Metatek-Group Ltd.

Thank you for standing by. This is the conference operator. Welcome to the MediTrip Group Limited first quarter fiscal 2026 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. Should you need assistance during the conference call, You may reach an operator by pressing star and zero. I would now like to turn the conference over to Dennis Fong, Investor Relations. Please go ahead.

Thank you, operator. On the call today are Mark Davies, Meditech CEO, and Nick Morgan, CFO. Before we begin, Meditech would like to remind listeners that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the company's views with respect to future events. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on the risks, uncertainties, and assumptions relating to forward-looking statements, please refer to Meditech's public filings, which are available on CDAR. During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, They are not recognized measures and do not have standardized meanings under IFRS. Please see our MDMA for additional information regarding our non-IFRS financial measures, including for reconciliations to the nearest IFRS measures. Please note that unless otherwise stated, all references to any financial figures are in U.S. dollars. With that, I'll hand the call over to Mark.

Good morning, everyone, and thanks for joining us. I'll start with what drove revenue in the quarter, then spend some time on the progress we made with our DFDG system, which I think was an important operational milestone for the company. First quarter results reflected the normal seasonality of our government and sovereign nation-led business. Fiscal budgets and approval cycles typically result in lower activity early in the year, with activity building as the year progresses. That's a cadence we expect and plan for. Revenue in the first quarter was primarily driven by our EFDG system, which completed two surveys, both for repeat clients. In Angola, we executed the follow-on project from a prior survey completed in 2024. In West Africa, we completed an initial program for a client we have now worked with multiple times. In fact, This marked our fourth return to the region. Both projects were completed within the quarter, and the work with our West African client is expected to lead into a larger plan survey expected to commence in the second quarter of 2026. That repeat customer dynamic, starting with an initial survey and expanding coverage over time, continues to be a defining feature of our business model. From an execution standpoint, It also reduces risk and improves visibility. Once a system is mobilized for a client, follow-on phases tend to be more efficient to execute and easier to sequence, which supports utilization over time. The first quarter also marked the first deployment of our VFTG system on a live customer project, following installation and testing in fiscal 2025. The DFTG is designed to be more portable, allowing deployment on a wide range of aircraft, including smaller aircraft and helicopters. That portability expands our ability to operate in geographies where access and logistics are more constrained. The DFTG commenced operations in Dubai late in February and completed just over 12% of the planned data acquisition before activity was halted due to regional military events and airspace closures. Importantly, the project itself has not gone away. The client, who has previously used older generation technology, has been very impressed with the data acquired to date and is paying the pro rata fees associated with the work completed. We have agreed to return and complete the project once conditions allow. The remaining contract value sits in backlog, Although for prudence, we have not included the return to Dubai in our schedule or forecast for the year. The DFDG has since been demobilized from Dubai, and it is important to note we have no other contracts in the Middle East region in our adjusted backlog. As with any new system, particularly a new system design, there was a degree of technical risk associated with the DFDG's first real-world deployment particularly around how the technology would perform in an operational environment. Based on analysis of the initial Dubai dataset, the system has performed significantly better than we anticipated. We have seen a performance that exceeds expectations in both signal-to-noise, around 40% better than expected, and dynamic range. That gives us a high degree of confidence in the platform and confirms that DFTG is ready to operate at scale. Most importantly, the dynamic range indicates that the system should exceed current daily production estimates. In addition to data acquisition work, the first quarter also included revenue from processing and interpretation phases of projects where data had been acquired in 2025. This included airborne EFDG projects in Singapore and Malaysia, and after the successful execution and result of the airborne survey, a ground-based magnetotelluric project in Singapore. We also began work on a marine-based conventional gravity data acquisition program during the quarter, in partnership with a marine gravity provider we have worked with previously. Long-leaked pre-project deliverables were completed, and mobilization occurred late in the quarter, with data acquisition commencing in the second quarter. At the end of the first quarter, our adjusted backlog stood at approximately 77 million US dollars, representing growth for more than 30 million since the time of our IPO at the start of March. We expect this backlog to convert over the next 18 months, and it continues to be driven largely by repeat sovereign customers. More broadly, recent geopolitical events have only reinforced the importance of energy security, critical minerals, and the national resource planning for governments. We continue to see those priorities translate into sustained demand for our products. As we said before, demand is not the constraint in this business. With two systems now operational, a growing backlog, and the flexibility to redeploy assets as conditions evolve, Our focus remains on disciplined execution and converting backlog into revenue as activity builds throughout the year. With that, I'll turn you over to Nick, who will walk you through the financial results in more detail.

Thanks, Mark. Turning to the financials, first quarter revenue was $4.1 million, consistent with the same period last year. As Mark outlined, the first quarter reflects the normal seasonality of our government-led businesses. with activity typically lower early on in the year as client programs move through budget and approval cycles and building as the year progresses, which was reflected in our quarterly results from 2025. The majority of revenue in Q1 was generated by our ESTG system, which at steady utilization is capable of generating in the order of 20 to 25 million of annual revenue. With our second system, the DFTG, now in operation and having performed well in its initial deployment, it expands our available capacity and is expected to deliver similar levels of revenue once deployed for a full year. Cost of sales for the quarter was £2.3 million compared with £1.8 million in Q1 last year, even though revenue was broadly consistent year over year. That increase was primarily due to the direct costs of maintaining the aircraft, instruments, and crew in Dubai, while data acquisition operations were paused during March due to airspace closures. Those costs continue to be incurred even though acquisition activity was temporarily halted, and the decision was made in conjunction with the client to demobilize and return to complete the project once circumstances allow. As a result, gross profit and gross margin in the quarter were lower than the prior year period, Importantly, this reflects operational timing and external circumstances rather than any change in pricing, client economics, or the underlying cost structure of the business. Operating expenses for the first quarter were $3.6 million compared with $1.7 million in the same period last year. The year-over-year increase was driven primarily by one-time IPO-related costs of approximately $1.5 million, which were incurred in connection with the completion of the IPO. Outside of those items, operating expenses reflect a modestly higher underlying cost base following senior hires made during 2025 and increased depreciation now that both the EFTG and DFTG are deployed as opposed to in 2025 when just the EFTG was operating. Importantly, the IPO-related costs are non-recurring and now behind us. Adjusted EBITDA for the first quarter was 0.4 million, compared with 1.1 million in the same period last year, representing an adjusted EBITDA margin of 9%. The year-over-year change primarily reflects the lower gross margin in the quarter, driven by the Dubai standby costs discussed earlier. As activity builds and utilization improves, we would expect adjusted EBITDA margins to normalize accordingly. Below EBITDA, the company recorded a total comprehensive loss of $11.1 million for the quarter. The primary driver of this was an $8.7 million non-cash revaluation loss related to the company's convertible debentures and associated warrants, which converted to equity in connection with the IPO and the costs associated with the early repayment of the group's term loan. The majority of these costs were non-cash, non-recurring accounting items and will not impact results going forward. From a cash flow perspective, net cash inflow from operating activities was 0.2 million, compared with 1.1 million in the prior year period. That 0.2 million includes the impact of approximately 0.8 million paid out in prepayments relating to capital investment in aircraft engines planned for later this year. Turning to the balance sheet, On March 25th this year, we completed our IPO, raising approximately 25 million or 22 million after expenses. As part of the transaction, all of the company's existing convertible debentures converted into common shares, and the majority of the associated warrants were exercised. Shortly after the IPO, we also repaid the outstanding balance of our term loan, which totaled 6.8 million, using a portion of the IPO proceeds. As a result of these actions, the balance sheet has been materially simplified and strengthened. We exited the quarter with no term debt outstanding. The convertible debentures fully eliminated and significantly improved liquidity. At quarter end, we had 17.2 billion of cash and cash equivalent and total borrowing of only half a million. As we said on our last earnings call, we are directing capital towards the next phase of capacity expansion. This includes an initial milestone payment of approximately $5 million for up to two new EFTG instruments expected to be made in Q2, and we expect to invest approximately $10 to $12 million in the refurbishment and redeployment of the IFTG into the marine environment throughout the year. Our adjusted backlog of $77 million supports the expected build and activity throughout the year and into fiscal 2027, and these capital investments extend capacity beyond it to support future growth and meet this increasing backlog. With that, we're happy to take questions.

Thank you. We will now begin the analyst question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. First question comes from Russell Stanley with Beacon Securities. Please go ahead.

Good morning, and thanks for the question. Maybe my first on the backlog, 77. I think I'm from the prior number of 69 that you reported during March. I guess, can you provide some color on the incremental $8 million you've added? How many contracts is that? How much is under definitive contract as opposed to LOIs? any color as to how much of that is repeat business as opposed to new customers. Any details would be helpful. Thank you.

Yeah, sure. I can answer that one. So from IPO to the report, that was an existing client in West Africa that we are now on to phase four. The actual increase since then to the report today is a new client. a new nation state client who we've been working with probably for the last 24 months We're now at the stage where they issued the fuller LOI and we are about to sign the full contract for execution. They would like to execute the project in Q2 to beat the weather window and then we will return to finish the project off in Q4 after their seasonal weather window opens up again.

Oh, great. So you're anticipating that incremental $8 million to be executed this year?

We expect to execute it by the end of the year, yes.

Great.

And maybe thinking about... Sorry, go ahead. Sorry, one thing I should add is that this is phase one of three phases for this particular nation-state client.

Excellent. Thank you for that. And I guess along that vein, looking at the pipeline, can you talk about where that stands roughly in terms of what you're looking at and perhaps comment on the range of opportunity sizes you are seeing? And related to that, in the prepared remarks, you mentioned obviously the conflict in the Middle East. has only intensified demand in terms of nation states. I'd love to hear the latest view. Is it more hydrocarbon driven at this point for obvious reasons, or are you seeing increased opportunities across the board? Any color there would be great.

Yeah, sure. I'll take it in reverse in terms of those points there. Interestingly enough, most of the larger nation-state clients that we have tend to be multidisciplinary. However, you can imagine with the current geopolitics and the state in the Middle East, There is a renewed focus on trying to ensure that we map the hydrocarbon potential before we then turn to critical minerals. So we have noticed that and we have been in dialogue with a number of the nation states. Also, some of the existing nation state clients we've got, there is a renewed interest in accelerating their exploration. So I'm talking about Southeast Asia and West Africa clients as well. In terms of the, you know, we call it the qualified backlog there. We've added about 15 million to that in the last two months. And that's, again, come from repeat business. we do have some new players that have entered, both nation-state and large independents as well. And what we're finding at the moment is there is a lot of piggybacking on the nation-state programs by the large independents, which is something that is new to us. So a really good example of that is we've returned into Azerbaijan this year and there is a large independent that wants us to execute their program at the same time. So it's kind of a nice mix. We are getting more and more large independents. Outside of that, we have had two super majors contact us asking for our services as well. So we've been working with them and that's in our qualified backlog as well. So the range of the project sizes, large independents are about one and a half to two million, all the way up to 10, 15 million for nation-state programs.

Got it. Thank you. And maybe my last question, and I'll get back in the queue, on the DFTG that was demobilized going to geopolitical events. Has that system been

uh redeployed and started work or or is that still to come any any color there would be great thank you yeah sure we we are just about to mobilize to to the next job um although we have a queue of uh execution for um for our services um the one of the things that we do require is before we start a survey is you have to get Security permissions in place, low flight permits as well. So there's about four different permits that you have to get. And that time span takes anywhere between two to three weeks up to six weeks. So as soon as we knew that we were going to pull out to the Middle East, we started working on this West African project to get our permits in place. And we had the heads up today that we're going to be pretty close to being able to mobilize to that project. We fully expect to start that in the next two weeks.

Excellent. I appreciate the color. I'll hop back in the queue. Thank you.

The next question comes from Charles Yang with Canaccord Generities. Please go ahead.

Well, thanks for taking my question. That was good color on the backlog and the DFTG deployment. I'm just curious on the future, like 2027-ish with the new deployment refurbished IFTG platform. We know it's a marine-based platform, so is there any differences in terms of permitting you mentioned and also any color on the economics of it and the utilization of it, if you can share any color on that?

I can share some of the color on that. So the deployment of the IFTG in a marine environment is fundamentally a different type of survey just by the fact that we add other instrumentation to the package. So at the center of it, very much like what we do in the airborne environment, at the center of it will be the IFTG, but there will be a bunch of ancillary instrumentation that's around it that allows us to develop that product for our clients. The addition of these additional instrumentation means that we expect the revenue per project to be higher than what we currently get in an airborne environment, just by the very nature of the additional instrumentation that we will be deploying at the same time. In terms of execution and execution risk, you may or may not that we recruited our COO, Rob Adams, who has worked in the marine environment for 27 years, knows that space very, very well. And that was a strategic recruitment of Rob. So in terms of risk profile for deploying in that new environment, we believe it's pretty low.

That's great, Collier. Thanks. And maybe just jump back to the 77 million backlog. Is there any like timeframe of those contract and share like how much is short-term within 12 months and how much is long-term 24 to 36 months?

So sure. Nick, do you want to take a stab at that or do you want me to do it?

No, no, sure. Yeah, I can chip in there. So I think it's worth saying the backlog of that 77 is only applied to our existing two instruments. Obviously, once the IFTG is deployed, we will then bring those contracts as they start to go through the pipeline. So we're looking at effectively 18 months to two years to deliver that 77 million across those two instruments, if that helps.

Of course. That's great, Tyler. Thank you. I'll pass the line.

If there are no further questions, this concludes the question and answer session. I would like to turn the conference back over to Mark Davies for closing remarks. Please go ahead.

Okay, thanks everyone for joining us today. As we said in our opening dialogue, For us, we have an extremely healthy, solid backlog and ever-growing pipeline with many new inquiries coming in, which are not cold called by us, but clients coming to us. So it's all about disciplined execution now and getting through that backlog over the next 12 to 18 months. You know, and I'm very excited for the future. So thanks for joining us and I appreciate your time.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.