on a QD film. But again, it is moving the quality of the TV and the viewing experience on to the next level. As was the case in sensing, the opportunity for Nanoco is that some of our current opportunities do include the potential to move out of R&D to scale up and then into meaningful production revenues. In terms of why you would use quantum dots in a display today. We said often before, but it's worth repeating, it gives you a much wider color gamut, so you can get a lot more individual colors. You get improved color saturation. The narrow bandwidth from the light emitted by a quantum dot means that you can get better light extraction through color filters. And finally, again, quantum dots can be inserted, certainly for the film-based systems, into the existing LCD supply chain. In terms of Nanoco's differentiation, as we've emphasized in the past, our quantum dots are cadmium free. And while we're still awaiting a final ruling from the European regulators on RoHS, we are seeing more moves around the world, including in countries where cadmium is currently accepted for supply chain to start asking questions or at least be interested in moving to a cadmium-free solution. Nanoco's quantum dots will give enhanced color and energy efficiency for LCDs. We do believe that our green quantum dots are the best in the world in terms of Full Width Half Max, which is a critical measure for the performance of the quantum dot, and we believe our red quantum dots are at least equal to the next best in the world. It's also worth noting that our materials are applicable in all generations of display technology. So our quantum dots can be used in film-based display. It can be used in Generation 2 or QD-OLED display, and they will have a use in Generation 3 display, which is electroluminescence. It is worth emphasizing, though, that in each different application, you do have to reengineer the dot but one of the beauties or attractions of a platform technology is you're starting with a lot of the solution already in place, and you then modify what you've got for the new application. And finally, just around that second generation, there have been a number of announcements recently by global players in terms of OEMs, but also global suppliers of materials to the electronics and display industries or very significant investments in Generation 2 QD-OLED using 2D-based inks for inkjet printing in that supply chain. That's it on Slide #8. So if we then go over the page to Slide 9. Just some very brief comments on 2 other areas that we've talked about in the past. Nanoco life sciences, it is a versatile platform technology. It's actually built directly on our CFQD platform. As we've emphasized in the past, one of the benefits of Nanoco's cadmium-free system is that it is nontoxic and can be used in human applications. The properties of the quantum dots are very useful in medical applications, whether that's for detection or pinpoint detection with respect to tumors, whether it's for image-guided surgery or for detecting multiple different targets all at once. It's worth noting, it is also possible to conjugate or join different antibodies to VIVODOTS. VIVODOTS are the trademark name for the biological quantum dots that we evolve from our CFQD dots. And that has the potential to be interesting going forward. But it is fair to say on the life sciences piece, we are further back in the development cycle, and it's closer towards the R&D phase than it would be towards the scale-up phase. In terms of lighting, which includes horticultural, and you'll see a similarity between both these areas, life sciences and lighting, they're both extremely adjacent to the CFQD display materials that we use because we take those materials, we fine-tune them in a slightly different way, and then they can be used in life sciences and lighting. When it comes to lighting, and the example we talk through here is for horticultural, quantum dots can enhance the spectrum of light that's being emitted that enhances the growth of the plant. You can also tune the light to the specific needs of a specific plant or for other applications in lighting. Current opportunities that we're exploring do include vertical farming. And again, one of the benefits of our solution is that it integrates with the current supply chain and the current infrastructure, which today does use blue emitting LEDs. And the final benefit on the horticultural side is that the quantum dots can actually give you an even distribution of light. So instead of getting growth clustering near the source of light, you actually get good evenly spread growth around the whole grow area. So as I mentioned, both of those are adjacent to the display side of the business. We tend to be reactive in these areas rather than talking as much resource. And one of the impacts of the restructuring is that we are putting less resource into these areas, but we still retain our IP, and we still have some ongoing activity in those areas, which could bear fruit at some point in the future. So that's it for Slide 9. If we then move on to Slide 10, which is the last one for me before I hand over to Liam. The inorganic source of value in the Samsung litigation. As we've noted before, a successful outcome to that litigation, whether that's going all the way through the trial or some sort of settlement, is potentially transformative for shareholder value. And in simple terms, what we mean -- what I mean by transformative for shareholder value is that the value of any outcome could be worth more than the current market capitalization of Nanoco today. So you can see it has the true potential to be transformative. Just to recap where we are on the litigation and if I can emphasize before running through these bullets. This is a marathon, not a sprint. This is not a high court injunction that you can get something done in 4 days, 7 days, however short a period of time. This is a process that if it runs to -- all the way through to a trial, will be measured in years, not weeks and months. So just to summarize where we are on the process, we retained IP litigation specialists, Mintz, Leven, out of Boston. We also have a strategic IP adviser in Epicentre. Both of those organizations are not just highly experienced in dealing with litigation in the IP and technology space, but both of those advisers are actually extremely experienced in litigating specifically against Samsung. We filed our suit in the Eastern District of Texas on the 14th of February this year, and we then served that suit on the 12th of May. That process is active. It is ongoing. But as I mentioned, it will be measured in years, not in weeks or months. Our suit alleges that Samsung willfully infringed our core intellectual property. Again, as we've noticed before or noted before, we did put Samsung on notice of this. So the fact that they've continued in their current activities, those raise the specter of more serious penalty if we're successful in our suit because they've been warned that they're in breach. We cited 5 different patents relating to our acuity synthesis and resin capabilities in that lawsuit. And in simple terms, what we're saying is that the TVs or displays that Samsung have been selling since 2015, whether they're the SUHD or today's QLED TVs, those products have been using or infringing Nanoco's IP because of the quantum dots that are embedded in those displays. It's estimated that Samsung has sold around 14 million TVs since 2015 using Nanoco technology. And while the current lawsuit focuses on the U.S. market, which is the largest market for those TVs, it can easily be expanded to other major markets, whether that's in Western Europe or Southeast Asia. After filing and serving the suit, we then got substantial third-party litigation funding in place. We've mentioned before that the litigation could cost in excess of $10 million. So you can see that it required a significant third-party to be able to stand behind the potential cost of this lawsuit. The funder, if we are successful, will get a return of their capital and a share of any winnings. But it is worth noting that they only get their costs back if the case is successful. If the case is unsuccessful, Nanoco is not exposed to any costs of this lawsuit. Something else worth pointing out that the -- any damages that are awarded if the suit is successful, will reflect a share of the value created or we believe should reflect a share of the value created by our technology. So that basically is talking about the difference in value between a TV with quantum dots in it and a TV without quantum dots in it. The second thing to emphasize about any damages award or settlement award is that it will have to consider not just the TVs and displays that have already been sold, but also future TVs, whether they are film-based TVs or second-generation QD-OLED TVs, because we believe our background IP is relevant to the cad-free quantum dots that are used in both of those applications. And ultimately, while it would be harder to quantify, the same would apply to third-generation electroluminescent televisions. So the final point to say about the Samsung litigation is that in most reasonable successful outcome scenarios, Nanoco, after paying the funders costs and the counsel costs and the various advisor costs, we will retain more than half of any award or damages. That increases to over 3/4 of any damages or award once the award starts to get bigger. That's because some of the advisor fees are fixed by reference to multiples of costs incurred rather than a simple percentage of the winnings. So summary is, Samsung litigation, potentially transformative. We've got a very, very experienced team of advisers and funding. The process is ongoing. It is very active. We're trying to protect as much of the business as possible from the distraction of that lawsuit, but we do have dedicated individuals who are spending a lot of time supporting our advisers and in prosecuting that lawsuit. And that's it for the Samsung litigation. I'll now hand over to Liam to take you through the financial review.

Thank you, Brian. If you move on to Slide 12. This highlights some of the key financials for the year ended July 31, 2020. As mentioned in the introduction, our adjusted operating loss has actually decreased by around 5% when compared to prior year in spite of revenue and other operating income falling by GBP 3.3 million. We are focused on where we reduce costs without impacting the core capabilities of the group, where we have retained our strength in R&D scale and production. All restructure activities now likely in place. And this, along with the cost savings, has put our overhead run rate at less than half of FY '19. Cash is an obvious area of management focus. And taking into account the impact of the restructuring and other cost savings, the monthly gross cash cost, roughly half what they were in FY '19 at GBP 0.4 million per month, which as mentioned, it includes some discretionary CapEx spend. Our current cash runway extends to December 2022, and any new commercial wins will only further extend this. If you want to turn the page to Slide 13. This is summary of our income statement for the year. Before we get into the numbers, I just want to point out that FY '20 has been prepared on IFRS 16 basis, and FY '19 is prepared on IAS 17 basis. If we restated FY '19 under IFRS 16, the impact will be to move approximately GBP 0.7 million of costs from other admin expenses below the line through depreciation and amortization. So as we work through the numbers, starting with revenue. As mentioned, revenue and other operating income has fallen by GBP 3.3 million as a result of the completion of the U.S. customer contract in December 2019. The contracting with ST Micro, partly offset the loss of the revenues from the customer in the year. As shown in the table, we have seen a reduction in R&D costs and admin expenses. And this has resulted in our adjusted EBITDA reducing compared to last year by GBP 0.9 million. On a like-for-like basis, this is a GBP 0.2 million reduction. As mentioned, the difference is the change in accounting standards. If we move on to exceptionals. We incurred costs during the year for a number of corporate projects. These were the formal sale process. Fundraise completed in July 2020 and some small costs incurred for Samsung litigation in advance of the litigation funding agreements being signed. There's also some small restructuring costs included. If you turn the page to Slide 14. This year is our revenue and billings for the period. As you can see, the majority of both is made up of sales of sensing products and services. You'll also noticed quite a big disparity between billings and revenue in FY '20 and FY '19. This is due to the invoice profiling for the U.S. customer in FY '19. The trend invoices were raised quarterly in advance. Going forward, we expect our revenue to be in line with our billings profile. If you want to move on to Slide 15, this is our movement in the net loss for the year. As mentioned earlier, the number of cost savings in both R&D and admin expenses, which have offset the fall in net revenue. Our exceptional cost of GBP 0.7 million and a reduction in the R&D tax claim and take our FY '20 loss to GBP 5.1 million. Moving forward, we expect our gross funding cash cost base to be around GBP 0.4 million before revenue and tax credits. And we move on to Slide 16, just on movements in cash. This bridges our FY '19 cash position with our FY '20 cash position. So we started the year with GBP 7 million of cash. Cash cost of the business, which are our adjusted EBITDA and our operating lease costs, which are now shown separately, totaled GBP 3.7 million. As a result of the invoice and profile for the U.S. customer, we then have negative movement in working capital and deferred revenue of GBP 1.7 million. We received our GBP 1.1 million tax credits relating to FY '19 in January 2020. And this puts our total cash outcomes for the year at GBP 5 million. You can see then we had the equity raise, which raised GBP 3.2 million, taking our cash balance back up to GBP 5.2 million at year-end. And just a quick note that we expect our FY '20 tax credit to be received before January 2021. We move on to Slide 17. This is a quick financial summary. So going forward, we expect our billings and revenue to align with each other in FY '21. This should avoid the disparity we've seen in prior years and should make our working capital much less bumpy. We have contracted orders and royalties for FY '21 of GBP 1 million, and other opportunities are being discussed or not yet under contract. In spite of our significant cash costs, which includes the mothballing of the display facility in Runcorn, which can be restarted at short notice, our remaining team are highly flexible and capable. And we retain our core operational capabilities in R&D, scale of production and IP. Given our position, we're always cognizant of our cash burn rate. And net of revenue in the R&D tax credits, going forward, this should be around GBP 0.3 million per month. Any new business wins will further improve this position. However, it's important to note that we do have potential plans in place to preserve the cash runway should no new business wins materialize. And that's the finance sections on. So I'll pass back to Brian.

Thanks very much, Liam. If we then just move to Slide 19 for a summary of what you've heard this morning and the past year. So firstly, just looking at the cash runway, it is worth remembering that in our interim results presentation and certainly this presentation this time last year, we were looking at our cash being exhausted in July 2021 through a combination of the restructuring activity carried out in the group, the equity fund raise, and I should note, actually, on that, it was excellent to see so many retail investors participating in that. We find it particularly useful to use primary bid to make sure that retail investors could access the fund raise. So we appreciate that support. But the restructuring, the equity fund raise, getting third-party funding for the Samsung lawsuit, extending that cash runway out to December '22, is a very significant achievement given that, as I noted, we were looking at running out of cash in July 2020. So it's also worth noting, as Liam has said, that even if we win no new business, we can still protect that December 2022 cash runway. It would involve significant restructuring of the business. And clearly, I've got 45 people in the business today who are absolutely focused on winning new business so that, that cash runway can be extended further and also avoid the need for any further restructuring. So the future very much is in our own house. In terms of opportunity, we still, as we've emphasized a number of times, have retained our R&D capability, so we can do JDA work and service work, looking around new opportunities. We can then take those new applications through into scale up. And finally, once successful R&D has been completed -- once successful scale up has been completed, we can then move into commercial production, which ultimately is the goal of the business given the significantly higher revenues that can be enjoyed from commercial production than we can from R&D services. It's also worth noting that there is promising R&D activity underway today in sensing and display. I emphasize it is R&D activity. So if you remember those 3 phases, R&D, scale up and then production. We're still at the R&D phase. We did, for our material for the U.S. customer, get all the way through to preparedness for full scale production. And indeed, if that material was required again, we could very rapidly go into full scale production, we would not need to go through an R&D phase again or scale up phase again, but that will be dependent on customer demand. But that activity today in sensing and display represent a platform on which we can rebuild the business and the organic value in the business. And it's also worth noting that success in either sector, so as I said, we're not just betting on one application, one customer, success in either of those 2 main sectors can get us to that breakeven level of recurring revenue, that GBP 6 million a year on an annualized basis in the medium term, meaning in the next 3 years. So in terms of value, we have the transformative potential in the Samsung litigation. The cost of that litigation are not protected or Nanoco is protected against the cost of that through the third party funding. And I can honestly reassure you that all members of Nanoco staff today are now focused on generating value from the organic business from those opportunities in sensing and in display. And with that, I will hand you over to Rosie, who is going to ask Liam and I, the questions that have come in over the Internet using the Google sheet as we've been talking. Over to you, Rosie.

Thank you. We have one question from Anne Margaret Crow from Edison. The question is regarding the Samsung litigation. So the 14 million TVs only include devices sold in the U.S.?

So yes is the simple answer. It includes the current year. And if you wanted the global figures in very broad terms, it's 1/3 North America, 95% of which is the U.S.; 1/3 Europe; and 1/3 rest of the world, predominantly, Southeast Asia. So you can see 14 million is the North American number and roughly 95% of that is the United States. Is there another question, Rosie?

Yes. Thank you. There is another question from [ Hans Wilmut ]. His question is, is Nanoco still active in agriculture, vertical farming, and the green energy, solar panels or Q dots in window glass sector? Are there any prospects for orders in those sectors in the medium term?

So the simple answer is yes, we are active in both of those. It's fair to say that if you remember those 3 phases, of R&D, scale up and production, it's very much towards the R&D end of things. There are a number of new and nascent applications that are emerging in both of those areas. So you can understand why some of these opportunities are much closer to the R&D end of things. So yes, it's possible that some revenue could arise from those areas. It's possible that it could be in the next 3 years. But if it does, if I'm honest, it's more likely to be R&D service income at this stage rather than very significant production revenues. But yes, we are active in both of those specific areas. Whether vertical farming, agriculture or quantum dots in glass.

There are no further questions on the webcast at this time. [Operator Instructions] We have another question from Eric, who asks, is Merck still active with Nanoco despite no particular contract at present?

So as we announced earlier in the year, Merck did terminate the previous license agreement. We also noted at that time that we were continuing to work with Merck providing R&D services and also discussing other opportunities. That remains the position today. So there's no further update to the market, but that statement from a few months back remains the case.

Thank you. We also have a question from Damindu from Peel Hunt. He asks, you've always been in contact with some smaller OEMs with regard to QD opportunities. Are there any you would like to particularly highlight?

I'm -- so having mentioned that we are talking to different OEMs and parts of the supply chain in vertical farming, but also in encapsulating dots in glass, we're also, on top of that, speaking to potential new supply chain partners in the Southeast Asian markets, again, trying to access things in China. I wouldn't call any out by name, most of them at this stage are either early stages of engagement or just very low levels of R&D service work going on in sensing and/or in display. Again, some of the early contracts are on more substantial opportunities, but they're really far too early to be starting to name names or talk about the opportunities. But we are active with a number of other parties.

Thanks. [ Hans Wilmut ] asks, are you still in contact with the U.S. customer and working on future business opportunities?

So the simple answer to that is no. I think people will be aware that when we were dealing with the U.S. customer, it was a slightly unusual position for someone like Nanoco to be in and that we are very close to the start of the supply chain, and they were the end customer. We are now dealing with parties or companies much closer to us in the supply chain. So we can't speculate on who ST Micro's customers are. We know they've got hundreds of customers unlike Nanoco. So who their customers are, we can't speculate, but we can say we are still working on similar applications, as the ones we're working with the U.S. customer, but we're dealing with different aspects of the supply chain. The U.S. customer may or may not still be interested in that technology.

We also have a question on, is Nanoco active in COVID-testing applications? It was mentioned in the previous results presentation.

Sorry, could you repeat that one again, please?

Yes. So the question is, is Nanoco active in COVID-testing applications? It was mentioned in our previous results presentation.

So as I mentioned in the life sciences section, it is theoretically possible to attach any number of antibodies to one of Nanoco's VIVODOTS. Attaching a COVID antibody to VIVODOT is a theoretical possibility.

We have another question coming. Are you confident you've managed to explain your technological capability and knowledge base following the restructuring?

Yes, absolutely. I think I mentioned when I was running through the slides, we've actually retained all of the team leaders in our R&D team. So whether that's in display, whether that's in sensing, whether that's in our device team, which sits beneath those 2 teams and actually supports them, and today, we've still got our team leader as well in our life sciences business. And on top of that, we've managed to retain the majority of our senior scientists on the R&D side. And certainly, when it comes to production, while as Liam mentioned, the sensing facility is -- it's effectively dormant but not mothballed, we do use it occasionally at the moment. The display facility itself is mothballed, but that can be taken out of mothball in a matter of weeks. So we've managed to retain all of our production capability. And again, as I've said, we've also retained our scale up capability. The thing to add is that through the restructuring process, and it's something we continue to work on today, we're encouraging more staff to become multiskilled, so that rather than having a single field of expertise, so if it happens to be in scale up, well, actually that scale up person, there are aspects of R&D that they could get involved in. There are also aspects so that will be going back up the supply chain. There are also aspects of production they could get involved in. And we're encouraging that across all of our staff. So the staff that we have today in almost all cases are capable of working in multiple areas, which is another way that we've managed to retain a very flexible staff structure and cost base and also retain our capabilities, both technological production and scale up.

We have another question from [ John Mark ] from [ Sancos ]. Has the performance gap between cadmium-based and the Nanoco cadmium-free QDs for displays be narrowed, both in terms of color gambits and brightness?

So on our green dots, we would say, absolutely. They're as good -- they are -- we believe they are the best in the market. And if you take one of our main competitors Nanosys, who previously had very much cadmium-base systems, they now have cad-free systems. They're not as extensive as the cadmium-based applications. We believe we've got the best in the world green dots and that our red dots are as good as our competitors.

I had another question come through. Did Nanoco receive any COVID-19-related support from government schemes?

Yes, we did. We were unable to access any of the loan schemes. They weren't really designed for companies in Nanoco's position. Being small made us eligible, but being listed then made us ineligible and also being early stage or still being a pre-profit, created issues. However, on the employment support, we did access the government's job retention scheme. And at its peak, 2/3 of our staff were on furlough, and we were getting support from the government for around 45 out of the 67 people that we had at that time. And obviously, as our numbers have reduced and going forward, it will stabilize around 45, we still expect to be able to access the new job support scheme, but it is, as people are aware in the press, it's a much more limited scheme and it will only apply if we don't have full-time work for staff. Because of the restructuring that we've carried out, we have a much smaller number of staff who wouldn't necessarily be occupied 5 days a week. And it is also the case, our understanding that actually some of the excess time can be used for training and development, which is something that Joss Little, our HR business partner who will shoot me for forgetting her name earlier, given that she was the first person I hired into Nanoco 2 years ago, if this is a public apology to Joss, take it that way. She's looking at those training and development opportunities. So yes, simply, we have accessed government support. I should say though that the staff, and that goes from the Board all the way down through the organization, in accepting pay cuts that we implemented across the company, the Board took the lead on this with a 35% pay cut for nonexecutives that started on the 1st of April and the rest of the company -- sorry, executives at that time also took a pay cut of 20%, with the rest of the company, then taking a 20% pay cut that started on the 1st of May. Though that contribution or that pain, if you like, felt by staff was as big, if not a bigger support for the company than the government's job retention scheme. So yes, we did access that scheme, and it was helpful for the business. Is there another question?

We've had another question from [ Hans Wilmut ]. You mentioned that the lawsuits against Samsung will last for years and he asks from what date, February 2020 or the date you filed the lawsuit?

From the date we filed the lawsuit and we filed the lawsuit in February 2020. So I'd say it could last for years. If you're looking for an example, Samsung a few months ago, settled a lawsuit. I think it was in Texas as well, but that was almost 4 years from when it started. So it could happen sooner. One of the advantage in the Federal district that we've filed our case in, is that, that district and the judges there are known for trying to move things along quickly. They don't want this process to be dragged out over 4 years. However, it is a process. It is a legal process. It's a legal system as opposed to a justice system. So there are steps that have to be taken and those steps can take time. People can request extensions, et cetera, et cetera. We will not, during this process, be giving a running commentary every month on what's happened this month in the process because it is too long, and you wouldn't want people reading things into what ultimately is a series of administrative or bureaucratic steps. So yes, from February, when we filed, this could take more than 2 years to get to a trial. Equally, and if there was any kind of settlement that could come faster or it could come later in the process. And as I say, if you look at the recently settled case for Samsung, that was close to 4 years from filing.

We have a final question, which asks, is there any expectation for an update from the EU regarding cadmium ban in quantum dots in 2020?

The somewhat painful answer is, and I guess, I remember this question being asked when I first joined Nanoco in 2018 is that the wheels of the European regulators seem to turn awfully slowly. So at the moment, I would be wary of saying when we expect any kind of outcome, people will be aware that the ban was due to come into place. There was then an appeal, an extension was granted. And the way the system works is, rather than the extension collapsing on a certain date, it has to await the decision from the regulator. So it's only if the regulators make an actual positive decision that the extension should terminate, will the ban then come into place. There was another round of submissions in the last 12 months, which we actively supported and led. We got support from other industry players to support that. You'll be unsurprised to know that people currently using cadmium, including a number of our competitors, were putting in objections to the end of the ban on cadmium. So we remain watchful and waiting to see that there isn't much else I can add in terms of perspective of when the European regulators may or may not make a decision on that subject. Any other questions?

There are no other questions at this time. If I turn the call back to you, Brian, for any closing remarks.

So I thank you for your time this morning. Thank you for the numerous questions. We really appreciate the interaction with shareholders, both institutional and from a retail base. As I mentioned earlier, it was particularly gratifying to see the retail support for our equity raise. And I guess the final comment I'd like to leave you with is that the entire management team, the entire staff team here at Nanoco today is focused on generating value from those organic sides of the business from sensing and display, with the real live active opportunities. At the same time, taking the necessary steps to protect the potentially transformative value in the Samsung lawsuit. But if you like, what we're trying to do is make sure that, that lawsuit represents a cherry on a cake, and it's up to myself and the Nanoco team to actually bake that organic cake, where we believe there is significant value for the business. Thank you very much. Goodbye.