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spk00: I'd like to remind everyone that this call is being recorded today, April 29th, 2024. On the call are Evan Gappelberg, Chief Executive Officer, and Andrew Chan, Chief Financial Officer. Today, after markets closed, Nextech3D.ai released its unaudited financial and operating results for its full year and fourth quarter ending December 31st, 2023. A copy of the earnings disclosure is available on the Nextech3D.ai website and on CDAR. Some of the information discussed on this call is based on information as of today, April 29, 2024, and contains forward-looking statements that involves risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statements, disclosure, and the earnings press release, as well as in the company's CPR filings. During the call, they will discuss IFRS results and key performance indicators. Neither this call nor the webcast archive may be recorded or otherwise reproduced or distributed without prior written permission from Nextech3D.ai. To begin the call, Evan Gappelberg, Chief Executive Officer, will discuss financial highlights as well as recent business developments, followed by Andrew Chan, Chief Financial Officer, who will review financial results and outlook. I'll now turn the call over to Chief Executive Officer and founder of Nextech3D.ai, Evan Gappelberg.
spk02: Thank you. Welcome, everyone, and thank you for joining. 2023 is in the rear view. We are driving hard in 2024, but it is important to look at 2023 just to gain some perspective. We did do about $5 million in revenue in 2023, and that was during challenging economic conditions I don't know if everyone remembers, but in 2023, interest rates were rising at a breakneck pace, and capital was leaving the capital markets. Rating capital has become extremely, extremely difficult in 2023, and that really continues because interest rates are still at elevated levels in 2024. We made... strategic initiatives in late 2023, given the climate that we were in, we pivoted to India in Q3 2023. That strategic shift contributed to our optimistic outlook in 2024 and beyond. We reduced our labor costs quite dramatically, and we're starting to see dramatic positive results from that pivot to India without losing our production capabilities along the way, meaning it's not easy to move 100 people from one part of the world to another and still maintain your business, especially as a small company. So that was no small feat, and we accomplished that. And I can happily report that that is done. We also had a reduction in headcount in 2023 to streamline our operations and reduce our costs in our drive to profitability and going cash flow positive. We also invested heavily in our AI technology, particularly in our patented technology, which is playing a crucial role in our enhanced product offerings and also our operational efficiencies. For Nextech, AI is actually driving our business forward. If you look at our business performance in 2023, we reduced our burn, but it didn't actually kick in in a dramatic way until 2024, because it does take a quarter or two to see the results. 2024, we've reduced our burn to right around and really just under $200,000 a month. Q2 2024, which is where we are today, we are looking at our 3D modeling business, that segment of the business, if we look at that business as a standalone business, it is cash flow positive. And that's generated by optimizations of our AI technology and the combination of our pivot to India. Again, looking forward, we are driving towards achieving profitability in 2024. And that's going to be on the back of increased enterprise level customers. We are currently working towards closing deals with some very large accounts. And when those deals close, we expect that that's going to have a material impact on our business. We're also looking at innovation, and that's a big part of our story, that we are innovators in the 3D modeling space. It's not just about 3D models. It's about generative AI texturing. It's about our CAD converter technology. enhancements in our ai capabilities to improve 3d modeling process and ultimately improve the speed lower the cost and increase our our ability to scale our ai and 3d cloud hosting services are expanding uh in 2024 again and of course our ai powered 3d photography studio which i'm extremely bullish about it's a brand new service And we are seeing a strong market demand. Every single customer that we presented to wants it, is buying it, and signing up for it. So if you think about photography, 3D photography going with the 3D model, it really is a perfect, perfect business. And that is 100% AI-towered. Those are 3D photography businesses and AI business segment that we are launching right now in Q2. If you look at the market, we're still dealing with high interest rates, which again is, I think, keeping a lot of the small cap stocks from actually achieving much higher valuations. But from our perspective, we're seeing significant interest in our entire tech suite. including our 3D modeling business and our AI-powered services. But again, I will stress that the upside is still ahead of us as these enterprise deals really do take time and they really do, they really will have a material impact. If we look at our subsidiary performance, ARWay is Standing out, ARWI has experienced a significant increase in demand for its indoor navigation and wayfinding services globally throughout 2023 and really starting to surge in Q1 and Q2 2024. We're signing deals now on a weekly basis. That's pretty much unheard of for a new tech company to be able to achieve that on a global scale. And I'm extremely bullish on ARWay and what's to come in the second half of 2024. If you look at ARWay, the main event and the thing for investors to keep their eye on is developing infinite scale indoor navigation. Nobody has cracked the code on infinite scale indoor navigation using spatial maps. We think we are knocking on that door and about to break through. We believe that we will be first to market in 2024, and that will really, really excite the entire global market for what it is that ARWay sells, which is, again, indoor navigation using our proprietary spatial computing platform. So the big event, though, there is infinite scale. So, pay attention to that. We have many AROA pilot programs that are concluding, and we expect them to transition into major contract signings, again, specifically in the second half of 2024. If you look at our growth, the completion of pilot programs, which is what we have been working on really for the last six months, is anticipated to lead to signing of substantial contracts, and that's going to continue to boost the company's growth and profitability for years to come. If you look at the convergence of technology and advancements with new business opportunities, it really does position ARWay, and by extension, the parent company Nextech, for robust performance in 2024. So as we move forward and we look at Nextech and we look at Toggle, you really need to look beyond just 3D modeling. The company positions itself as a comprehensive AI 3D tech provider, expanding and extending beyond mere 3D modeling. That's where we started. but we are way, way past just doing 3D models. We have a full spectrum of 3D-related technologies and services, and I would suggest our investors value our company not just on the 3D modeling business, but also on the intrinsic value of our patented technology and the future significant revenue opportunities, which include the 3D modeling business, but extends to 3D texturing using AI, 3D hosting using our own cloud services, 3D AI photography. These services are extremely valuable. They're part of our technology that we're selling. And again, we don't think that the company's getting the proper valuation for its suite. of 3D AI technologies that it's been pioneering. If you look at our platforms, we've seen a notable growth in 2023, up over 50% over 2022 in our top line revenue. Most of that growth is tied to partnerships with major entities like Amazon and other significant platforms. We are positioning with new partnerships, which we think will position the company for future growth and provide substantial returns to investors. So it is always Amazon that's our key account, but we have other key accounts that are quite significant that we are working on closing. Beyond Amazon, beyond our operating business, We also have investments in subsidiaries. We have major financial equity in Toggl and in Arway. We own 26 million shares combined, which are currently worth, as of the close of trading today, $5.1 million in equity. So if you look at our current market cap, I'm talking about Next Tech, at these very, very depressed prices, You have a company that clocked in at $5 million in revenue, and we have about $5 million in equity. That's, you know, if you look at our market cap, something's wrong. It's so undervalued. It borders on the absurd. But that's the small cap market. If you look at our... Shares for Services program, I want to highlight that for our investors because I think it's misunderstood and I also think our investors don't understand how valuable that is. The program has been a huge success. The program, which involves compensating employees and service providers with company shares instead of cash, has been massively successful And it has succeeded in Nextech not needing to raise additional capital. And that will continue as long as our Shares for Services continues until the company goes cash flow positive. So, let me reiterate. We have been extremely successful with our Shares for Services program. It's worked. It's working. It will continue to work. As long as it continues to work, we will not be raising capital. I've been offered anywhere from $5 to $15 million investments in the last couple of months, and I have turned them down. Why? Because our Shares for Services program is working. We are not raising capital, and that's evidenced by the fact that I'm turning down capital raises at this juncture. So that's good news for shareholders because I know that's always a hot topic. So if you look at sustainable financing, that's what the Shares for Services represents. Ongoing success of the Shares for Services program suggests that the company might be able to avoid traditional capital raising indefinitely and to continue to fund operations through this approach until we go cash flow positive, which we expect it to happen later this year. Further support from investors, we have some long-term investors who are prepared to support the company financially by buying potential non-core assets for cash from the company. So, you know, there's even additional cash on the sidelines. If the company wants to sell some of its non-core assets, it has some investors that are willing to put cash in and do that. So if you look at, you know, if you think about what I'm describing, we've really reduced the financial risk. of Nextech by minimizing the need for external financing, the company lowers its financial risk and increases its operational stability. So even though if you look at our balance sheet, you look at our bank account, it's not a lot of cash, but we're operating, we're paying our bills, and we're able to continue to sustain our business and grow our business in this current market without having to go to the market for capital raises. So if you look at our company, $5 million in revenue this year. We're going profitable with our 3D modeling business, cash flow positive already, Q2. And if you look at 2024, Amazon still represents a huge opportunity, but we have lots of opportunity for growth with other enterprise companies and platforms that we're currently working with, have NDAs with, are doing POCs with, and we expect to have some of these contracts land in the near term, although they do take a lot of time to actually close. It's just the way big companies work. I thought we would have them closed in Q1, They're rolling into Q2, it's not uncommon, but that is essentially what is happening at our companies. So with that, I'm going to turn it back to the moderator.
spk00: If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, again, press star one. Your first question comes from Scott Buck from HC Wainwright. Please go ahead.
spk01: Hey, Evan. Nice to catch up. I just want to ask about some of the potential licensing opportunities. I know there was a release put out earlier this year that you guys may be close to something. Just curious if you could kind of walk us through the mechanics of how a deal like that could potentially be structured. Sure. So, how are you doing, Scott?
spk02: Good to hear your voice. So, our technology, this is primarily the CAD to 3D toggle platform that we have been negotiating and working with large enterprises where we would license the tech to them. They would essentially pay us a usage fee on a monthly basis, and they would turn their CAD files, you know, these are equipment manufacturers, into 3D models on the platform and then texture it and then use our photography studio to take pictures, publish it to the web. Then they would also use it for hosting, for tracking the data and analytics. And so it's kind of this, you know, CAD... the 3D, very easy-to-use platform that we're seeing a lot of interest in across multiple industries, including jewelry, industrial manufacturing, and a bunch of others. Even consumer product goods companies are looking at it for rapid prototyping where they might have boxes of cereal or boxes of mac and cheese, And in different parts of the world, those boxes have different labels on it. And so we would make the 3D model, and then they would be able to transfer it throughout the globe by just changing the text on the 3D model and then have these prototypes, essentially. So that's kind of the use case, Scott.
spk01: I appreciate that. That's helpful. And then second, I want to ask about revenue cadence through 24. I assume we're still kind of largely dependent on delivery schedules, but if there's any color you can provide there, I think that would be helpful.
spk02: Yeah, so right now we're built for scale. We can produce for these large enterprise customers, and again, licensing the tech means they're actually producing the 3D models. They're loading the CAD file onto our platform and out pops the 3D model. It's pretty instant. And then they point and click on the texture, the color that they want. And so we have the ability to license our tech to scale it. Things are taking a little longer, but we are heavy in negotiations and nobody's walking away from the table. It's just driving through NDAs and then testing phases and then legal, then it goes to the innovation department and it goes to someone who's on vacation. You wouldn't believe how long it takes to land these deals. But even with Amazon, Scott, when we first started, we had almost six months of testing, six months before they actually signed the contract. So that's just par for the course in 2024. It's kind of steady as she goes with our business and our revenue, but these big deals are gonna be the thing that really moves the needle.
spk01: Yeah, that's helpful. And then last one for me, Evan, Just on OpEx for 24, I assume you guys are able to scale the business at operating expense levels that are fairly close to where you are today. Or do you need a meaningful amount of investment in either R&D or sales and marketing in 24 to support this growth?
spk02: We've actually sunk all of our money in in 2022, 2023. We put tens of millions of dollars in to building the tech and the team. And so we do not foresee, in fact, OpEx expenses. In fact, it's going down because we continue to, you know, use our India resources when we need any new resources. If you think about that equation, the cost of these resources in India are like 90% less than North America. So we're selling our goods and services in markets where the price is high and then our cost is quite low.
spk01: That's helpful. It sounds like we should see some real operating leverage as we move through the year. Appreciate the time and look forward to catching up again in a few weeks for the first quarter.
spk02: Thanks, Scott.
spk00: Evan, I'll turn it back to you for closing remarks.
spk02: All right. In conclusion, investing in Nextech or one of our subsidiary companies, Congo or ARWay, is investing in innovative early-stage startups. These startups have moonshot potential in emerging industries like 3D, like AI, like augmented reality and spatial computing. All of which, according to Gartner and others, have multi-billion dollar market potential. I remain committed to increasing shareholder value. it has definitely taken longer than expected. Interest rates, the pandemic, these are all things that are not in my control. And as of right now, our business is ready to scale. It's clear to me that our tech and our team is in place. So it's not a matter of if. It's just a question of when. When will these big deals land? AI has the potential to drive our business forward to new heights. With our growing patent portfolio and our growing product portfolio of AI GPT products, we are well positioned to surprise investors to the upside. We are very undervalued, in my opinion, and I think that long-term investors that are still invested will be rewarded. We are working with some of the biggest companies and brands around the globe, including the largest e-commerce company on the planet, including the largest car rental company in South America, including the largest consumer packaged goods company, and many other large companies that we would hope to be able to announce soon. companies, these big accounts represent the future potential growth of our business revenue. Again, it takes time. It takes patience. We've built the tech. It is pioneering technology, and we are focused on monetizing that. We've gotten our costs down, and now it's just a question of when we get a signed contract, and then it's off to the races. I want to thank our investors for staying steadfast, and I do believe that there's going to be a reward. Thank you.
spk00: This concludes today's conference call. Thank you for your participation, and you may now disconnect.
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