Core AI Holdings, Inc. Q2 FY2022 earnings call

Financial Results - Revenue increased to $970,000 in Q2 2022 from $350,000 in Q2 2021. - Gross profit improved to $109,000 (11.2% of sales) in Q2 2022 from a negative $470,000 in Q2 2021. - Adjusted EBITDA loss decreased to negative $3.4 million in Q2 2022 from negative $4.6 million in Q2 2021. ### Business Highlights - SD7 rugged handset showcased at APCO, certified and approved for North American carriers (FirstNet, AT&T, Verizon Communications, U.S. Cellular) and international channel customers (Logic Wireless, TASSTA). - Expanding into new verticals beyond first responders, including government, school districts, utilities, security, logistics, retail, amusement parks, and hotel resorts. - Launched a new HPUE antenna product in conjunction with Assured Wireless Corporation, with first units delivered in Q3. ### Industry Trends - North American carriers seeing robust results, with potential for push-to-talk over cellular technology to replace land mobile radio (LMR) devices. - Global pandemic, work-from-home policies, and public safety needs driving demand for push-to-talk over cellular technology. ### Product Categories - Rugged handsets: SD7 PTT handset shipping to North American wireless carriers, VK7 vehicle kit and rapid kit for emergency response showing strong interest. - In-vehicle devices: Trials with government agencies in U.S. and Canada, pursuing opportunities in Australia, Europe, and the Middle East. - Cellular boosters: Growing demand for cellular boosters, with new HPUE antenna product for government and commercial vehicles on FirstNet.

Revenue for Q2 2022 was $970,000, an increase of $600,000 (172%) compared to $350,000 in Q2 2021, mainly due to rugged handset sales in EMEA and initial sales of the SD7 rugged handset. Gross profit for Q2 2022 was $109,000 (11.2% of sales) compared to a negative $470,000 in Q2 2021. Adjusted EBITDA was negative $3.4 million in Q2 2022 versus negative $4.6 million in Q2 2021, a decreased loss of $1.3 million.

- Expect double-digit growth in 2022 and beyond. ### - Anticipate strong growth from the rugged handset product category, particularly from the SD7 PTT handset and VK7 vehicle kit. ### - Plan to deliver significant volumes in Q3 and subsequent quarters as customer trials convert to purchase orders.

- Supply chain issues, including increased shipping costs and component availability challenges. ### - Uncertainties in converting customer trials into robust top-line sales. ### - Potential differences between projected and actual results due to known and unknown risks, uncertainties, and factors discussed in the company's annual report on Form 20-F.

Q: With the SD7 and VK7 devices in North America, can you speak about the importance of carrier partners and how you prioritize demand and initial shipments?

A: It takes 6 to 8 weeks or more to ramp up sales after carrier approvals. The market for SD7 extends beyond traditional first responders to various verticals like waste management, utilities, schools, etc. We're focused on sales now, with inventory built up to meet demand and supply chain managed to address challenges.

Q: Can you update on the current supply chain environment and inventory trends?

A: Supply chain is improving but shipping costs are higher. We're managing inventory and quality control, with ramp-up in Q3 expected. Inventory ramped up in Q2 for Q3 sales, and we're working to balance supply chain needs.