Q2 2023 Nextech3D.ai Earnings Call

Speaker 1: Good afternoon, ladies and gentlemen. Welcome, everyone, to the NextTech 3D AI second quarter 2023 results conference call. All lines have been placed on mute to run any background noise. 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 questions. Thank you all for listening.

Speaker 1: I'd like to remind everyone that this call is being recorded today, August 22nd, 2023.

Speaker 1: I will now turn the call over to Julia Viola, investor relations at Nextech 3D AI.

Speaker 2: Hello and welcome to the next Tech3D AI Q2 2023 earnings call. With me on the call are Evan Gappleberg, Chief Executive Officer and Anju Chan, Chief Financial Officer.

Speaker 2: Today, after markets close, Nextech 3DAI released its unaudited financial and operating results for its second quarter, ended June 30, 2023. A copy of the earnings disclosure is available on our website and on CDAR. Some of the information discussed on this call is based on information as of today, August 22.

Speaker 2: to 2023 and contains forward-looking statements that involve risks and uncertainties.

Speaker 2: Actual results may differ materially from those set forth in such statements.

Speaker 2: 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 CDER filings.

Speaker 2: During this call we will discuss IFRS results and key performance indicators.

Speaker 2: Neither this call nor the webcast archives may be recorded or otherwise reproduced or distributed without prior implementation from NextTech3D AI.

Speaker 2: To begin our call, Evan Gappleberg, CEO , will discuss Q2 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 over the call to CEO and founder of NexTech 3D AI, Evan Gappleberg.

Speaker 3: for joining us.

Speaker 3: for our Q2 earnings call. In 2023, we are at, you know, we're a little past the halfway mark because we're in Q3 now, but as far as today's numbers go, this represents the 50-yard line.

Speaker 3: for 2023. And in 2023, it's important to underline that NextTech 3D AI became a pure play technology company.

Speaker 3: that transition.

Speaker 3: That transition has yet to be recognized.

Speaker 3: by our investors.

Speaker 3: as we see our AI capabilities.

Speaker 3: As we see the demand for 3D models,

Speaker 3: and as we see our production capabilities continuing to ratchet up in 2023 and beyond.

3D models, as I've said many times before,

But now, I'm going to lean in even stronger. They are no longer a nice-to-have. They are a necessity in e-commerce and even beyond e-commerce, into gaming and manufacturing, which we are starting to gain momentum in. These industries, which are massive, multi-trillion dollar industries, are all pivoting to 3D. And it should not be underestimated how huge an opportunity this represents for early investors in Nextech.

But now I'm going to lean in even stronger. They are no longer a nice-to-hab. They are a necessity in e-commerce and even beyond e-commerce into gaming and manufacturing, which we are starting to gain momentum in. These industries, which are massive, multi-trillion dollar industries, are all pivoting to 3D. And it should not be underestimated how huge an opportunity this represents for early investors in Nextech. Amazon.

to lean in even stronger. They are no longer a nice-to-hat. They are a necessity in e-commerce and even beyond e-commerce, into gaming and manufacturing, which we are starting to gain momentum in. These industries, which are massive, multi-trillion dollar industries, are all pivoting to 3D and it should not be underestimated how huge an opportunity this represents for early investors in Nextech. Amazon is at the heart of e-commerce in their history. Microsoft could not have thought the display as face to face.

The leader in the e-commerce space, they have roughly a 70% market share. They are by far the single largest enterprise customer. If you add everybody else up in the entire e-comm ecosystem, it only adds up to 30% of the market. Amazon is the giant. They are our largest customer for 3D models. And they are going all in on 3D.

The world has pivoted, make no mistake about it, to 3D models. And 3D models.

it. Make no mistake about it to 3D models. And 3D models are the future.

of e-commerce to compete in the next decade in e-com, in medicine, in education, in events. You will need a 3D model and that is what NextTech makes. 3D models which positions us for rapid growth.

for many years to come. It was a huge challenge getting here. It took five years.

come. It was a huge challenge getting here. It took five years, but we are here now.

And we see nothing but blue sky opportunities in the market.

going forward.

Supplying Amazon.

demonstrates

Next, text technical proficiency.

and leadership in 3D modeling for e-commerce, and really sets us up for success.

with other big enterprise accounts.

Because if it's good enough for Amazon...

It's good enough for everybody.

But we are still hunting.

Amazon is not the last stop for us.

We are still hunting. We have a large number of enterprise deals that are moving forward.

We already serviced Target, we already serviced Kohl's, we already serviced CB2's, Procter & Gamble.

and many others.

But we're not done. We're still hunting and we still have very, very large enterprise deals, as I said, that are moving forward.

This industry is massive.

It's a massive, massive opportunity for the company.

And it is starting to accelerate.

in Q3 2023.

So, we're eight months in.

and we are seeing a ramp up.

for demand continuing in 2023, especially starting now, which we're in Q3. This is another week, will be two-thirds of the way done with Q3. And we see Q3 accelerating.

and Q4 actually accelerating even further in 2023. The demand for 3D models in e-commerce, we believe, is only just really getting started.

And it's going to shift into overdrive.

In my opinion, we're going to see the demand.

Get to a frenzy.

where just like during COVID you had everybody that was in any kind of business searching for virtual events and virtual event platforms.

That was back during 2020, which had a significant impact on our business because we were in that business at the time. I believe that it is starting to happen again, only this time it's for 3D models. It's a much, much more sustainable, decade-long.

mega trend and I believe that right now starting in Q3 2023 We are starting to see liftoff in the demand for 3d models

If you look at the potential future catalysts,

We're signing more contracts with major players.

And Nextech really is cementing itself as the world's leading supplier for 3D models. And we believe that more companies are going to become our customers in the next 6 months and the next 12 months.

And Nextech really is cementing itself as the world's leading supplier for 3D models. And we believe that more companies are going to become our customers in the next six months and the next 12 months. If you look at e-commerce, you can see a lot of the

The business opportunity and demand for us to produce 3D models has never been greater, and we are extremely, extremely excited about e-commerce.

The reason why e-commerce is having such a dramatic impact on our business is because with 3D models in e-commerce you see a tremendous ROI.

You're seeing a 40% reduction in returns.

You're seeing a 93% higher click-through rate and up to a 250% increase in convergence.

Nothing comes close to that. Nothing. Not video, not direct messaging, not even next day delivery by Amazon. With 3D modeling technology, we at NexTech are perfectly positioned.

Nothing comes close to that. Nothing. Not video, not direct messaging, not even next day delivery by Amazon. With 3D modeling technology, we at NexTech are perfectly positioned for this next question that was requested,

phase of growth in e-commerce, which is widely called Web 3.0.

in e-commerce, which is widely called Web 3.0. 3D models.

can be used for virtual photography. You can use them as try-ons. So you can have a 3D model, and you can literally see what a product looks like in your space.

You could see what they look like on your face, on your feet, on your wrist.

it opens up a whole new opportunity for

consumers to feel more confident buying products online. And it's predicted that over the next decade or two, that 95% of all commerce, that's right, 95%. That's pretty much everything.

will be conducted online, and that's only possible

because of 3D models.

If companies don't adopt this technology, if they sit on their hands, they will be left behind.

So, everything is perfectly aligned for NextHEC.

as we are going to experience

this dramatic growth over the coming years and decades.

As our AI improves,

Our 3D production.

capabilities improve.

And that hits our bottom line.

and our profits improve.

Now, if we shift our attention to our portfolio of companies, apart from AR-itized 3D and our 3D modeling business, we own.

two other

public companies.

Nextech owns some very valuable

breakthrough technology in industry disrupting

in industry disrupting products.

And in our way.

Which the symbols A R W Y in Canada, A R W Y F.

In the US is an augmented reality experience platform that we own Roughly 49% of the shares are outstanding.

It's an easy to use, out of the box AR platform. We are targeting the indoor navigation market just like Google owns outdoor navigation with GPS. AR way we are anticipating is going to own the indoor navigation market.

using its proprietary technology.

So AR we

So, ARWE is

having quite a year in 2023.

We have over 30 pilots underway.

with big brands.

Some of them are governments.

Some of them we talk about, some of them we can't talk about. But we did announce

just I think it was a week ago that we signed a deal with the Irvine Spectrum Center Mall in Irvine, California, a massive million square foot mall that's a paid for deal.

They are rolling out, they are away, and that is.

just an enormous, enormous opportunity.

for ARWay to become a leader in the mall industry, which is massive, obviously.

We also recently signed a deal with Localiza. Localiza is the largest car rental company in South America. They're like Enterprise or Hertz in North America. They have over 500 locations in airports.

So, you know, AR way.

He is doing quite well.

The share price, I believe, is extremely undervalued.

We are in talks with major AR glass companies about

using ARWay in their ecosystem. So we have some very, very high hopes.

And we think that ARWAY is going to be the dominant.

indoor navigation system.

that people are going to use, just like you use your Google Maps to drive.

you're going to use ARWay as you walk indoors and you navigate whether it's a museum.

whether it's a theme park.

whether it's a trade show, a hospital, an airport.

a warehouse, a mall.

It all of those all those

require some kind of navigation.

and ARWA is perfectly, perfectly suited for that.

So, we're expecting.

quite significant contracts for ARWIG and we expect that business to do quite well in 2023 and beyond. If we look at map dynamics,

We licensed our ARIA platform to MAPD.

and we expect to see significant growth because it's just a perfect product market fit.

You have navigation capabilities inside the MapDynamics app so that when people go to trade shows and events

They click on a navigation button and it opens up a map and using augmented reality navigation You can navigate to a booth and you'll see sponsorship. You'll see a product offering It's just the next level experience for Events and we have some big news

that we expect to announce in the near future related to that.

As we look at, you know, toggle, toggle is another one of our spinouts.

Simple is TGGL in Canada, TGGLF in the US.

We've announced that it's had huge success with signups showing over 300% growth.

But that's just the beginning. That's just the tip of the iceberg. We recently hired Anita Mate as director of growth marketing from Amazon, which is just a coincidence. But she is inexperienced.

and she now is tasked with focusing on converting.

users to paid SAS subscribers. It is too early to really talk numbers because we just launched in June , and it takes a little while to ramp up. But it's fair to say that we are very, very confident with the business use cases we are seeing. And we're in discussions with large enterprise companies that are not using the same services

customers for toggle that have come knocking on our door that have a dire need for its technology. So I would just say to our investors, be a little patient.

with Toggla. It's only been public since June of 2023.

In closing.

2023 has been challenging as a shareholder.

Again, I am the single largest shareholder with 11 million shares.

There's nobody that's taking it on the chin more than I am.

But I don't stress about it.

I'm not stressed.

In fact, I see opportunity.

I see huge opportunity.

In my opinion,

And this is just my opinion.

That 2023.

is going to be a year

significant growth.

for our business.

I believe that the strong companies which NextTech is one of

Bounce back.

And I think we will see.

A rip your face off bounce back for next tech.

I'm not going to say the day, I'm not going to say the week.

But I believe NextTech is going to bounce back.

quite significantly.

We are fully focused.

as a company.

on becoming the world's leading 3D modeling company.

To do this, we've made critical business decisions.

As mentioned, by becoming a pure play tech company and jettisoning our legacy business.

Just as importantly, our revenues are ratcheting up.

And even more importantly, our burn rate has come down to only 300,000 a month.

That is a huge improvement compared to where we were in the previous years. And it gives us the runway.

to be able to build our business.

to become a profitable technology company.

We are continuing to integrate Airtize3D with third-party econ platforms. We are rolling out.

AR ties 3D with third party ecom platforms were rolling out a SAS.

product. And I believe that all these decisions that we've been making over the past year, specifically, is going to be paying significant dividends.

for NextTech shareholders. NextTech is capturing market share in the early days.

It's seen its customers come back for more and more 3D models and more and more renewals.

And with Amazon,

We believe that we have a very, very bright future. I've never been more excited and confident about the position that our company is in and the opportunity that we have in front of us.

Before turning the call over, I'd like to thank our experienced executive leadership team for their hard work and dedication.

and thank every NextTech employee.

working day in and day out.

striving for success to achieve our company's goals.

I also want to thank our new board members, Nitti Cumbra and Anthony Pizonia, that have recently joined us, adding greater board independence. I also want to thank our loyal shareholders.

for sticking with NextTech.

through the ups and downs. I have full confidence in our company's direction, and I'm looking forward to continuing growth in 2023 and beyond. With that, I'll turn the call over to NextTech's Chief Financial Officer, Andrew Chan, to provide full commentary on the financials. Andrew, take it away.

Thank you, Evan, and good afternoon. As a reminder, unless otherwise noted, all figures reportedly on today's call are in Canadian dollars and under IFRS. All the preceding information are unaudited and was made available through today's press release and also available on our website and on CDER.

This is the second quarter outside of our recently filed annual results where we are preparing and presenting our financials excluding our discontinued operations and removal of our legacy business.

With that, I'd like to say our total revenue for the quarter was $1.4 million, up 8% sequentially from Q1 2023 and up 155% compared to the same quarter last year.

3D modeling revenue year-to-date increased over 460% from the same six-month period last year, contributing to close to 1 million this quarter and 2 million year-to-date.

Our MAPD revenue has also increased 22% year-to-date compared to the same period last year.

We continue to expand our relationship with marquee customers such as Amazon with increased 3D model production requests for Q3 and Q4, and continue to see consistent repeat revenue from growth for my hybrid events platform, MappD, throughout this quarter.

Gross profit remained consistent near the 40% mark over the last few consistent with the last few quarters.

We anticipate gross profit margins to increase 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 corridor was $6.5 million, which includes $1.5 million from ARWay.ai through the consolidation and some contributions from Toggl from our recently spun out company Toggl3D.

Overall, expenditure levels were consistent with Q1 2023 across sales and marketing, general and admin, research and development categories, and stock-based compensation.

Non-stock based compensation expenses were down 1 million this quarter compared to the same time last year and down 2 million.

year to date compared to the same period last year.

This is mainly due to lower salary and wages and other compensation costs incurred last year.

To help offset the cash outlay for these expenses, our previously announced employee shares for services compensation plan contributed 700,000 this quarter and 2.3 million year to date.

Net loss from continuing operations for the period was $6.6 million consistent with the immediate preceding quarter and with a net loss per share of $0.06 per quarter.

As of June thirtieth 2023, we had a cash balance of three point eight million. In addition, we raised net proceeds of two point two million in July to fund our future growth efforts and we continue to hold 13 million shares in each of ARA and Togo three D, with a total market value of over $18 million.

This quarter continues to reflect our push towards our growing 3D modeling making abilities and the adoption of AI as we continue to scale our business. With that, I would like to return the call back to Evan.

On behalf of NexTech, I want to thank everyone for taking the time to join us. And operator, we're ready to answer questions. Thank you, sir. If you would like to ask a question on the phone lines today, you can press star one on the telephone keypad to remove yourself from the queue. It is star one again. We do have some questions that were submitted from Lisa Thompson from Zacks Research. And that is, what percent of Q2 revenues are from Amazon? Do you expect that to increase or decrease? The second question is, is the 3D model business just...

our dependence on Amazon is likely to go down in the future, even though our revenue is likely to go up, if that makes sense. Operator, we're ready for the next question. Thank you. Her next question is, is the 3D model business just e-commerce websites? Are there any customers doing any other than that?

but dependence on Amazon is likely to go down in the future, even though our revenue is likely to go up, if that makes sense. Operator, we're ready for the next question. Thank you. Our next question is, is the 3D model business just e-commerce websites? Are there any customers doing any other than that?

So, yes, we're seeing an increase in demand. Thank you, sir. Our next question comes from Scott Buck with HC Wainwright. Please go ahead. Hi, good afternoon, guys. Thanks for taking my questions. Quickly, Evan, first one, what is the timing around Seller Central and when that opens up to you guys? That is the billion dollar question, Scott. We've been geared up and gearing up for it for quite some time. I still believe it's going to happen Q3, so that would make it.

In terms of capacity, we are getting, let's just say, stretched a little, but we are ramping up our team and our capabilities, so it is constantly this kind of push-pull that's happening. As far as where we end up at the end of the year, it's a tough answer. I would just say that our technology is getting significantly better and our profit margins are going to get significantly better in Q4. We expect the business to be significantly more profitable and to be able to do more volume. I just can't give you an exact number for Q4. That's helpful, Evan. Just to clarify, it sounds like gross margins for the fourth quarter could potentially be

If there's any kind of update around NASDAQ and what you guys might do there in terms of enough listing, that'd be great.

Yeah, as you know, we applied. There's been some comments which we've been answering.

Nothing earth-shattering and you know it's moving forward. There's nothing at this point to report other than it's on track.

All right, super. I appreciate the time guys. Thank you very much.

Thank you, Scott.

We'll take our next questions from

Hi there, this is Sivakar. I was wondering if you could give us a little bit of flavor in terms of 3D models you have delivered, if I remember correctly, for 60% growth in terms of complexity.

level of those models that you delivered.

Say that again, you're asking about the complexity. The 3D models that you deliver, if you can kind of little bit parse out the complexity level, you know, it's like.

more complex ones are growing faster or less complex or you know a little bit if you can Part it out. Yeah, that'll be great. Yeah, so every single You know batch of 3d models we make has simple medium Complex the complex one complex to super complex. So there's multiple

reasons for all those different categories, I would say that at least 50% of the models are complex and above.

So 50 to 60% are complex and above, and the balance is more of the simple meeting.

And that trend is what it was in the last few quarters, so that is changing as we go forward.

Okay, and I see that you guys were able to decrease selling and marketing expense. There is more factor of cost control or you think you are getting better utilization of your selling and marketing dollars? Well, you know, because we are dealing with Amazon.

on getting new customers, right? Because Amazon keeps on keeping us busy. Okay. And so that's good, unless you're kind of trying to go into new customers or verticals, that sort of would be the trend, at least for the short period? Correct. Perfect. Thank you. Thank you. As a reminder everyone, that is star one to ask a question. We'll take our next question from Akash Makhheba, a private investor.

Thank you, operator, and good afternoon, gentlemen.

Thank you, operator, and good afternoon, gentlemen.

So, I wanted to ask you, I know a previous question you just talked about was.

in regards to Amazon, Seller Central, and when that might be opening up.

You, Evan, you mentioned that the possibility could be, could still be by the end of this quarter in the next five weeks on a recent on a recent one of your recent interviews that you and Reza had done.

So they would not, you know, perhaps want to take a chance with trying something, you know, kind of opening up a new avenue in that very important critical quarter for them. So in the event if perhaps it does not occur by the end of Q3, do you think it may perhaps it would be more realistic that it may happen, say, more like maybe towards late Q1, maybe early Q2? What are your thoughts on that? So let's be clear, it's conjecture that, you know, what I'm saying is what I think it's not necessarily.

So it's really, I think there's some pressure internally at Amazon building. And as I said, I still think it'll be Q3. I don't believe that Q4, and that was me who said that, would make sense, but I could be wrong. They could be like, you know what, it's go time, let's just go with Q4. But if they did wait, I think it would be early Q1. I don't think they would slow roll it because Q1 kind of sets the stage for a whole 2024.

year where they can really accelerate the 3D modeling business. So, that's my thinking on that.

conjecture until they actually come out with an announcement.

nobody really can predict, right?

Okay, thank you. Sure.

And I know in your, in your, the other topic I wanted to cover was in regards to, you know, your kind of your capital structure and

I know in your announcement today you announced that your latest capital raise should be sufficient and does not appear likely that you will need to do any further raises perhaps for the next 12 months I believe as was stated.

I know in your announcement today you announced that your latest capital raise should be sufficient and does not appear likely that you will need to do any further raises perhaps for the next 12 months I believe as was stated.

It was not a very big dilution, but then correspondingly, perhaps that's because it was not

You know really a very large capital raise 2.2 million as you guys have pointed out

So do you feel, could you say a little bit about, I mean, are you confident that that is going to meet next tech's capital requirements going through this coming year or let's say the next 12 months?

or at least until revenue ramps up to a level where further raises would not be necessary. Could you give us some outlook on that?

Yeah, so if you think about the capital raise and you think about the backdrop of our revenue starting to scale from 1.3 million in Q1, 1.4 million in Q2, now we're predicting 1.7 million in Q3, maybe Q4 pops above 2 million.

And you put that into the equation of this lower burn, right, where 300, as we start to see revenue come in, that 300 at our limit, we'll see there's a No every now and then,

It could turn into 200, it could turn into 100, it could turn into break even and then going cash flow positive. So as the revenue ramps up, as our margins ramp up, our ability to not have to dip into our cash account and...

to finance our business through our business, right through our revenue and cash flow goes up. So you know there's a pendulum that's swinging you know in the right direction for NextTech and that's

That's why I said that we don't think we're going to need to raise capital over the next 12 months if you just follow what I'm saying. We're not far away.

said that we don't think we're going to need to raise capital over the next 12 months if you just follow what I'm saying. We're not far away.

you know, being cash flow, break even, and going cash flow positive. It's not going to take that much more.

3D model production to get there.

Okay, great. Great to hear that. And finally, I just wanted to touch upon sort of the competitive landscape for NextTech.

Could you, and this is sort of a two-parter, the first part being,

this is sort of a two-parter, the first part being, you know...

obviously this is a pretty, you know, a very fairly exciting new space in tech.

Do you, is there, could you say a little bit about, is there any initiatives going on at the, you know, at what would traditionally be sort of the big, large tech companies, let's say, you know, traditionally in this space?

for example Adobe is kind of the 800 pound gorilla here, but then this is also an area that in terms of publishing that is, is also an area where Microsoft has been a player, and then you can, this is also a natural extension for a company like Google.

Can you, one, first comment on are any of the big giant tech companies, are they in this space? And is there any competitive threat from them as far as you can see? And if not, could you just also say like why haven't they gotten into this space if this is such a, you know, exciting...

space and once you answer that I have a follow-up.

There are other things that have taken.

Center stage.

And really it's growing R. R.

Our business with Amazon right now that we're focused on and profitability.

Makes sense I appreciate it thank you for your time.

Thank you.

We'll take our next question from Jan Lung Wong Investor.

Hey, Evan So I had a quick question regarding <unk>.

The up listing to the NASDAQ so.

There is minimum.

Price per share alone three of $4.

The next tab <unk> AI to reverse split.

<unk> to the NASDAQ.

Yes.

Correct, there is a minimum price requirement and we have not.

Decided to do a reverse stock split as of today.

So as of today, we're not doing a reverse stock split that.

That doesn't mean that it's 100% off the table. It just means that today, we're not going to do it from these these levels.

Okay. Thank you David.

Youre welcome.

We will take our next question from Michael Farah Investor.

Hey, good afternoon, everybody and good afternoon Evan.

Thank you question I.

Hope you guys are doing great.

Please tell the team as I've told you all quite a few times that you guys are doing a great job.

Market price stock price doesn't really reflect that at the moment, but.

Quick question about the.

Employee stock compensation plan.

I'm not sure I heard it all but maybe $700000 a month can you tell me is that kind of the high <unk>.

That it would be and is there a stock dilution say by the end of this year or however long.

That program runs so.

Other words, yes, we will be at breakeven.

If not now certainly in the next step.

Q4, but then there is the stock compensation plan that is potentially taking some shares as well could you maybe explain that a little bit more.

Yeah. So good question.

The stock comp plan as a way for us to preserve our cash and be able to pay people.

With stock it it does have some minor dilution.

A couple of percentage points.

But you know we see the greater good.

And.

Being able to preserve our cash and ultimately.

So cash cash flow positive. So there is some dilution absolutely.

But.

It's either.

Small dilution through the shared services or bigger dilution through stock offerings, we're trying do not view.

Any additional stock offerings, which.

It seems to hammer the stock to no end.

Which we don't.

Nobody likes.

But.

So we're trying to do what we can for our shareholders of course as I've said, many many times.

Being the largest.

Could I ask one more question.

Yes, okay. Okay.

No. This is sachin.

I apologize if this has been asked before and it's a very difficult question to answer but.

As of August where does our capacity to turn out.

<unk> models and wet.

Theory.

Wanted to make it onto the future when it's obviously the more efficient the AI program becomes obviously that that scales down into a lot of different expenses and production capacities et cetera.

But yes, I mean do you have a figure kind of on that at least right now.

So here's what it comes down to.

If Amazon said to US we want 10003 D models in let's say the <unk>.

<unk> of September .

We would not be able to deliver in the month of September we would say to Amazon can you give us too.

December .

So there is a ramp up period.

Is my point and so right now we're able to meet the demand.

And.

<unk>.

Demand ratchets up we're going to be able to meet the demand again, but we will have a bit of a backlog, which isn't a bad thing right. So.

So we're keeping up with demand.

And we can flex up.

You know that.

Really the key is that as demand continues.

Come in we're able to meet the demand and that's been that's been evident by a rising revenue as you see the revenue go up what that tells you.

Is that we're meeting the demand and so.

That's the key.

Metric that's going to.

Give you an indication.

And a lot of this is driven by.

The demand side.

Of the equation from Amazon and we think when sell a central opens up as we've said a number times demand is going to.

Increased dramatically, we will meet that demand.

With additional <unk>.

Volumes from our factory, but it will take a bit of a ramp up period, but that's okay, because as we ramp up the revenue will ramp up with it.

I know that there's an amazing amount of complexity.

<unk> provided.

And are detailed in terms of what each customer wants whether it's.

It's a super <unk> model or that he just just give me.

A stick figure with a little bit of facial hair.

Yeah, Yeah yeah.

Do you think that the.

How do you put this.

What is the holdup with being able to say produced.

<unk> thousand a month, there must be something in the AI algorithm and the way that it's working.

Whether it's doing inter and intra.

Layered connected nets, theres something inside of that algorithm that could.

It could be improved in terms of efficiency is that basically what's happening.

Well.

I mean, a lot of it is because each <unk> <unk> model has like you said some uniqueness to it.

So the AI is learning that has it if it hasnt seen something.

Can't just produce it out of thin air it has to.

Pull it from somewhere now some of the AI AI can actually produce.

Some from thin air, but it's not always accurate.

Just like chat Jeep and very familiar with AI technology believe me.

Alright, so I get it.

It's almost great mouth, if you will right so sometimes it hallucinates right chats EQT, sometimes right. Okay. So depending on how quick you.

Your data that you put in for the inputs and the expected output retinal layers that you have in the neurons et cetera.

So a lot of the same stuff happens with you now.

With three modeling the bottom line is that we still need to QA. That's really the thing right, we still need to have a human.

Actually do the QA and so there's just limits to what the AI can do independently.

And so.

So what we're doing is essentially assembling.

Different parts of the three D model some of its human some of its AI at the end of it.

We put it all together into a photo realistic amazing for K <unk> model.

But it's just kind of it's that it's just not fully formed yet the machine isn't fully fully capable of autonomous.

Production.

No no I understand it it's a matter of putting in.

501000 weights.

Neuron different kinds of configurations for different client needs.

More questions, but I'll take that offline with you Evan and thank you. So much you guys keep up the great work. Thank you so much. Thank you.

Thank you. Thank you.

Thank you and that does conclude our question and answer session I would like to turn the call back over to Evan <unk> for closing remarks.

Well I'll have to say that this.

Q2, Q&A session was quite good for me.

It was actually.

Pleasantly surprised with the quality of the questions and I hope I answered everybody's questions.

In a way that makes sense for them I am available if there's additional questions.

My opinion on the stock price is that it is not reflecting the value of the company and then the upside from here.

Is.

Massive.

Just like the opportunity.

Of three D modeling is massive just like Amazon and sell a central opening up as new massive demand. So if you connect all the dots.

And you think it through logically not emotionally.

<unk>.

Brighter days are.

Part of your days are just around the corner.

With that we will conclude the call. Thank you everyone.

Thank you that does conclude todays presentation. Thank you for your participation and you may now disconnect.

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