Micro-X Limited (MX1) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Micro-X Limited Quarterly Investor Call. [Operator Instructions] I would now like to hand the conference over to Mr. Kingsley Hall, Chief Executive Officer of Micro-X. Please go ahead.

Thanks, Mel. Well, hello, everyone. My name is Kingsley Hall, and I'd like to welcome you all to Micro-X quarterly investor call. Also joining me today is our Chief Operating Officer, Anthony Skeats; and Dr. Brian Gonzales, President of Micro-X Inc., who is in Seattle. All 3 of us will be available for the question-and-answer part of today's call.

Hello, everybody. This is Anthony.

Hello, everyone. This is Brian.

So today, we'll be providing listeners with details on our commercial and development progress during the quarter ending 30th of June 2025, as outlined in our Appendix 4C filed with the ASX on the 31st of July. Before -- and after that, we will open up to a question-and-answer session. Now before we begin, I would like to remind those on the call that today's call may contain forward-looking statements, which involve inherent risks and uncertainties. Those risks and uncertainties include those disclosed in our ASX lodgments, which we recommend that you review. And while there are reasonable grounds for any forward-looking statements made today, due to their inherent uncertainties, we recommend that you do not place undue reliance on those statements, and you note that actual results may, of course, differ materially from those forward-looking statements. So as we close out the 2025 financial year and look back on the quarter, it's been a period of strong commercial and operational achievement. We adjusted our focus earlier this year squarely on to the medical imaging market, and we believe our momentum particularly commercially is starting to build. This was no more evident than the Rover Plus supply agreement we signed last week with a major U.S. health care provider with a staggering 700 health care facilities across the U.S., which I will touch on in a minute. I'd also like to highlight that we've added potential $35 million of partnered funding to progress our portfolio of products in development through the U.S. Department of Homeland Security, the U.S. Advanced Research Projects Agency for Health, or ARPA-H as they're known, and Billion Prima out of Malaysia. Throughout the call, I'll focus on our 3 near-term objectives. The first, executing on large-scale opportunities for Rover Plus to drive near-term revenues. The second, progressing our medical CT products, taking head CT into human imaging studies and advancing development of our full-body CT scanner. And third, building out partnering opportunities, including monetizing our security business. I'll be discussing our partners as we step through the review of operations for the quarter. But let me start with our flagship product, the Rover Plus. Firstly, as I just mentioned, we were very pleased to secure our first supply agreement with a major U.S. health care service provider for Rover Plus. I appreciate that listeners would like us to tell you exactly who this customer is, but the simple fact is that as an enormous organization, publicly detailing their contracts is not the way they like to do business, and we have to respect their need for confidentiality. What I can say is that this has been a huge team effort since the time that our sales team first engaged with this customer last year through a 2-stage evaluation process and a competitive tender, supported by our technology and engineering teams, then lastly, the contract and pricing stage. What this means is that the Rover Plus is now approved for procurement throughout their entire member network across the United States. That's any of their major hospitals, specialty hospitals, clinics and radiology practices that need a mobile imaging solution. Being selected as their provider is a real feather in our cap and now creates a frictionless path to Rover Plus orders. A number of shareholders have asked me to explain what this deal means in terms of actual orders. And I want to assure listeners that while there are no minimums, the sales team is working hard in the background to educate the customers on Rover Plus, its advantages and to convert their needs into orders. I can't provide more detail on timing or amount of orders at this point, but the sales opportunity is a very high priority for us. I should also add that we are still in discussions for another large Rover Plus sales opportunity, and this is with a major U.S. procurement group. A few other quick things to mention on the rest of our Rover Plus selling efforts. We have continued to engage distributors more aligned to us, including Lighthouse Imaging in the U.S. and Vertec Scientific in the U.K., who took the Rover Plus to the UK Imaging & Oncology conference in June attended by over 2,000 radiology professionals. We also continued to gain traction in the professional sporting arena with the Houston Astros joining our list of Major League Baseball teams with the Rover Plus. We've now sold about 10 systems across 8 teams, which validates the versatility of Rover Plus and builds awareness across the health care channels that interact with these multibillion-dollar sporting groups. I'd also like to provide an update on our partnering efforts across our security business. We are continuing to speak with a number of large security focused groups who are interested to take our airport security offering into market with a partnering deal. This quarter, Brian and I met with senior management from our short-listed candidates in the U.S. and Europe, and we remain optimistic that we'll secure a partnership creating alignment and value for Micro-X. And with that, I'll now pass over to Ant to provide further detail regarding head CT and full-body CT programs. Thanks, Ant.

Yes. Thank you, Kingsley, and hello, everyone. Well, our head CT or stroke diagnosis as listeners are aware, is our project backed by the Australian Stroke Alliance as part of their Golden Hour funding from the MRFF and is our highest priority. It's to take head CT into real-world studies here in Australia. To make this happen, we have been finalizing the integration of the key technology components, and I'm pleased to say that we are near completion with the integration of the cone beam CT reconstruction algorithms, which convert multiple 2D x-ray projections into a single detailed 3D image. The image quality we are getting is now at the resolution that we need to visualize detailed structures within the entire skull, so we can see a potential bleed even one as small as 1 or 2 millimeters in size. The next step is to work alongside the ASA team to corroborate this image quality, which we need to secure ethics approval to initiate our hospital imaging trials. In the background, we have been testing our array of 21 mini x-ray tubes and firing those in split-second intervals, like a continuous wave of x-ray imaging with the images assembled and combined to provide a single 3D picture. And this has a major technological -- this has a major technological challenge as no one has done this before, but we are confident our test bench will operate robustly in the hospital and of course, in any ambulance. In summary, our head CT test bench units are now scheduled to be delivered to the 3 Australian hospitals working with us, and we expect those trials to run approximately 9 months. Turning now to the full body CT scanner, where we have up to $25 million of funding from ARPA-H, as Kingsley mentioned. Our prototype is advancing as planned, leveraging our x-ray technology to create a highly portable CT scanner, which has an enormous global implication. The work this quarter has focused on the design and documentation stage, and we were pleased to achieve Milestone 3, which unlocked a $1.4 million payment. This is another step forward of our design of this transformative technology. And with that, I will now hand over to Brian, who will discuss our security developments.

Thanks, Ant, and thank you, everyone, for joining us today. The checkpoints and baggage scanner projects funded by DHS, reached several milestones this quarter. In April, we delivered the first complete prototype of the passenger self-screening checkpoint to a test lab run by DHS for evaluation. As you can imagine, this was a big moment for all of us to see this checkpoint commissioned and then accepted by DHS, which represents the culmination of a multiyear program with a large team both here at Micro-X and other technology partners. I would add that this also unlocked additional milestone payments with $3 million remaining from DHS through May 2026. For now, we are working closely with the government as they continue to evaluate the checkpoints at their labs, which is proceeding well. The types of tests are designed to mimic a range of real-world airport scenarios, and of course, the checkpoint has to be highly rigorous, robust and accurate. During the initial testing, we were able to observe a number of mock passengers go through the checkpoint. Each passenger was able to go through entirely self-directed with no prior training or guidance. This was a very exciting milestone for us as it is the first demonstration of passenger self-screening on an entirely new and independent set of test passengers. We are excited to take back what we learned to continue to improve the design, and we are now building another 2 checkpoint prototypes, which will be delivered by the end of this calendar year so that we can fast track testing and move toward real airport tests. Changing gears to our more recent commercial partnership in security with Billion Prima, we also made good progress on our development work this quarter. We have now completed the mechanical design and development work, marking the achievement of Milestone 2. With this, we received $900,000 payment as part of the project's structured funding model. We are on track to deliver the product within the designated 12-month time line. And from there, we will be able to sell imaging units and generators to Billion Prima to support their market entry of this baggage and parcel scanner. And with that, I'll now hand it back to Kingsley.

Thanks, guys. I'll now run everyone through the financial activities for the quarter as reported in the Appendix 4C lodged with the ASX on 31 July 2025. And the numbers I'll be referring to are all in Australian dollars and in accordance with ASX listing rooms, these have not been audited. So receipts from customers of $750,000, receipts for project work from medical partners being ARPA-H and ASA of $1.4 million, receipts for project work from our security partners being DHS and Billion Prima of $1.4 million. And I would add that we had an additional $1.9 million of overdue project payments from DHS and Billion Prima at the 30th of June, which were all received in July. So our net cash outflows from operations were $3.5 million for the quarter but would have been $1.6 million had the receivables I noted earlier have been received in June. We also received $200,000 throughout the quarter from directors related to the placement from April. And we drew down $1.7 million against our 2025 R&D rebate. These activities resulted in a cash balance of $3.2 million at the 30th of June. And as I just noted, this would have been $5.1 million closing cash had the project payments that came through in July on time in June. As we move forward, we're naturally looking to drive Rover Plus sales and strong margins, especially with our new U.S. hospital customer now on board. We estimate our research and development rebate for the 2025 financial year will be just over $5 million due later this year, less borrowings, and supporting our development work moving forward is $16 million of contracted payments for financial year 2026 and onwards. With this in mind, we will continue to manage cash carefully and focus on areas which support commercial and sales progress. We also had a number of engagement activities this quarter. We were pleased to hold our 2025 Investor Open Day. It's always great to see the positive reactions we get from shareholders walking through the facility at Tonsley, where they get to see firsthand the cutting-edge work that we're delivering. This great work was also recognized when we were judged to be one of Australia's Top 10 Most Innovative Manufacturers at the 2025 AuManufacturing Awards. And later this week, we'll also be presenting at the Bioshares Investor Conference in Hobart to update on recent progress. Looking forward, we are optimistic regarding the outlook for Rover Plus, and we feel there is a growing momentum here. We expect the U.S. supply agreement I mentioned earlier to be a catalyst for future sales, and I'm hopeful that we can provide a final update on the discussions on the second Rover opportunity very soon as well as some additional opportunities in our sales pipeline. We're now, as Ant said, very close to completing the final steps before we take our head CT scanner into the first imaging trials in 3 hospitals here in Australia. And we are also looking at some strategies to expand that work into ambulance and air ambulance trials to really show the real-world capabilities of the head CT as a life-saving solution. We have built a solid foundation for the future, and we are committed to executing on our strategic objectives and delivering value for our shareholders. I'll now pass it back to Mel for the Q&A portion of this call.

[Operator Instructions] Your first question comes from Scott Power with Morgans Financial.