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Thank you for standing by, and welcome to the Micro-X Limited Leadership Transition and Quarterly Investor Conference Call. [Operator Instructions]
I would now like to turn the conference over to Mr. David Knox, Chair of Micro-X. Please go ahead.
Thank you, Melanie. Welcome, everyone. My name is David Knox, Chair of the Board of Directors at Micro-X, and I'm pleased to welcome you all today to Micro-X' investor call to discuss our leadership transition as announced to the ASX this morning as well as our results for the March quarter.
I'm joined today by Kingsley Hall, who has been announced as our new Chief Executive Officer. Also with me are Anthony Skeats, our Chief Operating Officer; and Dr. Brian Gonzales, who's [ beaming ] in from Seattle, our CEO Americas and Chief Scientific Officer.
Thanks, David. It's Kingsley here in Tonsley.
Hi, everybody. It's Anthony Skeats here in Tonsley.
Thank you, David. This is Brian Gonzales from Micro-X in Seattle.
Thank you very much, everyone. So in a moment, I will talk to the details and rationale for the transition of our leadership team and the retirement of our founder, MD and CEO, Peter Rowland. I'll then hand back to Kingsley to provide a brief overview of our operations and financial matters for the quarter ending 31st of March 2023, which we outlined in our Appendix 4C filed with the ASX on the 27th of April.
We will then open to questions and answers. And for those that are not able to attend, a recording of this call will be available on our website shortly.
Now to begin, I would like to welcome our new Chief Executive, Kingsley Hall.
Thanks, David. Good morning, everyone. Can I say, firstly, how excited I am to be speaking with everyone today as our company's new Chief Executive and to have been entrusted with this opportunity to lead Micro-X, which, I genuinely believe, is an exceptional Australian company with world-leading talent and technology.
Before we start, I would, however, like to cover off on one brief formality and remind everyone 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.
I'll now hand back to you, David.
Thank you, Kingsley. So let me begin with the transition of our leadership team with the appointment of Kingsley Hall for the role of Chief Executive Officer of Micro-X effective from today.
Kingsley, of course, is well known to many of you, having joined our team in February 2020 as our Chief Financial Officer at a time when we saw the need to strengthen our commercial and financial capabilities. He has performed outstandingly in that role. And while he led major improvement of our financial and governance systems, he was also instrumental in driving a number of our key relationships and initiatives. These include the $15 million partnership and funding arrangements that we struck with Varex Imaging last year as well as leaving our balance sheet debt-free with the repayment of our SAFA facility and the unwinding of the convertible notes with Thales.
As Kingsley will touch upon when he talks to our current position and near-term objectives, the Board and I believe that as a company, we are at a key juncture in our evolution from a technically led to commercially led enterprise.
Our Argus IED X-ray camera, which has no peer in either security or defense markets, is close to its commercial launch and presents as our newest and most important value driver. We continue to receive strong interest from highly influential industry customers eager to trial and buy this technology from us, which we expect will bring strong cash flows and far more attractive margins in our Rover unit, which competes in a crowded market.
Similarly, our Airport Checkpoint team, under the outstanding stewardship of Brian Gonzales and his team in Seattle, is on track to deliver working prototypes of our groundbreaking new miniature baggage scanner and self-check-in systems to the U.S. Department of Homeland Security this year. The enormous opportunity in front of us here will be to advance our commercial readiness and plot a pathway to customer adoption and sales.
And finally, our range of Mobile DR commercial products, widely regarded as competitive to other units available with a number of significant technical advantages, has not achieved the consistent level of sales that we are satisfied with. And we believe we must do better.
So the Board and I consider now is the right time for Kingsley to become the next Chief Executive of Micro-X, with Peter Rowland retiring after 12 years in a row and moving to become a nonexecutive director. We see Kingsley as a leader with a strong commercial and financial background, making him an ideal person to lead Micro-X into the next phase of commercial development.
In line with our succession planning, Kingsley was our ideal candidate, and we'll, of course, be able to hit the ground running because he already has deep knowledge of all 4 of our operating divisions as well as the respect of our staff, our partners and our key customers. I would add that while Kingsley came to us as our CFO, he's been supporting the leadership team from an operational and commercial perspective for some time. Prior to joining Micro-X and in addition to his substantial CFO experience, Kingsley held senior operational roles where he was responsible for significant sales and profitability outcomes and is suitably accustomed to the accountability and, more important, to the performance we need to lead our company to commercial success.
Now as I mentioned, we have also used this as an opportunity to strengthen and focus our leadership team, with the promotions of Anthony Skeats and Brian Gonzales. Anthony will become our Chief Operating Officer, with responsibility for all engineering and development activities, including our product manufacturing of Rover and Argus systems. As our CEO (sic) [ COO ], Anthony will effectively be charged with ensuring our technology remains cutting edge and delivers next-generation outcomes for our customers while also ensuring we can deliver highly robust products at scale with industry-leading margins that will be necessary for future success.
Brian Gonzales will now have an expanded role from Chief Scientific Officer to also being the CEO of our American operations. Based in Seattle, Brian will continue to lead our highly skilled team of U.S.-based engineers and software developers while also driving our commercial U.S. operations, including the U.S. Department of Homeland Security, the Department of Defense and, of course, the many high-value U.S. police and bomb squads that Argus can service. Brian is highly respected and known to many of these organizations, and we look forward to his continued success.
It gives me great pleasure to be here to present to you 3 outstanding leaders for the future of our company led, of course, by Kingsley, who will drive our renewed commercial focus and performance.
Before I hand back to Kingsley, it would be remiss of me not to acknowledge our deepest gratitude and appreciation for Peter Rowland. On behalf of the whole Board as well as our dedicated Micro-X team and our shareholders and partners. As many of you know, Peter founded Micro-X in Melbourne in 2011, with a novel idea and a passion to create revolutionary x-ray products to better lives. It has been Peter's vision, energy and leadership, which has taken his idea and turned this into the company we are today, becoming a force in global radiology and security markets.
It also pleases me that as Peter retires, his knowledge will not be lost to us. He will remain on our Board and be available for 6 months to assist Kingsley as needed. I am sure all of you will join me in wishing Peter and his family every success as he moves into retirement and the next chapter in his life.
Turning now to the business at hand and how we can best serve all shareholders, I will pass back to Kingsley. Thank you all.
Thank you, David. And before I talk to the results for the quarter, I wanted to add a few introductory remarks. Firstly, I'd like to echo David's remarks and thank Peter for his outstanding contributions and building Micro-X into the business we are today. He has been a true mentor of mine. And when I consider the challenges that lay ahead, it's Peter's legacy that this has been the culture of innovation, collaboration and dedication that he has created in our organization that will be one of the most important things that will help us succeed.
As the new Chief Executive of Micro-X, my focus will be on driving the business to greater commercial success while also addressing some of our shortcomings, especially the sales performance of our Mobile DR business. We are considering multiple plans to better leverage our Mobile DR product portfolio and technology and ensure it becomes a profitable business line and contributive to our success. We will not rule out any approach to monetize our technology and leverage the great value we have built in the development of our x-ray tubes and generators.
My other immediate focus will be the successful commercial launch of Argus, getting that program back on track to deliver us a new revenue stream this year and putting the delays of the last 12 months behind us. As David mentioned, I feel our airport checkpoint products lead all competition, but with an opportunity of this size to transform an industry, we cannot rest on our laurels. We must deliver working prototypes to the TSA this year and then expand new funded development opportunities and formulate plans to engage and sell these airport security products to multiple customers or partners over the next year or 2.
By way of report on the quarter's activities, I'll now run through each of our 4 business units and our achievements in the March '23 quarter. Firstly, our work with Varex continues to progress well, and this was recognized as we achieved both the second and third milestones under the Varex licensing agreement, which triggered cash receipts to our company totaling $3 million. The Micro-X and Varex teams are making significant progress in enabling Varex to utilize the Micro-X NEX technology in the field of multi-beam x-ray tubes, and we are confident of achieving the final 2 milestones before the end of this calendar year, which will bring an additional $3 million in milestone payments to Micro-X.
As we've touched on, our Mobile DR performance this quarter was below expectations, with a little over $800,000 in sales. One pleasing aspect is that in line with our strategy to reduce our inventory on our balance sheet and convert that to cash completed, the majority of these sales were from completed units that were in our Seattle warehouse.
In the growing field of sports medicine, our U.S. sales team attended the Major League Baseball's spring training camp in Arizona to showcase the mobility and versatility of the Micro-X Rover as a way to better diagnose their athletes. We completed our first sales of the Rover Plus to several professional baseball and ice hockey teams, and we'll use these as reference sites to drive further sports medicine sales. Closer to home, the medical team from the Alfred Hospital had a Rover Plus on hand and in action track side of the Australian Formula 1 Grand Prix a couple of weeks ago.
In Europe, we've been frustrated for some time by the delay in receiving CE Mark approval. But thankfully, this quarter, our notified body has finally advised that they are now able to convince -- commence their review of our submission for MDR or CE mark approval. We will keep you updated on this as we look forward to finally being able to convert our sales pipeline in Europe.
Now moving to our x-ray camera business unit, the Argus. The focus has been on small changes to the mechanical configuration and image reconstruction and processing software. The team is confident that we've now dealt with all development hurdles. And over the next month, we plan to build productionized versions of the Argus so that we can commence customer demonstrations to Australian police and defense personnel.
During the quarter, our Checkpoints team once again achieved their development milestones and remain on time and on budget for both the miniature CT baggage scanner and the self-screening checkpoint programs for the U.S. Department of Homeland Security. An official preliminary design review was held for the self-screening checkpoint module with the Department of Homeland Security and Transportation Security Administration, with the result that we now have an approved initial design for the self-check-in portal.
Our work on brain CT for the Australian Stroke Alliance also continued on time and on budget. The key highlight was completing the image acquisition test rig, which simulates the operation of the array of a number of miniature x-ray tubes. Our image data was then reconstructed to give us a first look at what the raw images will look like in the final unit design. This is an important proof-of-concept step for a stroke imaging product capable of imaging patients in clinical trials during 2024. Anthony also presented a full-scale model of our miniaturized CT brain scanner and the latest brain images to a stroke awareness event at Parliament House in Canberra.
Now turning to our financial results as reported in the Appendix 4C lodged with the ASX on the 27th of April. And I note the numbers that I'll be referring to are all in Australian dollars, and in accordance with ASX listing rules, these are not audited.
For the quarter ended 31 March 2023, we built, shipped and invoiced approximately $840,000 of Mobile DR units and parts. We received $600,000 in customer receipts from sales, a further $1.4 million from our contract with the DHS and, as mentioned, the $3 million from the Varex technology transfer agreement.
We had cash outflows from operations of $7.5 million, resulting in net operating cash outflows of $2.6 million. We had minor cash outflows of approximately $60,000 from investing activities for buying some additional capital equipment. We had cash outflows of a little under $200,000 from financing activities, being mostly the principal component of operating lease repayments as calculated under AASB 1016. In summary, we had overall net cash outflows of $2.85 million and a cash balance of $8.5 million as at March 31, 2023.
As noted, we've also undertaken a review of our resource allocation and planned expenditures to best manage our cash resources in the current market conditions. At the end of April 2023, we implemented a cost rationalization program, which delivered $2.2 million in annualized cost savings. This represents approximately 20% of the cash expenditure outside of our externally funded development projects, and these savings will be accretive from July 2023. The reduction in cash burn has mostly been from the Mobile DR division and corporate overheads as we seek to continue to resource and focus on those areas that are critical to achieving our growth.
Looking ahead, I will be undertaking a review of our operation and strategies to address the key goals that I outlined for the business earlier on this call. And as we move into the final quarter of 2023's financial year, our highest priority is getting Argus ready for customer demonstrations. We have a long list of law enforcement and defense EOD personnel that are lined up for trials, and we look forward to finally being able to bring our first security product to market.
We will improve the contribution of the Mobile DR division to our business. We have a number of customer road shows planned across the U.S. And in addition, we will provide every possible support to successfully achieve our CE Mark application in Europe to enable us to convert our European sales pipeline into further cash flow.
And thirdly, we plan on delivering the 2 miniature CT baggage scanner prototypes to the DHS next quarter.
I'll now pass back to Melanie, who will commence the Q&A portion of this call. Thank you.
[Operator Instructions] Your first question comes from Scott Power with Morgans Financial.
Just a quick question just on that European approval that you mentioned. So the notifying body has now said they will review it. Have you sort of got any indication on how long that review process might be?
Look, yes, thanks for this question, Scott. Look, we don't, but we're towards the end of the process. So we expect that the vast majority of the work has already been undertaken. Whether -- I'm not -- I can't give you a time frame. They've not giving us one. We know that they're going to convince -- commence the review towards the end of May.
Right. Okay. That's fine. And just in terms of the Argus, obviously, that's the #1 priority. Again, just in terms of those customer demonstrations, just a sense of timing and what might be involved with that. Is that something where they had upon -- they review it over a week? Or what's your anticipation of what that demonstration will look like?
Yes. Scott, I might hand that one over to Anthony, if I can.
Yes, Scott, Anthony here. Scott, yes, the first demonstrations of the Argus unit are already planned with the South Australian police here, and that will actually be then taking unit and using it at their facility. If they are happy with that, they will then go ahead and start using it in real time, so in their field operations so we can actually get some feedback on how it performs in the field. So effectively, it's a fully operating unit.
Right. Okay. Okay. That makes sense. And just in terms of that larger defense contract, what's the update on that?
Yes. So Scott, we did -- we included a reference to it in the 4C. Government procurement processes, once you're in them, have some pretty strict rules around what you can and what you can't say once you're a part of the process. So we weren't attempting to be overly vague in what we put in the 4C, but the process is ongoing. We understand at this point, we've been neither accepted nor rejected. But there's -- unfortunately, we can't say a lot more at this time.
Your next question comes from [ Miriam Lee ], who is a retail investor.
Can you hear me?
Yes, [ Miriam ].
Okay. Congratulations anyway. I think Micro-X is now going to be well served going forward. Anyway, look, I got a lot of questions, so I probably want to keep going until you stop me. With respect to the Mobile DR, what proportion of sales have been affected by the European holdup, approximately?
Well, it's a difficult question to answer because we haven't been able to sell any at all, [ Miriam ]. What we do have is we've had -- we've got what we believe is a very high-quality pipeline of people that have expressed an interest in demonstrating and using the product, but we've not been able to do that at this point because we need CE Mark approval before we can do demonstrations of the product. So we're ready to go, and pending receiving that approval, we will be pursuing it.
All right. So it's not like I've got shares in another company that had an approval and then it had to be reorganized and then they're allowed to start selling again, but you've never been able to sell in Europe.
Correct. The Carestream Nano, which is the same product, obviously, in a different shell to a large degree as the Rover, does have CE Mark approval, but that's under Carestream's approval. We sought approval for the Micro-X Rover.
Some time ago now, the change to a new certification method commenced as I understand it a few years ago. There's now a backlog of thousands of products awaiting approval. And again, as I understand it, I think they've just extended the grandfathering provisions for another couple of years to get through that backlog. But we are in the process, and we're at the -- I'm pleased to say we're at the right end of the process, and we look forward to keeping everybody updated as to how that progresses.
Right. So at the moment, you're able only to sell in Australia, the U.S. and...
Look, and other jurisdictions that accept the U.S. certification and some of the Middle East and some of Asia do that. So we have been able to sell into some of those countries, but Europe, for us, we spent a lot of time lining up a very solid pipeline, and we're very eager to commence selling in Europe.
All right. Great. Now this may have been stated and I didn't quite understand it, but you've actually adapted the Rover specifically for sports teams. You've got a special version, have you? And is that -- and are you signing them that they are -- the sports teams are taking it up with greater acuity? That's going to be an area that your sales teams are really going to target perhaps.
Yes, indeed. [ Miriam ], I might just ask Brian to comment because Brian has led the U.S. team in selling into the sports teams. So Brian, if you'd like to take that question?
Yes. Sure. So the product hasn't been specifically adapted for Rover -- sorry, for sports teams. It actually fits sports teams in its current configuration quite well. What we were able to do was through an early sell that we made to the Mariners, the local Seattle team, we were able -- we were invited down to the baseball spring training in the United States, and that got an opportunity for multiple teams to have a look at it and led to a number of sales. And in that, it's opened up some new opportunities because in the U.S., professional sports teams require imaging for the players at site as part of the contract for the employees. So it's been an opportunity we're excited to continue to pursue.
Well, this turns wonderful because there would be a lot of sports teams. And now the other thing was -- I've asked about this before, the U.S. Department of Defense and its meeting about mobile x-ray equipment. And there was some doubt about whether you had gotten the application in time and whether that meant that you couldn't apply for another 7 years or something like that. Is that something that you still may be able to apply for?
Brian, did you want to take that also? You had [ chair ] meetings recently.
Yes. Yes. So the conversations with the U.S. Department of Defense are ongoing. You are correct that we had missed an earlier deadline, but we've worked with the military, and that work is ongoing. The interest is there, but we're working with them on how that opportunity could look. I can't say much more detail about it, but there is interest there.
Okay. Well, it's helpful. Look, can I ask about the one that seems to me lease helpful, the stroke. I mean if you got it right and it was taken up widely, it would be a wonderful thing, both for humanity and financially for Micro-X. But I understand that there's a fair bit of competition. I was just reading at The Weekend actually that the Stroke Alliance is -- well, it's funding an unusual creation by a company called NVision, which works completely differently, but it also is funding a stripped-down version of a conventional CAT scan. And I'm wondering that from what I read, it seems to be a long way before you're even going to be able to start trials of your version. And I wonder if the other 2 are going to get there first.
And is it quite -- and the other thing generally is when you get money from the Stroke Alliance for the stroke equipment and from the Department of Homeland Security for the checkpoint, do those payments completely cover the work that you're doing for each of those particular deals? And I'm fumbling for words, but do you get what I'm saying? Or do you have to then also reach into the -- in the general funding even just to cover the work because you're running short of cash?
I'll field that question. Okay. So quite a few questions there in one question. I'll start with the funding, both, I'll speak on Brian's behalf and on my behalf. The funding that we receive covers the cost of development of those products, and it would take us to a point where we can -- in both of those, the CT baggage scanner and in the stroke imager demonstrate a fully working product.
Now when we look to scaling up our production operations for that, that's going to require additional funding on top of those -- on top of the grant funding, then that's necessary, but we would expect to be able to produce a low number of units in the first instance to generate some income to support that.
The Stroke Alliance is predominantly set up to identify the best possible way of faster treatment of stroke. Maybe 5% of stroke [ uses ] can make it if we can administer TPA within the first 3 hours. The chance of recovery is much higher. Now that points itself into the direction of point-of-care stroke imaging, and the Stroke Alliance is looking at all different technologies that may achieve that.
The notion of taking existing CT technology, which is the benchmark and a requirement, in fact, for diagnosing if there is a hemorrhage in the head or not, is -- it's difficult to reduce in size. Fundamentally, the technology is big and heavy. It's rotating 600 kilograms. So effort is being made because it's a known benchmark to reduce the weight, but it's always going to be very, very heavy and cumbersome and, therefore, expensive to operate. The NVision technology is very different. NVision's technology uses a completely different imaging method which is not yet used in a clinical diagnostic way. So their technology is very interesting, and I see it as complementary at being able to monitor stroke progression, but for use as a point-of-care diagnostic device where time is brain, it's got a long way to go compared to what we're developing, which is a super lightweight CT. We're effectively producing the exact same image that the conventional diagnostic decision is made from, and it's going to weigh 50 kilograms, not 600 kilograms. So the notion of being able to put it in an ambulance and move it to the patient is very real.
The program itself is progressing very well. We have our initial images, as Kingsley mentioned. And we are looking to get into real patient imaging certainly in 2024.
Your next question comes from [ Jamie Fitzgerald ] with [ Fitzgerald Enterprises ].
Just from one very passionate Micro-X investor, you're obviously hearing a very passionate CEO has retired, Peter. And Peter Rowland, I'd like to say thank you. But also by the same token, I'd like to hear the recommitment from the Board of Directors to Australia because obviously, a lot of our passionate investors have been with Micro-X for a long time. We've seen our investments, obviously, go down, whether that be share price directly or dilution to pay the directors. What's the commitment to Australia, continuing to manufacture in Australia and be an Australian company? Or is this an opportunity for directors to cash out?
Well, obviously, [ Jamie ], thank you. We're in Tonsley here today, and our manufacturing facility is here. We are, of course, looking to monetize our products globally though as all good Australian companies do. And currently, as Kingsley said, a big market for the only product which we've got on the market right now is the Mobile DR is obviously the United States of America but also Europe, which we've talked about breaking into.
So I think our commitment as a company is we remain an Australian company. We remain here with the manufacturing center here. However, our products will be sold globally. And I think we should -- all our head's up with some pride that, that has been achieved and will continue to be achieved under this new leadership team.
But my question isn't necessarily, that is, whether or not you are scoping out buyers for Micro-X. Is that anything on the book on the agenda?
Sorry, are we doing what? I didn't catch you.
Are there any talks of scoping out buyers for Micro-X? Are we passionate about staying an Australian company and on the ASX as Micro-X?
Obviously, to answer the question, we're not scoping out buyers. No, it's not what we're doing at all. What we're focused on is obviously driving efficiency into our own processes, which is part of the announcement last week we made in the 4C. We've appointed a new leadership team to give us more commercial edge. We're focusing on that. And we're focusing obviously on being very successful in sales and marketing and effectively monetizing our technology in every way we possibly can.
So nothing's off the table. But certainly, right now, we are continuing our focus, with CEO based in Australia as our manufacturing focus. The Board of Directors, with the exception of Andrew Hartmann, who comes from the very, very senior executive in Varex, who obviously did a very good deal with this last year, are all Australian.
And the Varex deal, just to touch on that, it's opened up new opportunities for us for our tech. With the -- I think they're the largest supplier of imaging products in the world. So we have a huge partner and friend with us. And they're obviously Salt Lake City-based.
Yes, general contention there is they're passionate about -- as passionate as Peter Rowland about making stuff in Australia and continuing to be Australian company, am I right?
Yes, yes. Absolutely. 100%. A successful Australian company will do everything they take.
Excellent. Moving on to the DR, the Rover, are there just too many products out there by the way? [ Because if that's someone from ] America, GE really pushes their mobile x-ray machine. There's a lot of other stuff coming from India, China. Is it just too many products? Because obviously -- and another point I want bring up was, obviously, you guys weren't at the Sydney x-ray imaging conference, and Channel 9, Channel 7 did a big, big story on Fujifilm's new portable x-ray machine.
Yes. So it's a good question. It's a very good observation, [ Jamie ]. I mean, I think our view is that the market is crowded. There are many x-ray imaging products even in the mobile space. What there aren't are any product that utilize the technology that ours does. And I think moving forward, we want to look at more ways and looking at more different opportunities to monetize our technology than just selling it within our [ CAT ]. And so I think as we have more discussions, we find more interest in our tubes and in our generators. And one of the things that we're going to be spending a lot of time on moving forward is commercializing the technology, not necessarily just commercializing the [ CAT ]. So we see the technology as really the value driver and the value that the business has created, and we should monetize that.
Okay. So you're possibly looking at what's more licensing or perhaps moving more into just making tubes where say, for instance, [indiscernible] might want to use it in their products. Is that what you're thinking?
Yes. Look, as we said in the commentary, nothing's off the table. I think what we want to do is we want to move our technology into the hands of more users and get paid for it and earn money. And whether that happens via tube and generators or tubes or generators or however it fits together, the quality of the technology that we develop and manufacture is world class. And I don't necessarily think it should only be sold within our [ CAT ].
No, it's fair enough. Obviously been through your facilities and your teams. Just it's all excellently amazing. Just obviously [ not forgetting the sales on the board ]. And I mean no disrespect here, but I've been with Micro-X for a long time, and it just -- those DRs just don't seem to be rising in numbers. What's going on? What do you think is going wrong?
I think it's crowded market. And the market is driven by some very large names, and those large names are powerful within the buying circles. What we're finding is that as we're having more conversations and uncovering more opportunities outside of the more traditional large hospital, they're much more open to a disruptive product. They're much more open to having conversations with us about the quality of our product and how it can help them. We're going to do a lot more of that.
And yes, the larger crowded, big market, big hospital market is difficult. And look, we've partnered with a couple of very good distributors in the U.S. We have very solid pipeline waiting for us to get into -- in Europe. What we do find is when people get hold about technology, they really like it and they see the value in the product, and we've got to get more people. We've got to get it in the hands of more people.
Yes. I would believe that would be the case because there's obviously less moving parts. There's less things go wrong, and you'd have to assume that this magnificent device that you guys are making would be a lot more durable and long lasting in a hospital situation and, over a long period of time, save that customer money.
Is it price-competitive? Is it -- I guess, obviously, you can't obviously tell me what you guys are selling it for because I understand that's confidential because you're selling numbers to hospitals. But is it competitive like the GE rover or the Fuji gear and all that sort of stuff and even stuff coming from China and India now?
Yes. [ Jamie ], the short answer to the question is we're very competitive. It's not price.
That's all I wonder here. That's good.
We are committed to being very competitive on all fronts.
All right. Well, I've taken up a lot of time. It's good to be hearing [indiscernible] the passion there that you guys want to stay Australian and manufacture in Australia because it is obviously a long, long way back for us that started this market a long time ago. So we definitely want to see you guys succeed.
Your next question comes from Ian Craig with Craig Capital.
I've got a couple of questions. With the departure of Charlie Hicks and Chris Anderson in the U.S., is this part of the recognition that the DR is just not what we'd all hoped it would be? And following on from that, we just hope that Europe might be something really destined to fail?
Yes. Thanks, Ian. I might just take that question in 2 parts. The first one is I think what we have identified is that the skill set that we need to be successful in the U.S., and Brian has this in spades, is different to what you might refer to as a traditional large company distribution skill set. And so the movement Charlie and Chris leaving the business is as much recognition that we need to do things differently. And we're seeing some real positive outcomes from some of the things that we are doing. And I think we'll continue to see more of that. And so that's the first question.
The second one with Europe. Interestingly, the Carestream Nano also sold very well in Europe. So what we found is there was a larger demand for the product in Europe than there was in the U.S. Now interestingly, we applied for the right or the certification to sell into Europe about the same time as we applied for it in the U.S. It wasn't staggered. It's just literally taken 2 years to get to the point where we are, and we're not alone in that regard.
We are not, by any stretch, thinking that Europe is the answer to all of our Mobile DR questions. It will be one part of what we're looking at moving forward. But Brian, who's going to be in charge of our U.S. sales team has expectations in the U.S. as well. And as I said earlier, we continue to look at monetizing our technology. Mobile DR is part of that on a very global scale. I mean Europe will be one part of that.
Okay. With the DR not living up to expectations that we've all held over the years with the delays in the launch of Argus, I found it very disappointing when the company is coming out with things like the reconciliation action plan. For a small company that's losing money, that's not meeting sales targets and isn't getting product out on sales that management is spending time on things that might be nice to have but not need to have. Are we likely to see a time come to your management, Kingsley?
We'll take that as a comment. Thank you.
Well, it's more than that. It's about focusing the company. So at a time when the cash [indiscernible].
You do not need to worry about the focus of this company. That is in safe hands. That's why we appointed Kingsley. Don't worry about the focus.
Your next question comes from [ Tim Kroll ], who is a private investor.
I'd just like to start by saying thanks to Peter, if you're there or listening. Your vision has been amazing, and it's great to see that it's given that to an amazing Australian business story.
The first question I had probably relates to Brian Gonzales the most considering you were -- you wrote a paper with other authors in 2014. I preface this by saying, I think the Varex agreement is really good. I think it's -- it will open up many doors. But it was about the rectangular fixed gantry CT prototype. And in that paper, you use a multi-beam emitter to create a CT for airport baggage scan. And I was wondering how -- you've clearly shown in the paper that you can deal with the image artifacts that occur by having it in a linear multi-beam emitter. Well, if it can done with the multi-beam emitter and that technology has been licensed out, what advantage is doing it the way that you're currently doing in Seattle over a potential competitor doing it with a multi-beam emitter?
Yes, I'm happy to answer that question. It's a very good question. And quite frankly, the answer to that starts with Peter, and it's his vision of seeing how this technology could grow differently than everyone else did at the time. Everyone in the industry was focused on multi-beam tube and still are. And there's real advantages of using multi-beam tubes, but what makes Micro-X approach so unique and revolutionary is looking at how to use the advantage of the technology to completely reimagine how the technology could fit into the broader market. And in the checkpoint project, that's perfectly the example. Lots of the CT that was envisioned in that paper is functionally the same as the other CTs that exist on the market today. And if you build that same product, you would have a very competitive market space with multiple other conventional technology CTs, and your advantages would be limited.
What we have the opportunity of doing with the checkpoint project is working with the key stakeholder customer in the entire world, the U.S. government, who influences the entire way that security has done globally to reimagine how airport security could be done and doing that using unique advantages of our technology. Putting a multi-beam tube into the type of system that we have made for this wouldn't really be -- if you could do it, but there would be no advantage. It would be very expensive and very challenging to do. The way that we do with single-beam tubes is far more cost-effective and actually gives you a better image and a better system. And it's that combination of the technology but also our relationship with the customer and the ability to think of an entirely new way where no one else can compete with us is what makes that whole approach different, not the fact that we can make a conventional checkpoint CT.
Okay. All right. So it's a multifactorial kind of angle that you're going for by utilizing the technology. Okay. Interesting.
The question I had is with the checkpoints. So Rapiscan previously had a millimeter-wave scanner, but there were some privacy issues, I believe, in U.S. airports where they were using these millimeter-wave scanners, but there was an issue with the fact that it would give a kind of clay-looking like model of someone's body. So that was taken off. But with the millimeter-wave scanner for the checkpoints, so is it the fact that the machine learning algorithms do all of the initial scanning? So any person doesn't need to be there until a potential target is identified. Is that how the privacy concern is addressed?
Yes. Yes, exactly correct. It's the automation that obscures the image. An officer never sees the actual image. It's just the avatar that you see on the screen with a box indicating where a potential alarm is. The advantage of the technology that we're partnered with is that the -- by doing multiple frames real time, so you're actually like taking a millimeter-wave video instead of a static shot, you gather more data to have a much more accurate machine learning algorithm applied, and that will dramatically reduce the number of times that an officer has to come and pat someone down.
Okay. How long do you think -- hardly up and running, but how long is the machine learning model going to take to train given that it would be -- yes, there'd be a lot of data that needs to be run through the model. And obviously, with the seriousness of potentially getting a false positive or false negative.
So much of the training has been undertaken. This project exists in parallel with other projects done and funded separately in U.S. government national labs that have been working on training these algorithms in parallel. The time will be certification and testing more than it will be training to validate it in the field.
Yes. Okay. Just a bit of a kind of future forward-looking statement. I don't have any plan to just hold on to the stock. So I was wondering what the company -- after these products are developed and being sold on the market, what will be the future angle? Can you say that the software side of it will become a bigger side of what is sold as far as potentially a software as a service that can be linked to the hardware provided by other companies in addition to that produced by Micro-X? Or will more products after these initial 4 have been developed continue to be envisaged and executed?
Yes, I can fill that for you. It's -- really, what we're doing now in the baggage space and in the stroke imaging space is a -- the platform technology for CT applications. We have a number of different CT applications. All sorts of different applications around full-body pathologies, introducing lower-cost spectral CT with photon-counting detectors. There's a whole plethora of different product opportunities that we can target with our technology.
As Kingsley mentioned a couple of times, the -- what we call the imaging chain internally, our own internal generator and x-ray tube and how we control it, we're actually already starting to make some early sales in providing real-time imaging feedback in existing systems, such as those used in radiotherapy. We'll be able to control the treatment beam in real time. So there's a lot of different hardware applications and products that we can conceive. All of them are going to require continual software advancements, feature sets, introducing additional machine learning algorithms, drawing comparative data using quantum computing for MRI, for example. So there's a whole heap of opportunity that we can actually start to leverage once these initial platform technologies are commercially in the market.
That's fantastic. Sorry, I've got a few questions here. I hope I'm not taking up too much time.
Can we just go to the last one and then so we can get others?
Yes. Okay. With the actual marketing of the Rover as well as the other products with medical applications, is there -- what is the radioactive -- [ well, ionizing ] radiation dose that is delivered to the patient? Is it lower? And if it is, is that part of the marketing campaign for Rover and the CT scanner? And if it's not, what is required to actually -- do you have to provide the data for that again for the Rover and for the CT coming up? Or how would it work? Because it's a square wave, isn't it, versus kind of the emission?
Yes. Look, the radiation dose required for different facilities is set by the pathology that you're imaging, and we deliver the appropriate radiation dose. We do extensive dose symmetry and measurements on our device. It is a very square wave. We do have a very fast policy via switching x-ray source. We are undertaking some research to understand if there is opportunity to effectively deliver a slightly shorter pulse and, therefore, slightly less dose on the basis that we deliver a very clean dose, very early stages in research there.
With the CT products, we had a very compelling advantage. We -- our approach on using an array of tubes, fast-switching array of tubes, cone-beam CT, means we can deliver approximately 15% of the standard CT dose to get the same image that you would get from a conventional CT. So there are dose reduction opportunities. We'll continue to explore those on an application by application.
Do we have any more questions? Thank you. Operator, do we have any more questions?
That is all the time we have for our question-and-answer session. I'll now hand back to Mr. Knox for closing remarks.
Thank you very much. Thank you again for joining us on the investor call today. Today, Micro-X has transitioned our leadership team in a way that we believe will best allow us to remain commercially focused through the strong technical support.
I'm delighted to have hosted this call with Kingsley, our new Chief Executive. I know he'll be speaking to many of you over the coming months, with a very exciting quarter ahead of us as we aim to deliver our first security product and generating our first Argus sales.
I thank you all for joining us this morning and with Brian in Seattle. Thank you very much, everyone. That ends the call. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.