Nextech3D Ai Corp

Ladies and gentlemen, welcome everyone to the Next Tech AR Solutions Corp 2022 First Quarter Results 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, and instructions will be provided at that time for you to queue up for a question. I'd like to remind everyone that this call is being recorded today, Monday, May 16, 2022. I would now like to turn the conference over to Ms. Julia Viola at Next Tech AR Solutions Corp. Please go ahead, ma'am.

Hello and welcome to the Nextech Q1 2022 earnings call. With me on the call are Evan Gappelberg, Chief Executive Officer, and Andrew Chan, Chief Financial Officer. Today, after markets closed, Nextech AR Solutions Corp. released its financial results for the first quarter ended March 31, 2022. A copy of the earnings disclosure is available on our website and on CDAR. Some of the information discussed on this call is based on information as of today, May 16, 2022, and contains forward-looking statements that involve 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 in the earnings press release as well as in our CDAR filings. During this call, we will discuss IFRS results and key performance indicators. A detailed description of our key performance indicators is available in our MDNA, which can be found on CDAR. Neither this call nor the webcast archives may be recorded or otherwise reproduced or distributed without prior written permission from Nextech. To begin our call, Evan Gappelberg, CEO, will discuss 2022 Q1 highlights as well as recent business developments followed by Andrew Chan, CFO, who will review our financial results and outlook. Finally, Evan will make closing remarks before opening up the line for a question and answer period. I'll now turn the call over to Next Tech AR Solutions CEO and founder, Evan Gappelberg.

Thank you, Julia. Hello, everyone, and thank you for joining us. As usual, I want to thank all of our Nextech employees located throughout the globe for their dedication and hard work. Nextech's success to this point and into the future is only made possible through their continued commitment and their striving for excellence. In 2021, and into q1 2022 we have emphasized the accelerating adoption and global demand of our augmented reality and 3d model solutions for the metaverse this is our key growth driver this is the main business as we move forward in 2022 and beyond this has been reinforced over and over again through the multitude of new deals that we have announced during q1 of 2022. Our AR for e-commerce is winning. We are signing up 3D model deals regularly across various industries and various product categories. The most prominent being furniture, sports equipment, artwork, appliances, lighting, auto parts, and more. Basically, all the e-commerce ecosystem is signing up for 3D models. These deals that we're signing, the pace that we're signing deals has never been experienced before by Nextech. And we believe that this is representative of a rapidly increasing demand globally for 3D models and ultimately augmented reality. We believe strongly that this will accelerate throughout 2022 and beyond. And as mentioned on our last earnings call, Our company's mission is to build the first vertically integrated, artificially intelligence-powered 3D model factory for the metaverse. Throughout 2022 and the next several years, we're going to strive to accomplish this highly ambitious goal, but attainable goal. As we transition our company into a SaaS business and a 3D modeling business, factory for the metaverse. The demand for 3D models is what's driving our business. We are experiencing a tremendous amount of demand in the marketplace, and it's evidenced not just by Nextech, but by other investments that are happening in the ecosystem. We are not alone in our beliefs that 3D models and the metaverse is the future of technology. Last year, In the fourth quarter, it was a tidal wave of investment from venture capital into the VR and AR space. Nearly $1.9 billion of venture capital rolled into startups in the virtual and augmented reality software and hardware space, more than any other quarter before. And last year, was about almost $4 billion going into the VC space. VC money has accelerated their investing, is the point, in the future. And that's what they invest in. They invest in the future. They don't invest in things that are yesterday's technology. They invest in tomorrow. The future is the metaverse, and we are a metaverse company. Seven of the top 10 rounds last year occurred in the fourth quarter. The fundamental tech trend is here for virtual worlds. If you look at the hundreds of billions of dollars of investors' capital, they're positioning themselves now, either by investing in big tech or by snapping up smaller startups, snap bought Vertebrae, Epic Games, bought Sketchfab, Getty Images, bought TurboSquid, Niantic, bought Hwall, Qualcomm, bought Wiki2. These are all smaller players similar in size and scale to Nextech that are getting picked off one by one by one. The on-ramp to the metaverse 3.0 is 3D models. And I believe that we are in the midst of the fourth industrial revolution, which is now being hailed as the metaverse. The metaverse is being led by AR, VR, AI, NFT, 3D models, e-commerce, and of course, the 5G network. And it's all converging and becoming increasingly ubiquitous for e-commerce, advertising, and entertainment. We're seeing this play out in the real world every day. The convergence that we're seeing is stimulating a rapid market adoption environment, similar to the rapid market adoption of the Internet in the 1990s. And it drove the creation of trillion-dollar industries almost overnight. The metaverse market is what Nextech, what I've been waiting for, for four years to emerge. And it is a market that we are uniquely positioned to capitalize on. The adoption is already underway, but it's still very early, which is the opportunity. It's very early, and that is the opportunity. It's not as early as it was in 2018 when there was no adoption underway. The adoption is happening. We are in the first inning. My belief is 3D models is the gateway to the metaverse. We, Nextech, are now entering a new phase of major growth opportunity. We at Nextech are benefiting from the paradigm shift in the way people shop, work, travel, meet, learn, and are entertained. That paradigm shift is shifting to our business. It's shifting to the products that we sell, the products that we're positioned for. Again, this is just the first inning of a megatrend. And I've never been as excited about any opportunity in my lifetime. And my feeling is that by the time the masses wake up to this idea, it's going to already be too late. We're tapping into this trillion-dollar opportunity by being the 3D model supplier for the metaverse, essentially the gateway product. We're not competing with Facebook. We're not competing with Microsoft. We're not competing with Google. We're not competing with Amazon. We're enabling them to be even more successful. And they love us for it. E-commerce is an enormous industry. Globally, it's a $5 trillion industry. And again, we are the 3.0 3D model factory. If you look at 3D models globally, They're now ranking higher than 2D images on Google Search, which is creating even more demand and even putting more wind at our backs. Shopify has mentioned many times and publicly declared the future of e-commerce is 3D. Make no mistake, we will take full advantage of this opportunity, of this paradigm shift. And we feel extremely confident with the way our business is aligned and the rapid growth that we're experiencing today. Changing gears to one of our portfolio companies, we do have a portfolio of companies. If you look at our hybrid events platform, We own a company called Map Dynamics, and in 2022, we are seeing a healthy uptick in our live event business. Map Dynamics revenue is increasing by 47% since Q4, and the average Map Dynamics order was up over 20% compared to Q4 in the previous year. In December, we announced the signing of a multi-year hybrid event and marketplace contract worth over $600,000. That's a big number for NextTax. We're proud to say that last week we executed on the first part of this contract, delivering as the event platform for the 2022 Restaurants Canada show and the launch of of a 365 metaverse marketplace. So we're taking this opportunity with this event platform and we're turning it into a metaverse marketplace, which is quite a big deal because, again, we're doing the pioneering work. The RC show, the Restaurants Canada show, is, I think, the largest food service and hospitality show. It was, I think, the biggest one of the biggest events of the year that happens up in Canada. And our technology was on full display. We had a major booth at the show right when you walked in. I think we were the first booth that you saw. We had our map dynamics event platform on full display. The show floor experiences included augmented reality navigation, which is AR wayfinding. We had human holograms. We had 3D models. All of that was on display for the public at the largest trade show in Canada for the food service and hospitality. It was really a tremendous, tremendous showing for Nextech. And it was a major success because we were able to show in the real world how our technology worked. And we ended up picking up a substantial amount of interest from new customers in our technology so we believe the 365 marketplace launch opens up a large new opportunity for next tech to expand the same business model into other industries beyond hospitality and at the rc show rc show again we received a tremendous amount of interest from other associations for our metaverse marketplace, and we're excited to see how that unfolds in 2022 and beyond. When we look at our 3D and AR revenue, again, everything is rapidly accelerating. The demand for 3D and AR models for e-commerce has increased, and that's because of the positive ROI. In 2022, we are seeing New accounts sign up for ARTIZE 3D and ARTIZE CAD in many different industries, and we do not see that slowing down anytime soon. In fact, we're seeing reorders. We're seeing signing of new deals from small and medium-sized businesses as well as large. We've signed dozens of POCs. Those are essentially test orders. with e-commerce businesses that have massive potential to grow. So we're in this testing phase in the first inning. All the orders, all the business that we're currently closing are the smallest orders. This is just the test. And so our clients have indicated that as the test goes well and it's already happened, some of them have already stepped up to the plate. and ordered significant amounts of additional models. As they all step up and reorder, it represents thousands of additional skews and significant potential for future monthly recurring revenue and annual recurring revenue. We're seeing an uptick in new customers, which again is resulting in our annual recurring revenue continuing to grow in 2022. It's a huge validation of our efforts. This business did not exist in 2021 at this same time. We are now, what we believe, we're disrupting the emerging multibillion-dollar 3D model market because we have the highest quality, we have the lowest cost, and we have the most scalable 3D model solution in the world. All signs indicate that 2022 will be a breakout year for everything 3D. As previously indicated, 3D models for e-commerce, 3D models represent annual recurring revenue. And it's going to be the area of our business that we believe can scale quite quickly and should be what our investors keep their eye on to measure the health of the company and our growth potential. I would highly recommend our investors steer their attention away from top line revenue growth because that's essentially our legacy e-com business and focus on what's happening inside the company, which is our 3D model business starting to scale. in q1 2022 we saw a substantial uptick in customer adoption either signing 12-month contracts or annual repeat contracts totaling over 1.3 million dollars which is from zero and we're just getting started so q2 is even better in the first six weeks of q2 we exceeded all contracts signed in Q1 for 3D models, which points to the acceleration we keep talking about actually happening. If you look at our solutions, we have an end-to-end metaverse suite. As we've previously demoed for investors, we've launched a tremendous amount of technology in Q1 and rolling into Q2. Just a recap of some of our announced launches. ARTize 3D, which is our 3D model and web AR for e-commerce platform, launched. ARTize Maps, which is the spatial mapping metaverse platform, launched. ARTize Holograms, human hologram creator app, launched. ARTize 3D Shopify integration, launched. Airtize Swirl, Airtize Seltzer Swirl launched. I mean, all of this indicates a very healthy technology company that you're invested in, that we are continuing to hit our milestones. In 2022, we announced Airtize Metaverse Suite launched. Airtize 3D for BigCommerce launched. Very shortly, we will be able to announce that we've integrated with WooCommerce, which is a significant platform similar to Shopify. That will be happening in Q2. We're also going to be integrating with Magento, another significant platform. We're also going to be announcing the Android version of our human hologram creator app, ARTize Holograms. And we're also going to announce Later this year, our CAD to Poly SaaS business will be launched. SaaS integration with our product line does have significant implications for the scalability of our products and Nextech's revenue growth. With our continued rollout of our SaaS platforms, Nextech continues to move away from the managed solutions. We've almost completely moved away from managed solutions And we're now focusing on annual recurring revenue and monthly recurring revenue, which is low touch. We are just beginning to see the revenue in business emerge as we move full force into 3D model making, augmented reality, and metaverse solutions with our new SaaS products, which I just announced we've launched. The massive opportunity for making 3D models for e-commerce is estimated to be worth over $200 billion. We're just breaking the million-dollar level. So we haven't even scratched the surface. This is the tip of the iceberg. And it's only a matter of time, in my view, before our competitors lose their ability to compete And Nextech becomes the 800-pound gorilla in this space. If you look at the number of models that we've served, we currently have 4.5 million total 3D AR models served. That means there's 4.5 million experiences, 3D and AR experiences, that shoppers, consumers have experienced on our platform. 870,000 3D models served in Q1 alone. That speaks volumes. That speaks volumes. If you divide 870,000 by 90 days, I'm going to do the math right now. that's almost 10 000 views a day which is incredible incredible so you know the average for the last year was uh uh much much lower our increase in average downloads is is growing very very rapidly and it will continue to grow so in closing 2021 was a transformative year for NECTEC, and 2022 is shaping up to be a breakout year, a substantial year of growth for our key growth driver, which is 3D models and AR. Again, it's critical that investors focus on the main event, which is not our legacy e-com business, which is shrinking, and just focuses on our fast-growing 3D model metaverse business. We're focused on obtaining greater industry leadership and being the top provider of augmented reality and 3D model solutions for the metaverse. We have a unique position as one of the only end-to-end metaverse solutions providing spatial mapping, augmented reality, 3D models for the metaverse, which creates unique immersive experiences that people are willing to pay us for. If you look at the potential, we believe the total addressable market is a quarter of a trillion dollars. We believe that the SaaS market is just massive. Our AR products and our 3D models are very sticky and have significant implications for continuing monthly recurring revenue and annual recurring revenue, which we believe will accelerate with the adoption and stickiness of our entire augmented reality suite of products and services. I expect 2022 to be a year for hypergrowth of all things augmented reality, 3D, and the metaverse. I've said it over and over again that this will be a multi-decade, multi-trillion-dollar megatrend. I started saying that in 2018. It's now actually being parroted by many analysts on the street. I'm very excited. for what the future holds. I feel the company is realizing its dream, and this is just the beginning, just the beginning, the tip of the iceberg. I have confidence in our company's direction, belief in our executive leadership team, and in every employee working to build the vision of the metaverse. Before I turn it over to Andrew Chan, our CFO, I'm just going to say a few more things. We delisted from the NEO last week. We announced the delisting, our voluntary delisting. I decided to delist. Nobody asked us to delist. I just made the decision to delist. Common shares were delisted as of Thursday, May 12th. This was done to reduce the associated cost of being listed on multiple exchanges in Canada because we were duplicating the expense because we were listed on the CSE. I would also like to note that the shares have had two positive trading days since we delisted and that I don't believe in coincidences. So Thursday and Friday, actually Friday and today were both positive trading days. I believe that on the NEO, the shares were being targeted, but now we are no longer on the NEO and we are much less likely to be targeted. I don't have any evidence to back this up, so time will tell, but I do believe that getting off the NEO exchange was a positive for shareholders, not just for the company in saving money, but also the way the stock trades. The company's shares will remain listed on the Canadian Securities Exchange and on the OTCQB. Just talking for a minute about market conditions, I want everybody to put things into perspective. Perspective is critical. As we all know, the current market conditions are rough, to say the least, for small cap stocks. 50% of the NASDAQ is down 50%. 50% of the stocks are down 50%. That's a huge, huge drop. 22% are down 75%. 22% of all the publicly listed companies on NASDAQ are down 75%. And 5% are down about 90%. Meme stocks got crushed down about 80%. Crypto is getting crushed. The decline in 2022 is the second worst decline in history, second only to 1932. Now, 1932 was, what, 90 years ago? I don't think any of us on this call were alive 90 years ago. So if that's true, then this is the worst decline of our lifetimes. certainly of my lifetime, but we will survive and we will thrive. In fact, Nextech is in the right place at the right time with what we are selling. My point is that our stock is not going down because of solvency issues. It's going down because the entire market is going down. And as the largest shareholder of Nextech, I can empathize with all of your frustrations. I'm sure you are frustrated with the share price decline as I am. And I've been as affected, I would even argue more affected than anybody else with these declines in Nextech. The company and I are doing everything we can to bring shareholder value, and it will emerge over time as the market recovers and realizes the value of Nextech's groundbreaking technologies and solutions. It's important to think long-term, 12, 24, 36 months. And remember that this is the beginning of a long journey where patients will be rewarded. As mentioned previously, I am working night and day, day and night to unlock the value of our many assets and businesses that we own as a diversified technology company. We are very close to signing a deal for a possible spin-out of our Metaverse Builder Platform ARitized Maps, which was on full display, as mentioned earlier, at the Restaurants Canada show last week in Toronto. if this happens it's an if it's not a guarantee if it happens it will result in a free stock dividend to shareholders of record that means if you own the shares you will get additional shares in this spin out if you don't own the shares you won't and you know the goal here is to increase shareholder value we're very close Not a guarantee, but stay tuned. With that, I'm going to turn the call over to NECTEC CFO Andrew Chan to provide further commentary on the quarterly financials. Take it away, Andrew.