Today I'm very pleased to have Jay Chandan. He's the CEO of Gorilla Technology. I should mention that Gorilla has their safe harbor statements on their website. Welcome, Jay. Good to see you again.
Thank you very much, John. Thank you for having me here.
Great. So let's cut right to the chase. So there have been rumors circulating about a $300 million equity offering. Can you clarify this situation and talk a little bit about what is the shelf really aimed at?
Well, you're catching the bull by the horn straight away, John. That's great. But listen, the rumors of the $300 million equity offering are absolutely inaccurate. Now, Gorilla filed a $300 million shelf registration in August of 2023, which allowed us the flexibility for future fundraising. But that does not mean that we're issuing the full amount now or anytime in the future. Our recent announcement actually only pertains to the $12 million offering, not the $300 million. Now, I think what has happened is that people have actually read the opinion letter from our counsel and mistook that F-3 or the 20-F opinion letter to be what we call an equity offering. Now, we have no current plans for a larger offering at this particular stage, and we are focused on absolutely minimizing fundraising and dilution for shareholders despite the challenges posed by our stock price.
Now, of course, the intent being, you know, we've signed up some massive partnerships. You know, a lot of people I've seen boards across the universe, and everybody seems to be talking about, why are you raising this money now? I mean, we have signed two large projects. I mean, Egypt is one, but we've also signed a $21 million project with the government of Taiwan. Now, apart from that, we've also signed up some massive partnerships. We have done the partnership with MTI for manufacturing in Egypt. We have signed a partnership with Lenovo for manufacturing and bringing CPEs to the Middle East, North Africa region. We've signed a project with SINTRONES, where we're actually doing in-vehicle computing technologies. We've signed a partnership with the Thames Freeport. We've signed a partnership with the Suez Canal Economic Zone. We're building a data center in Thailand.
And more importantly, we're also partnering with the likes of Intel on AI and building the next product as far as AI is concerned. So for that, we need cash on our balance sheet. And more importantly, it was good to have visibility of the cash so that we could then have visibility into the pipeline. So some of the statements which I see going on in the market about signing some of these contracts and not signing these contracts is also not true. Okay, we've only intentionally delayed only because of the lack of resources, and we are going after the ones that are going to be profitable, which are paying us reasonable advance payments. I hope that answers your question.
No, I definitely get a clear message. So I know also there's been some concerns about the accuracy of the audit financials. Can you give us some color on this and maybe explain the measures you've taken to really ensure financial transparency?
Absolutely, John. First of all, you know, pardon my French, that's a whole load of bollocks. Okay, first of all, I have to set the record straight. We've been audited by PwC for 20 years. And this year, when we moved from PwC to Marcum, which is one of the top 10 in the U.S., they have actually gone through a very detailed, diligent PCAOB audit process. These statements which people have made are probably for their personal benefit, manipulation, or they're just untrue. People just don't seem to understand what is out there, and people panic. There was a delay in our filing. I'll give you that. That was purely because the audit financial results were delayed because of the change in the company's auditors.
It involved a significant amount of time for them to actually enhance and go through their PCAOB to publish their yearly financial results on time. Now, how am I going to create what I call a better efficient system going forward? We've actually set up an independent FP&A team in our India office in Chennai. This focus of the FP&A team is predominantly on what we call a digital transformation, financial modeling, setting up internal controls, Lean Six Sigma. We're doing that for the first time in this business. More importantly, creating all of the financial processes and metrics to drive what we call business results reports into the CFO and to the CEO.
Now, we've also included what we call monthly operational reviews, which is being provided to the leadership and to the board on a quarterly basis so that we can review the performance of the business so that we can take corrective actions weekly, monthly, quarterly. But more importantly, the analytics teams, which you talked about, we are bringing the analytics team to work very closely with the business and the functional leaders. This is basically to raise what we call as red flags at any given point of time. It's either on revenues, leakages, margin expansion, cash flow commitments, et cetera. Finally, I talked about lean processes. We're implementing our Six Sigma lean processes towards the latter part of this year. That is to act on as an internal control process mechanism for all of our business financial processes and to avoid any errors and misses.
That's what we are going through. This, I hope, will kind of alleviate some of the skepticism regarding our financial reports. More importantly, these are steps which are designed to build and rebuild investor confidence.
Right. Yeah. Well, kind of moving quickly, let's talk about Egypt here for a minute. I mean, certainly the currency devaluation has some impact. Maybe you can talk us through that a little bit and how Egypt is going to be paying and what is Gorilla doing to kind of work through that situation?
Absolutely. Well, listen, I mean, nobody expected a devaluation to fall so significantly. We surely didn't expect a 50% devaluation. But you know what they say, every crisis brings in an opportunity. This recent devaluation of the currency has actually been quite a game changer for Gorilla. It actually has helped in fueling our operations and financial stability in a number of ways. Okay, first of all, it's helping us boost what we call our export power. Now, if you've seen some of my press releases, we've talked about building up manufacturing. We're now talking about building packaging plants and a foundry as well in the region.
But more importantly, what we are now doing is, as we ramp up our manufacturing, we believe that our investment in the local currency is going to rake in more dollars for us, driving up our revenue and more importantly, strengthening up our financial muscle. Now, we've also made strategic local investments. Now, our bold move into Egypt was kind of almost dissed by many. Okay, now what we have done is we've stayed true to the path. What we have done is that we have started demonstrating that our unwavering commitment to the local economy and by investing in the Egyptian pound, we're actually capitalizing on the devalued currency by building top-tier facilities at a fraction of the cost. We're not using dollars. We're using local currency.
Then, more importantly, I've seen messages in the market, which I find absolutely amusing, is the fact that, you know, whether we've hedged our currency, whether we've deployed cutting-edge hedging, whether we've done anything to shield ourselves against currency swings and so on and so forth. Yes, of course we have. We're not idiots. We have done that. But more importantly, it's also a strategic foresight as team. I mean, we've got a very strong board. We've got a management team like Daphne, myself, and so on, who actually are understanding and ensuring that Gorilla's financial stability remains rock solid. But more importantly, finally, it's the local costs. With the local costs plummeting due to the devaluation, our operational expenses have only dropped significantly.
That means the lower labor costs and material costs have actually allowed us to actually look at our numbers again in terms of producing more, getting more profitable. But more importantly, if you remember, John, one of the first times when I spoke to you, I said we were going to make Egypt the hub for MENA. That is actually becoming a ground reality for us. So for us, it's all about dominating the market. So our investment into the local market is not just about, hey, cutting costs, putting dollars and taking out dollars. It's about utilizing the local currency, creating a local powerhouse, fueling long-term growth, and more importantly, solidifying our marketplace. I hope that responds to your question.
No, this is great. Maybe one last hot topic, but since we've got a few of them, obviously there's a warrant overhang. And maybe you could give us some color about that. And what are you kind of doing to address that?
That's a very good question. So listen, again, if I may step back, John, there have been three fundraisers, including the $12 million recent fundraise. Now, a lot of these people came to me and said, wow, you've done a very difficult, dangerous fundraise. How are you going to sort your warrant overhang? Why was this fundraise essential? First of all, let me tell you, this fundraise was absolutely essential because we won two large projects worth $300 million. We are a small company. We are growing. We don't have the financial muscle of some of the big boys. So we needed to go out into the market and raise more money. Now, if I wasn't growing from $22 million to $65 million, going up to whatever, $90, $100, $200 million in the next couple of years, then I don't need the kind of cash I was looking for.
But the problem being a small company, people were not willing to lend. It is very difficult. People think, oh, why did you do this toxic raise? Why couldn't you go to the banks? It's very easy for people to talk, John. Okay, they have to be in my shoes and my CFO's shoes to understand how difficult it is to raise a dollar from the banks. The banks are asking about tons and tons and tons of documents. They want tons and tons of warranties. But more importantly, they want a lot of guarantees. Yes, we have an asset. I mean, I don't know how many people know our IP alone, if you look at the net present value today, it's about $300 million. We were willing to do an IP lend a borrow against the IP. But again, the markets were very tough.
The financial markets are not very strong. So we have now come up with a variety of ideas as to how we can address the warrant overhang. Now, all due respect to the two investors who've been backing us for the last three times, they have done a phenomenal job. They believe in the business. Anybody who's trying to spread any rumors that these guys are dumping stocks so that they can make more money for themselves is absolutely untrue. Okay, I stand by my investors, Anson and Highbridge, and the top five investors within the company who still own the equity. They have not sold. Okay, Anson and Highbridge are standing by. They're like, we don't want to collapse your stock. We are not going to sell. We're going to hold. Now, how am I going to address the warrant overhang?
I've come up with a couple of maybe two or three ideas which I have in my mind, which I've already kind of floated to our investors. One of them is potentially buyback of these warrants. If and when we build sufficient cash reserves over the next 12, 24 months, we would consider buying them back from the buying back the outstanding warrants from our existing holders. And this can help reduce, I believe, some potential dilution of our ordinary shares. That should alleviate some of the concerns for the market. We're thinking of some very innovative ways of, let's say, warrant exchange offers. Okay, proposing for an exchange where the warrant holders can trade in their existing warrants for new warrants with slightly different terms, maybe at a higher exercise price if they believe in the business, of course, but with a longer expiration period.
Or we could come up with a combination of shares, cash, et cetera. Then, more importantly, it's also about negotiating with them. We have to engage in discussions with these guys who hold these warrants to explore mutually beneficial solutions. Because at the end of the day, they just don't want to dump their warrants and move on because that creates a bad reputation for them. But these are also people who believe in the business. They want to stay with us for the next two, three, four years. So I want to talk to them about how we can reach a direct agreement on exercising some of them or some of the buyback ideas which I talked about. Finally, I'm also going to make it very clear to the market we're going to be in absolute communication. Communicate positive developments, financial performance, our strategic plans.
More importantly, as and when a share price increases, it may encourage some of the warrant holders to actually exercise some of the warrants, convert them to ordinary shares. My job is to keep a close watch on the market. I'm going to make sure that our company's stock performance does not fall. I'm going to work very closely with the warrant holders so that we can have a mutually win-win situation.
Great. That sounds like a great plan. So speaking of wins and communications, maybe you can tell us something about recent project wins and their significance to the company.
Absolutely. So this is what excites me a lot. As I think, as you've seen, John, we've gone out to the market. We have actually won projects in Colombia, Thailand, U.K., Middle East, even places like now we're in active discussions in places like India, for example, for some massive projects. Now, our pipeline is only growing stronger and stronger. Now, I know people are going to be like, hey, Jay, when's the pipeline going to materialize? Again, it will bring me back to what I call the chicken and egg story. If I sign some of these big deals, unfortunately, I may need cash. So what do I do? So I'm trying to figure out how and when I should sign these deals. But more importantly, I'm also signing deals with customers which are being more reasonable and paying us a little more upfront.
Now, John, one of the concerns which more people had was, what is Gorilla? I think there was a kind of a very common misconception that Gorilla, but people don't understand what Gorilla is doing. We've signed projects, let's say, for example, in roaming lawful interception recently. I signed the PASS Smart Port Solution in Taiwan. We signed the criminal investigation systems in Taiwan as well. Nobody batted an eyelid, but people don't seem to understand that these are mind-blowing, groundbreaking projects which have been done first of its kind by Gorilla. Because these are products which we can then sell to other customers, not just in Taiwan, but across the world. So where we are today, when I came in in September of 2022, I promised that we were going to build platform as a service.
Today, I can absolutely stand hand on heart that we have actually completed our transition from being a project-based company to a platform-based company. That means we have built what we call a very effective, scalable technological system. We're also building recurring revenue streams. Now, I think the market, again, has shortsight and oversight on this. They have not realized that we are not just signing a one-time project with the Egyptians. It's an actually five-eight-year project. That means there's recurring revenues. The same thing with the project in Thailand, the same with Colombia. It's a 3 + 2-year project, if I'm not wrong. And we've also now, every single project we do, we are providing the platform services. That means we manage the operations of the customer. And this is important because this brings me to another level of what we call project management.
It diversifies our offerings and it mitigates the risk of this business. Now, in the future, we are going to expand our global footprint, as promised, between Singapore, Malaysia, Thailand, Indonesia, Philippines, of course, Taiwan being our bread and butter, India, United Kingdom, Middle East, North Africa, including Egypt quite significantly. And now we've opened up other markets such as Colombia, Chile, Brazil, and they're all coming up to us. And by the way, John, a testament to what Gorilla can actually provide and achieve is that we are getting the inward calls. We've never gone out to any of these government agencies to go out and say, hey, can I implement your project?
All these projects which we're signing are coming to us, which shows that people trust that we can deliver, but we have the absolute quality products to support and enhance their overall smart cities, safe cities story.
All right. So to hear what you're saying, in addition to the projects being solid good business, they're also fitting a more strategic, a longer-term plan for productization, recipes essentially that you can repeat, right? You're also getting recurring revenue. Am I reading that right?
That is correct. And you know why we win them? Because technological. So I'll give you three very important points. Technological leadership, tailored solutions, but more importantly, local partnerships. Now, I think the market thinks that I just keep giving statements for the sake of giving statements that we have done this project in, we've signed up this manufacturing plant in Egypt, or we're doing this partnership with Lenovo, or we're partnering with Red Hat or Cisco or Intel. These are very relevant partnerships. Why? Because if you do not do local collaborations with local partners or with international partners, then your story is very weak. More importantly, I talked about the technological leadership. If we can combine our strengths with the strengths of the global leaders, we are able to deliver a lot more to the customer. And John, I'm sure you've already seen this.
Customers are becoming extremely smart. They are not idiots anymore. They're not people where you could just sell a solution and walk away and say, thank you very much. Let me get paid and I want to move on. No, it doesn't work this way. They are looking for tailored solutions, which is my second point. They want customized solutions that fit their operational and their regulatory requirements. That is where Gorilla comes in, what we call with a difference. People look at us with someone who understands the specific challenges they face and we're able to address that.
Great. So lots of projects, lots of things happening. What kind of financial milestones can we watch for that really indicate that this is starting to work?
You put me in a corner. Okay. So I would say five, very important milestones and performance indicators everybody should be watching over the next few months, quarters, and over the next year. First, revenue growth. We have to be monitoring. People have to, we are monitoring, by the way, sorry, our quarterly revenue trends to ensure that we are on track. And more importantly, it is on track with our financial goals. Second, market expansion. Now, we have to track the progress of entering into new markets. When I go into a new market, it's not about just signing one project. I want to make sure I'm able to sign 10. How can that one project become the linchpin to attract 10 more new projects with some very large customers? Third, product innovation. That's kind of the central pillar of this business. And I'll tell you why.
I'm very closely associated and I'm evaluating the launch and adoption rates of every single new product we build. Now, a lot of people do not realize this. When we started out in July of 2022 and we went public, we had very little patents and IP to our name. Today, we have 25 patents, global patents. Okay. And we have actually created diversified offerings on every single patent. Now, the reason I told you, and I gave you a number previously that our IP, based on our net present value of the cash flow, our IP is roughly around $300 million-$310 million is what I believe it should be at today. Obviously, we've done a very extensive valuation analysis, which is internal, and we've used an external consultant to evaluate one or two of our patents as well.
But our aim is to actually not just rest on our laurels, but I want to make sure that we're able to create an ROI. To that extent, I work with my CTO and our CDO every day. This is important for me to make sure that the new products that are coming out are fully utilizable and we're not putting a dollar to waste. four, this is the fourth one. Yes. Operational efficiency. Now, a lot of people, again, don't know this. And John, you may be also surprised. When I first came into this business, our operational efficiency was at 40%. Okay. Yeah, you heard that right. 40%. We just crossed 98% last month. That means we've been observing our improvements, increasing our operational metrics.
We have been going through a very stringent cost reduction, and we've been going through a very, very strong, highly strengthened productivity enhancement program. Whether it's your R&D team or whether it's my customer success team, I want to make sure that they are in the north of 97%+. Kudos to the team. They've actually touched 98% last month. I don't know if we'll be able to do the 100%, which is a magic marker, but I hope I'll be able to hit the 100% productivity. And last but not the least, it's the customer satisfaction. Assessing customer feedback and retention rates is very, very, very important for me. I want to ensure high satisfaction levels with every single customer we have. And that's why if you recollect, I actually went from having almost 300 customers to now about 120 customers.
Because I want to make sure that I'm able to satisfy all my customers by delivering the absolute best for them.
Makes sense. So now, if we take a step back for a second, what kind of broad macroeconomic trends and challenges are you kind of monitoring? And is it impacting your strategy at all the way the globe is going?
Yes. So I mean, a lot of this has changed. I mean, surprisingly, John, if I'm being very cognizant to the current issues around us, it's changing every day, every week. Right. But that said, we are not turning a blind eye. Remember, we are in smart cities and safe cities, which means the need for our product is actually even greater today. Okay. We're closely monitoring several broad economic trends. We're studying the challenges faced by countries within the region. We're looking at inflation rates. We're looking at supply chain disruptions. And more importantly, we're also monitoring changes to the customer behaviors today. Okay. Now, for example, we're investing in a very robust supply chain management system to mitigate any disruptions. Right. We're adopting flexible pricing with customers to manage some of the inflation impacts. Now, the customers are being actually quite reasonable, by the way.
They're not being rigid. But more importantly, I'm also, like I said, tailoring my requirements to meet specific customer preference and shifts in their demands. So we're becoming agile based on the economic conditions. Now, that said, there's a lot of volatility in the current economic market conditions. Right. So what we are doing is we are prioritizing regions with a very strong growth potential. So that's why when I said Singapore, Malaysia, Thailand, Philippines, Saudi, Southeast Asia, East Asia, Middle East, North Africa, South America, including the U.K. and parts of Europe, we are making sure that we are diversifying our market presence so that we can reduce our dependency on a single economy. So people are going to come back and say, hey, you won the Egypt project. It's $270 million. How's that going to affect you? Hey, my pipeline is not for $1 billion plus now.
I'm actually looking at signing a lot of these new contracts over the next few months. Guess what? My de-risking strategy has taken place. So now I'm able to weigh the scales rather than just kind of move them in a single direction. So for me, this is important. So based on all what we are doing, we're very confident that what strategic directions we're taking today and decisions we're taking will enable us to thrive in these uncertain economic times, ultimately driving long-term growth, which is important for me and creating value for all of our stakeholders. Now, again, I've heard, and I'm going to address this, and I know who this is going to reach out to as well. There's some investors, retail investors who said, hey, Jay's just going to come out and deliver a statement. It's going to be salad on the plate.
This is not salad on the plate, guys. I'm working hard. I'm sitting here in New York right now. We are working very hard to make sure that we create value for our stakeholders. Unfortunately, we are also at the mercy of our market manipulators. What they want, I don't know. Do they want to shock my stock and squeeze out? I don't know. But all I'm doing is carefully focusing on the business so that I do not lose touch with my business.
Great. We're kind of running at the end of the time. Maybe if you want to have one final couple of messages for those investors that are watching and what their major takeaway is.
Yes, actually, one of the questions I maybe thought, you know, I maybe didn't respond to this or maybe I kind of jumped the gun because I'm a little too excited now, is you talked about the company's financial plans, right? And what does that strategy look like? Now, a lot of people also wanted details behind the numbers and, like they say, detailed devils in the details. Let me give you some of our thought processes and strategies we're currently working on. Now, what we are doing is we are looking to improve our credit control mechanism with our customers. So that means what we are doing is we're providing some level of discount for early payments so that customers can pay us early, they can pay us on time, and so on and so forth.
We are looking at very prompt invoicing and review, and more importantly, we are helping trying to clear some of the unbilled revenues so we can hit them on time. Now, if you look at our credit payment terms for payables has changed drastically, and we are looking to absolutely make sure that we are on top of it. Now, quick statistics, just off my head, our conversion of contracts, assets, and receivables into cash is roughly around about $36 million, which is pending. And what we are doing is we're working with the business, the finance team, and the ops team to make sure that we come up with a plan for clearing all these debtors. But more importantly, this is quite important. Our profit before tax last year was roughly around $17 million. Now, if you look at our EBITDA, it was about $19.1 million.
That means our cash conversion ratio was about 0.49, 0.5. Yeah, 0.5. We're implementing strategies, one such as extending our payables period and more importantly, improving our profitability so that we can bring this to positive. Most people know that once you brought this to positive, this means that we will be having glowing reviews from not just the investors, but from the market itself. Our working capital turnover currently is at about 2.79. It is currently lower than where the industry standards are. Industry standards are for a business such as ours are between 5x and 9x . I want to get to the 6 mark, between the five and the six mark by 2026. So what I want to do is I am working very closely to build the, I talked about building the finance team.
So we're building a very enhanced finance team in India, Taiwan, and in the U.K. as well so that we can start implementing these strategies, which I talked to you about, and more importantly, making sure that we are delivering value again to our investors and to the employees.
Great. Well, Jay, that's a great finishing up there. Give everybody a good sense of where you're doing on the operations control, because that's certainly critical. So we're going to have to leave it there because we're running out of time. I appreciate you spending the time with us today. Thanks everyone for joining. To learn more about Gorilla Technologies, certainly you can visit their website or you can visit our website at watertowerresearch.com. Thanks everyone for joining us today.
John, thank you so much for having me.
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