Core AI Holdings Q4 FY2023 earnings call

• Fourth quarter 2023 revenues were $1.9 million vs $2.1 million in Q4 2022, mainly due to increased sales of mission-critical SD7 handset and accessories offset by decreased booster sales. - Revenue from U.S. was 67% of total revenue for the year compared to 59% in 2022. - Rugged device sales in 2023 were $6 million vs $3.9 million in 2022, up ~$2.1 million. - Gross margin percentage for Q4 2023 was 46.2% vs 8.1% in Q4 2022; gross margin dollars increased from $170,000 to $900,000. - SG&A expenses in Q4 2023 were $3 million vs $4 million in Q4 2022, a positive variance of $1 million. - Adjusted EBITDA in Q4 2023 was negative $2.3 million vs negative $5 million in Q4 2022, a positive variance of $2.7 million. - Significant business highlights: Launched SD7 handset with fourth largest U.S. carriers (AT&T, Verizon, T-Mobile, UScellular), achieved stocked status with some, to get it with third major carrier in Q2; UScellular released PR on launching SD7 handset with PTT service; developing 5G rugged handset portfolio; announced new large scale logistics reseller in Middle East; Siyata Real Time View product rolled out to ambulances and expect growth in 2024; sales funnel of over 50,000 units of SD7 handset potential sales; close with FirstNet, which added push-to-talk over cellular connections; active with major North American carriers and international carriers; building recurring revenue channel with application partners; selling UV350 in-vehicle device and VK7 vehicle kit; Siyata Real Time View had first order of $1.2 million in 2023.

For the fourth quarter of 2023 ended December 31, revenues were $1.9 million compared to $2.1 million in Q4 2022. Gross margin percentage for Q4 2023 was 46.2% versus 8.1% in Q4 2022. SG&A expenses were $3 million in Q4 2023 versus $4 million in Q4 2022. Adjusted EBITDA for Q4 2023 was negative $2.3 million compared to negative $5 million in Q4 2022. For the full year ended December 31, 2023, total revenue was $8.2 million compared to $6.5 million in 2022. Gross margin dollars were $2.7 million in 2023 compared to $1.4 million in 2022. Revenue from the U.S. was 67% of total revenue for the year. Rugged device sales in 2023 were $6 million versus $3.9 million in 2022, an increase due to sales of the SD7 handset and accessories.

• Increasingly optimistic that strong sales growth momentum will continue throughout 2024. - Goal to deliver strong year-over-year revenue growth and reach profitability in the coming quarters. - Plan to expand launch with additional international carriers and PTT application companies. - Aim to ramp up sales to reach breakeven and then profitability as soon as possible.

Forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The company's actual results may differ materially from those contemplated by the forward-looking statements. Risks are also discussed in the Risk Factors section and elsewhere in the company's annual report on Form 20-F for the year ended December 31, 2023, filed with the Securities and Exchange Commission.

Q: Could you expand on the recurring revenue channel mentioned, percentage of revenue today, scaling overtime, and margins?

A: Our recurring revenue channel is small today, not yet material financially. It works by co-selling hardware with application partners where there's a subscription fee; an example is CrisisGo for schools. We are growing it and expect it to become material over time.

Q: In which vertical markets are you seeing the most current success and most upside potential?

A: Most current success is in schools; we've sold into well over 20 school districts, with over 20% of sales funnel being various school districts. Upside potential is in schools as it's a greenfield market with over 3 million teachers and 0.5 million yellow school buses; also looking at colleges but K-12 is bigger currently.