Micro-X Limited (MX1) Earnings Call Transcript

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 Kingsley Hall, Chief Executive. Please go ahead.

Thank you, Travis. Hello, everyone. I'm pleased to welcome you all to the Micro-X quarterly investor call, along with our Chief Operating Officer, Anthony Skeats; and Dr. Brian Gonzales, President of Micro-X Inc., who is speaking to us today from Malaysia, where he's been visiting with Billion Prima and IMS. And all 3 of us will be available for questions and answers at the end 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 September 2025, as outlined in our Appendix 4C filed with the ASX on the 31st of October before we'll open up to that Q&A session. Now before we begin, we'd 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. 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 starting with the key achievements over the September quarter, where I think it's fair to say we've hit some fantastic milestones and there's strong commercial momentum starting to build. Since we began this calendar year, we refined our focus and really wanted to deliver on 3 core strategic priorities that we believe will best drive value for shareholders and set Micro-X up for the longer term. So to recap those 3 matters, we want to secure larger Rover Plus sales. We want to build our Rover Plus sales. We want to commence clinical trials with HCT for stroke diagnosis, and we want to deliver more partnerships for our security assets to monetize that technology. What I'm most pleased about is that we achieved a lot this quarter across all 3 of these priorities. So from a commercial execution and delivery perspective, we were thrilled when we secured our largest ever Rover Plus order for $3.3 million a few weeks back. And I'll talk shortly about how the team all came together to win this competitive tender, which is our first major foray into the Asian market. On our second priority, after 4 years of development work, we're also really excited that our Head CT for stroke diagnosis is now at a final prototype stage that we call a test bench and is ready to be installed in an Australian hospital to start clinical trials. This now puts us likely within 12 months from data to support a filing for regulatory approval, where the requirement is basically to demonstrate that our Head CT powered by carbon nanotube technology provides the same image quality for diagnosis of a stroke as patients we currently receive in a traditional hospital CT. The key point here being that with the Micro-X miniaturized CT system, which will go into ambulances, doctors will be looking at CT-generated images in exactly the same way they do today. This means not changing the standard of care or retraining, which would have been a far harder and more costly path. In parallel with our upcoming hospital imaging trial, we also secured an additional $4.4 million grant from the Australian Government Industry Growth Program to develop and trial the world's first in-ambulance head CT scanner in partnership with the South Australian Ambulance Service and the Royal Adelaide Hospital Stroke Unit. This will allow us to complete the final piece of our go-to-market strategy as we build and test our Head CT stroke detection unit in real-world ambulances. And Anthony will touch on this a little more later. And to our third key priority, our partnering work has also moved forward really well this quarter. Our work with Billion Prima achieved a pivotal milestone when we delivered the first prototype baggage and parcel scanner that we've developed for and with them. They've already started showing the prototype to their customers, which include the Malaysian government to build a pipeline ahead of a launch in 2026. This means we're not far away from being a supplier of tubes and generators to Billion Prima for their scanner, adding another strong source of revenue and cash flow for Micro-X. On the work to secure go-to-market partners for our airport security technology, we've continued our engagement with a number of large security organizations. We're dealing with really large organizations here. And as a result, it's difficult for us to move as rapidly as I would like to. But I do want to assure listeners that we remain highly focused on securing the right partnership that aligns commercially and strategically for us in the near term, and we're confident of being able to deliver this. So stepping through some details on our commercial operations and our Rover Plus unit, which has now been sold in just under 40 countries globally. Starting firstly in the U.S., as we discussed on the last quarterly call, in July of this year, we executed our first supply agreement for Rover Plus with a major U.S. health care services provider. And having spent the better part of 12 months securing that landmark deal for Micro-X. Over the last 3 months, our team has been actively engaging with various sites across their network. And one of our top commercial priorities is to start building orders with them. In our other U.S. efforts, including ongoing sales into the elite sports markets, we've secured our first sale to a professional basketball team in the NBA, opening up a third professional sports vertical in addition to National Hockey League and Major League Baseball. We also remain in discussions with the second major U.S. procurement group, and we expect that agreement to be finalized in the first half of next year. This will provide another major growth opportunity for Rover Plus as we look to scale our business. And returning again to our largest ever sales order in early October, which was for $3.3 million worth of Rover Plus units from our newest Malaysian distributor known as IMS. This order will supply the Malaysian Ministry of Health, who run a national network of hospitals and clinics across Malaysia, where we would expect Rover Plus would be invaluable in caring for their patients. And as you'd expect, this order followed a government tender process where the Rover Plus won out over a number of mobile X-ray offerings. So following our Australian government orders and those through U.S. NGOs for the Ukraine war efforts, this is yet another strong government validation of Rover's technology and quality. In terms of what this means for us financially, we don't talk publicly about margins. But what I can say is that this represents an attractive deal for us and one we would hope to repeat with the Malaysian government in the future. And as we sit here today, I'm happy to report that we're well on track to meet the Ministry of Health's 6-week delivery schedule with over 3/4 of the units already shipped. So our sales growth is building. And with that, I'll pass over to Anthony to provide further detail on our Head CT and Full Body CT programs. Thanks, Ant.

Thank you, Kingsley. Well, I'll start with the Head CT for stroke diagnosis, which as listeners are aware, has been funded by the Commonwealth MRFF program in partnership with the Australian Stroke Alliance and in collaboration with Johns Hopkins iStar labs, Monash Health Collab and the South Australian Ambulance Service. On the 1st of October, I'm really pleased to announce the team achieved a significant contracted milestone with our first Head CT test bench now being ready for installation in the Royal Melbourne Hospital. The commencement of human imaging trials with that test bench is now pending receipt of a license from Victoria Health to operate X-ray equipment, which is standard practice as part of the Royal Melbourne Hospital Radiation Management Plan and the completion of the ethics review [ phantom ] reader study. Now the data for that study has been collected by the Australian Stroke Alliance at Micro-X facilities last week, and the study review is in progress. Once we have the final ethics approval in place, then the unit will be installed and the first patient imaged. This is a real pivotal moment in Micro-X history, and we are very excited about it. To give investors a little bit more detail on the human imaging trial, and I apologize, this might be a bit technical, but the ASA are leading the trial, and they have a peer-reviewed test plan, which details the recruitment of 90 subjects at 2 sites over a 6-month period. The primary objective is to investigate the ability of the Micro-X Head CT to identify neuroimaging-based contraindications to stroke thrombolysis in reference to the gold standard of current best practice with hospital-based computed tomography or CT. Essentially, what that means is that we are validating by an expert reader study accurate anatomical imaging of the brain and accurate pathological imaging of 9 patients with stroke mimics, 27 with ischemic stroke and 27 with intracranial hemorrhage, which is divided into categories of intracerebral, subarachnoid, intraventricular and subdural types. And finally, 27 brain tumors, essentially 5 patient groups. And a successful outcome will be an independent clinical report, which provides -- which proves that our Head CT meets diagnostic standards for stroke imaging, which is a crucial part of our regulatory submission, and we're planning to make that submission by the end of calendar '26. Also related to this work, we plan to collect data from the use of the Head CT in a conventional road ambulance in South Australia. And to enable this work, we were very pleased in September when we were awarded a 2-year nondilutive $4.4 million grant from the Australian government's Industry Growth program, which is a commercialization fund. These funds are to develop and trial the world's first in-ambulance head CT scanner, which we'll do in partnership with the South Australian Ambulance Service and the Royal Adelaide Hospital Stroke Unit. And alongside the in-hospital Head CT trials I just mentioned, the funding supports the final step in commercializing our Head CT for deployment with road and air ambulances being our initial target market. The contract with IGP is now active and an initial $1.1 million payment has been received. The remainder of this will be received over the next 4 quarters as the ambulance prototype is developed. Once they -- once the first prototype scanner is built and tested, it will be installed in an active ambulance for real-world imaging trials, enabling stroke diagnostics prior to transporting a patient to a hospital. We think this is an absolute game changer for patient care, and that view is supported by most people we meet in the stroke community. In doing this work, we will also collaborate with leading neurologists and Adelaide University to develop training and paramedic protocols for remote stroke triage so that we have a complete solution demonstrated that we'll be able to use in our future marketing. Moving on now to the Full Body CT project, where we have up to $25 million of funding from the U.S. ARPA-H agency. This project has a number of stages and steps which we keep kicking off successfully. As part of this, during the quarter, our software and design engineering teams across Tonsley and Seattle submitted and received approval for our concept design. This meant that we achieved milestone 4 and triggered a $1.4 million payment, further advancing the compact CT imaging road map. And with that, I'll hand over to Brian.

Thank you, Anthony. And hello, everyone, from Malaysia. Turning now to our security business. Testing continues to progress well with both our passenger checkpoint and 2 baggage scanners that are currently with the U.S. Department of Homeland Security in collaboration with TSA. I'm pleased to say that we are on track to deliver 2 additional checkpoints early next year to support even more testing and move us closer towards live airport trials. While the details of all of this testing remains confidential, I want to assure shareholders that this work is progressing to plan. Our relationship with DHS remains very strong and collaborative. Reflecting on this, we were awarded a further contract extension up to $25 million (sic) [ $2.5 million ] from DHS. This is work to continue to advance our threat detection capabilities of the baggage scanner as we work to bring the CT to a point where we can scan in a live airport environment. This increases the total contract value for Micro-X from DHS to $31.7 million. This September, we were able to publicly showcase the miniaturized CT baggage scanner for the first time with a live demonstration at the Future Travel Experience Global 2025 in Long Beach, California. This is one of the key global airport transport expos with over 2,500 delegates and 120 airlines and airports. Kingsley and I had strong interest at the booth, which reinforces our belief that Micro-X is well positioned to play a leading role in the future of airport screening and the passenger experience. As Kingsley mentioned, our other security work in partnership with Billion Prima is also on track with the delivery of our first prototype for our new baggage and parcel screener this quarter. The initial installation and delivery went very well. We are now working with Billion Prima to refine a commercial scale-up version for them as they engage with their market in this exciting new baggage screening platform. And with that, I'll now hand it back to Kingsley.

Thanks, Brian. I just thought I'd just take the opportunity to clarify something. It might have just been my phone, but I -- the contract extension with the DHS that Brian referred to was up to $2.5 million. I heard $25 million, so if anyone was confused, it's $2.5 million. But thanks, Brian. Just briefly on investor and industry engagement before we get into the financials. We maintained a really active outreach program during the quarter, including non-deal roadshows with both existing and prospective investors and brokers. And in August, I also presented at the Bioshares Conference in Hobart, where we had held a number of really productive meetings. We also showcased the Head CT at 2 major events in Adelaide, the IUPESM World Congress on Medical Physics and Biomedical Engineering and also The Council of Ambulance Authorities Congress. And in the U.S., we featured Rover Plus at the Texas Organization of Rural and Community Hospitals Conference in Austin. As Brian mentioned, we showed the miniature baggage scanner at the Future Travel Experience Global Expo in Long Beach, California. The team is also gearing up for the major imaging industry event, RSNA conference in late November, where we'll be making another big sales push. We believe these events are crucial to building awareness and engagement with our customers and stakeholders. I'll now run through the financial activities for the quarter as reported in the Appendix 4C lodged with the ASX on the 31st of October 2025. And the numbers I'll be referring to are all in Australian dollars and in accordance with ASX listing rules are not audited. So for the quarter ended 30 September 2025, our headline numbers were cash inflows from product sales of $400,000, cash inflows for medical imaging project work with ASA and ARPA-H of $1.4 million; and cash inflows for security imaging project work with both DHS and Billion Prima of $3.6 million. And in total, our net cash outflows for the quarter were [ $1.7 million ]. In addition to this, on the 30th of September, we received our full R&D rebate of $5.1 million, which was paid directly to our lender, closing our loan with the net $800,000 from R&D being paid to Micro-X after interest in early October. These activities resulted in a cash balance at the end of the quarter of $2 million. And as I just mentioned, this would have been $2.8 million had the R&D payment come through to us in September rather than being paid directly to the lender. Additionally, subsequent to the end of the quarter, we've received some really strong cash inflows already throughout October of $2.9 million from the initial IMS Rover orders and also the first payment of the Head CT IGP grant. Looking ahead, we're entering a really exciting phase for Micro-X with Rover Plus now approved for procurement across a major U.S. and Southeast Asian health care networks and strong distributor momentum in place, we're focused on converting that into meaningful orders. In parallel, our Head CT program will start hospital trials shortly and the funded work to now design in-ambulance Head CT is underway, bringing us closer to a commercial stroke unit. On the security front, active prototype testing, new contract extensions and growing interest from global partners signal real commercial potential for that technology. And with that, I'll now pass back to you, Travis, for the question-and-answer part of this call.

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

Congratulations on a solid result for the quarter. I might just start a question to Anthony, just in terms of the submission for the Head CT scan. Once that evidence comes out or the data comes out, is that a TGA submission you're planning?

Yes. Actually, we'll do global registrations. So we will submit with the FDA, the TGA and the European MDR all at the same time, but they all have slightly different time frames for their review process. Interestingly, there is some government initiatives, federal government initiatives that are looking to replicate or reciprocate FDA within the TGA to try and reduce the time frame to get Australian coverage. So our strategy is to go for all them and hopefully try and get them all within a reasonable time frame. The only one that we know some certainty around is FDA. FDA actually mandates 120-day response time. TGA doesn't give you any kind of guidance and nor does MDR, but they're typically somewhere between 6 months for TGA and up to 12 months for MDR.

Great. That makes it clear. Just getting back to the DHS contract. Can you just remind me how much you've received so far? Because I think Brian said the total contract value is $31 million, including the extension. So just what's actually been received so far?

Yes. Thanks, Scott. I think the total is up to $31.7 million. I think we're about 2/3 of the way through that, Brian. I think it's about [ $19 million or $20 million ], is that right?

I'm trying to do the -- we received about USD 12.5 million, almost USD 13 million.

Yes. So it's about [ $19.5 million ] I think, Scott.

Okay. That's right. And just all things being equal and all things going to plan, when would that contract finish?