Q4 2022 Nextech Ar Solutions Corp Earnings Call
[music].
Please standby were about to begin.
Good afternoon, ladies and gentlemen, welcome everyone to the next tax <unk> got AI fiscal year 2022 in the fourth quarter 2022 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session and instructions will be provided at that time for you to queue up for you.
<unk>.
I would like to remind everyone that this call is being recorded today Thursday April 20th 2023.
I'll now turn the call over to MS. Julia Viola Investor Relations at <unk> Dot AI.
Julien. Please go ahead.
Hello, and welcome to the next tax fiscal year, 2022 and fourth quarter 2022 earnings call with me on the call our oven GAAP Holberg, Chief Executive Officer, and Andrew Chang Chief Financial Officer.
Today after markets close next six <unk> Dot AI released its unaudited financial and operating results for its fourth quarter and fiscal year ended December 31 2022.
A copy of the earnings disclosure it will be available on our website and on SEDAR once our audit is complete.
So it must be information discussed on this call is based on information as of today April 22023 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 SEDAR filings.
During this call we will discuss I F. R. S results and key performance indicators, a detailed description of our key performance indicators will be available once our audit is complete and our M. DNA is filed on SEDAR.
Neither this call nor the webcast archives, maybe recorded or otherwise reproduced or distributed without prior written permission from next tech.
To begin our call Evan GAAP Warburg CEO will discuss fiscal year 2022 in Q4, 2022 highlights as well as recent business developments, followed by Andrew Chen CFO, who will review our financial results and outlook.
Evan will provide closing remarks before opening up the line for a question and answer period.
I'll now turn over the call to CEO and founder of next text really Dot AI Evan Goldberg.
Thank you Julia.
So today is.
Numbers that we are we just released.
Are unaudited and they essentially due to a scheduling issue with our auditors the actual audited numbers will be filed on SEDAR.
Shortly next week and there's obviously not expect it to be anything materially different which is why we're comfortable having this call. Obviously, we're finalizing the audit. So we have a very good view and feel 100% confident in today's release or we would not have relief.
The numbers today.
When I look back at 2022, I mean, it was a long time ago.
There's been a lot of things that happened in 2022.
And most importantly.
Im going to talk a little bit.
20.
'twenty three so far.
First off.
Well, let's just reviewed that in 2022, we emphasize.
The rapidly growing.
Global demand for our three D modeling and augmented reality solutions or.
E Commerce.
And today in 2022, we are being proven right about that trend continuing in 2023 as our business is growing.
It remains very strong.
The new deal flow is continuing in 2023 and really that serves to reinforce the narrative that we've been publicly vocal about which is that there is a rapid.
And accelerating adoption.
And demand for three D models in e-commerce across various industries and product categories, which include furniture.
Equipment clothing, and accessories artwork appliances lighting auto parts.
Everything that you buy online.
And so that trend is here to stay.
And three D models in E Commerce is rapidly becoming.
Must have.
Must have solution.
In Q3 2022, it is important to highlight that we've landed Amazon.
They are by far.
The single largest enterprise customer that a company can land for three D models or e-commerce, they're going all in on three D.
The world has pivoted towards the peak.
So make no mistake about it <unk> is here to stay.
And it will really be driving.
The next leg.
Of the five and a half trillion dollar ecommerce Mega Mega trend.
To compete in the next decade in E Commerce in Medicine and education.
Vince you will need a <unk> model and that is what next tech makes.
We make three D models.
We have breakthrough generative AI, which gives us a competitive.
Advantage in the market and positions us for rapid growth for many years to come.
It was quite a challenge to get here, meaning.
Meaning.
2023.
Well, we're here now.
And we see nothing but blue sky opportunities from here going forward.
So let's go back to Amazon for a minute because.
It's just the.
The most important customer.
For next tech.
We have delivered.
Almost 23 D models to Amazon 20000 take a minute to take that in.
40000 products.
On Amazon chairs.
Couches Tvs rugs coffee payables, all the products that you have in Europe , France, and your relative shop, or an Amazon being converted from two D.
Flat photos to three D.
Interactive.
Models.
And next tech is leading that conversion, it's amazing it truly is amazing.
It's amazing that we are a preferred <unk> model supplier for Amazon.
We're very proud of that.
And we're proud of the fact that our relationship is.
He is only getting stronger and stronger as time goes on with Amazon. We just had a call I was on the call. This week I'm not on every call.
It was on this call.
And just to be clear I mean, we are fully integrated with them.
Just imagine we speak with them daily our tech is integrated into their platform.
The three D models.
We supply them.
It is a constant flow of back and forth.
They have a platform called chime, which is very much like slack, but it's 100% built and owned by Amazon. We are communicating with them daily All day multiple times a day, because our volume is that big and.
Getting bigger.
We are anticipating that as a preferred security model supplier.
They are going to allow us the lowered models directly.
Onto the Amazon platform, which is basically.
Turning us into a preferred.
Seller central it really exclusive <unk> model supplier. This is a huge new opportunity for next tech.
Been talking about them opening up seller central.
They mentioned to us.
That they're going to allow us before they open seller central publicly.
To bring our clients.
Through seller central onto the Amazon platform.
This is a big deal.
We expect this to happen in May 2023.
They are essentially giving us the keys to the Amazon Kingdom as a trusted partner.
Meaning they're going to allow us to operate essentially independently.
Right now we're supplying them with models.
But in.
Not too distant future meeting next month, we're going to be supplying their merchants.
With models.
And we're gonna be bringing those models over the Amazon wall onto the platform.
Because they trust us, we're basically going to be able to do that.
Autonomous fleet, so that is a very big deal.
From our perspective, it means more deals and more revenue why.
Because we're going to be able to go hunting after Amazon merchants, we're going to be able to essentially go to Amazon merchants and offer them the opportunity to bring to have three models made by next tack onto the Amazon platform and to be clear I don't know of any other company that's going to be.
We're able to do that.
And so it's a very very big deal.
From our perspective, it's kind of like going hunting in the zoo.
So significant upside.
Our business signing a deal with Amazon.
Really does demonstrate next tax technical proficiency and leadership in three D modeling for E Commerce.
Sets us up for success with other big enterprise accounts as well since once you break through with Amazon.
Everybody else is relatively easy.
And believe me Amazon only works with best in breed.
They don't work with just anybody and it's not it wasn't easy to establish that relationship.
Today, there's millions of registered active Amazon sellers worldwide.
Each with millions.
There's millions of <unk> models that are needed the Amazon platform has over 250 private skus.
If you just wrap your head around that like I said earlier, we've delivered like 20000.
So the upside is just massive massive massive opportunity is huge for our company and we really just got started in Q3 2022, so were like seven months eight months in.
And we see a significant ramp up.
In demand continuing in 2023, especially starting next month.
With our new status.
As an exclusive supplier for seller central merchants, not just supplying Amazon corporate.
Those merchants pay a different price point, which leads to much higher profitability for us. So again, we're super excited about that.
New development demand for three D models in E Commerce.
In my opinion will only accelerate through 2023.
I believe that as we get into the second half of the year.
See demand shift into overdrive.
It's similar to what happened to our business.
During the pandemic with virtual events and it did have a significant impact on our valuation and I believe that that is going to happen again.
As we move forward in the e-commerce industry.
The business the opportunity the demand for next tech to produce three D models.
Our experiences or e-commerce has never been greater.
And we are extremely extremely excited.
For this opportunity.
And we're taking full advantage of this opportunity.
Again, its a $5 five trillion dollar industry is expected to grow to over six trillion in 2024 <unk> models are fundamentally transforming the online shopping why because you get a 40% reduction in returns, 93% higher click through rate and a 250% increase in.
Conversions nothing else comes close to this ROI on ecommerce not BDO lack direct messaging not even next day delivery with our <unk> modeling technology power.
Powered by our agenda of AI, we are perfectly positioned to ride this mega trend for the foreseeable future.
Really our the on ramp.
Or web 3.0, and we've achieved a perfect product market fit with <unk> models in E Commerce.
Next tech, we believe is creating tremendous value for the ecommerce industry, which is now getting started just getting started with the transition from <unk> to three D. If companies do not adopt this technology they will be left behind by their competitors.
So once again.
<unk> 2023.
Everything's perfectly aligned for next tech two experienced dramatic growth.
Throughout this year as we improve our AI and <unk> model production capabilities.
We expect that our profit margins will improve dramatically, we think that in 2023, we will be able to hit us.
Towards the end of the year, but it's going to be a watershed moment in <unk> history and drive profitability for many years to come and we are on the path to achieving that.
It's it's quite significant.
If you look beyond our three D modeling for E Commerce, we have a portfolio.
<unk> technology companies that we feel are very valuable that they have.
<unk> technology industry disrupting products.
And we are working towards unlocking the value of these assets and businesses and that brings us to our augmented reality space a computing platform.
<unk>.
Is an augmented reality experience platform.
Microsoft's technology Magic leap.
And others and so we expect that when Apple comes out with their glasses, which is expected to happen. This summer I know we've talked about it in a number of times.
There will be an explosion in demand because it's not the consumer.
Enterprise customers that spend the $234000 for a pair of these glasses.
Or their warehouse workers that want an augmented reality experience platform.
That is what a way to think of <unk> as an operating system for augmented reality experiences.
And there's just an enormous enormous application beyond the phone.
With the glasses and so it opens up next tax.
Three D and <unk> solutions to new substantial markets for use by creators brands and companies and we've been very very busy.
We've secured over 20 pilots with big brands for <unk>, and we expect to announce a major deals very soon.
As mentioned in talks with major.
All the major glasses companies about integrating <unk>.
Into their ecosystem.
We believe <unk> is.
He is the killer application for glasses, because it allows for custom and dynamic experiences, which is what the glasses need today the glasses today.
Come with some prebuilt software that really only offers point solution experiences like gaming.
We can offer an array of never ending experiences that can be controlled remotely and updated dynamically which is what the glasses manufacturers tell us they want.
We have always been focused on increasing shareholder value as the largest shareholder.
That is my primary goal and as CEO that is my job and that is why in June we spun out we announced the spin out of our way and then we actually completed the spin out in October of 2022.
And as a result of that spin out I believe the true value of <unk> business and technology is now starting just starting to get recognition.
Deserves.
I see a positive reevaluation in the near future with the glasses.
For sure and with some some new new contracts, which will benefit not just the AAR way investors, but the next tech shareholders, because as everybody knows we own 13 million shares of a way so as they are we increases value it increases.
The value of next tech.
I am.
100% confident that air glasses.
And our air experience platform a way is the next big breakthrough in technology.
Assembly their most important technology breakthrough in the 21st century other than AI and AI is fundamentally.
Power a lot of the experiences but.
<unk> in reality glasses, plus our ways to experience our experience platform as an operating system really is the complete package.
We just see an enormous enormous blue sky opportunity there.
And unlimited use cases.
We look at our.
Next spinel.
<unk> <unk>.
We announced that that would be spun out.
And that is on track to happen.
In early June .
Thiago <unk>.
He is funded Basel III D.
Has gotten there.
Opinion.
The value either and so title III.
He is on track and on its way for.
And we will be a successful second IPO spin out.
Our next tech shareholders, creating value next tech shareholders will get a pro rata share of 4 million title III D shares.
We're super excited.
For that to happen in the June timeframe.
So if you look at our portfolio of companies. We also have next tech event solutions.
Which is in the $50 billion of live event industry.
We've integrated and updated.
That platform and that is now starting to show an acceleration in growth.
Next tech at the end of the day.
Has become a pure play technology company.
That spins off.
Other pure play technologies and retains.
An ownership stake of 50% stake.
We are extremely excited about our three D modeling business. We're extremely excited about our <unk> platform to augmented reality experience platform. We are extremely excited about the growth prospects.
All of our toggle <unk> platform.
There is really just a perfect synergistic ecosystem that each one of these businesses.
<unk> is playing a role in it.
And they all become pure play technology companies, but the mother ship.
Is next step.
So.
In closing.
The company and AI.
We're doing everything we can to bring shareholder value up.
Our stock is not reflecting.
The work that we do.
And we are both.
<unk>.
John .
Increasing shareholder value and we're doing everything that we think we can.
To try and increase the value of our company if you look at.
Next tech and you look at toggle <unk> D and you look at our way.
You look at.
Our next techie bad solution and you add them all up.
I think it's fair to say that the valuation that we see today.
Is extremely extremely low and attractive given the fact that there's these mega trends that each one of these startups.
Play an important Roland.
I've never been more excited I've never been more confident about the position that our company is in and the opportunity there.
That we have in front of us before turning the call over I'd just like to thank.
Our experienced executive leadership team for their hard work and dedication.
I want to thank every next tech.
Our employee working day in and day out.
Striving for success to achieve our company goals.
I, especially want to thank our new COO Reza.
Really doing an amazing job on executing on the dream.
And I have full confidence in our company's direction and I'm looking forward to our continuing growth in 2023.
And beyond with that I'm going to turn the call over to our Chief Financial Officer, Andrew Chang to provide further commentary on the financials.
Thank you Ivan and good afternoon.
As a reminder, unless otherwise noted all figures reported on today's call are in Canadian dollars and under our for us.
All the preceding financial information was made available today through press release, the final audited financials and MD&A will be made available next week. Once our audit has been completed and will be available on our website as well as on SEDAR.
Okay.
As you know we've wound down our e-commerce legacy business and as such in accordance with our for US we have removed the results of that legacy business from our financial statements, which now focus on our ongoing technology business.
And as such our technology revenue for the year was $3 2 million down from $6 7 million compared to last year.
These revenues continue to reflect the transition of our business from virtual events to <unk> models, the meta versus <unk> three data.
<unk> model revenue increased 266% contributing to a $1 $5 million in revenue in 2022 compared to 2021.
With contributions from marquee customers such as Amazon.
We also saw consistent repeat revenue from our next tech event solutions platform throughout 2022.
Gross profit came in at $1 6 million compared to $1 9 million last year, but with higher margins with a 51% gross profit margin compared to 28% last year.
This is attributable to a more profitable <unk> model business compared to our legacy virtual events business.
We anticipate gross profit margins to increase even more as we continue to implement AI technologies and our <unk> model production process to allow us to increase our model accretion capacity at scale.
Operating expenses for the year was 22 million down $4 5 million from last year.
Sales marketing expense was down $5 4 million compared to last year in research and development was down $2 7 million compared to last year as we refocused our efforts to our <unk> model business and away from virtual events.
While taking a fiscal responsible approach in that process.
General and administrative expense have increased $3 6 million, mainly due to onetime expenses related to the airwave Spinout and paid acquisition bonuses to.
So it helps us to help offset the cash outlay for these expenditures our previously announced employee shares for services compensation plan contributed $2 5 million this year.
Net loss from continuing operations for the year was $26 million down $4 million from last year contributing to a 26.
Loss per common share down almost 10% from 35 in 2021.
As of December 31, 2022, we had a cash balance of $3 8 million. In addition to the gross 3 million raise at the end of January 2023, and continue to hold 13 million shares of Airwave valued at approximately $12 million to fund our future.
This quarter.
In the fiscal year is a continuation of months of hard work from next second place related to cost management refocus of our business and Onboarding large customers and the launch of <unk> our way.
Like Kevin I would like to thank each next tech employees for their hard work and dedication and look forward to working with them in the next phase of our exciting journey.
With that I turn that I will turn the call back to Ed.
Thank you Andrew.
I do want to mention one thing before we.
We opened it up.
We also let's not forget that we did upgrade to the OTC <unk>.
In December December 16th 2022.
And to anyone that thinks that the NASDAQ dream is done a new would be mistaken anyone who underestimates my resolve we're getting listed on NASDAQ you will be sorry that you did.
And just wanted to put that out there.
Because I know that that's always been a hot topic.
But.
Operator, we are ready for questions.
Thank you Mr. Gilbert ladies and gentlemen at this time of CGM. The question simply press Star one and just to remind if you find your question has been addressed you can remove yourself from the queue by pressing the pound key again star one for questions well go first to Scott Buck at H C. Wainwright.
Hi, Kevin Thanks for taking my question.
Firstly could you talk a little bit about what the revenue opportunity is within the current customer footprint.
I guess, what I'm, saying is if you were not to add one more customer from this point forward could you grow revenue tenex with Amazon and some of the other large enterprise customers you have.
I think.
Thank you Scott.
Great question.
We only had Amazon as a customer that would be email.
Amazon represents.
Millions of merchants.
And they are opening the door and allowing us now to engage directly with merchants starting next month. So.
We just had Amazon.
We would be extremely happy and very very busy.
For the next decade, but the reality is that we have.
We also have target.
Crate and barrel Kohl's, we are the single source supplier for Kohl's West.
West Farmers group out of Australia, There's a long list Dyson electro Lux.
We supply lots and lots of big brands and substantial E Commerce players with <unk> models and the magic here Scott is that with our generative AI. This is going to become an extremely profitable business for.
And we will be able to scale our production to meet the global demand of all the Amazon merchants and beyond.
That's helpful. And then kind of flows into my next question just in terms of where you stand from a capacity standpoint.
Or are you able to meet the level of interest or level of demand that you have currently.
Currently we are able to meet the demand, but the demand has been held back again by <unk>.
Amazon.
Basically have.
Clothes, there their platform where their merchants cannot bring models on so thats been holding the demand back even though the demand is there but that is going to start to flip and switch in next month and throughout the year. It's just going to continue to ramp up the good news is Scott is that.
Our AI is getting better and better and stronger and stronger every day and the more models. It makes.
The more.
The stronger it gets and so we currently do not have.
Supply award demand, probably we're able to manage both sides of that.
That's great and then last one for me and then just on the current cash balance I'm curious kind of what the preference or thinking is as we move through 'twenty three in terms of either raising capital or potentially selling <unk> shares to raise some.
Working cap.
Yes, it's an interesting question I mean.
We talk a lot about.
You know internally, but there is the potential that we go cash flow positive, obviously everything needs to line up.
For that to happen and if that happens then we don't need to raise anymore.
But it's not it's not pie in the Sky. It is something that can happen.
And we are driving very hard to achieve that so.
You know that's really the focus right now and Thats really.
Which driving driving us.
Alright, perfect I appreciate the additional color. Thank you very much.
Thanks Scott.
Thank you. We'll go next now to Lisa Thompson of Zacks investment research.
Hi, guys.
Gladly.
Here's an update again.
A few questions Hello, hi to Wade through the numbers with the restatement.
And particularly trying to figure out the fourth quarter.
And then you made a comment that you wanted to possibly work to get to 90% gross margins can you tell us where we are in the fourth quarter from a gross margin level. If you take out all the onetime stuff.
So I Wouldnt look at 2022 to give you any real guidance about what you know what 2023 is going to look like meaning I mean.
It's going to rise, but the AI has gotten substantially better in 2023, and so our margin is going to accelerate throughout the year and for us to achieve that 90% gross profit margin.
Is.
In my view doable as we roll into Q4.
But these are technological advancements that need to happen that the foundational tech is there.
We're on the path to achieving it but obviously we cant.
Talk about what hasn't happened yet other than to say that it's possible and we were driving towards that goal.
As we look at Q4, I mean, there was a lot of things, there's a lot of startup costs.
We're in Q4, because we were just really starting to ramp our production for Amazon and not much of that was.
Really AI powered as we roll into.
Q2 more of our tech or of our three D models is going to be.
Built by AI, the more that we build with AI the more our profit margins are going to <unk>.
Expand and so.
It's really a N a.
My story here, Lisa and the AI is really just just starting to get going so looking backwards isn't going to give you a good indication of what's to come.
We have to just.
Look forwards at and know that the AI is going to continuously improve our margin.
Okay.
Good to know.
One number I could figure out in Q4 as it looks like you were up 36% sequentially from Q3 and revenues.
Is that.
A number that is going to continue or is there some point, where it starts the spike or a step function, maybe how does that go.
Yes, sure, yes, so 2020.
Or 2023, rather Q1.
We're going to see another bump.
In sequential growth in.
In 2020.
Three Q2.
When I think we start to see 50 60, 70% sequential growth over Q1.
In Q3.
Should continue to see that kind of growth it could really pop in Q4 I mean this is all.
Happening real time, as we start to get deeper and deeper.
Into into Amazon.
Merchants.
And the AI starts to be able to scale that.
That's really going to determine.
How fast we can grow.
Our topline and Bottomline.
Alright that sounds exciting.
To hear that.
We are very excited Lisa.
Yeah.
Yes.
So when are we going to start seeing the revenues come in at our away.
It's a good question.
We expect well first of all there is some some small revenue that's already.
Trickled in and we've already closed.
Number of pilot projects there is some significant six figure contracts.
Almost all of the deals that we're working on with our way our enterprise deals.
So they do take a little bit of time.
But we're having calls with big brands and Big names. These are big Boys, Verizon Philip Morris <unk>.
Tanger outlet malls.
Disney I mean, we have a very very big names. The biggest names that are very interested.
Say interested.
It takes work for them to actually pilot project, meaning they have to we create either a white label app for them, where they do what they create a white label app with their SDK. They create an experience in augmented reality way finding experience or whatever theyre going to use it for and they test it out for a period of weeks.
They have their employees use it.
And only after that.
Does the conversation move too.
Let's talk about our rollout.
And.
The quoting that kind of thing. So it is an enterprise sale Lisa It does take a little time, but we are generating.
Some small pilot revenue now the pilot revenues.
Tens of thousands of dollars.
The enterprise sale is hundreds of thousands of dollars. So we're in the tens of thousands today.
We're on the cusp of getting a deal that's in the hundreds.
Sounds great, but based on my last trip to the outlet mall I'm looking forward to it.
Thanks.
You can find any.
Yes.
Good stuff alright, great.
I look forward to seeing.
Seeing the full filing next week in Toronto pass through the numbers, but it looks great. Thank you so much thank.
Thank you Lisa.
Thank you. We'll go next now to Christopher Sakai of singular research.
The whole process.
I would like to circle back to gross margins.
I know you provided on 2022, 51%, but if you can give us a flavor.
You guys were on the fourth quarter.
Yes, as I mentioned.
Fourth quarter is not going to be.
Indicative of what we're doing in 2023, we could talk about it but it's.
Rearview mirror, it's not going to give you an indication about.
Investing in next tech today, why you should invest in <unk> today.
It has nothing to do really with 2022, but if you want the number Andrew would be happy to give it to you.
<unk>.
It's up to you.
Sure I can maybe take it up with them.
Yes.
On the fourth quarter, obviously Armando.
Congrats on the strong going into 'twenty, two and making the transition so kudos to you and your team.
It seems to baas.
Pretty strong growth in fourth quarter, Bob Correct me, if I'm wrong.
The fourth quarter Technology service revenues, who are probably little.
Slower than what you the growth part.
It was a little slower than what you had in third quarter.
Is that right.
I don't think so Andrew.
Yeah, you know in our press release.
We said there was a 14% growth.
Q4.
That was mainly just driven by the holidays and.
Working with our customers over the holidays.
Or a bit troublesome.
Troublesome.
Completing models AMA.
Okay. So some of that probably.
Jumps into possible.
Yes, Okay, yes, yes.
I don't have all the numbers, but it seemed that way and.
Thanks for giving guidance.
The previous caller.
In terms of what you expect in first quarter second quarter and.
Yes.
The rest of the year.
Any more color you could provide on <unk> would be helpful.
<unk>, obviously also from the perspective on gross margins, but also from selling and marketing expense.
Rich I think one of the all the lumbar or.
Significantly down.
The secret total cash flow, but at the same time I see that.
<unk> very hard to garner new customers. So if you can kind of paint a picture and give some guidance on that.
Yeah, So we're going to probably pre announce our Q1 numbers sometime in the not too distant future. So stay tuned for that.
But this is the year of breakout growth if I havent been clear, let me be crystal clear.
This year 2023, Q1 should be a solid good quarter.
Q2, we should see at least 50% sequential growth over Q1, and I expect to see that same kind of trend in Q3, and Q4 could be something extremely special where we get triple digit 100% growth in both top line.
And bottom line, where the AI kicks into high gear. So this is a year of breakout rapid growth for next tech it's already begun.
Q1 is in is already in the history books will release that.
As I said it was a good quarter, but Q2 is going to be even better.
In Q3, and Q4 better still so it's just going to be this ramp up.
Revenue.
And then we'll be able to talk some more.
On the Q1 after we released the Q1.
Numbers, but both the profit margins and the revenue are going to increase quarter after quarter after quarter and as far as marketing expenses as mentioned.
With Amazon, allowing us to market.
Their merchants.
We can now target Amazon merchants directly.
It's a huge huge cost savings like I said earlier, it's like going hunting in the zoo.
We're going to work.
We know where they are.
They are on EM.
And we're going to offer them, our three D modeling services, there's nobody else doing that so we see that as just the bonanza and absolute Bonanza.
Sure.
Next tech because our cost of targeting them is very very low.
And so our customer acquisition cost is low our margins are going to be high and get stronger throughout the year and we see that as a big revenue driver.
Throughout the year.
So as a percentage of sales there is more room for.
All our sales and marketing to go down.
Yes, absolutely.
And between the two.
<unk> 'twenty, one and 'twenty two the steep decline.
Probably can be attributed to your spinoff.
<unk>.
Divestment or stoppage of the legacy business.
More parts to it.
Excuse me did you you want to talk about 2021 2020 versus 22.
The steep decline in <unk>.
Sales and marketing.
Yes.
So so we did not spin out our way until Q4 2022. So it has nothing to do with that as mentioned previously a number of times in 2021, we had a completely different business driven by <unk>.
Virtual events and E Commerce in 2022, we divested ourselves of those two businesses, which is why you saw the decline in revenue.
And so the whole story is that those.
Those legacy businesses are no longer part of our.
Going forward plans everything now is geared towards.
High margin.
Pure play technology companies.
Okay. Thanks.
Essentially all of it is due to.
100% Leggett $100 yeah, yeah.
That's all thanks.
Yeah Everything's.
Think of everything is.
A complete reboot.
Okay, great. Thank you.
Sure.
Thank you the next now to Sabra <unk> private investor.
Hello, Evan Thanks for taking my question.
I'm going to kind of step away from the financial aspect for a bit.
Two questions.
Sure.
With your.
Parts library or archives and the <unk> technology.
I want to ask you is the <unk>.
Hi, <unk>.
<unk>.
Positioned or.
Is it capable to step in and.
Cover any inventory that is lacking to build a particular model.
Not every.
So today cannot just go into the parts library and build anything and everything.
That is the future and that is the goal, but today. It can only do some of the products.
By going into the parts library.
But.
Over time, as we keep adding to the parts library to the <unk>.
Its library gets bigger.
And that means that there's more potential for the AI to go in and assemble.
More and more products, so it just gets stronger and stronger and bigger and bigger over time.
Kent do you.
Anticipate or is there any.
Mindset.
Potentially.
The.
Yes.
The product.
You have.
Toggle <unk> through other customers that may be implemented within the library as well or not.
That's a good question.
No.
I'll have to get back to you on that whether we're able to harvest the parts for.
Toggle <unk> I don't see why not.
But.
I'll have to get back to you on that.
Thank you and just one last question.
Do you think maybe one day.
Next tech could potentially be a <unk>.
Cash dividend paying stock.
I do.
I think that.
Essentially we're doing that now with our businesses.
And so.
If let's just use as an example, one of our businesses got acquired and there was a windfall gain two next tech because we own $10 million or 13 million shares.
We would end up with I don't know $100 million in cash and so.
You know it.
It would be hard for me not to.
Dividend some of that out to our loyal investors.
And again.
Being the largest single shareholder.
I'm always going to do what's in the investors.
Best interests so yes.
I appreciate it thank you very much.
Thank you.
And we'll take our next question now from Georgia, Kramer private investor.
Good afternoon Evan.
I wanted to tell you how much I appreciate the work Youre doing for us seems like Youre working very hard at.
I certainly appreciate it but what I wanted to ask is to get some clarification on the Apple.
Glasses I'm looking on the Internet now and what I'm seeing is they're talking about an apple headset coming out in June of this year.
Yes.
With the glass is not until 'twenty six 'twenty seven.
Yes.
Yeah, so so from what I understand.
Until it's <unk>.
It's all just.
Conjecture is that.
There's going to be.
A pair of I guess they call it XR glasses that come out this summer.
It's not pure AR and VR.
Pair of glasses so.
It's it's I think not.
Pure.
So think about it like this.
I don't know if you were reading glasses, but the idea of the AR glasses is a lightweight.
Tariff glasses that you would wear that are equivalent to your reading glasses.
Okay those are the pure.
Glass.
Youre talking about 'twenty six 'twenty seven.
The glasses that are being discussed.
Applegate is going to release this summer.
Is a hybrid.
Of VR goggles.
Goggles, they're more like you see pictures of them are like almost like ski goggles, very cool looking but theyre not quote glasses like reading glasses, but they do this thing.
And so the.
I don't care, whether you call it glasses or goggles or headsets.
It works.
Okay.
Our technology will work.
With that technology, and that's all I care about is that <unk> Tec will.
We will be able to get integrated into those Apple goggles that come out this summer.
And Thats, all I really and that's all you should care about as an investor as well so glasses goggles.
It's going to work, Okay, I just wanted to try to clarify it.
One of the questions I have is I wonder if I could ask how many three D models using AI that you can.
Get ready in one month now and then what would it be by the end of the year do you have any idea.
Yes, so it's a good question.
No.
It's going to be happening in real time.
Over the next couple of weeks and months and quarters and so just think about it as we're just at the beginning.
And so that means you know 6000 8000 models per month today.
That can scale to 10 X.
Or more.
By the end of the year.
It could be.
Some variation of that but that's how I see it kind of playing out where.
Look the AI is able to.
Produce if the AI is fully formed.
It can produce a <unk> model.
In a couple of minutes.
Now you still need to go through QA.
Still need to have somebody do some quality control, although that can be automated to and you still need to get it onto the Amazon platform, although that can be automated to so there's lots of pieces to it.
It's not so it seems like a simple question, but it's there's a lot of pieces and parts.
<unk>.
To actually build the technology so that it can.
Deliver the three D model onto somebody's website.
And be hosted in the cloud so to answer your question <unk>.
It's happening now.
We're able to deliver as I said six to 8000.
A month.
And that number is going to grow.
And it could grow quite dramatically, it's just hard for me to gauge.
And I don't see it stopping meaning once it once it starts to grow exponentially.
It doesn't stop so if you go past 2023 into 2024 in theory, we would have.
Essentially limitless production.
Capacity.
Well that sounds perfect.
Just one more question if I can I'm trying to.
Define what AI means.
To this business and the question is.
Is AI just like.
Like a software that you update and that's all you need or do you have to add.
More personnel and more computer power or can you explained.
Clarify that for me.
So the magic with AI is that it generates.
The more without more people right.
It kind of builds on its on itself.
So its an algorithm it's a computer program that learns which means you don't have to keep programming that's the magic it programs itself.
And so you don't need more people.
Thank you Martin or computer power to do it as well.
Well Thats I don't know about the computer power most of it happens in the cloud.
We use the cloud AWS.
Or or Azure and so most of the <unk>.
Computing happens in the cloud, we haven't had an issue with the computing power but.
In terms of.
The growth of AI, it's really.
It's really magical and it really is extremely powerful because.
It learns just like people learn.
And it gets smarter.
Supposedly like people do.
And as that happens.
It's able to do more and more work faster and faster and it never sleeps.
24 hours a day.
Seven days a week.
365 days a year. So if you pointed in the right direction.
It is incredible I mean, obviously, if its going the wrong way.
[laughter] hits the prop.
So.
That's that's.
That's the best I can give you on kind of how it.
Working today.
Okay I appreciate your your.
Thank you much.
Thank you George.
Thank you and we will take our last question from Vincent <unk> of private Investor.
What was your computation.
Is this vincent.
No. This is why scale.
Oh, Hi, Gail.
Hi.
So there is no public company.
That we compete with.
There are private companies.
That are out there that do some similar stock there's a company named Avatar.
That does virtual try on they just raised $45 million.
And.
A series a round or be round.
But there really aren't any competitors that are publically listed so as private companies, it's hard for us to really.
Identify.
I think.
Amazon has told us that they have next tech and a handful so look at your hand not that many.
Of companies that are making <unk> models for them today.
Okay. Thank you for that.
Youre welcome Gail.
Okay.
And we do have a follow up question now from our Sard Rashid.
Okay Hello, Evan.
Just to follow up.
When we're talking about.
Port Folio of technology is that.
<unk> has built.
See you.
God willing.
Down the road.
Gets acquired will you retain that.
Database that all these operating operating systems have been building or.
I'm not sure I understand the question.
So pretty much.
I guess.
Intellectual property.
It does.
Next tech nano scale.
Yes, so no no we'd become a shareholder just like you we're not going to.
Control.
When we spin it out.
Its own public company at stand alone.
And it is.
It gets.
All the assets.
Yeah. So.
On public company and there's a reason we do that otherwise it would be.
Well first of all.
It wouldn't be a legit.
Sand alone public company, if we retain.
The IP and also.
It would make it impossible for a suitor if somebody wanted to acquire one of these spin outs, if they don't have any IP.
There is nothing.
They're right so yes.
Yes.
And just one last question.
We are familiar with your partnership with Amazon.
Do you at all anticipate.
Further.
Our growing with Amazon Web services at all.
Future.
Okay.
I'm not sure what you mean by that.
I mean, well.
You have quite a range of <unk>.
Our technologies in your portfolio.
Obviously, you are working with Amazon with.
The toggle <unk> or even <unk> for this matter.
<unk>.
AAR away or any other technology that you may have in your portfolio, but perhaps that can be predicated more towards Amazon web services.
Yes.
Definitely cross selling.
What youre asking.
We're very aware that there is.
Crossover and the ability to cross sell.
To our customers is is important.
We will definitely.
We've been doing that.
Okay perfect.
Perfect. Thank you. Thank you very much.
Thank you.
Mr. <unk>. It appears we have no further questions I will turn the conference back to you Sir for any closing comments.
Alright, I just wanted to thank our loyal shareholders.
I do believe that.
The stock is extremely undervalued at these levels and I do believe that patience and poised will prevail. Thank you very much have a nice evening.
Thank you and again, ladies and gentlemen, this will conclude the <unk> AI fiscal year 2022 in fourth quarter 2022 results Conference call give me like to thank you all so much for joining us and wish you all a great evening.
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Yes.
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Yes.
Okay.
Okay.
Okay.
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Okay.