All right. Hello, everyone. Thanks for joining. We'll give it another 30 seconds or so for people to dial in and join. Give us 20, 30 seconds and we'll get started. All right. Well, welcome everyone. Thank you for joining our investor webinar. My name is Jan Goetgeluk. I'm the founder and CEO of Virtuix. I'll start off with some introductions. I'm joined today by my longstanding partner, David Allan, who's our President and COO. David leads our worldwide operations and has a storied career in manufacturing, specifically in Asia. He led big manufacturing programs for example, Flex for customers like Apple. I'm also joined by Oh, hey, David. Hi. I'm also joined by Lauren Premo, who's our Chief Marketing Officer. Lauren joined us from also a storied career in marketing.
For example, she was the Director of Marketing at Corsair, which is a big gaming hardware brand. What I'll do today is I'll walk you through some slides first to give you an update on the business, and then we'll open it up for Q&A. You'll see at the bottom right of your screen, you'll see a question tab, where you can put in your questions. We won't answer those during the presentation, but at the end, we'll start to go through and answer the questions we can answer. Obviously, we can't answer any forward-looking requests or information. All right, well then, it's great to see so many people join us today. It's great to see the excitement. We wanted to do this webinar because we have a lot of recent developments and successes we wanted to share since our latest earnings release.
We didn't want to wait until the next one. There's also been some volatility on the share price. I'm not necessarily supposed to comment on the share price, but I'm getting always a lot of texts and emails about that. I know a lot of you personally, many of the investors here and shareholders on the webinar. Many of you have been with us for many years, even 10 years. Also keep in mind, management and the board also have shares. We're the biggest shareholder of the company. To see the downward pressure on the share price, sometimes with no apparent reason or no apparent negative news, it's certainly gut-wrenching for all of us, sometimes head-scratching. Look, at the end of July, about six weeks ago, we had our lock-ups expire, so about over 15 million shares got added to our flow.
That's certainly expected to add some downward pressure, and I'm hopeful that that's behind us. We're having a bit of a rebalance. Look, ultimately, I believe, and we believe our business is doing really well. What I want to show to you today is just the strength of our business, our growth, our momentum in the defense space and the enterprise space, the potential acquisition, the pending acquisition we alluded to that if completed, we believe will be a major catalyst for us. We have a lot of great things going that we want to share with you. Ultimately, we as a team, we focus on what we can control and what we do best, which is building great products and continuing to build a great company. Without further ado, I'll get started here. Just a quick note on forward-looking statements.
During this presentation, I may make forward-looking statements. Do not place undue reliance on those. All right, let me start off with some highlights. As you know, we are a leader in full-body immersive simulation, and we do that with our core technology, the Omni, which is an omnidirectional treadmill that lets you walk and run around inside virtual reality worlds. You are not just sitting down and pushing buttons. You are physically moving around inside a virtual world. We do that for entertainment and gaming on the consumer side, as well as defense for training and simulation and enterprise. A couple of key highlights, recent successes and developments. On the consumer side, we launched Omni One for Quest in collaboration with Meta at the end of June.
Since then, our new orders for Omni One systems are up 3x, threefold, quarter to date compared to the same period last year since that Meta launch. That is a really exciting growth pattern we are seeing, strong momentum on the consumer side with our Meta launch. We will talk about that more. On the defense side, strong momentum and traction there. We are already working with all four major branches of the U.S. government, Department of Defense, the Marine Corps, the Army, the Navy, the Air Force, even sold units to the National Guard. I will go through each of the various projects and awards we have going on. Most recently, a couple of recent announcements, we sold some systems also to the U.S. Navy for their Morale, Welfare, and Recreation program, MWR, which is a program for sailors.
This is actually military-wide as well, just to take care of the recreation and the morale of the troops. The U.S. Navy has these centers, 68 centers nationwide at naval bases. We sold first systems to that program for one base, which can be It is globally potentially. Again, good revenue opportunity, but also just yet another way to increase our adoption and awareness across the U.S. military. That is just a recent announcement. We also just this week announced we sold the first systems to the Department of Veterans Affairs, the VA, for therapeutics. A bit of a crossover with our healthcare space. We will talk about that as well. We are in advanced negotiations on the strategic acquisition, which if completed, we believe would create significant value for us and our shareholders. We will talk about that as well. Consumer, defense, and then enterprise.
It is a third division that is coming up with peak sales to Tesla on the robotics side, Figure AI as well. You can think about industrial training, safety training simulation. We sold repeat units to NASA, for example. The majority of our enterprise systems are going to research institutions, universities, research groups. Those sales are growing as well. Those are high-margin sales. We will talk about that. Healthcare is emerging as potentially a third big vertical after consumer and defense, and we will talk about that as well. Also recently we got our 26th patent issued, five more pending. I just want to reiterate that we have a very strong IP portfolio around everything we do. There is really nobody else that I believe comes close to what we do. The growth of revenue streams, consumer, defense, and enterprise all around our Omni technology platform.
Across markets, we try to have upfront revenues from hardware and make a margin there, and then have recurring revenues from software afterwards, software licensing and so forth. Let's start with consumer. I am not sure if many of you have seen our Quest trailer. I think many of you have seen our general Omni One trailer. I will show our Meta Quest trailer real quick of our Meta Quest product, as you may not have seen it yet. Let me pull up a quick video just to set the stage.
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All right. That is our Omni One for Quest. Let me go back to the presentation here. That Quest launch, I mean, it is off to an incredible start. Meta has sold about 20 million Quest headsets. By recent estimates, there are about 6 million or so active users. Addressable market was expanded by an immediate 6 million users who, for the first time, can use our product directly with their existing headset and game. Our orders, as I mentioned in the beginning, our orders are up threefold, 3x, since that Meta launch. Great momentum there. I feel like we are only getting started even with our Meta collaboration. There is still so much more we can do. Now we are looking at joint marketing opportunities, potentially bundling our products together. We are only scratching the surface here.
It is a great momentum here with our Meta product on the consumer side. Maybe David, now maybe it would be good to have you to say a few words about-
Yeah
production and we're getting ready, of course, for the holiday season.
Sure
which is the most important season of the year, and shaping up to be a great season for us. Maybe say a few words about
Sure
as you're leading our global operations for the production and
Yeah.
Yeah. Go for it.
Thanks, Jan. I lost my connection a minute ago. I'm calling in from Taiwan. Not sure why that glitch happened, but I'll talk quickly just in case I get cut off again. Thanks, Jan, for the quick intro. When Jan was saying that he and I are long-standing partners, I was going to jump in and say that a few weeks ago was our 13th anniversary of working together on this Virtuix. We're in our 14th year now of working on this business. I just want to always take the opportunity to thank our investors for your support. We've had many long-standing investors since the very early days, and now with the listing, I guess thousands more. It just feels like even though we're in our 14th year, it really feels like we're just getting started.
I mean, the listing is new for us and it's just really fueling our growth. We couldn't be more excited about what lies ahead. On the Meta, Lauren, maybe you want to jump in as well, talk about the Meta launch. My job is the fulfillment, the operations, the manufacturing. I'm also a hardware design engineer. That's my role in the business. As far as the manufacturing, we've got a wholly owned manufacturing facility over here in this part of the world. We have capacity to deliver up to 3,000 units a month, which would be $100 million in revenue. We have no constraints on capacity.
We're just full on, ramp up those sales, drive that sales engine, that partnership with Meta and the other avenues that we're trying to do on driving volume on the consumer side, and then margins and recurring revenue on the enterprise and defense side. How's that?
Yeah.
Maybe over to you, Lauren.
Sure.
On Meta. Yeah.
Absolutely. I cannot be happier with it. Meta has been a fantastic collaboration for us. Just to reiterate, orders up threefold quarter to date versus the same period last year is a very positive result for the company. Holiday is really important on the consumer side. It is when people buy their big-ticket items. We are gearing up for it now, and I am looking really forward to our holiday period and putting together some good offers for you guys.
Lauren, a question I often get is how do we do our marketing. Maybe you can say a few words about our paid social and influencer program.
Absolutely. We are really focused on digital marketing here, primarily through paid social and influencers. These two systems really feed each other. We pull a lot of our content from our influencer partners, and those become very effective ads through social. That is really our primary marketing driver. I see sometimes on our Discord people commenting on our ads. That is great. That means it is working. Then we have some other supplementary things. We definitely go to events. We have other partnerships. Excuse me. Definitely the really big driver for us is digital marketing and being D2C first, it is very important to get that right, and I think we are doing that.
Yep. Terrific, Lauren. Couple more notes on the consumer side. I mean, it is a gaming system, first, it has exercise benefits. Some of you have heard this example before, but we have many users who use our product almost daily as their key way to stay active, stay fit. One user lost 40 pounds in four months using it. It seems to be a key driver for many of our customers, including parents who want to get their kids off the couch. We work with most big game studios. We have great games now for our Quest system, and announcing new games every month. The business model for our consumer product, it is DTC, direct to consumer. There is an upfront hardware purchase, which is around $2,500, depending on the SKU. $2,995 for a complete system with Pico.
Our target gross margin is 40%, so we do aim to make a good margin on the upfront hardware purchase. It is not for everybody, of course. It is a fairly big-ticket item, but it is the price of a gaming PC connected to exercise equipment. It can also become a monthly payment. We work with Affirm, and so it becomes a monthly payment starting at around $90 a month or so. So there is an upfront hardware purchase. On a complete system with Pico, we do have a recurring revenue stream from selling games on our game store and from selling subscriptions to play online, similar to Xbox Live for Xbox or PS Plus for PlayStation. So we juice up our margins further with software revenues after the hardware purchase. All right. That was on the consumer side.
Now let us talk about defense, where we have a lot of early traction already working with all four major branches of the U.S. military. I mean, if you think about it, the military has always had simulators for aircraft, flying. They have simulators for vehicles, tanks, driving. Before, they never really had simulators for ground troops or infantry until now, thanks to our technology. Now, infantry, ground troops can virtually walk the battlefield before fighting on it, before putting boots on the ground. They can explore the battlefield, training, mission planning, mission rehearsal.
So it is a really exciting capability for the U.S. military. So we are working, for example, with the U.S. Marine Corps, where we are the lead integrator on the development of an infantry fire team trainer. I will show you another slide there in a second. We also have a counter-drone training system for Marine Corps evaluation.
For the U.S. Air Force, we have a first contract, a phase I SBIR contract for a Virtual Terrain Walk system. I will show that as well. Those are actual revenues, the first contract revenue is coming in. We will be submitting for a phase II later this month. Phase I will actually be completed this month, and then we are submitting for a phase II with the support of various Air Force bases and departments. The phase II is additional funding up to $2 million. So that is the backstory here, that for all these initial contracts and awards and sales and projects, we are progressing those towards bigger contracts, bigger awards, bigger programs. Also sold units to the Air Force Academy, Air National Guard, U.S. Army, West Point, and then U.S. Navy.
I mentioned the sales to the Morale, Welfare, Recreational program could be expanded potentially to 68 bases globally. We also have a development agreement with the Navy as well. A lot of initial traction as we are progressing the momentum to bigger awards. At the bottom here is also an important note. As we've announced, we're actively looking at acquisition targets in the defense space, and we also announced that we're in advanced negotiations with one potential target that is at the top end of that revenue range, $10 million- $50 million we're looking at. That potential target is at the top end of that range. If completed, it would take our revenues to a whole different level with a step change. We believe it could be a major catalyst for us.
The valuation and the financing structure that we believe, again, if completed, could create significant value for us and our shareholders. It could be a major catalyst for us. Not only on the revenue side, which is significant, takes us to a whole different plane, if you will. It's way beyond revenues. One other important part of it is access to contract vehicles that we would acquire. For example, GSA or OASIS+. Those are contract vehicles that are commonly used to sell goods and services to the government. To obtain access to those organically, that would take a lot of time. We would speed that up by this acquisition. We'd also obtain past performance. Past performance is very important.
If you want to get a $100 million contract with U.S. government or a $50 million contract, they will look if you've done a $30 million contract or a $10 million contract, and what's your past performance. You can acquire that through acquisitions, which will be part of this as well. Then access to sales channels and access to the right people to show our core technology, our Omni technology, too. This would really accelerate our momentum in the defense space and to get to those bigger contracts, those bigger programs, even for our core technology, our Omni technology. It's a really exciting development, which, of course, the revenues are paramount here. Potentially, again, if it's completed, it's a game changer for us. We'll keep everybody posted on that. Nothing to announce just yet, but that's just something we're working on.
Here's that infantry fire team trainer that we're developing for TECOM. It's a four-person system for mission rehearsal. We plan to bring the first system to Quantico in the fourth quarter of this year. If successful, it could potentially be rolled out across training centers nationwide. Just to give you a sense of scope here. A training system like this, four persons, typically, you may get a five-year contract per system. Could approach or exceed $500,000 per contract. Again, just illustrative numbers here. Then it could be rolled out to, let's say, 20 training centers for the Marine Corps nationwide. To give you a bit of sense of scale of this potential project as we try to progress that to the next stage. We also have our counter-drone training system that we've been showing.
We just showed it this week to the U.S. Army at Fort Benning as well, and it's also in evaluation by the Marine Corps as well. Counter-UAS, counter-drone training is a top priority for Western militaries, as you can imagine. We have the movement piece to that. Let me show you a quick video of our demo here. One second.
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That's our counter-UAS system together with Liteye, which is creating a lot of buzz, as you can imagine, across both the Marine Corps and the Army right now. Then we have a VirtuTerrain Walk system that forms the basis for our award with the Air Force or SBIR phase one award. That's also using that AI-driven 3D reconstruction technology that I've talked about in the past. It's forming a big part of this. That phase one will be completed this month. Then, as I mentioned, the goal is to progress, advance to phase II, which is up to $2 million in additional funding. Let me show you a video about our VirtuTerrain Walk system. This will be the last video I'll show today.
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Yeah. That's our Virtual Terrain Walk system. Again, there's nothing like it. It's a revolutionary capability that the military is very excited about. To give a sense of potential scale here, again, illustrative numbers only, but we could make a system like this for 10 people connected for mission planning. A system like that may typically go for $500,000- $1 million or so, plus recurring revenues over a five-year contract, maybe $1 million- $2 million over the life of the contract. Again, illustrative numbers. The U.S. Army alone has 117 battalions that can use a system like this. That's just to give you an example. Then we have the Marine Corps, the Air Force, allied forces, NATO, you name it. The defense opportunity for us is very substantial.
It takes time to go to the bigger programs, but once those start to come in, it's a game changer, right? That's why we're spending a lot of time on defense. We have a lot of traction in that space, a lot of potential, and could result in significant revenues for our company in the future. A few words about enterprise. Our enterprise revenues are also growing. Those are high-margin revenues. We target a margin of 70% or more on our enterprise sales. You can think about industrial training, safety training. As I mentioned, we work with NASA. We've sold repeat units to Tesla for the robotics, Optimus robotics division. Figure AI as well. There's various other applications and research institutions. Then healthcare. Healthcare, we'll talk about that a bit more here.
It could become a third big vertical after consumer and defense, specifically in the field of therapeutics, cognitive therapy. We're working with a couple of research institutions, including Rutgers WINLAB, specifically around autism therapy for children. For autism therapy for children, VR, virtual reality, is already used and is already reimbursed in some states to help children with life skills, crossing the street, going to the supermarket. Adding the movement component for the Omni seemingly can increase the engagement and the efficiency and effectiveness even more. That's what we're working on. We also have a partnership with Sirica Therapeutics. We've delivered the first systems there. They've announced plans to expand to 100 treatment centers nationwide. The U.S. alone has about 12,000 ABA therapy centers that could buy our systems as part of this cognitive therapy, neurodivergent therapy.
I've also announced our first sales to the VA, the U.S. Department of Veterans Affairs. The VA is actually also quite cutting-edge using virtual reality. They have this VA immersive program that is now across 145 VA facilities using virtual reality for PTSD treatment, pain management, cognitive therapy, behavioral therapy. The VA is actually pretty forward-leading in that regard. That's another opportunity for us for meaningful revenues as we expand that healthcare vertical. We'll see where this leads in the future, but this is an exciting development that we are supporting and could become a big vertical for us over time. A few words about our financials. These are the financials from our last fiscal year, where our revenues were still, I'd say, modest, but growing. We reported $4.2 million in revenues last year.
We're aiming to grow that, especially with our consumer growth, where we're seeing substantial growth right now. Our gross margin was up to 30% in the last quarter. We're not profitable yet as we're investing right now in our growth, in our expansion. Mind you, that a large part of the losses here are non-cash. Our adjusted EBITDA last quarter was about negative $3 million. Ultimately, our key goal and drive is to go to profitability, to become cash flow positive. That's the key goal of the company. That's what we're working towards. How do we get there? This is the last slide. It is through this multi-use growth opportunity. We can build on that 30% gross margin of the last quarter and scale our revenues, drive consumer growth, thanks to our Made for Meta partnership collaboration.
There, as I mentioned, we are seeing 3x, three-fold order growth, which is very exciting. Then defense, advancing our defense traction to larger contracts, larger programs, that's a key focus. The acquisition I mentioned, the potential acquisition, which if completed, would be really meaningful, would take our revenues to the $50 million range at a valuation, again, at a valuation and financing structure that, if completed, we believe could create significant value for our shareholders and also accelerate our momentum in the defense space. It's really consumer, kind of high volume consumer, high value defense, and then supplementing that with enterprise, high margin enterprise sales, where we're seeing some traction as well, and potentially healthcare as another big vertical coming up. That's our key goal is to drive towards profitability. The question is, okay, when can we expect that and how we get there?
When we really believe we will turn the corner on profitability is when those large defense contracts may start to come in. That will not be this fiscal year. That is a bit of a longer sales cycle, but we could aim to potentially see some of that next fiscal year at the earliest. Where does it lead us from a cash position? That is the next question. Last quarter, we announced cash in the bank of $7.4 million, plus additional warrant exercises for $1.2 million after the quarter end. Pro forma, let us call it about $8.5 million. That takes us to next year. How do we go from there? The good news is, and this is one of the reasons we went public as a company, is to have access to the public capital market.
We have a lot of good options there, we believe. I will give us a couple of examples because I get this question a lot. A highly common way for small cap companies like us to tap into the public company capital markets is to put an ATM facility in place, an at-the-market facility where you sell equity at the market under an S3 registration statement. That would be a fairly common, relatively inexpensive and efficient way to raise more capital. That is something we could do next year once we are S3 eligible. This is just, again, an example. Another thing we could do, especially as it relates to the acquisition or the potential acquisition, is put a bridge to the ATM in place, which could be, for example, senior secured notes, senior debt, trade debt. That is another option.
Again, these are just examples I am giving to paint the picture that we have options. We have options, and we believe, we are very confident that we have good options here. I meet regularly with our investment bank, Maxim Group. I met with our financing partners Tradable this week. That is the advantage of being in the public markets, is we have those options to bridge to profitability and to execute on our plan, which is accelerate and drive our consumer growth, advance to bigger contracts in the defense space, and then complete a potential acquisition, which could be game changing as well. Let me just sum it up here in summary. Look, it is a very exciting time for all of us here at Virtuix. We are seeing our orders growing threefold since the Meta launch, which is very exciting for us.
We have a lot of traction in the defense space with sales to and awards and projects with all four major branches of U.S. government, Department of Defense, as we progress those to larger contracts. We have this spending potential acquisition, which, as I mentioned again, if completed, would take our revenues potentially to the $50 million range. True game changer. Again, at a valuation and financing structure that, if completed, we believe would drive a lot of growth and be a big catalyst for us. Behind that, we drive our high-margin enterprise sales and maybe healthcare as a big third vertical. Look, we have a lot in the pipeline. If we can execute on everything in our pipeline this year, I believe we will be in great shape.
We stay very focused, mostly on consumer and defense, but we're laser focused on growing our revenues and driving towards profitability with all the opportunities we have in front of us. Thank you very much. I'll leave it at that, and we'll open it up for questions right now.
All right. Right off the bat, Logan has a question about Tesla and their usage of Omni One. Are we able to talk a little bit about some of our enterprise applications and what the feedback has been like?
Yeah, on the robotics side, it's an interesting application where we've shown a video of this earlier on as well with University of Central Florida where somebody's on the Omni wearing a virtual reality headset and sees in real time what the robot is seeing and then walks on the Omni. Sorry, Lauren, the keyboard is very loud. Sorry.
I'm so sorry.
Walks on the Omni and steers a robot in real time while walking on the Omni. It is teleoperation of robots and data collection. It is an interesting opportunity. We will see how far that leads. We are getting some traction there with repeat sales to Tesla and other companies. A question here for you, Lauren, here from Michael.
Yeah. Michael asks, "Have you considered collaborating with Twitch streamers to reach their millions of followers?" The answer is yes. We work with a variety of creators and streamers. Generally, we tend to prioritize YouTube because the content has a longer shelf life, remains searchable long term, whereas you have to catch a stream in the moment. Especially when people do research, Omni One is a highly researched product. It is an expensive product, so people like to take their time in learning about it. So we tend to favor longer shelf life content, but we do work with streamers. If you search Omni One, you can see a lot of content we have done with various creators.
Yeah. I will address a question here from Andre asking if we triggered any covenants of the company. The answer is no, not that I am aware of.
All right. Then a question here from Jeff. Jeff asks, "What about working with Apple VR headset partnerships or other partnerships?" Jan, you want to comment on that?
Yeah. We work with really all the headset manufacturers, including HTC, Pico, Meta. Apple is a bit of a different animal. They've quite ignored the gaming space. Their headset doesn't even have controllers that games need to play games. So they're doing their own thing. Really excited about their technology and also really excited about the fact that they continue to invest billions of dollars into this space. We'll see if we can have a close relationship in the future. But right now, they're kind of staying away from gaming, which, of course, on the consumer side is our bread and butter. So we'll see how that evolves over time.
I answered this question, but I think it's worth answering publicly. Cedric asks about how Affirm works and if we're getting revenue from that today.
Yeah, go ahead, Lauren. You can answer that.
Yeah, sure. So Affirm is our partner that we use to offer monthly payment options. We do get revenue from them today. The way Affirm works is that the customer gets what is essentially a loan from Affirm. Virtuix receives the entire purchase amount upfront, and then we get. So it's not a monthly recurring revenue. Monthly recurring revenue really comes from things like our software sales. But we do get money from that upfront minus the financing fees. It's been a very powerful tool to help customers afford Omni Ones and very popular for our customers to use Affirm.
Okay. Thank you, Richard, for the shout-out. Good to see some of our long-standing investors on the chat as well.
So a question from Robert here, and we'll start with Jan, and then David, I think it'd be good for you to chime in as well. He wants to know if we're working on an Omni Two.
Gosh, not sure we can answer that, Lauren.
Well, maybe not specifically Omni Two, but maybe we can talk a little bit about that we're not sitting still as a company.
Oh, for sure. We continuously improve our products. Oftentimes, we do it as a running change, running quality improvements, and so forth. Now we continuously work on new items. We actually have a couple of new items in the pipeline as well that we will announce soon. We definitely continue to evolve our technology, but can't really comment on the bigger development roadmap at this point.
Yep. All right. I had a question from Mark that I answered, but I think it is also worth repeating. Mark asks, "What kind of boots on the ground type direct sales are happening? Do we have a sales force? Are we sending them off to campuses, gyms, and gaming shops?" As a D2C company, we are mostly supporting ourselves by events where we can demonstrate a large amount of Omni One sales to a concentrated amount of people. Having a large sales force across the country is a very costly endeavor, and we try to control our costs by focusing our efforts where we can have the most impact. We also have tools to reduce the barrier for buying products like Omni One.
We offer a very generous 30-day risk-free return policy to help make sure customers are comfortable buying Omni One and testing it out and feel good about their purchase.
Okay. Question from Andrew about how the 3x order growth translates to sales. We will report our sales at the next earnings call. The Omni One for Quest product is a bit lower priced than a complete Omni One system, something to keep in mind. We will see where our revenues end up at. The bottom line is, look, we are obviously seeing strong growth with our launch with Meta that we are really excited about.
Yeah. A question from Richard. He wants to know about any feedback around VTW. I would love, Jan, if you can explain a little bit about what SBIR phase one means for us as a company and what that path is into SBIR phase II and phase III .
Yeah. Phase I is just the first phase. It is actual revenues, but it is not very large, but it is a first step. A lot of these military sales cycles, you start with a first step, and then you go through several gates. This is just the first gate, and then hopefully go to a phase II. Phase I is really more of a validation phase. Phase II is where you start to actually deliver systems or a test system, and as I mentioned, could be up to $2 million in funding. Phase III with SBIR is your sole source, almost unlimited funding source, up to $100 million or so. We are also the sole source contract, so the buying entity does not need to compete it out. That is why the SBIR process and the SBIR vehicle is very interesting.
As with our other projects, we are progressing these towards larger and larger awards and programs, and we will keep everybody updated as we progress through that process.
Great. David asks about Steam Frame . Any Steam Frame news we can share?
Oh, yeah. I mean, we love the Steam Frame , and certainly, we're gamers, and I'm very excited about that.
I think you just bought one.
Of course. Something we're looking at, I can say that for sure. Something we'd like to make it compatible. Yeah.
All right. A question from Cedric. Any information regarding police and firemen, and I'll expand on that to just public services applications for Omni One.
Yeah. Police and firemen training is a different animal, especially in the U.S. It is a very fragmented industry. Same with fire departments. Every county has their own police department, and that sales process is very difficult. It is not something we are focused on right now, although we have some higher-level opportunities, more on the federal space around Department of Homeland Security and so forth. But kind of local police departments, we have a lot of interest from that sector, but it is a difficult sales cycle. So we stay more focused on the Department of Defense side of things right now, since that is more centralized, and it is a long sales cycle, but at least there is potentially a large pot of gold at the end of it, right? So that is more interesting to us at this time.
Yeah. Perfect.
Lauren, I would like to respond to a question here from Mark Scavinski.
Sure.
He has written to us that as a shareholder, he would love to lead the charge for his local to boost sales. I just want to say, we love that spirit. In fact, we have had so much evangelism, you might call it, among our investors to want to spread the word about the product and use the product themselves and help out. So thank you, Mark, for that sentiment. Really appreciate it.
Actually, David, that brings up a really good point that I don't think I've mentioned yet. We do have a customer referral-
Oh, yeah.
pathway.
That's right.
We do give actual money for customer referrals. We have a referral link that any Omni One owner can use and sign up for and-
Any owner, not just the investor owner,
can share their link to.
Yeah.
They will get commission.
Yeah.
Mark, if you want to sign up-
Right. Yeah.
If you haven't signed up, it's available today.
Yeah. Excellent.
Question from Kyle. How come we don't see this at Best Buy? Well, it's a direct-to-consumer business model. If you want to start selling through big box retailers, it's very onerous. They'll take 30%, 40% or more, extremely tough terms on inventory turnover. It's not our business model. Our consumer business model is DTC, direct to consumer, but works really well for our kind of product. We don't aim to be in the Best Buys of the world.
Yeah. A question from Mark T. I know some of this we can't answer, but first off, can the production pace match the pace
Yeah
To which we're selling? David, do you want to comment on our production?
Yeah, I'm just going to give that a big fat yes. I mean, yeah, we have the capacity all set up. We can handle a big upside in sales. All of you, Mark and everyone, get out there and spread the word and help us move more units. We can deliver. No problem. No problem at all.
The second part of Mark's question for Jan. Can you talk a little bit about the profitability margin on Omni One? It's a good time to talk about how that's changed over time.
Yeah. I mean, as I mentioned, we kind of disclosed a target margin of around 40% on our upfront hardware. Yeah, that's what we strive for, depending on our production costs and whatnot. Is there anything else, Lauren, there that I needed to address?
No, but I would just comment that our margins are significantly up year-over-year. That's in our public filing, and I think we're on the right trajectory here.
Yeah. We've also tried to improve our margins wherever we can, control costs, and drive up our margins. There's another question here, somewhat related from Daniel, that I appreciate. "Jan, as you mentioned, the company is not profitable right now. How do you keep SG&A under tight control and watch it like a hawk?" Yeah, we do.
We do.
I mean, David and me personally approve every expense in the company.
Every penny.
Then there's some expenses that we-
We watch it like-
We watch it like a hawk.
Yeah.
We watch it like a hawk.
Yeah.
We really. Our SG&A went up a bit being a public company. Certainly, there are some expenses there that you do not have as a private company. We are getting a better handle on that now as well and trying to really tighten our SG&A expenses. Again, drive towards profitability, both by growing revenues.
Yeah
That is critical, but also by controlling costs, which is equally important.
Yeah.
Yeah.
Every bill we pay gets looked at by Jan, by me, by our CFO. I mean, we are absolutely rigorous in how we control the outflow of cash. So great question, and that is how we run things.
Yeah.
Yeah. I will just provide an anecdotal comment here. Internally, in the team, we have a bit of a Jan sniff test. Whenever we get a quote from a vendor or a new bill, it has to pass that before we even want to look at it.
Yeah
It definitely fosters something we are looking at from the ground level up every day.
Yeah. Good question here from Andrew about the 3x order growth, if it is sustainable. Right now it is sustained through this quarter. Of course, I do not have a glass ball and can not make any forward-looking projections. But through this quarter, I mean, when we reported last quarter, I think we reported 72% order growth, 150% since we launched Meta the prior quarter. Now we are reporting 3x quarter to date order growth units, unit orders. So, yeah, so far so good. We will see if we can drive it even more. As I mentioned, I think with our Meta collaboration, there is more we can do around bundling, cross-promotions. There is more we can do there, and I think we are only scratching the surface.
All right. Let me just do a last call for questions. I think we've gone through most of them.
Yeah. Brian asked a question about the kind of year-over-year growth and size of these newer verticals. Again, I have to stay away from making any sort of forward statements. But as I mentioned, I gave a couple of illustrative numbers on the defense side, how big those potential awards could be for some of our systems based on sort like systems and the number of bases or training centers. I hope that was helpful. On the vertical of healthcare, I gave some numbers around number of centers, 12,000 ABA centers, 745 VA centers. Again, if you look at our enterprise system and the cost of that gives you a bit of an idea of the potential scale there. I hope that's helpful to get a better idea of how big some of these verticals could get, especially on the defense side. It's really meaningful.
Just a comment from Kevin. Kevin H says, "I bought my Omni through HSA using Truemed." Yay. Thanks, Kevin.
Great.
That's great.
Since I haven't touched on that, Truemed is our partner that's helped us get people approved in buying Omni One through their HSA and FSA programs. Very easy to use. All you have to do is send your information to Truemed. They'll use a doctor to help you get medical approval for an Omni One. If you gain approval, then you can use your HSA, FSA. It's a great program.
Yeah. Very well. I think we went through all the questions. I'll just sum up by saying, by thanking all our shareholders and investors for the continuing support and excitement. Look, we have a lot of great opportunity ahead of us. We're laser-focused again on growing our growth on the consumer side, our defense programs, that acquisition, which again, potentially could be a game changer when we can announce that. Ultimately, us growing our revenues, controlling our costs, driving towards profitability, I think is our key goal. With our technology and with what we have in front of us, I think we have an exciting journey ahead of us. If you're an existing investor, thank you for being part of our story and if you're considering investing, we welcome you to come aboard and join our exciting journey ahead. Thank you, everyone.
Yeah. Thank you, everybody. Almost everybody stuck around till the end, so thank you all.
Yeah.
That's great.
Thank you.
Thanks, guys.
Thank you.
Bye.