Maris Tech Ltd. Q4 FY2023 Earnings Call

Hello. Good morning to the U.S. participants. Good afternoon to the Israeli participants. My name is Israel Bar, I’m Maris-Tech Founder and CEO. Also with me is Mr. Nir Bussy, our CFO. Thank you for joining us for this webinar. This is the first time we hold such an event, but we intend to continue with similar events in the future. Before we start, please take a few seconds to review the forward-looking statements presented in this slide. On March 21, we published our 2023 financial statements, and we invite you to review them. Mr. Bussy and I will present to you during the next 10 to 15 minutes the company's technology and business activities, as well as the key financial information. During the webinar, you may ask questions in the chat room, which will be addressed right after the presentation. It is important to mention that in accordance with the legal advisor's instructions, we can only refer to information that has been published in the EDGAR system. So who is Maris? What are we doing? What is the technology? So Maris is a company that deals with what we call AI-based edge computing, which, according to what we see in the market these days, is one of the most rapidly developing technologies. When we talk about edge computing, we are talking about technology that enables autonomous decision-making at the edge on any remote platform. It can be a drone, a robot, a vehicle, and many other platforms equipped with cameras, with video, that need to take decisions autonomously. Edge computing functionality, as I said, relies on a variety of video sensors, and it can be any sensor available in the market, starting with standard definition, high definition, and any other standard mounted on a remote platform. Another important feature that relates to edge computing is the possibility for the technology to provide and stream the video from the remote platform to the operator with low latency. When we mention low latency, we are referring to an important feature that indicates the delay between what the camera sees and what the operator sees, and this is crucial when trying to control a remote platform; it should be as low as possible. Maris declares a 100 milliseconds end-to-end latency. Now, when it comes to edge computing, most of the related applications, such as small drones, are very sensitive to size, weight, and power consumption. Maris technology, with its wide range of hardware and software solutions, answers these requirements and provides technology that spans large and fast-growing markets and applications. It is important to mention that the announcement we published yesterday about the cooperation with Renesas is strong evidence of the recognition of Maris technology by market leaders concerning what we are developing. Let me now take you through the applications in which Maris is involved and deployed. This application tool will give you a much better view of what our technology is capable of doing. So let's start with defense. Defense is one of the most important markets for Maris technology, and unfortunately, we cannot ignore the fact that defense plays a significant role all over the world these days, especially due to the war in Ukraine and here in Israel. The modern battlefield is significantly changing, with AI and instant remote visual information creating a revolution. As a result, defense budgets are significantly growing. If you look at the list of applications in which Maris is involved, we can see the drones market. Drones are now everywhere; they are used in military applications, both indoors and outdoors. Maris provides the video payloads for such drones. I can tell you that we already have thousands of drones equipped with Maris technology here in Israel and in many other locations worldwide. Armored vehicle situational awareness is also an important part of AI capabilities, where individuals within an armored vehicle receive indications about threats surrounding the vehicle. Without going into too much detail, Maris has already equipped hundreds of armored vehicles with our situational awareness solutions in recent months, and we are currently delivering hundreds more. Feedback from the battlefield indicates that our technology is saving lives. Other applications are related to missiles, missile launchers, rotary ammunition, special forces, tactical devices, and important markets Maris is engaged with, including intelligence agencies. We are developing now and have won several tenders for AI-based sophisticated intelligence gathering, and we aim to play a crucial role in this market. And, of course, many other unmanned vehicles, such as UAVs and unmanned ground vehicles, are part of our portfolio. This slide is an excellent description of where Maris is. Maris is present in every application mentioned here. It could be in a satellite, on an infantry soldier, in a sniper's scope, or in an aircraft or military drone. The Maris technology is robust enough to span a wide range of defense applications and provide everything needed on the modern battlefield, delivering information to operators or command centers to facilitate decision-making during conflict. Another important market is Homeland Security. Maris provides solutions for law enforcement, border control, and many solutions with miniature devices and low-power devices for covert applications on remote platforms. Maris is also involved in space applications. Based on announcements made in the past, we provided video for Israel's first satellite that was launched to the moon, the Beresheet 1, which transmitted video until the last moment before the satellite crashed on the moon. We have been awarded a new project, the Beresheet 2. We're collaborating with a U.S. company for situational awareness in space, providing high-quality visual data acquisition, collision avoidance, docking, proximity, and many other space-related applications. This project is currently underway. Smart City and Safe City applications are also crucial, where we utilize our technology alongside partners in AI applications. Our technologies are now serving crowd control, traffic monitoring, and other smart city applications. We can even use the technology in commercial applications, such as drone delivery and smart retail, where we can detect customer behavior in malls and similar environments, as well as for infrastructure, precision agriculture, and machine vision. The edge computing market is expanding rapidly. Every new research report indicates larger market values. As of today, based on some of the research, we're looking at a market of $50 billion for 2023, which may grow to over $100 billion by 2028, and I feel that within a year we will have research indicating even higher numbers. Maris is also expanding its market presence beyond Israel, our main market, with significant activities worldwide. We are currently focusing on the Far East, and yesterday's announcement adds a flag in Japan, which we didn't have the opportunity to include in the presentation. We have a strong position in India, where we have many drone customers. We are actively working on numerous projects in Europe with our U.K. distributor, and we are making substantial efforts to access the U.S. market. We plan to participate in exhibitions and utilize local partners and agents to establish similar activities in the U.S. as we have in Israel with defense industries. Now, I will hand over to Nir, our CFO, to continue with the presentation.

Hi, everyone. My name is Nir Bussy, and I am the CFO of the company. As Israel said, I will share with you some highlights from our financials. Just a second. As Israel has mentioned before, I will share with you some financial highlights, focusing on what we can disclose as a public company. Our revenues have increased since 2020 from $1 million to $4 million in 2023. As you can see at this stage, we are a project company, and our revenues are not linear. For this reason, our revenues for the second half of 2023 were approximately $3.6 million. Our projections for the current year, 2024, are for revenues of approximately $7 million, based on our backlog as we announced this January. Our backlog continues to increase, rising from $600,000 to approximately $10.8 million as of March 20, 2024. We define backlog as the accumulation of all pending orders with later fulfillment dates for which revenues have not been recognized, and we consider them valid. Our backlog consists of executed purchase orders from new customers, existing customers with whom we have long-standing relationships, and governmental agencies. Some highlights from our financials: Our revenue totaled $4 million for the year ended December 31, 2023, compared to $2.5 million in the previous year. Our net loss for the year ended December 31, 2023, was approximately $2.7 million, compared to $3.7 million in 2022. As mentioned earlier, our total revenue for the six months ended December 31, 2023, was approximately $3.6 million, with a net loss of approximately $500,000. The balance of trade receivables on our balance sheet as of December 31, 2023, was approximately $3 million, with cash and cash equivalents of approximately $5.2 million. As of March 21, 2024, our cash, cash equivalents, and bank deposits are approximately $4.75 million. Thank you very much.

Okay. This concludes our presentation, and now we are open to answer your questions. As I mentioned, we will answer whatever we can based on the information available in the EDGAR system. You may take the next minute or two to add more questions if necessary. Okay. We will start answering the questions. We have a question from Brian Landfill, and I will read the question. Could you talk a little more about the importance of real-time edge AI video analysis for your customers, and the challenges of doing that analysis with other video processing technologies, particularly in the cloud? This is an excellent question because the main reason for edge computing and implementing AI at the edge is that remote platforms communicate via wireless communications, and you don’t always have the capacity to provide the high-quality raw video via this communication for manipulation or processing in the cloud. Thus, you must have the capabilities on the remote platform to do the AI functionalities, and that’s the only way to enable the platform to make autonomous decisions. For example, if we want a drone to detect objects, classify them, attack them, and perform other functionalities, that’s the reason we need everything at the edge. Another question that Brian also asked was whether edge AI devices will complement or serve as an alternative to other AI video processing solutions. I believe the answer is quite similar. Regardless of the technology—whether it’s Maris or other platforms—you need a solution at the edge to provide the necessary computing capabilities. There is no alternative to having the right sensors, ensuring a variety of sensors available day and night, and the possibility to process them with AI acceleration capabilities. Another question from Jacob Greenblatt. Can you discuss the use of AI in various markets? Yes, I can definitely discuss this, and that's what we are doing with our U.S. partner. We are developing AI capabilities in space for situational awareness based on our Uranus platforms, intending for surrounding cameras on a nanosatellite to detect threats in space, avoid collisions, and enable precise landings whenever necessary. We have a question related to the situation in Gaza; the question is whether we can announce all the significant deals given the sensitive political situation regarding the Gaza War. We can announce deals, and we are doing so without going into too much detail, which may not always relate to a specific war, regardless of where it occurs. However, if there is a significant announcement, we will communicate that.

There's another question about our gross margin. I'm pleased to see that our gross margin is above 25% to 50% now in the second half. Do you have gross margin guidance? We are a project company with a set of different products. Therefore, gross profit is determined according to the mix of products the company sells each year and, of course, as any manufacturing company. Since we have fixed overhead, an increase in sales volume can have a positive effect on our gross profit and profitability.

Okay. We don't have any further questions. If there are no other questions, then thank you very much, and we hope to see you at one of our next webinars. Thank you all.