Call Fourth Quarter and Fiscal Year 2023 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 0. 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, and to withdraw from the queue, you may press star then two. As a reminder, this conference is being recorded. I would now like to hand the call to Robert Blum with Lithium Partners. Please go ahead. All right. Thank you so much, MJ. Good morning, everyone, and thank you all for joining us today on the conference call to discuss LiqTech International's fourth quarter and fiscal year 2023 financial results for the period ending December 31, 2023. Joining us on today's call from the company is Fei Chen, Chief Executive Officer, and Philip Price. For those not familiar, Philip has recently assumed the role as 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. MJ provided the instructions on how to queue up at the beginning there. Before I begin with prepared remarks, we submit for the record the following statements. 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 conference call. 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 the risks that may affect the company's business, financial condition, operations, and cash flows. If one or more of these risks or uncertainties materialize or if 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 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 LiqTech International. Fei, please proceed. Thank you, Robert, and good day to everyone on the call. I am excited to have this opportunity to speak with you and share an update on the solid progress we have made during the last year. During 2023, we successfully executed a number of strategic initiatives to drive revenue growth, improve our manufacturing and operational efficiencies, and strengthen our balance sheet. We grew our revenue by 13% and increased our gross margin by 12 percentage points. Meanwhile, we reduced our operating expenses with $2.5 million and improved the bottom line with $5.6 million. After taking over as CEO in late 2022, I have introduced a new commercial strategy that has initially focused on stabilizing and growing our established business areas, which are core in terms of our ability to generate revenue. This effort includes reducing the length of the sales cycle we have in market segments such as our commercial pool systems, and it also means addressing new types of trust or customer needs in areas where we have an extensive customer base. This includes, for example, diesel particulate filters, marine scrubbers, and other areas where we have recurring revenue opportunities such as general aftermarket sales and plastics. These established business markets provide a strong and stable base of revenue for LiqTech and allowed us to gain manufacturing efficiencies by leveraging our existing production capacity. The 2023 financial results clearly show that our new strategic focus is working. I will dive into more details on how we intend to continue focusing on improving each of our established areas in a moment. Before doing so, however, let's talk about what we refer to as our target markets. Where we have stabilized the business and brought about operational efficiencies, we are also setting the stage for growth in key markets where our high-performance silicon carbide ceramic membranes can provide customers with strong returns on their investments. This includes specific industry filtration applications to remove solids, oil, pathogens, and heavy metals from water as well as compounds from emissions and industrial off-gases. Where this has potential to encompass a large number of markets, we have narrowed our near-term focus to chemical and petrochemicals such as phosphoric acid and monoethylene glycol, and oil and gas-produced water. These areas tend to have longer sales cycles, but it is our belief that if we align ourselves with great partners and establish key reference customers, the sales cycles will decrease and the large market opportunity will open up for LiqTech. As I hope you all have seen from the two most recent press releases we issued over the last two weeks, this process has already begun. Last week, we announced that we have received a significant order for a containerized pilot system for produced water treatment from Razorback Direct. This marks our first-ever U.S.-based oil and gas-produced water order. The containerized pilot system that Razorback Direct has required will be used at the customer site to test, demonstrate, and document the efficiency of LiqTech's water filtration technology in treating produced water to facilitate beneficial industrial reuse and meet current and future regulatory requirements. On the longer term, the intention is to use the results from this pilot operation as the basis to design and implement full-scale commercial systems for the onshore oil and gas application in the U.S. The North American oil and gas market is going to be a key focus for LiqTech, moving forward led by our agreement with Razorback Direct, who has a strong presence in key oil and gas geographies in the U.S. The speed at which this order came is really exciting. As we entered into a distribution agreement with Razorback Direct only a month ago, this is clearly a significant milestone in our efforts to expand operations in North America, and we are really excited about the future perspectives and the potential it holds. We followed up the U.S. order from Razorback Direct with another significant oil and gas-produced water commercial pilot order from National Energy Services Reunited, or NESR, in the Middle East. This unit will be used in Gulf Cooperation Council countries by one of the largest integrated energy and chemicals companies in the world. This order has been in the works for some time but encountered some delays towards the end of last year due to the conflict in the Middle East. The delay accounted for the vast majority of the differences between our initially stated annual guidelines and the results we concluded the year with. Where we are certainly frustrated by the delay, we couldn't be more pleased to have moved this program forward. Once again, we believe that this commercial test unit for produced water has the ability to open the doors for additional orders with this customer and mapping other operators in the region. It is important to note that the first oil and gas-produced water unit that we deployed in the Middle East in mid-2022 was a key reference point in receiving this order. That system has been now successfully operating for nearly two years, and our 99% of the filtered water passing through it is being delivered back as clean, brine-permitted water for reinjection. Beyond produced water for the oil and gas industry, another significant opportunity for us lies within monoethylene glycol, or MEG. During 2023, we had our first offshore installation in the Mediterranean with a large oil and gas client, which continues to perform well. As I mentioned last quarter, this was the first of a two-part order for the offshore project with expectations for follow-on orders shown. This, however, had again encountered some delays due to the conflicts in the Middle East. As a reminder, the platform is located just off the coast of Israel. We initially expected this second order to ship in late 2023, but it will most likely be a 2024 event now. As I stated at the beginning, where these oil and gas orders can initially have long sales cycles, it is our firm belief that getting our foot in the door to showcase the capabilities of our systems will allow us to shorten future sales cycles and ultimately help us open a very large, attractive, addressable market. Transitioning away from oil and gas, let's move on to phosphoric acid, another key target market where we have recently reevaluated our position. In doing so, it has become evident that there is a broader opportunity for us in what I would call the broader chemical or petrochemical markets, where our solutions have a superior value proposition. In the past 15 years, we have sold membranes to 40-50 different customers for chemicals, petrochemicals applications. The customers are very satisfied with our membrane filtration efficiency and excellent lifetime. We will therefore work on establishing strong collaborations with selected system integration companies, OEMs, to penetrate this highly relevant and potential marketplace. As you can hear, I am pleased with the progress we have made to advance our position within our target markets where our core technology can be easily adapted. Each of these areas provides us with a large, addressable market and opportunity to unlock significant growth for LiqTech as we move forward. But as I have stated many times since I took over as CEO, I will not put all the companies' eggs in one basket, chasing opportunities that have longer sales cycles. We need to have a strong base that provides us with revenue and cash flows. That's where our established market strategy comes into play. So let me just touch on a couple of focus areas within our established markets, starting with our commercial swimming pool products. During 2023, we successfully delivered 20 swimming pool systems in total. We now have more than 120 commercial swimming pool installations across Europe and the Pacific Ocean regions. During 2023, we executed key distribution agreements with Ocedis, Waterco, Barr + Wray, and Total Pool to expand our footprint. As we look into 2024, we will work on harvesting the results from our established partnerships and build our reputation further in the market. We are looking to further expand into key geographies where we don't have a presence, such as in Germany, France, Netherlands, and the United States. I am pleased with the progress we have achieved and look forward to continuing market adoption in the years to come. Transitioning to our DPF and membrane businesses. Again, these are areas within our established markets where we have an extensive base of more than 50 long-term DPF customers and another 40-50 customers on the membrane side. We offer a highly defined value proposition to our customers across both Europe, North America for DPFs, and Europe and China for membranes. During 2023, our DPF and ceramic membrane business in combination generated $6.2 million in sales. As we pointed out in our press release, we are seeing order flow improving for DPFs, with new orders up 11% sequentially compared to first quarter of 2023. As we enter 2024, we will remain focused on building up new DPF customers in emerging areas such as black carbon emission and emergency electricity generation, nurturing our existing customer base where focusing on strategic customers with master agreements. On the membrane side, we are looking to scale up through OEM partners in China, Europe, and the U.S. We think there is a strong opportunity for this business to grow nicely in the years to come. Finally, let's discuss our initiatives on the marine scrubber side. As those of you that have followed the companies closely for many years know, this was a very large part of the business in 2018 and 2019, driven by the pending introduction of IMO 2020, which regulated emissions on marine vessels. Since 2018, we have approximately 170 installations around the world with multiple types of ships. Unfortunately, the adaptation of IMO 2020 was impacted by the pandemic. However, we saw the return of our first new marine scrubber system orders in more than 18 months as we deployed and upgraded modular design systems through our recently enhanced distribution relationship with MOU in China during the third quarter of 2023. Where we still are not seeing the same adoption rates we saw back in 2018 and 2019, there does still appear to be a market for our solutions. Furthermore, new types of marine fuels and engine technologies are currently being developed, and we believe our systems may be suited to support them. Therefore, our team is working to regenerate the relationship we had in the past and develop new agreements that will potentially put us in a position to regain the leadership position we previously held in this market. Having completed my first full fiscal year as CEO of LiqTech, I am proud of the accomplishments we have made. It is my firm belief that LiqTech is more relevant today than ever before. Our filtration solutions address key issues related to climate change, induced freshwater scarcity, will also help to reduce emissions, lower energy consumption, and increase productivity. Our silicon carbide membrane solutions remove particles, oil, pathogens, and heavy metals from water, making it possible to recycle it for essential applications, thereby reducing stress on our freshwater resources. Our diesel particulate filters reduce harmful emissions from diesel vehicles, diesel machinery, or power generators. We are also effectively removing black carbon emissions in maritime applications. Our commercial pools filtration provides significant environmental benefits and cost savings with up to 80% less water usage, 60% lower energy consumption, and 30% less chloride dosing. Together with our partners, we create advanced filtration solutions for liquids and gas purification that provide clear value to our customers and contribute to a cleaner and more sustainable planet. We are executing against the business plan we have set forth with strong operational and financial progress made in 2023. As we look to 2024, we are confident in our ability to continue expanding our revenue base across both our established markets and the target markets. We're driving improvements in operational efficiency that will move the company to break even this year. Before I return it over to Philip to review the financial results, let me just take a moment to thank Simon Stadil for his commitment to LiqTech for the past two years. Simon joined LiqTech at a time of a tremendous transition for the company and provides a steady hand and sought-for insights when it was needed most. As Robert stated at the beginning, Philip has assumed the role as Interim Chief Financial Officer. Many of you have had a chance to meet with Philip over the past few months and hopefully have come away impressed as I have with his understanding of LiqTech and our opportunity. Philip has held the role of head of group finance for LiqTech for the last two years, and I look forward to his continued contribution as he steps into the role of Interim Chief Financial Officer. With that said, let me turn the call over to Philip to review the financial results in more detail. Philip. Thank you, Fei Chen, and good morning, everyone. Now, let me add some color on the financial highlights for the full year of 2023. The reported revenue of $18 million represents an increase of 13% or $2 million compared to the $16 million reported for the full year of 2022, which underlines a robust result in a transition year for LiqTech with a new leadership team and revised strategy. We are pleased with the progress on both top and bottom line. As Fei mentioned, we did experience delays in order delivery due to the escalating geopolitical unrest in Israel-Gaza, which did postpone project deliveries and climate commitments in our oil and gas projects in the region. Broken down by verticals, sales were as follows: system sales and related services of $7.7 million, an increase of more than 45% compared to the $5.3 million reported in 2022 due to a significant increase in pool system deliveries, as well as the increased focus on our aftermarket activities. Looking at our ceramics business, DPF and membrane sales ended at $6.2 million, down 9% compared to $6.8 million last year, reflecting a dedicated focus on improving profitability by carefully managing our revenue mix. Finally, plastics revenue and externally funded R&D projects of $4.1 million, up 6% compared to $3.8 million reported in 2022, underpinned by stable plastics order intake as well as progress on key external R&D projects. In summary, our system sales and related services experienced a significant increase, the plastics business continued its stable performance, and the ceramics business experienced a decline, reflecting our focus on profitable deliveries. To be specific, the key revenue drivers during the year were a record high number of pool system deliveries shipped to clients across Europe and Asia-Pacific, but also the delivery of our first phosphoric acid pilot to China, continued progress on key projects within oil and gas and metal cooling, and finally, increased aftermarket sales with uptick in orders for both marine and acid applications, leveraging our global installed base. Zooming in on our component business, our ceramics and plastic businesses executed on incoming orders with decisive focus on improving throughput and reducing lead times. In terms of our forward guidance, we expect the first quarter of 2024 to be comparable to the just-ended quarter of 2023, with a top-line growth of approximately 3%-8% and a gross margin ranging between 5%-10%. 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 pool system markets with our proven and industry-leading solutions. Turning to our gross margin and more insight on our journey towards break-even. We are pleased to report a full-year gross profit of $2.8 million, indicating a gross profit margin of 15.4% compared to just 3.5% reported for the full year of 2022. The result is within our previously disclosed guidance. The positive development compared to 2022 is a direct result of increased activity levels and better revenue mix as we continue to streamline our business and zoom in on the markets where we can deliver profitable growth. From an operational perspective, during the year, we have installed new kilns and revitalized our ceramics facility, with new organization further complementing the positive momentum. We continue to have excess capacity, hence the immediate focus to compress delivery lead times and ensure the delivery of high-quality membranes and filters. Contribution margin. We remain focused on closely monitoring this important KPI to ensure we develop a profitable and sustainable business. Financial objectives of break-even. For the full year of 2023, our contribution margin ended at 46% and thus well above the 30% reported for the full year of 2022. Our contribution margin has historically been volatile as it directly correlates with the underlying revenue mix. However, we have now succeeded in significantly improving and stabilizing our contribution margin well above 40%. On that note, we do maintain our quarterly break-even target measured on an adjusted EBITDA basis of approximately $7 million in revenue and potentially lower with the right revenue mix. Turning to OpEx. The full-year OpEx of $10.6 million came down 19% or $2.5 million from the comparable full year of 2022. The result is evidence of our commitment on running a lean business by right-sizing and streamlining our operations. Our primary focus is to keep OpEx at a reasonable level to maintain our quarterly break-even target. This ensures financial stability and supports strategic investments for sustained profitability. Other expenses of $1 million came down compared to the $1.9 million reported last year, with the development mainly explained by the increased levels in prior year due to the early repayment of the convertible note in 2022. Concluding on the P&L, we reported a net loss of $8.6 million compared to the net loss of $14.2 million reported in 2022. As evidenced, we still need to deliver profitable growth over the coming years to help safeguard our business and restore profitability. We are well positioned with excess production capacity, and thus commercial order intake remains our number one priority. Finally, let me briefly comment on our cash flow and balance sheet before summarizing and handing back over to Fei. We ended the year with $10.4 million in cash, down $6.2 million compared to the year-end 2022. We took delivery of multiple machines and manufacturing equipment during the year, with net cash used in investment activities of $2.9 million, all related to commitments made in previous years in the context of our domestic and international expansion plans. The equipment has contributed to a solid upgrade to our manufacturing facilities, and therefore, we do not anticipate similar investments over the coming years as we are well positioned to grow within our existing capacity. Also, I'm pleased that during the year, we successfully extended our June 2024 maturity related to our senior promissory notes to January 2026. In summary, the underlying cash flow profile is improving as we are showing progress on both top-line and profitability combined with a more stable capital structure. Thanks, everyone, for your support, and back over to you, Fei. Thank you, Philip. In closing, we remain committed to executing against our strategic roadmap, focused on long-term value creation. Over the past year, we have launched a clearly defined commercial strategy that has already yielded positive results. Going forward, our business will be underpinned by strong recurring revenues within our established businesses and an increased foothold in our strategic target markets. This growth, coupled with improved operational execution across organizations, will be key to drive safe change in growth margins and positive cash flows. I look forward to continuing to execute against our strategic initiatives in 2024 to drive value creation for our shareholders. With that, operator, we would be happy to take any questions. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one, on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you may press star, then two. Today's first question comes from Rob Brown with Lake Street Capital Markets. Please go ahead. Hi, Fei. Hi, Philip. Hi, Robert. Hi, Rob. First question's on the good progress in the oil and gas kind of area with the U.S. partner. Just wanted to get a sense, I guess, in both the new partnerships, how does that play out? What is the test period, and how does the incremental order activity sort of play out? What does it depend on? Yeah. As you have heard, we are very excited about this opportunity because we actually just signed the distribution agreement with this new partner one month ago. We are so happy to see things move so fast. We already have the first pilot plant on the way to the U.S., actually, already this week. So really, we are working with this partner very closely together. Our joint goal is to make this pilot plant up and running as soon as possible on the ground in the U.S. because that will be a very good showcase to the other potential partners and customers about our new technology for the produced water in the U.S., a very interesting market for us. Great. Could you just sort of highlight some of the regulatory and other drivers for this system and what the customers are really interested in here? Yeah. I mean, the regulatory drive, the situation is in the U.S., especially in the areas like Texas, New Mexico, and some other states is really the oil-producing states. There's more and more water scarcity coming up. And there's really discussion going on about the, they call it, beneficial reuse of the water, both for the industry and for agriculture and also for reinjection. And for all these applications and use, you do need to kind of treat the water before you're doing any other treatment. So our U.S. membrane is the best for the pretreatment for produced water. In all other uses, you can either use for the reinjection or use it for the agriculture irrigation and also for the industry processing reuse. We can be the efficient first step. So that's why our application, actually, is really directly related to the upcoming regulatory requirements. But not only regulatory requirements, even the industry needs is really related to us because everyone's looking at how to reuse the water. Okay. Great. Congratulations on that progress there. And then on sort of the ethylene glycol market, I think you had some delays there. How does that market sort of look at this point? Are you waiting, really, for that project to kind of kick in, or are there other customers that that system can be used on? And can you see growth in 2024 in that market? Yeah. The MED market, as we announced, we were expecting the second part of the order coming already last year. And it was delayed because we need some operation period in the offshore platform. And that offshore platform is right at the coast of Israel. So it was really a big delay. And then everything was delayed quite longer than what I expected in the beginning. And now things are starting going back to normal. So we do believe we will have something happen in 2024. As I say, it's going to be events in 2024. And we also start looking if there are other companies besides this company able to use this technology. So there's more potentials also there. But definitely, for these concrete customers, we expect something to happen in 2024. Okay. Great. And then last question's on the DPF market. I think that was down a little bit as you really focused on the margin there. How does that look in 2024? Should that grow in 2024? And I guess, what's sort of the dynamics there that you see? Yeah. The reason 2023 DPF market's going down is because we got a very huge order from one customer in Asia. That big order, actually, is not a very good margin for us. So we made adjustments. We do not want to sell any DPFs to this kind of project anymore. We really want to improve our profitability. So we changed our focus. That's why the revenue goes down, but the profitability goes up quite a lot, significantly. Very happy to tell you, Rob, this year, the first quarter, the sales order for DPF actually increased 11% compared to the same quarter, 2023. So we definitely expect a very nice growth of DPF this year, both especially for some new emerging areas like black carbon emission and also the emergency electricity generator for the data centers around the world. That was really increasing demanding. We really believe it's going to be an increase, quite a nice increase this year. Okay. Great. Thank you. I'll turn it over. Thank you. The next question comes from Lucas Ward with Ascendiant Capital Markets. Please go ahead. Hi, Fei. Hi, Philip. Good afternoon. Rob, good morning. Hi. Congratulations. I'm actually in your time zone, the Danish time zone, right now. Yeah, this is exciting. I have a few questions. First of all, on your business development, if you look at your overall order book, how does it look? Is it getting better? Is it worse than it was, let's say, six months ago? I mean, this is a very, very relevant question. When I come in in late 2022, I realized we have to build up a sales pipeline because we do not have a very nice sales pipeline at all. That's what we have done in 2023, the whole year, to build up the new sales team and the sales pipeline. I would say very confidently, and the projection we made looking into 2024 is based on the pipelines. That's why it's much more improved than 2023. Okay. So it is getting better. Can you also help us understand that sales cycle? Again, it seems like a really important thing. You've talked about the need to shorten it. When you look at system sales, as an example, what is the time between you would typically get an order and when you would actually book revenues? I mean, we have different segments, right? Each of the segments are different. And if I take the commercial pool system as an example, what we really have been doing in 2023 is really reduce the cycle from we got the order to we deliver so we can book the revenue. And we have standardized our design and really streamlined our production so the delivery time has reduced from 24 weeks to 6 weeks. So that means when we get the order today, maximum 6 weeks, we were able to convert that into revenue. And that's really a significant improvement compared with before. Okay. I guess in some of the target markets where you're still developing it, you can't just do that right off the bat. But the goal over time is to get that kind of efficiency. Is that fair? Exactly. What we are doing is we're actually trying to standardize all the solutions for our system and market. So in this way, we're able to really reduce the converting time and also increase the quality and the stability of our system. So this is what we are working on across all the product lines, actually. Okay. Just shifting over to the regulatory environment, would you say that overall, it's getting better for LiqTech, or are we going backwards? For instance, we've seen sort of a backlash against ESG. I mean, what are you seeing when you go out and try and sell your systems in terms of the regulatory tailwind or headwind? I mean, if you're talking from the macroeconomic point of view, definitely, we're seeing on the mega trends for the water scarcity and for the energy efficiency and also for the air pollution improvement. So we are really having some very good mega trends. It's on our back. So we really have some big potential. And one of the things we actually learned from our marine scrubber market is we have to really go out to work with customers to have their needs, not only based on regulatory requirement alone, really based on also their business needs. So you can see the market we're working on today, the majority of them, not only based on the regulatory requirement, it's also because the customer really has the needs. Of course, the DPF area is very much regulatory-driven, but we have some very good trends there, like black carbon emission for maritime industry. It's really more and more enforcement there. Also, the emergency generator for data center, with all this artificial intelligence going in the world, more and more data center required. They have to have the DPFs installed. So there are some really strong victories in these areas. Then the oil and gas, as I discussed before with Rob, it's not only on the regulatory requirement. It's also about the company really have actual needs. They would like to reuse the water. So in that way, we are kind of more stable than only relying on the regulatory requirements. Got it. Got it. Okay. Just a financial question or two. Do you have your revenue growth outlook at this point? We only come in for the next quarter. What we guide for is, if you can compare to the just-ended quarter, we expect revenue growth of 3%-8%. Okay. So should we take from that that your visibility is not that you're confident about your visibility, that we would just be looking to cue? No. The reason we don't make them longer than that is you know our product mix is quite complicated. Some projects are very big, some projects small. The dynamics are changing very much. That's why we do have the forecast for the whole year. But this dynamic changing makes it very difficult to say exactly when it's coming. We feel it's more reliable to tell a quarter of time. In this way, we know exactly what is going to happen because the dynamic is very difficult to reflect if you're telling the whole thing. Okay. Okay. Last question, and thanks for indulging me. Based on the mix that you're targeting, let's say, over the next year or two, what is your accounting break-even revenue run rate? So as we also mentioned before, we are still comfortable that our break-even revenue target is $7 million. It could be lower depending on the revenue mix, but that's what we're aiming at. $7 million per quarter. So if we're able to achieve $7 million a quarter, we will be able to reach break-even. Okay. Got it. Okay. Thank you so much for answering all my questions. Thank you very much. Thank you. As a reminder, to ask a question, you may press star, then one. The next question comes from Craig Rose with Axiom Asset Management. Please go ahead. Hello, guys. Thanks for taking my questions. As far as the produced water pilot programs that you're initiating with the Middle East and with Razorback Direct, what are the capital requirements to execute on those? We are selling this kind of systems to the partners. Basically, we're selling directly to our partners. They purchase the equipment from us, then they run at customer sites. They're selling further to the customer sites. This is a very good model for us because we are a small company, do not have so much capitals. This is the way we're working on. Okay. What is the capacity that you're expected to offer as far as barrels per day for the process you'll be involved in? I mean, those small pilot units, we can treat the water between 3,000-5,000 barrels per day. But our concept design, we're able to scale up to 100,000 barrels per day. I mean, we have the model design concept. We're able to scale up. So that's why we are very excited to have those pilot projects going on, especially when in the U.S. because it's a very interesting market for us. This is our strategic focus market. And we hope this pilot unit is up and running fast, and we're able to get the data and also the use case. Then we're able to scale up to a full-scale commercial system in the U.S. Okay. And so 100,000 barrels per day, what would your process cost a service provider to buy that system that is capable of 100,000 barrels a day? I cannot answer that question here now because it very much depends on what kind of water quality you have because we need to adjust what kind of elements in our system and the strainer. So it's very much site-specific. And also, there's a lot of conditions on the facility and strainer outside will be connected to that. So that's something we discuss every time when the customer and the partner come with a request, and we will discuss with them. And the more interesting thing is more discussing about the cost to treat per barrel of water because that's what industry is using to compare to each other. And we are confident our treatment cost will be comparable with other competitive technologies. This is more the things we are measuring us on. What is that value? Is that $1, $2, $3 per barrel in your process? It's a range. It's a range. I think it's between $0.50-$1, something like that. Right. But as you said earlier, you're only doing a small portion of the cleanup of the produced water, correct? You're a pretreatment? Is that before or after they kind of clean some of the chemicals first to treat the water? I mean. Depends on the application. Are you involved in detail at the end, or are you involved in taking the chemicals out in the beginning? We are only doing the pretreatment. So basically, if you're using the water for reinjection, then our technology is efficient enough. You don't need any other additional technology. But if you need the water for agriculture irrigation, then you might need the desalination at the end. That's not something we are working. We're only working on our technology. Okay. All right. That's helpful. The release was a little untraditional. You didn't break out the fourth quarter spot on its own. I guess the formal release will have more detail of the specific quarter. Is that correct? Sorry. I almost cannot hear what you said. You reported full year. You didn't break out the quarter. That's a little untraditional. I guess your filings with the government will have more detail. No. We are also the whole last year and now, we gave guidance for each quarter at a time. Thank you very much. Thank you. Thank you. This concludes our question-and-answer session. I would now like to turn the call back over to management for closing remarks. Thank you. I would like to thank you all very much for being with us today. We look forward to communicating with your show again. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line.