Good morning, everyone. I will be your conference operator today. At this time, I would like to welcome everyone to Advent Technologies' Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. On the call today, we are joined by Dr. Vasilis Gregoriou, Advent's Chairman and CEO, and Kevin Brackman, Advent's CFO. Before we begin the prepared remarks, we would like to remind you that Advent issued a press release announcing its 3rd quarter 2022 financial results shortly before market open today. You may access the materials on the investor relations section of the company's website, www.advent.energy.
I would also like to remind everyone that during the course of this conference call, Advent's management will discuss forecasts, targets, and other forward-looking statements regarding the company's future, customer orders, and the company's business outlook that are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. While these statements represent management's current expectations and projections about future results and performance as of today, Advent's actual results are subject to many risks and uncertainties that could cause actual results to differ materially from those expectations. In addition to any risks highlighted during this call, important factors that may affect Advent's future results are described in its reports filed with the United States Securities and Exchange Commission, including today's earnings press release.
Except as required by applicable law, the company undertakes no obligation to update any of these forward-looking statements for any reason after the date of this call. Lastly, information discussed on this call concerning the company's industry competitive position in the market in which it operates is based on information from independent industry and research organizations, other third-party sources, and management estimates. Management estimates are derived from publicly available information released by independent industry analysis and other third-party resources, as well as data from the company's internal research, and are based on assumptions made upon reviewing such data and with knowledge of such industry markets in which it believes to be reasonable. These assumptions are subject to uncertainties and risk, which could cause results to differ materially from those expressed in the estimates. Please note this call is being recorded. Kicking off the call will be Dr. Vasilis Gregoriou.
Dr. Gregoriou, I'll now turn it over to you.
Thank you, operator. Good morning to everyone listening in, and thank you for joining us on Advent's Third Quarter 2022 Earnings Call. I'm joined today by Advent CFO, Kevin Brackman. On today's call, I will provide comments regarding our 3rd quarter results, followed by an update on the business. I will then hand over to Kevin, who will give a review of our financial performance and outlook in more detail. Advent had a very productive 3rd quarter, which began in July with a formal ratification from the EU for Advent's Green HiPo project. This now clears the way for the process to begin for funding from the Greek state. Under the IPCEI hydrogen framework, the ratification represents approval of up to EUR 5.4 billion in support of 15 member states in the hydrogen technology value chain.
This value chain has four key areas consisting of hydrogen generation, fuel cell technology, storage, transportation, and distribution, and end-user technology. Advent's Green HiPo encapsulates two of these areas, namely hydrogen generation and fuel cell technology. Example of other companies in these areas include Cummins, McPhy Energy, Aalborg CSP, Bosch, and Daimler Truck. The scope of Green HiPo over the initial period of six years is to innovatively develop and manufacture fuel cell systems and electrolyzer systems. We're aiming for cumulative capacity of 118 MW of fuel cells and 1.5 GW of electrolyzers over this time. The production of these systems will take place in Greece in the region of Western Macedonia, which will become our focal point for technology development and mass production. The streamlining of the business has continued in earnest and has resulted in a clear focus of resources towards our core technologies, products, and market segments.
This has proven to be effective, and we have entered into several new MoUs during the 3rd quarter with major partners. The sale of fuel cell systems and MEAs will provide near-term revenue. Our stationary power sector has been targeting telecommunications, and our portable power sector has been targeting the defense sector. We have secured new agreements in these sectors during the 3rd quarter. Our focus on the mobility sector is geared towards heavy-duty vehicles, marine, and aviation. While opportunities from the mobility sector are likely to be significant, owing to their nature, they will lend themselves to longer-term license agreements. We have cash reserves totaling $42.4 million as of September 3rd. Overall, our performance this quarter leaves us confident about the long-term growth and earnings potentials of the company.
In addition to the Green HiPo project, I will now give an overview of our key achievements during this quarter. In July, Advent hosted its 2022 Investor Day, where Advent's executives and senior leadership discussed the company's most recent advancements for its fuel cell products and systems, hydrogen development projects, and business activities in markets across the U.S., Europe, and Asia. The key areas that were addressed were the company's Green HiPo project, which planned funding of EUR 782.1 million over six years from the Greek state, aimed at producing high-temperature PEM fuel cells and electrolyzers to decarbonize global power production via hydrogen, R&D partnerships and collaborations with OEMs, the U.S. Department of Energy, and the U.S. Department of Defense, high-temperature MEA and water electrolysis innovations, and Advent's commercial activities in global markets aimed at replacing existing power systems with hydrogen alternatives.
In August, Advent announced the launch of Honey Badger 50, a compact portable fuel cell system and quiet power supply for use in off-grid field applications such as military and rescue operations. The launch of Advent's portable power system coincided with the company's fulfillment of its first shipment order from the U.S. Department of Defense. The Honey Badger 50 power system can be fueled by biodegradable methanol, allowing near-silent generation of up to 50 W of continuous power with clean emissions. Designed for covert operations, Honey Badger 50 can easily power radio and satellite communications gear, remote fixed and mobile surveillance systems, laptop computers, along with more general battery charging needs. Honey Badger 50 is a unique technology that can provide up to 65% weight savings versus batteries over a typical seven- to 10-hour mission. The weight savings benefit increases further for longer missions.
Honey Badger 50 unique design allows it to be used in soldier-worn configurations or operated inside a portable backpack or vehicle while charging batteries and powering soldier systems, while its thermal features allows it to operate within an ambient temperature range of -20 degrees Celsius to +55 degrees Celsius. Aside from its optimized compatibility with Integrated Visual Augmentation Systems, Honey Badger 50 can also power devices such as high-frequency radios like the model AN/PRC-117G, as well as BGAN and Starlink terminals. Honey Badger 50's durability allows it to be easily deployed in challenging conditions and climates while supporting mission mobility for three to seven days without the need to resupply.
Since Honey Badger's fuel cell technology can run on hydrogen or liquid fuels, the system can operate a fraction of the weight of traditional military-grade batteries to meet the U.S. Department of Defense continuous evolving needs for on-the-go electronics. As military power needs continue to evolve, highly portable, lightweight power solutions like Honey Badger will become a mission-critical necessity. Also in August, Advent announced the signing of an MoU with DEPA Commercial S.A., the leading importer of pipeline gas and liquefied natural gas in Greece. The MoU paves the way for a strategic collaboration on hydrogen projects and sets out the framework for a forthcoming mutually binding agreement.
The parties have preliminarily agreed to collaborate on the production of environmentally friendly hydrogen as a fuel with the participation of other major industrial partners, co-develop a proprietary, highly differentiated CHP system ready for mass production with efficiency approaching 90% and with multi-fuel operating capabilities such as hydrogen, natural gas, and e-fuels that can address the key current and future on-grid and off-grid operation modes and business cases, and create an innovation hub for the Greek hydrogen fuel cell industry and develop synergies for promoting hydrogen and related technologies. Also in August, we announced the successful delivery of our portable fuel cell products to the Hellenic Army's Special Operations Unit. Advent's fuel cell technology powers a highly sophisticated, incredibly portable battery charger designed to meet direct off-grid power needs in performance-demanding settings, such as those regularly faced by the Hellenic Army's Special Operations Units and other military divisions.
The portable fuel cell can be quickly and efficiently utilized by remote military units to power off-grid radio, surveillance radio, and other mobile electronic military equipment by operating under even the most challenging combat conditions. Advent's portable fuel cell uses the company's proprietary methanol reformation technology to deliver premium performance alongside a significant reduction in size and weight. Being lightweight and compact, the portable fuel cell fits in soldiers' plate carry systems and rucksacks, maximizing efficiency and portability across a full range of military operations. The portable fuel cell delivers up to 50 W of continuous power and up to 85 W of peak power, ensuring a reliable charging experience to the wide variety of high-power electronic devices regularly used by the Hellenic Army's Special Operations Units. Advent's portable fuel cell operates silently and can run uninterrupted off-grid for up to two weeks with a single hot swappable fuel tank.
The portable fuel cell can be deployed successfully within the framework of Parmenion National Large-Scale Joint Exercise. In August, Advent announced that it has co-signed an MoU with the New York State Energy Research and Development Authority and more than 60 clean hydrogen ecosystem partners. Under the MoU, the parties will collaborate to develop a proposal that will enable the Northeastern United States to become one of the least four regional clean hydrogen hubs designated through the Federal Regional Clean Hydrogen Hub program included in the Bipartisan Infrastructure Investment and Jobs Act. The coalition of six states: Connecticut, Massachusetts, Maine, New Jersey, New York and Rhode Island, along with more than 60 clean hydrogen ecosystem partners, are laying the groundwork for the proposal for the U.S. Department of Energy funding opportunity with up to $8 billion in total funding available.
After the initial announcement in March 2022, New York has continued to add strategic partners that now include 14 private sector industry leaders, 12 utilities, 20 hydrogen technology original equipment manufacturers, 10 universities, seven nonprofit organizations, five other states, two transportation companies and three state agencies. The consortium partners have committed to collaborate with the New York State Energy Research and Development Authority, New York Power Authority, the Empire State Development for the proposal to advance clean hydrogen projects. At the same time, partner states will also coordinate with their respective state entities to help align the consortium efforts with each state's climate and clean energy goals, such as Massachusetts' goal of reaching net zero carbon emissions by 2050.
With execution of this agreement, the partners will work together to define the shared vision and plans for the regional clean hydrogen hub that can advance safe, clean hydrogen energy innovation and investment and address climate change while improving the health, resiliency and economic development of the region's residents. Advance our Hydrogen Hub proposal and makes climate and environmental concerns center to the strategy which deliver opportunities and improve the quality of life for under-resourced areas in the region. Perform research and analysis necessary to support the Hydrogen Hub proposal and to quantify the reduction of greenhouse gas emissions resulting from the project. Develop a framework to ensure the ecosystem for innovation, production, infrastructure and related workforce development is shared across all partner states. Support environmentally responsible opportunities to develop clean hydrogen in accordance with the participating states' policies.
The coalition will continue to focus on the integration of renewables such as onshore and offshore wind, hydropower and solar PV, and nuclear power into clean hydrogen production and the evaluation of clean hydrogen for use in transportation, including for medium and heavy-duty vehicles, heavy industry, power generation applications and other appropriate uses consistent with decarbonizing efforts. In September, we announced the signing of the MoU with Hydrogen Systems, a hydrogen energy solution company based in Saudi Arabia, to provide integrated hydrogen solutions and value-added support to industrial and renewable energy markets in the Middle East. Under the MoU, Hydrogen Systems aims to utilize a vast number of existing relationships in the telecom and hydrogen energy marketplace in the Kingdom of Saudi Arabia and elsewhere throughout the Middle East to market, sell, distribute, install and service Advent's full line of high temperature PEM fuel cell and hydrogen production products.
Simultaneously, Advent and Hydrogen Systems intend to collaborate and explore potential large-scale development opportunities for hydrogen fuel cell power applications across the region. Advent's family of products, including the Serene and M-ZERØ fuel cell systems, realize a significant carbon advantage over conventional diesel remote power generation technology. High-temperature PEM fuel cells can operate in the range of low or zero carbon hydrogen fuels and enable more efficient heat management. Such fuel cells can produce power in extreme ambient temperatures from -40 degrees Celsius to +55 degrees Celsius and conditions such as higher pollution and low humidity, resulting in a longer lifetime and lower total cost of ownership.
Also in September, we announced the signing of a three-year agreement with the German state of Brandenburg for the supply of methanol powered fuel cell systems, which will be installed in select critical communication sites in the region. Advent's methanol powered fuel cell systems will be used as a backup power source for Brandenburg's BOS digital radio network, replacing the diesel-driven emergency power systems at several sites over the next three years. Germany's overall public safety and security infrastructure has relied on an outdated analog radio system for communication. BOS is a digital, encrypted and secure means of communication. The new BOS network allows first responders and other public safety officials to communicate easily and securely. The BOS network now covers 99.2% of German territory.
Advent's solution was selected as part of a tender launched by the German state of Brandenburg, which requested that fuel cells and hydrogen technology companies submit proposals for sustainable and reliable emergency power supply solutions. Prior to Advent's selection, the performance of the company's methanol powered fuel cell was tested at the site of the BOS digital radio network, providing further proof of concept for the use of high temperature PEM fuel cells as an efficient backup power source for critical infrastructure applications. Advent's methanol power fuel cell deliver reliable power in an environmentally friendly way, reducing CO₂ emissions and operating silently while having a low impact on the surroundings. Methanol, as a carrier of hydrogen, allows simpler storage than pure hydrogen and enhances the safety of operations. Advent has a strong pipeline and has made progress in converting this pipeline to tangible agreements.
The projects we are attracting are significant, and we remain fully focused on commercializing our innovative technology portfolio. With that, I would like to hand over to our CFO, Kevin Brackman.
Thank you, Vasilis, and good morning, everyone. Turning to our financials, we delivered revenue of $2.4 million in the 3rd quarter compared to $1.7 million in the prior year 3rd quarter. The 43% increase resulted from an increase in the delivery of MEA electrochemistry components as well as engineering fees. Gross profit was flat year-over-year in the 3rd quarter. R&D expenses were $2.5 million in the 3rd quarter, primarily related to internal R&D costs incurred in each of our businesses, as well as our cooperative research and development agreement with the Department of Energy. Administrative and selling expenses were $8.2 million in the 3rd quarter.
Combined with R&D expenses, total operating expenses were $10.8 million, which is a year-over-year decrease of $3.2 million, primarily due to $2.4 million of executive severance recognized in the prior year 3rd quarter, as well as a year-over-year reduction in stock-based compensation expenses of $0.6 million. Net loss totaled $11.5 million in the quarter, and adjusted net loss was $10.6 million. Our adjusted net loss excludes a $0.9 million loss from the change in the fair value of outstanding warrants. Our net loss per share was $0.22 in the 3rd quarter. Advent remains well capitalized, with $42.4 million in cash reserves on the balance sheet as of September 30th, which provides us with the flexibility to be agile in executing on our strategic and operational priorities.
This is a decrease of $4.1 million from June 30th, 2022. In the 3rd quarter of 2022, we received $3.8 million in tenant improvement allowances for the Hood Park R&D and manufacturing facility, which is net of additional spending for the build-out of the facility. Our existing cash reserves and projected cash flows are anticipated to be sufficient to support our planned operations for the next 12 months. I will now turn to our outlook. Advent entered 2022 with a more advanced product range and a dedicated technical sales team focused on key sectors and geographies. We therefore have a strong pipeline. Also, in mid-June, the company announced the successful notification from the Greek state for funding of EUR 782 million for Advent's Green HiPo project, which was subsequently ratified by the EU.
As we all know, however, not every opportunity in the pipeline will transpire due to factors that may be beyond Advent's control. Opportunities may not materialize or could be delayed. Due to the long-term contract nature of our business model, the timing of our revenue can also be difficult to predict. Throughout 2022, we have experienced delays from our customers in the Philippines for fuel cell systems and their installation. As a result, our revenue for 2022 will be less than we had originally planned. With respect to Green HiPo, discussions with the Greek state are progressing, and we look forward to providing updates over the coming weeks. In closing, we believe Advent is well-positioned to be the provider of clean energy solutions across a variety of end markets. The company has built a solid foundation for the business and continues to execute on its strategic initiatives.
With that, I will hand back to Vasilis for closing remarks.
Thank you, Kevin. Advent has a significant portfolio of technology and commercial strength, allowing to compete and be successful at the global level. Advent Green HiPo will be transformational for Advent, and Green HiPo is for the long term. The Greek state has now started the process that will allow for funding, and we'll keep you informed on developments. Advent is pursuing a visible and defined path towards key and significant sectors. Advent is a clean energy technology company, and we will leverage from this strength to generate commercial products and provide attractive technological solutions through our partnerships with OEM. I would like to thank you all for joining us today, and we're now ready to answer questions. Thank you very much.
At this time, if you'd like to ask a question, simply press star followed by the number one on your telephone keypad. Again, that is star one for any questions. To withdraw your question, press star one again. We'll pause for just a moment to compile the Q&A roster. Our first question will come from the line of Laurence Alexander with Jefferies. Please go ahead.
Good morning. This is Dan Rizzo on for Laurence. Could you just provide a little bit more color on the Honey Badger 50 project with the Department of Defense? What's the revenue from that once I guess it's fully ramped? What is the addressable market, and what is the timing in terms of ramping that up?
Yeah. I'm not gonna provide a specific revenue number for that project. As we described, we're excited about that product. It's a compact fuel cell for off-grid solutions such as military and rescue operations. We expect scale-up of production and sales to occur over the next, let's say, 18-24 months. We believe the potential is significant because, you know, a lot of power is needed in the field of operations, you know, especially if programs like the Integrated Visual Augmentation System progress as planned. We're excited about the potential.
Just to follow up, is this an exclusive agreement with the U.S. Department of Defense, whereas you cannot sell to anybody else, or is it not like that? Am I thinking about it wrong?
No, it's not. It's. You know, we do need an export license, as you can imagine. You know, because it's a state-of-the-art U.S. military product. That will not be an issue for NATO countries. It's not. There's no restriction there if that's where the question is.
Thank you very much.
Thank you.
Your next question will come from the line of Sanjay Jha with Panmure Gordon. Please go ahead.
Yes. Hello. Thank you for taking my questions. Just, I've got two or three, if I may. First of all, on the German state agreement you have, could you sort of give us some idea of how many backup systems the Brandenburg digital network have? What's the potential number of fuel systems that you could supply them? Is your kind of contract kind of for testing or is it ready to be deployed? My second question is, you said earlier that you're expecting revenue to be less than you had originally expected. How much of the expectation were you expecting to sell to the Philippines? Should we expect that to now come in in the following year?
Yeah. So let me take your second question first. So we started the year, our guidance was $23 million. That included both revenue and grants. The large majority of it was revenue. So let's say $20 million of revenue and $3 million of grants. I mean, we're at $6 million of revenue through nine months, due to the delays that we've seen in the Philippines. We expect to obviously fall short of that $20 million revenue number, for the full year. Having said that, I mean, we're working every day to secure orders. We hope to hopefully close on some orders before the end of the year, so that we can hit the ground running in 2023.
To your point, you know, we still kind of view it really as a timing issue, that, you know, we still believe in the growth potential of the business. It's just taking more time to secure orders than we had originally planned for. Your first question on the Brandenburg contract. The contract in and of itself is not for a significant number of systems. But hopefully, you know, that's the start of, you know, more contracts, similar agreements that we can do with Brandenburg or with, you know, other states and municipalities. You know, so hopefully that's just the start of good things to come.
Yes. Sanjay, if I may say a couple of things as well, to comment what Kevin said. As you know, the opportunity is really in Asia-Pacific, okay? There, even though we have a delay in the Philippines, we're not saying that we're not gonna do it. It's just it's delayed, you know. We have to, how can I say, differentiate between sales and revenue. The sales are on track. It's just the revenue projections quarter- to- quarter, we will have a delay. That's why we're announcing. However, in the meantime, and as Kevin said, a lot of other opportunities have shown up in Asia-Pacific and also in Europe, as you see now, Germany, and so on. Overall, we're very optimistic about the way things are.
It's just the timing of the revenue is the issue here. Plus, as Kevin said, when we started the year, we really projected the grants to come from what I would call normal grants. You know, grants that we have dealt in the beginning, and it was on the low end, you know, $3 million. Now, with the advent of Green HiPo, and as we said, we have at least, you know, five weeks till the end of the year to see how the funding will come from these IPCEI projects, which are, you know, pan-European issue. You know, everybody's pushing for this thing to happen this year. The potential to have a significant, you know, grant revenue, was there, and that's what we also announced at the beginning.
Overall, revenue-wise, we should be lower. However, you know, sales and IPCEI-wise, not only we're not down, I think we're gonna do very, very good. It's just the timing of it that has gone further, and that's where we're announcing now. All right?
Thank you.
Thank you.
At this time, I will turn the conference back over for any closing remarks.
No, we're okay. Thank you very much for your participation and attention. Thank you.
Ladies and gentlemen, that does conclude today's call. Thank you all for joining. You may now disconnect.