Core AI Holdings, Inc. Q1 FY2023 earnings call

• Explained the late earnings call and auditor change due to new audit firm selection and regulatory issues in Canada. - Reported year-over-year revenue growth driven by SD7 rugged push-to-talk handset sales. - Business highlights: SD7 certified with North American and international carriers, expanded distribution with strategic resellers (Two Way Direct, RadioTrader, Entropia), new product SD7+ with body camera launching later in 2023, extended sales team with industry veterans. - Industry trends: FirstNet growth supporting push-to-talk over cellular solutions.

For the fourth quarter ended December 31, 2022, revenue was $2.1 million (vs $1.9 million prior year) with cost of sales $1.9 million (vs $1.8 million), gross margin $170,000 (vs $165,000), and adjusted EBITDA negative $5 million (vs negative $2.7 million). For the full fiscal year ended December 31, 2022, revenue was $6.5 million (vs $7.5 million prior year), cost of sales $5.1 million (vs $5.7 million), gross margin $1.4 million (vs $1.9 million), and adjusted EBITDA negative $12.5 million (vs negative $12.4 million). For the first quarter ended March 31, 2023, total revenues were $1.8 million (116% increase y-o-y), rugged device sales up 286% y-o-y ($1.4 million vs $400,000), revenue from US was 60% of total, gross margin percentage 27.5% (vs 30.6% prior year), SG&A $2.4 million (vs $2.7 million prior year), and adjusted EBITDA negative $1.9 million (vs negative $2.6 million).

• Expect continued revenue growth from SD7 sales. - Goal to reach profitability in coming quarters. - Anticipate growth in various product categories, especially rugged handsets. - SD7+ expected to launch later in 2023 with higher margin potential and recurring revenue.

• Unexpected auditor change and regulatory issues in Canada, but not foreseen to recur. - Uncertainties in forward-looking statements due to inherent risks and changes in circumstances.

Q: Can you talk about the school vertical and the sale for that?

A: Marc Seelenfreund explained about partnering with CrisisGo for a package with SOS button and push-to-talk over cellular for schools, with many schools engaged and large scale potential deals.

Q: On the SD7+, is there a different unit selling price or product margin profile than the traditional SD7?

A: Marc Seelenfreund thinks SD7+ will have a higher margin profile and potential recurring revenue.

Q: On sales and marketing expenses and G&A expense line in Q1, is that a good quarterly run rate?

A: Marc Seelenfreund says SG&A is expected to stay lean with current staff and not increase much.

Q: Can you provide color on sales pipeline with major U.S. carriers?

A: Marc Seelenfreund says they've passed product launch with carriers, training salespeople, and getting customers from all carriers.

Q: Who are the competitors for U.S. first responder end customers?

A: Marc Seelenfreund mentions companies like (ph), Samsung, Kyocera as competitors but with unique offering of radio-like device at lower cost.

Q: Update on plan to remain compliant with NASDAQ and liquidity levels?

A: Marc Seelenfreund says they're doing factoring, will need to raise more money, and plan to do a stock split soon for NASDAQ compliance.

Q: Color on customer trials, number of customers, and verticals?

A: Glenn Kennedy said number of trials can't be exact, but includes various verticals like schools, first responders, warehouses, etc., with multiple simultaneous trials.

Q: Amount of capital raised from warrants in Q2?

A: Marc Seelenfreund said $3.6 million.

Q: How does the sales process with carriers work?

A: Marc Seelenfreund said it varies, with some customers purchasing inventory and others just-in-time, working with master distributors.