BeWhere Holdings Presents at MicroCap Leadership Summit 2021

[Music] uh our next company is beware holdings and beware is a fast-growing mobile internet of things company that designs and sell sells soft i'm sorry sells soft powered hardware and sensor and software applications think slap and track beware's devices transmit collected data into mobile and cloud-based platforms providing its customers with real-time data for cost-effective asset management the company generates revenue through low margin hardware sales and a high margin software as a service offering which has now reached an inflection point of both profitability and growth we're honored to have owen moore ceo beware with us today you know as a reminder if you have a question during owen's presentation feel free to click the q a button on the bottom of the zoom screen and enter them there and then after the formal presentation we'll get to your questions at that time uh thanks for being with us owen oh thanks for having us ian um we appreciate the opportunity to present to your group and i'm here with margo berry our vp of growth and strategy and uh we look forward to sharing our story with you today um you know the the global pandemic has has um created horrors right across the world but for our little company um you know despite some of the challenges personally with the pandemic and it's hard to imagine that you know somebody hasn't been affected by covid uh it's been a it's been a good catalyst for our company as as corporations have moved to work from home models uh it's created the requirement to be able to track assets without people in the field and at facilities and so we're excited to share our story with you today and with that i'll share our screen our presentation and hand it over to margo to kick us off sorry one quick second here folks good afternoon everybody so as i mentioned i am margo i'm the vp of strategy of beware it's a pleasure to present to you today and i'm going to cover the first part of the presentation which is more about the operations of the company and then i'll hand it over to one to talk about the financials um for our public who might not be um familiar with the business um beware is a company that does b2b iot b2b slap and track pricing product and services so our our products are using low power 5g which is called commonly ltm or nviot those are carrier networks that offer a very small amount of data so it's a lot cheaper so we build products around those very very low networks um which allows us to to sell those products at very low cost the way we collect revenues are on the hardware cell and we then collect the monthly recurrent revenue we offer either integration to uh third-party platforms or we can sell our middleware foreign software or user interface um the investment thesis behind a company such as beware is to monetize iot internet of things is a growing industry i have some numbers on my screen here it's a very fast growing market in an industry that has been led originally by smartphones um there's only so many smartphones that you can buy so carriers are looking for alternative solutions to collect more revenues so we offer them products that essentially can be tracked can be slapped and allowed to track a number of different assets um where the value is less and less expensive so our trackers can track trailers they can't fight cultures they can't buy garbage uh for the product i will describe a bit later we can start tracking much smaller assets with a lot a lesser value essentially so it's very easy this slide just shows you is the key to sell solutions to customers in this century so we have trackers um and then we just put a sim card inside of them and it transmit data location data and sensor data to the cloud server this data can then be used through our software an application or it can be integrated into third party the integration point is a key sell point for beware because that means that our distribution as a b2b company can integrate it white label it into their own solution those are some of our distributors so those men are familiar to most of you a t bell t-mobile geotag flip complete advanced tracking is more of a european recent reseller that we have uh bewares has hands a reseller those are the most um prominent ones that the public may know and so what they do is they buy a hardware and then they pay us a reference fee and and use the data to sell to the end user um end users can range from construction companies for example astana fleet companies like uh companies in the idea of like the penske or the costco's of the world so they're mostly industrial companies this is a video to show you one of our reseller and some of the use cases along with the products that we sell them what if there was a way to manage any building project from your fingertips well there is [Music] [Music] is [Music] the thinner for example i see a significant inflection in cells over kovy 19 due to the fact that a lot of staff had to stay in offices yet construction kept growing during the pandemic so our trackers that are featured in this video are helping you know chief of operations or fleet managers keeping an eye on the valuable assets even if they can't be on the field to do a physical account those are two of original products this is what we call our suite of mobile iot products so they're dedicated to do outdoor asset tracking um their beso is one of our best seller in the sense that it is completely self um standalone it's you can slap it in front of the trailer and you can track a trailer down to every five minutes yes the cost of the data is about a buck a month it's revolutionary compared to 3g or 4g technology and the fact that is it it is a low power network with a with very small consumption of connectivity also allows you to have a very long battery life and that's what has really changed the industry when we started selling those devices the b10 for example has two double-a batteries there are 3.6 volts and it can last up to 10 years if you slap it on an asset we have a link at the bottom of that slide that you can go and describe in detail how products work but i will leave it for now now what has changed for us so this is a product that we are very excited about the fact that beware wasn't was a first player on the market of the low power 5g asset tracking also gives us an advantage compared to the competition we have an extensive knowledge on how the module works how the modem have to be built what is the expectation of the carriers and given some exceptional relationship that we have with our components manufacturer we are also starting to see an advancement in the technology the availability of of products it's getting smaller the components are are starting to become more how can i say a minuscule and so we can come up with smaller and smarter products it's a little bit uh if you think about the smartphone market when you're originally huge to have this huge alcatel and then you end up with a tiny little iphone in your pocket so this is where we are right now and very early on in the in the in the evolution of the market so the beaming that you can see here this is in my hand um it fills a gap that we didn't have with originally original products as you can see it's about a fourth of the size of our first generation of product it also features more inside the box so we still have a gps we still have a sim card but we also now starting adding wi-fi and bluetooth module which helps us track indoor assets because until now we were kind of restricted to outdoor low power you want a dark side to the g to the dark side of the sky to have a good gps so now we can start looking at different use cases smaller assets less expensive assets essentially commoditizing a product to a a number of use cases that it's hard to grasp a forest to do forecasts we are launching the product as we're speaking we already have orders and we are continuing to develop some firmware to make it more intelligent and and depending on the use case of the customer we can custom the device is to a certain degree so this is an example of use cases not everybody with industrial asset tracking so with original products we were focusing more on trailers flat flatbed chassis controners uh construction equipment so things that are rather big with the new bimini and the price points of the device we can now start focusing on smaller assets we can do both we are just enlarging our market essentially so now we can do portable generators on instead of doing the trailer generators we can do hand tools we can do remediation equipment such as ventilators and fans sorry not ventilators uh we can do um um how do you call this again um sorry for example we have a we have a pilot going on right now to try bikes um around the city we can do pallets uh we can do potentially money tracking uh we can put them into a box and to track you know the box on its way from the uh expenditure to the recipient and because we also have sensors on the device we can monitor the temperature we can measure the humidity inside the box um it is quite really quite revolutionary this is just a quick example of the moving one of the early on tests that we were doing we've got a green light relocation doesn't go it may have numerous [Music] [Laughter] or when you use our devices you actually get access to that software that we were telling you so you can try point by point where the device is going so the tracking is the number one use case this is a quick overview of our portal it's pretty basic uh you know you log in you have your list of of trackers inside of it you have a bunch of data such as the signal strength to make sure that you get a good signal the battery levels the impact temperature light levels etc our product that makes it kind of unique and obviously you have a map with the gps location and then you can access to historical positions which helps uh do some forecasting for industrial companies for example how long does an asset spend at this this location doesn't need to be moved is there a geofence that has been broken et cetera et cetera and then the next slide is just all these data that we collect we can actually integrate it into a third-party software for example geotab is one of the largest management company in north america and they are a porn over us so they sell their product they sell their platform and then they sell the beware asset tracker as they call it as a as a side product of their own geotab gps tracking devices okay thanks so the uh the next handful of slides is just a quick update on our financial performance over the last several quarters um you know we we did reach an inflection point during covid and and um you know our results have continued to improve uh quite regularly over the last number of quarters but what's more exciting um than our historic results is what we think we have coming forward uh for the remainder of the year two three and q4 so we're we're looking to get those numbers um past the auditors and filed um q3 will be out around the third week of november and then before is obviously i'm looking into february of next year um unadjusted we recently reported our seventh consecutive quarter of positive adjusted ibida uh most recently just shy of quarter million dollars uh in in positive vivida um and this this turned around in q4 of 2019 right right at the start of the pandemic and and obviously we we've managed to continue to improve uh bottom line performance throughout throughout the pandemic uh net income we did have an impairment in 2-4 of last year so this is net income before that impairment um that impairment was of non-tangible assets it was associated with um deferred development costs and we got those out of the way in q4 to kind of set us up moving forward into 2021 but most recently um on on a quarter million inhibitor we produced about 130 000 in in positive net income and we do expect that number two to improve going forward um on the revenue side once again the most recent quarter was another record we produced uh just under 2.3 million in revenue in the quarter about 600 and changed 613 640 000 was in recurring revenue the remainder was in hardware and service fees with hardware being the majority of it um because we we you know we have a lot of reliance on hardware sales we don't get you know that smooth trajectory we're not um you know 90 recurring we're we're closer to 30 to 35 percent recurring um but nevertheless um you know if you look at things on a year-over-year basis or or even uh quarter over quarter on some quarters we're we've been producing good strong results and and like i said we're expecting that trend to continue for for the next couple quarters so we're excited about the potential um the the new launch of the mini uh should incrementally add to to our revenue so all of this revenue that you're seeing here is off of products that we developed in in 2018 and have commercialized since then and continue to see strong traction and with the addition of mini sales we're expecting to take it forward over the next few quarters here um that that kind of concludes the majority of the presentation we're happy to get into more details um if there's any questions um please visit us on social media we're fairly active on linkedin uh we do have a youtube channel as well as facebook um and that's where we like to um keep our our stakeholders up to date on on new and exciting things that we're involved with and we also share industry information so we try and make it um you know interesting for for all different groups with that ian should we uh get into some questions yes um this is mike um so uh um first of all uh if any of the participants want to ask questions please uh click on the qa button and ask away um so first of all can we um talk about like the rough cost of hardware and cost of service on like a per device basis can you kind of give us an idea of that sure and and um you know part of leveraging low power 5g is to be able to hit price points that the market hasn't seen historically and so we don't sell a device that over a hundred dollars and and many are coming around 55 upwards of 80 per device that that's significantly lower than what the market has seen in the past we we often go against companies for example um you know margo did a great job in landing a project with new york city they bought a couple thousand units just in this past march and i believe we were about a third of the cost of the nearest competitor on an open bid and that's because we can leverage this this low power 5g technology on the monthlies depending on the level of service that we're offering it could be as low as 50 cents a month a month all the way up to three dollars a month once again these are numbers that are orders of magnitude lower than what the industry has seen previously and so you know our whole stick is to try and get in and disrupt the market we're we think we're going to do that again with the be mini not just because of the form factor allows us to get it onto smaller assets but also hitting price points that just haven't been seen in our industry before can you talk more about competition and where you see your moat um sure there's um there have been you know the asset tracking industry has been maturing over the last 15 to 20 years there are some large competitors cal-amp is an example of one zergo is another one that we see on a regular basis um we've actually been taking a lot of business away from them recently because we've managed to operate through chip shortages and the supply chain uh issues that have hit the market um you know we have a good strong relationship with our major component vendors and and they've kept the production lines rolling for us but not without commitment so um you know in return for getting guaranteed product we put in hard commitments for for components with suppliers that you know push us out over the next year but those are some of the big ones we see on a regular basis sometimes people think you know geotab or fleet complete is a competitor they are definitely not competitors they are channels for us and so we expand their offering by by allowing them to start tracking things outside of the vehicle assets that might be carried in the vehicle but but not the vehicle themselves are there um things that could uh sort of cause an inflection point for your business yeah we're obviously excited about the launch of the mini um we do think that um that we're gonna get a lot of traction with it we've seen some early success um in the pre-sales activities stop sharing um no that's a little better um and you know obviously we we've we've hit that inflection point on bottom line performance and so um any incremental addition to recurring revenue and unit sales or unit sales and thereby recurring revenue will continue to push um bottom line performance top line performance we're expecting to see an improvement due to the mini launch as well as continued uh uptake of the existing products so uh now that the b mini is released is there you know something else beyond that that you're kind of targeting that you can talk about yeah um you know as a technology company you always have to keep developing or you're going to see a downturn in revenues and so the the b mini was a was a fairly significant effort for our engineering team um you know what we've been good at is sort of identifying uh future wireless technologies and finding out how we how we can play and and and get market share um if we can be a first mover and first adopter of those technologies um what has been launched from a 5g perspective for the last couple years is low powered 5g what's coming out is the next version of 5g which is relatively a power hog but what it does is it it reduces latency so communication between devices and the network happens really quickly and it increases bandwidth and so some of the some of the markets that have been identified for high-powered 5g include things like holograms but it also includes things in the autonomous vehicle market so vehicles can communicate to each other uh to allow self-driving vehicles and and um that's a network called b2b it's probably still about 18 months away and while we won't be the technology that goes into the vehicles to do autonomous driving there still is a a large requirement to include other things into the autonomous driving network things like uh bicycles things like skateboarders things um you know of that nature that can benefit from anti-crash detection or or notifications and and that's where we're starting to work um today actually with bell in the lab prior to this technology being launched uh bell mobility is is our largest uh telecommunications company up here in canada there there are our significant um distributor for us but they're also an investor in the company they own about six or seven million shares in us and have board representation as well and so those close relationships with the carriers allow us access to next generation technology and and don't be surprised if you see us come out with some news with bell in the next few months talking about connected helmets as an example for motorcycle riders or bicycle riders that allow them to be part of this this b2b network or or extending it from vehicle to vehicle to b to x x can be anything from a pedestrian to a bicycle rider and so on and so forth so uh price points are going to go up with with that version of 5g power consumption goes up so it creates um you know battery uh requirements um but it's it's um you know it's the next evolution in networks that are coming down the pipe no pun intended and and we fully expect to have products that relate how should we think about um uh business scalability from an sg a perspective so one of the things and i i speak about this sheepishly um because it's it's not always something that we want to promote but you know we outsource all our sales and marketing and and that allows us to keep a small lean team um as we start to approach sort of 10 million in revenue we're doing that with with a um total full-time equivalence of about 11 people in our company and and um and it's been at that level for the last three years so as we've moved from you know 2 million in annualized revenue to closer to 10 million in annualized revenue we haven't increased our staffing or our sg a significantly at all and and i think that goes to the business model you know we use cloud-based services the the cost for us to add a new asset to our servers is is fractions of a cent and and um you know the upside to us is anywhere between 50 cents and three dollars a month and you know there's the opportunity for scaling i think we've shown a good job of scaling going forward obviously we are going to continue to to keep hiring but um you know we think we have a pretty attractive little little company and model that will continue to leverage so how did the relationship with bell um come about so similar to what i just explained with you know future generations of 5g technology we worked early on with bell prior to the low-powered 5g networks being launched um initially they set up one specific tower in a in a region of ontario that focuses on wine production and so we stuck some devices out with belle's help we we co-engineered a product and and you know brought it to market even though our focus at the time wasn't to do you know ice wine monitoring and the reason that we were limited in space was because it was a test network that was set up on a single tower um it gave us access to technology it gave us access to working closely with bell engineers and product developers and as we commercialized our asset tracking market based on on that initial experience um bell was interested in more than just distribution they were interested in getting a piece of the company and so um our last financing was almost three years ago and and bell was the lead order on that financing we haven't issued any stock since then we've had no warrants or options exercise that i can think of and our cash continues to go up simply based on operating cash operating performance we're kind of unique in having a relatively small market cap for a company that that has a history of profitability now and uh and we're encouraged about those results we're excited about what's coming down as well so so since there's a lot of competitors in the space where do you find that um is the sort of the place where you compete the best or your solution really shines versus somebody else sure so um you know with with the with the original products we were really it was a relatively mature market and so our focus was to disrupt the market by hitting low price points we've been very successful in the container and trailer and and flatbed tracking market clients include lowe's costco and many other large trailer companies across the board so that was more of a disruptive play with the mini um it's more of a novel early phase initiative where we're starting to get after assets that traditionally haven't been tracked before whether those are uh bikes that are a part of a bike share program in a municipality whether those are restoration equipment that that you know service companies use when when they're dealing with them the aftermath of a flood in a home or a business and and so you know we like the combination of being disruptive as well as um novel with with new innovation and and that seems to work well for us uh we were talking about cost and um uh specifications before um i don't think we talked about the price point for the b mini and uh you may have mentioned but i didn't capture the battery life of the bee mini um yeah i might we'll take that one so again pricing depends on who you are at the end of the table and the quantities you can right now you can go on shop.beware.com and you can buy a unique trial for 120 u.s all included for one year obviously if you are one of our largest tier reseller you'll get a different pricing um for the shelf life we are going anywhere depending on the conditions of the use of a device obviously if you use it on a trailer or if you use it on your purse might have a different life uh you're looking anywhere between five to ten years and the bimini i forgot to mention that the mimi is actually rechargeable but that's also a game changer uh for us um we expect the life we count in gps being the gps is the bigger power hog on a gps device obviously if you're using the gps you can count about 500 pings is what we're looking at in optimal conditions as you know cold reduces life and makes battery fluctuations so about 500 pigs on gps now if you're using uh wi-fi positioning you may get a much longer battery life so it depends on what you set the reporting frequency to if you set it to once a day then you're looking at josiah two years if you set it to every five minutes and it obviously comes down significantly but that is something that's unique with the minis um you know for a relatively small device to have it be able to operate in the field for for an extended period of time without the need to recharge it relatively i'm gonna i'm gonna show you the beaming again um compared to my airpod case that's about the size this is another company that does bluetooth tracking this is tiles this is the difference between the two devices and this is an apple airtight this is the difference so those two don't use gps or similar this one does so if you want a device that can provide location information autonomously without communicating through either your cell phone or a network or cell phone which creates privacy issues um this is really one of the few devices on the market that doesn't require any external device to communicate directly to the back end and that that's where it's relatively novel um compared to something like the air tag or the tile device looking through the questions here ah so where is the device made we have contract manufacturers in china as well as in canada um and that's just to have backup um you know you obviously get more aggressive pricing out of uh asia but you uh we also have clients that demand product is 100 manufactured in north america particularly companies that are concerned about security we do have a large uh group of security clients um brinks um g4s garda um loomis to name a few are all key clients for for our company so how is the recurring revenue priced is it like per location update or no it's per per device per month and um the variable the variable in the monthly pricing has to do with the level of service that we're providing so if we're providing um you know the ability to send the data to third-party applications plus providing a portal um you know msrp for that and msrp can be negotiated in large quantities but msrp is is about three bucks a month if if we're just providing a fee of data and providing back office support and firmware upgrades for for um other technology providers you know it can go down as low as 50 cents a month with an msrp of about a buck so our our customers on a month-to-month contract or how what's the duration of that look like yeah they're typically month to month we don't require contracts uh long-term contracts with our clients and and uh that's done on purpose i mean we you know we're not interested in locking our clients in based on contracts we're interested in having our clients stay with us for many years because it provides a significant value add to their end users how do you expect the recurring revenue component of your business to evolve um well you know as we produce every hardware sale comes with the recurring revenue component to it and so you know the idea is to continue to to drive recurring revenue um based on new hardware sales and that that's for every product um as we launched the mini margo kind of touched on it um you know that device is being sold all in with wireless data cellular data uh application and and device um for for one year in advance and so um well it will change our accounting a little bit and and we'll have a deferred revenue category associated with it that gets brought in and recognized on a monthly basis um it helps from a cash flow perspective and and cash flow is something that we're we're doing well on already so we we just seem we just feel like this will help move things along for us but we'd like to see recurring revenue go up towards 50 the interesting thing is when you have a good quarter your percentage of recurring revenue is lower it means you've sold a lot of hardware that's what it's kind of confusing to to say that oh we had a good quarter and our return revenue percentage was down but that's just a function of the business model what are the things about the business that keep you awake at night everything [Laughter] listeners you know it depends at the point in time in history that you're looking at obviously um you know everybody's quite right well aware of chip shortages in the industry um chris panzik our co-founder does a wonderful job of keeping our suppliers um happy and keeping components running that that's something that obviously we've had to pay a lot of attention to if we do see a delay or um shortages and particular chips alvin our cto and his team are really quick to design something out and design something back in and run it through testing and get it to market so certainly chip shortages that hit our industry kovid was a you know when covet initially hit we were deer in the headlights we didn't know how it was going to impact us um but you know one month into covid we saw the sales starting to roll out um so you know those are some of the things that kept us up at night in the past but but we seem to be doing pretty well to to manage it that's a lot of work so i believe there's a lag between when you sell devices to your channel partner and then and when the devices are resold to the end customers with subscriptions um what would be the recurring revenue portion from devices that are in the hands of your channel partners but not activated yet yeah that's a good question our partners especially our larger ones do buy in bulk and we we begin the recurring revenue bullying once they are sold to their client um usually you know on the longer end for the larger clients we tend to get purchase orders from them every quarter so that means they're burning through um product and and you know moving it from in the warehouse to actually recurring revenue generated for us sometime between one and three months thank you owen and thank you margot for the participation great job of the presentation thank you for your time oh thanks for having me and we really appreciate it it's uh it's uh we're looking forward to more with you guys so thanks again man thank you have a good afternoon

Channel: MicroCapClub

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Keywords: microcap, microcaps, microcapclub, stocks, investing, microcap leadership summit, mls2021

Id: 8wv-tJSo7_c

Length: 38min 54sec (2334 seconds)

Published: Wed Sep 29 2021