Xtract One Technologies Inc. (TSX: XTRA) (OTCQX: XTRAF) (FRA: 0PL)
(“Xtract One” or the “Company”) a leading technology-driven threat
detection and security solution that prioritizes the patron access
experience by leveraging AI, is pleased to announce its annual
results for the year ended July 31, 2023. All information is in
Canadian dollars unless otherwise indicated.
The following press release should be read in
conjunction with the Company’s Annual Consolidated Financial
Statements, prepared in accordance with International Financial
Reporting Standards (“IFRS”) and the Company’s Management’s
Discussion and Analysis for the years ended July 31, 2023 and 2022,
which can be found under the Company’s profile on SEDAR+ at
www.sedarplus.ca.
“We surpassed several milestones this year
including posting a record year for revenue, which increased by
365% from last year for the Platform operating segment,” stated
Peter Evans, Chief Executive Officer of Xtract One. “We continue to
experience incredible demand for our solutions across several
market verticals which has been fueling the 344% growth in total
contract value of new bookings for the year. I am excited to
continue this growth trajectory into fiscal 2024 while delivering
exceptional experiences and safer environments for our customers
and their patrons.”
Company highlights for the year ended
July 31, 2023
The following is a summary of the key business
highlights for the year ended July 31, 2023:
- Total contract value of new
bookings1 for the Platform operating segment was $15.0 million for
the year ended July 31, 2023, as compared to $3.4 million for the
year ended July 31, 2022, representing an increase of 344%;
- The Platform operating segment’s
contractual backlog was $4.1 million as of July 31, 2023, as
compared to $1.3 million as of July 31, 2022, representing an
increase of 213%. The Platform operating segment’s contractual
backlog excludes an additional $10.4 million of agreements pending
installation1 which is 447% more than the balance for the prior
year;
- Accelerated topline growth for the
Platform operating segment with approximately $3.6 million in
revenue for the year ended July 31, 2023 as compared to $0.8
million for the year ended July 31, 2023, representing an increase
of 365%;
- Completed a strategic investment of
$13.4 million from Madison Square Garden Sports Corp. to fund
continued innovation and support accelerated growth in
revenue;
- Entered into a commercial agreement
with Sphere Entertainment Co. (formerly Madison Square Garden
Entertainment Corp.), which allows Sphere Entertainment Co. and its
affiliate Madison Square Garden Entertainment Corp. (“MSG
Entertainment”) (formerly MSGE Spinco, Inc.) to deploy SmartGateway
solutions across the Sphere in Las Vegas, which opened in September
2023, and MSG Entertainment’s portfolio of iconic venues, including
New York’s Madison Square Garden, The Theater at Madison Square
Garden, Radio City Music Hall, and Beacon Theatre; and The Chicago
Theatre;
- Announced a new strategic
partnership with the Oak View Group (“OVG”) which has introduced a
new patron screening technology to multiple properties, enabling
OVG owned and operated properties to utilize Xtract One’s
SmartGateway system to enhance the customer experience and
safety;
- As part of this strategic
partnership, secured contracts with OVG to protect entrances at
multiple venues including Angel of the Winds Arena, Total Mortgage
Arena, Acrisure Arena, Simmons Bank Liberty Stadium, Cross
Insurance Center, and Budweiser Gardens;
- Secured contracts with several
sport and entertainment venues including SAP Center, the home of
the NHL’s San Jose Sharks, and Tech CU Arena which is the home of
the AHL’s San Jose Barracuda;
- Continued expansion into new market
verticals such as schools, healthcare facilities and public sector
buildings with deployments with Lakewood School District, Sentara
Health, Hyundai Transys, and City of Phoenix Municipal Courts;
- Subsequent to the year ended July
31, 2023, chosen by the U.S. Department of Veteran Affairs Medical
Centers in Virgina to create a more efficient healthcare
environment while ensuring the safety of patients and staff;
- Subsequent to the year ended July
31, 2023, partnered with the American Association of Professional
Baseball as the exclusive preferred supplier to enhance venue
security and guest experiences at games; and
- Subsequent to the year ended July
31, 2023, the Company announced its next phase of growth through a
selective international expansion with three multinational
companies, one of which is a global entertainment organization with
a three year contract totaling over $5.1 million USD.
Fiscal 2023 Annual Financial Highlights
- Total revenue was $4.1 million for
the year ended July 31, 2023 as compared to $3.6 million for the
year ended July 31, 2022.
- Total contractual backlog of sales
commitments not yet recognized as revenue was $4.5 million as of
July 31, 2023, as compared to $2.2 million as at July 31,
2022.
- Loss and comprehensive loss was
$16.3 million for the year ended July 31, 2023 compared to $39.7
million for the year ended July 31, 2022. The decrease in loss and
comprehensive loss for the year pertains to a non-cash goodwill
impairment during the prior fiscal year.
- Basic and diluted loss per share
was $0.09 for the year ended July 31, 2023 as compared to $0.25 for
the year ended July 31, 2022.
Fourth Quarter 2023 Financial Highlights
- Total revenue was $1.8 million for
the three month period ended July 31, 2023 as compared to $0.8
million for the three month period ended July 31, 2022,
representing an increase of $1.0 million or 123%.
- Revenue of $1.6 million was
attributable to the Platform operating segment for the three months
ended July 31, 2023, in comparison with $0.3 million for the same
three month period in 2022, representing an increase of $1.3
million or 516%
- The Company recognized a total
adjusted loss and comprehensive loss2 of $3.3 million for the three
month period ended July 31, 2023 as compared to $5.6 million for
the same period in 2022, representing a decrease of $2.3 million or
40%.
Audited Statements of Loss and
Comprehensive Loss for the Years Ended July 31, 2023, and
2022
The following table is extracted from the
Company’s audited financial statements and presented in Canadian
dollars to demonstrate the Statements of Loss and Comprehensive
loss for the years ended July 31, 2023, and 2022:
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
Revenue |
|
$ |
4,111,244 |
|
|
$ |
3,619,214 |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Sales and
marketing |
|
|
2,789,338 |
|
|
|
1,968,641 |
|
|
Research and
development |
|
|
6,206,176 |
|
|
|
4,463,527 |
|
|
General and
administration |
|
|
1,362,378 |
|
|
|
2,044,536 |
|
|
Personnel
costs |
|
|
5,723,359 |
|
|
|
5,284,255 |
|
|
Professional
fees |
|
|
677,469 |
|
|
|
772,091 |
|
|
Hardware |
|
|
926,058 |
|
|
|
277,286 |
|
|
Amortization |
|
|
805,900 |
|
|
|
805,900 |
|
|
Depreciation |
|
|
643,390 |
|
|
|
765,126 |
|
|
Share-based
compensation |
|
|
950,536 |
|
|
|
1,063,840 |
|
|
Loss on
inventory |
|
|
346,374 |
|
|
|
502,397 |
|
|
Impairment
of goodwill |
|
|
- |
|
|
|
25,582,433 |
|
|
Loss on retirement of assets |
|
|
181,107 |
|
|
|
12,155 |
|
|
|
|
|
20,612,085 |
|
|
|
43,542,187 |
|
|
|
|
|
|
|
Loss from operations |
|
|
16,500,841 |
|
|
|
39,922,973 |
|
|
|
|
|
|
|
Unrealized gain on investment |
|
|
(58,333 |
) |
|
|
(175,000 |
) |
Realized loss on investment |
|
|
55,082 |
|
|
|
- |
|
Interest and other income |
|
|
(161,117 |
) |
|
|
(31,284 |
) |
|
|
|
|
|
|
Loss and comprehensive loss for the year |
|
$ |
16,336,473 |
|
|
$ |
39,716,689 |
|
|
|
|
|
|
|
Weighted average number of shares |
|
|
176,664,492 |
|
|
|
155,744,354 |
|
|
|
|
|
|
|
Basic and diluted loss per share |
|
$ |
0.09 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
Audited Statements of Financial Position
as at July 31, 2023 and 2022
The following table is extracted from the
Company’s audited financial statements and presented in Canadian
dollars to demonstrate the Company’s financial position as at the
years ended July 31, 2023, and 2022:
|
|
|
|
July 31, 2023 |
|
July 31, 2022 |
Assets |
|
|
|
|
Current assets |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
8,327,449 |
|
|
$ |
6,277,321 |
|
|
Receivables |
|
|
847,429 |
|
|
|
1,895,156 |
|
|
Prepaid
expenses and deposits |
|
|
1,026,668 |
|
|
|
668,650 |
|
|
Inventory |
|
|
1,602,971 |
|
|
|
1,106,034 |
|
|
|
|
|
|
|
|
|
|
|
11,804,517 |
|
|
|
9,947,161 |
|
|
|
|
|
|
|
Property and equipment |
|
|
2,063,817 |
|
|
|
1,477,841 |
|
Intangible assets |
|
|
4,843,700 |
|
|
|
5,649,600 |
|
Right of use assets |
|
|
286,796 |
|
|
|
589,832 |
|
Investment in Gemina Labs |
|
|
- |
|
|
|
393,750 |
|
|
|
|
|
|
|
Total assets |
|
$ |
18,998,830 |
|
|
$ |
18,058,184 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts
payable and accrued liabilities |
|
$ |
2,519,350 |
|
|
$ |
2,639,082 |
|
|
Deferred
revenue |
|
|
1,379,741 |
|
|
|
196,651 |
|
|
Current portion of lease liability |
|
|
232,483 |
|
|
|
320,435 |
|
|
|
|
|
|
|
|
|
|
|
4,131,574 |
|
|
|
3,156,168 |
|
|
|
|
|
|
|
Non-current portion of lease liability |
|
|
124,358 |
|
|
|
356,841 |
|
|
|
|
|
|
|
|
|
|
|
4,255,932 |
|
|
|
3,513,009 |
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
Share
capital |
|
|
135,823,337 |
|
|
|
119,796,584 |
|
|
Contributed
surplus |
|
|
14,420,259 |
|
|
|
13,912,816 |
|
|
Accumulated deficit |
|
|
(135,500,698 |
) |
|
|
(119,164,225 |
) |
|
|
|
|
|
|
|
|
|
|
14,742,898 |
|
|
|
14,545,175 |
|
|
|
|
|
|
|
Total liabilities and shareholders' equity |
|
$ |
18,998,830 |
|
|
$ |
18,058,184 |
|
|
|
|
|
|
|
Audited Statements of Cash Flows for the
Years Ended July 31, 2023 and 2022
The following table is extracted from the
Company’s audited financial statements and presented in Canadian
dollars to demonstrate the Company’s cash flows for the years ended
July 31, 2023, and 2022:
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
Cash flow used in operating activities |
|
|
|
|
|
Loss and comprehensive loss for the year |
|
$ |
(16,336,473 |
) |
|
$ |
(39,716,689 |
) |
|
Adjustment for: |
|
|
|
|
|
|
Share-based
compensation |
|
|
950,536 |
|
|
|
1,063,840 |
|
|
|
Depreciation |
|
|
923,764 |
|
|
|
802,925 |
|
|
|
Amortization |
|
|
805,900 |
|
|
|
805,900 |
|
|
|
Finance
cost |
|
|
42,237 |
|
|
|
66,632 |
|
|
|
Other
income |
|
|
(20,000 |
) |
|
|
- |
|
|
|
Unrealized
gain on investment |
|
|
(58,333 |
) |
|
|
(175,000 |
) |
|
|
Realized
loss on investment |
|
|
55,082 |
|
|
|
- |
|
|
|
Gain on
lease terminations |
|
|
- |
|
|
|
(707 |
) |
|
|
Impairment
of goodwill |
|
|
- |
|
|
|
25,582,433 |
|
|
|
Loss on
inventory |
|
|
346,374 |
|
|
|
502,397 |
|
|
|
Loss on
retirement of assets |
|
|
181,107 |
|
|
|
12,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,109,806 |
) |
|
|
(11,056,114 |
) |
|
Changes in non-cash working capital |
|
|
|
|
|
|
Receivables |
|
|
1,047,727 |
|
|
|
1,362,255 |
|
|
|
Prepaid
expenses and deposits |
|
|
(358,018 |
) |
|
|
(313,075 |
) |
|
|
Inventory |
|
|
(2,198,583 |
) |
|
|
(526,082 |
) |
|
|
Accounts
payable and accrued liabilities |
|
|
(99,732 |
) |
|
|
1,373,471 |
|
|
|
Deferred
revenue |
|
|
1,183,090 |
|
|
|
(111,896 |
) |
|
|
|
|
|
|
|
|
Cash used in operating activities |
|
|
(13,535,322 |
) |
|
|
(9,271,441 |
) |
|
|
|
|
|
|
|
Cash flow used in investing activities |
|
|
|
|
|
Purchase of property and equipment |
|
|
(32,539 |
) |
|
|
(95,757 |
) |
|
Disposal of investment - Gemina Labs |
|
|
397,001 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Cash received from (used in) investing activities |
|
|
364,462 |
|
|
|
(95,757 |
) |
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
Proceeds on issue of share capital, net of share issue costs |
|
15,583,660 |
|
|
|
6,359,678 |
|
|
Lease payments |
|
|
(362,672 |
) |
|
|
(367,652 |
) |
|
|
|
|
|
|
|
|
Cash received from financing activities |
|
|
15,220,988 |
|
|
|
5,992,026 |
|
|
|
|
|
|
|
|
Net increase (decrease) in cash for the year |
|
$ |
2,050,128 |
|
|
$ |
(3,375,172 |
) |
|
|
|
|
|
|
|
Cash and cash equivalents beginning of the
year |
|
|
6,277,321 |
|
|
|
9,652,493 |
|
|
|
|
|
|
|
|
Cash and cash equivalents end of the year |
|
$ |
8,327,449 |
|
|
$ |
6,277,321 |
|
|
|
|
|
|
|
|
Conference Call Details
Xtract One will host a conference call to
discuss its annual results on Thursday, October 19, 2023, at 5:30
pm EST. Peter Evans, Xtract One CEO and Director, and Karen Hersh,
CFO and Corporate Secretary, will provide an overview of the
financial results along with management’s outlook for the business,
followed by a question-and-answer period.
Investors may register for the live conference
call by clicking this link. Participants should dial in at least 10
minutes prior to the start of the call. A recording of the call
will be available on the Company’s website after the conference
call concludes.
About Xtract One
Technologies
Xtract One Technologies is a leading
technology-driven threat detection and security solution leveraging
AI to provide seamless and secure patron access control
experiences. The Company makes unobtrusive threat detection systems
that enable venue building operators to prioritize and deliver
improved patron experiences while providing unprecedented safety.
Xtract One’s innovative AI-powered Gateway product enables
companies to covertly screen for weapons at points of entry without
disrupting the flow of traffic. Its AI-based Xtract One Vision
allows venue and building operators to identify weapons and other
threats inside and outside of facilities, and Xtract One Insights
provides valuable intelligence for optimizing operations. For more
information, visit www.xtractone.com or connect on Facebook,
Twitter, and LinkedIn.
For further information, please contact:
Xtract One Inquiries
info@xtractone.comhttp://www.xtractone.com/
Media ContactKristen Aikey, JMG Public
Relationskristen@jmgpr.com -
347-394-8807
Investor Relationsxtract1@rbmilestone.com
1 Supplementary
Financial Measures:
The Company utilizes specific supplementary
financial measures in this earnings release to allow for a better
evaluation of the operating performance of the Company’s business
and facilitates meaningful comparison of results in the current
period with those in prior periods and future periods.
Supplementary financial measures do not have any standardized
meaning prescribed under IFRS and therefore may not be comparable
to measures presented by other companies. Supplementary financial
measures presented in this earnings release include ‘Agreements
pending installation’ and ‘Total contract value’ of new bookings.
Agreements pending installation reflects total value of signed
contracts awarded to the Company that has not been installed at the
customer site. ‘Total contract value of new bookings’ is comprised
of all new contracts signed and awarded to the Company, regardless
of the performance obligations outstanding as at the end of the
reporting period. Total contract value is the aggregate value of
sales commitments from customers as at the end of the reporting
period without consideration of the Company’s completion of the
associated performance obligations outlined in each contract.
2 Non-IFRS Financial
Measures:
This earnings release refers to a historical
non-IFRS performance measure. This measure does not have any
standardized meaning prescribed under IFRS, and therefore may not
be comparable to other reporting issuers. The non-IFRS measure
included is, ‘Adjusted loss and comprehensive loss’. Management
believes that this non-IFRS performance measurement provides
investors with useful information as it excludes an amount that is
not indicative of the core operating results, and ongoing
operations, and further, provides a consistent basis for comparison
between periods. The Company has adjusted its loss and
comprehensive loss pertaining to the quarter ended July 31, 2022,
to exclude a non-routine, non-cash impacting impairment loss
relating to goodwill. The following table provides an illustration
of the calculation of ‘Adjusted loss and comprehensive loss’ for
the quarter ended July 31, 2023 and 2022 in millions:
|
|
Three months
ended |
|
|
July 31, 2023 |
|
July 31, 2022 |
|
|
|
|
|
Loss
and comprehensive loss |
|
$ |
3.3 |
|
$ |
31.2 |
|
|
|
|
|
Adjusted
for: |
|
|
|
|
|
|
|
|
|
Impairment of goodwill |
|
|
- |
|
|
25.6 |
|
|
|
|
|
Adjusted loss and comprehensive loss |
|
$ |
3.3 |
|
$ |
5.6 |
|
|
|
|
|
CAUTIONARY DISCLAIMER STATEMENT:
This news release contains forward-looking
statements within the meaning of applicable securities laws
relating to system sales, product development, licensing,
commercialization and regulatory compliance issues and other
statements that are not historical facts. Forward-looking
statements are often identified by terms such as “will”, “may”,
“should”, “anticipates”, “expects”, “believes”, and similar
expressions or the negative of these words or other comparable
terminology. All statements other than statements of historical
fact, included in this release are forward-looking statements that
involve risks and uncertainties. There can be no assurance that
such statements will prove to be accurate and actual results and
future events could differ materially from those anticipated in
such statements. Important factors that could cause actual results
to differ materially from the Company’s expectations include but
are not limited to: results of operational activities, completion
of contracts; the Company’s limited profitability; dependence on
management; the Company’s need for additional financing and the
effects of financial market conditions and other factors on the
availability of capital; competition, including that of better
funded competitors; the impact of the Russia-Ukraine conflict on
the global economy; the continued impact of the COVID-19 pandemic
on the global economy; the need to build alliances and
partnerships, including with customers and suppliers; and other
risks detailed from time to time in the filings made by the Company
with securities regulations. The reader is cautioned that
assumptions used in the preparation of any forward-looking
information may prove to be incorrect. Events or circumstances may
cause actual results to differ materially from those predicted, as
a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of the Company.
The reader is cautioned not to place undue reliance on any
forward-looking information. Such information, although considered
reasonable by management at the time of preparation, may prove to
be incorrect and actual results may differ materially from those
anticipated. Forward-looking statements contained in this news
release are expressly qualified by this cautionary statement. The
forward-looking statements contained in this news release are made
as of the date of this news release and the Company will update or
revise publicly any of the included forward-looking statements only
as expressly required by applicable law.
No securities exchange or commission has
reviewed or accepts responsibility for the adequacy or accuracy of
this release.
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