Stephen Axelrod - Managing Partner, Wolfe Axelrod Weinberger Associates Sune Mathiesen - Chief Executive Officer Aldo Michael Noes Petersen - Chairman of the Board.
Eric Stine - Craig-Hallum Capital Group LLC Joe Gomes - William Smith & Co. Walter Schenker - MAZ Capital Advisors Louis Margolis - Select Advisors Rick Teller - Pemberton Research.
Greetings, and welcome to LiqTech International call to discuss Results for the Fourth Quarter and Year End December 31, 2016. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Stephen Axelrod, Managing Partner at Wolfe Axelrod Weinberger Associates. Thank you, Mr. Axelrod, you may begin..
Thank you, Doug. Aldo Petersen, Chairman and Sune Mathiesen, CEO, will begin their formal remarks shortly. But before I turn the call over to them, let me remind our listeners that following their remarks, there will be an open question-and-answer session.
You should also note that a replay of the conference call will be available starting at 3 PM Eastern Time today and ending on April 20. To access the replay, please dial 877-660-6853 or 201-612-7415 and enter the conference ID number 13658247.
If you do not have today’s release, please contact my office at 212-370-4500 and we will be pleased to forward the details to you. In order for all the listeners to have an opportunity to ask questions, please limit your question participation initially to one question and one follow-up question.
After all individuals that had the opportunity to ask their questions, you’re welcome to ask further questions. Now please bear with me for a minute as I read the forward-looking statement as required. The press release and conference call contains 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 in these forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission, including the Risk Factors that attempt to advice interested parties of the risks that may affect our business, financial condition, results of operation and cash flows.
One or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. Readers and listeners are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of the release and call.
We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this release and call. Having dispensed with that, it’s my pleasure to turn the floor over to Aldo Petersen the Chairman of the company. Aldo, please proceed..
Thank you, Steve, and good morning and good afternoon to everyone who are participating in this conference call. 2016 has been a difficult year for LiqTech and the results for 2016 is a disappointment to us all.
We believe that our progress in solutions to the oil and gas industry and the large systems that we delivered in 2015 would bring additional business in 2016. The solutions that we have delivered to the mining industry and the solutions to drinking water was also expected to bring additional business.
But we have to accept that these large solutions take a lot longer to get validated than we expected and the fact that we work with a new technology as we can cap out makes the delegation process more time and resource improvement.
Our effort in scrubber water solutions and the new initiatives in regulations in the international maritime area puts in something that we had developed over the last three years and we believe that we will now start to see results of our long history in this area.
2016 have also brought through important opportunities in China and although the implementation of our joint venture efforts takes a lot longer, we still believe that it will bring significant opportunities in 2017.
Our efforts to attract investments and partnerships in China from a very large water company Yonker has taken longer than we anticipated but we are working diligently to finalize our agreement to the Yonker as we speak. 2016, we have managed LiqTech on a low cash position and cash still a concern.
We planned to solve the cash issue with an investment from China and we will continue to run LiqTech on a tight cash basis until you receive such an investment. I will now hand over the conference to our CEO, Sune Mathiesen for further details about LiqTech.
Sune?.
Thank you, Aldo. Good morning to all participants from the US and good afternoon to all participants from Europe. Thank you very much for dialing into this LiqTech International conference call to discuss the year end 2016 results and the outlook for our business. As Aldo stated, we are disappointment about our 2016 results.
We have a new technology and the market breakthrough has taken much longer than we initially anticipated.
We are however encouraged, there are large companies believe and invest in the long turn opportunities for the silicon carbide technology, and we believe that even though 2016 was disappointing from a financial point of view, we have made good progress and establishing future opportunities for our products.
In 2014, we acquired Provital Solutions with the objective to transform our business into the supply of complete water treatment systems. In the past two-and-a-half years, we have developed several standardized systems for the treatment and the use of water.
We have also developed a chemical free treatment reverse osmosis systems and other related technologies in order to be a complete supplier. Our learning curve has been steep and we have invested significant resources into the development of our systems business. Over the past three years, we have been able to secure a number of large-scale references.
We have delivered systems for oil water separation, for drinking water, for heavy metal removal from the mining industry, the treatment of waste water from scrubber systems in power plants and treatment of waste water from maritime scrubber systems.
All of these large-scale systems in different applications have proven that our technology is well suited for use in challenging applications with the demand for a durable and reliable solution. In the oil and gas industry, we have proven that our technology is superior to other membrane materials.
We are working with some of the largest traders in this industry like Shell, - and Total just to name a few of them. Our technology offers the combination of reasonable CapEx and very attractive OpEx. We have done a large number of successful pilots in this industry but with a possible fund these.
We have also delivered large-scale systems and built an impressive pipeline for this application. Unfortunately, investments in this industry has been very low. We do however remain confident that this market will open up for us when investments increase again. This week, we commissioned the $4 million system in Serbia for drinking water.
The system is planned to deliver water to consumers by the second quarter of this year. The system which is one of the largest in Europe removes arsenic, iron, manganese and other harmful substances from the water before it is distributed to the consumers.
By this strategic we developed our own RO systems to treat the water after the ceramic ultrafiltration process. This is the first large-scale system LiqTech has delivered for drinking water. We trust that it will serve as an important reference for future projects and enable us to secure further orders.
Two weeks ago, I met with the Mayor of Zrenjanin, the city where the system is installed. He was looking forward to seeing the plant in operation and assured me that they already had plans for further water treatment plants.
Once in operation, we trust this unique water treatment plant will serve as an excellent reference for us and open the doors for further orders in Serbia and the rest of the world. Last year we completed the installation of the $6.9 million system for a mining company.
The system removes heavy metals from cooling water, before discharge in a copper smelter installation. We are now in the final stages of handing over the water treatment plant to the customer and this process is scheduled to be completed before the end of the second quarter.
The project, to our knowledge is one of the largest of its kind in the world and the largest order ever received by LiqTech. It has been a great challenge for our company and we have invested significant resources in the development of several new technologies for these projects.
We are proud of the end results and we are confident that it will serve as a great reference for future opportunities in this industry. We are confident that the investments we have made into the oil and gas industry, drinking water industry and the mining industry will prove successful in the future.
We now have large-scale references and we have proven that our technology is well suited for these applications. We trust that it will open doors for future projects and we have already built a good pipeline of opportunities in these industries.
We have however over the past two years learned that the sales cycles of projects in these industries is longer than we initially anticipated. We know now that the sales cycle could be as long as up to sixty months.
This is why we have now chosen to delegate the majority of our short-term focus to treatment of scrubber waste water from power plants and the marine industry, of course, not forgetting about the aforementioned opportunities.
In December last year, and January of this year, we announced three orders for systems to treat scrubber waste water from power plants. Last year we spent significant resources into developing a standardized system for this application and we are pleased to see that the market is searching our solution.
All three orders are for Danish power plants, but we see great potential for our systems in both Denmark and abroad. We are pleased to see that one of the orders came from one of the largest power plant operators in the world, DuPont and we are confident that we will see further orders from the power plant industry in the short-term.
As Sune discussed earlier, LiqTech is deploying the significant resources in the development of the maritime scrubber market. In October last year the International Maritime Organization IMO an agency under the United Nations ordered to implement a new lower global cap on sulfur emissions from international shipping.
The current global limit for sulfur content of ships fuel oil is 3.5%, the new global cap will be 0.5% and will apply after January 1, 2020. The new regulation leaves the ship owners with two uncertainties, either to use the significant remodel expenses low sulfur fuel oil or to install a scrubber system to clean the exhaust gas.
Speculations from players in the industry suggest that the return on investment for a scrubber system could be as low as 16 to – 6 to 18 months.
Market analysts expect that the ship owners will be motivated to install scrubber systems due to the quick return on investment and also because they do not want to rely on the availability of low sulfur fuel oil.
From discussions with our customers in the industry, we know that following the IMO decision, they have experienced strong interest from ship owners. LiqTech is currently working with a handful of manufacturers of scrubber systems and altogether they are expecting to receive orders for several hundreds of scrubber systems before the end of 2018.
These scrubber systems represents an average selling price for LiqTech of just over $200,000. It has been almost three year since LiqTech first came into contact with the maritime scrubber industry. We are working with some of the pioneers in this emerging industry and our technology has proven reliable and durable for this tough application.
Over the years, we have refined our system design and today we offer standardized systems with very attractive CapEx and OpEx and also small footprints.
The standardized system is easily scalable and it allows for a short and effective production process which will be very important if the projections of a multi-billion dollar market that analysts following the maritime industry are suggesting.
Being one of the first companies in the industry, we are recognized as market leaders and besides the handful of companies with whom we are already working, we are also experiencing strong interest from further players in the market.
We are in close contact with our customers in this industry and our expectation at the current time is that we will see gradually ramp up of orders and deliveries from the second quarter and on. As earlier discussed, we have invested significant resources into developing the Chinese market.
In August last year, we announced the letter of intent to establish a joint venture company for the production and sales of Diesel Particulate Filters in China together with Kailong High Technology Company.
And in November, we announced an agreement to establish a joint venture company for the sales of our water treatment systems together with Hunan Yonker Water Company. We believe that these agreements will prove important for the future development of LiqTech.
Yonker and LiqTech also entered into an agreement pursuant to which Yonker will purchase 4,000,000 shares of common stock of LiqTech. This transaction was scheduled to be completed before the end of February this year. However, due to regulatory issues, this deadline has been pushed forward to April 15.
The investment team from Yonker is working diligently to meet the new deadline and once completed, the investment will take the pressure of the tight cash position we have been managing and we can dedicate all of our focus through the anticipated growth from the scrubber industry.
With the before mentioned large-scale references, the unique opportunity into marine scrubber industry, the two joint ventures in China for our DPF products and water treatment systems and the capitalization of our company from the investment mentioned earlier, we believe that our investments over the past years will now finally pay-off and we will see acceleration of our business.
We do appreciate the continued support from our shareholders and we will continue our hard work to establish our technology in the market and finally bring value to our shareholders. Having said this, I would now like to turn over the conference to a Q&A session. Thank you..
[Operator Instructions] Our first question comes from the line of Eric Stine from Craig Hallum. Please proceed with your question..
Hi, everyone.
So I just wanted to start with Yonker, and in that situation, can you just update us or remind me of the structure of that, I mean, you are working towards the joint venture and also the investment piece, I mean, are those separate or do they – I mean, are they tied together? And is that, I am curious about the $1 pricing just given where the stock is today, is that something that part of the negotiation is that being reconsidered, maybe repriced?.
If I can go with that, Eric..
Hello..
Good morning..
Good morning. .
With regards to the share price of $1, that is the fixed price that we have entered into an agreement about and this is the over price that will be completed in the deal.
As to the deal structure, it is two separate deals, we have the joint venture agreement that, but the joint venture agreement is pursuant to them completing the investment in LiqTech.
The joint venture is for a sales company initially in China so it means the production will be in Denmark after the systems we will sell the systems through the joint venture in China who will be doing the marketing locally.
And the budget, I think we have discussed before is ranging up from approximately $2 million this year to approximately $40 million in 2019. .
Okay. So just to be clear though, I mean, the – you need the 4/15 deadline and should that deadline hold, it sounds like you are working towards it.
That all needs to happen before the JV is put in place because, I know that the Kailong joint venture you had, you formed it, but you had also planned on an investment that did not happened but that did not prevent the formation of the joint venture.
Should we think about this one similarly or I mean, is it something where if that investment does not happen, the joint venture does not happen?.
Yes, you are correct, this is a different deal structure. So, the joint venture is depending on them completing the investment in LiqTech. .
Okay. Got it. All right, I’ll stay tuned on that. And then maybe just, just wanted to stick with the cash balance, good to see up $1 million sequentially, but you laid out what’s going on with the Serbia project and the completion of the mining project late last year.
Can you just remind us of any payments here since the end of fiscal 2016 that might be impacting that cash balance here early in the year?.
As I mentioned earlier, we will start delivering water for the consumers in Serbia by the second quarter of this year. We actually commissioned the plant this week. So we are in the very final stages. Once we start delivering water to the consumers, we will receive a substantial part of the payment from the Serbian project.
Also with regards to the mining project, we expect it to do the final handing over the system to the customer by the end of the second quarter this year and that will also be followed by a payment. .
Okay.
So, second quarter is really, I mean, aside from the Yonker, that potential investment, it sounds like first quarter maybe fairly similar in terms of cash continuing to run at tight, but that second quarter is when from the business not through Yonker investment from the business, you should see an uptick in cash?.
Correct..
Okay. Thank you..
Thanks, Eric..
Our next question comes from the line of Joe Gomes from William Smith. Please proceed with your question..
Good morning. Kind of following a little bit along the lines here with what Eric was saying, I understand from the cash flow to be coming in, in 2Q, but obviously, sales have not been where I think any of us would have expected at this point in time and it just seems that the Yonker investment is huge.
You have to invest, I think it’s $4 million in the Kailong joint venture, I know that’s over two years, but if 4/15 passes and we still don’t have an agreement with Yonker, what’s the next plan from the LiqTech standpoint?.
Joe, this is Aldo. .
Good morning Joe..
And remember, we had a written agreement with Yonker, so it’s not if we do not have an agreement, but we do have an agreement in place with Yonker and with regards to Kailong, our commitment to investing in the JV is regulated through the fact of us receiving orders from them on a running basis per month.
So we are very careful of not permitting to spending any money that we do not receive. It has been a very long process and the learning process of how difficult things are in China has of course been very material on us.
We have truly anticipated that from early November until late February, that all the regulatory and preparations from Yonker has been in place. This is ongoing and we believe that we are in line to complete this according to the timeline that they have given us.
But again, remember there is a signed agreement with Yonker and there is no indication in any way that they are not interested. They are looking at the business opportunities which is always what carries any good relationship and they are on significant interest in the solutions that we have for the Chinese market.
So, our anticipation is that we will complete with Yonker. We have an agreement with Kailong that we adjust the money that’s going into the JV according to our cash position. So we are covered there and as you can understand, we are very, very careful with our cash position and will not enter into any agreement that we cannot honor..
Okay, I understand that, Aldo. But, if just to play devil’s advocate for a second and again is it something that, Eric and a lot of other people brought it up, from an investor standpoint, if I am in Yonker, and I am locked into paying a $1 per share and I am looking at where the current stock price is, it doesn’t make a whole lot of sense.
And they seem to be driving the car here in terms of they are giving you dates and timelines, what to prevent them from just continuing to extend this out, extend this out, extend this out, and hope that LiqTech finally breaks in cents, agrees to a lower price.
I mean, is there a Plan B of LiqTech finally saying, we are just going to go back out into the marketplace and look for a different partner, or are you just committed to waiting indefinitely upon Yonker getting approval?.
First, we had not anticipated that we would go beyond the February deadline. But, we have at no place in the relationship with Yonker ever had any discussions around the pricing of the deal. Remember, we had very thorough preparation when we met with Yonker in Denmark in October.
We met with them in China in November and we signed a legally binding agreement with them. It was due to the fact that they had done a very thorough research into the market opportunity for LiqTech technology in the heavy water treatment. So this is a very business-driven decision by Yonker.
They see a strong opportunity for Yonker in utilizing our technology in combining our technology with some of the best solutions that they already have and also use our solutions as a standalone offering into some of their customers, especially in the oil and gas industry and in the scrubber water treatment.
So it’s a business-driven decision from Yonker and we can say that there has been no discussion, there has been no indication that they are looking for a different pricing. We have entered into a legal binding agreement and they are pursuing and we are pursuing to complete that agreement..
Okay. .
Maybe I can add to this a little bit as well, Joe. Maybe just I add a little bit as well, Joe..
Sure..
Aldo is perfectly correct. There has been no indication that they are looking to renegotiate the price of the deal. And I believe and we believe that why Yonker interested in this is not as much from the investment point of view, they are interested in having access to this technology in China.
There is a lot of development in China these years and you see that environmental focus is one of the things that that has a very attention from Chinese government. Especially in the oil and gas industry, we see a lot of potential for our technology. We are already planning pilots with some of Yonker’s customers.
We have had some very good discussions with some of the customers in the oil and gas industry. So, I think they more see this as a business opportunity than an investment opportunity and this is why there has been no discussion around share price..
Okay, fair enough. Just one other follow-up. So in 2017, if I am here and you guys correctly you are hoping for revenues to be driven mostly here from the marine scrubber marketplace in China.
Anything else that you see that would be impacting revenues on a significant basis in 2017?.
We believe that we have been able to get some large-scale references in a number of industry, in the oil gas industry, in the drinking water industry, in the mining industry, in the short-term, we see that it will be difficult to see significant revenue coming harvested, but in the long run, we believe that it’s been very important for us to – large-scale references and now we can start the specification work to get into projects that will be realized maybe in 2018, 2019, and 2020 and so on.
In the short run, we are dedicating most of our focus into the scrubber industry that being land-based scrubber systems in power plants and also the marine scrubber industry. It’s been approximately four months since the IMO made this decision to implement this no new caps on sulfur content fuel oil.
And we see from our customers that they are experiencing a very strong interest from ship owners at this stage. They are in negations to close orders for several hundreds of systems and this is why we are focusing most of our resources into this industry.
We believe that already in the second quarter, we will see this market gradually ramping up and that we will see orders coming in and then of course followed by deliveries. So the answer your question, where do we see the revenue coming from in 2017? It will be predominantly from scrubber systems. .
But I just want to add, Joe, you are mentioning scrubber has been into the Chinese market and that is not what we are looking at. The scrubber solutions that we are looking at is through the ….
I understand that, so I did mean, sorry to confuse that..
Okay..
But I was saying is that, the scrubber market and the Chinese market….
Okay..
The Kailong and hopefully the Yonkers here..
Yes. You are correct..
Okay, thank you guys..
Thank you. .
Our next question comes from the line of Walter Schenker with MAZ Capital Advisors. Please proceed with your question..
Good. Aldo, Sune, five years ago, it’s a long-winded question, the company, the $21 million revenues and $0.06 a share at 14 million shares. Last year you did $14 million in revenue, lost $0.45, the good news is the number of shares went from 14 million to 37 million, so the loss per share wasn’t much greater.
In the last five years, and I have been involved now for five years , Aldo, something close to it, the company has listed five to ten different growth markets, be it oil service, swimming pools, industrial scrubbers, just one thing after another which were going to be the driver in the coming year.
The question therefore is, is it not obvious the problem seems to be both management and the company size and therefore unless or you be going to change management, we can’t do a lot about the company size, the solution is just to sell it, at what point do you sort of look in the mirror, I am saying to both of you and admit failure and just say, let’s get what we can get for the company, because we have demonstrated we can’t make it work..
No, I think that is a very valid commentary. So, coming from being a filter company five years ago, when we were close seeing the revenue which was predominantly baked on an EPS and the markets that we are in predominantly, Europe, but also growth in the US.
Our effort in the membrane business on a strategy that was first based on being a supplier of membrane for other system integrators has surely been a significant failure. We have never managed to be that membrane inside other large system supplier’s solutions.
And the learning process can easily be, that we as a management has been a failure in pursuing that strategy that is truly acceptable.
What we have seen is that, because we are one of the very few companies who are carrying this technology of silicon carbide, we have always had trouble of convincing customers that a new technology would have the long-term prospect that we were supplying.
When we acquired Provital and turned our strategy into be a system integrator, it was supposed to be on a platform of solution for the swimming pool market and then the development of key solutions to different markets.
In 2015, 2016 to some extent brought some very big solutions that we had optimistic hope would be these solutions that would be validated, but we haven’t seen additional big orders in the oil industry.
We haven’t yet validated our mining and our drinking water solution because they are completing now and we have come to learn that to implement and develop these large solutions that simply takes longer time. So to answer your question, yes, we have changed our strategy. We have changed our focus.
We believe that we now have a number of solutions and obviously, we have to start delivering on that or to find the right partner that can utilize the technology that we have already developed. But as we are conveying on this conference call, we have established opportunities in China.
We are now well dressed for servicing the maritime market with our scrubber water solution, because our main customer has been a customer of ours for almost three years. And they have expectations that the scrubber market in the maritime industry will grow significantly and they are utilizing our technology. So that’s what we will be focusing on.
But your comment and your criticism is well deserved, I have to say..
Okay, again, the thrust of it still is, unless things really turnaround dramatically given the limited financial resources you now have, then it just seems that the effort to really drive this maybe too much for what we have, be it resources and/or management and at some point just, I realize no one wants to sell a company when the stock is $0.40, but it is what it is and it’s a path forward.
I am just making sure we all understand at some point that’s the alternative. .
That we are fully aware of and this is why the focus that we now have on strengthen our cash position that we believe will come from the agreements we have made in China. The business opportunity of DPF and water in China and the potential of scrubber water, we believe will be able to carry LiqTech towards the growth that we strongly need.
We have also a number of large solutions out there that are now going to be validated and we believe that validation in the mining, in the drinking water can carry further orders in that industry and we are adjusting our expenses and our cost structure, so that we very carefully curtail for taking the – you could say, focused opportunities or limited opportunities and not try and go into many different new solutions.
We have what we have been trying to describe today, those solutions the most predominant opportunity in the short-term is in the maritime business. We are focusing strongly on that. We are also focusing on completing our venture into China and those areas are the ones that we’ll need to bring the growth into LiqTech..
Okay, thank you. .
Thank you, Walter. .
Our next question comes from the line of Louis Margolis from Select Advisors. Please proceed with your question..
Hi, like the gentleman from MAZ, I’ve been an investor for six, seven years. Your forecasting ability obviously is in question. I do have one concern that that you might be quickly to address.
You mentioned you are going to complete two systems, large systems in the second quarter, how much cash will you have on the balance you have to assume that happens and the Yonker does not happen how much cash do you have on June 30?.
Margolis, this is Sune speaking..
Yes. .
We are in the process of completing this or handing over these two systems which means that we have made all the investments into the projects that we need and now we will have to collect the remaining portion of the payment. So, it means, basically, very little money out and some money coming into the business. .
How much is some, $2 million, $3 million, $5 million?.
I would not have the exact figures right now, but would love to come back to you on that. But it is a substantial amount of money that we were looking..
Yes, I’ve heard that was substantial before. It seems to mean different things. Were there any sales of swimming pools in this quarter? Were there any swimming pools….
Yes, we do have some swimming pool systems going out this quarter. We have sent three systems to Spain. Yes, we are talking about….
I remember there was something about 400 new systems, there is something like that. Your ability to forecast and execute, clearly is in question and I am only hoping you do something about it before you go broke.
The Chinese reputation is being – incoming, is well received and if they wanted to get this thing done and through the regulators, they would have gotten it done.
I think you have to assume they are not coming up with the money on August - April 15 and you are going to have to figure out you have a ballpark number of how much cash is coming in from these two big systems? $1 million, $3 million, $5 million….
I believe, first of all, to address the Chinese opportunity and the Chinese investment from Yonker, we are dealing with a country with some very strict policies as to transferring money out of the country. And we have learned a lot in this process. We started this process already. .
They are going to tell you that the new policy prevents them from investing and it’s not their fault. They really wanted to leave in the business, can you survive without their money? And I think it’s clear that you can’t manage this business. All these people are zigging and zagging they have to live with you.
I am an independent investor and all I am hoping is that you don’t go broke before you sell the company. That’s the question they are all asking. But they are ….
Aldo and myself are very large investors ourselves and we have a strong belief that we are on the right path here. It is certainly taking much longer for us to get market acceptance of this new technology that silicon carbide is.
We see all the very large players who are trying to establish themselves in this industry and they have also spent significant resources in doing so and they continue to do so.
What we are seeing now is that we finally have the market namely being the marine scrubber business, but we see an industry that has the need for our technology, an industry where we are one of the first pioneers in the industry, we have proven our technology and now we see this market happening because there is new legislation forcing the ship owners to invest in scrubber systems.
And you are perfectly right, we have been very bad at projecting the business. But now we have finally see that we have some help from legislation and in a market where we have already proven our technology and we have some very strong partnerships with potential customers.
So yes, we do believe we are on the right path here and we are managing a cycle of decision that we do believe there is a good future for this company..
How can you not know, how much cash….
I want to address, Louis, you are absolutely right. Let me just address that, if the Chinese, because they regret that they have entered into a too pricy investment strategies can do things about that.
The important part from our side, it is that it’s a business-driven agreement that originally their intent of investing in us was to form a close relationship because they wanted to have our product into China.
So if they were to find ways to get out of their investment agreement, it would be because they do not believe in the business opportunity any longer. Of course, now we have a discrepancy of about $2.5 million between the $1 million - $1 price and the current price of the shares and that is of course a significant gap.
But it’s based on when we enter into this agreement in November, there was still a 30% gap between the stock price at that time and the price that they agreed to invest in. But they are clearly motivated by getting access to this technology and their company who have huge revenue in the Chinese market.
But we do agree that things can happen and we have surely come to learn that we are not in control out of all the issues around China, but again the reason why we still believe and are optimistic is because it’s driven on their need to and want to represent our product into the Chinese market.
And when we look at the income that we are expecting from our water treatment system in Serbia and remaining payment from our mining industry, that will not significantly change our cash position because we also have outstandings that we need to pay.
So if the money from China will not come in, we will still be in a very tight cash position and we are of course very aware of that, because, as Sune was saying, we have also invested a significant amount of money into the company and of course we will do everything to our ability and yes, I can easily accept the fact that our ability has not been good.
But this is what we have focused on and this is what we will do to execute. .
In this call, you talked about significant money is coming in from these two projects. All of a sudden, the two projects, the money will be going out the door, because you have liabilities against it.
So, if these – if Yonker says, we’ll do it at $0.80, you will agree in a heartbeat, or $0.60, you will agree in a heartbeat to keep alive and get their involvement in the business? I think, like Mr. - the gentleman from MAZ, you should aggressively be pursuing a buyer.
This is – I am deep underwater in the stock and I would like to see it not go to zero.
Have you had any enquiry from buyers?.
And we couldn’t agree more than none of us would like that to happen and again, we have a developed the technology. We have contacted to a number of larger companies, but not in any discussions about selling our technology.
I think it’s important that we have the allegation on our technology, I think it’s important that we execute on the maritime business that we have invested heavily in to be an effective company. .
Is there any competitive alternatives to your product in the maritime industry?.
The main competition to our product is Defil Technology being centrifuges. So it is a totally different product, technology and that has a much, much, much higher OpEx than our solution. .
Our next question comes from the line of Rick Teller with Pemberton Research. Please proceed with your question. .
Yes, hi, Sune and Aldo, I just wanted to ask what happened and what do you think will happen to the pool business.
The reason I say that is, there should not have been any issues of validation because that was a business that provide always seem to be doing a pretty good job and some years ago when it merged and there were supposedly some requirements, I believe in Denmark for upgrading water quality in pools.
And then, so, I think you had kind of an established product there and it seems to have – I know you said, you did a little business in it, but it seems to have lost interest that something that’s going to be helpful in the short run.
Is anything about that going to change in the longer run? Or what’s going on there?.
Good morning, Rick. I can answer that. In the old Provital days, we did have traction in the pool business and that was predominantly a business that we had in the Danish market and the Scandinavian market. We have discussed this on earlier conference calls where we have admitted that maybe we lost some focus into this market.
We have recently addressed that during the second half year of 2016. And we are pleased to see that that part of our business is slowly, but safely picking up again.
We have established new relationships in Spain, in The Netherlands, in the UK, in France and we are happy to say that we have seen sales with these markets over the past couple of quarters. It is still on a low level, but we are getting traction in this industry again..
Okay, thanks..
Thanks, Rick. .
There are no further questions in the queue. I’d like to hand the call back over to management for closing comments. .
Yes, I would like to thank everybody for dialing into this conference. For sure, 2016 was a difficult and disappointing year for LiqTech. We made some strides though in getting these large-scale references that we were now used for future specification work and to get our products specified for future projects.
We are also very encouraged by the development in this maritime scrubber industry and we trust that our investments that we have made in 2016 into this will prove successful in 2017 and on.
As I said before, we do appreciate the continued support from our shareholders and we will now continue our hard work to make some of these predictions come to fruition. So thank you very much for dialing in and have a great day..
Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day..