Integral Technologies' (ITKG) CEO Doug Bathauer on Q3 2016 Results - Earnings Call Transcript

| About: Integral Technologies, (ITKG)

Integral Technologies, Inc. (OTCPK:ITKG) Q3 2016 Results Earnings Conference Call May 16, 2016 4:45 PM ET

Executives

Doug Bathauer – Chief Executive Officer

Bart Snell – Chief Financial Officer

Douglas Mathias – Independent Member of Board of Directors

Analysts

Greg Grammer – Private Investor

Harvey Wodka – Private Investor

Operator

Greetings, and welcome to Integral Technologies Incorporated Corporate Update and Financial Results for the period ending March 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.

Unidentified Company Representative

This conference call contains forward-looking statements within the meaning of Section 27A of the 1933 Securities Act and Section 21E of the 1934 Securities Exchange Act. These statements include, without limitation, predictions and guidance relating to the company's future financial performance, and the research, development and commercialization of its technologies.

In some cases, you can identify forward-looking statements by terminologies such as, may, should, expects, plans, anticipates, believes, estimates, predicts, potential, continue, or the negative of these terms or other comparable terminology.

These forward-looking statements are based on management's current expectations, but they involve a number of risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements, as a result of such factors, risks and uncertainties, as competition in the markets for the products and services sold by the company, the ability of the company to execute its plans, other factors detailed in the company's public filings with the SEC, including, without limitation, those described in the company's Annual Report on Form 10-K for the year ended June 30, 2015, as filed with the Securities and Exchange Commission and available at www.sec.gov, and the parties maybe unable to agree upon definitive agreements. You are urged to consider these factors carefully in evaluating the forward-looking statements.

Operator

I'll now like to turn the conference over to your host, Doug Bathauer, Chief Executive Officer of Integral Technologies. Thank you. You may begin.

Doug Bathauer

Hello. Welcome, everybody. As always appreciate your time and support and taking the time to listen to us today. What we will do is, we'll begin with as is typical, Bart will start off reviewing briefly the financial results for the quarter. I'll then follow with a bit of business update on what has transpired over the last quarter and what things we have to look forward to from a business development standpoint and then we will have a Q&A as well.

One thing I want everyone to, we have changed the format of the conference call a little bit from the standpoint we do have schedule at block times, so we're looking at a fairly hard stop roughly 45 minutes from the beginning of the call, so we'll be wrapping up just a little bit after 5:30 Eastern and we'll cut the Q&A after that point.

So with that, I'll just turn it over to Bart. And we'll only have one Q&A that will be after Bart and myself speak.

Bart Snell

Great. Thanks. Again, good afternoon to all. I am going to cover the results of operations for Integral Technologies for the first nine months of our fiscal year which ended March 31st and we will end our fiscal year on June 30th.

Let's start with the income statement. We recorded revenue for the quarter for the first nine months of $57,000, around $58,000, which was a combination of our ongoing Hanwha revenue recognitions, as well as sales of ElectriPlast. The revenue was down for the first nine months because we had an engineering services agreement that occurred in the first nine months of 2015.

Operating expenses for the first nine months were about $2.7 million, a decrease year-to-year of about $463,000. We discussed last year that we were going to reduce our burn rate and we've been doing that steadily across the first three quarters.

Consulting fees decreased $588,000, inside operating expenses for the first nine months. Research & development expenses, which includes some of our early ElectriPlast shipments for development purposes to potential partners increased to $155,000 in the first nine months and our interest expense increased by about $282,000 as we relied a bit more in 2016 on the use of convertible debt compared to the prior year.

Our net loss for the first nine months was $3.8 million compared to a loss of $3.1 million, so you are seeing parts - have the loss go up as R&D total expenses were down and revenue wasn’t down that much and its basically because the reductions in consulting expenses that were partially offset by increases in R&D were also increased by the non-cash fair value loss on derivative financial instruments and some of our convertible debt had convertible warrant associated with it. Part of that increase by the way was offset by the gain on extinguishing convertible debt during the nine months as well.

So we used – have used approximately $1.9 million of cash in operating activities, which is a decrease from the prior year of about $606,000, so that cash reduction tracks to the reduction in the burn rate used for the first nine months.

The cash used are provided by financing activities was about $1.8 million compared to about $2.7 million for the same period in the prior year. The principal source of that funding for the first nine months was proceeds from the exercise of warrants about $890,000, proceeds from convertible debentures of about $840,000 were the two principal sources.

As we pointed out in our disclosure in the 10-Q, that was just release today, and in our 10-K, we have a continuing need to raise capital. We have a significant potential source of cash associated with the remaining warrants outstanding, which accounts for about $3.9 million, as well as other sources of capital in the equity and debt markets.

During the most recent quarter, we issued a press release, so we added Doug Mathias to our Board. Doug is the President and CEO of Jasper Rubber and he provides us another independent director on our board.

So we trust our continued actions that Doug will touch in the business overview and with the adoption of ElectriPlast, as we discussed in the overview and in the 10-K we will continue to make integral and increasingly attractive source of investment for investors, as well as for customers.

So Doug, let me turn it over to you to go through the business overview.

Douglas Mathias

Thank you, Bart. And just for everyone sake, the business overview, we went a little bit more into detail on the disclosure in the business overview section of the current 10-Q. So from a order standpoint, I am basically just going to be going through the 10-Q and then expanding a little bit upon those items.

And before I get going, I mean, I certainly do need to address, I know everybody's concern has been share price, and I certainly understand that and as we had mentioned on that last call, it’s a little difficult for us to always know what takes place, but we certainly understand your concern and share back because there is really no one out there who wants the share price to go higher more than Bart and I, but we're doing what we can to help with that.

And certainly I am sure convertible debt probably contributed to that a little bit in the last quarter, but as you'll seen in the Q we did just recently secure a financing and all of our convertible debt was recently purchased and retained, there is one remaining one, which was the new note that we entered into, but that new note, again retired all existing convertible debt. So that should certainly take care of some of the convertible portion – convertible debt portion of the markets that’s been causing so a little bit of pressure and that transaction was just completed, I mean, roughly a week or so ago.

The other thing I do want to address too, as you know we did have a low cash balance at the end of the quarter, as you can well see if you read the financial statement and that was in large part because we were in the middle of negotiating this particular financing and it took a little longer to close than we had anticipated and that’s why that cash balance was as low it was.

So – but in anyway we just recently closed $900,000 financing in the last week or so. I just want to get those things that would certainly look as negative right off the bat to show, but we haven’t done – we have alleviated some of those issues.

So going through the business development, so in the 10-Q and these are pretty well outlined in there, a few of these things we've not talked about before and I just want to add a little bit of color, provide a little bit better understanding of what that is.

The first one though as we mentioned as we entered into a reseller agreements with Carbon fiber plating company, that’s actually Carbon fiber manufacturer and you may ask the question as to why would you do that, why would be want to be a reseller of Carbon fiber.

And you know, Bart can probably add to this when I am finished, but the important part of the business we weren’t addressing license relationship with people, we still maintain – we're still the seller of the carbon fiber today. And we've already realized a little bit of revenue from this in Korea.

So for example when Korea manufacturers, ElectriPlast, I am sorry, Hanwell [ph] manufacturers ElectriPlast, they are actually buying the carbon fiber from us and so through us it was a pretty important strategic thing to enter into because it adds one other revenue source, not only are we – did we receive licensing revenue from Hanwell or any other license fee but also we see revenue off of the sale of the Carbon fiber itself.

Anything further you want to add to that one Bart?

Bart Snell

Yes, I would just add that as we've looked at particularly in our technology center at different ways to develop and then produce the ElectriPlast technologies, this is a particular method that we think is important and that we wanted to make sure that we would participate in, going forward to degree some of our customers who wanted to move in that direction.

Douglas Mathias

And further we've talked it in some past calls too as far as the supply chain and how that’s such an important part of what we're doing as well. This actually just digs much deeper into our – into the supply chain and we're now part of the supply chain.

And next what I do want to talk about is the bipolar battery technology, definitely technology were [indiscernible] about, we have been since we initially talked about it. We most recently announced that we are in an agreement with advance batter concepts. I want to add a little bit more color to and I'll refer to this as ABC [indiscernible]

First met with ABC almost a year ago, very soon after we announced our technology and we met with them and to really put into context, ABC is pretty much a connect battery company. They do the development, they do the design, they do the manufacturing, they do the assembling, they do the testing, they do everything as pertains to bipolar batteries.

And currently to my knowledge anyway and I could be wrong, there maybe be some other small player out there, they are the only bipolar battery manufacturer currently in North America and why that is important and it became very evident to us that the battery show, they’re recognized as the technology leader in bipolar technology.

When we settle our booth and I think we mentioned this in the press release or at least in the conductive portion of our website, ABC is who in conjunction with them is we made our first prototype battery with them, as we are sitting at the booth, essentially every larger battery company that is out there came up and commented about the battery specifically about the fact that it was an ABC battery and prior to ABC.

So they are very much the leader in the bipolar technology currently and for us what's important is the current agreement we have with them is not tie up either parties IP, it doesn’t lock anybody up anything at the stage of the game, what's so important about them for us is they are smaller company, as compared to some of the multinationals, they can move very quickly and we’re in the process right now of building out 20 plus batteries.

And why that is so important for us is ABC can do it in a very quick fashion over the course of a few weeks we can have all those batteries and what will come out of that is all the test data and we will – actually just the test data but all of the data that’s needed for us to take the technology on to that next step.

We know it works and already just by our first prototype and now we’re digging much deeper working towards true commercial application for the place. Again to put this in little bit better timeline on this, this is something that doesn’t take years to do, we are working with one of the larger battery companies potentially that would be the case, this is something that in the matter of weeks to months we will have really good handle on those and why we’re taking this approach and we have met with most every North American battery company over the last year.

And the reason we’re taking the approach with ABC is number one they are the technological leader, number two they can move very quickly but most importantly to all that we haven’t varied from our approach with the batteries, we still fully intend on the wholly owned subsidiary, we still fully intend on monetizing, that technology in and of itself but that technology will be far more valuable once we have all the data in place prior to moving on doing that.

But again super excited about it and again had some questions about the recent Plastics in Motion Conference, we just want to make sure we get the word out there and everybody is fully aware of this technology but one thing I do want to be clear on were not just about batteries, we haven’t changed focus, we haven’t deviated from what our core is, our goal is to sell ElectriPlast and to monetize our technology portfolio, you may be more about batteries because people don’t associate ElectriPlast with batteries, so that is what you hear us publicly speaking more about it, just so that association comes in with the batteries more and more.

So again we’re not – there have been no change of focus whatsoever as a company, what we’re doing is developing applications that use conductive plastics and the battery just happens to be one of happen to be very large application of that and anything to add to that Bart?

Bart Snell

No I will – gets back to the basic thing, so we are using ElectriPlast on kind of existing verticals, automotive vehicles and other associated mobile verticals that benefit lately ElectriPlast in a bipolar battery is a battery another form is also lighter alternative but also opens up new verticals because bipolar batteries have some intrinsic benefits for fixed place storage particularly in alternative energy or it needs to be sort of peak in those areas we want to explore in ABC, we have data from working batteries as opposed to bipolar plates, so it’s much easier to enter into those discussions with those potential vertical market partners.

Douglas Mathias

I’m glad you brought that out because again the technology not only lends itself to bipolar technology and we’ve talked about this publicly in press releases, this technology as well as our IP also lends itself to flow batteries, lead carbon batteries, there were multiple other applications outside of the ABC relationship that we’re working with too. Some of those don’t happen to be in formal relationships but nonetheless we continue to develop on that front as well.

And another thing I might add, it’s little preliminary at this point but there is we have been talking with the couple of different government agencies both U.S. and Canadian, there is a lot of resources as well as lot of interest in developing the bipolar plate technology as a whole.

Next thing is there is not a whole lot more to say on that beyond what the press release said. Obviously we’re glad to have another commercial application out there, no it’s not for tremendous number of them because it is a rather small part but it’s a commercial application nonetheless and we’re not actually able to talk about because of LeverTec request not actually able to talk about what sector that actually goes into but we’re really excited about the actual sectors going into very high growth sector that it goes into and we just recently sent more material tech for couple of other applications that they’re working on.

And next we want to talk about Chang Rim in Asia as a whole just a little bit right now Chang Rim continues to be a real champion of ElectriPlast since we started working extra – and that’s then really the last several years and get that little more detail to what Chang Rim they’re primarily and over and so, what they are trying to do is they are trying to sell this product and the reason is really have so much interest in ElectriPlast this allow then to develop applications that you can sell.

The first one that we announced, the first order we announced late last year we’re in the process of – on more material for that, that was on the consumer electronic product as well as there are several other applications again we cording on with them right for automotive as well as military. Don’t have timelines on that because they have then give to us but I don’t know we’re at least of the point of the coding process with Chang Rim, so again Chang Rim continues to be a overall champion of ElectriPlast continues to move forward with multiple applications.

And as far as, well goes there is still the point whether a taking a much more higher level approach. The manufacturing line is back in operation but there is still, they really hasn’t done a lot of advance towards short terms sales with them.

They are primarily dealing with the OEMs and as many of you knew already know probably when you’re dealing with the OEMs that seems to be a little bit longer process when you get that business obviously it’s very large and launch for many but getting to that points sometimes takes a little bit more time.

And the good things with us as we continued to get more, more commercial applications and will talk about this here this the next topic or two, those are things that can really help on what they’re doing in South Korea as well. And anything further on that Bart as far as tomorrow with….

Bart Snell

I just take it, its again significant that Asia, Southeast Asia, China is a not only a large manufacture but also consumer of a automotive and related parts – that we have a partner, it is a pushing ahead and looking innovatively for, as to get ElectriPlast into those markets not only the vertical market but the geographic markets because a trip China really shows you and to Korea really shows you where people are going when it comes to the automotive parts supply side of that marketplace.

Douglas Mathias

And then the next thing I want, I do want to talk about again it’s in the, it’s our research, as the electric can be whole market really continues to be a place of rapid growth I think I’d mentioned last time you have test log, you have tests were coming on board fair day future there are others are really rather rapidly coming to market and we’re just through the this point we’ve been approved as a supplier for one of the domestic Tier 1s and we were approved to that supplier for the purpose of supplying a very specific electric vehicle platform. This all have happen within the last roughly six weeks, may be eight weeks on the little ‘m not sure on the timeline exactly we had to go through the whole process.

The coding process, the purposes of supplier generic IMS, IMDS number for the material been used and it’s looking of though we haven’t been give the exact production day yet but the initial timeline given back to us is production of the vehicles supposed to take place in the latter half of 2016 which when you back that up a little bit that means the production of the electrical parts that were going to be supply material for; will probably happen sometime over the next, sometime in the next quarter for the current quarter were in actually or could be early that next one given basically on everything I know on that, other than specific name of the company.

But were very driven that more prepared ready to go with that right now but again it’s the – for us for number one begin shows in the supplier and then been approved as the supplier for that particular platform and the big for us is once you approved in one persons platform that really just opened up the field to multiple suppliers, multiple platform and kind of back to what we’re saying about South Korea.

Once were one electric vehicle you can open up for multiple other things especially been incur production with it and anything that we’ve not talked about and this really has to do with the next item in the 10-Q in the business discussion and last year we were in I guess negotiations with another small conducted plastic compounder then it’s important to point us the reason we did that as because we were, continued to stand behind then Tsunami comment, conduct plastic.

And there is a too basically two different types of conduct its honestly, you have the long five that we have used for the heavy – and then there is also more the compounded plastic which is a different, little different processing that, yet there is that’s where the established conductive plastics market already is and what we started finding was we were running into multiple applications that had sales opportunity, immediate sales opportunity.

But yet we didn’t have capability, shouldn’t say we have the capability we did really have the product portfolio to supply some of its orders. So, that’s why we actually entered into negotiations with this plastics compounder and again just for the decisions under scope, this was not a multibillion dollar conductive plastics compound but it was a nice little business.

And again the whole point for us was, was how we can immediately drive revenue from the conductive plastics business as our business continues to grow well which we still believe as a much larger business then this.

So, unfortunately the owner of that business passed away late last year and this was tied up in the states, I won’t go into the details because that in and of itself would run past the timelines, so let me boil down to the point. Just in the last two months, we have been able to contact that company’s current customer base and we shipped the first order last week. We can have it something that affect and there are multiple orders in line right now that we are currently suggesting for them.

Again exciting twist on our current business, we thought this would have been close taking care of last year, it’s on timely debt certainly put a rinch in that and added roughly six months for this to happen. But at this point in time, we were successfully compounded and sent off those cost materials and we’re looking forward to yet another revenue source of conductive plastics.

So again it’s real just an exciting development that we have which we thought would have happen much sooner which is why we haven’t really talked lot about till this point because again has really through things off.

Next thing coming up here is actually the infamous [ph] global commercialization agreement and in this particular quarter we have a little bit more color to what's really been going on with that. We came to a verbal agreement and actually the verbal agreement we came to the company with we filed the 8-K in November which were stated that we've come to agreement on terms in which we had with the documentation actually came back to us, it was not consist of what the agreement was.

And to be quite clear on this everybody, we - there were multiple times last year we had the opportunity to enter into this agreement. Quite frankly it just not after 20 years of being in operation, as far being in operation the terms of that agreement and just were not - it would have provided a short term lift if you will but from a long-term perspective it was on the best interest of the company.

Yes we have achieved the global commercialization, yes would have been attachment with very well-known name, but from a long-term revenue standpoint we didn’t really feel as though this is the best up tick those current terms that we had.

The terms that we arrived at November, we thought were much better, documentation came back and again it was not consistent with what the discussion was and then quite frankly we touched on this a little bit the last call, it wasn’t the financial terms that were so much of a concern, as it was how far reaching the agreement was as far as how much control of our technology that company wanted.

And we have we talked about for the last several years and even in this call, we have some industry changing technologies battery, wire, other things that we haven’t discussed this yet and we don’t believe it’s in our best interest to entirely delay 100% of our technology at this stage of the game to that particular company.

So we are still in discussions with not only them but a few other companies right now and we’re not being greedy, we’re not being hard, we’re just really trying to do the right thing for the company and not license too cheap soon and yes it takes lot of patience, yes it’s difficult when you see the share price continuing to dwindle down.

But from a longer term perspective this is the best, it’s the best way to go about it. So we built the technology, we built the manufacturing. We’ve done all these things over the last several years and now the time to actually start monetizing it and not to monetize it too soon. That is the longer answer but I could go much, much longer.

Another thing I do want to touch on is wire, I alluded to this on our last conference call or two conference calls ago but essentially what happened technological huge advancement on the wire in January and we just recently completed another wire trial just in the last two or three weeks and we’re waiting to see total outcome of all that.

But the wire just it clears I can see, there are two very distinct things why I approach this, we have our regular wire and we also have a bundle shielded wire, I won’t dig into the midi gridi [ph] technical details of this. But why I separate those two things out is there are two very distinctive things, we just filed patents.

Integral just filed provisional patents on the bundled shielding roughly six to eight weeks ago, maybe it’s not even that long ago and our engineers believe that the bundled shielding, commercial applications is within weeks. And again that’s assuming that you have the right resources going towards the right commitment towards it, but they believe in the next, they say six to eight weeks, I know how engineering goes that is probably going to be longer than that.

But it’s been a significant - I need to call it breakthrough because it’s too superb, sounds too superbly, but it’s been a significant breakthrough on the wire, not just the wire also with the bundled shielding.

I wouldn’t stand behind the six to eight weeks for commercialization, but I would say it’s on relatively short term from that standpoint whereas you know it’s been in process for about three years but quite frankly but bundled shielding is newer application we’re probably working here on for last 12 months.

And then one of the thing I do want to touch on had been to open up to Q&A here pretty soon and as you for the Q, you will be able to see that we have – we filed international patent application in September of 2014 and we’re just talking about it now because those patents don’t actually published for about a year or later.

So it’s not actually public information and you don’t necessarily will be sharing that information preliminarily but one thing is our the actual pellet patent, how that was made, the design, all those things. So the most part that was only had North American patent protection and recently filed that patent September was actually given us much more global reach on class.

Also again if approved there is significant amount of time for our patent, so we went for patent that was only covered within the United States and Canada for patents to we’re in that patent is the patent on the pellet and manufacturing process once approved will have coverage across the globe not every single country.

But most of the large developed countries will be coverage in and on that certainly most of our newer patents that we file it’s with the intention of having global coverage on those as well. We filed for the PCT which then allows us to then file the global patents roughly a year later and in the case of the one I’m speaking of, we have filed in many of those countries already with those particular applications.

So I will open up to Q&A before I give any closing remarks here. You could give the instructions.

Question-and-Answer Session

Operator

Yes, thank you. This time we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Greg Grammer, a Private Investor. Please proceed with your question.

Greg Grammer

Hey, Doug.

Doug Bathauer

Hello, Greg.

Greg Grammer

So I had a lot of - there is a lot of grant money out there, is any of that coming Integral’s way, so over the finances and so the actual revenues come in?

Doug Bathauer

Greg, we are currently pursuing probably a bit too vigorous stats, we're actively looking at grants as it pertains to bipolar flow battery, as well as conductive materials and right now we are - and I think you may have seen also in one of our recent conductive post, we are working with the University as well, almost all of that is through state and federal grants.

We’re working with state and local government entities right now, as well as universities and it is from grant money at this stage of the game and particularly on the battery, there is a lot of grant money out there and we are – we're going after.

Greg Grammer

Okay, great. Do we have any preliminary results set from the bipolar batteries?

Doug Bathauer

No, we will be - right now we still have the one prototype battery, quite honestly that was done just as a proof of concept to make sure it worked, there is much for me as anybody else because you hear engineer say a lot of thing and I needed to see that yes, I have got battery that would work and indeed it did and that’s a lot of what with ADC right now.

There was a little bit of a – there was some tooling that needed to be done and that’s been complete and we’re working on the timeline to produce in the ballpark of another 20 battery or so here over the next month or so, and then we will have the results and preliminary results. I would anticipate keeping everybody fairly well posted probably through the conductive on our website with and – some with your press release as well.

Greg Grammer

When we had the original battery, do we do our own performance measurements?

Doug Bathauer

Just very – one, I mean it was 12 volt battery, 12 volts out, but that battery in itself was truly made as a proof of concept not for long-term payment cycle, even things like that. It was just for the sake of working battery, it’s really technical beyond that, but we really needed to have gone into much more greater detail on the first manufacturing of that in order of that projected all the testing.

Greg Grammer

Right. You mentioned a lot of various potential revenue in the short term, can you tell some size on that, like, how big the market in short term, I know its going to build up, but what that means to the short term in terms of funding operations and things like that?

Doug Bathauer

Yes, understand, I mean the bulk of - we anticipate having what I would term smaller sales, I mean we continue to have those each quarter, we book some this quarter, we had some last quarter and by smaller sales that’s [indiscernible] tens of thousand.

Now when I spoke about that other conductive plastics company that we have revenue coming from, once that’s fully integrated into the business which we’re continue to work on the integration of that, it’s not totally done, over I mean some of those customers themselves are $300,000 to $400,000 customers and it’s very high margin business and by very high I mean I don’t want to say, it’s very high margin business.

So where the bulk of we see are money coming in is still the monetization of the technology, it will be clear on that Greg, I’ll use the battery technology as an example. The battery plate in and of itself has value and we believe and actually know that we can actually sell a portion of that technology to somebody else via license, via some sort of ownership that’s where the bigger chunks of that’s going to come from in the short term it’s going to be from that which is why we’re going through all the steps of battery that we are now is to do all the right things technologically in order to extract the most value we can with that.

Greg Grammer

Okay. So you have an idea of when breakeven, so we would not do anymore of financing, I think so.

Doug Bathauer

It is too soon for that, again nobody is ready to get there sooner than I am on that. Believe me but it’s just to it would be too much conjuncture to say when it’s a breakeven. For us when we reach that point where we have multiple commercial orders now we’re starting to get some orders of size.

And so where it’s started to build right now but not anywhere near or ready to starting to make any projections or anything like that for various reasons one I don’t want to throw our number out there then we potentially disappoint too, so I’m not going to do that. Okay. So in point of time, thanks.

Greg Grammer

Thanks, Doug. Thank you.

Operator

Our next question is from Harvey Wodka, a Private Investor.

Q – Harvey Wodka

Hi Doug.

Doug Bathauer

Hello, Harvey.

Q – Harvey Wodka

I’m looking at Yahoo Finance and I don’t see any Directors showing up anywhere, do they not own a stock in the company?

Doug Bathauer

As far as any Directors owning the stock in the company.

Q – Harvey Wodka

Yes, number one I don’t see any Directors on Yahoo Finance at all?

Doug Bathauer

Yes, that is misreported.

Q – Harvey Wodka

The only two people I see is are you and Bill and as insiders and even the transaction business only goes back to June '14.

Doug Bathauer

Yes that is a Yahoo issue. As a general rule the most accurate information is going to be on the some sort of SEC website or OTC markets.com that is honestly I’m responsible for Yahoo information.

Q – Harvey Wodka

Market Maker who are you saying?

Doug Bathauer

We don’t use Market Maker, Market Maker has come on the box, we don’t really have a choice as far as who does that, who doesn’t do that which probably sustain Market Makers of Integral out of it.

Q – Harvey Wodka

Okay. I had an order on this morning at market and I never got for 15 minute period, so I just cancelled the order.

Doug Bathauer

Yes unfortunately that is one of the sort of the challenges of the OTC to be perfectly honest about with you and there is a fair amount of trading around it does take place which didn’t happen but it does but the order was in best totally, there is slab and it’s slab doesn’t actually do, typically doesn’t do their own query, it goes for somebody else. So it’s a matter of how they trade.

Q – Harvey Wodka

Okay. I don’t see any instance to investors, do we have any?

Doug Bathauer

No it’s insignificant.

Q – Harvey Wodka

Okay and how about analysts who are following?

Doug Bathauer

Zacks has been following us.

Q – Harvey Wodka

Okay. Is there any reason that would be beneficial to stopping the penny stock and do a reversal we can get some more attention?

Doug Bathauer

You always want that to happen but you always want to be I shouldn’t say always, for the most partners you want to be Nasdaq company because certainly OTC market is not the best place to live in, it has all kinds of challenges and problems and just things like you just brought up, what I mean, always the desire to do that the timing is everything.

And you have to weigh all those things out. So right now I can’t tell you, we don’t have the immediate plan to do that, but it’s always something we’re aspiring to we want to do because certainly I think the company would be much better off trading on different exchange in OTC.

Q – Harvey Wodka

Do you have PR company going and doing [indiscernible] Pony show out there anyway?

Doug Bathauer

We do a little bit of that, so I mean that is just part of what the job is, it is out there telling your story and yes we do - but I don’t actually hire an IR for, go out and do those kinds of things.

Q – Harvey Wodka

I didn’t hear you say anything about Moe and Detroit?

Doug Bathauer

No they are at the centre of everything we’re doing, you know, like with the batteries, with the wire all that…

Q – Harvey Wodka

Yet wire than….

Doug Bathauer

Absolutely Moe and Bob are an integral part of the team.

Q – Harvey Wodka

Okay, you might talk about either of them.

Doug Bathauer

Totally remiss on my part, when I talk about patents that is Moe and Bob filed those patents, one time with that wire trials that is Moe's down there for a week to go after trials, absolutely those guys are real important part of our team.

Q – Harvey Wodka

So if you get orders that you’re looking for can you get up production quickly?

Doug Bathauer

Yes, the orders we have right now, I am sorry….

Q – Harvey Wodka

Orders – batteries order can you produce that?

Doug Bathauer

Yes there is enough lead time for that. Really it’s not going to be a boom millions and millions of pounds to be produced, so yes we will have ample time to scale and kind of go back to not going back to bringing up why we have some people working with us, we’re currently working on advanced manufacturing method that would once it’s perfected that in and of itself will increase our capacity by about six or seven times.

Q – Harvey Wodka

Okay.

Doug Bathauer

And it so simple it wouldn’t increase any cost, so I mean those are the things we are working on the manufacturing side right now to make sure we can scale rapidly as we need to but also scale the most cost effective way that we can.

So yes and that is why we are manufacturing and we are manufacturing as I mentioned probably a year ago we moved here, we have equipment that earmark, so we need to scale it, most probably equipment right now.

Q – Harvey Wodka

Okay. Nice to hear that you added the gentlemen from Jasper to the board.

Doug Bathauer

Absolutely, thank you.

Q – Harvey Wodka

Okay, thanks guys. I appreciate it.

Doug Bathauer

We got time for at least one more, to trying to stick by the side 45 as hard cut of, so John Hix?

Q – Unidentified Analyst

Thanks, Doug. Is there any potential by bipolar to replace lithium ion and electric cars?

Doug Bathauer

Maybe but that’s not really what we’re – that’s not what we're shooting for. But the same here is with lithium ion it’s becoming very well and you have got Tesla spend in billion dollars on lithium ion, that I mean lot of chance with lithium ion price, price and availability of lithium sitting at the top of the list but right now that’s not what we’re looking for as the part of market.

We’re really much more interested in lower barriers to entry than that. You may be aware, all of your electric cars for example, they have 12 or 40 systems aside from the lithium ion that is electronics inside the cars, but twin power there are so many other applications out there that we currently had applications, we don’t really need to try to up lithium ion.

So is it possible, yes it is possible but it’s not what we’re attempting to do at this point, it’s just barriers entry just too difficult at this point and the development would be just massive and we have nothing to take forever right.

Q – Unidentified Analyst

Several conference calls you talked about not having any competitors in the [indiscernible] I believe, it was and in the last conference call, you alluded to some competition. Has there been some competition arise in high volt?

Doug Bathauer

No, there hasn’t competition arise but there have been other players coming and we can’t explain very briefly conductive plastics, I’m going to turn this highly conductive, which means we can actually do the high voltage shielding, a lot of your conductive plastics are there not and it will sound how the manufacturing method is done because we are long fibre manufacturers and if you want to look at sometimes you can, long fibre technology, LFTs okay.

Q – Unidentified Analyst

Okay.

Doug Bathauer

Other people have started coming into the long fibre technology as it pertains to conductive plastics. There are at least two other companies out there who started doing long fibre, what they still don’t have is applications experience to get into the particularly in the automotive, the high voltage shielding applications.

So I wouldn’t call them competitors yet because we haven’t walked in prototype that work with anybody we’re competing against any of these people but some of them have either started, I mean this is on huge community, so we all know each other, okay.

So some of them have licensed the technology, some of them have just started walking into it and that continues to be our huge advantage as, we still have tap on the use of long fibre technology for conductive plastics and we have the know how and right now those other people who are coming into the market do not have those things yet.

Will they, yes they will, they will three years from now, five years from now, yes they will acquire knowledge and get it but right now we’re the leaders and I don’t look at those people competitors right now, I’m looking at those people but I’m looking at those people as potential partners. Okay and I’m we are actively talking with those people.

Q – Unidentified Analyst

You think our intellectual property is something that they would be interested in?

Doug Bathauer

If they want to apply this to a lot of automotive applications and others then they are, so just because at this stage of the game, you still have to come through our patent portfolio for a lot of the even if you can get around the pellet patent, you still have to go through our application patents in order to get to market on many of these applications.

Q – Unidentified Analyst

Okay.

Doug Bathauer

Which again that is why we’re spending so much time and quite frankly a lot of money on global patent coverage on our newer patent as well just to make sure we covered all around the world on these larger applications.

Q – Unidentified Analyst

And going back to global commercialization and path, maybe you stated this partner want too much control is there interest potential interest buying the company?

Doug Bathauer

No I mean potentially yes, we’re not having discussion right now and the valuation would certainly have to be will have to be right as well but for us what was very, very protective of it’s not just control but it’s really we’re really protective of the patent portfolio because that is still the real value lies selling a portion of our portfolio and yes ultimately could there be at some point in time there could be targets wouldn’t say right now it’s time.

Q – Unidentified Analyst

Okay. And is Delphi, you talk about six to eight weeks before you think that – okay go ahead.

Doug Bathauer

No just I literally had to cut off in one in two minutes because we got hard cut off from the conference call to end at this time. We had two sets of wire applications that we’ve been working on, one is bundled shielding and one is wire shielding, our engineers believe that the bundled shielding could be a matter of weeks to commercialization. I think that’s a little bit aggressive okay because I know how much work and time and all that goes into that but the bundled shielding we have set patents on right now and I don’t believe it will be six to eight weeks, I believe it will be longer.

So if I want anything it always takes longer but we are at least that close to what our engineers believe it and engineers usually saying oh we got to do this, this and this, they’re far more particularly after the last trials we’re in I got that phone call from them saying we got to move now because we’re there.

So I apologize but John I have got to go - has to be last caller and I see a couple of other questions out there, I really apologize.

Q – Unidentified Analyst

Okay, Doug.

Doug Bathauer

But we do anticipate having another conference call prior to the 10-K call and so we will get that out there realistically Bart, you think it’s probably a couple of months before we have the call, your guess?

Bart Snell

Yes I would say absent anything out of that’s material probably would be 3rd July.

Doug Bathauer

So just my parting thing, again appreciate everybody’s time, patience. I know this has been rough in the markets over the last few months, it’s absolutely been rough on all of this, any other questions feel free to reach out to Scott or Eric certainly no my time has been far more, I have been much more difficult to reach last few months.

So don’t take it personal, it is fully has to do with the schedule these days. But anything Scott and Eric something if they can’t help you with, reach out to me, we’re going to take care of. But again thanks for everything everybody and we will be talking to you here in the next couple of months.

Operator

Thank you. This concludes today’s conference. You may disconnect your lines at this time.

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