Venzee Technologies Inc.

Thank you for standing by and welcome to the Binsey Technologies second quarter fiscal year 2021 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's call is being recorded. If you require additional assistance, press star then zero to reach an operator. I'm now going to hand the call over to John Abrams, CEO.

Thank you, operator. And before we get started, I just want to call out, I recognize that a number of you who have participated on the call and are part of the Venzi team are up early with us because it's early in Vancouver. So thanks for your early morning participation. Welcome to our discussion of Venzi Technologies Q2 2021 financial results. I'm John Abrams. As president and CEO, I led a business model and operational turnaround here at Venzi. We started our pivot to a SaaS model platform in the fourth quarter of 2019 and completed it at the end of fiscal year 2020 with initial revenue generated from sales of our Mesh Connector product. Today, in our second consecutive quarterly earnings call, I'm excited to share that at halfway through our year, We are on track for our year-end targets with zero churn, building revenue, strong pipeline, mesh connector sales at just half of our full year goal. Our call today will cover how Venzi's growth is reflected in our key performance indicators and how that KPI progress ensures our ambitious 2021 and 2022 client acquisition and revenue goals are met. Following my remarks, our CFO, Darren Battersby, will provide a financial review, and we will conclude our call today, as we did last quarter, with an open Q&A session. Including Q&A, our call today is scheduled for one hour. Should we not cover an area of interest for you, please reach out to us directly or to our investor relations teams. Before I get started, I want to let you know the earnings release reference on this call, the associated MD&A, as well as the slides we will speak to can all be found in the investor section of our website, investors.benzi.com. Today's call may include forward-looking statements about Benzi's future performance. Actual performance could differ from what is suggested by our comments. Information about the factors that could affect future performance is contained in our CDAR filings. So let's get started. For those of you not familiar with Benzi, we are a software as a service platform. We operate in the consumer retail sector of the global supply chain. We focus on the movement of digital product information that is required to convey, market, and sell a product through any retail channel to any consumer anywhere in the world. Benzi's core product is a unique, artificial intelligence-driven mesh connector used by brands and manufacturers to automate, accelerate, and improve the delivery of their product information to their retail partners. Unlike services sold by our competitors, our proprietary mesh connectors stand alone as the reliable, rapid digital path into more than 400 retailers. Mesh connectors are purchased by brands and manufacturers to displace their slow and costly manual processes. Often put in place decades ago, mesh connectors provide a brand with modern compute-based retail connections that improve margin and accelerate sales. That's a lot, so let me tell you more simply why this is an attractive problem to solve and why I chose to solve it. Prior to Venzi, for seven years at Cardinal Health, I ran the largest regulated medical product supply chain on the planet. Responsible for more than 600,000 active products and generating some $120 billion in revenue, our products were sourced globally and distributed across North America. I managed 12 high-volume manufacturing sites, 52 distribution centers, and really thousands of human resources in India, the U.S., and Mexico that managed it all. During my tenure at Cardinal, I built the capabilities and set the standards that led us to be the number one Gartner-ranked healthcare supply chain for an unprecedented four consecutive years. Despite my success, expansion of our retail sales channel's was constrained by dependence on manual processes, on people and outdated tech to one by one find and communicate to a retailer the endless and variable product information needed to engage the consumer and sell a product through a retailer. Without finding any viable technical solutions for this obvious problem, I set out to fill this market gap. Today at Benzie, I've solved this endemic problem. Our proprietary platform allows a brand to optimize and grow their sales channels with the click of a button rather than laboriously building out a team of people. Our AI-based solution outperforms human teams, and we know that because today our clients tell us exactly that. Let me pause there because that is significant. A year ago, as we were working to connect our first partners and initial clients, I said our solution is important. I said our product performs better than humans. I said it reduces labor. I still say those things, but today our clients say them, and they share our value within their networks. Promotion of Venzi's value within a network is starting to uncover a very important selling dynamic. With brand clients now using mesh connectors in their retail networks, some retailers are now promoting Venzi to brands in their supplier networks. And if that's true, and we know this to be true in at least a couple cases, we may be at the leading edge of what economists call the network effect, where an increasing number of users on a platform creates increased value. That increased value draws in more users and further increases the value of the platform. The network effect has been at the core of platform growth for a number of wildly successful e-commerce and social platforms, including Amazon, Alibaba, Uber, Instacart, LinkedIn, and Snapchat. Today, the value of Venzi platform isn't theoretical. Our value is now measured by our clients who say things like, with Venzi, we spend about a tenth the amount of time on retail syndication than we used to. Another says, using Venzi, our consumers now know exactly what they will get when they purchase our product. And one client who, due to some severe pandemic challenges and needed to rapidly shift and expand their retail sales channels, told us flatly they were able to survive due to Venzi. Our traction in the market is real and it's growing. Our customers and our KPIs tell us that. Let me shift gears here and focus on revenue. At the end of the day, for many of you, the key performance indicator of our success is revenue. Our CFO will share our revenue detail in a moment, but ahead of that, let me preview and provide some context. Since pivoting to a software as a service platform in late 2019, we have increased revenue each and every month. By targeting a single sales persona, partners, We have leveraged and engaged seven partners and filled our sales pipeline with more than 7,000 mesh connector sales opportunities. And as of Q2 end, sold 792 mesh connectors that as we activate those connections and any incentive discounts we provided, we'll continue to grow our revenue in line with our sales target. Let me repeat that. Consistent month-on-month revenue growth derived by one salesperson selling to one sales persona has generated 7,000 opportunities and nearly half of our full-year mesh connector target of 2,080 sold connections. Because our partner sales have performed, a number of direct sales and retail opportunities have emerged. To monetize those opportunities, we recently announced expansion of our sales team and are very pleased that in a tight labor market, we have recruited three top-tier, high-performing sales leaders who will accelerate revenue conversion of our existing sales pipeline and unlock direct brand and retail opportunities. On top of that, our partner sales persona work continues to bear fruit. Last week, we announced an agreement with one of the world's leading digital asset management companies. With an established client base of more than 700 brands in 175 countries, we targeted this partner in 2019. But the company felt there were alternatives to Venzi, and they chose another path. As validation, Venzi's platform and mesh connectors are indeed unique in the market. Three months ago, the partner asked us for an engagement. Activity in this sector has been increasing for some time. I've been in this space for 20 years, so I know most of these companies that have been acquired. In fact, my last supply chain company was acquired, and most of our leadership team has been involved in at least one acquisition over the past five years. So it is a very, very active investment sector. As we close out our prepared remarks for our call today, I believe you can tell my enthusiasm for the business we are building. Recently, I had the opportunity to host Nick Vyas, director of the University of Southern California's Marshall Center for Global Supply Chain Management. Dr. Vyas said brands and retailers will embrace modern supply chain tech or they will die. Venzi is the lifeline brands and retailers need to survive in an ever more competitive consumer-driven market. Finally, I want to call out the Venzi team. Our team is well curated. Almost all of the people on our operational team have been in this industry. They've been a part of an acquisition of some kind or have sold a company in this space. As industry veterans, they know the technical gaps that exist and know how to apply our platform capabilities in order to close those gaps. Our team continues to expand and attract highly capable, highly talented individuals who know how to take on our competitors and win. I am proud of the team we have built rapidly, but intentionally, to capture and grow market share in the rapidly changing retail supply chain sector. Thank you for your engagement and participation in our Q2 earnings call. I'm going to turn the call over to Darren Battersby, our CFO in Vancouver, Canada, for more discussion of our financial results. Darren.

Thank you, John, and good morning, all. Yeah, my name is Darren Battersby. I've been CFO for the company since John took over his leadership in August of 2019. I'm a member and good standing of the CPA Institute of Canada since 1997. And my background is that I have a history of advising and developing early stage companies supporting their public market goals. I'll be discussing Benji's results for our second quarter in June 30th. The numbers I'm referencing will be in US dollars unless I know them otherwise. Before I get into the financial details, I want to point out a few things that happened in the quarter. As John noted, Venzi made a successful pivot to the SaaS platform model in Q4 2019. From a revenue perspective, the company has currently seen eight months of Consecutive months of increased on-model revenues from the SaaS model. Since our earnings call last quarter, we have been reporting this number as part of our standard sub-KPS. Related to our SaaS pivot, we've moved from a negative margin sales to positive margin SaaS revenue sales, while significantly growing our sales leads in mesh connected pipelines. We've also recently increased our exposure for the company in the US market by gaining a U.S. OTC ticker, VNZ, V-N-Z-S. Separately, we have open discussions with a Dallas-based firm, StoneGate Capital Partners, who recently commits coverage to VNZ and is now working with our team to attract new U.S.-based shareholders. On the financial side of things, from a revenue perspective, for the three months ended, we had $13,595 of revenue. For six months in the year to date, we had $22,345. All of it is a non-model class revenue. The prior year's revenues were off-model and through the partnership negative margin revenue model. In prior years, we had $803 and $26,590 for the year, so that's the three and six months under perspective. Again, this is revenue that was not on our SAS model, but holdover revenues from our previous sales strategy. As mentioned in Q4 2019, we implemented the SAS revenue model where we seek to establish consistent monthly recurring revenue model, where we grew revenues from zero at that time to what we're seeing today in this board. From a cost perspective, we've seen the overhead costs increase since Q4 2020. This is all due to adding additional talent to the team. We've added experienced sales and AI technical hires during this period. You'll also see that we have increased our sales and marketing and implementation in tech areas too. The GMA as a whole has increased. This current quarter is a big function of a stock-based compensation for the restricted share units, RSUs, that we issued and which bested during this quarter. So if we adjust for the stock-based comp, which is a non-cash expense, we have hard costs for the three months of $704,000. Last quarter, in Q1, we were at $530,000. And in the previous year, in Q2, $375,000. For the six months, we've incurred $1.9 million of hard costs, where in the previous year in Q2, we did $800,000. All in all, we posted a net loss of $932,000 for the three months, $1.6 million for the six months ended. That gives us a zero per share and one penny per share loss, respectively, for the three and six months. Also important to note, we've been able to receive over 1.5 million US in funding, primarily through the exercise of warrants, but also some options, and we did receive some folded funding over the six months. Looking at our cap table, we have approximately 226 million common shares issued and outstanding. We have approximately 112 million outstanding warrants, 14.3 million stock options, and 1.9 million, as previously mentioned, restricted share units. Also, fully diluted, we have 354 million shares outstanding, and we approximately have a market cap of 23 million Canadians. All in all, the quarter is on target, where we expect it to be from a sales, operations, and overall performance perspective. So I think it sets us up very strong for this fiscal year. This is the end of my formal discussion, and I'll hand it back to John.