Xtract One Technologies Inc.

Good day and welcome to the Extract One Technologies Fiscal 2025 Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Woody, Investor Relations Advisor. Please go ahead.

Thank you, and good morning, everyone. Welcome to Extract One's Fiscal 2025 Fourth Quarter and Annual Conference Call. Joining me today is the company's CEO and Director, Peter Evans, and CFO, Karen Hirsch. Today's earnings call will include a discussion about the state of the business, financial results, as well as extract one's recent milestones, followed by a Q&A session. This call is being recorded and will be available on the company's website for replay purposes. Please see the presentation online that accompanies today's presentation. Before I begin, I would like to note that all dollars are Canadian unless otherwise specified and provide a brief disclaimer statement as shown on slide two. Today's call contains supplementary financial measures. These measures do not have any standardized meanings prescribed under IFRS, and therefore may not be comparable to similar measures presented by other reporting entities. These supplemental financial measures are defined within the company's filed management discussion and analysis. Today's call may also include forward-looking statements that are subject to risks and uncertainties, which may cause actual results, performance, or developments to differ materially from those contained in the statements and are not guarantees of future performance of the company. No assurance can be given that any of the events anticipated by the forward-looking statements will prove to have been correct. Also, some risks and uncertainties may be out of the control of the company. Today's call should be reviewed along with the company's annual consolidated financial statements, management's discussion and analysis, and earnings specialties issued October 23, 2025, available on the company's website and its CEDAR Plus profile. And now it is my pleasure to introduce Peter Evans, Chief Executive Officer of XR1. Please go ahead, Peter.

Well, thank you, Chris, and welcome to all of our investors and analysts joining us today. We're going to start off by turning to slide four and talk a little bit about the state of the business. I'm very pleased to say that we ended fiscal 2024 with a very strong Q4 that has positioned us well for the immediate and long-term future, particularly as our new extract one gateway benefited from strong and accelerating demand across a wide variety of markets, most particularly education. where we are rapidly cementing ourselves in a leadership position by offering the most efficient, most adaptable, frictionless technology suitable for screening solutions in environments where the average individual has a much higher volume of personal items on them as they pass into a venue. Items such as backpacks, laptops, tablets, metal water bottle, and other items. We see this application not only for schools in the education market, but also for places like convention centers, office buildings, and hospitals, where we've seen a significant uptick in interest for our solutions. Following a record $16.1 million of total bookings during the fourth quarter, we began fiscal 2026 with a solid backlog, including pending installations of nearly $50 million. These are signed contracts soon to be installed. This is clearly the largest in our company's history and something we're very proud and pleased about. While revenue was negatively impacted by certain one-time events, which we'll talk about in a moment, these were customer-initiated delays. And it was also times when we saw a customer doing a phased approach for some of our larger installations. We continue to work through these items with our customers and cannot be happier about where the company stands as we begin on the next stage of our journey as a company. I personally am looking forward to the coming year being one of higher revenue growth, significant conversion of the backlog into revenue, and continuing improvement of our bottom line results, as well as continued progress on our path to cash flow breakeven, a key objective for the company and myself and the other executives. Let's turn to slide five for a moment. I'd like to provide some further commentary on the rollout of the extract one gateway. The market continues to be very large and growing for this recently launched product, as evidenced by the number of announcements that we've made over the past few months, particularly in the education marketplace, including organizations and school districts like Maynard Independent School District out of Texas, the Del Mar School District in Delaware, Volusia County Schools in Florida, and Mecklenburg in Virginia. It was a very, very active summer for us with several of these awards taking place just before the end of our fiscal year or just after the fiscal year, and some additional contract wins that have continued to go and be booked soon after the end of the fiscal year. Many of these are not yet reflected in our backlog. That said, during the year and predominantly in the fourth quarter, the company signed contracts for X-Track 1 Gateway with multiple customers worth over $13.1 million, serving a variety of markets including education, some healthcare, and some commercial enterprises. Since then, we've continued to win additional contracts and are now successfully begun commercial deployment of the X-Track 1 Gateway just subsequent to the fiscal year-end. And the initial feedback from those first customers has been extremely positive, with many of them looking to expand. We see this as the tip of the iceberg for us in terms of overall demand, as deployments, referenceability, client demonstrations, and all further drive interest that we believe will continue to show growth and acceleration in 2026 and beyond. we have surpassed the original business plan that we built and that we envisioned for the first year of deployments for the extract one gateway and accordingly we now have plans in place to double the manufacturing capacity very quickly for the extract one gateway in fiscal 2026 in order to serve this inbound demand that we're seeing from organizations like schools and others this thing is a nice sign of having a vision to deliver something different and actually delivering on that and the market responding incredibly positively. The positive market response has been in comparison to other solutions where essentially you need to introduce other technologies like x-ray machines and create an environment like a TSA screening activity in airport in order to have a comparison versus the extract one gateway. It's for these reasons that the customers are so excited. As a reminder and a point often asked by investors, we would love to announce many, many more of these customer wins, but due to competitive reasons or their preference of a particular entity, or perhaps their non-disclosure agreements, we may not always be able to announce some of those new wins. This is why we promote and highlight that our backlog is a much better barometer at a good forward-looking indicator of the health of our business and the future success of our business. is the best measure of our performance than the number of press releases that we put out. We continue to visit potential customers and host demonstrations on a weekly basis, multiple different demonstrations across the country every single week. And this is resulting in expanding the way of interested school boards and new previously untapped industries who are intrigued by our unique and groundbreaking capabilities. Our AI-enabled technology is truly the best in class at determining real threats in a world where the average individual is carrying a large number of large metallic items like laptops phones chromebooks chargers metal bottles and all sorts of other paraphernalia and invite anyone on this call to think about your own experience when you have to divest of all those items versus the extract one gateway where you just simply walk through with your rolling luggage your backpack or whatever and we can uniquely highlight that is a gun and that is a knife on the person and on the location. We continue to meet not only with school boards, but healthcare entities have now shown interest, warehouse and distribution companies who are looking to protect them both inbound and outbound. Commercial property organizations, due to some of the unfortunate incidents, such as what happened in New York a few months ago, has caused these marketplaces to open up to us. Other organizations like that, similarly, are looking to showcase our applications, which will then result in us securing new contracts. All of this does take time, particularly as the size of the orders grow. A typical school board is much larger or a school district is much larger than, say, a theater. And so the analysis that goes in takes some time for these organizations, but we're very pleased because that is increasing the size of our average order. And we're very pleased with the pace of introduction and even more excited by what the future holds for this solution. With rapid growth on the horizon, we're planning for the future and expect fiscal 2026 to be a significant change here at Extract One on many aspects. Complementing this new and accretive growth that we're recognizing the Extract One gateway, we continue to win new contracts for our smart gateway at a strong, steady pace. The smart gateway has proven itself to certain specific vertical markets and is performing extremely well. In the past few months, we've announced awards from organizations such as Temple University in Philadelphia, a global performing arts organization, San Mateo Medical Center in California, and follow-on contracts, for example, with a multinational entertainment organization amongst others. These wins underscore the continued and strong demand for the Smart Gateway product and its unique fit to serve those markets particularly well. particularly with his latter customer that I mentioned, where this entity, a known worldwide organization known for its theme parks and related properties, chose to order additional Smart Gateway units to accommodate expansion in its locations. With a planned spring 2026 deployment for a three-year contract worth about $2.6 million in value, we'll increase the Extract 1's global footprint, particularly with Smart Gateway, and further support the entertainment organization's mission to deliver a safer guest experience at all of its venues. Both the Smart Gateway and the One Gateway deliver specific capabilities that are key requirements for unique market segments and their needs. So this is not a one-size-fits-all. It's a perfect fit for each segment. So each of those products is well-positioned to serve their respective marketplaces, and we're very pleased with the response from those markets. This provides balance across our portfolio and more future business predictability as we have different kind of cycles of purchasing across different segments. And of course, delivers a differentiated value that each customer requires out of their screening solutions. Overall as a business, we continue to grow the pipeline of opportunities. We have more than about $100 million U.S. currently in our qualified sales pipeline, customers that we're actively engaged in at various stages of selling cycle. And this is across both product lines. And this number continues to rise due to increasing threats, unfortunately, across the world and in geographies outside of the United States as well as inside of the United States. This improves our positioning and growing brand recognition of who we are and what our technology can actually accomplish. Given the current outlook for these and other opportunities, we're very optimistic about the quarters to come, and we believe the company is on a precipice of a step-level change in terms of the volume and scale of our operations. Therefore, why we continue to do things, like I mentioned earlier, about doubling the capacity to manufacture the one gateways. This obviously leads us to be very positive about the trend towards cash flow neutrality, and we look forward to sharing those updates as we get further into fiscal 2026. I'd like to address some prior comments about revenue delays. We have experienced a handful of customer-initiated delays in their deployments to systems, which have caused one-time delays in our revenue recognition. Let me provide a few examples of these. We've signed a contract and there's a desire for an expanded contract with a major US federal organization that due to federal government optimization activities that have taken place through 2025 has caused a lot of reorganizations of their organizational structure and how different people are responsible for different activities like IT infrastructure, budgets, financing, and these sorts of things. While the contract is still valid, And while that organization has a federal mandate that they will screen for weapons at all of their locations, they've had to pause as they've gone through these reorganization activities. So the requirement is still there and the order is still there and has not gone away, but we're working with that customer as new individuals come into play to start scheduling those deployments. Similarly, a very significant sports venue that we signed a contract with earlier has undertaken a new rebuild of their venue. And they have paused deployment of the systems until such time as they get closer to building occupancy. The good news here is that they've invited us to work closely with them and with the venue's architects for the best placement of systems, where the conduits would go underground, how do they bring wiring in, how they bring power in, and optimize the deployment of the systems into the venue design to ensure the maximum guest experience and deployment of our systems. So I'm pleased that we're working with them closely. I just like the ability to finish that much faster so we can actually convert that order to revenue. On the other hand, we do have scenarios where we're very pleased where things are accelerating. We signed a contract with one of the top five major car manufacturers who wished to protect various venues, and they had delayed their deployments for assorted reasons. However, when we were starting to get a little bit frustrated with the delays, they called us up and said, we are ready to take shipment. And so we shipped those systems this past month. After about a 12-month pause, well, they worked through some entrance redesign activities. So along the same lines, these orders have not gone away. Sometimes a customer needs to pause as they work through some internal activities. The summary here that I'd like all our investors to take from this is the bookings backlog is solid, and we're still actively engaged with all of those customers as well as new customers. At this point, I'd like to turn it over to Karen, who can then provide a little more detailed discussion on our financial results, and then we'll move to Q&A. Karen, over to you.