Mphase Techs Inc

Q4 2021 Earnings Conference Call


spk_0: reading welcome to the embassies technologies fiscal twenty twenty one earnings conference call at this time all participants are in a listen only mode a question and answer session will filed a formal presentation if anyone should require operator sisters during the conference please press start zero on your telephone keypad and please know that this conference is being recorded i went out to the conference over to your host brian front of a you may begin
spk_1: good afternoon everyone and welcome to emphasize technologies fiscal twenty twenty one earnings conference call as a reminder the m face fiscal year and is june thirtieth twenty twenty one two figures presented for this period or reflect that him date yesterday we issued our fiscal twenty twenty one financial results press release which highlighted a number of financial results for the fourth quarter in full fiscal year copy of the press release is available on the investor relations section on our website and the complete financials are posted on edgar before beginning our formal remarks i'd like to remind listeners that today's discussion may contain forward looking statements that reflect management's current views with respect to future events any such statements are subject to subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward looking statements i'm faced is not undertake to update any for looking statements except as required at this point i'm pleased to turn the call over to mcc you aren't you bought nigger please go ahead
spk_2: thank you brian this is our first earnings conference call and it's been a long time coming but we wanted to make sure we had the necessary pieces in place before we unveiled or strategy first i will discuss the company's overall strategy before we provide a brief overview of the financials for more than a year we have been developing are empowered ecosystem to harness the power of the he be revolution which we believe will transform the way people shop dine fuel and interact with the world today you want to give you a better understanding of our unique approach to this future and our plan to bring together consumers and retailers in new ways previously not possible the transition to the as the dominant form of travel as complex viewed as an opportunity to some and a major threat to others we believe that we have built a much needed set of tools that will help improve the interface between retailers and consumers throughout this transition we have branded this under the and power name which describes an ecosystem consisting of even charging stations ultra fast five g connectivity and a ai driven consumer engagement software or empower ecosystem has evolved out of our own effort to build an ai enhanced travel platform combined with our ai engines and close comes consumer engagement platform we already had the troubled components the mapping the point of interest locations built into our platform so the transition to the cv platform was more of a case of adapting our products rather than building from scratch we realize and twenty twenty that are powerful consumer oriented travel and engagement tools could be integrated with even charging stations and five g connectivity to address some big changes coming in the way people travel and fuel to we didn't just design and ordinary app but set out to solve it problem experience by easy owners today while also helping retailers future proof a post patrol reality the best way to understand or empower ecosystem and why it's so rapidly gaining traction it's you look at each of the parts that you easy segment is fairly straightforward were installing level two and level to be chargers under our own empower brand name we're sourcing the stations from well known oh yeah suppliers so we'll be equivalent to the biggest names in the business in terms of equipment itself but unlike some charging configurations which are a row of inanimate objects at the corner of our property are stations will be connected devices acting as point of interest on a map map that extends beyond the locations into retailers in close proximity to each station today the issue of range anxiety is very real and something that can only be solved by the proliferation of charging stations
spk_0: to there's an open window for the real estate grab that's going on around the world
spk_2: and we have developed a significant conduit into a very large number of high quality locations in the us or announcements to date or just a sampling of our sales pipeline in what is still a massive untapped market it's easy to view us as an upstart in he the with a later start than better known names in the field but on the other hand we are highly experience and consumer engagement ai and travel software we have years of development behind us and patented and proprietary technologies in though
spk_3: categories
spk_2: other companies in the field have little or no experience in these value added technologies to we have a very real opportunity to leapfrog the industry in terms of building a more complete solution said that does more than just dispense electricity into a battery the technology behind this is our ai driven consumer engagement platform this is a comprehensive promotions and incentive platform that learns specific consumer preferences and extends targeted incentives to consumers to drive sales to a retail location a key target for this part of the platform is a quick service restaurant or qs are such as subway burger king mcdonalds and other similar locations we offer a very affordable program that enabled retailers to drive traffic on demand via coupons and promotions the are why can be very high over three hundred percent with a quick payback period in this era of privacy issues one of our great feature their engagement platform is that it is anonymous learning habit of each phone holder while keeping the identity private the privacy features combined with a very affordable price makes a compelling offer in this ace the third element of our ecosystem is ultra fast five g contrary to the steady stream of five the tv commercials touting various levels of functionality all five g is not created equal were installing millimeter wave five ci that can generate download speeds in excess of one gigabit per second which is about four times faster than most public five g networks sites with strong five g are highly attractive to power users particularly individuals operating out of a mobile office at sites featuring our top tier and power five g retailers gaining new incentive to attract customers while we gain a footprint capable of supporting local or regional private networks this gives us an opportunity to provide service to municipalities schools and other entities in need of extra speed and coverage in their mobile computing the five g technologies segment has an opportunity to generate multiple we occurring revenue streams so it is an important element in our concept to create multiple sources of recurring sas and pass base revenue at each installation cool location opportunities for he be charging and five g are numerous do this is a natural combination of technology that many sites for property owners these services add value to the real estate and businesses to they represent highly desirable capital improvements particularly for owners operators looking to remain competitive in their local markets one of the key features of the empower ecosystem is it's adaptability because it gives retailers that option to embrace the green future in stages some sites are not quite ready or simply cannot insult even charging due to restrictions on site configurations but these locations can still putting a paid in our amp our ecosystem be a consumer engagement and five g components for chains this is a very important attribute because it enables them to enhance their green footprint across the entire organization in that regard and power is appropriate for any location desiring more customer traffic but the program really shines at the locations that can install the entire stack of consumer engagement five g and e be charging to better illustrate this problem today i would like to share my own experience on a recent road trip in my electric vehicle my vehicle let me know that i needed to stop at a particular charging station i had six percent battery left when i arrived at a close restaurant parking lot at night with no restrooms are amenities the next closest destination or charger was too far away our amp power platform is uniquely designed to avoid this kind of scenario in our model we have the same user interface but with a much better engagement lair were based on the drivers profile are ai system can direct a driver to have preferred location if i had the m power system it would most likely have said instead of stopping at the two hundred mile mark there's a coffee shop and one hundred and seventy mile mark why don't you stop there the software would also know by my past actions that this location would have my favorite coffee and have five g connectivity so i can do a bit of work while i waited
spk_0: and the and power system could take it a step further by presenting me the menu giving me an easy way to preorder something my food would be ready when i arrived i could plugin go to the restroom grab food eat charge up and get back on the road i would be a happy and power customer and the coffee
spk_1: shop would get a visit from a new customer there would not have otherwise seen this is a distinguishing feature between and power ecosystem it's ability to serve the needs of the consumer and retailers under a single platform
spk_2: now owner turn briefly to the financials fiscal twenty twenty one was the first profitable annual results and the company's twenty five years in business to we are proud of that achievement our core business is exceptionally consistent with little change quarter to quarter but queue for we had a number one time event that affected our profitability however these events also left as well positioned for future growth the most notable of these actions involved are financing activities where we raised four point six million which enabled us to eliminate less desirable forms of debt and provide as much needed cash we ended the fiscal year with two point five million of cash
spk_1: this activity coupled with better receivable collection has significantly improved our balance sheet
spk_2: in terms of individual line items for the quarter revenue increased slightly to seven point eight million compared to seven point six million in queue for twenty twenty seventy nine percent of the revenue comes from subscriptions twelve percent from service and support and nine percent from application development and implementation these ratios are fairly consistent quarter over quarter we saw some improvement in gross margins which increased hundred and ninety basis points to see twenty seven point eight million compared to twenty five point nine million the same year ago quarter we recorded in operating loss of half a million which was primarily driven by a two hundred and five percent increase in software development cost as a result to for showed a net loss of point four million compared to a net income a point three million the prior quarter and point eight million in the year ago period to significant one time events are noteworthy during the quarter the company negotiated a one time payment of two hundred and thirty thirty five thousand to eliminate it's largest legacy debt of seven hundred and eighty four thousand which resulted in a five hundred and forty nine thousand gain upon it settlement we booked a large gain on change and fair value derivative liability for approximately seven hundred and sixty two thousand didn't the company paid off for convertible notes during the fourth quarter the existing gravity of liability which was established in a prior quarters was eliminated as again the net effect of all this was positive in the sense that the company now has a cleaner balance sheet with five significant debt vehicles paid off and replaced with more institutional debt instruments all of these actions were essential to position the company to qualify for better forms of capital in the future in terms of our results for the full year annual net income set a record a one point seven million compared to a loss of fourteen point one million in fiscal twenty twenty annual fps also improved to two cents compared to a dollar and eight cents loss in the prior year in april twenty twenty one and phase recapitalised with four point six million in new financing giving the company it's best financial position and many years stockholders' equity establish a new record of eleven point seven million a hundred and twelve percent increase over the five point five million figure and twenty twenty
spk_4: an important milestone as a company does not need to complete an equity offering to qualify for an uplift to a senior a change
spk_2: we are particularly pleased to report that due to continued improvement in the company's financial condition and our plans for future profitability and capital there's no longer substantial doubt as to the company's ability to continue as a going concern as reflected in our recently filed mk this is more than just a matter of semantics because are growing pipeline is expected to begin generating new revenue in the very near future and we have significant cash and cash flow to launch our most important projects we entered a new growth mode that will require additional spending and eventually capital but all our projects under the and power umbrella will begin with some level of core monthly recurring revenue which will increase as we layer on e v and five gene solutions the recent store owner association announcement for and power installations in florida and illinois represent around eighteen hundred sites but i just a fraction of our target customer base which will eventually extend across the u s we will start with smaller steps first but we are encouraged by the size of our pipeline it is important to remember that every em power participating site can generate some former monthly recurring revenue very quickly we're consumer engagement part of the platform with later growth coming from same locations as five g and easy are installed as a result we expect to show accelerating quarterly revenue as insulation psycho gains traction we utilize boats software as a service and technology and as a service models sas and tas respectively to create multiple revenue streams from a single location so the positive impact on our revenue in the future quarters could be substantial understanding the capital required for this growth the company is targeting segments that have very favorable equipment financing options subsidies and grants from government sources and considerable interest from financial institutions as we grow we will need to expand our resources but are rapidly improving financials have put us in a great position to access better sources of capital in the future i would like to spend the last part of today's call discussing what we have planned for the remainder of twenty twenty one and what will be on tap for twenty twenty two operationally we intend to name additional independent board members as well as establish board committees we hope to hire a see i phone the near future as well as other experts in areas where we need industry experience at high levels too fast track are partnerships forecasting he be charging is complicated at the moment due to the wide range an electric car subsidies and rebates that can vary by state and county furthermore we do not know which sites will implement the full easy five g and engagement sack until we complete a site survey but i can provide a framework for the kind of scale that is ahead of us every site will carry at minimum our consumer engagement software and will generate somewhere between fifty to one hundred dollars per month and recurring revenue about half of the site will qualify for five g which is another fifty dollars per month and we will expect about fifteen percent of every location to qualify for easy installations we expect each site to have an average of four ports and utilization of around ten percent our current sales pipeline has more than thirty thousand targeted locations so it will be fairly straight forward to judge our success as we sign new contracts and began booking revenue because a majority of our revenues recurring and a roll out process will occur in stages weeks back to establish a pattern of accelerated monthly quarterly growth we're really excited about this trend because the margins are very high on the sas part of the business which will support the overall margins as we layer on more capital intensive hardware driven past parts of our ecosystem as the company we have kept a low profile because we wanted to begin locking down our site partners the even charging business is really a real estate land grab at this stage in it's growth cycle so it's important to secure as many high quality sites as possible this is particularly important for our company as we work to create a premier value added network in the industry our goal is not only to future proof are and power location partners but also to future proof or network against that time when commoditization comes to this young industry might be years away but location location location is a phrase that has never gone out of style we get a lotta questions about pipeline and how an upstart like and phase could make so much headway so quickly but we have a simple answer to that most companies in this industry approached the problem with the battery and dashboard as are starting points but our strong thing point was a consumer and the store owner would this user centric approach we can now offer everyone in this easy value chain more than they get from any other provider to understand where we're going with this it's important to look closely and our pipeline the low hanging fruit for us is that class of retailer most threatened by changes in the way people fuel such as gas station and associated convenience store owners they're facing a future similar to holders of taxi medallions when o'brien left arrived on the scene we have heard from some of these operators that the value of their gas station properties will peak in just a few years as a future of gasoline becomes more uncertain to their a very motivated group that will embrace he the outer necessity but beyond that obvious retail segment restaurants hotels bowling alleys grocery stores and other retailers with available parking lot spaces are also eager to add even charging to enhance their value of their property we have a full pipeline of sales prospects in all these categories sore goal is to add new customers in each retail type to build use cases and momentum with the world of business now emphasizing environmental social governance yes she practices we intend to take advantage of the fact that participants and our engagement software are automatically part of a verifiable yes she positive platform even if a participant can not install he be charging by participating in our ecosystem our partner customers are helping proliferated the building out of even charging sites to we offer a direct way for companies to be yes she practiced beyond the limitations of their inherent business store locations every day we get a new affirmation that are and power ecosystem is a right solution at the right time in the form of interest from potential new customers and partners we look forward to providing tangible evidence of that interest in a form of additional deal several help make the empire our brand a well recognized name for mobile consumers and retailers throughout the u s if there's one thing that i hope everyone takes away from today's call it that we are entering a growth phase armed with technology offering that is resonating across many retail categories we believe that will translate into great momentum into twenty twenty two and beyond
spk_0: at this time i would like to open a call for questions thank you at this time we will be conducting a question and answer session if you like to ask a question please press star one on your telephone keypad a confirmation total indicate your line is in the question to you you may press start to as he would later move your question from the queue the participants easy speaker equipment and may be necessary to pick up your handset before pressing the starches we as that you limit to one question and ashore follow up one moment please what we pull for questions as a reminder this time we are in the question and answer session of you like ask a question please press star one on the telephone keep them a confirmation total indicate your line is in the queue you may press start to if you late to remove your question from the que
spk_5: the participants using speaker equipment it may be necessary to pick up your hands before pressing the starkist one moment please or pull for questions
spk_6: our first question comes from michael windows with the benchmark company please proceed with your question
spk_7: fancy thanks for the update
spk_2: i don't think you are oh my god
spk_5: so you know want to better understand the economics for the consumer of do they have to pay for the apathetic description think associated with that the time
spk_2: no so for the consumer there's no there's no fee for the consumer we will be providing them and app so historically we actually worked with the retailer and with their retailers app under current model were also extending this to our own our own platform so basically within the next day a few weeks we'll have our our site our app that consumers can download and essentially no charge to them it will be used for both they're charging network as well as a consumer engagement platform with retailers so we have our own loyalty rewards program and everything else built into that but no charge to that trump consume itself sacha and so have you put out the take up of the app so each location will be one we have an nfc chip built into like a sticker or arrived counter display and there were essentially the retail location would basically push
spk_5: the adoption of that app because they're incentivize for that as well salt the as for the consumer all they need to do is touch their phone or bring their clothes phone to that counter are on the counter
spk_7: sicker and i will pop up our app and they can just press download and they'll app that that downloaded and with that we can kind of load their digital wallet where the discount coupons may be immediately upon their purchase right a similar to you go there you have a fifty dollar bill you touch this thing you get twenty percent off immediately so there's a there's sort of an immediate and sent
spk_8: dave for people to download the app and then they'll be a continued incentive for them to keep the app installed
spk_2: badger okay and so the who will be paying for the hardware at these location either for the charging stations and or the fancy equipment will that be for that coffee bored by and things or that be bored by ah the tell
spk_9: yes we have a kind of sorts was a five g's concerned where employees will
spk_10: paper bulk of the cost because our larger strategy is to build our own private five gene network essentially a wisp around that location and hence the dense locations where we would be getting a lot of revenue from many other sources right they'll be a lot of other users that can get on our platform and pay a monthly subscription fee
spk_2: ah but as far as a tv charging is concerned it's a combination where we have certain customers who want to own an outright we also have some hybrid model and then in some cases we've actually partnered with finance companies that will essentially provide us a hardware on it on almost like a cat model right so they'll be giving us apart location per month charge and
spk_5: and that would be paid for through the to the subscription itself right so that's something we worked out with the were different locations we have a the hybrid model which will be kind of posting
spk_11: i was in the next step
spk_5: mean i will say thirty days or something we'll we'll kind of get older model worked out and share that with with everyone
spk_12: when of a sudden was again and as far as the app
spk_13: he talked about
spk_7: he has been in that all that receiving for of the the retail chains or others are playing in the charges stay know whether or not their directly thought that they just want the on and and know what that might look but
spk_14: ah so it's okay can you will be the questioning us
spk_7: what is the town called you'll start to look like the retailers or other charging installers
spk_2: i i think regardless of of the the bottle ever since i think that there will be the a wave of those who want to be on your app like it so it will be a be charging company that out there know maybe the better than some way they did the wanna be on your app i to see a trip like that oh absolutely and i think that's all honesty what's what's been the sort of leading driver were not only talking to like the independent owners which has become a very kind of niche market for us because it's a unserved community right where they're basically are not being targeted by our or even approach are you they're having a tough time even when they reach out to some of the other companies that they simply don't want to deal with them because it's an independent one single location and it's it's not something that they're interested in where
spk_9: you know we feel that industry changing and they're feeling that the industry changing when we sit down and have conversations with them they realize that for them to partake in this is future the have to be changes right both on on the green they even charging but also the engagement side of of of how the world is changing how consumers are gonna be
spk_7: be going to work and and how they interact with one another all that is changing and they're not well positioned for that so when we can to walk them through our our engagement platform that absolutely love it and that's really been are key driver behind behind our rollout and we just have a tremendous pipeline at this point and the of of of interest and doing just kind of working all that out as we speak and we sort of reflects on the on the recent announcements but we're also working with a lot of big brand as well so so they'll be a lot of interesting announcements on that front as well
spk_5: just try to clarify the model
spk_7: like third or above the question have you club i love that i survive in a driver of the the vehicle and
spk_2: and i already have you have downloaded i roll into subway they saw suggestion from europe
spk_15: and i purchase you know a meal and drank or maybe this post attached to that
spk_2: his father whole transaction a lot of course the first my vehicle and they don't believe in vijay services what is the revenue flow to your company as result of that whole process pure so it so there's just two types of sort of revenue model that we have one is a recurring model that we have from the
spk_15: from the property owner itself right so that would include our platform that we would we'd like to them and which includes a recurring model from vote the consumer gauge and platform as well as the
spk_9: as well as the five g model and under the separate sort of model around the he be charging which you know which is a little more complicated for us to really provide guidance on right now but even aside from that as many additional revenue sources for the company when you when it comes to
spk_7: this have a platform to the hold all separate revenue stream that comes from driving traffic two locations where we can actually and and the coupons where we we can get actually a percentage of the of the sale or that are the promotion that were were offering and we also have lot of interest from
spk_16: the companies who are wanting to get their products on our platform and that they're looking to either pay or
spk_2: per site see where they can actually give us a fee to get their products in locations as well as percentage of of sales
spk_9: from products are sold so we're actually looking at a much more expansive revenue stream that will come out of this
spk_2: well as a bunch of getting herself at this point the others are so worked up or yeah well we have a model we're just kind of because is a lot of components that we just need to kind of build into it because especially on the be charging side right there's the is you know there's a whole every state counties is and sometimes even cities have different pricing structures that that we need to work with as well as demand charge and and many other factors at that go into this so we actually have engaged outside consultants to actually build a model and and work on that for us and we're pretty close to being able to provide
spk_9: more detail guidance around that
spk_2: and at the same time we're actually in the process of rolling out or alternative revenue seem to really get to that point those are still some some time away but at the core of our model right the of businesses that recurring model that i talked about which is about one hundred dollars fifty to one hundred dollars per location for the engagement platform is about fit
spk_7: thirty dollars per location for five g and as we roll the five g network out we can offer the same services to schools two counties to government facilities again fifty dollars per user per month
spk_0: and that's something that doesn't even come from the school board right it comes from federal emergency broadband funds to this is all part of the cares to act where we can get a tremendous amount of subsidies from
spk_2: both are the federal government as it relates to find you connectivity as well as he be charging so lot of that stuff we haven't
spk_0: disclose get because there's a lot of things that we just need to kind of work out on on on be able to disclose that model

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