Q2 2024 LiqTech International Inc Earnings Call

Speaker Change: Special thanks to

Operator: Good morning, and welcome to the LiqTech International second quarter fiscal year 2024 financial results conference call. All participants will be in listen-only mode.

Operator: Good morning and welcome to the LiqTech International second quarter of fiscal year 2024 financial results conference hall. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: Good morning and welcome to the LiqTech International second quarter fiscal year 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To enjoy your question, please press star, then two.

Operator: Please note today's event is being recorded.

Operator: Please note, today's event is being recorded. I would now like to turn the conference over to Robert Blum, with Lucas Parkhurst. Please go ahead.

Robert Blum: I would now like to turn the conference over to Robert Blum with a partner ask. Please go ahead.

Robert Blum: All right, thank you very much, Rocco. Good morning, everyone, and as Rocco indicated, thank you for joining us for today's LiqTech International Second Quarter 2024 Financial Results Conference Call for the period ended June 30th, 2024. Joining us on today's call from the company is Fei Chen, the company's Chief Executive Officer and Phillip Price, the company's Interim Chief Financial Officer.

Robert Blum: All right. Thank you very much, Rocco. Good morning, everyone.

Robert Blum: And as Rocco indicated, thank you for joining us for today's LiqTech International second quarter 2024 financial results conference call for the period ended June 30, 2024. Joining us on today's call from the company are Fei Chen, the company's chief executive officer, and Phillip Price, the company's interim chief financial officer. Before I turn the call over to management, let me remind listeners that there will be an open Q&A session at the end of the call. If you are dialed into the call through the traditional teleconference line, as the operator indicated, please press star, then one, to ask a question.

Philip Price: And Philip price, the company's interim Chief Financial Officer.

Robert Blum: Before I turn the call over to management, let me remind listeners that there will be an open Q&A session at the end of the call. If you are dialed into the call through the traditional teleconference line, as the operator indicated, please press star, then one to ask a question. If you are listening through the webcast portal and would like to ask a question, you can submit your question through the ask a question feature in the webcast player, and we'll do our best to get to as many questions as possible.

Speaker Change: Before I turn the call over to management, let me remind listeners that there will be an open Q&A session at the end of the call. If you are dialed into the call through the traditional teleconference line as the operator indicated. Please press Star then one to ask a question. If you are listening through the webcast portal and we'd like to ask a question you can submit your questions through the ask a question feature in the web.

Speaker Change: Gas player and we will do our best to get to as many questions as possible.

Robert Blum: If you are listening through the webcast portal and would like to ask a question, you can submit your question through the ask a question feature in the webcast player, and we'll do our best to get to as many questions as possible. Before we begin with prepared remarks, we submit for the record the following statement. This conference call may contain forward-looking statements. Although such statements reflect the good faith and judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause X's results to be materially different from those discussed during the conference call.

Robert Blum: Before we begin with prepared remarks, we submit for the record the following statement. This conference call may contain forward-looking statements. Although the four looking statements reflect the good faith and judgment of management, four looking statements are inherently subject to known and unknown risks and uncertainties that may cause extra results to be materially different from those discussed during the conference call. The company therefore urges all listeners to carefully review and consider the various disclosures made in the reports filed with the Security and Exchange Commission, including risk factors that attempt to advise interested parties that risk that may affect their business, financial condition, operations, and cash flows.

Speaker Change: Before we begin with prepared remarks, we submit for the record. The following statement. This conference call may contain forward looking statements. Although the forward looking statements reflect the good faith and judgment of management forward looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed during the call.

Robert Blum: The company therefore urges all listeners to carefully review and consider the various disclosures made in the reports filed with the Securities and Exchange Commission, including risk factors that attempt to advise interested parties of risks that may affect our business, financial condition, operations, and cash flows. If one or more of these risks or uncertainties materialize or the underlying assumptions proven correct, the company's X results may vary materially from those expected or projected.

Speaker Change: Called the company, therefore, urge all listeners to carefully review and consider the various disclosures made in our reports filed with Securities and Exchange Commission, including risk factors that attempt to advise interested parties of the risks that may affect our business financial condition operations and cash flows if one or more of these risks or uncertainties materialize or.

Robert Blum: If one or more of these risks are uncertainties materialized, or the underlying assumptions proven correct, companies' act results may vary materially from those expected or projected. The company therefore encourages all listeners not to place undue reliance on these four looking statements, which pertain only as of this date and the date of the release and conference call. The company assumes no obligation to update any four looking statements to reflect any events or circumstances that may arise after the date of this release and conference call.

Speaker Change: The underlying assumptions prove incorrect the company's actual results may vary materially from those expected or projected the company. Therefore encourages all listeners not to place undue reliance on these forward looking statements, which pertain only as of this date and the date of the release and conference call Company assumes no obligation to update any forward looking statements to reflect any events.

Robert Blum: The company therefore encourages all listeners not to place undue reliance on these forward-looking statements, which apply only as of this date and the date of the release and conference call. The company assumes no obligation to update any forward-looking statements to reflect any events or circumstances that may arise after the date of this release and conference call. Now I'd like to turn the call over to Fei Chen, CEO of Licktec International. Fei, please proceed.

Speaker Change: Or circumstances that may arise after the date of this release and conference call.

Robert Blum: Now, I'd like to turn the call over to FHN, CEO of LickTech International. They please proceed.

Speaker Change: Now I'd like to turn the call over to Fei Chen CEO of Lectec International Bae. Please proceed.

Fei Chen: Thank you, Robert, and good day to everyone on the call. I am excited to once again get a chance to speak with you all today and provide an update on the program. Let me start by diving right into the announcement we made earlier this week, where we announced the recipe recipe of an order on one of the world's leading integrated energy companies to deliver a pilot system for produced water treatment in the U.S. This order is key for LickTech as it becomes the second significant produced water treatment order we have received in the U.S. in just the past few months.

Fei Chen: Thank you, Robert, and good day to everyone on the call. I am excited to once again get a chance to speak with you all today and provide an update on the progress we are making. Let me start by diving right into the announcement we made earlier this week, where we announced the receipt of an order from one of the world's leading integrated energy companies to deliver a pilot system for produced water treatment in the U.S.

Thank you Robert and good day to everyone on the call.

Fei Chen: I am excited once again, given the chance to speak with you all today and provide an update on the progress we are making.

Fei Chen: This order is key for LiqTech as it becomes the second significant produced water treatment order we have received in the U.S. in just the past few months, following the order we received in March 2024 from Risselback Direct, highlighting the capability our systems provide for the most challenging purification applications. The new pilot system is scheduled to be delivered to the customer in the third quarter of 2024 and will mark the third consecutive quarter in which we have received and delivered a produced water filtration system for the oil and gas industry. Join the return order I mentioned in quarter one and the commercial pilot unit to NASA in quarter two.

Fei Chen: Let me start by diving right into the announcement, we made earlier this week, we have the anomaly.

Speaker Change: Is it basically <unk> of that.

Speaker Change: Older I'm, one of the world's leading integrated energy companies to deliver a pilot system.

Speaker Change: Produced water treatment in the U S.

Speaker Change: This is key for D. C. I think you can.

Speaker Change: Significant produced water treatment order, we have received in the U S. In the past few months. Following the older. We received in March 2074 from regional banks.

Fei Chen: Following the order, we received in March 2024 from RISO back direct highlighting the capabilities our systems provide to the most challenging provocation applications. The new pilot system is scheduled to be delivered to the customer in the third quarter of 2024, and we will mark the third consecutive quarter in which we have received and delivered a produced water filtration system for the oil and gas industry, joining the Rageback Order I mentioned in quarter 1 and commercial pilot units to NASA in quarter 2. From a higher level perspective, the border oil and gas industry and the US in particular is interested in the increasingly understanding the importance to use produced water to offset fresh water demands both inside and outside the oil field.

Speaker Change: Highlighting the cabinet BDC our systems provide so the most challenging verification applications.

Speaker Change: The new pilot system is scheduled to be delivered to the customer in the third quarter of 2024, and we will lap the third consecutive quarter in which we have received and delivered a produced water filtration system for the Oems and the guests industry gelling.

Speaker Change: There is a back order I mentioned.

Speaker Change: And the commercial pilot Union to Nisha in project.

Fei Chen: From a high-level perspective, the border oil and gas industry, and the U.S., in particular, is increasingly understanding the importance of using produced water to offset fresh water demand both inside and outside the oil field. Our solution can be key to reducing OPEX for our customers and meeting their desired state force to drive sustainability going forward. As I have stated, each of these three orders is considered a pilot order, whereby the initial objective is to demonstrate and document the efficiency of our unique silicon carbon ceramic nitrification technology in treating produced water to facilitate re-injection and beneficial reuse and meet current regulatory requirements with each customer in each specific area. The RISC-VAC system is currently on site with the oil and gas customer.

Speaker Change: From a high level perspective, the border oil and gas industry and the U S. In particular is interesting.

Speaker Change: They see me understanding the importance. So you produced water to upset freshwater demand both inside and outside the oilfield our solution can be key to reducing OPEC for our customers and the meeting they asked me Sir stage for us to drive sustainability.

Fei Chen: Our solution can be key to reducing OPEX for our customers and the meeting their desire state for us to drive sustainability going forward. As I have stated, each of these three orders are considered pilot orders, whereby the initial objective is to demonstrate and document the efficiency of our unique silicon carbon ceramic filtration technology in treating produced water to facilitate re-injection and the beneficiary reuse and to meet current regulatory requirements with each customer in each specific area. The Rageback System is currently onsite with the oil and gas customer. To date, the system has been running stable for more than two months, with preliminary data highlighting that all requirements are being met.

Speaker Change: Going forward.

Speaker Change: As I have stated each of these three older I can see their high net.

Speaker Change: We have IP nisha objective is to demonstrate and document the efficiency of our unique silicon carbide ceramic.

Speaker Change: So the <unk> technology in treating produced water to facilitate reinjection and the beneficial reuse and meet regulatory.

Speaker Change: Terry requirements with each customer in each.

Speaker Change: Area.

Speaker Change: The recent back system is currently on site, we said Oh, yeah and against customer today. It's just the system has been running stably for more than two months weighted for 11 memory data highlighting that all requirements are being met.

Fei Chen: To date, the system has been running stably for more than two months, with preliminary data highlighting that all requirements are being met. Assuming we are successful after full testing with the new pilot unit, which we estimate would be approximately three to four months, it's our belief that two things will come out of it. Number one, each of the customers who are currently utilizing the systems will deploy new systems widely across their operations with significantly larger treatment capacity.

Fei Chen: Assuming we are successful up in full testing with the new pilot units, which we estimate would be approximately three to four months. It's our belief that two things will come out of it. Number one, each of the customers who are currently utilizing the systems, we are deploying new systems widely across their operations with significant larger treatment capacity. Number two, as this fair-weather customers deploy them in their operations, we will have strong commercial proven points to convince other companies to adapt our technology for their full commercial systems. When that took over as CEO about two years ago, I stated that oil and gas market would be a tremendous long-term opportunity for the tech.

Speaker Change: Assuming we are successful.

Testing with a new pilot Union, which we estimate would be approximately three to four months.

Speaker Change: Our belief that closing we've come off of it number one each of the customers who are currently utilizing the systems, we are deploying new systems wisely across their operations.

Speaker Change: Significant larger treatment capacity number two I this bellwether customers deploy them in their operations, we will have strong commercial rules applying to convince other companies too.

Fei Chen: Number two, as these fair-weather customers deploy them in their operations, we will have strong commercial proof of points to convince other companies to adapt our technology for their full commercial system. When I took over as CEO about two years ago, I stated that the oil and gas markets would be a tremendous long-term opportunity for LiqTech. However, it would take some time to develop.

Speaker Change: Our technology.

Speaker Change: Ooh commercial systems well.

Speaker Change: That's what the hour as CEO about two years ago I have stated in earlier in the gas market would be a tremendous long term opportunity for leasing.

Fei Chen: However, it would take some time to develop.

Speaker Change: However, it would take some time to develop.

Fei Chen: With the progress made over the past three quarters, I formally believe that we are on the cusp of something significant. We see this key target market for the tech.

Fei Chen: With the progress made in the past three quarters, I formally believe that we are at the crossroads of something significant. We think this is a key target market for LiqTech. Another key initiative I laid out when I took over our SEO was to align our service with partners that can open up key markets for our solutions. It is a strategy that worked extremely well during my time with talk show and set the ground for us. And one that I saw would work well with LiqTech.

Speaker Change: The progress made our the past three quarters I firmly believe that we are on the cusp of something significant we are seeing this key target market for leasing.

Fei Chen: Another key initiative I laid out when I took our SEO was to align ourselves with partners that can open up key markets for our solutions. It is a strategy that works extremely well during my time with talk show and the ground first. And one that I saw would work well with Leitec. Given the unique verification that our filtration systems can provide, as a small company, we simply cannot have an internal service team that is aggressively targeting the multiple industry segments that our products can address. To that end, over the past year, we have signed the following distribution agreement.

Speaker Change: Another key initiative I laid out when that took our SCO, let's align ourselves with partners that can open up a key market for our solutions is he is a strategy that works extremely well during my time with top show in the world for Us and one that I saw with what we have.

Speaker Change: With leasing given the unique diversification that our filtration systems can provide as a small company. We simply cannot have internal sales team that is aggressively targeting the launch of what industry segments that our products tend to address to that end, our the past year.

Fei Chen: Given the unique verification that our filtration systems can provide, as a small company, we simply cannot have an internal service team that is aggressively targeting the multiple industry segments that our products can address. To that end, over the past year, we have signed the following distribution agreements. For the produced motor oil and gas industry, we have signed up for NESA in the Middle East and the Reserve Act in the US, both of which have been key contributors to our recent progress within the industry I just touched on.

Speaker Change: Have fun the following distribution agreements for the <unk>.

Fei Chen: For the proposed water, oil, and gas industry, we have signed up. NASA in the Middle East and the Reserve Direct in the US, both of which have been key contributors to our recent progress within the industry, as just touched upon. With the commercial food system markets, we have bought an Alchicant, Total Foods, Waterco, Barnary, and the Nebcom. Again, each of these partners has driven some sales for the tech, which I will go into more detail in a moment. Within the first-forward asset market, we send an agreement with Silicon Feature; they are in active dialogue with some food-grade, first-forward asset producers in China.

Speaker Change: What oh in the gas industry, we havent done that.

Speaker Change: NASA in the media and the visa direct in the U S. Both of which I think has been key contributors to our recent progress we've seen in the industry I just touched.

Fei Chen: Within the commercial pool system markets, we have bought on Oxygen, TotalPools, Watercool, Binary, and NEPCOM. Again, each of these partners has driven system sales for LiqTech, which I will go into more detail on in a moment. In the phosphoric acid market, we signed an agreement with Silicon Factor. They are in active dialogue with some food-grade phosphoric acid producers in China.

Speaker Change: We're just gonna come Marcia, who see some markets. We have bought out of Tucson total who's what's it called binary and the netcom again each of these partners that's driven system sales, but did take which I will go into more detail.

Speaker Change: Yeah.

Speaker Change: We've seen the first for the asset market, we signed an agreement with Silicon feature they are in active dialogue with some fourth grade acid producers.

Speaker Change: Producers in China.

Fei Chen: We continue this progress of bringing up partners that can deal with driving awareness and adoption of our solutions, with particular progress made within the marine-scarboard market. To that end, in May, we entered into a partnership agreement with Standmarine Group to expand our presence in the Chinese seafood and repair market for marine-scarboard water treatment as we are at new exhaust gas risk risk regulation water treatment system for due of your marine resource. The agreement also includes the servicing by Standmarine Group of existing LiqTech marine installations, including fast delivery of spare parts and arm-sized repair work. Also in May, we announced an agreement with the Fremen, a where established maritime representative to the shipping industry in Grace.

Fei Chen: We continue this progress of bringing on partners that can help drive awareness and adoption of our solutions, with particular progress made within the marine scrubber market. To that end, in May, we entered into a partnership agreement with Stan Marine Group to expand our presence in the Chinese ship building and repair market for marine scrubber water treatment, as well as a new exhaust gas recirculation water treatment system for dual-fuel marine vessels. The agreement also includes the servicing by Dan Marine Group of existing LiqTech Marine installations, including fast delivery of a spare part and on-site repair work. Also in May, we announced an agreement with the Fremen shipyard, where it's happening. Maritime represents you to the shipping industry in Greece.

Speaker Change: We continue this progress.

Speaker Change: That's kind of driving awareness and adoption of our solutions with particular progress made within the marine scrubber market.

Speaker Change: In May we entered into a partnership agreement with tendering, who expand our presence in Chinese shipbuilding and repair market.

Scott: Not really Scott were water treatment as well as new exhaust gas recirculation water treatment system.

Speaker Change: And bearing with us.

Speaker Change: The agreement also includes the servicing but then marine group of existing dictate marine installations, including fast delivery of spare parts and onsite repair work.

Speaker Change: Also in May we announced a win with a friend.

Speaker Change: We have established maritime representing for the shipping industry inquiries from then we are bring me too close to the various infringed here keep owners through its extensive network.

Fei Chen: Freiman will bring LiqTech close to the various influencer ship owners through its extensive network. In July, we announced an agreement with Danby Marine, a South Korea-based maritime representative to the shipping industry, for Danby to market our marine scuba water treatment solutions within South Korea, the second-largest shipbuilding market in the world, after China. We are starting activities to recover the customer relationships we had in the market. These three new partners, along with our previously signed agreement with Yuyong Photos in China, from whom we received two marine scrubber water treatment system orders in the past year, should help us expand our preferences in this important market for LiqTech.

Fei Chen: Fremen, we are bringing it close to the various inferential ship owners through its extensive network. In July, we announced an agreement with Standmarine and South Korea-based maritime representative to the shipping industry. For Standmarine to mark our marine-scarboard water treatment solutions, we think South Korea is the second largest ship-builder building market in the world, after China. We are starting activities to recover the customer relationships we had in the market. These three new partners, along with our previously signed agreement with Yuyong Photos in China, from whom we received two marine-scarboard water treatment systems orders in the past year, should hear from us, expand our presence in this important market for LiqTech.

Speaker Change: In July we announced an agreement is signed the Marine is South Korea.

Speaker Change: And every time, they presented to the shipping industry, but that'd be my our marine Chicago, what fitness solutions, we're seeing South Korea, the second largest shipbuilder building market market in the World China.

Speaker Change: We ask that these activities to recover the customer relationships, we had in the market.

Speaker Change: These three new partners, along with our previously signed that women's business.

Speaker Change: Hotels in China.

Speaker Change: From whom we received two marine scrubber water treatment system owners in the past year should help us expand our presence in this important market wanting to take.

Fei Chen: One other partnership agreement I wanted to touch on was our announcement two weeks ago that we have entered into an MOU with China's High-Song Engineering Company to explore the application of this system, as well as the filtration system for the challenged industry water treatment in China. China is a significant market for industry water treatment, with environmental protection and sustainability of increasing importance to the government and enterprises. I am excited about what this collaboration with China's high-song for live industry uses will bring the tech. Our partnerships and the collaborations will be a key for us going forward.

Fei Chen: One other partnership agreement I wanted to touch on was our announcement two weeks ago that we had entered into an MOU with China's Haisheng Engineering Company to explore the application of D6 advanced filtration system for the challenged industrial water treatment in China. China is a significant market for industrial water treatment with environmental protection and sustainability of increasing importance to the government and enterprises.

Speaker Change: One other partnership agreements I wanted to touch on our announcement two weeks ago that we have entered into a Mou with China has some engineering company to explore the application of these things as well situations system. So the challenge industrial water treatment in China.

Speaker Change: China is a significant market for industry water treatment at least England mentor sanction and sustainability.

Speaker Change: Creasing important to the government and enterprises I am excited about what these calibrations with China highest them for life industry uses we are bringing music.

Fei Chen: I am excited about what this collaboration with China High Sum for life industry uses, Partnerships and collaborations will be a key for us going forward. They often take time to materialize, but we are beginning to see results with nearly all of them. We have signed up over the past 18 months or so and believe we will see further positive impact, in the years to come. As I highlighted in the press release this morning, we successfully delivered five swimming pool systems during the second quarter.

Speaker Change: Yeah.

Speaker Change: I have my team and the collaborations will be a key fast going forward. They often take time to materialize, but we are beginning to see results with nearly all of them. We have done over the past 18 months or so and believe we will see further positive impact.

Fei Chen: They open time to materialize, but we are getting to see results with nearly all of them. We have sent up our past 18 months of show and believe we receive further positive impacts. in the years to come.

Speaker Change: In the years to come.

Fei Chen: As I highlighted in the press release this morning, we successfully delivered five swimming pool systems during the second quarter. The swimming pool market is an important recurring revenue opportunity for LiqTech. However, as I stated on the call last quarter, our budget and the expectations we set forth for the second quarter included eight swimming pool systems for delivery. Unfortunately, three systems, and it's needed to be shifted from municipal applications in the UK and Australia, were delayed due to government funding. Causing us to throw a shot by about 500,000 from the upload we provided. One big deployment that we are benefiting, the swimming pool market for us, is the risk, the risk of NSF suffocation for our systems in the US.

Speaker Change: As I highlighted in the press release. This morning, we successfully delivered five swimming pool systems during the second quarter, the swimming pool market is an important recurring revenue opportunity for Lindsay.

Fei Chen: The swimming pool market is an important recurring revenue opportunity for LiqTech. However, as I stated on the cold last quarter, our budget and the expectations we set for the second quarter included eight swimming pool systems for delivery. Unfortunately, three systems and these phases to be shifted from municipal applications in the UK and Australia were delayed due to government funding, causing us to fall short by about 500,000 from the outlook we provided.

Speaker Change: Oh, I said stated on the call last quarter, our bucket and they used to patients with CIT plus for the second quarter included eight swimming pool systems for delivery.

Speaker Change: Fortunately three systems and his stated to be shifted from municipal applications in the UK and Australia was delayed due to government funding.

Speaker Change: Causing us was jumped by about 500000 from the outlook we provided.

Fei Chen: One big deployment that will benefit the swimming pool market for us is the receipt of NSF certification for our systems in the US. For those that are not aware, we are unable to sell our commercial swimming pool solutions in the US as we work through this approval process.

Speaker Change: One big deployment that will benefit the swimming pool market for us.

Speaker Change: The risk is chip.

Speaker Change: S M S S to vacation for our systems in the U S.

Fei Chen: For those that are not aware, we are unable to sell our commercial swimming pool solutions in the US as we work through this approval process. With the certification now in hand, we are in conversations with partners that we will hear drive adoptions in the US with the goal to have new agreements in place by the end of the year. So, where we are disappointed with the delays from the three planned systems, the pool market continues to remain strong for us, and we will be a key contributor to our recurring revenue in the future.

Speaker Change: For those that are not at where we are able to sell our commercial swimming pool solution in the U S. As we work through this approval process. We supposed education now we are in conversations with partners that will help drive adoption in the U S. We used to go to have new agreement.

Fei Chen: With the certification now in hand, we are in conversations with partners that will help drive adoption in the US with the goal to have new agreements in place by the end of the year. So, while we are disappointed with the delays with the three planned systems, the pool market continues to remain strong for us and will be a key contributor to our recurring revenue in the future. When you dig into the financial results, a few things may not be as obvious, and I think it bears mentioning.

Speaker Change: It's in place by the end of the year.

Speaker Change: So where we are disappointed with the delays from three blended systems. The pool market continues to remain strong for us and will be a key contributor.

Speaker Change: Our recurring revenue in the future.

Fei Chen: When you dive deep into the financial results, a few things may not be as obvious, and I think it bears mentioning. Oh, total, we are seeing incremental growth in our system sales. During the second quarter, we reported 1.3 million in system sales, which is up from 1.2 million in the year-ago second quarter and 1.2 million in quarter one of this year. Further, during the second quarter, DPF sales was 1.6 million, a 23% increase compared to the year-ago period and up about 4% sequentially. As I mentioned last quarter, we are seeing increased interest in our DPF solutions.

Speaker Change: When you dive into the financial results a few teams may not be as obvious and I think it bears mentioning.

Fei Chen: All told, we are seeing incremental growth in our system sales. During the second quarter, we reported 1.3 million in system sales, which is up from 1.2 million in the year ago, second quarter and 1.2 million in 4.1 of this year. Further, during the second quarter, DPF sales was $1.6 million, a 23% increase, compared to the year-ago period, and up about 4% sequentially. As I mentioned last quarter, we are seeing increased interest in our DPF solution within the European inline transportation market as renewed focus on black carbon emission reduction occurs. We are also seeing strong sales for our filters for emergency electricity generators.

Speaker Change: Increased compared to the year ago period and up about 4%.

Speaker Change: Sequentially.

Speaker Change: As I mentioned last quarter, we are seeing increased interest in our ETF solution, reaching the European inland transportation market as renewed focus on flat carbon emission reduction across we are also seeing strong sales for our features play emergency electricity.

Fei Chen: We see the European inline transportation markets as renewed focused on black carbon emissions reduction across. We are also seeing strong sales for our features for emergency electricity generators. Similar to pool systems, we are pleased with the growth coming from our DPF solutions, which in many ways was an afterthought for Dixig previously, but has become a solid contributor for us today. What I might call a two revenue areas, system sales and DPF sales, that are both showing growth for quarter two. System sales and DPF sales were up more than 400,000 combined in year to year and 200,000 sequentially.

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Fei Chen: Similar to the pool system, we are pleased with the growth coming from our DPF solutions, which in many ways was an afterthought for LiqTech previously but has become a solid contributor for us today. Watt and Michael are two revenue areas, system sales and DPF sales, that are both showing growth. For Q2, system sales and DPF sales were up more than 400,000 combined year-over-year and 200,000 sequentially. However, offsetting this growth were pullbacks during the second quarter within our system aftermarket solutions, which were down from the year-ago period by about 300,000.

Speaker Change: Similar to pull system, we are pleased with the growth coming from our <unk> solutions, which in many ways, what an afterthought for DC previously, but has become a solid contributor for us today.

Michael: Welcome Michael.

Michael: Revenue areas system sales and DPF sales that are both showing growth.

Michael: Quarter, two we'll see some sales and DPF sales were up more than 400000 combined year over year and 200000 sequentially.

Fei Chen: Offsetting these growth were pulled back during the second quarter. We see our system after market solutions, which were down from the year ago period by about 300,000; our ceramic membrane sales, which were down about 400 from last year; and our plastic components, which were down about 200,000. We are at these other three areas and lead a bit less code to our focus.

Michael: Offsetting this growth while pullback during the second quarter, we are seeing our system aftermarket solutions, which were down from the year ago period by about 300000, our ceramic membrane sales, which were down about $400 from last year, and our plastic components, which were down about 200000.

Fei Chen: Our ceramic membrane sales, which were down about 400 from last year, and our plastic components, which were down about 200,000, these other three areas are a bit less core to our focus. They are still contributors to our financial results, and we are focused on developing new channels and opportunities to expand these areas. Phillip will explain in more detail about this in a moment. To wrap things up, as our outlook suggests, we expect to see revenue of about $4 to $5 million in the third quarter and the mid-to-early part of the year. That would be similar to what we just reported in the second quarter. The biggest variables we have to attend to are timing of development and a few systems, particularly within the swimming pool market.

Speaker Change: This other three areas at least at this list Cove, our focus they have steel contributors to our financial results and we are focused on developing new channels and opportunities to expand these areas. Philip we would spend in more detail on this in a moment.

Phillip Price: They are still contributors to our financial results, and we are focused on developing new channels and opportunities to expand these areas. Phillip, we are spending more details on this in a moment.

Fei Chen: The wrap-up, wrap things up as our outlook suggests. We expect to see revenue of about 4 to 5 million in the third quarter as a midpoint that would be similar to what we just reported in the second quarter. The biggest variables we have put into timing of delivery and refuse systems, particularly within the swimming pool market. It is my belief that as we achieve the expected traction within the oil and gas markets I indicated, experience a revamped income, manage bubble market and continue the positive overall trajectory in the swimming pool market, we will see the fourth quarter significantly above the levels, achieve all expect in the first three quarters of this year.

Philip Price: The wrap up wrap things up at our outlook suggests we expect to see revenue up about $4 million to $5 million in the third quarter at the meeting.

Philip Price: One that would be similar to what we just reported in the second quarter. The biggest variables. We have attended to timing of deliveries on a few systems, particularly we are seeing the swimming pool market.

Fei Chen: It is my duty that, as we achieve the expected sections within the oil and gas markets I indicated, experience a revamped income in the marine fiber markets, and continue the positive overall trajectory in the swimming pool markets, we will see the fourth quarter, significantly above the levels, achieve all we expect in the first three quarters of this year. The groundwork we have set in terms of partnerships, collaboration, and regulatory approvals should all help contribute to this goal. With that said, let me turn the call over to Phillip to review the financial results in more detail. Phillip?

Philip Price: It is my belief that as we achieve the expected traction we're seeing the oil and gas market I indicated experience a re ramp in the marine scrubber market and continue the positive our ROE trajectory in the swimming pool market, we will see this fourth quarter signature.

Philip Price: Tend to be above the levels achieved all expect in the first three quarters of this year.

Fei Chen: The groundwork we have set in terms of partnerships, collaboration, and the regulatory approvals should all be of contribute to this growth.

Philip Price: The groundwork we have sitting set in terms of partnerships collaborations and regulatory approvals should all help to contribute to this growth.

Phillip Price: With that said, let me technical our to Phillip to review the financial results in more detail. Thank you very much, and good morning everyone. Now, let me brief your comment on the financial highlights for the quarter. Whether you came in at 4.5 million compared to 5.0 million in the same quarter last year, representing a decrease of 10%. Broken down by verticals, sales were as follows. System sales and related economic services of 1.9 million compared to 2.1 million in the same period last year, and are sequentially compared to the 1.5 million in Q1. CPF and surrounding manufacturing sales of 1.7 million compared to 1.8 million in the same period last year and 1.8 million in Q1.

Philip Price: With that said, let me turn the call our to Filipe to review the financial results in more detail.

Phillip Price: Thank you, Fei, and good morning, everyone. Now, let me briefly comment on the financial highlights for the program. Revenue came in at 4.5 million compared to 5.0 million in the same period last year, representing a decrease of 10.

Filipe: Thank you Bruce and good morning, everyone.

Now, let me briefly comment on our financial highlights for the quarter.

Filipe: Revenue came in at $4 5 million compared to $5 two will reduce in the same quarter last year, representing a decrease of 10%.

Phillip Price: Broken down by Verticals, Sears, Ware, Smaller, system sales and related aftermarket services of 1.9 million compared to 2.1 million in the same period last year and up, sequentially, compared to 1.5 million in June. DPF and ceramic membrane sales of 1.7 million compared to 1.8 million in the same period last year and 1.8 million in Q1.

Filipe: Broken down by verticals trials, where those models through some tools and related <unk> of $1 1 million compared to $2 1 million. The same period last year and all superintendents compared to one 5 million in Q1.

Filipe: As Robert mentioned sales of $1 7 million compared to one 8 million.

Filipe: The same period last year of $1 8 million.

Filipe: In Q1.

Phillip Price: And finally, plastic revenue of 0.9 million compared to 1.1 million in Q1 last year and 0.9 million in Q1. To be specific, the key revenue requirements for this quarter was the delivery of another gas produced water pilot as part of our distribution agreement with NASA, the delivery of five food filtration systems along with stable transmission from DPS sales, attributed to focused sales efforts that began in that day, 2023, and generated innovative activity in the current year. Our aftermarket services decreased due to elevated remediation work and associated deliveries in the same period in 2023, and declined in plastic revenue related solely to a large one-off sale that was recorded in 2023 without recurrence in the current year.

Filipe: And finally plastics revenue.

Filipe: $2 9 million for perhaps one more move ins in Q1 last year and <unk> 9 million in Q1.

Operator: Good morning and welcome to the LiqTech International Second Quarter of fiscal year 2024 Financial Results Conference Hall. All participants will be in listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero.

Phillip Price: To be specific, the key revenue drivers for this quarter were the delivery of an oil and gas produced water pilot as part of our distribution agreement with NESA, the delivery of five pool filtration systems, along with stable contribution from DPF sales attributed to focused sales efforts that began in late 2023 and generated elevated activity in the current year. Our aftermarket services decreased due to elevated remediation work and associated deliveries in the same period in 2023 and a decline in plastics revenue related solely to a large one-off sale that was recorded in 2023 without recurrence in the current year.

Speaker Change: Please proceed with key revenue drivers for this quarter was the delivery of an oil and gas produced more of China as part of our distribution agreement with Minnesota with deliveries through to trading systems, along with stable contribution from VP of sales attributed to focus sales efforts began in depth.

Operator: After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your telephone keypad. To enjoy your question please press star then two. Please note today's event is being recorded.

Speaker Change: 2023 have generated deleveraging activity in the current year.

Speaker Change: Our after market services decreased due to elevated remediation work and the solution delivers to the same period of 2023 and a decline in plastics revenues remained solid through a large one off sales levels reported in two to three without recurrence in the current year.

Robert Blum: I would now like to turn the conference over to Robert Blum with a partner ask. Please go ahead. All right thank you very much Rocco.

Robert Blum: Good morning everyone and as Rocco indicated thank you for joining us for today's LiqTech International Second Quarter 2024 Financial Results Conference call for the period ended June 30th, 2024. Joining us on today's call from the company is Fei Chen, the company's chief executive officer and Phillip Price, the company's interim chief financial officer. Before I turn the call over to management let me remind listeners that there will be an open Q&A session at the end of the call.

Phillip Price: In terms of lower gardens, as they mentioned, we expect the revenue for the third quarter of 2024 to be between 4.0 million and 5.0 million, which will be similar to the first two quarters of 2020. We remain permitted to grow in our business so that the common borders as we work intensively to execute our ambition to further penetrate the global oil and gas chemicals and boosts the market with our proven and industry-leading solutions. Looking at our growth profit for the quarter, we reported 0.7 million or implied growth profit margin on approximately 16% compared to 1.2 million and 23.3% in prior year's second quarter.

Phillip Price: In terms of forward guidance, as Fei mentioned, we expect revenue for the third quarter of 2024 to be between $4.0 million and $5.0 million, which will be similar to the first two quarters of 2024. We remain committed to growing our business over the coming quarters as we work intensively to execute on our ambition to further penetrate the global oil and gas, chemicals, and food system markets with our proven and industry-leading solutions.

Speaker Change: In terms of forward guidance as Perry mentioned, we expected revenue for the third quarter of 2024 to be between $4 2 billion or five consumer review, which will be similar to the first two quarters to be treatable.

Speaker Change: We remain committed to growing our business over the coming quarters as we work exclusively to execute on our ambition to further penetrate the global oil and gas chemicals approaches the markets with our proven and industry leading solutions.

Robert Blum: If you are dialed into the call through the traditional teleconference line as the operator indicated please press star then one to ask a question. If you are listening through the webcast portal and would like to ask a question you can submit your question through the ask a question feature in the webcast player and we'll do our best to get to as many questions as possible.

Phillip Price: Looking at our gross profit for the quarter, we reported $0.7 million with an implied gross profit margin of approximately 16% compared to $1.2 million and 23.3% in the prior year's second quarter. The unfavorable change is first of all a result of the revenue mix for the quarter. In particular, the delivery of the containerized oil and gas pilot system impacted margins, resulting in a decreased capacity.

Speaker Change: Looking at our gross profit for the quarter, We reported Q1 7 million on our cloud gross profit margin of approximately 16% compared to $1 2 million or 23, 3% to prior year second quarter.

Robert Blum: Before we begin with prepared remarks we submit for the record the following statement. This conference call may contain for looking statements. Although the four looking statements reflect the good faith and judgment of management, four looking statements are inherently subject to known and unknown risks and uncertainties that may cause extra results to be materially different from those discussed during the conference call. The company therefore urges all listeners to carefully review and consider the various disclosures made in the reports filed with the Security and Exchange Commission including risk factors that attempt to advise interested parties that risk that may affect their business, financial condition, operations and cash flows.

Phillip Price: The available change is, first of all, a result of the revenue makes for the quarter. In particular, the delivery of the containerized oil and gas pilot system impacted margins, resulting in a decreased compared to typical levels. This decision was a strategic undertaking through a showcase and validating effectiveness of our technology. As we still have overhead and other fixed costs that are not fully being installed, one of the key metrics we look at to highlight the progress being made is our contribution margin. During the quarter, when you back out fixed costs, our contribution margin ended at approximately 46%, compared to 52% in the same quarter, the quarter last year, with the available change, mainly extinct by revenue makes and especially the delivery of the containerized oil and gas pilot system, as mentioned before.

Speaker Change: The unfavorable change, which first of all a result of the revenue mix for the quarter.

Robert Blum: If one or more of these risks are uncertainties materialized or the underlying assumptions proven correct, companies act results may vary materially from those expected or projected. The company therefore encourages all listeners not to place undue reliance on these four looking statements which pertain only as of this date and the date of the release and conference call. The company assumes no obligation to update any four looking statements to reflect any events or circumstances that may arise after the date of this release and conference call.

Speaker Change: Particularly with delivery.

Speaker Change: Oil and gas pilot systems impacted margins, resulting in a decrease.

Phillip Price: This decision was strategically undertaken to showcase and validate the effectiveness of our technology. As we still have overhead and other fixed costs that are not fully being absorbed, one of the key metrics we look at to highlight the progress being made is our contribution margin. During the quarter, when you back out fixed costs, our contribution margin ended at approximately 46% compared to 52% in the same quarter recorded last year, with the unfavorable change mainly explained by revenue mix and especially the delivery of the containerized oil and gas pilot system as mentioned before.

Speaker Change: Typical levels. This decision was strategic opportunity to showcase and validates the effectiveness of our technology.

Speaker Change: As we still have overhead and other fixed costs that are not fulfilling absorbed one of the key metrics you look at China. The progress being made is our contribution margin.

Speaker Change: During the quarter when you back out fixed cost our contribution margin ended at approximately 46% compared to 52% in the same quarter reported last year with U a favorable change mainly explained by revenue mix and especially the delivery of the continuous oil and gas powered system estimated before.

Phillip Price: From our operational perspective, we still have excess capacity with the reasoning in some of the new kilns and revitalization of our ceramic facility. Our immediate goal is to capitalize on this positive momentum by shortly delivering these times while still maintaining the high quality of our membranes and filaments. As previously stated, we still maintain our guidance that our business will be breaking in relation on a just a digital basis, assuming a quarterly revenue of approximately 7 million and potentially no longer with the right revenue needs. Turning to topics, total operating expenses for the quarter was 3.8 million, which is comparable to the same quarter last year, with a slight increase of 38,000 or approximately 1.4%.

Phillip Price: From an operational perspective, we still have excess capacity with the recently installed new kilns and revitalization of our ceramics facility. Our immediate goal is to capitalize on this positive momentum by showing the liberal [inaudible] As previously stated, we still maintain our guidance that our business will be breakeven, measured on an adjusted EBITDA basis, assuming a quarterly revenue of approximately $7 million, and potentially lower with the right revenue mix. Turning to OPEX, total operating expenses for the quarter were $2.8 million, which is comparable to the same quarter last year, with a slight increase of $38,000, or approximately 1.4%.

Speaker Change: From an operational perspective, we still have excess capacity with recently installed new tunes and reasons for illustration of our ceramics facility.

Speaker Change: Our immediate goal is to capitalize on this positive momentum, while shortening delivery times, while still maintaining the high quality of our maintenance and service.

Fei Chen: Now, I'd like to turn the call over to FHN CEO of LickTech International. They please proceed. Thank you Robert and good day to everyone on the call and excited to once again get a change to speak with you all today and provide an update on the program.

Speaker Change: Yes.

Speaker Change: As previously stated.

Speaker Change: We still maintain our guidance that our business will be breakeven on an adjusted EBITDA basis, assuming a quarterly revenue of approximately $7 million and potentially new work with the rough revenue mix.

Fei Chen: Let me start by diving right into the announcement we made earlier this week, where we announced the recipe recipe of an order on one of the world's leading integrated energy companies to deliver a pilot system for produced water treatment in the U.S. This order is key for LickTech as it becomes the second significant produced water treatment order we have received in the U.S, in just the past a few months. Following the order, we received in March 2024 from RISO back direct highlighting the capabilities our systems provide to the most challenging provocation applications.

Speaker Change: Turning to Opex total operating expenses for the quarter was $2 8 million, which was comparable to the same for last year with a slight increase of 38000 or approximately one 4%.

Phillip Price: As stated over the last few quarters, we remain focused on running a new business by monitoring costs and carefully renovating our spin, to ensure we do not jeopardize our financial objectives. Moving on to the next item, net other expenses during the quarter were 39,000 compared to the income of 33,000 in Q2 of last year, with the development mainly explained by reduced interest income as well as increased the discount of legislation due to the extension of the insurance date for this new information notes. Recruiting on the piano, net loss was 2.1 million for the quarter, compared to 1.6 million for the comparable period in 2023.

Phillip Price: As stated over the last few quarters, we remain focused on running a lean business by monitoring costs and carefully evaluating our spend to ensure we do not jeopardize our financial objectives. Moving on to the next item. Net other expenses during the quarter were $39,000 compared to an income of $33,000 in Q2 of last year, with the development mainly explained by reduced interest income, as well as increased discount amortization due to the extension of the maturity date for the senior promissory notes.

Speaker Change: As stated over the last few quarters, we remain focused on running a new business by monitoring cost accounting evaluating our spin.

Fei Chen: The new pilot system is scheduled to be delivered to the customer in the third quarter of 2024, and we will mark the third consecutive quarter in which we have received and delivered a produced water filtration system for the oil and gas industry, joining the Rageback Order I mentioned in quarter 1 and commercial pilot units to NASA in quarter 2. From a higher level perspective, the border oil and gas industry and the US in particular is interested in the increasingly understanding the importance to use produced water to offset fresh water demands both inside and outside the oil field.

Speaker Change: To ensure we do not jeopardize our financial objectives.

Speaker Change: Moving onto the next item.

Speaker Change: <unk> expenses during the quarter with 39000 compared with income of 33000 in Q2 of last year with a development mainly explained by reduced interest income as well as in previous dip discount amortization due to the extension of the maturity date for the senior producing notes.

Speaker Change: Recruiting on the cumulative net loss was $2 1 million for the quarter compared to $1 6 million for the comparable period in 2023.

Phillip Price: This quarter's result was mainly given by the decreasing revenue and lower margins. Finally, that is briefly common on our casual availability before summarizing and handing back over to space. We added the quarter with 5.5 million in cash, down 2.2 million compared to the first quarter, explained by cash use and operating activities, and increased networking capital, mainly related to increased activity levels, and cabbages of 2.2 million related to replacement of care and information. Summarize balancing our cash flow, remain a KGBI for our business, as we have determined to preserve cash to maintain our strategic and financial flexibility.

Speaker Change: This result was mainly driven by the decrease in revenue and lower margins.

Phillip Price: Concluding on the P&L, the net loss was $2.1 million for the quarter compared to $1.6 million for the comparable period in 2023. This post result was mainly driven by decreasing revenue and lower margins. Finally, let me briefly comment on our cash flow and balance sheet before summarizing and handing over to Fei. We ended the quarter with $5.5 million in cash, down $2.2 million compared to the first quarter, explained by cash use in operating activities, an increased net working capital mainly related to the increased activity levels, and capex of $0.2 million related to replacement of kiln insulation.

Speaker Change: Finally, let me briefly comment on our cash flow balance sheet before summarizing and handling megawatts.

Speaker Change: We ended the quarter with Viacom Parkman, and the cash balance $2 2 million compared to the first quarter explained by cash used in operating activities and increased net working capital mainly related to increased activity levels.

Speaker Change: Capex of <unk> 2 million related to replacement optimum solution.

Fei Chen: Our solution can be key to reducing OPEX for our customers and the meeting their desire state for us to drive sustainability going forward. As I have stated, each of these three orders are considered pilot orders whereby initial objective is to demonstrate and document the efficiency of our unique silicon carbon ceramic filtration technology in treating produced water to facilitate re-injection and the beneficiary reuse and the meet current regulatory requirements with each customer in each specific area.

Phillip Price: Summarize, Balancing, El Casco, Dominic K, KPI, for our business as we are determined to preserve cash to maintain our strategic and financial flexibility. We also acknowledge that we need to increase the throughput of our existing facilities in order to accelerate growth, reduce lead times, and ultimately pave the way for a business imbalance from both a net income and cash flow perspective. Thank you everyone for your support, and now, back over to you.

Speaker Change: Summarize balancing our cash flow remain acuity CPR.

Speaker Change: For our business as we are determined to preserve cash to maintain our strategic and financial flexibility.

Phillip Price: We also acknowledge that we need to increase the throughput of our existing facilities in order to accelerate growth, reduce these times, and ultimately pave the way to a business balance of vulnerability, income, and cash flow perspective.

Speaker Change: We also acknowledge that we need to increase the throughput of our existing facilities in order to accelerate growth reduce lead times and ultimately pave the way to boost its a balanced proposed amendment cost and cash flow perspective.

Phillip Price: Thank you, everyone, for your support and our fabulous evening.

Speaker Change: Thanks, everyone for your support and now favorable to increase.

Fei Chen: Thank you, Phillip. As I mentioned, and the Phillip's elaborated arm, we have experienced nice growth within our system sales and DPS business year-over-year and sequential. The change in revenue from the year-ago quarter is entirely due to deliveries of plastic products, ceramic membranes, and after-market sales. We recognize the top and bottom line numbers are what people will focus on. However, I'd like to point out that we are making progress within our co-girls' initiatives to drive new systems sales and expand our DPS operations. Importantly, we have a wide range of initiatives in place to continue this growth with new partnerships, collaborations, and regulatory approval in place.

Fei Chen: Thank you, Phillip. As I mentioned and Phillip elaborated on, we have experienced nice growth within our system sales and DPF business year over year and sequentially. The change in revenue from the year-ago quarter is entirely due to deliveries of plastic products, ceramic membranes, and aftermarket sales.

Speaker Change: Thank you Philip.

Speaker Change: As I mentioned in the film.

Speaker Change: Elaborated.

Speaker Change: We have experienced nice growth, we're seeing our system sales and EPS business year over year.

Fei Chen: The Rageback System is currently onsite with the oil and gas customer. To date, the system has been running stable for more than two months with preliminary data highlighting that all requirements are being met. Assuming we are successful up in full testing with the new pilot units which we estimate would be approximately three to four months. It's our belief that two things will come out of it. Number one, each of the customers who are currently utilizing the systems, we are deploying new systems widely across their operations with significant larger treatment capacity.

Speaker Change: Sequentially.

Speaker Change: The change in revenue from the year ago quarter is entirely due to deliveries of plastic products ceramic membranes and aftermarket sales.

Fei Chen: We recognize that the top and the bottom line numbers are what people will focus on. However, I would like to point out that we are making progress with our co-growth initiatives to drive new system sales and expand our DPF operations. Importantly, we have a wide range of initiatives in place to continue this growth, with new partnerships, collaborations, and regulatory approval in place. However, it should be clear that my biggest excitement right now is the progress we are making within the produced water treatment for the oil and gas industry. Quarter 3 will be our third consecutive quarter with a new produced water system being delivered.

Speaker Change: They recognize the top and bottom line numbers are what people will focus on however, I would like to point out that we are making progress we've seen our core growth initiatives to drive new system sales and expand our dps operations.

Speaker Change: Importantly, we have a wide range of initiatives in place to continue this growth with new partnerships collaborations and regulatory approvals in place.

Fei Chen: Number two, as this fair-weather customers deploy them in their operations, we will have strong commercial proven points to convince other companies to adapt our technology for their full commercial systems. When that took over as CEO about two years ago, I stated that oil and gas market would be a tremendous long-term opportunity for the tech. However, it would take some time to develop.

Fei Chen: However, it should be clear that my biggest excitement right now is the progress we are making within the produced water treatment for the oil and gas industries. Quarter three will be our third consecutive quarter with a new produced water system being delivered. We are optimistic that successful exclusions of this pilot unit really do significant opportunities for this take in the quarters to come.

Speaker Change: However, it should be clear that my biggest excitement right now is the progress we are making we are seeing the produced water treatment for the oil and gas industry.

Speaker Change: Quarter three will be our.

Speaker Change: Secretive quarter with our new produced water system being delivered we are optimistic that successful execution of this pilot units will lead to significant opportunities for <unk> in the quarters to come.

Fei Chen: We are optimistic that the successful execution of this pilot unit will lead to significant opportunities for this tech in the quarters to come. One final comment before I turn it over to your questions. I will be participating in the HD OneWeight conference and conducting one-on-one meetings with investors in New York on September 9. If you happen to be attending and would like to connect, please reach out to Robert Blum to coordinate.

Fei Chen: With the progress made over the past three quarters, I formally believe that we are on the cross of something significant. We see this key target market for the tech.

Fei Chen: One final comment before I turn it over to your questions. I will be participating in the HC one-way conference and conducting one-on-one meetings with investors in New York on September 9th. If you happen to be attending and would like to connect, please reach out to Robert Bloom to coordinate. Further, I will be conducting virtual one-on-one meetings at this time, partners for 2020 for Investor Conference and October first. Again, reach out to Robert to coordinate.

Speaker Change: One final comment before I turn it out to your questions I will be participating in the etch, Steve One week conference and conducting one on one meetings with investors in New York on September 9th if you happen to be attending.

Fei Chen: Another key initiative I laid out when I took our SEO was to align ourselves with partners that can open up key markets for our solutions. It is a strategy that works extremely well during my time with talk show and the ground first. And one that I saw would work well with Leitec. Given the unique verification that our filtration systems can provide, as a small company, we simply cannot have an internal service team that is aggressively targeting the multiple industry segments that our products can address.

Speaker Change: And we'd like to connect please reach out to robots globally to coordinate.

Fei Chen: Further, I will be conducting virtual one-on-one meetings at the LISM Partners for 2024 investor conference on October 1st. Again, reach out to Robert to coordinate. With that operator, we would be happy to take any questions. Thank you. If you would like to ask a question, please press star then 1 on your telephone keypad. If you would like to withdraw your question, please press star then 2. Today's first question comes from Rob Brown at Lake Street Capital Markets. Please go ahead. I wear hats a lot.

Speaker Change: Further I will be conducting virtual one on one meetings at Lytham partners towards 2024 Investor Conference in August October 1st again reach out to Robert to coordinate with.

Operator: With that, operator, we would be happy to take any questions. Thank you. If you would like to ask a question, please press start on one of your telephone keypads. If you would like to withdraw your question, please press start on two.

Speaker Change: With that operator, we would be happy to take any questions.

Fei Chen: To that end, over the past year, we have signed the following distribution agreement. For the proposed water oil and gas industry, we have signed up. NASA in the Middle East and the Reserve Direct in the US, both of which have been key contributors to our recent progress within the industry as just touched upon. With the commercial food system markets, we have bought an Alchicant, Total Foods, Waterco, Barnary, and the Nebcom. Again, each of these partners has driven some sales for the tech, which I will go into more detail in a moment.

Speaker Change: Thank you.

Speaker Change: I wanted to ask a question. Please press Star then one on your telephone keypad.

Speaker Change: So Charlie a question. Please press Star then two.

Rob Brown: Today's first question comes from Rob Brown at the HC Capital Markets. Please go ahead.

Speaker Change: Today's first question comes from Rob Brown of Lake Street Capital markets. Please go ahead.

Fei Chen: Hi, Faye. First question of the produced water market and the pilot. What's the timeline for that pilot evaluation? I guess the next steps are opportunity that this customer breathes. The pilot, we are going to, I mean, we're delivering in quadrant three. We take about three to four months to finish the testing, and after that, we expect, you know, to see some progress in that direction. Okay, great.

Speaker Change: Okay.

Fei Chen: Bye y'all. First session of the produced water market in the pilot. What's the timeline for that pilot evaluation? the kind of next steps or opportunity that this customer represents. The pilot we are delivering in Q3 will take about 3-4 months to finish the testing.

Rob Brown: Hi, Bob.

Rob Brown: First question on the produced water.

Rob Brown: Market in the pilot.

Speaker Change: Timeline for that pilot evaluation and I guess the.

Speaker Change: Kind of next steps or opportunity that this customer represents.

Speaker Change: The pilot we are going to I mean, we're delivering in quarter three we would take about three to four months to finish their testing.

Fei Chen: Within the first-forward asset market, we send an agreement with Silicon Feature, they are an active dialogue with some food-grade, first-forward asset producers in China. We continue this progress of bringing up partners that can deal with driving awareness and adoption of our solutions, with particular progress made within the marine-scarboard market. To that end, in May, we entered into a partnership agreement with Standmarine Group to expand our presence in Chinese seafood and repair market for marine-scarboard water treatment as we are at new exhaust gas risk risk regulation water treatment system for due of your marine resource.

Fei Chen: And after that, we expect to see some progress in that direction integrated. And then the kind of evaluation metrics that you're looking at, I guess, if you could just remind us what you're looking for, what the customer's looking for, and what you sort of evaluate. So can you repeat your question? That was not very clear. Sorry about that.

Speaker Change: <unk>.

Speaker Change: After that we expect and also see some progress in that direction.

Speaker Change: Okay, Great and then.

Fei Chen: And then the kind of evaluation metrics that you're looking at, I guess, maybe you just just remind us on kind of what you're looking for, what customers looking for, and what you evaluate when you do these pilot programs. So, can you repeat your question that was now very clear? Sorry about that. I just wanted to clarify the, as you evaluate these pilot programs, one of the key things that you and the customer are looking for in terms of the ability, the system, and what are they really evaluating on these. Okay, okay. I mean, what we really like our system is, our system has a very high mobility and also very reliable, and also very automation is totally that digitalized.

Speaker Change: And then the kind of evaluation metrics that youre that youre looking at I guess, maybe you could.

Speaker Change: Just remind us on kind of what youre, what youre looking for what the customer is looking for and.

Speaker Change: And what you sort of evaluate when you do these pilot programs.

Speaker Change: Sure Doug.

Speaker Change: Can you repeat your question that was not very clear.

Fei Chen: I just wanted to clarify, as you evaluate these pilot programs, what are the key things that you and the customer are looking for in terms of the ability of the system and what are they really evaluating on these platforms. Okay. Okay. I mean, what we really like in our system is our system... It has very high mobility and is also very reliable and also very automated; it's totally digitalized. We're able to have remote monitoring and control automation.

Doug: Sorry about that I just wanted to clarify the as you evaluate these pilot programs what are the what are the key things that you and the customer looking for in terms of the.

Fei Chen: The agreement also includes the servicing by Standmarine Group of existing LiqTech marine installations, including fast delivery of spare parts and arm-sized repair work. Also in May, we announced an agreement with the Fremen, a where established maritime representative to the shipping industry in Grace. Fremen, we are bringing it close to the various inferential ship owners through its extensive network. In July, we announced an agreement with Standmarine and South Korea based maritime representative to the shipping industry.

Doug: The ability of the system and whether they are really evaluating okay. Okay.

Speaker Change: What we really like our system is.

Speaker Change: Our system.

Speaker Change: Asia.

Speaker Change: <unk> has a very high mobility and also very reliable and and also automation is totally that digitalized, but we're able to have the remote monitoring and the control automation and the numbering it's a very stable quantity.

Fei Chen: We're able to have the remote monitoring and the control automation, and the membrane is a very stable quality. So, so the pilot, we have been with the reserve at our custom site; it has been running more than two months, and the membrane has your extremely stable quality and lifetime. And the water purification result is very good and stable. So this is what they are evaluating. So, it basically is a reliability, it's mobility and automation. Okay, great. Thank you.

Fei Chen: And the membrane is of very stable quality, so the pilot we have, together with Riesebeck, at our customer site has been running for more than two months, and the membrane has an extremely stable quality and lifetime, and the water purification result is very good and stable.

Speaker Change: The pilot that we have.

Speaker Change: Bandwidth rich rich bank at our customer site it.

Fei Chen: For Standmarine to mark our marine-scarboard water treatment solutions, we think South Korea is the second largest ship-builder building market in the world of China. We are starting activities to recover the customer relationships we had in the market.

Speaker Change: It had been running more than two months and the memory has shown extremely stable.

Speaker Change: Jen lifetime and the water purification of result is very good and stable. So this is what they are.

Fei Chen: So this is what they're evaluating. So basically, it's reliability, it's mobility, and automation. Okay, great. Thank you. And then on the U.S. pool market, you talked about getting NSF certification.

Speaker Change: Evaluating so it basically is a reliability is mobility and automate automation.

Fei Chen: These three new partners, along with our previously signed agreement with Yuyong photos in China, from whom we received two marine-scarboard water treatment systems orders in the past year, should hear from us, expand our presence in this important market for LiqTech.

Speaker Change: Okay, great. Thank you.

Fei Chen: And then on the US pool market, you talked about getting the NSF certification. Maybe, you know, maybe give us some more color on what that means in terms of being able to sell into the market and your expectations or what you think the pipeline looks like in the US market. We are very excited to get this NSF certification because that means we're able to start going to the US market. But we have already behind the scene, doing the go to master planning. So it's not like we just start now. So right now, we have the plan in place.

Speaker Change: And then in the U S coal market, you talked about getting the NSF certification.

Speaker Change: <unk>.

Fei Chen: Maybe, you know, maybe give us more color on what that means in terms of being able to sell into the market, expectations, or..., the pipeline. We are very excited to get this NSF certification because that means we're able to start going to the US market, but we have already been behind the scenes doing the go-to-market planning so it's not like we just start now. We invite enough people this year so we're able to really start going to the US market.

Speaker Change: Maybe.

Speaker Change: Maybe give us some more color on what that means in terms of being able to sell into the market and do your expectations or what you think the pipeline looks like in the U S market.

Fei Chen: One other partnership agreement I wanted to touch on was our announcement two weeks ago that we have entered into an MOU with China's high-song engineering company to explore the application of this system, as well as the filtration system for the challenged industry water treatment in China. China is a significant market for industry water treatment with environmental protection and sustainability of increasing importance to the government and enterprises. I am excited about what this collaboration with China's high-song for live industry uses will bring the tech.

Speaker Change: We are very excited to get this the NSF certification because that means we're able to go into the U S market.

Speaker Change: But we have already and behind the scenes doing the go to market planning. So it's not like we just don't know so right now we have the plans in place. So we noticed that approaches our potential partners already some now and then.

Fei Chen: So we're going to start approaching the potential partners already from now. And it is our intention. We would like to have some partners in place by the end of this year. So we're able to really start going to the US market. Okay. Good.

Speaker Change: Our intention we would like to have some <unk>.

Speaker Change: Partners in place by the end of this year. So we're able to really start going to the U S market.

Fei Chen: Our partnerships and the collaborations will be a key for us going forward. They open time to materialize, but we are getting to see results with nearly all of them. We have sent up our past 18 months of show and believe we receive further positive impacts, in the years to come.

Fei Chen: And the pool system order that you talked about in the U.K. and Australia that did not ship in the quarter of the three system. Do you expect those to ship in... sometime in the rest of the year, Q3 or Q4, or are those... They are delayed because of government funding, and unfortunately, you know how the government is. They don't give you a new date or say when it's going to come in.

Speaker Change: Okay. The U S sorry.

Fei Chen: And the US are sorry, the pool system order that you, that you talked about in the UK and Australia that did not ship in the quarter of the three systems. Do you expect those to ship in, I guess, the rest some time in the rest of the year, Q3 or before, or are those sort of on hold for a while? And they are a delay because the government funding, and unfortunately, you'll know how the government are. They don't give you a new date. So when it's going to come in short, so for a conservative conservative one of you, we try to make some other opportunities to replace them.

Speaker Change: Our system order that you.

Speaker Change: You talked about in the UK and Australia that did not ship in the quarter. The three systems do you expect those to ship in.

Speaker Change: Yes.

Speaker Change: Compared with the rest of the year to three years before or are those sort of on hold for a while.

Fei Chen: As I highlighted in the press release this morning, we successfully delivered five swimming pool systems during the second quarter. The swimming pool market is an important recurring, revenue opportunity for LiqTech. However, as I stated on the cold last quarter, our budget and the expectations we set forth for the second quarter included eight swimming pool systems for delivery. Unfortunately, three systems, and it's needed to be shifted from municipal applications in the UK and Australia, were delayed due to government funding.

Speaker Change: And they are delayed because of the government funding and.

Fei Chen: Causing us to throw a shot by about 500,000 from the upload we provided. One big deployment that we are benefiting, the swimming pool market for us, is the risk, the risk of NSF suffocation for our systems in the US. For those that are not aware, we are unable to sell our commercial swimming pool solutions in the US as we work through this approval process. With the certification now in hand, we are in conversations with partners that we will hear drive adoptions in the US with the goal to have new agreements in place by the end of the year. So, where we are disappointed with the delays from the three planned systems, the pool market continues to remain strong for us and we will be a key contributor to our recurring revenue in the future.

Speaker Change: Unfortunately, you'll know how the government. They don't give you a new date say when thats going to be coming so sofa conserved conservative front of you.

Fei Chen: So from a conservative point of view, we try to make some other opportunity to replace them. And we don't know if they will certainly come to Q3, Q4, or maybe they will postpone to Q1, Q2 next year. So we try to make some other compensation, some other opportunities for them. So we don't get a certain date from the government to say when they will come.

Speaker Change: Try to make some other opportunity to replace them and then we don't know if they certainly will come to Q4.

Fei Chen: And you know, we don't know if they certainly will come to Q3 or Q4, or maybe they respond to the Q1, Q2 next year. So we try to make some other, um, compensation from other opportunities for the case. So, because we don't get the certain date from the government, say when this will come. Thank you.

Speaker Change: Maybe they were postponed to Q1 Q2 next year. So we tried to make some other.

Speaker Change: Compensation from other opportunities for them.

Speaker Change: So because we don't get the certain stage from the governments they wanted to come back down.

Yeah.

Fei Chen: Okay, good. Thank you. My last question is really about some of the partnerships you've developed in the, I guess, Korean Ship Market Partnership in particular. How do you see that playing out in the scrubber ramp and the marine ramp?

Speaker Change: Okay. Good. Thank you and my last question is really on me.

Fei Chen: My last question is really on the some of the partnerships you've developed in the, I guess, the Korean ship market partnership in particular. How do you see that playing out in the scrubber ramp and the marine ramp? I really think we have very good opportunities for this new scrubber segment is for the DIA for a few Indian ships. And those ships, you know, expecting 2024-2007 period where before 100 new ships coming to place in this special segment. And our solution is really very good for these segments. We actually have made some modifications. So really have a much higher capacity and the longer continue operation.

Speaker Change: Some of the partnerships you've developed in the I guess, the Korean ship market partnership in particular.

Speaker Change: Do you see that playing out in the scrubber.

Speaker Change: Graham.

Speaker Change: Right.

Speaker Change: Great.

Fei Chen: I really think we have a very good opportunity for this new scrubber segment, it's called the EGR, for dual-fuel engine SIPs, and those SIPs, you know, expect in 2024 to 2027 period will be 400 new SIPs coming to place in this special segment. And our solution is really very good for this segment, we actually have made some modifications to really have a much higher capacity and a longer continued operation, and this is something very unique compared with other competitive solutions in the market.

Speaker Change: And I really think we have very good opportunity.

Speaker Change: For this new scrubber segments as per the ETR and for <unk>.

Speaker Change: As chip and those seats expecting 2024 to 2027 period will be 400, new seats coming to place in this suspicious segment and our solution is really very good for this segment, we actually made some modification to really have a much higher capacity and then in the longer.

Speaker Change: Continued operation and this is something very unique compared with other competitors solution in the market. So in this way we believe they have very good opportunity to able to go into this segment very strongly. So that's why we are actually building up to partnership in this area and those shows we also very activity.

Fei Chen: And this is something very unique compared to other competitors' solution in the market. So, in this way, we believe we have a very good opportunity to able to go into this segment very strongly. So that's why we are actively building up the partnership in this area. And also, we are also very actively looking into the most efficient way of going to the market. And if there's any other business model, she'll be applied for really going intensively going to this market because the market is coming up now. And for the next four years, we'll be really, really interesting.

Fei Chen: So in this way, we believe we have a very good opportunity to go into this segment very strongly. So that's why we are actually building up a partnership in this area, and also, we are very actively looking into the most effective way to go to the market and if there are any changes in the other business models to be applied for really going, intensively going to this market, because the market is coming up now, and for the next four years, it will be really, really interesting. I hope I can tell you something more in the next quarter, and we are really strongly going back there. You're great.

Phillip Price: When you dive deep into the financial results, a few things may not be as obvious and I think it bears mentioning. Oh, total, we are seeing incremental growth in our system sales. During the second quarter, we reported 1.3 million in system sales, which is up from 1.2 million in the year ago, second quarter and 1.2 million in quarter one of this year. Further, during the second quarter, DPF sales was 1.6 million, a 23% increase compared to the year ago period and up about 4% sequentially.

Speaker Change: Looking into the most effective way go into the market and <unk> in our business model simply applied for really going it intensively going into this market because the market is coming up now and the next.

Speaker Change: Yes will be really really interesting so.

Fei Chen: So I hope I can hear something more in the next quarter. And we are really strongly going back there. Okay, great. Thank you.

Speaker Change: I hope I can hear something more in the next quarter and we ended the IBD is strongly going back there.

Fei Chen: Thank you and congratulations. Thank you. And as a reminder, if you'd like to ask a question, please press star then 1. Our next question comes from Lucas Ward of Ascendian Capital Markets. Please go ahead.

Speaker Change: Okay, great. Thank you and congrats on progress.

Phillip Price: As I mentioned last quarter, we are seeing increased interest in our DPF solutions. We see the European inline transportation markets as renewed focused on black carbon emissions reduction across. We are also seeing strong sales for our features for emergency electricity generators. Similar to pool systems, we are pleased with the growth coming from our DPF solutions, which in many ways was an afterthought for Dixig previously, but has become a solid contributor for us today.

Speaker Change: Okay.

Speaker Change: Thank you and as a reminder, if you'd like to ask a question. Please press Star then one.

Operator: And, as a reminder, if you'd like to ask a question, please press stars and want.

Lucas Ward: Next question comes from Lucas Ward. Is it sending you in Capital markets?

Speaker Change: Question comes from Lucas <unk> capital markets. Please go ahead.

Lucas Ward: Please go ahead. Thanks.

Lucas Ward: Thanks. Hi. Good afternoon, Fei, Phillip, and Robert.

Lucas Ward: Hi. Good afternoon, Fay, Philip, and Robert. Hi. So regarding the full year outlook, it sounds like you're expecting a similar type of revenue run rate for Q3, although Philip gave a fairly wide band there, but a much better Q4.

Lucas: Thanks, Hi, good afternoon, Fannie fill up and Robert.

Lucas: Hi, good afternoon.

Lucas Ward: So regarding the full-year outlook, it sounds like you're expecting a similar type of revenue run rate for Q3, although Phillip gave, you know, a fairly wide band there, but a much better Q4. Do you have a target for the full year that you can share at this point? And I mean, we have shared the quarter three prediction, and we do not want to tell you what Q4 will look like. Because it's really going to be a big, big quarter, and we need to see something fit into place before we have a certain number. But it's definitely going to be a much better quarter than the first three quarters.

Speaker Change: So <unk>.

Speaker Change: Regarding the full year outlook it sounds like you're expecting a similar type of revenue run rate for Q3, Although Phillip gave a fairly wide band there but.

Speaker Change: A much better Q4 do you have a target for the full year that you can share at this point.

Fei Chen: Do you have a target for the full year that you can share at this point? And I mean, we have shared the quarter of three predictions. And we don't, we do not want to hear, you know, what is the Q4 effect because it's really going to be a big, big quarter. And we need to see something frame to place before we have the certain number. But it's going to be a much better quarter than the first three quarters. That we can say.

Phillip Price: What I might call a two revenue areas, system sales and DPF sales, that are both showing growth for quarter two system sales and DPF sales, were up more than 400,000 combined in year to year and 200,000 sequentially. Offsetting these growth were pulled back during the second quarter, we see our system after market solutions, which were down from the year ago period by about 300,000, our ceramic membrane sales, which were down about 400 from last year and our plastic components, which were down about 200,000.

Speaker Change: And I mean, we have shared the quarter three <unk>.

Speaker Change: <unk> and <unk>.

Speaker Change: We do not want to walk into the Q4 looks like because it's really going to be at.

Speaker Change: Dig a quarter and.

Speaker Change: We need to see something thing took place before we had the certain number but it's definitely going to be a much better quarter than the first three quarters that we can say.

Lucas Ward: That's all we can say. Okay, how about gross margins? How do you see those trending?

Fei Chen: Okay.

Lucas Ward: Looks like it was 16% for Q2. So, they seem to be coming up relative to last year, certainly relative to late last year. Yeah, so gross margin is connected with revenue because we have fixed costs and then we have our variable costs. So, whenever the revenue is lower than the same quarter last year as we compared it to, the gross profit margin would be lower.

Speaker Change: Okay, how about.

Phillip Price: How about gross margins? How do you see those trending? Looks like it was 16% for Q2. So they seem to be coming up relative to last year, certainly relative to late last year. Yeah. So, course margin is connected with the revenue because we have fixed costs, and then we have our variable costs. So whenever the revenue is lower than the same quarter, last year, compared to the gross profit margin would be lower. But as I also mentioned, we need to be able to monitor our contribution margin, which is still at about 45%, 45%. Okay. Yeah.

Speaker Change: Gross margins, how do you see those trending.

Phillip Price: We are at these other three areas and lead a bit less code to our focus. They are still contributors to our financial results and we are focused on developing new channels and opportunities to expand these areas. Phillip, we are spending more details on this in a moment.

Speaker Change: Looks like it was 16% for Q2.

Speaker Change: So they seem to be coming up relative to last year.

Speaker Change: Certainly relative to late last year.

Speaker Change: Yes, so gross margin.

Speaker Change: It's connected with the revenue because we have fixed costs and then we have our variable costs. So whenever revenue was lower than the same quarter matching us with comparisons.

Fei Chen: The wrap-up, wrap things up as our outlook suggests. We expect to see revenue of about 4 to 5 million in the third quarter as a midpoint that would be similar to what we just reported in the second quarter. The biggest variables we have put into timing of delivery and refuse systems, particularly within the swimming pool market. It is my belief that as we achieve the expected traction within the oil and gas markets I indicated, experience a revamped income, manage bubble market and continue the positive overall trajectory in the swimming pool market, we will see the fourth quarter significantly above the levels, achieve all expect in the first three quarters of this year. The groundwork we have set in terms of partnerships, collaboration and the regulatory approvals should all be of contribute to this growth.

Speaker Change: The gross profit margin would be lower.

Lucas Ward: But as I also mentioned, we are also monetizing our contribution margin, which is still about 45%. Okay. Yeah. That's an internal figure, right?

Speaker Change: I mentioned, the Awesome March March rising our contribution margin, which assume 40% 45%.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Phillip Price: That's an internal figure, right? Like, would it be possible for us to to to to calculate that the numbers that you report? Not at this moment, though. Okay. That's fine.

Speaker Change: That's an internal figure right like it would it be possible for us.

Lucas Ward: Like, would it be possible for us to calculate that, the numbers that you report? Robert Blum, Robert Blum, Lucas Ward, Fei Chen, Phillip Price, LiqTech, Okay, that's fine. Um, and- So just looking at the drivers of the revenue, it looks like the aftermarket solution sales were soft. What, what drives that?

Speaker Change: To calculate that the numbers that you report.

Manav: Manav this moment no.

Manav: Okay, that's fine.

Fei Chen: And so just looking at the drivers of the revenue, it looks like the aftermarket solution sales were soft. What what drives that like what what impact? I mean, if we're selling a lot of systems, why wouldn't the aftermarket solution revenues just sort of track with that? I mean, after now, our aftermarket service primarily is the Marine Squadron. And that's also one of the reasons why we send this to country is the marine group. And in the past in years, after we have shot the marine squadron, we have nothing very good at the set up the after sales, both the system and the service China.

Manav: Good morning, and.

Speaker Change: So just looking at the drivers of the revenue it looks like the aftermarket solution sales were were soft.

Lucas Ward: Like what, what impact? I mean, if we're selling a lot of systems, why wouldn't the aftermarket solution revenues just sort of track with that? And up to now, our aftermarket service primarily is the marine scrubber. And that's also one of the reasons why we signed this contract with Stemmarine Group. And in the past years, after we shot the marine squabble, we have not been very good at the set-up, the after-sales, both the system and the sales to China. And so we missed opportunities there.

What drives that like what what.

Speaker Change: I mean, if we're selling a lot of systems why wouldn't the aftermarket solution revenues to sort of track with that.

Speaker Change: And the up to now our after market services, primarily is the marine scrubber.

Phillip Price: With that said, let me technical our to Phillip to review the financial results in more detail. Thank you very much and good morning everyone. Now, let me brief your comment on the financial highlights for the quarter. Whether you came in at 4.5 million compared to 5.0 million in the same quarter last year, representing a decrease of 10%. Broken down by verticals, sales were as follows. System sales and related economic services of 1.9 million compared to 2.1 million in the same period last year, and are sequentially compared to the 1.5 million in Q1.

Speaker Change: And.

Speaker Change: That's also one of the reasons why we signed this contract with the Marine group.

Speaker Change: In the past eight years and after we have sharpened our reach cover we have not been very good at the setups.

Speaker Change: After sales both the system and the sales to China, and so we missed opportunity there and what really now trying to see is we really believe the aftermarket for the Murray will come back and then hiring the Marine group revenue was passed with the fast delivery and also <unk>.

Fei Chen: And so we meet options to there. And what we really now trying to see is we really believe the aftermarket for the marine will come back. And the marine, the that marine group will be the one here past with the fast delivery and also very close to the customers. And so for the new marine squadron market, the EGR market, we are also working on a new service concept. So initially we were able to from the beginning already have a service package with the customer. And that will also be the case with the oil gas market.

Fei Chen: And what we're really now trying to see is we really believe the aftermath for the marine industry will come back. And the Stemmarine Group will be the one to help us with fast delivery and also very close to the customers. And so for the new marine squabble market, the EGR market, we're also working on a new service concept. So in this way, we were able to, from the beginning, already have a service package with the customer. And that will also be the case with the oil and gas market. We also intend to have a service package agreement with the customer from the beginning when we start selling the commercial project.

Speaker Change: Close to the customers and for the new learnings fiber market. The ETR market. We also working on a new service concept. So initially we were able to from the beginning or do you have a service package with the customer and that will also be the case with the oil and gas market. We also intend to have a servicer.

Phillip Price: CPF and surrounding manufacturing sales of 1.7 million compared to 1.8 million in the same period last year and 1.8 million in Q1. And finally, plastic revenue of 0.9 million compared to 1.1 million in Q1 last year and 0.9 million in Q1. To be specific, the key revenue requirements for this quarter was the delivery of another gas produced water pilot as part of our distribution agreement with NASA, the delivery of five food filtration systems along with stable transmission from DPS sales, attributed to focused sales efforts that began in that day, 2023, and generated innovative activity in the current year.

Fei Chen: We also intend to have a service package agreement with the customer from the beginning when we start saving the commercial project. So, so the aftermarket is really under development.

Speaker Change: Package.

Speaker Change: Agreement based on customer from beginning let me start saving the commercial project. So the aftermarket is really under development and this is what we see.

Fei Chen: So the aftermath is really under development, and this is what we see, the unstable situation. Could you comment on the geopolitical situation? I know this was a problem in Q1, the war was impacting your ONG's prospects in the Middle East. Is that still an issue on your radar screen?

Fei Chen: And this is what we see: you know, the unstable situation. Okay.

Speaker Change: The unstable situation.

Speaker Change: Okay.

Fei Chen: Could you comment on the geopolitical situation? I know this was a problem in Q1. The war was impacting your OMG prospects in the Middle East. Is that still an issue on your radar screen? Yes, that's actually one of the big reasons why we have moved our focus primarily to the US market, and I'm sure because we believe that your great geopolitics situation is really unstable. And we don't know what's really happening. So, so we now change to a more stable market. And we also see the US market actually is coming up with a lot of actions for the produced water and treatment.

Speaker Change: Could you comment on the geopolitical situation I know this is Ed.

Speaker Change: The problem in Q1.

Speaker Change: War was impacting your OMG.

Phillip Price: Our aftermarket services decreased due to elevated remediation work and associated deliveries in the same period in 2023, and declined in plastic revenue related solely to a large one-off sale that was recorded in 2023 without recurrence in the current year. In terms of lower gardens as they mentioned, we expect the revenue for the third quarter of 2024 to be between 4.0 million and 5.0 million, which will be similar to the first two quarters of 2020.

Speaker Change: Prospects in the Middle East is that still an issue on your radar screen.

Speaker Change: Yeah.

Fei Chen: Yes, that's actually one of the big reasons why we have moved our focus primarily to the U.S. market, because we believe the geopolitical situation is really unstable and we don't know what's really happening. So we now change to a more stable market and we also see the U.S. market actually is coming up with a lot of traction for the produced water treatment. So we are very happy actually we made this change and we can see the results already.

Speaker Change: Yes, that's actually one of the Big reason why we have moved our focus primarily to the U S market on the on shelf because they believe that geographic geopolitical situation is really an unstable and we don't know what's really happening. So so we've now changed to a more stable market and we also see that.

Speaker Change #100: <unk> actually is coming up we sell our pensions for the produced water.

Fei Chen: So we are very happy, actually we made this change and we can see the results already.

Speaker Change #100: And treatment. So we are very happy actually we made this change and they can see the results already.

Phillip Price: We remain permitted to grow in our business so that the common borders as we work intensively to execute our ambition to further penetrate the global oil and gas chemicals and boosts the market with our proven and industry-leading solutions. Looking at our growth profit for the quarter, we reported 0.7 million or implied growth profit margin on approximately 16% compared to 1.2 million and 23.3% in prior year's second quarter. The available change is, first of all, a result of the revenue makes for the quarter.

Fei Chen: Okay, got it.

Speaker Change #101: Okay got it.

Fei Chen: Could you comment in general on the ceramic membrane business? Historically, this has been a big segment, like what are the outlooks for it? I think what we are now investigating is that we have been a manufacturer of ceramic membranes for more than 15 years, but the way we are selling our ceramic membranes has been a little bit ad hoc. So we don't really have very systematic knowledge about how we should sell our membranes and how to price sell them, and what is really the most competitive way to do our membrane selling.

Fei Chen: Could you comment in general on the ceramic membrane business? Historically, this has been a big segment. Like what? What are the what does that look for? I think what we are now investigating is we we're having a manufacture for ceramic membrane for more than 15 years. But we we're selling our ceramic membrane has been a little bit at hawk. So we don't really have very systematic knowledge about, you know, how we're selling our membrane and how surprised sitting and what is really the most competitive way to do our membrane selling. So, so this is what we are now working on very systematically to getting the knowledge and social, trying to find the right partners to bring our membrane into the market because our membrane is in high end and it's for some special applications.

Speaker Change #102: Could you comment in general on the ceramic membrane business. Historically this has been.

Speaker Change #103: A big segment like what are the what is the growth.

Speaker Change #103: Outlook for it.

Speaker Change #104: I think what we are now investigating is we have.

Speaker Change #105: <unk> manufactures ceramic membrane for more than 15 years and by the way we are selling our ceramic membrane has been limited at hub. So we don't really have very systematic knowledge about how we sort of setting our membrane and has the price setting and what is really the most competitive way.

Phillip Price: In particular, the delivery of the containerized oil and gas pilot system impacted margins, resulting in a decreased compared to typical levels. This decision was strategic undertaking through a showcase and validating effectiveness of our technology. As we still have overhead and other fixed costs that are not fully being installed, one of the key metrics we look at to highlight the progress being made is our contribution margin. During the quarter, when you back out fixed costs, our contribution margin ended at approximately 46%, compared to 52% in the same quarter, the quarter last year, with the available change, mainly extinct by revenue makes and especially the delivery of the containerized oil and gas pilot system, as mentioned before.

Speaker Change #105: Two our membrane silly. So so this is what we are now working on very systematically to getting the knowledge and also trying to find the right partners to bring our run rate into the market because our membrane is in the high end and it's for some special applications. So that's where the place to have the various shutdowns. So.

Fei Chen: So this is what we are now working on, very systematically getting the knowledge and also trying to find the right partners to bring our membrane into the market because our membrane is in high end and it's for some special applications, so that's where the place we have to be very sharp on. So this is one of the reasons why we have sent this MOU with this Chinese partner called the Hizone, because they have some very unique applications. We are now doing the pilot testing with them, so I hope in a quarter or so, I will be able to present some results there.

Fei Chen: So, so that's where the place we have to be: very Japan. So this one up reason why we had sent this. The MOU with this Chinese partner to the high sum because they have some very unique applications. We are now doing the pilot testing with them. So I hope being a quarter or show I will be able to produce a percent some results there. This is the way we're going to do it. It's more selective and more focused and really have much more max knowledge about what's the best way to selling our membrane.

Speaker Change #105: It's one of the reason why we had some of this mou.

Speaker Change #105: Mou with the Chinese partners with the highest them because they have some very unique applications. We are now doing the pilot testing wisdom, Chuck hoping a quarter or so we'll be able to reopen.

Speaker Change #105: Present some results. There. This is really going to do it's more selective and more focused and is really have much more max knowledge about what's the best way to setting our membrane.

Fei Chen: This is the way we're going to do it, more selective and more focused, and really have much more maximum knowledge about what's the best way to sell our membrane. Okay, I think I'm good. Thank you very much, Fei, Phillip. I appreciate it. Thank you very much. Thank you. We're sure you know the questions at this time.

Phillip Price: From our operational perspective, we still have excess capacity with the reasoning in some of the new kilns and revitalization of our ceramic facility. Our immediate goal is to capitalize on this positive momentum by shortly delivering these times while still maintaining the high quality of our membranes and filaments. As previously stated, we still maintain our guidance that our business will be breaking in relation on a just a digital basis, assuming a quarterly revenue of approximately 7 million and potentially no longer with the right revenue needs.

Fei Chen: Okay.

Speaker Change #105: Okay.

Lucas Ward: Okay, I think I'm good.

Speaker Change #105: Okay, I think I'm. Good. Thank you very much very Philip I appreciate it.

Lucas Ward: Thank you very much, Fei, Phillip; I appreciate it. Thank you very much. Thank you.

Speaker Change #106: Thank you very much.

Speaker Change #107: Thank you I'm showing no further questions at this time. So it was the turn the conference back over demand there's room for any closing remarks.

Operator: I want to show you no further questions at this time.

Operator: I'd like to turn the conference back over to management for the closing remarks. Thank you all very much for being with us today. We look very much forward to communicating with you soon again in the next quarter. Thank you. Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day. BF-WATCH TV 2021

Robert Blum: I'd like to turn the conference back over to management for my closing remarks. Thank you all very much for being with us today. We look very much forward to communicating with you, so again in next quarter. Thank you.

Speaker Change #107: Yeah.

Speaker Change #108: Thank you all very much for being with US today, we look very much forward to communicating with you. So again in next quarter. Thank you.

Phillip Price: Turning to topics, total operating expenses for the quarter was 3.8 million, which is comparable to the same quarter last year, with a slight increase of 38,000 or approximately 1.4%. As stated over the last few quarters, we remain focused on running a new business by monitoring costs and carefully renovating our spin, to ensure we do not jeopardize our financial objectives. Moving on to the next item, net other expenses during the quarter were 39,000 compared to the income of 33,000 and Q2 of last year, with the development mainly explained by reduced interest income as well as increased the discount of legislation due to the extension of the insurance date for this new information notes.

Speaker Change #109: Thank you. This concludes today's conference call. We thank you all for attending today's presentation.

Operator: This includes today's conference call. We thank you all for attending today's presentation.

Operator: You may now disconnect your lines and have a wonderful day.

Speaker Change #110: Now disconnect your lines will have a wonderful day.

Speaker Change #110: Okay.

Speaker Change #110: Okay.

Phillip Price: Recruiting on the piano, net loss was 2.1 million for the quarter, compared to 1.6 million for the comparable period in 2023. This quarter's result was mainly given by the decreasing revenue and lower margins. Finally, that is briefly common on our casual availability before summarizing and handing back over to space. We added the quarter with 5.5 million in cash, down 2.2 million compared to the first quarter, explained by cash use and operating activities, and increased networking capital, mainly related to increased activity levels, and cabbages of 2.2 million related to replacement of care and information.

Phillip Price: Summarize balancing our cash flow, remain a KGBI for our business, as we have determined to preserve cash to maintain our strategic and financial flexibility. We also acknowledge that we need to increase the throughput of our existing facilities in order to accelerate growth, reduce these times, and ultimately pave the way to a business balance of vulnerability, income, and cash flow perspective.

Fei Chen: Thank you, everyone, for your support and our fabulous evening. Thank you, Phillip. As I mentioned, and the Phillip's elaborated arm, we have experienced nice growth within our system sales and DPS business year-over-year and sequential. The change in revenue from the year ago quarter is entirely due to deliveries of plastic products, ceramic membranes, and after-marked sales. We recognize the top and bottom line numbers are what people will focus on. However, I'd like to point out that we are making progress within our co-girls' initiatives to drive new systems sales and expand our DPS operations.

Fei Chen: Importantly, we have a wide range of initiatives in place to continue these growth with new partnerships, collaborations, and regulatory approval in place. However, it should be clear that my biggest excitement right now is the progress we are making within the produced water treatment for the oil and gas industries. Quarter three will be our third consecutive quarter with a new produced water system being delivered. We are optimistic that successful exclusions of this pilot unit really do significant opportunities for this take in the quarters to come.

Fei Chen: One final comment before I turn it over to your questions.

Fei Chen: I will be participating in the HC one-way conference and conducting one-on-one meetings with investors in New York on September 9th.

Fei Chen: If you happen to be attending and would like to connect, please reach out to Robert Bloom to coordinate.

Fei Chen: Further, I will be conducting virtual one-on-one meetings at this time, partners for 2020 for investor conference and October first. Again, reach out to Robert to coordinate.

Operator: With that, operator, we would be happy to take any questions. Thank you. If you would like to ask a question, please press start on one on your telephone keypad. If you would like to withdraw your question, please press start on two.

Rob Brown: Today's first question comes from Rob Brown at the HC Capital Markets. Please go ahead. Hi, Faye. First question of the produced water market and the pilot. What's the timeline for that pilot evaluation? I guess the next steps are opportunity that this customer breathes. The pilot, we are going to, I mean, we're delivering in quadrant three, we take about three to four months to finish the testing, and after that, we expect, you know, to see some progress in that direction.

Fei Chen: Okay, great. And then the kind of evaluation metrics that you're looking at, I guess, maybe you just just remind us on kind of what you're looking for, what customers looking for, and what you evaluate when you do these pilot programs. So, can you repeat your question that was now very clear? Sorry about that. I just wanted to clarify the, as you evaluate these pilot programs, one of the key things that you and the customer are looking for in terms of the ability, the system, and what are they really evaluating on these.

Fei Chen: Okay, okay. I mean, what we really like our system is, our system has a very high mobility and also very reliable, and also very automation is totally that digitalized. We're able to have the remote monitoring and the control automation, and the membrane is a very stable quality. So, so the pilot, we have been with the reserve at our custom site, it has been running more than two months, and the membrane has your extremely stable quality and lifetime. And the water purification result is very good and stable. So this is what they are evaluating. So, it basically is a reliability, it's mobility and automation.

Fei Chen: Okay, great. Thank you. And then on the US pool market, you talked about getting the NSF certification. Maybe, you know, maybe give us some more color on what that means in terms of being able to sell into the market and your expectations or what you think the pipeline looks like in the US market. We are very excited to get this NSF certification because that means we're able to start going to the US market.

Fei Chen: But we have already behind the scene, doing the go to master planning. So it's not like we just start now. So right now, we have the plan in place. So we're going to start approaching the potential partners already from now. And it is our intention. We would like to have some partners in place by the end of this year. So we're able to really start going to the US market.

Fei Chen: Okay. Good. And the US are sorry, the pool system order that you, that you talked about in the UK and Australia that did not ship in the quarter of the three systems. Do you expect those to ship in, I guess, the rest some time in the rest of the year, Q3 or before or are those sort of on hold for a while? And they are a delay because the government funding and unfortunately, you'll know how the government are.

Fei Chen: They don't give you a new date. So when it's going to come in short, so for a conservative conservative one of you, we try to make some other opportunities to replace them. And you know, we don't know if they certainly will come to Q3 or Q4 or maybe they respond to the Q1, Q2 next year. So we try to make some other, um, compensation from other opportunities for the case. So because we don't get the certain date from the government, say when this will come. Thank you.

Fei Chen: My last question is really on the some of the partnerships you've developed in the, I guess, the Korean ship market partnership in particular. How do you see that playing out in the scrubber ramp and the marine ramp? I really think we have very good opportunities for this new scrubber segment is for the DIA for a few Indian ships. And those ships, you know, expecting 2024-2007 period where before 100 new ships coming to place in this special segment.

Fei Chen: And our solution is really very good for these segments. We actually have made some modifications. So really have a much higher capacity and the longer continue operation. And this is something very unique compared to other competitors solution in the market. So in this way, we believe we have very good opportunity to able to go into this segment very strongly. So that's why we are actively building up the partnership in this area.

Fei Chen: And also, we are also very actively looking into the most efficient way going to the market. And if there's any other business model, she'll be applied for really going intensively going to this market because the market is coming up now. And for the next four years, we'll be really, really interesting. So I hope I can hear something more in the next quarter. And we are really strongly going back there. Okay, great. Thank you.

Operator: And as a reminder, if you'd like to ask a question, please press stars and want.

Lucas Ward: Next question comes from Lucas Ward. Is it sending you in capital markets? Please go ahead. Thanks. Hi. Good afternoon, Fay, Philip, and Robert. Hi. So regarding the full year outlook, it sounds like you're expecting a similar type of revenue run rate for Q3, although Philip gave a fairly wide band there, but a much better Q4. Do you have a target for the full year that you can share at this point? And I mean, we have shared the quarter of three predictions.

Lucas Ward: And we don't, we do not want to hear, you know, what is the Q4 effect because it's really going to be a big, big quarter. And we need to see something frame to place before we have the certain number. But it's going to be a much better quarter than the first three quarter. That we can say. Okay. How about gross margins? How do you see those trending? Looks like it was 16% for Q2.

Lucas Ward: So they seem to be coming up relative to last year, certainly relative to late last year. Yeah. So, course margin is connected with the revenue because we have fixed costs and then we have our variable costs. So whenever the revenue is lower than the same quarter, last year compared to the gross profit margin would be lower. But as I also mentioned, we need to be able to monitor our contribution margin, which is still at about 45%, 45%.

Lucas Ward: Okay. Yeah. That's an internal figure, right? Like, would it be possible for us to to to to calculate that the numbers that you report? Not at this moment, though. Okay. That's fine. And so just looking at the the drivers of the revenue, it looks like the aftermarket solution sales were were soft. What what drives that like what what impact? I mean, if we're selling a lot of systems, why wouldn't the aftermarket solution revenues just sort of track with that?

Lucas Ward: I mean, after now, our aftermarket service primarily is the marine squadron. And that's also one of the reason why we send this to country is the marine group. And in the past in years, after we have shot the marine squadron, we have nothing very good at the set up the after sales, both the system and the service China. And so we meet options to there. And what we really now trying to see is we really believe the aftermarket for the marine will come back.

Lucas Ward: And the marine, the that marine group will be the one here past with the fast delivery and also very close to the customers. And so for the new marine squadron market, the EGR market, we also working on a new service concept. So initially we were able to from the beginning already have a service package with the customer. And that will also be the case with the oil gas market. We also intend to have a service package agreement with the customer from beginning when we start saving the commercial project.

Lucas Ward: So so the aftermarket is really under development. And this is what we see, you know, the unstable situation. Okay. Could you comment on the geopolitical situation? I know this was a problem in Q1. The the war was impacting your OMG prospects in the Middle East. Is that still an issue on your radar screen? Yes, that's actually one of the big reason why we have moved our focus primarily to the US market and I'm sure because we believe that your great geopolitics situation is really unstable.

Lucas Ward: And we don't know what's really happening. So so we now change to a more stable market. And we also see the US market actually is coming up with a lot of actions for the produced water and treatment. So we are very happy actually we made this change and we can see the results already. Okay, got it. Could you comment in general on the ceramic membrane business? Historically, this has been a big segment.

Lucas Ward: Like what what are the what does that look for? I think what we are now investigating is we we're having a manufacture for ceramic membrane for more than 15 years. But we we're selling our ceramic membrane has been a little bit at hawk. So we don't really have very systematic knowledge about, you know, how we're selling our membrane and how surprised sitting and what is really the most competitive way to do our membrane selling.

Lucas Ward: So so this is what we are now working on very systematically to getting the knowledge and social trying to find the right partners to bring our membrane into the market because our membrane is in high end and it's for some special applications. So so that's where the place we have to be very Japan. So this one up reason why we had sent this. The MOU with this Chinese partner to the high sum because they have some very unique applications.

Lucas Ward: We are now doing the pilot testing with them. So I hope being a quarter or show I will be able to produce a percent some results there. This is the way we're going to do it. It's more selective and more focused and really have much more max knowledge about what's the best way to selling our membrane. Okay.

Fei Chen: Okay, I think I'm good. Thank you very much, Fei, Phillip, I appreciate it. Thank you very much. Thank you. I want to show you no further questions at this time. I'd like to turn the conference back over to management for me closing remarks. Thank you all very much for being with us today. We look very much forward to communicating with you, so again in next quarter. Thank you. This includes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.