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 open to Advent's analysts. 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 third quarter 2023 financial results shortly before market open today. You may access the materials in the investor relations section of the company's website, www.advent.energy.
I would also like to remind everyone that during 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 most recent SEC reports filed with the 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 and markets which it believes to be reasonable. These assumptions are subject to uncertainties and risks, which could cause results to differ materially from those expressed in the estimates.
Please note that this call is being recorded, and kicking off the call will be Dr. Vasilis Gregoriou. Dr. Gregoriou, I'll now turn the call over to you.
Thank you, operator. Good morning to everyone listening in, and thank you for joining us on Advent's third quarter 2023 earnings call. On today's call, I will provide an update on the business. I will then hand over to Kevin, who will review our financial performance and outlook in more detail. In my last update, I highlighted that Advent was consolidating its business operations and was focusing on its core sector, where our high temperature PEM technology is particularly well suited. Through implementing this strategy, we achieved a number of milestones and contract wins since the start of the third quarter, and I will discuss shortly. We remain focused on expanding and executing our commercial pipeline with a view to embedding our technology and portfolio in these key power sectors.
We believe that the future demand for Advent's high temperature PEM technology and related products will create significant opportunity, and we believe Advent will be ideally positioned to capitalize on this through suitable partnerships. We look forward to growing our commercial activities and achieving long-term profitable growth. I will now give an overview of our recent business update. Last week, we were excited to announce the signing of a term sheet with Airbus, a global leader in aeronautics, space, and related services, for a joint benchmark project regarding an optimized Ion Pair Membrane Electrode Assembly for hydrogen fuel cells. Airbus will provide financial support to the project and its extensive knowledge of the aviation industry. Advent will invest in people, materials, hardware, and third-party research centers to contribute to the goal of the project. The multi-million dollar collaboration will take place over two years.
A contract based on the signed term sheet is expected to be signed by the end of 2023, and the project will commence immediately thereafter in 2024. The goal of the project is to accelerate the development of Advent's MEA and benchmark the Ion Pair MEA against aviation requirements and current and expected technological limits. High temperature PEM MEAs, operated at temperature higher than 180 degrees, aim to solve one of the largest challenges in aviation fuel use, which is thermal management. High temperature fuel cells allow increased performance, increased passenger carrying capability, and increased range compared to low temperature fuel cell technology. Advent believes that high temperature PEM is a superior option not only for aviation, but also for heavy-duty trucks, the automotive industry, and maritime use.
In September, through our wholly owned subsidiary in Livermore, California, we secured a new $2.2 million contract with the U.S. Department of Defense for portable power systems. This milestone achievement comes under the General Technical Services prime contract and will play a crucial role in supporting the demanding mission requirements of the U.S. Army. This contract is a continuation of a series of past contracts with the U.S. Department of Defense, and its primary objective is to further optimize Advent's proprietary HB50 portable fuel cell system by integrating our innovative Ion Pair MEA technology. On the completion of this new 12-month contract, Advent and the U.S. Department of Defense aim to reinforce their long-term collaboration by focusing on the manufacturing process of the enhanced HB50 fuel cell system that will enable high volume production manufacturing capacity.
MEA forms the heart of the fuel cell, and their performance determine the lifetime, efficiency, weight, and to a large extent, the cost of the end electrochemical product. Advent Ion Pair MEA technology is anticipated to significantly enhance HB50's performance, resulting in higher power density and improved combat packaging, making it ideal for off-grid field applications, including military and rescue operations. Since 2020, we've been actively refining the HB50 fuel cell system to create a highly portable and efficient power supply suitable for on-the-move battery charging and direct power supply for various U.S. Army applications. Through rigorous development efforts, the size and weight of the original 50-watt fuel cell system has been significantly reduced, culminating in successful field tests in 2022 and 2023, with a final technical report reinforcing its operational suitability.
The HB50 power system can be fueled by biodegradable methanol, providing near-silent power generation with clean emissions. Its compact design allows it to seamlessly power radio and satellite communication of RFI, remote surveillance systems, laptops, and other battery charging needs. The system's unique thermal feature enable it to operate within a wider, wide ambient temperature range, from considerably below freezing to at least 40 degrees Celsius, therefore ensuring reliability in challenging conditions and climates. HB50's adaptability to run on methanol as a hydrogen carrier allows it to operate at a fraction of the weight of traditional military-grade batteries. This factor is aligned with the U.S. Department of Defense pursuit of lightweight and highly portable power solutions for their electronic needs. Also, in September, Advent secured a significant expansion order contract with a prominent fuel cell integrator operating in the Asian market.
Under the terms of this agreement, Advent will provide its innovative e-fuel power Serene fuel cell stacks for incorporation and power application within the leisure section, sector in the region. The contract has a total initial value of $1.3 million. The supply chain is projected to remain active throughout 2024, in accord with the customer's specific timeline. The primary application of Advent's fuel cell stacks is to serve as a sustainable prime and backup power source in small cabins working in conjunction with batteries. The utilization of Advent's Serene fuel cell stacks using liquid methanol as a hydrogen carrier fuel, offers advantages in terms of transportation, logistics, and storage efficiency compared to gaseous hydrogen, therefore enhancing operational safety. Advent Serene fuel cells stand out with their small footprint, occupying only about a third of the space required by a typical comparable diesel generator.
Beyond their environmental advantages in terms of reduced emissions, Serene fuel cells provide an uninterrupted power supply across diverse environmental conditions and geographical locations. Also, in September, at the Monaco Yacht Show, Advent unveiled its range of Serene Power Systems, resulting from the synergy of the company's high-temperature proton exchange membrane fuel cells with a compact battery unit designed to fulfill both primary and auxiliary power requirements for maritime vessels. Serene Power Systems integrate a compact battery, significantly smaller than traditional battery-only solutions, with a small fuel cell configuration operating on methanol, biomethanol, or e-Methanol. This combination not only serves as a primary power source for smaller vessels, including leisure boats, sailboats, ferries, and inland river vessels, but also replaces conventional diesel generators, providing a clean and efficient power alternative for a wide range of maritime applications.
Additionally, Serene Power Systems offer robust power capacity for supporting auxiliary loads on larger vessels and supply convenient shore power solutions for vessels at ports. Leveraging Advent's patented high-temperature PEM technology, Serene Power Systems are purpose-built for optimal performance with various fuels. Operating at high temperatures, they efficiently generate electricity while reducing heat, significantly boosting overall efficiency, which can reach up to 85%. Methanol is a standout energy delivery and storage medium and excels as a superior hydrogen carrier, releasing hydrogen catalytically through a fuel reformer. Moreover, methanol offers the advantage of efficient storage and wide availability for existing infrastructure, with a distribution network comparable to conventional fuels, establishing it as a safe and cost-effective maritime fuel option. Let me now provide an update on the Green HiPo project.
I chair the coordination group for the Important Projects of Common European Interest in hydrogen technology, and in October, at the European Commission's Clean Transition Dialogue, I had the opportunity to bring President of the European Commission, Ursula von der Leyen, on the progress of projects endorsed by the E.U. under the IPCEI Hy2Tech. I also addressed the length of time that is taken for the Greek state to finalize funding for Advent's E.U.-ratified Green HiPo project, reiterating Advent's resolute commitment to executing the project efficiently. The Green HiPo project is among the 41 initiatives under IPCEI Hy2Tech, collectively prepared and reported by 15 member states. In July 2022, the European Commission officially ratified Advent's Green HiPo project, following a notification by the Greek state in June 2022, securing total state aid funding of up to EUR 782.1 million over the length of the project.
The Green HiPo project focuses on the development, design, and production of high-temperature PEM fuel cells, electrolyzer systems for the production of power and green hydrogen, respectively. Located in Kozani, Greece, the project is expected to play a crucial role in transitioning the Western Macedonia region from a coal-based economy to a more sustainable economic model. The state-of-the-art facility in Kozani is intended to serve as a production hub for fuel cells and electrolyzers, contributing significantly to the region's economic development. Advent has already installed over 1,200 high-temperature PEM fuel cell systems worldwide, replacing environmentally harmful diesel generators and providing clean energy to sectors such as telecommunications and critical communications infrastructure. Moreover, Advent is expected to lead the way in electrifying the transportation sector with these fuel cell systems that will be produced in the Kozani region as part of the Green HiPo project.
Advent is working closely with the Greek state to help finalize its internal process and procedures so that the funding for Green HiPo can commence. We will provide further updates on Green HiPo at an appropriate time. Advent is well positioned to take advantage of the ever-increasing focus on clean energy. We're continuing advancing our technologies and consolidating our operations to address new and key opportunities. Finally, we have a highly advanced product portfolio that's focused on enabling a green economy, one that can help reduce the reliance on fossil fuels and provide far greater energy security to communities and economies. With that, I would like to hand over to our CFO, Kevin Brackman. Kevin?
Thank you, Vasilis, and good morning, everyone. Turning to our financials, we delivered revenue of $1.3 million in the third quarter, and income from grants of $0.5 million, for a total of $1.8 million. R&D expenses were $2.1 million in the third quarter, primarily related to 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 $8.9 million in the third quarter. Combined with R&D expenses, total operating expenses were $11 million, a year-over-year increase of $0.3 million, primarily related to an increase in expenses for our new Hood Park facility in Charlestown, Massachusetts. Net loss in Q3 was $11.8 million, or $0.20 per share.
Unrestricted cash reserves were $3.7 million as of September 30, 2023, a decrease of $6.4 million from June 30, which includes $2.1 million of cash raised from the company's equity line of credit with Lincoln Park Capital, and a final payment of $0.7 million for the build-out of the Hood Park facility. Our existing cash balances and projected operating cash flows are not expected to be sufficient to support planned operations for the next 12 months. In addition to the potential funding from the pending Green HiPo project, we continue to seek other sources of capital. We finalized an agreement in April this year for an equity line of credit with Lincoln Park, which gives us access up to $50 million of capital over the three-year term.
However, the utilization of this equity line of credit is prohibited if our stock price closes below $0.50 per share. As I mentioned earlier, we raised $2.1 million in the third quarter using this equity line of credit. We also set up an at-the-market equity program with HC Wainwright as sales agent, under which we may sell up to $50 million of the company's common stock through the agent. We began utilizing this ATM facility during the month of October and intend to continue utilizing this, this facility moving forward. In October, we collected a $1 million prepayment under the new defense contract and finished the month of October with $3.1 million of available cash, compared to the $3.7 million of available cash as of September 30th.
We will continue to manage our cost structure closely and capitalize on any opportunities to reduce costs where possible. Let me now turn to our outlook. Advent has a strong pipeline of opportunities. 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. Due to these factors, and because state aid funding for Green HiPo has not yet commenced, we are not providing an outlook for revenue and income from grants for 2023 on this call. With that, I will hand back to Vasilis for closing remarks.
... Thank you, Kevin. Advent has significant opportunities for its high temperature PEM technology, advanced materials, and fuel cell system products. Advent is a clean energy technology company developing innovative products for key sectors that require clean energy. We look forward to growing the business and to keeping you informed of developments. I would like to thank you all for joining us today. I will now turn back to the operator to open the line for questions from the analysts. Thank you very much.
Thank you. To ask a question on the phone lines today, please press star one on your telephone keypad. To remove yourself from the queue, that is star one again. We do ask that you please limit yourself to one and one follow-up, and we'll pause for a moment to assemble the queue. We'll take our first question from Sean Urquhart with Hannam & Partners.
Hi. Thanks for the presentation, Dr. Gregoriou. And just from our side, I think what would be interesting to understand is, given the capital constraint and going into next year, does this impact the strategic allocation in terms of how you look at your sort of projects in different regions, E.U. versus U.K., U.S.? And does it also impact looking at the product mix that you're currently looking at across different segments of the market? Are you honing down into specific areas, or does that- is it impacted by that?
Yeah, so thank you for the question. As you know, as you already said, that we've been working very diligently, and we have blue-chip organizations that they are close to us now in very key sectors, and these sectors are also very consolidated, if you will. All right? So we're gonna grow these relationships. You saw the very recent relationship with Airbus, that for us, is very, very important, because with our technology, we have a chance to really fly, you know, the hydrogen plane. Now, pretty much the same technology is used in automotive and maritime, and I say the same for the general audience. You know, obviously, there are many differences when you go down to the technological level. The most...
The thing will make the difference, and we have talked about in our presentation here, is the contribution from the IPCEI project, which, you know, it's been going slower than we thought. However, we've done everything we have to do. And keep in mind, we're dealing with the state, you know, we're only dealing with a customer. So we've purchased the site, we have scheduled the R&D work, we have the strategic agreements with BASF that we have announced and with some others that we will announce the appropriate time, and we're waiting for the Greek state to actually go through the process. And we have to show the patience and resolute that's needed in a situation like this. For sure, we're not gonna walk away from a big grant like that.
So that will, in a way, determine very much when we're gonna go cash flow positive. But overall, we're moving in the right direction. I think we've done a tremendous job, and we need to bring the cash in now to continue the operations at the level that we're here and basically, you know, finish these partnerships in a very good way.
Thank you very much. Just to follow up on that, I think looking at the purchase orders and going through into next year, just given the difficult environment around supply chains, that tends that focusing on the sort of hydrogen sector specifically, how do you sort of see the key mitigants for Advent to make sure that you can deliver against those orders, and make sure that you can execute?
Yeah, it is true that, there, there is cost increases in, in the stuff that we made. I think primarily take a tail from, COVID and all the uncertainties with, you know, the geopolitical situation and also, the cost of capital. But, you know, we gotta do what we have to do in order to, as you say, you know, deliver, the products to the, to our customers. So I think there is an effect, but, it's not gonna be, in my opinion, the, rate determining step. You know, we have to do the stuff that I mentioned in our, you know, in your first, part of the question first, and then, you know, we'll, we'll take care of, problems as they, as they arise.
Thank you very much.
You're welcome.
As a reminder, that is star one to ask a question, and we'll pause for a moment. We do have a question from Roger Bell with Hannam & Partners. Roger, your line is open. Please go ahead. Roger, your line is open. Please pick up your handset or release your mute option.
Apologies. Apologies, I was on mute. Yeah, thank you very much for the call, and congratulations again on the project with Airbus. I just wanted to ask about the Green HiPo project and, you know, the drawdown of the funding from IPCEI. So when you do commence that project and start drawing that down, what's the timeline, time frame to bring that into production, and start generating revenue from that project?
Yeah, we, you're right. I mean, it has to go from, let's say, when the time zero, right? When we sign, how fast, we're gonna get up, if you will. Very fast, because we're waiting for it now. We're waiting for it for almost a year. So we're ready. So with this, you know, the cash flow also will follow. So as I said, we're dealing with the state. We have to show the necessary respect to the process, if you will. But the whole mood is positive. I must say that overall. So we will move fast after we have the signature.
Thanks. And then just to follow up in general on the sort of structure of your partnerships with the potential downstream customers. Are you a sort of equity holder in those partnerships? And would you be sort of obliged to find funding if, you know, if they sort of move forward or are the sort of partners providing the cash and you, you're providing the sort of expertise and you're potentially taking some kind of technology royalty further down the track? Is that how you would sort of see those relationships working in general?
Yeah, that... Well, all of the above. I'll tell you where we are right now and obviously where we'd like to be, and I think you kinda said it, what the right track is. Right now, we bring the technology, okay? And since we bring the technology with the big partners, that they have tremendous knowledge of their particular markets, we both want to accelerate what we do, okay? So instead of taking a X amount of time, it should take us much less. Because keep in mind that they have a lot of people and a lot of capital tied to these big projects themselves. Right? We're talking about automotive, we're talking about aerospace, we're talking about marine. You know, these are big consolidated markets, okay? Huge markets.
Now, a company like us right now, as you've seen, in addition to this, we sell complete systems, and basically, we try to do it through major distributors and resellers, things like that. Eventually, and I think you alluded to it, for us, we need to license the top manufacturers, okay? And that's, that's our, that's our model, and I think we are true to our model so far. We said we're gonna do JDAs, we did them. We said we're gonna have license tomorrow, I hope we'll do it sooner than later. But we know where the path is, and I think starting from telecom, starting from construction, start from marine, where, you know, we have final products. You've seen, we partner with Siemens Energy for the large-scale systems.
We have the San lorenzo boat that, everybody is waiting to see in the next Monaco show. We're very proud of it, so we keep our fingers crossed that we get everything right. The same thing with the telecom. We have a lot of installation, not only in Asia, but also with the German police, and then, of course, Smart and Globe in the Philippines. So we're moving along this route, if you will, knowing very well that, in the end, we definitely would like to license the technology, you know, in automotive or through aerospace giants, and we will get a lot of revenue from that.
Because if you look at the margins, the license margin is very, very big, and the gross margins for, you know, the fuel cell systems are much smaller, which is understandable. So that's our plan.
Thank you. That does conclude Advent Technologies third quarter conference call. Thank you for your participation today, everyone, and you may now disconnect.