Q2 2023 Nextech3D.ai Earnings Call
Operator 2: Good afternoon, ladies and gentlemen. Welcome everyone to the Nextech3D.AI Corp. Q2 2023 Results Conference Call. All lines have been placed on mute to prevent 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. I'd like to remind everyone that this call is being recorded today, 22 August 2023. I will now turn the call over to Julia Viola, Investor Relations at Nextech3D.AI Corp..
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.
Julia Viola: Hello, welcome to the Nextech3D.AI Corp. Q2 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 Corp. released its unaudited financial and operating results for its Q2 ended 30 June 2023. A copy of the earnings disclosure is available on our website and on SEDAR. Some of the information discussed on this call is based on information as of today, 22 August 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 IFRS results and key performance indicators.
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.
Julia Viola: Neither this call nor the webcast archives may be recorded or otherwise reproduced or distributed without prior written permission from Nextech3D.AI Corp.. To begin our call, Evan Gappelberg, 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 Nextech3D.AI Corp., Evan Gappelberg.
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.
Evan Gappelberg: Thank you, Julia. Hello, everyone, and thank you for joining us for our Q2 earnings call. In 2023, we are 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 for 2023. In 2023, it's important to underline that Nextech3D.AI became a pure-play technology company. That transition has yet to be recognized by our investors as we see our AI capabilities, as we see the demand for 3D models, 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.
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.
Evan Gappelberg: These industries, which are massive multi-trillion-dollar industries, are all pivoting to 3D. It should not be underestimated how huge an opportunity this represents for early investors in Nextech. Amazon is 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-com 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 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 Nextech makes, 3D models.
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.
Evan Gappelberg: Which positions us for rapid growth for many years to come. It was a huge challenge getting here. It took 5 years, but we are here now, and we see nothing but blue sky opportunities in the market going forward. Supplying Amazon demonstrates Nextech's 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. 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 service Target, we already service Kohl's, we already service CB2, Procter & Gamble, Aisin, and many others. We're not done. We're still hunting, and we still have very large enterprise deals, as I said, that are moving forward.
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.
Evan Gappelberg: This industry is massive. It is a massive opportunity for the company, and it is starting to accelerate in Q3 2023. We are eight months in, and we are seeing a ramp-up for demand continuing in 2023, especially starting now, which we are in Q3. In another week, we 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 is going to shift into overdrive. In my opinion, we are 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.
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.
Evan Gappelberg: I believe that it is starting to happen again, only this time, it's for 3D models, and it's a much more sustainable, decade-long mega trend. I believe that right now, starting in Q3 2023, we are starting to see lift-off in the demand for 3D models. If you look at the potential future catalysts, we're signing more contracts with major players, Nextech really is cementing itself as the world's leading supplier for 3D models, 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, the business opportunity and demand for us to produce 3D models has never been greater, we are 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.
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.
Evan Gappelberg: You're seeing a 40% reduction in returns. You're seeing a 93% higher click-through rate and up to a 250% increase in conversions. 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 phase of growth 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. You can have a 3D model, and you can literally see what a product looks like in your space. You can see what they look like on your face, on your feet, on your wrist.
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.
Evan Gappelberg: It opens up a whole new opportunity for consumers to feel more confident buying products online. 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. 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. Everything is perfectly aligned for Nextech 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 ARitize 3D and our 3D modeling business, we own two other public companies. Nextech owns some very valuable breakthrough technology in industry-disrupting products.
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
Evan Gappelberg: ARway, which the symbol is ARWY in Canada, ARWYF in the US, is an augmented reality experience platform that we own roughly 49% of the shares 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, ARway, we are anticipating, is going to own the indoor navigation using its proprietary technology. ARway 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. We did announce, 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.
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.
Evan Gappelberg: They are rolling out ARWay, and that is just an 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. ARWay 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. We have some very high hopes, and we think that ARWay is going to be the dominant indoor navigation system that people are going to use.
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.
Evan Gappelberg: 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. All of those require some kind of navigation, and ARway is perfectly suited for that. We're expecting quite significant contracts for ARway, and we expect that business to do quite well in 2023 and beyond. If we look at Map Dynamics, we licensed our ARway platform to Map D, and we expect to see significant growth because it's just a perfect product-market fit. You have navigation capabilities inside the Map Dynamics app, so that when people go to trade shows and events, they click on a navigation button, and it opens up a map.
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
Evan Gappelberg: 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 Toggle. Toggle is another one of our spin-outs. Symbol's TGGL in Canada, TGGLF in the US. We've announced that it's had huge success with sign-ups showing over 300% growth. That's just the beginning. That's just the tip of the iceberg. We recently hired Anita Matte as Director of Growth Marketing from Amazon, which is just a coincidence. She is an experienced marketer, and she now is tasked with focusing on converting users to paid SaaS subscribers. It is too early to really talk numbers because we just launched in June, and it takes a little while to ramp up.
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
Evan Gappelberg: 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 customers for Toggle3D.ai that have come knocking on our door that have a dire need for its technology. I would just say to our investors, be a little patient with Toggle3D.ai. It's only been public since June 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. I don't stress about it. I am 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 of significant growth for our business.
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
Evan Gappelberg: I believe that the strong companies, which Nextech is one of, bounce back. I think we will see a rip-your-face-off bounce back for Nextech. I'm not going to say the day, I'm not going to say the week, but I believe Nextech 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. Even more importantly, our burn rate has come down to only CAD 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.
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.
Evan Gappelberg: We are continuing to integrate ARitize 3D with third-party e-com platforms. We're rolling out a SaaS product. I believe that all these decisions that we've been making over the past year, specifically, is going to be paying significant dividends for Nextech shareholders. Nextech 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. 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 Nextech employee working day in and day out, striving for success to achieve our company's goals.
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.
Evan Gappelberg: I also want to thank our new board members, Nidhi Kumra and Anthony Pizzonia, that have recently joined us, adding greater board independence. I also want to thank our loyal shareholders for sticking with Nextech 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 Nextech's Chief Financial Officer, Andrew Chan, to provide full commentary on the financials. Andrew, take it away.
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.
Andrew Chan: Thank you, Evan, good afternoon. As a reminder, unless otherwise noted, all figures reported on today's call are in CAD and under IFRS. All the proceeding information are unaudited and was made available through today's press release and also available on our website and on SEDAR. This is the Q2 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 CAD 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 H1 last year, contributing to close to CAD 1 million this quarter and CAD 2 million year to date.
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.
Andrew Chan: Our Map D 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, continue to see consistent repeat revenue from growth from our hybrid events platform, Map D, throughout this quarter. Gross profit remained consistent near the 40% mark 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 quarter were CAD 6.5 million, which includes CAD 1.5 million from Arway.ai through the consolidation and some contributions from Toggle, from our recently spun-out company, Toggle3D.
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.
Andrew Chan: 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 CAD 1 million this quarter compared to the same time last year, and down CAD 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 CAD 700,000 this quarter and CAD 2.3 million year to date. Net loss from continuing operations for the period was CAD 6.6 million, consistent with the immediate preceding quarter, and with a net loss per share of CAD 0.06 per quarter. As of 30 June 2023, we had a cash balance of CAD 3.8 million.
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.
Andrew Chan: In addition, we raised net proceeds of CAD 2.2 million in July to fund our future growth efforts, and we continue to hold 13 million shares in each of ARway and Toggle3D with a total market value of over CAD 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.
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.
Evan Gappelberg: Thank you, Andrew. On behalf of Nextech, I want to thank everyone for taking the time to join us. Operator, we're ready to answer questions.
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...
Operator 2: 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 Investment Research. That is: what % of Q2 revenues are from Amazon? Do you expect that to increase or decrease? The second question is the 3D model business just-
Evan Gappelberg: Hold on, let's go one by one. Andrew, can you answer that, please?
Andrew Chan: Yep. Cumulatively, up until Q2, Amazon's contributed a little under 50%, so around 49% year to date of our revenue. We continue to expect that to increase, until Seller Central opens, in which we'll be directly dealing with the customers rather than through Amazon. I don't know if you want to add anything further to that, Evan.
Evan Gappelberg: Yeah. Just to add a little more to that, Andrew, that once Seller Central opens, technically, the merchants will be buying direct from Nextech, not Amazon. In theory, 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.
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?
Operator 2: Thank you. Our next question is: Is the 3D model business just e-commerce websites? Are there any customers doing any other than that?
Evan Gappelberg: It's not just e-commerce websites, although that is the lion's share for sure.
Operator 2: Thank you. Our third question is: How is Q3 going? I would imagine customers are eager to get models up before Black Friday and have them available through the shopping season. Is there a push for that deadline, or is most of what you do furniture and such and not Christmas items?
Evan Gappelberg: Yeah, I would say that there's some seasonality, but not like a traditional e-com site owner's seasonality. We are seeing an uptick in business in Q3, and as mentioned previously, we are projecting a jump to CAD 1.7 million in revenue for our Q3. Yes, we're seeing an increase in demand.
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.
Operator 2: Thank you, sir. Our next question comes from Scott Buck with H.C. Wainwright. Please go ahead.
Scott Buck: 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?
Evan Gappelberg: 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 the next five weeks, we expect it to open up.
Scott Buck: Great. Thanks for that, Evan. I wanted to ask about where are you today in terms of 3D models generating capacity, and where will you be exiting the year once the AI is implemented?
Evan Gappelberg: In terms of capacity, we are getting, let's just say, stretched a little, but we are ramping up our team and our capabilities. 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.
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
Scott Buck: No, that's helpful, Evan. Just to clarify, it sounds like gross margins for Q4 could potentially be higher than what you've guided for Q3?
Evan Gappelberg: Andrew, am I right in saying yes?
Andrew Chan: Yeah, for sure. I think with technology, it's a ramp-up period. The longer you kind of run with it, the more efficient you become with it.
Scott Buck: Yep. No, that makes a ton of sense. Last one, Evan, if you could just touch on if there's any kind of update around Nasdaq and what you guys might do there in terms of an uplisting, that'd be great.
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.
Evan Gappelberg: Yeah. As you know, we applied. There's been some comments which we've been answering. Nothing earth-shattering. It's moving forward. There's nothing at this point to report other than it's on track.
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.
Scott Buck: All right, super. Appreciate the time, guys. Thank you very much.
Evan Gappelberg: Thank you, Scott.
All right, super. I appreciate the time guys. Thank you very much.
Operator 2: We'll take our next question from Christopher Sakai with Singular Research.
Thank you, Scott.
We'll take our next questions from
Christopher Sakai: Hey there, this is Christopher. 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.
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.
Evan Gappelberg: Say that again. You're asking about the complexity?
Christopher Sakai: The 3D models that you deliver, if you can kind of a little bit parse out the complexity level. It's like more complex ones are growing faster or less complex, or a little bit, if you can parse it out?
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
Evan Gappelberg: Yeah.
Christopher Sakai: That'll be great.
Evan Gappelberg: Yeah. Every single batch of 3D models we make has simple, medium, complex 1, complex 2, super complex. There's multiple reasons for all those different categories. I would say that at least 50% of the models are complex and above. 50% to 60% are complex and above, and the balance is more of the simple and medium.
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.
Christopher Sakai: That trend is what it was last few quarters or that is changing as we go forward?
And that trend is what it was in the last few quarters, so that is changing as we go forward.
Evan Gappelberg: I'd say it's pretty steady.
Christopher Sakai: Okay. I see that you guys were able to decrease selling and marketing expense. There is more a factor of cost control, or you think you're getting better utilization of your selling and marketing dollars?
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.
Evan Gappelberg: Well, because we're dealing with Amazon, we haven't had to spend as much on getting new customers, right? Because Amazon keeps on keeping us.
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.
Christopher Sakai: Okay. 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?
Evan Gappelberg: Correct.
Christopher Sakai: Perfect. Thank you.
Evan Gappelberg: Thank you.
Operator 2: As a reminder, everyone, that is star one to ask a question. We'll take our next question from Aakash Makava, a private investor.
Aakash Makava: Thank you, operator, and good afternoon, gentlemen. 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? Evan, you mentioned that the possibility could still be by the end of this quarter, in the next five weeks.
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.
Aakash Makava: On one of your recent interviews that you and Reza had done, in commenting on this topic, one of you mentioned that it was either going to be Q3, but unlikely to be Q4 because that's traditionally Amazon's busiest quarter, so they would not perhaps want to take a chance with trying something, kind of opening up a new avenue, in that very important, critical quarter for them. In the event, if perhaps it does not occur by the end of Q3, do you think 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 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.
Evan Gappelberg: Let's be clear, it's conjecture. What I'm saying is what I think. It's not necessarily what's going to play out, but I am on the front lines along with Reza, and so we do have some visibility. My thinking, and in conversations with Amazon is, they want to open it sooner rather than later. 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. If they did wait, I think it would be early Q1.
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.
Evan Gappelberg: 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. That's my thinking on that. Again, this is conjecture, until they actually come out with an announcement, nobody really can predict, right?
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?
Aakash Makava: Okay. Thank you. Sure. I know the other topic I wanted to cover was in regards to your capital structure. 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.
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.
Aakash Makava: That's great to hear. One thing, this latest raise, in the grand scheme of things, raise/dilution, it was not a very big dilution, correspondingly, perhaps that's because it was not really a very large capital raise, CAD 2.2 million, as you guys have pointed out. Could you say a little bit about, are you confident that that is going to meet Nextech'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?
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?
Evan Gappelberg: Yeah. If you think about the capital raise and you think about the backdrop of our revenue starting to scale from CAD 1.3 million in Q1, CAD 1.4 million in Q2, now we're predicting CAD 1.7 million in Q3, maybe Q4 pops above CAD 2 million. You put that into the equation of this lower burn, right? Where CAD 300, as we start to see revenue come in, that CAD 300 could turn into CAD 200, could turn into CAD 100, can turn into break even and then going cash flow positive. As the revenue ramps up, as our margins ramp up, our ability to not have to dip into our cash account and finance our business through our business, through our revenue, and cash flow goes up.
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
Evan Gappelberg: There's a pendulum that's swinging in the right direction for Nextech, and 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, that we're not far away from being cash flow breakeven and going cash flow positive. It's not going to take that much more 3D model production to get there.
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.
Aakash Makava: Okay, great. Great to hear that. Finally, I just wanted to touch upon the competitive landscape for Nextech. Could you, and this is sort of a two-parter, the first part being, obviously this is a fairly exciting new space in tech. Could you say a little bit about, is there any initiatives going on at what would traditionally be the big large tech companies, let's say, 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 also an area where Microsoft has been a player, and then 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?
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...
Aakash Makava: Is there any competitive threat from them as far as you can see? If not, could you just also say, why haven't they gotten into this space if this is such an exciting space? Once you answer that, I have a follow-up.
Evan Gappelberg: A couple of things. One is big tech companies are not pioneers. They might have been when they started, but they're not today. They wait for some pioneering company to have a breakout with new technology, and then they acquire them. That's just their business model. Having said that, when you look at Adobe, they supply software. The big tech companies supply the software that allows the smaller tech companies to do the heavy lifting of making these 3D models. There's an ecosystem that the big companies are essentially the pick and shovel kind of suppliers. We're going into the mines, and we're mining. We're doing the heavy lifting. That's maybe one way to think about it. The other thing is, we're creating our own technology. The AI is the game changer. That really only exploded in 2023.
space and once you answer that I have a follow-up.
Evan Gappelberg: We've been working at it for quite a while, but it's gotten a lot better in 2023, and it's going to continue in 2024. Again, the business model for big tech is they're not trying to be pioneers. There's just too many companies that fail at that. That's just like R&D for them. They might invest in little companies, but they wait for a company to break out, and then they acquire them. There are eyes on the industry from big tech, but they're not competing with us.
Aakash Makava: Okay. As a long, that's definitely nice to hear. In that regard, since we, I guess, at least for the time being, we don't have to necessarily focus on or perhaps worry about competition from big tech. Lately, I've been seeing in the kind of the community and in the press and so forth, that you had mentioned that on a recent interview, that Walmart was also getting into 3D. When I looked that up, what I found was that there's a company called Hexa. Upon investigating further, I see that, in fact, so they also, I guess, have some partnership or deal with Walmart, but then I also saw that they apparently are also doing work for Amazon. In fact, not only that, they in fact have a pretty attractive press release detailing so.
Aakash Makava: Can you talk about, I guess, where they fit in into the overall picture? You and Reza have repeatedly mentioned that you are not only a supplier to Amazon, but your relationship is essentially more deeper. It's much more of a partnership. If you have, as you've indicated in the past, that you guys are the dominant kind of player in this space, can you talk about where Hexa fits into all of that?
Evan Gappelberg: Yeah, I can talk about Hexa peripherally. They're an Israeli company that has been at this for, I think, twice as long as Nextech. They have a very different business model than we have, number one. Number two. They don't deal with high-volume 3D model production, Nextech. They're essentially offering a SaaS solution, and what they offer is an array of software, meaning they'll host your 3D models. They have virtual try-on for 3D models. They, I think, outsource 3D model production. I don't know if they make them in-house or not, but that's not their main business. Their main business is offering all the ancillary stuff that you do with a 3D model. It's a quite different business model. It's a SaaS model. What they don't do is high-volume production of 3D models for Amazon. That's what Amazon told us.
Evan Gappelberg: If you read their press release, which I did, they are working with a different division inside of Amazon, and it's not the division that we're working with. Amazon has one and a half million employees. They're a trillion-dollar tech company. They have lots of divisions, lots of people, and lots of stuff happening there. According to everything I know, we are not competing with them directly at Amazon, meaning we are the number one supplier of high-volume 3D models for Amazon. We have a multimillion-dollar contract with Amazon for 3 years. My understanding, what I've been told by our contact over at Amazon, is they do not. I can't speak beyond that. I'm not in their business, meaning I don't work there, but I am aware of them. The market, if you think about it, nobody should panic when there's a competitor.
Evan Gappelberg: It's a good sign. I know it's hard for you to think that way, but if they're in the same business we're in, then we must not be that crazy.
Operator 2: Thank you.
Evan Gappelberg: You as an investor aren't wrong to be invested, right? If these guys are in it, you guys are so enamored by them, okay, I guess there's something happening in this space that's exciting enough for them. I think they raised CAD 20 million in the last year or two or something. I don't know. There's investing capital flowing into the space. There's going to be competition. That's actually a good thing.
Operator 2: Thank you. We'll take our next question from Asad Rashid, investor.
Asad Rashid: Hi, good afternoon, everyone. Good afternoon, Evan.
Evan Gappelberg: Hey.
Asad Rashid: Evan, I just had a question pertaining to the AI on the gaming side of the business.
Asad Rashid: Will the current inventory in your parts library assist you in developing the 3D models? Is it something you build on, or will this require another set of archives?
Evan Gappelberg: That's a good question. It's somewhat unrelated technology, meaning the parts library, as you obviously are correct, is geared towards home furnishings and not games. It wouldn't overlap. The thing about gaming assets is that they, believe it or not, use TVs, couches, chairs in scenes in games. While maybe some of the stuff that's in a game, like a weapon for instance, we wouldn't have that. Not to say we can't make one, but it wouldn't be from our AI parts-based library. The point is that there's plenty of opportunity for us to populate scenes with 3D models from our existing inventory.
Asad Rashid: Understood. I guess with the scenario that you currently have with Amazon, for example, I guess with the gaming side, it's not really a mass production of the 3D models. It's more of a case-by-case basis. Is that correct?
Evan Gappelberg: It could be mass production. There is an opportunity there for mass production. Let's just say that it hasn't quite shown up yet. Yeah, right now it's not mass production, but it could become that.
Asad Rashid: Makes sense. Just last question. I'm just wondering, is a Map D spin-out still on the cards for 2023? I remember there was news earlier on this year that it may be a potential.
Evan Gappelberg: Yeah. I would say that's not something that I'm focused on today.
Evan Gappelberg: There are other things that have taken center stage and really it's growing our business with Amazon right now that we're focused on, and profitability.
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.
Asad Rashid: Makes sense. Well, appreciate it. Thank you for your time.
Makes sense I appreciate it thank you for your time.
Evan Gappelberg: Thank you.
Thank you.
Operator 2: We'll take our next question from Yan Lang Wong, investor.
We'll take our next question from Jan Lung Wong Investor.
Lang Wong: Hey, Evan. I have a quick question regarding the uplisting to the Nasdaq. There is a minimum price per share around CAD 3 or CAD 4. Will Nextech3D.AI do a reverse split to uplisting to the Nasdaq? Thanks.
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.
Evan Gappelberg: Yes. You're correct. There is a minimum price requirement, and we have not decided to do a reverse stock split as of today. As of today, we're not doing a reverse stock split. 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 levels.
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.
Lang Wong: Okay. Thank you, Evan.
Okay. Thank you David.
Evan Gappelberg: You're welcome.
Youre welcome.
Operator 2: We'll take our next question from Michael Farrah, Investor.
We will take our next question from Michael Farah Investor.
Michael Farrah: Hey, good afternoon, everybody, and good afternoon to you, Evan.
Hey, good afternoon, everybody and good afternoon Evan.
Evan Gappelberg: Thank you.
Thank you question I.
Michael Farrah: Quick question. Yeah. Hope you guys are doing great. Please tell the team, as I've told you offline 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 CAD 700,000 a month. Can you tell me, is that kind of the high number that it would be? Is there stock dilution, say, by the end of this year or however long that program runs? In other words, yeah, we'll be at break even, if not now, certainly in the next Q4. There's the stock compensation plan that is potentially taking some shares as well. Could you maybe explain that a little bit more?
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.
Evan Gappelberg: Yeah. It's a good question. The stock comp plan is a way for us to preserve our cash and be able to pay people with stock. It does have some minor dilution, a couple of percentage points. We see the greater good in being able to preserve our cash and ultimately.
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.
Michael Farrah: Right
Michael Farrah: go cash flow positive. There is some dilution, absolutely. It's either small dilution through the share services or bigger dilution through stock offerings. We're trying to not do-
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.
Michael Farrah: Right
Evan Gappelberg: any additional stock offerings, which it seems to hammer the stock to no end. Nobody likes. We're trying to do what we can for our shareholders. Of course, as I've said many, many times, me being the largest.
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.
Michael Farrah: Could I ask one more question?
Could I ask one more question.
Michael Farrah: Yeah. Sure.
Yes, okay. Okay.
Michael Farrah: Okay. I apologize if this has been asked before. It's a very difficult question to answer. As of August, what is our capacity to turn out 3D models and what, in theory, I won't even make you answer the future one. It's obviously the more efficient the AI program becomes, obviously that scales down into a lot of different expenses and production capacities, et cetera. Yeah. Do you have a figure on that at least right now?
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.
Evan Gappelberg: Here's what it comes down to. If Amazon said to us, we want 10,000 3D models in, let's say, the month of September, we would not be able to deliver in the month of September. We would say to Amazon, can you give us till December? There's a ramp-up period, is my point. Right now, we're able to meet the demand. If the demand ratchets up, we're going to be able to meet the demand again, but we'll have a bit of a backlog, which isn't a bad thing. Right?
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.
Michael Farrah: Right.
Evan Gappelberg: We're keeping up with demand. We can flex up, and that's really the key, is that as demand continues to come in, we're able to meet the demand, and that's being evidenced by our rising revenue. As you see the revenue go up, what that tells you.
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.
Michael Farrah: Sure
Michael Farrah: is that we're meeting the demand. That's the key metric that's going to give you an indication. A lot of this is driven by the demand side of the equation from Amazon, and we think when Seller Central opens up, as we've said a number of times, demand's going to increase dramatically. We will meet that demand with additional volumes from our factory, but it will take a bit of a ramp-up period. That's okay, because as we ramp up, the revenue will ramp up with it.
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.
Michael Farrah: I know that there's an amazing amount of complexity provided, and/or detailed in terms of what each customer wants, whether it's the super 3D model or the, Hey, just give me a.
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.
Michael Farrah: stick figure with a little bit of facial hair.
A stick figure with a little bit of facial hair.
Evan Gappelberg: Yeah.
Yeah, Yeah yeah.
Michael Farrah: Let's see. How do we put this? What is the holdup with being able to, say, produce 100,000 a month? There must be something in the AI algorithm, in the way that it's working, whether it's doing inter and intro, layered connected nets. There's something inside of that algorithm that could be improved in terms of efficiency.
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.
Evan Gappelberg: Well-
Michael Farrah: what's happening?
Evan Gappelberg: Well, no. A lot of it is because each 3D model has, like you said, some uniqueness to it.
Well.
I mean, a lot of it is because each <unk> <unk> model has like you said some uniqueness to it.
Michael Farrah: Right.
Michael Farrah: The AI is learning, and if it hasn't seen something, it can't just produce it out of thin air. It has to pull it from somewhere. Now, some of the AI can actually produce some from thin air, but it's not always accurate. Right? Just like ChatGPT.
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.
Michael Farrah: I'm very familiar with AI technology, believe me.
Michael Farrah: Right.
Michael Farrah: I get it. It's almost gray math, if you will.
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.
Evan Gappelberg: Right. Sometimes it hallucinates, right? The ChatGPT-
Michael Farrah: Yeah
Michael Farrah: sometimes. Right. Okay.
Michael Farrah: It depends on your data that you put in for the inputs, and the expected outputs.
Your data that you put in for the inputs and the expected output retinal layers that you have in the neurons et cetera.
Michael Farrah: Right
Michael Farrah: The layers that you have, and the neurons, et cetera. Yeah.
Evan Gappelberg: Yeah. A lot of the same stuff happens with 3D 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 there's just limits to what the AI can do independently. What we're doing is essentially assembling different parts of the 3D model. Some of it's human, some of it's AI.
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.
Michael Farrah: Right.
Michael Farrah: At the end of it, we put it all together into a photorealistic, amazing, 4K, 3D model. It's just kind of, it's that. It's just not fully formed yet. The machine isn't fully capable of autonomous production.
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.
Michael Farrah: No, I understand. It's a matter of putting in, let's say 500 to 1,000 weights per neuron, different kinds of configurations for different client needs. I had 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.
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.
Michael Farrah: Thank you.
Michael Farrah: Thank you.
Evan Gappelberg: Thank you.
Thank you. Thank you.
Operator 2: Thank you. That does conclude the question and answer session. I'd like to turn the call back over to Evan Gappelberg for our closing remarks.
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.
Evan Gappelberg: Well, I'll have to say that this Q2 Q&A session was quite good for me. I 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 the upside from here is massive. Just like the opportunity of 3D modeling is massive. Just like Amazon and Seller Central opening up is new, massive demand. If you connect all the dots, and you think it through logically and not emotionally, I think brighter days or sunnier days are just around the corner. With that, we will conclude the call. Thank you, everyone.
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.
Operator 2: Thank you. That does conclude today's presentation. Thank you for your participation, and you may now disconnect.
Thank you that does conclude todays presentation. Thank you for your participation and you may now disconnect.
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