Titomic Limited (T04.F) Earnings Call Transcript & Summary

Good morning. Thank you for joining us today for Titomic's FY '23 Results Presentation. My name is Ben Andrews and I'll be your moderator for this session. We're excited to have you here as we delve into the financial highlights and achievements of the past year. Today, we'll be joined by Mr. Herbert Koeck, Titomic's CEO and Managing Director; and Mr. Jon Nield, Titomic's Chief Financial Officer. Before we begin, please allow me to remind you that today's presentation includes forward-looking statements that are subject to various risks and uncertainties. This disclaimer states that the presentation contains general information only and does not constitute financial advice, investment recommendation or an offer or invitation to subscribe for or purchase any securities or other financial products. Today, Herbert Koeck will take us through the past year's progress on strategic initiatives and the highlights of FY '23. Jon Nield will then go over Titomic's financial results, followed by an operational update and company outlook. If you'd like to pose a question, which we welcome you to do, please drop those into the live chat, and they'll be answered by either Herbert or Jon once the presentation concludes. So without further ado, it's my pleasure to welcome Herbert Koeck to begin the presentation.

Thank you for taking the time today to join our results call for fiscal year '23. Before going to the details on the progress on the strategic initiatives we have, allow me to step back and share a couple of insights on what is happening out in the market and which are directly impacting our business already in the last year, but even so going forward. Well, the outlook for us is very good. It's a great opportunities, which have been showing up, and share with you the details at a later stage. It's still so that the geopolitical situation at the global level is challenging. Okay, challenging all across the globe. The investor climate overall has deteriorated. It's very difficult to find support for certain businesses. Nevertheless, we succeeded in multiple areas. Now the real question I'd like to answer you and give you an outlook today is how much progress did we make on our commercialization initiatives. And I tried to list the core strategies, which we are implementing right now, on this one page. At the end of the day, our numbers don't lie, and I want to share with you the numbers which we have seen over the last couple of years, but also for fiscal year '23. Number one, obviously, what are we doing in terms of customer revenue. Number two, how good are we in reducing costs, how good are we in getting our dependency off -- from tax incentives and also how can we optimize grants. And last but not least, there's still a lot of work which needs to be done that we promote cold spray as a technology across the globe as we are still finding a lot of customers, which on one side is an opportunity, who do not know about what cold spray can provide to them and what opportunity this represents for them and their business. And last but not least, we also report back to you on how we are scaling on our ability to reach out to our customers. Now to this slide to share with you and start with the revenue line, the big elephant in the room. As of today, we are reporting a customer revenue of $2.6 million, which is technically less than we had last year. But allow me to make a comment on that one. First of all, last year, it was definitely skewed by one big machine sale of $2.4 million, which went into TWI. And while we had a great plan in place for a super year 2023, it turns into a good year. What you need to understand is that part of the year '23 was that we get machine installed with a company called Neos in the U.K., where we have signed up a joint venture for the tooling business overall, which unfortunately, due to the very much rising energy costs in the U.K., went on administration. So that was a fallout of $2.4 million. On the other side, on top of it, we have another joint venture with Repkon, and they were supposed to do order a big machine, starting with the first of $2.4 million again. At this time, because of the many other businesses they have which are driven by the defense industry, they put basically every single dollar in scaling their existing manufacturing capacities and have put our machines on the halt. At the same time, you just have seen the disclosure that we have won the Sabanci deal of $2.4 million in Turkey, which we disclosed 2 weeks ago, which again came a little bit late. If you add all that stuff up, the original plan was adding another $7 million on this number that would have been a fabulous result. Now the other way around, let me say it this way. Having seen this revenue number of $2.6 million from customer revenues, we are starting now fiscal year '24 with a contracted value of revenues of $3.1 million already on day 1. We never had the situation where we in the first days of the new fiscal year where we are in right now, are in a situation that we have more revenue already on the contract than into the last fiscal year overall. So what you're going to see going forward is, and also that explains why I'm so optimistic on this fiscal year '24 because we have this backlog. We know how many machines on the mobile side we will be able to sell, and that's going to turn fiscal year '23 in a great year going forward. At the same time, the strategy also says, "Hey, how are we doing to reduce our cost and our dependency on tax incentives and optimized grants?" What you see there, these are the real numbers from the last 4 years. Okay. We are coming off where we have received a lot of tax incentives from the government -- from the Australian government over the years, which is great. But at the same time, it's also a sign that we are doing a lot of research and development work. I made it very clear from the beginning that we want to create customer revenue by attracting customers for commercial use into less of R&D and more of customer revenue. And the consequence out of that one is that, as you can see. So all the R&D which was done in the past with other customer behind, which at the end of the day, adds up on cost, is now charged and the majority of the cases is not charged out to the customers we have at hand. That gives us revenue on one side. But at the same time, obviously, it reduces our ability to claim back from the government the R&D rebates. At the same time also, we continue to look out for opportunities where we are working with institutions, with government to get grants to develop our technology, respectively, to develop capabilities. This is something which we had in place already with the space grant, which was reported back to you many, many times in the last years. But it also ended up another $300,000 during this year, where we got the first grant going now from the European Union. So this year, on top and beyond the grants we had already in Australia, we started to tap into this opportunity in the other regions, namely on the CoBRAIN grant, which we received in the European Union. Last but not least, cost structure. Okay. You heard me loud and clear that this needs to be addressed. In the past, we had a cost structure of approximately $12 million, $1 million is a run rate. Now we are reducing. And what you see already there in the fiscal year '23, it came down slightly. But you also need to understand is that in this number, this only reflected 2 months, the last 2 months after the restructuring was executed in May and June. And at the same time, we had a little bit of an offset because we had to incur redundancy costs as we separated from a couple of employees. In total, the cost structure I have by now is 30% less than what we had in the past, and we're going to see the benefits going forward into fiscal year '24. Now let me look and let me share some details and numbers also for the other core strategies we are pursuing. Strategy #3, we have to educate the market about cold spray technology. That has to be done with a specific targeted marketing, and we have really ramped up our marketing activities and you also can see, we have been spending more on marketing than in the years before, and that is yielding results already today. To give you a magnitude from a pure funnel perspective, at this stage -- last year, at this stage, we had a situation where we had $34 million in our sales funnel at that point of the year. Today, we are having $68 million of the sales funnel in the year. We have started to use webinars, where we are addressing specific topics with very selective and targeted group of potential customers out there. We did a webinar on service and repair. We did a webinar on aerospace and defense. We did a webinar on mining and energy. In total, 5 webinars, which have been run in the last 4 months. And that all has done 394 participants, out of which we created already 12 active leads, which has led to product or machining sales. Also, because we restructured our website with the money we spent in marketing, you can see some of the facts which are reality as compared to the year -- to the previous year. 33% up in Web traffic. We are getting now across the world free of charge leads coming in because customers are interested and became aware of the technology we have. We are seeing new visitors. We are seeing page views going up. And in total, as I said to you, the entire pipeline for unweighted sales has more or less doubled. Now did that lead to sales? Absolutely. Think about it, even our first machine, which we sold 1.5 years ago, which was TWI, the research lab in the U.K., it was followed up by a lot of sales, which we disclosed recently. We have sold a mid-pressure system to Perron called Windesheim a university in Holland. We sold the machine to an institute, Bayreuth, in Germany. We sold the machine to the University of Madrid. And last but not least, even so slightly delayed because the original plan was to get Sabanci into the last fiscal year, but we got the order now in August this year with another $2.4 million going forward. So the marketing activities and the sales reach is definitely working. Strategy is also that we have to scale our coverage across all regions. And as you can see down there, these are the numbers. And sorry that you can't see in the numbers for fiscal year '20 because at that point in time, we didn't report the differences in the different regions. But every single region is coming up. Every single region is getting traction. Even though the U.S. is still on the smaller side of the house, but you're going to see a lot more of the sales coming in for this year. On top of it, also, you asked me a couple of times, what are you doing with these resellers overall? And how is this working? So at this stage, in a couple of minutes, I give you more details on the reseller network, which we are building, which is a very valid sales strategy because it gives you an extended coverage in territories where you may not be active yourself as a company. And we are building up now that reseller network. And down there, you just can see the number of resellers we have under contract, okay? Each contract at the end of the day is related to a business plan, and we will see great returns coming in from there. Now in a nutshell, this is the summary. Sorry. This is the summary. I don't want to go through the details. But as you can see here, there's a lot of progress made in all dimensions, okay? When it comes to defense projects specifically, we have revamped our engagement with companies like Boeing, where we continue flight qualifications and powder qualifications, and they're paying us for that. We have revamped the engagement with Triton in the U.S., where we are doing base work for future manufacturing. Even though I have to say when it comes to manufacturing, we all must be crystal clear on one fact. Nobody in the world is changing, hits our manufacturing line based on an innovative technology like ours. If you can't prove that the parts quality and also the repeatability is a given. So a lot of the work we are doing right now together with customers, and in most of the cases, we get paid for, you see that we are qualifying the parts by proving that the properties of the parts are exactly the same or even better than the traditional methods. And on top of it, that we're also capable of showing up with a repeatable system, which can produce the same part quality in the first part, then on the 10th, then on the 100th. That is cumbersome. That's difficult in some cases because it takes time, it takes energy. But at this stage, we have found a way where we are getting paid by customers who have a high interest that we get this qualified going forward, and we continue on that path, okay? So from a commercialization standpoint, we made great progress and positioned us with the numbers in place in a perfect way for fiscal year '24. Think about it, just the contracted revenue we have already in our hands, which is Sabanci, which is Perron, which is during December, where we got the order and which we disclosed earlier, this on its own is already slightly more than $3 million. That's more than the entire revenue of fiscal year '23, which we are showing right now. If you add on that part, the opportunity we have out there with Repkon on the joint venture, which is another $2-plus million opportunity, and if we just repeat the sales of 22 machine sales this year, which is another $3-plus million, you would add another $5 million immediately, okay? All in, we have a great line of sight for these numbers going forward, out of which $3-plus million already contracted as of today. With that one, let me hand over to our CFO, Jon Nield, and I will come back and guide you through a little bit more details on the projects we are in right now. Jon?

Thank you, Herbert, and good morning to everybody. What we're seeing here is in the financials very much ties in with Herbert's message about how the business is growing and expanding. So we look at the top line there with the revenue. And as Herbert has mentioned, it is slightly down on prior year, primarily because of that TWI machine, a very large sale at the end FY '22. What's important in here is that the volume of machines is now expanding dramatically in all 3 regions. So we've got a much greater volume of machines at a lower sale price. But what that does is it gets more machines out in the market consuming powder and consumables, which leads to ongoing longer-term revenues as well. So the overall picture in there is more of a product mix change, which is actually benefiting us going forward. On the expense side, we're seeing lower expenses at about $3.5 million. And there's probably 3 key drivers behind that, as well as a little bit related to the lower sales and so therefore, lower cost of sales. But the other 3 key drivers are the -- a cash optimization program that we instituted in January of '23. So that's been running for the second half of the year, where we focus very much on reduce -- finding ways of reducing our cash outflow and reducing our cash burn. And really, there's been a focus, the second point, over the whole year of reduced operating expenses in every area where we can, but keeping on focusing on things like the marketing expenditure to build out the leads and get the message out there. Thirdly, there was the business restructure that Herbert mentioned, which came into effect in about May of '23. So there's a couple of months' worth of the actual restructure of the business to make it more suited to the stage of operations that we are at the moment. So there's a number of factors there that have reduced our operating expenses, and that's reflected in the next line down, the profit or loss before tax. Whilst it's still a negative number at this stage of our business, it is an improved number from prior year. And primarily, those expense reductions, you can see flowing through as a slightly improved loss position for the year. And we're not paying any taxes, obviously, at this stage. So that flows through to the bottom line. So I'll move now on to the cash flow and the balance sheet. With the cash summary there, we've got the operating activities, the first line. That's primarily related to customer receipts. So we did sell the TWI machine in FY '22, but all of that money was received in terms of cash receipts in FY '23, and plus, the sales of all the other machines. So we're actually about $2.5 million better there in terms of overall cash from operating activities. In terms of investing in the activities, we're spending a little bit more in that area, and that's primarily related to building out some of the cold spray equipment that we use in the factory in preparation for future customer projects, which are currently progressing strongly. So we're investing in new machines to support future growth with customers. The third line there, the financing activities is a fair way down on the prior year, and that's all related to the timing of our capital raise actions. So the majority of cash that we've received in the recent capital raise that we've completed, as announced to the market that was over June and July period, with the majority of that cash being received in July of '23, which is outside of that FY '23 reporting period. Moving down to the balance sheet now. Only a couple of points worth making on there. Really, the cash number is lower purely because of the timing. I mentioned just before the capital raise money is coming in and total current assets includes the cash. So that's reflecting the same impact there. Looking at the noncurrent assets, you can see that they're down on prior year. So we've completed some impairment actions on some of our fixed assets, right-of-use assets and intangible assets. And what we've done there is taking a conservative action in line with accounting standards and considering the uncertain nature of future cash flows bearing in mind the stage that we're at with the business. So we've effectively cleaned up the balance sheet somewhat to give us a good base to -- a good clean base to move forward with unencumbered assets on the balance sheet. Otherwise, the rest of the balance sheet is pretty stable, as you can see from the comparative to prior year. Well, that's pretty much all that's worth commenting on in the financials, I think. What I'd like to do is hand back to Herbert.

Thank you, Jon. With that said, let me go now to the operational update in more details on certain projects. Okay. What you see here is the commercial focus we have developed over the course of the last 2 years. You may recall with some of you who have been engaged for the entire period, and at the same point in time, we started off of chasing 167 use cases and applications, okay? And that was very obvious. And I said that multiple times, that does not work. That does not fly because you're getting a mile wide and an inch deep. And so we developed this focus areas. We narrowed down. We zoomed in so that we put all our resources and also developing our own competencies around a small set of well-defined applications and use cases where we think they have a sweet spot with cold spray as such. And what you see here is an even narrower focus than what we had 1 year ago, where we are making it smaller and smaller, but we are getting deeper and deeper into the details. And by getting deeper into the details, we create the data, which manufacturing customers want to see from us so that we can prove that we can do the job better than what they have already in place today. What you see out there, it's still the 2 groups unchanged in terms of coating and repairs and additive manufacturing, where on additive manufacturing, you're seeing structures. And among structures you can get into, for example, rings, titanium rings and titanium tanks, projects we are actively chasing. Or also, when it comes to armaments, where we are talking about the barrel work we are doing with Repkon, which is progressing really nice, okay? We are seeing already the first test results from shooting ranges with the barrels we produce, and everything is showing at the moment that cold spray is a valid manufacturing process for a future production in this area. On the other side, where we are seeing and gaining a lot of traction is also on coatings and repairs. The fact is that last year, we sold 22 of our mobile units after having sold basically 6 the year before. So we more or less tripled the sales in this area. And we have a big plan in place, obviously, also for fiscal year '24, where we think we can further increase the sales and moving the 22 -- 20%-30% up going forward, which would add another $3 million on the revenue, as I said before. What we're also seeing is that we have now customers. And without -- I cannot name them specifically, but customers which are very close to our day-to-day operations, like railways and some others, have acknowledged and accepted as a certified repair process. And with that one, obviously, we are getting attracted by business, where we can do these jobs. And we have the infrastructure here in Melbourne, where we can do these jobs. And unless the customer then has a big demand where they need their own machines in the future, which is the goal, we can do that service with the operations and the assets we have here in Melbourne. Now when it comes to the geographical view, this is what happened out there. Okay. And just be aware of, we are not talking about 3 different locations in the U.S. It's -- we only have 1 location in the U.S., but people spread over the country. We also, in parallel, have been working on developing a reseller network. It's very important to understand how good resellers can do for the business going forward if you approach them in the right way. First of all, we are only engaging with retailers who are either in that industry already and have a core interest on their side to engage with cold spray, what they see as part of their business, first thing. Second, whenever we engage with the reseller, we work with the resellers to get a business plan going. And financially, a business plan and a business with the resellers only makes sense if on the midterm, they're selling 4-plus machines out there because, otherwise, the investment on their side is not justified, neither on our side. okay? So we have business plans in place with our resellers. And actually, we move the number of resellers from 2 years ago where we had 1 to 5 last year to 11 by now, even so we are only saying 10 in that report here because another one came on board in July, which we didn't have before. And it's good to see, it takes time. And also, let's be clear, not all the resellers will be successful going forward, but it's like investing into a portfolio of shares. You know upfront if you invest in 10 companies, not all of these companies will deliver great results to you. But at the end of the day, if you have 3, 4 or 5, which are doing great, they are paying for the entire bill at the end of the day. So that's important that we made this progress. And also you want to have resellers, for example, where you simply can engage yourself despite the fact that I'm, as you could hear from my accent, I'm native Austrian, so my mother tongue is German. But if I would go to France, for example, and trying to sell a machinery, I would be barely accepted by the customers there because my French is very limited, okay? Same in Spain, same in Italy, same in Poland, same in the Nordics in Europe. So we are trying to build up this kind of resellers who do speak the native language, who have the local and the native relationships going on. And by that one, it's much better and more efficient way to get sales going than to hire people, which you then have 1 or 2 employees in a foreign country with all the challenges attached to it. So we made great progress. A number of resellers is up. The biggest number of resellers is coming definitely from the U.S., where we have now 3 resellers, and stay tuned on the results you're going to see going forward in fiscal year '24. Now what has happened on the product portfolio side, another progress I would like to report back to you. If you think about that's the portfolio as it looks like in a high-level description, you're seeing a couple of newbies on the block. The one is the D623, which is actually a machine which expands the ability to handle because of its mid-pressure nature. It expands the list of metals we can handle for service and repair. And we already sold 2 of these machines with a few more in the funnel actively where we're expecting to get orders any time soon. The 2 ones which have been sold already is the University of Madrid and the research institute in Bayreuth in Germany. And I'm specifically very proud on that sale because you know the engineering capabilities and capacity of Germany. And as they have decided to go their route with us, it's an awesome proof point of our capabilities. Let me now come back to the story about what are our routes to market. Because as you could see in the numbers before, we are growing in every region. Again, on the left-hand side, what you see on the chart is basically the product portfolio we have. We are talking about solutions. We are talking about consumables at the same time. And then we have once again 3 routes to market, which are going forward, and we are not planning any change on that part. The 1 route to market is where we want to get into manufacturing. We want to get into manufacturing with barrels. We want to get into manufacturing with titanium structures. We want to get into manufacturing with tooling. That's unchanged. We also have signed up, and you see here Repkon and 2 others because I can't share the nature of it. But as you can imagine, after the fallout of Neos in the U.K., we have become active pretty quickly. And at this stage, we are engaging with some of their competitors in the past, which are still in the tooling business and which are still serving Airbus and Rolls-Royce and other great companies in the U.K. They will come up. And the joint venture structure is the vehicle, is the tool we are using to get engaged with the manufacturing partners. And with these manufacturing partners, we have to do so a lot of qualification work. Most of the time, I can say we are getting paid for that qualification time now. But as I said before, nobody changes an entire manufacturing line unless you have proven that you have -- you can produce the parts at the right quality and you have a repeatable process. So that's the A and the B and the C in this area. [Technical Difficulty] couple of solutions which we [Technical Difficulty] hard work also with a specific certification body in Austria, Germany and Switzerland, which is called TUV which is basically a monitoring institution which checks that all machinery is up to the highest level from a mechanical and from an electrical design. We got that certification. And after we got the certification for Vetropack, it got installed. It is now operational at Vetropack. It's the first of its kind. Vetropack, as you have heard me say already in the past, is part of a consortium, which is called IPGR, International Partner Group for Glass Research. And they have 24 assembly lines. Technically, each of these assembly lines could use 1 of these machines, okay? And we are working right now by doing already coating jobs where we can prove it. Once again, it's back and forth because we do the work on the molds. And the molds get built into the glass manufacturing side. They're producing bottles and then we are checking quality back and forth. But this is work which is up and running right now. And last but not least, down there, it's the resellers. I've talked already about these. We are growing the number of resellers significantly and continue to grow the resellers significantly under the assumption that many of them will succeed, but we also need to be prepared that some of them will not. From the project itself, I don't want to go into the details. But as you can see here, we continue on specific projects. And as said before, where I'm proud of, these are customer-paid projects, almost all of them, okay? It's very important to understand that we have shifted from doing pure R&D work for the sake of R&D work, that we are supporting basically projects where we can validate manufacturing processes. Last but not least, and before coming to the summary and then open up for question and answers, this is getting more and more of a busy slide. You can see here quite a few more logos from customers up there, which I'm really proud of, which also leads me to a comment I want to make here on our installed base. As you know, the biggest installed base we have with our mobile machines, which have come in from -- with the acquisition of Dycomet in Holland. At this point in time, we are running specific programs to reach back out to each of the users who ever have bought a machine from us, to understand, a, what's going on with the machines. We know if they have bought powders from us, if they need consumables, for example nozzles and other accessories, gives us a strong opportunity not only to understand what these customers do. And based on that work, for example, we do know exactly that the 3 top applications and use cases for our mobile systems and service and repair is number one, engine remanufacturing. So we can repair and get engines remanufactured and back in the work process. B, we are talking about repairs and services. We are doing around casting, where our product is enabling operators to repair cars, which is very important because a lot of things can happen in this kind of a process. And the third one is all around electric plating. And for these specific applications, we have started to do webinars and to reach out to specific customers so that we get a clear understanding to these customers what our process enables them, how much business they can make by using and applying our technology. Now let me summarize the presentation overall. But I want to be very simple on what we have started to do and where we are in our process overall, okay? The starting point is, as I said before, I'm super optimistic going forward because of, and this is a little bit of a caveat from the last fiscal year, but we are starting the year second to none. We never have been in a position where on the first day of the new year, in the first month of the new year, we already have more revenue under contract than in the entire last year before. This is the case now, okay? But we are doing 3 things, and we have executed 2 of them already today, and we are entirely focused right now on item #3. First thing was to reduce cost, okay? We changed the cost structure. We came down by 30% in May and June with all the challenges around as we had to separate also from employees and we have to give up things and all kind of spending. We turned every stone upside down to understand where we can squeeze out a cent. That is done and executed, okay? We still have seen some costs actually in May and June because of the separations agreements and these actions. But going forward, this gives us a 30% cost structure reduction. First point done. The second, when you also look on the cash position, which was reported by Jon, where we ended the fiscal year with $1.7 million, which is not a lot. It also tells us that we were -- we could get the capital raise going before costs, where we could raise $6.5 million, which was fully underwritten by some investors, which is simply great to see because they continue to trust in us. And I'm very thankful for every investor who believes in the technology. So do I, as I also personally invested in the company. I use my rights issue, but I also invested in the capital raise already in November last year, which brings me to the last point. And here we are in the midst of the execution, okay? I can tell you the pipeline is at the record size and is expanding. We're having a backlog which is more on the contract already today than the entire revenue for fiscal year '23. Our reseller network is growing. And with that, when orders are coming in, we have made great progress on our approach in terms of marketing. Marketing costs are very tightly controlled, and I do not expect goods going further up in this year because we know now what we have to do and we are executing. And at the same time, we also have clarity now in the mix of the product portfolio we have. So we have a clear strategic plan in place which machines we want to sell to which customers, and that's what we are executing right now. So thank you very much for listening in. And Ben, I would like to hand back to you for questions and answers.

Great. Thank you, Herbert and thank you, Jon. [Operator Instructions] So the first question to you, is a 2-part question. Are customers required to buy Titomic consumables or powders if they own a Titomic machine? And is this a recurring revenue stream starting to build?

So the answer is yes, because many of the powders and the powder mixes we have in place do have a special mixture, so we are not making it transparent and posting it on the Internet, which ingredients are in there. Obviously, a customer could do a chemical analysis and trying to go for. But what our learning is, it's not only that you have to mix the powder with the right ingredients, but it's also the nature of the powder itself, which is very important, okay? When I'm saying the nature of the powder, it's important by that one, I mean the particle shape, the particle size and there are specific powders, which are more efficient and give you better quality than others. We have that experience, okay, which is because we have guys like [ Klas ] in Holland or [ Neil Mathews ] here who have tons of understanding on powders for many, many years. And at this point in time, we are offering these powders to the uses of their machines. At the same time also, we are tightening the belts, where we are saying ,"Hey, you can engage with us, but you must buy the powders, then we keep you updated, then you give them the latest upgrades on the machine and trying to tie an [ aircraft ] system overall in there. What we are seeing is clearly that we saw an increase in the powder sales already this year based on the installed base, plus all the new machines we sold this year, and this will go further up.

Great. Thanks, Herbert. The next question is how does the company plan to continue its operations while being potentially undercapitalized?

Yes. At the end of the day, that keeps Jon and me and others busy all day long. The answer is an easy one. We have -- we must grow revenue. We must grow cash coming from customers to the point where this -- we are getting cash flow positive as a company overall. If you think about it, we have in a high-level math, we have a cost structure of $8 million in place. We are ending up with a capital raise overall with roughly $7 million on the cash. We are planning for the revenue, as you could see before, with the contracted revenue in place. And that will give us the runway to get cash flow neutral going forward.

Great. Thanks, Herbert. Another question here, and there are a few more coming in. Given the pipeline of contracts and opportunities outlined, do you foresee any need in FY '24 or beyond for an additional capital raise?

So the answer is no. .

Okay. Short and sweet. You mentioned the sale of 22 D523 systems. Who are these systems being sold to and for what applications?

First of all, as we said before, which you see on the summary, we sold 22 of these machines. From an application standpoint, if you think back, what the machine allows a customer to do is that you can do in-situ service and repair of parts, okay? So you can bring the machine to the place where the part needs to be repaired, which is very important. While at the same time with the machinery, you can also have one of these machines centrally in a location and bring the defective parts to the place, but you also can do the other way around. And as I said before, the applications where our machinery are used most often are in engine remanufacturing, in casting, repairs and service, and in electric plating. And that includes areas where we are out in the oil and gas fields, where we are out in the mining fields, where we are out there, as we discussed already, where we have sold the machine to repair wind farms in Alaska, okay? Anywhere where you have a high impact by corrosion on one side, our solution is a good one.

Fantastic. The next question is, which products do you believe will be the largest driver of revenue growth over FY '24 and '25?

That's not easy to answer, but let me try to answer in that respect, okay? What you see here is, obviously, we have a product portfolio, which from a price standpoint, has a big variation. If you think about it, you're talking about D523 series at $70,000, $80,000, and you're talking about Sabanci machine, which we just sold at $2.4 million, okay? That's a wide range and has a wide variety on the prices as such. What we also have learned loud and clear, we got the message that, for example, a sales cycle for the D series machines is within the 3 months. So the first time we get a customer attracted and is approaching us either via the website or during a trade show or through a salesperson to the point where customer's order is within the 3 months. Contrary to that one, a deal like Sabanci, okay, and some others, where we're in manufacturing or in the education world, can go 12 to 18 months from a sales cycle. And what I'm saying is not that we are starting all new now and then in 18 months, you're going to see some revenues. But obviously, we haven't sit still in the last 2 years, where we have been working a lot with the customers and institute -- research institutes across the world. So at the same time, think about it, 1 machine like a Sabanci machine gives us $2.4 million. The same amount you can get from D series machines, okay? So actually, technically, you need both to succeed, but we are not confused by any means that we have to raise the business with D machines while continuing to push hard on the big investment machines out there, which from a revenue standpoint, almost equal on that part. But at the same time, the beauty on D machines going forward is that it continues at certain nice level. It's $80,000 after $80,000, and it adds up over time. While obviously, there is more risk on the big machines and it's also a much more lumpier business overall with a sales cycle which can easily go beyond 12 months, okay? And we are trying to balance at the moment. And how good are we with that balance? We are still seeing some impacts, as you can see from the numbers here. Sabanci technically is a project which we started 1.5 years ago. It was awarded technically to our partner in Turkey in April this year, while we only got the order in August, okay? It's simply the nature of the beast in terms of going through the administration processes sometimes, especially when it comes to government grants, which take that long. Would I have liked it already in the last year? As you can imagine, yes.

I can probably add a little bit to that, to Herbert's comments there as well in terms of the future. Obviously, we're not putting out a specific forecast. But what I mentioned before is we're investing in machines here in our factories, which are going to be producing production-related products going forward. So we've got a couple of very large customers that we're working with at the moment to develop and test. Some of that has been announced to the market. But I see a big part of the growth going forward in '24 and '25 in being -- establishing a repetitive production environment and producing those products in conjunction with the selling the machines as well.

Fantastic. Thank you both. The next question is around low pressure of mobile units. Is there an opportunity within Ukraine, for example, for portable systems to be sent closer to the front for infield battle repair damage?

Actually, there's -- some of our partners very much engaged in this case specifically. Even so you need to think about it. The technology originally, cold spray originally was developed back 35 years to repair metal equipment, okay? And so anywhere where you have a need to repair some metal equipment to get it up and running again, cold spray is a great way to do so. And yes, we are engaged with these guys. Even so the biggest -- what we have seen, the biggest requests coming in at the moment from that hotspot in the world is around ammunition, okay? If we would have been further advanced, for example, on the barrels overall and the barrels certification work, that would have helped. But this is, at the end of the day, a lengthy process to get there. So at this stage, we're going to see some sales of these machines out there, absolutely. But at the same time also, there is a big need in oil and gas and the mining industry where we are seeing the biggest inroads right now.

Great. Thank you, Herbert. And the last question that we have here is, are you in a position now that you're able to pursue grants within the U.S.A.?

Yes, we are. Actually, we are discussing with a partner right now as we speak. We have been quoting for this business. The way it works is you need to find a regional partner, which is interconnected, for example, with the Department of Defense. You get together. You quote a certain business. And many times, given the technology and the nature we are in, we have to team up with partners, okay? When I say team up with partners, like as an example with Triton and others, so that we get access to these funds because the next step for us is clearly to build also the capacity of cold spray in the U.S. We are talking with a couple of partners here, and you're going to see something coming during fiscal year '24, where we then also can take on orders, which at this point in time, we can't get because of the nature of the orders because they are restricted. They are IATA controlled. They are export controlled. So while we would have a fit from the technology, we can't take them because it's outside of export controls. But overall, yes, we are looking also forward to get on grants. The caveat, I would say, with grants to be straightforward is many times, the grants are also asking for a compensation and the contribution of the company. So it sounds easy, but it's difficult in the detail. For example, if you want to get a grant and the grant is offering $2 million to contribute that many times, you also need to bring up $2 million. So we have been very careful, and Jon is nodding his head on that part. It's easier said than done because you also would need to spend $2 million on your own, which given the capital efficiency we have right now, is a discussion we have another 2x before we can say yes.

Fantastic. Thank you, Herbert. And with that question, we can conclude the webinar. Thanks again, Herbert and Jon, for your time today, and thank you to all of the attendees. We very much appreciate your support and your interest. Please stay tuned to all of our channels on social media and, of course, [indiscernible], and we look forward to bringing you more good news when we're able to.

Thank you.

Thank you.