Q1 2023 Nextech AR Solutions Corp Earnings Call
Operator: Please stand by. We're about to begin. Good afternoon, ladies and gentlemen. Welcome everyone to the Nextech3D.AI Q1 2023 results conference call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question and answer session. Instructions will be provided at that time for you to queue up for your questions. I'd like to remind everyone that this call is being recorded on today, Thursday, 18 May 2023, and I'll now turn the call over to Ms. Lindsay Betts, Investor Relations at Nextech3D.AI. Lindsay, please go ahead.
Speaker 2: Please stand by, we're about to begin.
Speaker 2: Good afternoon ladies and gentlemen. Welcome everyone to the NextText3D.ai Q1 2023 results conference call. All lines have been placed on mute to prevent any background noise and after the speaker's remarks there will be a question and answer session. Instructions will be provided at that time for you to queue up for your questions.
Speaker 2: I'd like to remind everyone that this call is being recorded on today's Thursday, May 18th, 2023. And I'll now turn the call over to Ms. Lindsey Betts, investor relations at NexTex3D.ai. Lindsey, please go ahead.
Lindsay Betts: Hello, and welcome to the Nextech Q1 2023 earnings call. With me on the call are Evan Gappelberg, chief executive officer, and Andrew Chan, chief financial officer. Today, after markets closed, Nextech3D.AI released its unaudited financial and operating results for its Q1 ended 31 March 2023. A copy of the earnings disclosure will be available on our website and on SEDAR once our audit is complete. Some of the information discussed on this call is based on information as of today, 18 May 2023, 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 the IFRS results and key performance indicators.
Speaker 3: Hello and welcome to the Nextech Q1 2023 earnings call. With me on the call are Evan Gabelber, Chief Executive Officer and Andrew Chan, Chief Financial Officer. Today, after markets close, Nextech3D.ai released its unaudited financial and operating results for its first quarter ended March 31.
Speaker 3: uncertainties.
Speaker 3: Actual results may differ materially from those set forth in such statements.
Speaker 3: 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 CDAR filings.
Lindsay Betts: A detailed description of our key performance indicators will be available once our audit is complete and our MD&A is filed on SEDAR. Neither this call nor the webcast archives may be recorded or otherwise reproduced or distributed without prior written permission from Nextech. To begin our call, Evan Gappelberg, CEO, will discuss Q1 2023 highlights, as well as recent business developments, followed by Andrew Chan, CFO, who will review our financial results and outlook. Finally, Evan will provide closing remarks before opening up the line for a question and answer period. I'll now turn the call over to CEO and founder of Nextech3D.AI, Evan Gappelberg.
Speaker 3: During this call, we will discuss the IFRS results and key performance indicators.
Speaker 3: A detailed description of our key performance indicators will be available once our audit is complete and our mDNA is filed on CEDAR.
Speaker 3: Neither this call nor the webcast archives may be recorded or otherwise reproduced or distributed without prior written permission from NexTech. To begin our call, Evan Gappelberg, CEO , will discuss Q1 2023 highlights, as well as recent business developments, followed by Andrew Chen, CFO .
Speaker 3: who will review our financial results and outlook. Finally, Evan will provide closing remarks before opening up the line for a question and answer period. I'll now turn the call over to CEO and founder of Nextech3D.ai, Evan Gappelberg.
Evan Gappelberg: Thank you, Lindsay. Today, we reported a surge in our year-over-year 3D modeling business with 550% growth, record revenue for Q1 in 2023. We, in Q1, had multiple breakthrough generative AI patents filed. We delivered over 20,000 3D models to Amazon, and we saw our technology services revenue grow sequentially by 40%. I would say that Q1 was a solid quarter by all measurements. When I look at today's numbers, they really are just the beginning of our new growth curve as we are perfectly positioned to ride the CAD 100 billion 3D modeling growth wave for the next decade and beyond. If you look at 2023, it is a very interesting year. Microsoft has invested CAD 10 billion into their investment in OpenAI. Obviously, ChatGPT is the first breakout and breakthrough in this world of AI. It's the first major AI application.
Speaker 4: Thank you, Lindsay.
Speaker 4: So today we reported a surge in our year-over-year 3D modeling business with 550% growth, record revenue for the first quarter in 2023. Thanks for watching and happy developing!
Speaker 4: In Q1 had multiple breakthrough generative AI patents filed. We delivered over 20,000 3D models to Amazon and we saw our technology services revenue.
Speaker 4: grow sequentially by 40%. So I would say that Q1 was a solid quarter by all measurements.
Speaker 4: And when I look at today's numbers, they really are just the beginning of our new growth curve, as we are perfectly positioned to ride the $100 billion 3D modeling growth wave for the next decade and beyond.
Speaker 4: If you look at 2023,
Speaker 4: It is a very, very interesting year. Microsoft has invested $10 billion into their investment in OpenAI. And obviously, that CHAP GPT is the first breakout and breakthrough in the industry.
Evan Gappelberg: The key point is that Microsoft invested CAD 1 billion in OpenAI before they had even a working prototype because of the immense potential. They invested another CAD 10 billion at a CAD 28 billion valuation, and they were only generating around CAD 3 million in revenue. That's 9,000 times sales. That's extraordinary valuation. We did CAD 3 million in revenue in 2022. The key point is that I believe that as an AI company, Nextech is severely undervalued, and it's primarily, in my view, because we are under the radar. We are a small cap. We have no institutional sponsorship. I would say to our investors that that can change. That can change very rapidly with an up-listing to Nasdaq or the New York Stock Exchange, which should not be ruled out of the realm of what's possible.
Speaker 4: in this world of AI. It's the first major AI application. The key point is that Microsoft invested a billion dollars in open AI before they had even a working prototype because of the immense potential. Then they invested another 10 billion.
Speaker 4: at a $28 billion valuation, and they were only generating around $3 million in revenue.
Speaker 4: That's 9,000 times sales. You know, extraordinary valuation.
Speaker 4: thousand times sales. That's extraordinary valuation. We did 3 million.
Speaker 4: in revenue in 2022.
Speaker 4: The key point is that I believe that as an AI company, NextTech is severely undervalued. And it's primarily in my view, because we are under the radar. We are a small cap. We have no institutional sponsorship, but I would say to our investors,
Speaker 4: that that can change. That can change very, very rapidly with an uplisting to NASDAQ or the New York Stock Exchange, which should not be ruled out of the realm of what's possible.
Evan Gappelberg: In the world of AI, the question comes up a lot, is AI the new electricity? Is AI this new form of intelligence that the world has never seen? Is AI going to be as persuasive and pervasive as the internet? These questions I read in the news, and I'm sure you do too, on a daily basis. The answer is a definite yes and a whole lot more. The opportunity presented by AI is vast. Late last month at NVIDIA's annual GPU Technology Conference, the CEO, Huang, acknowledged this pivotal time for AI technology, calling it the iPhone moment for AI. AI, however, is not a new technology. I remember AI, growing up, being talked about. It was predicted decades ago to have a major impact on society. Only now in 2023 is that dream becoming a reality.
Speaker 4: in the world of AI.
Speaker 4: the question comes up a lot. Is AI the new electricity? Is AI the new electricity?
Speaker 4: this new form of intelligence that the world has never seen. Is AI going to be as persuasive and pervasive as the internet?
Speaker 4: These questions I read in the news and I'm sure you do too on a daily basis.
Speaker 4: I read in the news, and I'm sure you do too, on a daily basis. The answer is...
Speaker 4: A definite yes and a whole lot more. The opportunity presented by AI is vast.
Speaker 4: late last month at NVIDIA's
Speaker 4: annual GPU technology conference, the CEO Hwang acknowledged this pivotal time for AI technology, calling it the iPhone moment for AI.
Speaker 4: AI, however, is not a new technology.
Speaker 4: I remember AI growing up.
Speaker 4: being talked about.
Speaker 4: And it was predicted.
Speaker 4: And it was predicted decades ago to have a major impact.
Speaker 4: on society, but only now.
Evan Gappelberg: Only in 2023 is the AI genie out of the bottle. AI has arrived, and it's here to stay for good and bad. Big tech is jumping in with both feet. As mentioned, Microsoft has put CAD 10 billion into OpenAI, but it doesn't end there. Some of the best-known names in investing are betting big on artificial intelligence stocks. Bill Ackman recently put in CAD 1 billion into his bet in Google, parent Alphabet. Stanley Druckenmiller has put CAD half a billion into Microsoft and NVIDIA. Tiger Global, Cathie Wood, they're all super bullish on AI. Every industry will be forced to adopt AI in order to remain competitive, period. It doesn't matter what industry you're in. If it's education, it's healthcare, transportation, the military, or e-commerce, AI is going to have to play a role. If you don't adopt, you will not survive.
Speaker 4: in 2023 is that dream.
Speaker 4: becoming a reality. Only in 2023 is the AI genie.
Speaker 4: out of the bottle. AI has arrived.
Speaker 4: And it's here to stay for good.
Speaker 4: to stay for good and bad.
Speaker 4: Big tech is jumping in with both feet. As mentioned, Microsoft has put 10 billion into open AI, but it doesn't end there.
Speaker 4: Some of the best-known names in investing are betting big on artificial intelligence stocks. Bill Ackman recently put in a billion.
Speaker 4: best known names in investing are betting big on artificial intelligence stocks. Bill Ackman recently put in a billion into his bet in Google.
Speaker 4: Karen alphabet Stanley Druckenmiller
Speaker 4: has put a half a billion into Microsoft and NVIDIA Tiger Global.
Speaker 4: Cathy Woods, they're all super bullish on AI. Every industry.
Speaker 4: will be forced to adopt AI in order to remain competitive, period.
Speaker 4: It doesn't matter what industry you're in, if it's education, if it's healthcare, transportation, the military.
Speaker 2: for ecommerce.
Speaker 4: AI is going to have to play a role.
Evan Gappelberg: Lucky for Nextech and Nextech shareholders, we don't need to play catch-up. Make no mistake about it, 2023 is going down in the history books to be the year of AI, not just the big boys, but also for Nextech3D.AI shareholders. In fact, we have been investing in AI going all the way back to 2019. However, we really ramped up our investment in the summer of 2021, when we put CAD 10 million down to buy Threedy.ai. That was a big bet back then. Today, I'm happy to report that this investment is now starting to pay dividends. It really, again, is just the beginning.
Speaker 4: If you don't adopt...
Speaker 4: If you don't adopt, you will not survive.
Speaker 4: Lucky for NextTech.
Speaker 4: Lucky for NextTech and NextTech shareholders.
Speaker 4: We don't need to play catch up. Make no mistake about it, 2023 is going down in the history books to be the year of AI, not just the big boys.
Speaker 4: but also for Nextech3D.ai shareholders. In fact,
Speaker 4: also for Nextech3D.ai shareholders. In fact, we have been investing.
Speaker 4: in AI going all the way back to 2019.
Speaker 4: However, we really ramped up our investment in the summer of 2021.
Speaker 4: when we put $10 million down to buy 3d.ai.
Speaker 4: That was a big bet back then. Today, I'm happy to report that this investment is now starting to pay dividends.
Evan Gappelberg: I want to go through some math just to show our investors and speak to how potent AI can be for Nextech, and how it helps us to succeed in business, and how it's going to increase our share price, and why the world is literally running headfirst into AI. It really can be summed up in one word, productivity. AI equals productivity. What is productivity? What does productivity mean? Well, if you're productive, it means you do a lot. You create or produce large amounts of something. A productive worker makes more widgets than the slacker who keeps sneaking out to get a cup of coffee and chitchat. What is productivity for Nextech? For us, productivity is the measure of output per worker per hour. That's not just us, that's across all companies.
Speaker 4: But it really again is just the beginning. I want to go through some math.
Speaker 4: just to show our investors and speak to how potent AI can be for Nextech.
Speaker 4: and how it helps us to succeed in business, and how it's going to increase our share price.
Speaker 4: and why the world is literally running headfirst into AI.
Speaker 4: It really can be summed up in one word.
Speaker 5: Productivity.
Speaker 5: AI equals productivity.
Speaker 4: What is productivity? What does productivity mean? What is productivity?
Speaker 4: you create or produce large amounts of something.
Speaker 4: A productive worker makes more widgets than the slacker who keeps sneaking out to get a cup of coffee in the kitchen.
Speaker 4: What is productivity for NextTech?
Speaker 4: For us, productivity is the measure of output per worker per hour.
Evan Gappelberg: As a 3D modeling company, as a 3D supplier for the e-commerce industry, we can measure our productivity by evaluating the number or value of finished 3D models produced by every worker within a given amount of time. Let's bring this back to productivity again for Nextech and 3D models. Technology has improved our productivity of making 3D models dramatically since we started back in 2019. It used to take us a week to make a photorealistic 3D model. Five days working nine to five, seven hours a day. That's 35 hours to make one photorealistic, highly complex model back in 2019. Today, our productivity has improved, without the AI, to two models per day. One human making one complex 3D models every 3.5 hours. We went from 35 hours to 3.5, which is pretty damn good. I have to say, that's a big accomplishment.
Speaker 4: And that's not just us, that's across all companies. But as a 3D modeling company, as a 3D...
Speaker 4: supplier for the e-commerce industry. We can measure our productivity by evaluating the number or value of finished 3D models produced by every worker.
Speaker 4: within a given amount of time.
Speaker 4: So let's bring this back to productivity again for NextTech and 3D models.
Speaker 4: Technology has improved our productivity of making 3D models dramatically since we started back in 2019.
Speaker 4: It used to take us a week to make a photo realistic 3D model.
Speaker 4: a week to make a photo realistic 3D model. Five days.
Speaker 4: working 9 to 5, 7 hours a day.
Speaker 4: That's 35 hours to make one photorealistic, highly complex model back in 2019.
Speaker 4: Today, our productivity has improved.
Speaker 5: without the AI.
Speaker 4: to two models per day.
Speaker 4: or one human making one complex 3D models every 3.5 hours.
Speaker 4: So we went from 35 hours to 3.5, which is pretty, pretty damn good.
Evan Gappelberg: Remember, we're talking about AI. We're talking about a quantum leap in productivity for humans and businesses. A single human can only do two 3D models a day. They work 365 days a year with no holidays. That's 730 a year. Not that many. Hard to scale, even at 10X. 10X is not enough. Just not enough. If we think about our business, and just to be crystal clear, that example relates to a highly complex photorealistic model. We are able to produce significantly more for simple models. We can produce simple models three times as fast. Again, I'm not talking AI. Again, I'm using a super complex, highly complex model just to explain what's happening in our business. Now, here's where it gets interesting. This is where AI comes in. Back in 2021, we were dreaming that AI could be a game changer.
Speaker 4: And I have to say that's a big accomplishment.
Speaker 4: Remember, we're talking about AI.
Speaker 4: We're talking about a quantum leap in productivity.
Speaker 2: for humans and businesses.
Speaker 4: A single human can only do two 3D models a day.
Speaker 4: They work 365 days a year with no holidays. That's 730
Speaker 4: days a year with no holidays that's 730 a year.
Speaker 6: Not that many.
Speaker 4: Hard to scale, even at 10x.
Speaker 5: So, TEDx is not enough.
Speaker 6: It's not enough.
Speaker 6: So.
Speaker 4: If we think about our business, and just to be crystal clear,
Speaker 4: That example relates to a highly complex photorealistic model. We are able to produce significantly more
Speaker 4: For simple models, we can produce simple models three times as fast.
Speaker 4: And again, I'm not talking AI.
Speaker 4: And again, I'm using a super complex, highly complex model just to explain what's happening in our business.
Speaker 4: Now, here is where it gets interesting.
Speaker 4: And this is where AI comes in.
Speaker 4: Back in 2021, we were dreaming that AI could be a game changer.
Evan Gappelberg: As mentioned, we invested CAD 10 million into AI in 2021. We believed that after an enormous amount of computational power, after an enormous amount of algorithm testing, and working tirelessly seven days a week on this idea, this dream that AI was going to increase our productivity at Nextech. That we would be able to use AI to make 3D models. We believe that. We could take these highly complex 3D models that takes a human three and a half hours. We believe that by using generative AI, we could create the same model in 60 seconds. Now we're at 210 minutes. 3.5 hours, 210 minutes, down to one. It gets better, because AI works not seven hours a day. It works 24 hours a day. Not five days a week, works seven days a week. Doesn't have any vacations, never gets sick.
Speaker 4: And as mentioned, we invested $10 million into AI in 2021.
Speaker 4: We believed that after an enormous amount of computational power, we could have a better
Speaker 4: after an enormous amount of algorithm testing and working tirelessly, seven days a week on this idea, this dream that AI was going to increase our productivity at NextTech.
Speaker 4: that we would be able to use AI to make 3D models.
Speaker 4: we would be able to use AI to make 3D models. We believe that.
Speaker 4: that we could take these highly complex 3D models and that takes a human three and a half hours.
Speaker 4: We believe that by using generative AI, that we can create the same model
Speaker 4: We believe that by using generative AI, that we can create the same model in 60 seconds.
Speaker 6: Dope.
Speaker 4: Now we're at 210 minutes.
Speaker 4: 3.5 hours.
Speaker 4: 3.5 hours, 210 minutes.
Speaker 6: Cancel one.
Speaker 4: But it gets better because AI works not seven hours a day, works 24 hours a day.
Speaker 4: Not five days a week, or seven days a week. Doesn't have any vacations. Never gets sick.
Evan Gappelberg: Think about scale. Scale means we could run multiple algorithms simultaneously. If you think of ChatGPT being used by one person, or think of ChatGPT using simultaneously by 1 million people at the same time, that's called hyperscale. That's what Nextech3D.AI is after. This is what's happening. This is why I'm here. This is what you have invested in. Whether you realized it or not when you invested, this is and has always been the goal. Let's keep going a bit with the math. Remember, we're going for one model every 60 seconds, and that's 24 hours a day. If we continue, there's 1,440 minutes in a day. If we're selling the models at CAD 100 per model, and of course the price is going to go down as we continue to scale up, but let's use CAD 100 a model, which is an average price today.
Speaker 4: So think about scale. Scale means we could run multiple algorithms simultaneously. If you think of chat GPT being used by one person,
Speaker 4: or think of Chappie, GPT using simultaneously by a million people at the same time, that's called hyperscale.
Speaker 4: That is what NextTech3D AI is after.
Speaker 4: That's what NextTech 3D AI is after. This is what's happening.
Speaker 4: This is why I'm here.
Speaker 4: This is what you have invested in. Whether you realized it or not, when you invested, this is and has always been the goal.
Speaker 4: is what you have invested in. Whether you realized it or not, when you invested, this is and has always been the goal. Now let's keep going a bit with the math.
Speaker 4: Remember, we're going for one model every 60 seconds.
Speaker 4: And that's 24 hours a day. So if we continue
Speaker 4: this 1,440 minutes in a day.
Speaker 4: If we're selling the models at $100 per model, and of course the price is going to go down as we continue to scale up.
Speaker 4: But let's use $100 a model.
Evan Gappelberg: That means we can generate CAD 144,000 a day. In a week, CAD 1 million. In a month, CAD 4.2 million. In a year, CAD 52 million. The best part is that not only are we able to use our generative AI to scale production, but with the increase in production, is the decrease in cost. It goes down simultaneously since less humans are needed, which gets us to a 90% gross profit margin. There's still going to be some human, but it's going to be at the margin. I think the question that everybody wants to ask, and I know Lisa is dying to ask this question, is where are we with this dream today? Where are we? Today, our breakthrough generative AI can do about 40% of 50% of the work. This is moving fast. Very fast.
Speaker 4: which is an average price today.
Speaker 4: That means we can generate $144,000 a day.
Speaker 4: 144 thousand dollars a day. In a week
Speaker 6: Million.
Speaker 4: In a month, 4.2 million in a year.
Speaker 4: In a month, $4.2 million. In a year, $52 million.
Speaker 4: The best part is that not only are we able to use our generative AI to scale production,
Speaker 6: But
Speaker 4: with the increase in production.
Speaker 4: with the increase in production is the decrease in cost.
Speaker 2: It goes down simultaneously since less humans are needed.
Speaker 4: which gets us to a 90% gross profit margin. There's still going to be some human.
Speaker 4: but it's going to be at the margin. I think the question that everybody's asking is,
Speaker 5: wants to ask
Speaker 4: And I know Lisa is dying to ask this question. Where are we with this dream today?
Speaker 4: Where are we? Today, our breakthrough generative AI can do about 40%
Speaker 4: of 50% of the work.
Evan Gappelberg: Each week and each month, the AI is gaining strength, and it's only a matter of a few quarters before it fully stands up and does 100% end-to-end production. That is what we're after, and that is what we're marching towards. Today, we're at about 20% of the way to achieving this. We're on the path to this inevitable reality. We have the breakthrough generative AI. We are using it in our production, but it's not strong enough to fully be autonomous, much like the Tesla car. It simply takes time. Now that the AI genie is out of the bottle, it is inevitable. We have filed patents, many patents, and there's more coming. We are building our moat around our golden goose, around our proprietary breakthrough generative AI.
Speaker 4: But, this is moving fast.
Speaker 4: very fast. Each week and each month the AI is gaining strength and it's only a matter of a few quarters.
Speaker 4: before it fully stands up and does 100% end-to-end production.
Speaker 4: That is what we're after. And that is what we're marching towards. So today, we're at about 20% of the way to achieving this.
Speaker 4: We're on the path to this inevitable reality. We have the breakthrough generative AI. We're using it in our production, but it's not strong enough to fully be autonomous, much like the Tesla car.
Speaker 4: It simply takes time. But now that the AI Genie is out of the bottle, it is inevitable.
Speaker 4: So we have filed patents.
Speaker 4: many patents and there's more coming. We are building our moat.
Speaker 4: many patents and there's more coming. We are building our moat around our golden goose.
Evan Gappelberg: We are on the path to high-volume photorealistic 3D models at a low cost, high margin for the global CAD 5.5 trillion e-com ecosystem, which is going to represent 95% of all commerce. I'm talking e-commerce is going to be all commerce, essentially. Today it's 16%, but by 2040, it could be a CAD 50 trillion industry. This is a titanic shift in how we shop. It will all be online, and it will all be in 3D, and the only way to get there is through Nextech's generative AI. We've already achieved a 10x increase in productivity, but now we are on the path to a quantum leap forward by leveraging our generative AI. Because of this breakthrough technology that we have patent pending, that we are using today, I believe that we, meaning Nextech, should command a much higher valuation.
Speaker 4: around our proprietary breakthrough generative AI. We are on the path to high volume photo realistic 3D models at a low cost, high margin, for the global five and a half trillion dollar e-comm ecosystem, which,
Speaker 4: is going to represent 95% of all commerce. I'm talking e-commerce is going to be.
Speaker 4: All commerce essentially today. It's 16% but but 2040
Speaker 4: It could be a 50 trillion dollar industry.
Speaker 4: This is a titanic shift in how we shop. It will all be online and it will all be in 3D. And the only way to get there is through NextText generative AI.
Speaker 4: We've already achieved a 10x increase in productivity, but now we are on the path to a quantum leap forward by leveraging our generative AI.
Speaker 4: Because of this breakthrough technology that we have patent pending, that we are using today
Evan Gappelberg: I believe that Nextech and all our portfolio companies are worth 5x what they trade for today. When we achieve our AI dream, 20x. This is based on other valuations in the space. This isn't hype. In my opinion, this is going to play out over the next few quarters. If we look back, we see 2022 as a transformational year, where we divested ourselves of our legacy businesses, where we got focused on our AI, where we landed Amazon. Now we have a path to profitability with the largest e-commerce site on the planet as our number one customer, but not our only customer, because we also supply Kohl's, Target, Dyson, and others. In 2022, we saw demand start to ramp. As we look forward in 2023, I see it going down in history as the year of AI.
Speaker 4: I believe that we, meaning Nextech, should command a much higher valuation. I believe that Nextech and all our portfolio companies are worth 5x what they trade for today.
Speaker 4: I believe that we, meaning Nextech, should command a much higher valuation. I believe that Nextech and all our portfolio companies are worth 5X what they trade for today. And when we achieve our AI dream, we will be able to do that.
Speaker 4: This is based on other valuations in the space. This is in type. And in my opinion, this is going to play out over the next few quarters. If we look back, we see 2022 as a transformational year.
Speaker 4: This is based on other valuations in the space. This isn't hype. And in my opinion, this is going to play out over the next few quarters. If we look back, we see 2022 as a transformational year where we divested ourselves.
Speaker 4: of our legacy businesses, where we got focused on our AI.
Speaker 4: where we landed Amazon. So now we have a path to profitability with the largest e-commerce site on the planet.
Speaker 4: as our number one customer, but not our only customer.
Speaker 4: because we also supply coals, target.
Speaker 4: supply, coal, target, Dyson and others.
Speaker 4: But in 2022, we saw demand start to ramp.
Speaker 4: As we look forward in 2023,
Evan Gappelberg: For us, it will provide us with a quantum leap in productivity and earnings. The demand for 3D models in e-commerce will only accelerate throughout 2023, and I believe that in 2023, we can see demand shift into overdrive, which will have significant impact on our valuation. As mentioned, by 2040, 95% of commerce will be online, and shopping in 3D and augmented reality will be the new normal. If companies do not adopt this technology today, they will be left behind by their competitors. Everything is perfectly aligned for Nextech to experience dramatic growth over the coming quarters and years. As we improve our AI and the 3D model production capabilities, our margins are going to improve.
Speaker 4: I see it going down in history as the year of AI.
Speaker 4: And for us, it will provide us.
Speaker 4: And for us, it will provide us with a quantum leap.
Speaker 4: in productivity and earnings. The demand for 3D models in e-commerce will only accelerate throughout 2023, and I believe that in 2023, we can see demand shift into overdrive, which will have significant impact on our valuation. As mentioned by 2040.
Speaker 4: 95% of commerce will be online and shopping in 3D and augmented reality will be the new normal. If companies do not adopt this technology today, they will be left behind by their competitors. So everything is perfectly aligned for NextTech to experience dramatic growth.
Speaker 4: over the coming quarters and years. And as we approve...
Speaker 4: our AI and the 3D model production capabilities.
Speaker 4: and the 3D model production capabilities.
Evan Gappelberg: In 2023, if you think about Nextech and you think about us generating significant revenue quarter after quarter and having our margins push towards 90% with our generative AI technology producing an ever-increasing volume of 3D models, you start to get the picture that this is going to be a year where Nextech makes history, where we drive the company to profitability for many years to come. While this alone is exciting for me, it gets even better. We have a portfolio of AI companies. Remember, 2023 is the year of AI. Our 3D modeling AI, I think I just laid out the bull case. Apart from ARitize3D and 3D modeling, we own a portfolio of valuable companies that contain breakthrough AI technology and industry-disrupting products. We've been working towards unlocking the value of these assets and businesses.
Speaker 4: our margins are going to improve. So in 2023, if you think about NextTech and you think about us generating significant revenue quarter after quarter,
Speaker 4: and having our margins pushed towards 90% with our generative AI technology producing an ever-increasing volume of 3D models.
Speaker 4: you start to get the picture that this is going to be
Speaker 4: a year where Nextech makes history.
Speaker 4: where we drive the company to profitability for many years to come.
Speaker 4: And while this alone is exciting for me,
Speaker 4: While this alone is exciting for me, it gets even better.
Speaker 4: We have a portfolio of AI companies. Remember, 2023 is the year of AI.
Speaker 4: Our 3D modeling AI, I think I just laid out.
Speaker 4: Our 3D modeling AI, I think I just laid out the bull case.
Speaker 4: But apart from ARTI's 3D and 3D modeling, we own a portfolio of valuable companies that contain breakthrough AI technology and industry disrupting products.
Evan Gappelberg: One of them has already been spun out, that's ARway. I'm only going to say one thing about ARway. We are very close to signing multiple significant enterprise contracts with brand names. Stay tuned. The second spin-out is Toggle3D.ai, which is a pure-play SaaS AI platform. It's fully funded with about CAD 2 million in escrow raised. Investors that own shares in Nextech will get a free stock dividend in H1 of June when Toggle3D goes public, which is just a few weeks away. Couldn't be more excited for that IPO to happen. Then, of course, we have Map Dynamics, now Nextech Event Solutions, which we've integrated multiple technologies into. That is a game-changing events platform that we think is going to disrupt the CAD 50 billion live events industry.
Speaker 4: We've been working towards unlocking the value of these assets and businesses. One of them has already been spun out and that's ARWE.
Speaker 4: And I'm only going to say one thing about ARWIC.
Speaker 4: We are very, very close to signing multiple significant enterprise contracts with brand names. So stay tuned.
Speaker 7: The second.
Speaker 4: Spin out is toggle3d.ai.
Speaker 4: which is a pure play SaaS AI platform.
Speaker 4: It is fully funded with about $2 million in escrow raised.
Speaker 4: And investors that own shares in Nextech will get a free stock dividend.
Speaker 4: In the first half of June .
Speaker 4: in the first half of June when toggle 3D goes public.
Speaker 4: which is just a few weeks away. Couldn't be more excited.
Speaker 4: for that IPO to happen. And then, of course, we have the
Speaker 4: to happen. And then, of course, we have map dynamics.
Speaker 4: Now, NextTech Advanced Solutions.
Speaker 4: which we've integrated multiple technologies into, and that is a game-changing events platform that we think is gonna disrupt the $50 billion live events industry. So in summary, I'm extremely excited about the growth prospects of our 3D modeling and AR business in 2023 and beyond.
Evan Gappelberg: In summary, I'm extremely excited about the growth prospects of our 3D modeling and AR business in 2023 and beyond. Nextech3D.AI continues to gain traction in the 3D and AI technology space by signing new deals and building and investing in its AI-powered technology. We are now a pure-play AI tech company, and in my opinion, our valuation is about to change in a dramatic fashion to the upside as we get recognized as an AI pure-play technology company supplying Amazon with 3D models. Oh yeah, we're actually a preferred supplier to Amazon, which not every supplier is. When Amazon comes out, and they will, and they put out a press release announcing they're all in on 3D models. Watch and see what happens. In closing, Nextech's capture of market share within this new 3D modeling industry is just getting started.
Speaker 4: NextTech3D.ai continues to gain traction in the 3D and AI technology space by signing new deals.
Speaker 4: and building and investing in its AI-powered technology. We are now a pure play AI tech company.
Speaker 4: And in my opinion, our valuation is about to change in a dramatic fashion to the upside as we get recognized as an AI pure play technology company supplying Amazon with 3D models. Oh yeah, we're actually a preferred supplier.
Speaker 4: our valuation is about to change in a dramatic fashion to the upside as we get recognized as an AI pure play technology company supplying Amazon with 3D models. Oh yeah, we're actually a preferred supplier to Amazon.
Speaker 4: which not every supplier is.
Speaker 4: which not every supplier is. And when Amazon comes out, and they will.
Speaker 4: and they put out a press release announcing they're all in on 3D models.
Speaker 4: Watch and see what happens.
Speaker 4: In closing, Nextech's capture of market share within this new 3D modeling industry is just getting started.
Evan Gappelberg: In case you can't tell, I've never been more excited, never been more confident about the position that our company is in, and about the opportunity that we have in front of us to be the dominant AI-powered 3D model platform for e-commerce. Before turning the call over, I'd like to thank all of our experienced executive leadership team for their hard work and dedication, and I want to thank every Nextech employee that works day in and day out, striving for success with me, trying to achieve our company's goals. I have full confidence in our company's direction, I'm looking forward to our continued growth in 2023 and beyond. With that, I'll turn the call over to Nextech's Chief Financial Officer, Andrew Chan. Take it away, Andrew.
Speaker 4: Again, in case you can't tell, I have never been more excited.
Speaker 4: never been more confident about the position that our company is in and about the opportunity that we have in front of us to be the dominant AI-powered 3D model platform for e-commerce.
Speaker 4: Before turning the call over, I'd like to thank all of our experienced executive leadership team for their hard work and dedication. I want to thank every NextTech employee that works day in and day out.
Speaker 4: striving for success.
Speaker 4: for success with me.
Speaker 4: trying to achieve our company's goals. I have full confidence in our company's direction and I'm looking forward to our continued growth in 2023 and beyond. With that, I'll turn the call over to NextTech's Chief Financial Officer,
Andrew Chan: Thank you, Evan. Good afternoon. As a reminder, unless otherwise noted, all figures reported on today's call are in Canadian dollars under IFRS. All the preceding financial information are unaudited, was made available through today's press release, also available on our website and on SEDAR. Also, as a note, this is the Q1 outside of our recently filed annual financial results that we are presenting our financial results, excluding our discontinued operations, our legacy business, with the removal of such results for comparative purposes. To start off, our technology revenue for the quarter was CAD 1.3 million, up 40% from sequential Q4 2022, up 156% compared to the same quarter last year. 3D modeling revenue increased 550% from the same period last year, contributing CAD 900,000 this quarter.
Speaker 4: Andrew Chan, take it away, Andrew. Thank you, Evan, and good afternoon.
Speaker 8: As a reminder, unless otherwise noted, all figures reported on today's call are in Canadian dollars under IFRS. All the preceding financial information are unaudited and was made available through today's press release and also available on our website and on CDER.
Speaker 8: Also, as a note, this is the first quarter outside of our recently filed annual financial results that we are presenting our financial results, excluding our discontinued operations, our legacy business.
Speaker 8: with the removal of such results for comparative purposes. To start off, our technology revenue for the quarter was 1.3 million, up 40% from sequential Q4 2022, and up 156% compared to the same quarter last year.
Speaker 8: 3D modeling revenue increased 550% from the same period last year, contributing $900,000 this quarter.
Andrew Chan: We continue to expand our relationship with marquee customers such as Amazon, continue to see consistent repeat revenue from our live events Map D platform throughout this quarter. Gross profits increased sequentially to 41% from 39% last quarter. We anticipate gross profit margins to increase even more as we continue to implement AI technologies in our 3D model production process to allow us to increase our model creation capacity at scale. Operating expenses for the quarter was CAD 6.9 million, which includes a CAD 1.8 million contribution from ARway consolidation. Cash expenses excluding ARway was CAD 4.4 million, down CAD 1 million from Q4 2022, and down CAD 1.3 million from the same period last year. Sales and marketing expense, excluding ARway, was CAD 1.3 million this year, which included non-cash one-time investor relation expense of CAD 450,000. Removal of which would have put us in line with our Q2, or sorry, our Q4 2022 spend.
Speaker 8: We continue to expand our relationship with marquee customers such as Amazon and continue to see consistent repeat revenue from our live events Mapped e-platform throughout this quarter.
Speaker 8: Gross profits increased sequentially to 41% from 39% last quarter.
Speaker 8: We anticipate gross profit margins to increase even more as we continue to implement AI technologies in our 3D model production process to allow us to increase our model creation capacity at scale.
Speaker 8: Operating expenses for the quarter was $6.9 million, which includes a $1.8 million contribution from AR Way consolidation.
Speaker 8: Cash expenses excluding AR way was 4.4 million, down 1 million from Q4 of 2022, and down 1.3 million from the same period last year.
Speaker 8: Sales and marketing expense, excluding AR way was 1.3 million this year, which included non-cash one-time investor relation expense of 450,000, removal of which would have put us in line with our Q2, or sorry, our Q4 2022 spent.
Andrew Chan: General and administrative expenses, excluding ARway, was CAD 2.3 million, down CAD 2 million from Q4 2022 due to some one-time expenses related to the spin-out that was recorded last quarter. Research and development costs remain consistent with previous quarters at about CAD 900,000. To help offset the cash outlay for these expenditures, our previously announced employee shares for services compensation plan contributed CAD 1.6 million this quarter. Net loss from continuing operations for the year was CAD 6.6 million, and excluding ARway, net loss would be CAD 4.8 million, which is consistent with Q4 2022 and down CAD 2 million from Q1 2022. Net loss per share this quarter was CAD 0.06. As of 31 March 2023, we had a cash balance of CAD 3.5 million.
Speaker 8: General and administrative expenses, excluding AR way was 2.3 million down 2 million from Q4 of 2022 due to some one time expenses related to the spin out that was recorded last quarter.
Speaker 8: Research and development costs remain consistent with previous quarters at about $900,000.
Speaker 8: To help offset the cash outlay for these expenditures, our previously announced Employee Shares for Services compensation plan contributed $1.6 million this quarter.
Speaker 8: Net loss from continuing operations for the year was $6.6 million and excluding AR way net loss would be $4.8 million which is consistent with Q4 of 2022 and down 2 million from Q1 of 2022.
Speaker 8: Net loss per share this quarter was $0.06.
Andrew Chan: In addition, we just announced that we received CAD 2 million from a financing company to bring forward some of our receivables collections to bolster our cash position, and continue to hold 13 million shares of ARway, valued at approximately CAD 9 million. This quarter continues to reflect our push towards 3D model making and the adoption of AI as we seek to scale our business and reduce production costs along the way. I am very excited for what's coming up next in the next few quarters as we see AI implemented into our process, and we continue to embark on this journey. With that, I turn the call back over to Evan.
Speaker 8: As of March 31, 2023, we had a cash balance of $3.5 million. In addition, we just announced that we received $2 million from a financing company to bring forward some of our receivables collections to bolster our cash position.
Speaker 8: and continue to hold 13 million shares of ARWay valued at approximately $9 million. This quarter continues to reflect our push towards 3D modeling, 3D model making and the adoption of AI as we seek to scale our business and reduce production costs along the way.
Speaker 8: I am very excited for what's coming up next in the next few quarters as we see AI implemented into our process and we continue to embark on this journey.
Evan Gappelberg: Thank you, Andrew. I guess we can open it up for questions now.
Speaker 8: With that, I turn the call back over to Ed.
Speaker 6: Thank you, Andrew.
Operator: Thank you, Mr. Gappelberg. Ladies and gentlemen, at this time, if you have any questions? Simply press star one, if you do find your question has already been addressed, you can remove yourself from the queue by pressing star one again. We'll take our first question this afternoon from Christopher Sakai at Singular Research.
Speaker 4: I guess we can open it up for questions now.
Speaker 2: Thank you, Mr. Gappleberg. Ladies and gentlemen, at this time, did you have any questions? Simply press star one, and if you do find that your question has already been addressed, you can remove yourself from the queue by pressing star one again. And we'll take our first question this afternoon from Christopher Sakai at Singular Research.
[Analyst] (Singular Research): Hi, guys. This is Asim for Chris. Congrats on great quarter. First, like little housekeeping. Also, congrats on the CAD 2 million financing. If you can give us a little bit color on how this would be treated on the financial statements, on the balance sheet, et cetera, or this is totally off balance sheet?
Speaker 9: Hi guys, this is a theme for Chris. Congrats on great quarter. First like little housekeeping and also congrats on the 2 million financing. If you can give us a little bit color on how this would be treated on the financial statements, on the balance sheet, etc. This is totally off balance.
Andrew Chan: Nope. Hi, Asim. No, this is on the balance sheet. It'll be basically payable amounts listed. It's also disclosed as such in the notes this quarter.
[Analyst] (Singular Research): Perfect. Thanks for actually elaborating on the cost side of the equation in detail this quarter. Obviously, we have been talking about the revenue side and this does point out that we have growth opportunities both on the cost side, that is reduction of costs and the revenues. What I was wondering is that for the AI to totally take over the manual building of complex 3D models, how much investment would be needed by the company to get there? This would be done sort of as the AI is being developed elsewhere, and then you would adopt?
Speaker 10: Perfect.
Speaker 9: Now, thanks for actually elaborating on the cost side of the equation in detail this quarter. Obviously, we have been talking about the revenue side and this does point out that we have growth opportunities both on the cost side, that is reduction of cost and the revenues.
Speaker 9: And what I was wondering is that for the AI to totally take over the manual building of complex 3D models, what is the relationship between the 3D models and the 3D models?
Speaker 9: how much investment would be needed by company to get there? Or this would be done sort of as the AI is being developed elsewhere and then you would adopt? We are developing the AI in-house.
Evan Gappelberg: No, we are developing the AI in-house exclusively. We're not outsourcing the development of the AI. As I mentioned, we're developing it on a daily basis, and it's getting stronger on a weekly basis. We think that by the end of 2023, that we will achieve the goal.
Speaker 4: exclusively we're not outsourcing the development of the AI. As I mentioned, we're developing it on a daily basis and it's getting stronger on a weekly basis.
Speaker 4: And we think that by the end of 2023 that we will achieve the goal. Great. And in terms of prioritizing the R&D dollars,
[Analyst] (Singular Research): In terms of prioritizing the R&D dollars, how do you kind of see it at this point in the game, between AI-related or revenue-related developments and the cost-related developments?
Speaker 9: How do you kind of see it at this point in the game, you know, between AI related or revenue related developments and the cost related developments?
Evan Gappelberg: The focus is on the AI.
[Analyst] (Singular Research): Okay. On the cost side, because the revenue side, the trajectory is sort of set in the stone now with the Amazons and the Kohl's of the world, is that a good way to think?
Speaker 9: The focus is on the AI. Okay. So, on the cost side, because the revenue side is already sort of – the trajectory is sort of set in the stone now with the –
Evan Gappelberg: I would not say set in stone. I would say that there's a foundation that's pretty set in stone. There's plenty of upside, because as everybody should know by now, Amazon has not opened up Seller Central yet to allow the millions of merchants to bring 3D models on. That's still in the cards, and when that happens, that will change things quite dramatically. We expect a surge in additional biz in H2 of the year.
Speaker 4: Amazons and calls of the world is that it would have been better thing? I would not say set in stone. I would say that there's a foundation. That's pretty set in stone, but there's plenty of upside. Because as everybody should know by now, Amazon has not...
Speaker 4: opened up Seller Central yet to allow the millions of merchants to bring 3D models on. But that's still in the cards and when that happens...
Speaker 4: that will change things quite dramatically. So we expect a surge in additional biz biz in the second half of the year.
[Analyst] (Singular Research): Okay, great. Thank you.
Evan Gappelberg: Thank you.
Speaker 6: Okay, great. Thank you. Thank you. We'll go next now to Lisa Thompson and Vax.
Operator: We'll go next, now to Lisa Thompson at Zacks.
Lisa Thompson: Hi, guys. Glad to see the quarter come in as expected.
Evan Gappelberg: Hey.
Lisa Thompson: Things are looking really good. I have a few questions about a few things. First up, this loan that you got of CAD 2 million, what's the capacity of what you could borrow based on your contracts?
Speaker 11: Hi guys, glad to see the quarter come in as expected. Things are looking really good.
Speaker 11: So I have a few questions about a few things. First off, this loan that you got –
Evan Gappelberg: It's basically unlimited. It's based on purchase orders. As we get purchase orders, they give us a percentage of the value of the purchase order, and there's no cap to it.
Speaker 11: of $2 million, what's the capacity of what you could borrow based on your contracts?
Speaker 4: It's basically unlimited. It's based on purchase orders. So as we get purchase orders, they give us a percentage of the value of the purchase order. And there's no cap to it.
Lisa Thompson: Well, the cap is how many purchase orders you have, right?
Evan Gappelberg: Yeah, exactly. It's based on our ability to land business. They don't put a cap on it.
Speaker 11: Well the cap is how many purchase orders you have, right? Yes, exactly. It's based on our ability to land business. They don't put a cap on it. Oh right, okay. So I assume that you're going to just keep borrowing more each quarter as you need the cash. Is that how it works?
Lisa Thompson: Oh, right. Okay. Will I assume that you're going to just keep borrowing more each quarter as you need the cash? Is that how it works?
Evan Gappelberg: It's totally dependent on what's happening in our business at the moment. As mentioned, it gives us financial flexibility. It's another opportunity for us to access non-dilutive capital and we're basically going to analyze our business and make decisions as it comes.
Speaker 4: I mean, it's, you know, it's totally dependent on what's happening in our business at, you know, at the moment. It's, as mentioned, it gives us financial flexibility. So it's another opportunity for us.
Speaker 4: to access non-dilutive capital and you know we're basically going to analyze our business and make decisions as it comes.
Lisa Thompson: Okay. Since we're halfway through this quarter, can you give us a feel for what Q2 might look like?
Speaker 11: And since we're halfway through this quarter, can you give us a feel for what Q2 might look like? Ok, that's really good.
Evan Gappelberg: Q2 is looking good. There is a number of significant deals that are out there, and that are expected to close. These are new deals. When those new deals close, which again, we do expect to happen in Q2, that will have a material positive impact on Q2. Until they close, it is hard for me to give you a number other than to say that Q2 is looking strong.
Speaker 4: Q2 is looking good. I mean, there's a number of
Speaker 4: significant deals that are out there and that are expected to close. And these are new deals. And so when those new deals close,
Speaker 4: which, again, we do expect to happen in Q2. That will have a material positive impact on Q2, but until they close, it's hard for me to, you know, give you a number other than to say that Q2 is looking strong. Do you think it'll be as much as 40% sequential again?
Lisa Thompson: Do you think it'll be as much as 40% sequential again?
Evan Gappelberg: It could be, yes.
Lisa Thompson: Okay, cool. The one thing I just want to allay, find out what this is. Last quarter you said that you wanted to deliver CAD 700,000 worth of models to Amazon, but they went on Christmas vacation and couldn't accept it. For people that are concerned that on the day they open the door and you dump the CAD 700,000 in their inbox, the rest of the quarter, you only did CAD 1.3 minus CAD 700,000, or how did that work?
Speaker 11: It could be, yes. Okay cool. The one thing I just want to find out what this is, last quarter you said that you wanted to deliver $700,000 worth of models to Amazon but they went on Christmas vacation and couldn't accept it.
Speaker 11: Yes. OK, cool. The one thing I just want to find out what this is. Last quarter you said that you wanted to deliver $700,000 worth of models to Amazon, but they went on Christmas vacation and couldn't accept it. So what was the difference between the $700,000 and $700,000 that you had to deliver? So what was the difference between the $700,000 and $700,000 that you had to deliver?
Speaker 11: I would for people that are concerned that on the day they open the door and you dump the $700,000 in their inbox the rest of the quarter you only did you know 1.3 minus 700,000 or how did that work?
Speaker 11: With for people that are concerned that on the day they open the door and you dump the seven hundred thousand dollars in their inbox The rest of the quarter you only did you know one point three minus seven hundred thousand or how did that work? No, no, that's not what happened
Evan Gappelberg: No. That's not what happened.
Lisa Thompson: Okay.
Evan Gappelberg: In Q4, we delivered a portion of that 700,000, but.
Speaker 4: So, in Q4, we delivered a portion of that 700,000, but there was a portion that did not get delivered. And so, that's all that that speaks to.
Lisa Thompson: Okay
Evan Gappelberg: There was a portion that did not get delivered. That's all that that speaks to. That's all. Some were delivered, some weren't. Some rolled into 2023.
Speaker 4: That's all it was you know some was were delivered somewhere some rolled into 2023 Just like anyway, this is plenty Yeah
Lisa Thompson: We just shouldn't.
Evan Gappelberg: Yeah.
Lisa Thompson: We shouldn't be concerned that it slipped into Q1 and that Q1 would've been worse without that.
Speaker 11: So I shouldn't be concerned that it slipped into Q1 and that Q1 would have been worse without that. No. No. The $700,000 did not slip into Q1. Did it?
Evan Gappelberg: No. The CAD 700,000 did not slip into Q1, no.
Lisa Thompson: Okay, good. Just wanted to make sure on that because it could be a concern. I guess our last question is, you said Amazon still hasn't opened up Seller Central. Do you know what's holding it up, or is that just a big mystery to the world?
Speaker 11: Okay, good. Just wanted to make sure on that because it could be a concern. Okay, so I guess our last question is...
Speaker 4: You said Amazon still hasn't opened up Seller Central. Do you know what's holding it up or is that it's just a big mystery to the world? No, we talk to them all the time and what what they say to us is, you know, very honest and sincere that when they open it up it's forever.
Speaker 4: still hasn't opened up Seller Central. Do you know what's holding it up, or is that just a big mystery to the world? No, we talk to them all the time, and what they say to us is very honest and sincere, that when they open it up, it's forever. Which means,
Evan Gappelberg: No. We talk to them all the time, and what they say to us is very honest and sincere, that when they open it up, it's forever, which means it has to be 100% functional. It's a big piece of technology that they've built in-house, and we're part of that build. We use the technology that they built. We're part of the team that uses that to bring 3D models onto the platform. We're bringing our select customers over the wall onto the Amazon Seller Central platform and publishing 3D models, but it's manual. They're waiting for the tech to be perfect, and then it's going to be automated. They're going to decide when it's perfect. We're still working with it, but it's not like the floodgates have opened. It's just kind of a trickle right now.
Speaker 4: It has to be 100% functional. It's a big, big, you know...
Speaker 4: piece of technology that they built in-house.
Speaker 4: technology that they built in-house. And we're part of that build.
Speaker 4: We use the technology that they built. Today, we're part of the team that uses that to bring 3D models onto the platform. We're bringing our...
Speaker 4: We use the technology that they built. Today, we're part of the team that uses that to bring 3D models onto the platform. We're bringing our select...
Speaker 4: customers over the wall onto the Amazon seller central platform and publishing 3d models but it's manual they're waiting for the tech to be perfect
Speaker 4: and then it's going to be automated. And so they're gonna decide when it's perfect. I mean, we're still working with it, but it's not like the floodgates have opened. It's just kind of a trickle right now. Okay, so they're waiting for tech to happen.
Lisa Thompson: Okay. They're waiting for tech to happen.
Evan Gappelberg: Yeah, they're waiting for perfection. From our standpoint, it works. We use it. We use their tech.
Speaker 4: Yeah, they're waiting for perfection. I mean, you know, from our standpoint, it works. We use it. We use their tech. But from their standpoint, out there,
Evan Gappelberg: from their standpoint, they're still making sure it's perfect, and they've told us, again, when they launch it's forever, and it's got to be perfect. You're talking about millions of users, right? It can't have hiccups.
Speaker 4: still making sure it's perfect and they told us, you know, again, when they
Speaker 4: Launch it, it's forever, and it's got to be perfect. I mean you're talking about millions of users, right? So it can't have hiccups. All right, I guess one last question on toggle.
Lisa Thompson: All right. I guess one last question on Toggle3D.ai. The record date, you said it's going to be public by the first half of June, so when's the record date?
Speaker 11: The record date is it says you get it's going to be public by the first half of June so when's the record date? I don't have a record date but...
Evan Gappelberg: I don't have a record date, but it's going to be, obviously, the H1 of June. We expect it to be trading before 15 June.
Speaker 4: It's going to be obviously the first half of June . So we expect it to be trading before June 15th. Okay, good. All right, we'll look for the press release. Thank you so much. Thank you.
Lisa Thompson: Okay, good. All right. We'll look for the press release. Thank you so much.
Evan Gappelberg: Thank you.
Operator: Thank you. Just a quick reminder, star one please for questions. We'll go next now to Scott Buck at H.C. Wainwright.
Speaker 2: Thank you. And just a quick reminder, star one please for questions. And we'll go next now to Scott Buck at H.C. Wainwright. Hi, good afternoon guys. Congrats on all the progress. Evan, you guys were able to announce over the last couple weeks a couple contract renewals and expansions. I'm just curious what makes you guys…
Scott Buck: Hi. Good afternoon, guys. Congrats on all the progress. Evan, you guys were able to announce over the last couple weeks, a couple contract renewals and expansions. I'm just curious, what makes you guys such a strong partner for these e-commerce companies? Is it your speed to market, pricing, or the quality of the product itself?
Speaker 2: such a strong partner for these e-commerce companies. Is it your speed to market pricing or the quality of the product itself? It's a good question. I would say that from the standpoint of speed and being able to scale, yes.
Evan Gappelberg: It's a good question. I would say that from the standpoint of speed and being able to scale, yes, you could check the box. Ultimately, I think it's our white glove service that really gets them excited. These guys are up to their eyeballs in their business, and they see us as an extension of their business. They don't necessarily want to be managing the 3D models themselves. We basically do a lot of the heavy lifting for them, and that's something that they really value. They see us, I think, as a partner, not just as a service provider, and that's why they keep coming back.
Speaker 4: want to be managing the 3D models themselves, you know.
Speaker 4: we basically do a lot of the heavy lifting for them, and that's, you know, something that they really value. And so they see us, I think, as a partner, not just as like a service provider. And that's why they keep coming back. That's helpful, Evan.
Scott Buck: That's helpful, Evan. I was curious on OpEx. You guys have done a nice job kind of reining that in over the past few quarters. Is this level of OpEx spending something that you can maintain as the revenue line continues to scale here in the H2 of the year?
Speaker 2: I was curious on OpEx, you guys have done a nice job kind of reining that in over the past few quarters. Is this level of OpEx spending something that you can maintain as the revenue line continues to scale here in the second half of the year?
Evan Gappelberg: Actually, we think that there's potential for more efficiencies. We are working extremely hard to get the business to cash flow positive. The AI is going to do a lot of the heavy lifting, but it's managing the expenses as well. We see it going down from here.
Speaker 4: Actually, we think that there's potential for more efficiencies.
Speaker 4: We are working extremely hard to get the business to cash flow positive. And, you know, the AI is going to do a lot of the heavy lifting, but it's, you know, managing the expenses as well. So we see it going down from here.
Scott Buck: Great. That's helpful. Is there a meaningful piece of OpEx that comes out with the Toggle3D.ai spin-out?
Speaker 2: Great, that's helpful. Is there a meaningful piece of OpEx that comes out with the toggle spin out?
Evan Gappelberg: It's about 100 a month.
Scott Buck: Okay.
Speaker 8: It's about 100 a month. Okay. Yeah, it's about 100, 125 a month. Okay.
Andrew Chan: Yeah. It's about 100, 125 per month.
Scott Buck: Okay. That's really helpful.
Evan Gappelberg: Yeah.
Scott Buck: Last one from me. You teased in your remarks a little bit, where are your thoughts on up-listing and potential timing around that?
Speaker 2: Okay, that's really helpful. And then last one for me, you teased in your remarks a little bit. Where are your thoughts on uplifting and potential timing around that? All I would say is that it…
Evan Gappelberg: All I would say is that it's always been top of mind. I am not unaware of the fact that up-listing is going to get us the institutional sponsorship that we should have, which would increase our valuation. I would say that it is a priority, and it is something that we think can happen in 2023. It's hard for me to put an actual time on it. I don't want to end up with egg on my face, Scott, but it's definitely something that we are focused on.
Speaker 4: It's always been top of mind. I am not unaware of the fact that uplisting is going to get us the institutional sponsorship that we should have, which would increase our valuation. So I would say that it is a priority and it is something that we should be looking at
Speaker 4: we think can happen in 2023. It's hard for me to put an actual time on it. I don't wanna end up with egg on my face, Scott, but it's definitely something that we are focused on.
Scott Buck: Right. That's fair. Appreciate the time, guys. Thank you very much.
Evan Gappelberg: Thanks, Scott.
Speaker 2: All right, that's fair. I appreciate the time guys. Thank you very much.
Speaker 2: Right that's fair. I appreciate the time guys. Thank you very much. Thanks Scott. We'll take a question now from Michael Farah, a private investor.
Operator: We'll take a question now from Michael Farah, a private investor.
Michael Farah: Hey, good afternoon, everybody. Again, also congratulations on all the work you folks are doing in moving the ball forward. I have, I think, two questions. The first one is, how many patents do we have registered and how many do we have in the process?
Speaker 12: Hey, good afternoon everybody and again also congratulations on all the work you folks are doing and moving the ball forward. I have
Speaker 12: I've seen two questions. The first one is how many patents do we have registered and how many do we have?
Evan Gappelberg: I think there's a total of seven or eight.
Speaker 4: in the process? I think there's a total of seven or eight.
Michael Farah: That are registered?
Evan Gappelberg: And/or in process, combined.
Speaker 6: Better registered.
Michael Farah: Oh, I see.
Speaker 6: that are registered. And we are in process.
Evan Gappelberg: Yeah. Andrew might be able to.
Andrew Chan: Yeah. There are six that are registered and two in the process.
Speaker 8: combined. Oh, I see. Yeah, and yeah, there, there, there, there are six that are registered into in the process.
Michael Farah: That's fantastic. It sounded like from, I believe, Evan's comments that we are going to file even more, of course, as the generative AI and technologies that surround it improve and we come through with more unique technologies that we can also file with the USPTO, et cetera.
Speaker 12: Yeah, that's fantastic. And it sounded like from, I believe, Evan's comments that we are going to file even more of course as the generative AI and surrounding technologies that surround it improve. Thank you!
Speaker 12: and we come through with more unique technologies that we can also file with the USB PTO etc.
Evan Gappelberg: Yep.
Michael Farah: Yep.
Evan Gappelberg: Yep.
Michael Farah: Second question. I don't know if this was already addressed. Are we in conversations with companies like eBay, Alibaba, et cetera?
Speaker 12: Yep. Second question, and I don't know if this was already addressed.
Speaker 12: What about companies like, are we in conversations with companies like eBay, Alibaba, etc.?
Evan Gappelberg: eBay is a platform similar to Amazon. They have to build the tech for our tech to be able to integrate and same thing kind of goes with Alibaba.
So eBay is a platform similar to Amazon, so they have to build the tech.
for our tech to be able to integrate. And yeah, same thing kind of goes with Alibaba.
Michael Farah: Got you. Okay. Last question is the status of any pending lawsuits, whether they're material or not.
Gotcha. Okay. Last question is...
the status of any pending lawsuits, whether they're material or not.
Evan Gappelberg: There's nothing material out there.
Michael Farah: Yeah. What about non-material?
There's nothing material out there.
There's nothing material out there. Yet, what about non-material?
Evan Gappelberg: There's nothing non-material that I'm going to discuss on this call.
There's nothing non-material that I'm going to discuss on this call. Understood. You know, as a public company, there's always nuisance lawsuits. I mean, that's what happens. So, there's no reason to... But it's nothing material that would affect, say, 5% of the...
Michael Farah: Understood.
Evan Gappelberg: As a public company, there's always nuisance lawsuits.
Michael Farah: Yeah.
Evan Gappelberg: It's just what happens.
Michael Farah: Yeah.
Evan Gappelberg: There's no reason.
Michael Farah: It's nothing material that would affect, say, 5% of the stock.
Evan Gappelberg: No.
Michael Farah: That sounds good. Well, again, thank you so much. I'm sure I'm going to be buying more shares tomorrow.
Evan Gappelberg: Thanks, Mike.
Michael Farah: Well, it's been kind of tough because my wife, she's like, Well, we have this and we have that, and that stock has just plummeted, and I guess you were wrong about that one. I'm like, Oh, geez. I mean, really? I mean, I'm sure you don't want that.
My wife.
you know she's like well we have this and we have that and you know and that stock is just plummeted and you know I guess you were wrong about that one I'm like
She's like well we have this and we have that and you know and that stock is just plummeted And you know I guess you were wrong about that one. I'm like I mean, I mean you don't want up
Evan Gappelberg: How many people have been-
Michael Farah: I'm sure you don't want that 50-foot yacht.
Evan Gappelberg: Yeah.
Michael Farah: Yeah.
How many people have been right? I'm sorry, I don't want that 50 foot yaw. Yeah. Yeah. But yeah, it looks like a very good.
Evan Gappelberg: Yeah
Michael Farah: a very good buying opportunity. Everyone knows this is a growth company. It's going to take some time, 6 months to 1 year, to achieve cash flow and to get the numbers in the positive. Actually, I did have one last question, and this also may have been addressed, I think, by somebody. With the CAD 2 million that we received, any revenue that we receive, that just goes to them, and then it's taken off our balance sheet?
buying opportunity everyone knows this is a growth company it's going to take some time you know six months to a year to achieve you know cash flow and to get the numbers into positive actually I did have one last question it's this also may have been addressed I think
Everyone knows this is a growth company. It's going to take some time, you know, six months to a year to achieve, you know, cash flow and to get the numbers into positive. Actually, I did have one last question. This also may have been addressed, I think, by somebody. subject to personal or external curious. Who would be interested in considering developing or renewing public health for different partners,
With the $2 million that we received, any revenue that we receive, that just goes to them and then it's taken off our balance sheet.
Evan Gappelberg: Yeah. Basically, not any revenue, but there's revenue tied to that CAD 2 million that, yeah, essentially, we've been able to access the future revenue. As we get paid, we pay off that CAD 2 million. Yeah.
Yeah, I mean, basically, not any revenue, but there's revenue tied to that $2 million that, yeah, essentially, we've been able to access the future revenue. So as the account, as we get paid, we pay off that $2 million. Yeah.
Michael Farah: Got you. Okay. Well, thank you so much. You guys just always remember to drive safe and get your rest because you're going to need it.
Gotcha.
Gotcha. OK, well, thank you so much. And some keyboardcom police spiders.
You guys just always remember to drive safe and get your rest because you're going to need it. Thank you, Michael. All right. Have a great day. Take care. Bye.
Evan Gappelberg: Thank you, Michael.
Michael Farah: All right.
Evan Gappelberg: Have a great.
Michael Farah: Take care.
Evan Gappelberg: Yeah. Bye.
Operator: Thank you. We take our next question now from Asad Rashid at Private Investor.
We take our next question now from Asad Rashid at Private Investor. Hi, Evan. First of all, thank you for everything you're doing.
Asad Rashid: Hi, Evan. First of all, thank you for everything you're doing. The markets are shit, but this is probably one of the few companies that I really have faith in, so thank you for what you're doing. My question, sorry, I just signed in right now, so I'm not sure if this has been addressed, but is there any concrete date yet with the integration with Toggle3D.ai and Amazon?
The markets are <expletive> , but this is probably one of the few, you know, companies that I really have faith in. So thank you for what you're doing. Bye.
Question, sorry I just signed in right now so I'm not sure if this has been addressed, but is there any concrete date yet with the integration with toggle 3D and Amazon?
Evan Gappelberg: Toggle3D is going to be spun out in this first half of June.
So toggle 3D is going to be spun out in this first half of June . So that's in the next couple of weeks.
Asad Rashid: Yeah.
Evan Gappelberg: That's in the next couple of weeks. Basically, Toggle3D does some of the AI work on our 3D models that we supply to Amazon. To answer your question, Toggle3D is part of the AI story, and it is working quite well for our Amazon relationship.
And basically, Toggle3D does some of the AI work on our 3D models.
that we supply to Amazon so to answer your question toggle 3d is part of
the AI story and it is working quite well for our Amazon relationship. Okay.
Asad Rashid: Okay. Maybe I got this wrong, but it was my understanding that the Toggle3D platform was to be used by vendors. It would be an option for vendors on Seller Central. Is that the case?
So, maybe I got this wrong, but it was my understanding that
is from maybe I got this wrong, but it was my understanding that the
The toggle 3D platform was to be used to
by vendors like it was it would be an option.
Evan Gappelberg: Not yet, no.
for vendors on North Central, is that the case?
Asad Rashid: Not yet, okay. Do you currently have any institutional investors as of yet?
Not yet, no. Not yet, okay, okay.
Not yet, no. Not yet, okay, okay.
And is there, do you currently,
Asad Rashid: Not really, which is why we keep looking for NASDAQ or New York Stock Exchange because institutional investors are restricted from investing in companies that aren't listed. That's the primary reason.
institutional investors as of yet? Or not really, which is why you know we keep looking.
for NASDAQ or New York Stock Exchange because institutional investors are...
restricted from investing in companies that aren't listed. So that's the primary reason.
Asad Rashid: Yeah. It makes sense. All right, well, appreciate it. Thank you for taking my question. Yeah, I'll be in touch.
Yeah, it makes sense. All right, well, I appreciate it. Thank you for taking my question and yeah, I'll be in touch. Thanks. Thanks, Asad. Bye.
Evan Gappelberg: Thanks, Asad. Bye.
Operator: Mr. Gappelberg, it appears we have no further questions this afternoon. I'd like to turn the conference back to you for any closing comments.
And Mr. Gappleberg, it appears we have no further questions this afternoon. I'd like to turn the conference back to you for any closing comments.
Evan Gappelberg: All right, just wanted to thank everybody for joining us today. We are on the path to achieve our AI dream. Today's numbers really are just the beginning. Thank you, and everybody have a great evening.
I just want to thank everybody for joining us today. We are on the path.
to achieve our AI dream and today's
Numbers really are just the beginning.
Operator: Thank you, Mr. Gattleberg. Again, ladies and gentlemen, thank you for joining Nextech3D.AI's Q1 2023 results Conference Call. I'd like to thank you all so much for joining us and wish you all a great evening. Goodbye.
really are just the beginning. Thank you and everybody have a great evening.
Thank you, Mr. Gabelberg. Again, ladies and gentlemen, thank you for joining NextTech3D.ai's Q1 2023 results conference call. Thank you all so much for joining us and wish you all a great evening. And goodbye.
