ARHT Media Announces Q1 2020 Financial Results Pivots Business to Address Current Trends and Impact of COVID-19

First Quarter 2020 Highlights:

  • Q1 revenues of $440k vs $794k YoY, decrease of 45%
  • Q1 loss of $1,097k vs $885k YoY, increase of 24%
  • Launch of high impact online offering, Virtual Global StageTM (VGSTM)
  • Company signs largest contract within pharma vertical for 2020 activation with global repeat client
  • Company technology showcased to demonstrate benefits of 5G with executives of leading US telco
  • Company adds permanent installations at a university in Singapore and museum in Eastern Europe
  • Company cuts expenses by approximately 80% heading into Q2, remain bullish for Q3 and Q4 2020
  • Macro trends position ARHT for significant long-term growth

TORONTO, May 13, 2020 — ARHT Media Inc. (“ARHT” or “the Company”) (TSXV:ART), the global leader in the development, production and distribution of high quality hologram content through its patented ARHT Engine software technology, today announced its first quarter results for the period ended March 31, 2020. For the three-month period ended March 31, 2020 ARHT reported revenue of $440,000 compared to $794,000 for the comparable period in 2019.  The reduction in revenue is wholly attributed to the delay and/or cancellation of activations due to the COVID-19 pandemic.  The Company successfully delivered six events and three equipment sales with subscription agreements in the healthcare, technology and education verticals.  The Company incurred a first quarter loss of $1,097k vs $885k (+24%), which is attributable to the reduction of revenue, the cost of operating our London studio and financing costs in Q1.

Three Major Trends in 2020 and Their Impact on ARHT Media:

  1. The COVID-19 pandemic has forced organizations to utilize technology to communicate with their teams and clients.  Especially larger organizations that may have been slower to adopt technology are realizing efficiencies and cost savings they did not think were possible while still getting the job done.
  2. The move to online communication has created the need for a more impactful offering than standard streaming services that typically feature a screen full of talking heads – Virtual Global StageTM delivers impact, intimacy, and better communication.
  3. The primary theme at February’s World Economic Forum was the focus on sustainability and the reduction of carbon footprint.  ARHT Media’s technology reduces the need for airline travel and helps organizations realise these goals.

The COVID-19 Pivot:  Virtual Global StageTM Online Offering & Major Expense Reductions

The COVID-19 pandemic, and the “physical distancing” being practised to contain it, has resulted in events in Q1 and Q2 being deferred, and in some cases cancelled, negatively affecting ARHT’s revenues.  We entered 2020 with unprecedented momentum, coming off a Q4 which saw revenue increase by 318% year over year.  We had budgeted to once again double our revenue in 2020 and moving to profitability by the end of the year and were on course in Q1 to meet or exceed our budget when the delays and cancellations started. The impact was felt in Asia from the end of January, in Europe starting in February and in the Americas from the beginning of March.  We expect Q2 will likely be the same for Europe and the Americas, however China is starting to book dates for activations, as is Korea and other parts of Asia.

In March we launched the online platform Virtual Global StageTM (VGSTM), which allows multiple presenters to interact with one another on the same stage with no latency, appearing much like they would if they were physically next to one another.  Presenters can stand or be seated and can appear with 3D graphics, streaming video or PowerPoint to enhance the story telling.  With more than 50% of communication being nonverbal it Is important that the presenters body language comes across the screen, rather than just a talking head, which is how we are used to watching speakers on a digital device.  The initial reaction has been very positive and in fact in many instances, clients have started planning a hybrid of live presentations using holographic presenters with an online version for those who are not traveling to the event.  We believe that VGS will have a lifespan well beyond this pandemic as organizations re-evaluate their need to travel.

With the delay or cancellation of revenue activations management took action to reduce costs in early March and we have permanently restructured part of our operations for ongoing efficiency and cost savings.  A combination of government subsidies, rent concessions from landlords and employees being furloughed for various periods, allowed us to reduce our expenses from approximately $375,000 per month to approximately $75,000 in April and May and $105,000 in June.  With the support of government programs, the majority of our employees are back working from home, albeit at a reduced income. This includes management which worked for no pay for the first few weeks and have been working at a discount to their normal salary of 75-80% since then.  Our team has used this period to produce, and update existing, training programs that will allow the business to scale at a much faster pace in the second half of this year.   We have produced content used for sales and marketing activities – including the launch of Virtual Global StageTM. We continue to test and develop the HoloPod and we expect to have an operating prototype in Q2 and to deliver units to clients in Q3.  Our current sales funnel is the most robust it has been in the last two years from both a quality and quantity perspective and so it is incumbent that the Company is prepared to deliver unprecedented business in the second half of 2020 – and we are ready to do so.

“The current pandemic has created some short-term pain but will result in long-term gain,” stated Larry O’Reilly, ARHT Media President and CEO. “Our client base is getting deeper while our product offering is getting wider, which positions ARHT so incredibly well for the later part of 2020 and beyond.  With the increased interest in protecting the health and welfare of key executives and the planet, companies and organizations are looking for technologies that will allow them to communicate with their teams and clients in a powerful and effective way – ARHT Media is part of that solution.  We are very pleased with, and thankful for, the response and efforts of our dedicated team over the past two months.”

About ARHT Media

ARHT Media’s patented HoloPresence™ technology is a complete end-to-end solution that creates a sense of presence for audiences – as though the holographic presenter was actually live in the room. With no noticeable latency, ARHT Media makes two-way live communication with a 3D holographic presenter anywhere in the world possible. We can also playback pre-recorded content and 3D animations on our HoloPresence™ displays to deliver rich holographic experiences.  Add to this our capability to stream the same content online on our premium Virtual Global StageTM.

Connect with ARHT Media:

Twitter: http://www.twitter.com/ARHTmedia
Facebook: http://www.facebook.com/ARHTmediainc
LinkedIn: http://www.linkedin.com/company/arht-media-inc-

For more information, please visit www.arhtmedia.com or contact the investor relations group at info@arht.tech

ARHT Media trades under the symbol “ART” on the TSX Venture Exchange.

ARHT
Salman Amin
ARHT Media
samin@arhtmedia.com

This press release may contain “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, the intention to exercise convertible securities of the Company; disclosure related to the Company’s sales funnel; the Company’s technology; the potential uses for the Company’s technology; the future planned events using the Company’s technology; the future success of the Company; the ability of the Company to monetize the ARHT Media technology; the development of the Company’s technology; and interest from parties in ARHT’s products. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”.  Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic and competitive uncertainties; regulatory risks; risks inherent in technology operations; and other risks of the technology industry.  Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

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