INEO Tech Corp. (INEO) Earnings Call Transcript & Summary

Good morning, and hello, everyone. My name is Pardeep Sangha, Head of Investor Relations at INEO Tech Corp. Thank you everyone for joining us today, and welcome to INEO Tech Corp.'s Corporate Update and Fiscal Q1 2023 Conference Call. Joining me on the call today are Greg Watkin, Chairman, President and Founder of INEO; and Kyle Hall, the company's CEO. This call is being recorded. We will be having a question and answer session at the end of the call. [Operator Instructions] I expect that everyone has received a copy of our fiscal Q1 results press release that was issued last week. Please note, portion today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are outside of INEO's control that may cause the actual results, performance or achievements to differ materially from anticipated results, performance, achievements implied by such forward-looking statements. These factors are further outlined in last week's corporate update press release and in our previous quarter management discussion and analysis. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any changes in our expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based, except as required by law. And with that, let me turn the call over to Mr. Greg Watkin, Chairman and President, INEO Tech Corp.

Thank you, Pardeep. And before I get started, I just want to say I have got a bit of a cough right now. So hopefully, I can get through this presentation without coughing too much, but thank you, Pardeep, and good day, everyone. We truly appreciate everyone for joining us today. Before we begin, I want to mention that unfortunately, we are not able to use the names of the retail chains that we're working with due to non-disclosure agreements with these large companies. We'd love to share the names of these companies that we're working with, but regrettably, were not able to. For the benefit of our shareholders, analysts and potential new investors on the call today, we'll do our best to provide plenty of commentary on the nature of our roles without actually naming the retail chains. On today's call, INEO's CEO, Kyle Hall, will provide a financial summary of our results and an outlook for the business. But first, I'd like to provide some brief commentary on the quarter and an update on our recent sales activities. Once again, I'd like to start by thanking our employees, customers and partners of INEO. Despite the current macroeconomic conditions, including high inflation, increasing interest rates and uncertain economic conditions, I'm proud to report that INEO's outlook is better than ever. The company has a growing pipeline of opportunities, including several very large retailers. We're increasing revenue each quarter and the company's patented intellectual property that provides a moat around our business. We're thrilled with our fiscal 2023 first quarter results, in which we reported record quarter with a 74% increase in revenue compared to fiscal Q1 in the prior year. INEO has also experienced a 90% increase in gross profit in Q1 2023. We're extremely excited for fiscal 2023 as we continue to diligently rollout additional systems to our large retail customers. Thus far, INEO has not experienced any recessionary impacts and we're pleased to report the company is growing faster than ever as we began to see new retail customers joining the INEO media network. With regards to the current macroeconomic conditions, thus far, INEO has not experienced any impacts to its business from the supply chain disruptions, inflation and other macroeconomic challenges. Kyle will provide more details about our customer activities, but I'd like to give an update on 2 key developments. First, I'm very happy to announce that company is making significant progress with a large retailer in the United States. By the end of this week, we will have completed a full-scale welcoming system rollouts in a second separate geographic metropolitan center in the United States with this large retailer. This is in addition to the numerous GATE system installations at stores across the United States, which we expect to be upgrading to Welcoming systems in the coming quarters. Secondly, I'm proud to announce our strategic partnership with Prosegur is progressing very well. And the pilot trial with a large South American grocery store chain has resulted in the conversion from a pilot trial to a customer order, rolling out INEO's Welcoming systems to over 20 systems initially with additional locations being added in the second half of 2023. This grocery retailer has almost 100 grocery store locations, while its parent company has over 1,000 grocery store locations across Central and South America. Overall, INEO is continuing to service to increase its sales activity with our sales pipeline now increasing to over 9,500 store locations, including both our direct sales efforts and our partner, Prosegur. Combined, the company's total sales pipeline from direct sales and Prosegur partnership now represents over $40 million in annual recurring revenue once fully deployed. The sales pipeline is based on the full potential of contract values from retail chains who have currently installed or committed pilot installations. I'd like to now comment on our recent financing. Despite the difficult capital market conditions on November 17, INEO was able to complete a public offering and private placement for total proceeds of $2.74 million. This financing strengthens INEO's balance sheet and allows us to continue to execute on our existing commitments with our large retail chain customers and accomplish our growth plans for 2023. This financing represents a key component of INEO's rollout and expansion plans across the globe. We're very appreciative of our shareholders who have supported us in this financing and we welcome new investors to the INEO family. The fact that we're able to close the financing under such challenging market conditions is a reflection on the faith that investors have placed in us. And for that, we are grateful and committed to delivering on our growth and expansion plans. With that, and before I cough any more, I'd like to turn it over to our CEO, Kyle Hall, who will review the financials for the quarter and provide additional commentary on our outlook.

Thanks, Greg. I'm going to start off with our Q1 results. So in Q1 2023, INEO achieved revenues of $416,000 that compared to $239,000 in Q1 2022. That's a 74% year-over-year increase and that was driven a lot by sales of our loss prevention products to existing customers. In the quarter, we achieved $208,000 in gross profit compared to a gross profit of $109,000 in Q1 2022, an increase of 90%. This substantial increase was again primarily due to the revenue mix of greater higher margin products that we're able to sell in the quarter. During fiscal Q1 2023, INEO had an adjusted EBITDA loss of $512,000 compared to an EBITDA loss of $630,000 in Q1 2022. As of September 30, 2022, INEO had 60,190,138 shares issued in outstanding. As at September 30, 2022, INEO had $939,000 in cash and cash equivalents compared to $1.7 million in cash and cash equivalents at the end of June 30, 2022. Subsequent to the end of the quarter, we strengthened the balance sheet with an equity and debt financing for total gross proceeds of $2.74 million. Furthermore, we wanted to let everybody know that we recognize the need to control operating expenses in the current capital markets environment. And hence, INEO has taken appropriate cost reduction measures, while ensuring we do not jeopardize our future growth. Our plan for future growth is in place, we've been executing on it and we'll continue to execute on it. We now expect the need to initiate another financing in 2023 as our ramping revenue, improving gross margins and reducing cost structure assist in our cash flow profile in the coming quarters. In summary, INEO has an enviable financial position with a healthy balance sheet and our revenues are beginning to ramp up. That concludes the financial update and I'll now move into the business highlights over the last quarter. A couple of significant highlights that we have are some partnerships that we signed. July 26, 2022, we signed a programmatic partnership with Broadsign. Broadsign is one of the 3 large programmatic advertising partnerships. The other 2 which we've already signed are Hivestack and Vistar. And Broadsign will really add to our position of being a true solutions provider to the digital out-of-home advertising market where they can find the INEO screens, the INEO Welcoming system screens that are in the stores. They can find them on any screen that they go to within those 3 large majors to buy advertising line. And we're seeing an uptick on advertising coming from this programmatic partnerships. It's a growing part of the market and we're happy to be integrated with these companies. On August 18, 2022, we signed a strategic partnership with Adapt Media. Adapt is a Toronto-based company, quite large presence in the out-of-home advertising market, especially in the digital market. And it's a major advancement for us to add them to increase our pipeline for our fill rates for our advertising network in the liquor store network that we have in Western Canada. So it will give us increased access to national advertising campaigns that we're missing right now because we're kind of isolated a little bit on the West Coast, it gives us a Toronto presence and a broader range of potential customers. On August -- sorry, on October 19, we initiated a global priority patent filing for our previously announced design patent that we filed for the INEO Welcoming G.A.T.E. We originally filed that in Canada. And with the global priority patent filing, it's now includes the United States and Europe. So it's pending in Canada, the United States and Europe, but it is filed and we have a priority filing to get that through. We'll update as we get confirmation on the issuances of those patents. And I want to dig a little bit deeper into the sales pipeline. As Greg mentioned, our sales pipeline is now over $40 million in annual recurring revenue on both the direct and through the Prosegur channel. In the pipeline, we are only including retailers that we either have a contract, a pilot is already installed or a pilot is committed. And that full value, the $40 million would be if we rolled out every location in all of those. Obviously, that's the upper side of those locations. It's going to take a bit of time to roll those out even once we get full contracts. But within 2 to 3 years, we can achieve full rollout in those locations once contracts are signed. Once we have a pilot installation, we're very, very confident in our ability to land the full contract. There's no competitive products that we encounter in the market. It's really about us proving to the retailer, one, we're really good at loss prevention; two, our screens are exceptional at providing messaging and marketing at front of the store; and three, that we can operationally run this system for them. And we got a pilot. So far, our track record is -- we're about in 1,000 of -- being able to complete them into a contract. Some of the pilots take a little bit of time, as everybody I think has been around us for a while knows. It takes minimum probably 5 to 6 months, a little bit more some of the large retailers, but we will convert a fair number of these over to contracts. As far as our direct sales pipeline, we've been moving quite fast on this. Our large retail customer in the U.S., as Greg mentioned, has several cities now rolled out with several more to go. We're pretty buoyed by the response that we're getting in the stores and with the organization overall. Canadian retailer with approximately 500 franchise locations, we've previously said in the past that we have pilot location installed and we have several more systems going in, in the new year. Holidays kind of slowed us up a little bit on that, but in the new year, you'll see more installations with them. We have multi-system pilot already installed at a store in Surrey, BC, for a large Canadian grocery chain. And we have there previously installed 140 independent store network -- liquor store network. So they are focused on the large chains. We're now not installing many liquor stores going forward, few here and there, but our focus is really on the large retail clients. The 140 independent liquor store is done what we want to do. It's very valuable to build it out, test our products, test our technology, showcase it for the large retailers and it was especially valuable during the pandemic lockdowns. But it's a part of our point going forward, but it won't grow much more from where it's at. As for the Prosegur channel, Greg mentioned earlier that we have a South American supermarket chain that completed the pilot stage and is moving into full rollout. 20 additional units to be deployed in early 2023 of the remainder of the almost 100 stores to be follow thereafter. We're excited about this customer win because the parent company is literally over 1,000 locations across South America. Very strong retailer, we're proud to be working with them. The pilots we have installed with other prominent chains with Prosegur, 5 pharma chains in the pharmacies, department store, agriculture supply, sports franchise, warehouse club chains, all going well. Prosegur is making good progress in Canada. At the same time, it landed trials with an agriculture supply store and a Canadian pharmacy drugstore chain. Hopefully, we'll be able to announce more on those in the near future. Total pipeline overall, 1,500 locations direct with another 8,000 through our Prosegur channel for 9,500 store locations combined. We're really happy with the progress Prosegur has made. It's now been just a little over a year that we've had the contract with them, a year probably 2, 3 weeks to go. And they're presenting to retailers around the globe. We're confident in their ability to land these large retailers. And we'll be looking forward to sharing some of these wins in the future. As far as our key objectives, we're very focused. We haven't changed these much in the last little while. It's all about us, one, increasing our revenue deployment of our systems. We've got 2 direct customers, leading retailers, we're deploying that. And our future revenue is based upon scaling those customers. The number of systems in the market will scale our revenue. So we're very focused on that. The other, of course, is taking the INEO Media Network in more geographical regions in North America, South America, adding more retailers, which then flows right into our third and that's supporting Prosegur and their growth initiatives. Key retailers around the globe, converting those large retailers from trials and pilots over to full contracted customer rollouts. Our future revenue, our future capabilities are all about the scaling of those numbers of those locations at those large retailers. The overall outlook for INEO remains very positive. The company is now actively deploying systems ramping up our installations with our contracted customers. The next phase is really the development and personalization of this technology with landing wins with more large customers, expanding that footprint, ramping the revenues. Our focus is really about accelerating these deployments now as best we can, getting more in sooner, getting that critical mass of systems up within the INEO Media Network so that we are a recognized national name in retail media advertising. There's so much going on in retail media, in the online space in the app space, it's pushing into the stores now. We're going to have the systems in place and really be in place to take advantage of it when the retail media networks realize that most of the traffic is still in the retail store versus even online. And we're going to be in a good position with that with our systems in the stores. Our technology has really been proven out and validated by Prosegur. We've couldn't have asked for a better partner at this point in time. They've created a healthy sales pipeline across a multitude of different retail segments. And they've seen the market with trial systems, and that's what we want. As I said earlier, we get a trial system, we generally convert those to full-scale rollouts. And so we'll have more coming in the coming quarters. As retailers continue to invest in retail technology to improve the customer experience, advertising and analytics are going to become really important to them. It's part of the modern retail environment. We are right in the driver's seat for delivering advertising and analytics features to the stores. We'll take advantage of these trends. We'll jump on top of them in terms of our technology and our advertising partners, and that will really enhance our future growth. And once again, just to reiterate, the macroeconomic environment is challenging right now. I think we see it every day on the news. We are not experiencing any slowdown in our sales activity because of this. If anything, retailers learned the lesson during the pandemic. They didn't invest enough in tech. And retailers are investing in tech still. We look forward to increasing the quarterly revenue of the company based upon our ability to push forward in this environment. Coming quarters, we should be able to announce substantial expansion of our network. In summary, I feel that the outlook for fiscal 2023, given our unique distribution partnership with Prosegur, our numerous customer trials and our large pipeline of additional opportunities, it's a very strong reason for optimism for us going forward. Before we take some questions, I just wanted to -- a little bit additional commentary on the share price. As most of you on the call are aware, our share price experience had declined over the last year. We believe the general poor capital market conditions are the primary cause for the weakening of our share price. And small cap tech stocks have certainly been hurt more than the overall market and the market correction. We do not believe the drop in our share price is warranted given the size of our sales opportunities and our future positive outlook. As management has strengthened ownership in the company, our interests are aligned with shareholders. We are not happy with the current share price and we're looking diligently to sign-up customers and expand the network, prove this company out, take us into a much larger environment of more people knowing about us and knowing what we're doing, get those revenues up and we believe the share price will follow. With that, I want to thank you all for joining us on the call today. We look forward to providing an update next quarter. And with that, I'll now turn it back to Pardeep.

Thank you. We will now open the call for questions. [Operator Instructions] First question here coming in from Daniel Rosenberg of Paradigm Capital. Have you seen any slowdown in advertising demand as it relates to broader industry trends?

I'll take that one, if you don't mind, Greg. Daniel, no, at this point in time, our network, obviously, is still small and is centered around our liquor store network on the West Coast here. We're seeing gains in it right now just from a simple fact of we're starting small, we're getting big. Talking with advertisers, there has been some pullback in the advertising market generally, but not in any significant extent. Companies are still putting their major plans in place, rolling out products, positioning products, brand new products. And I think, if anything, there's more money being shifted around than it is taken away in. So we're seeing money come into retail media. And that -- again, that is one of the growing trends in the overall market. If you look at the shift in money from Google and Meta and some other areas in the retail media, that is definitely benefiting us.

Another question from Daniel Rosenberg of Paradigm Capital. Any changes to the competitive landscape that you're seeing in the new entrants?

No, not at this time. Interestingly, we expect at some point we have to go out and defend our patents a little bit. But we have not seen anything at this point in time. We are -- our patents are strong. I think anybody that looks at those will realize we're in a really well -- highly defensible position on our systems. Combining loss prevention with RF and RFID technologies is our exclusive domain. And I think because of that, we're not seeing that. It gives us some great advantages over the incumbents on the loss prevention side. Of course, that gives us that space and the financials for our advertising and our analytics.

Another question from Daniel Rosenberg. Just with regards to the recent raise, can you comment on where you'll be spending the money in terms of CapEx or increasing in materials or people, et cetera?

Greg, do you want to take that?

Actually, sorry, Kyle. If you don't mind...

Okay, I'll take it. No problem. We outlined in the prospectus offering most of the CapEx that we're going to be deploying is around the deployment of customers. We've got a little bit in terms of internal tooling and materials that we need to build systems and that type of thing. But the large majority of it is all the deployment of customers, that's where the capital will be used.

Turning to some of the questions from people on the call here. Since you are talking about the prospectus, there is a question here about the prospectus that says something about 50 Welcoming systems by June 30, 2023. Can you provide some color on this? And what's a larger ramp up beyond that?

It's interesting. When you do the prospectus offering, you have to get a little bit detail than outlining some stuff. But we still try to keep it fairly general because we expect with our 1 large U.S. customer that would be in the 200-plus units by this time next year. Our other customer we expect to be over 100. Those are the direct ones. Then we add in the Prosegur one. So the rollout schedules are a little bit fluid, but we have the next 4 months, 5 months already planned. And those systems will be going in the market. It's going to be fast and furious in January, February once the New Year's -- the holiday season is over. But as far as clarity around that schedule, I think it's just a big number that you have to look at. In the end, we raised this money so that we could deploy systems for these customers, and that's what we'll be doing.

Also I think maybe it might be useful to just add some clarity with regards to direct. You have to fund the hardware for direct, but with Prosegur, you do not fund the hardware, that hardware is funded by Prosegur, right? So maybe just offer some clarity on that so that people are clear that anything coming through the Prosegur channel is not going to be a capital drain.

Good timing for that, Pardeep, yes. Just so everybody is clear, I think we talked about this often so I kind of assume that people know what I'm talking about. But just to be clear, when we deploy a direct customer, we incur the cost of the hardware that goes in stores. So the hardware, the deployment, the shipping to get it there. And of course, we amortize these systems over time, but the cash has to go out the door right away. We recover that through our monthly fees and the advertising fees coming from the systems and the return is still good, but of course, it takes a little bit time so we have capital out the door. When we do an installation with Prosegur, they actually fund that capital. They fund the hardware going into the stores. So we do not have that expense upfront. So our capital needs are virtually, I shouldn't say not exist, but they're quite small in regards to rolling out a Prosegur location. Our fees, of course, are a little bit lower because they're taking fees as well because they have to cover the cost of the capital, the hardware that they put in. But it's a nice model for us because we don't have to not keep raising money to put systems out there. So we raised the money to look after the direct customers. So we signed up with those. We get higher fees. Prosegur pays for the hardware on their side and slightly lower fees.

A couple of another questions from listeners on the call today. Could you provide some color on how the sales cycle works and who is the point of contact and decision maker at the customer?

We generally still enter the retailer through the loss prevention department because it's a vital service that they have, the vital need that they have in the retail environment. If they don't have these loss prevention systems at the front of their stores, it's almost an open season for them to lose for the shrinkage to go up overnight to double. So they have to have these systems and they have to have the programs in stores to do that. And so we have to be good at loss prevention. That's our first up in there. And immediately, we get crossed over into the operations side because the store operation is going to have to get into the technology, IT teams because we actually have systems that are smart systems or connected systems, they have to be on the corporate network. And then the third, of course is -- fourth is the marketing department. So that's kind of the progression through there. And when it gets to the marketing department, that's when we know we're there, because the marketing department actually -- they're making money, they're spending money and that's where the business side of the systems really take off. Sales cycle, generally, if you look at some of our major customers, we put a pilot in and 6 months later, we -- pilot in, installed more locations and then 6 months later had a contract and then starts rolling out. And whether it's 6 months or 8 months or 9 months, I think that's the cycle you'll see inside the retailer. Big retailers aren't moving fast in terms of -- from this stuff again, we're putting stuff on the corporate network. They have to be very comfortable with how it works and what it does. They have to be very comfortable that we're as good as say we are in the loss prevention. And just to let everybody know there, any time we do get in and they make a comparison loss prevention, we win every time. Our capabilities on video capture, on the analytics side, the data that we give the retailer around what's going on, when they have alarm events is amazing and we win with that quite easily. But then we have to move through and get the marketing team very comfortable with it. How do we work with the rest of the retail media that they're doing? How are we working in terms of the brand alignment and everything else we're doing? So it takes a bit of time. But once you start moving, it's just a machine that starts moving. And that's what we're seeing now with a couple of these retailers.

Another question, next question. Can you share a bit more details on the cost reduction initiatives that you're currently starting to take?

I don't know if Greg can speak. But I'll take it and then Greg, jump in if you need to. For a while we were having to take much more inventory than we wanted just because the supply chain stuff. Supply chain seems to be settling a bit right now, but we're still having to carry a bit more inventory than we were comfortable with. Greg's really built the back-end of video on lean manufacturing, being able to do things at just in time manufacturing, low cost, keeping the numbers down, we need to make provisions, we haven't built 100 systems, we have to go and rebuild that kind of thing. It's worked really, really well for us. And we can get an order in the morning and have a system going out the door in the afternoon. But in order to make sure we have parts, we had to carry much more than we wanted to. We also -- we were spending fairly heavily on some customer acquisition methodologies. And also, to be frank, we've spent a bit more last year on capital markets presence and increasing our profile. The way capital markets are right now, I think spend any money over there right now would just be wasting some dollars. We have some plans to do some initiatives later in the year around some material events that we've got coming up. We're going to do some big pushes then, but we're going to be very meticulous on just where those dollars go and when we spend them. Anything to add, Greg?

Sorry, no.

A question once again on the what you can expect in the upcoming year in terms of growth. I think we talked about that in the outlook, maybe just cover that off again, maybe?

Again, our scaling from this point forward is not so much what's happening with the liquor store network and the loss prevention stuff. It is really about getting the systems out there with these large retailers and scaling numbers from there. So if we can add 300 direct systems and a bunch more through Prosegur, that's where our revenue is going to scale. I think you've seen the trends for the last couple of quarters. This quarter, we were up 74%, previous quarter 90%. A bit of fluctuation depending on when systems go in, what could be revenue, what's the year before. But we're on that trend right now. We're making good quarter-over-quarter increases and we hope to be able to even ramp that up a bit more.

There was a question here with regards to management buying shares. Now I think it's worth mentioning that there was a presence list in the current -- in the recent financing in which members of the board and others participated as well as, so friends and family stuff. So maybe just comment on that. Even though that might involve one of the open market, it was in the financing, right?

Correct. And I think everybody -- actually, I haven't worked out the numbers since the finance. But prior to the finance, we were 29% of the float. And we've worked very hard for that 29%. And we believe we're in line with our shareholders on that, that we are large shareholders that everything to do we keep in mind what it means to our shareholders going forward. We didn't take it lightly to do the financing right now, but the growth of the company is paramount to get where we want to go. For the [indiscernible] presence list, it was virtually all insiders. So we're continuing to add the position, but there's no -- we're not really at the stage right now where we're just like openly buying the market. We're just managing the business. And we parked our shares away and we see that the end result is going to be out there for us. The company valuation is where we want to -- we want to increase the valuation of this company immensely.

A question around the integration after the pilots happen, maybe just comment on that?

Pilots are -- the tempo, I guess, the procedures that we have with retailers and how we work on -- as far as after that, Greg has done a great job of working through just systematically how we do things; how we shift things out, how they get in the store, how they get installed. We do detailed installation diagrams for every store so that the installers when they get there, they know exactly what goes where, what ports they plug into, where they bolt things down. It's a well-oiled machine at this point. And every retailer is a little different though. So those pilots really learn a few things. We learn where different aspects of our systems go. We have an insight edge processing device that has to go somewhere and it goes in the network. In some places it's in the new telco room, somewhere it's electrical room, somewhere -- some people have their [indiscernible] elsewhere. But we learned a lot on those pilots and we figure the plan for them for the go forward.

If I could add just a little bit to that. Back at the beginning of October, I had the opportunity to spend some time out in the field with one of the large implementations where we did a 9 store rollout in the North Carolina area. And part of that was to actually go through and observe what it took to do the installs and how we could integrate and how we could deploy your systems faster, more efficiently, carry information back to our group internally, as Kyle was mentioning, for creating installation guides, site prep guides, et cetera, like that. And I think the proof of that is actually paying off. Right now, we have a team out there in Virginia, doing another set of installs, and we expect to be done much faster than we did the last time. So the integration of our systems and deployment installation, we work on improving that for every install that we do.

A question around the exclusivity arrangements with retailers as part of your direct sales or is there any exclusivity, maybe just comment on that?

We would love to lock everybody in exclusivity. Our retailers by and large will not sign exclusive deals. We get premier partner deals and we get priority type things, but exclusivity is a bad word out there. We would love it, of course, if they just said, no, we're never going to deal with anybody else. But the good news is, the contracts we sign have life to them. So we put to systems in. It's not we're going to get replaced for a better offer tomorrow. There's ramifications we're having to not proceed. There is built-in safeguards for capital costs that we spent to get back if something were to happen. But I think -- I don't think anybody should get too hung up over that end. I don't see too many companies signing exclusivity deals unless they're a very small retailer.

And I would add to that, that there's a high degree of stickiness to the systems that we put in there. It's not like you can just come in and replace something on a whim. As Kyle said, they tend to have a long life to them once the systems actually do get installed there. So there is a lot of stickiness to the clients once we install something.

You have to remember that the systems we're replacing basically plugged into a wall [indiscernible]. That was the extent of the technology. And we're giving so many features over and above that now. We're giving new capabilities to their organizations that they've never had before. And could something come along, replace -- replicate some of those, possibly. But we've got a good head start on it. We're getting inside the organization, we're giving them detailed, I would say, customized reporting that they want for a retailer. We're really doing a lot to allow them to utilize the technology and the information coming from the technology better. And then, of course, you have the advertising on top of it, which our patents protect.

I mean, the patent seems to be a big part of it as well. I mean, in terms of your protection of preventing other competitors coming in and trying to displace you?

Definitely, definitely. And it comes up a lot in the initial selling process and the retailers really feel the sight on those and then they feel very protected by them as well because it's not -- they know that this is a unique technology owned by us and they're not going to be infringed on anybody else either.

Further on in terms of the exclusivity's part, you're not limited from selling to other retailers either though. I mean, if you have -- if you're working, let's say, department store chain or a grocery store chain and that doesn't stop you from working with other department store or grocery chains?

Correct. We're not signing exclusive deals either. The only deal that has some aspects of that would be Prosegur where we've committed to them. There is out clauses within that contract. But we're not -- with any retailer, we are not signing exclusivity deals either. We can deal with everybody and anybody.

A question around the -- who actually builds the systems, yourself or Prosegur? Just maybe just clarify on that. And I know you've done some work in Czech Republic as well, getting their manufacturing facility in place. But maybe just give us a highlight on that in terms of -- help listeners understand who builds the systems?

We manufacture all of the systems for the North America and South American markets here in our facilities in Surrey, BC. We've got sufficient manufacturing capabilities, both on our machine facility which we're going to be expanding over the coming weeks and at our system here. And we believe that we've got the capability to meet our short-term demands for both our own customers and for Prosegur for the North American market for the foreseeable future. We spent some time last year in the Czech Republic doing technology transfer with the manufacturing partner over there. And we expect that as the volumes start to increase in the European market that they will do the manufacturing dislocations. But for everything in North and South America, we believe that we're positioned to be able to meet the demand of the market over the foreseeable future.

That seems to be it in terms of questions. I will turn it back to Greg and Karl if there's any other comments or anything else that you want to share.

I think it was a good Q&A everyone. I appreciate the questions. Again, we're open. If people have follow-up questions, please contact Pardeep, contact myself. We want to keep lines communication going on with our shareholders and investors. I want to thank everybody for joining the call today. Thank you to the analysts for your questions, shareholders for your support that you provide us, it means a world to us to take this company forward, do what we've outlined that we're going to do and be successful for ourselves and for you. It really is something that we're proud that we're doing this, we're building this company and we believe we're going to be highly successful. So wish everybody stay safe, and thank you, and we'll provide an update next quarter. Greg, any closing?

I'd just like to reiterate. I want to thank the shareholders for the support. We continue to work diligently every day to make sure that the company is going to be successful. And we really appreciate your ongoing support, and thankfully somebody brought me a coffee while I was muted on this call. So I've been able to get a relief from my coughing. But thanks again, folks.

With that, Pardeep, I'll leave it to you to end the call.

Thank you, all, and we'll end the call here. Thanks. Thanks for joining us today.