Ann: First K-TIG Welding as-a-Service (WaaS) Milestone Achieved, page-229

“K-TIG successfully executed against its plan for the financial period to 30 June 2019. The conversion of K-TIG from unit sales to a licence based Welding-as-a-Service (WaaS) business model is the final stage in K-TIG’s commercialisation strategy and the pre-cursor to its planned growth stage as an ASX-listed public company.


The WaaS model involves K- TIG utilising its cloud-linked controller to deliver services to fabricators on a subscription basis. This new model will facilitate K-TIG becoming a long-term partner to our customers, with revenue generated through licencing based on the linear metres welded.


Once the WaaS model is fully implemented, K-TIG is expected to generate long-term recurring revenues linked to the production of its customers. K-TIG will, to the best of its knowledge, be the first welding equipment manufacturer to implement such a model therefore has an opportunity to open up and capture an entirely new and uncontested market space. The decision to convert from unit sales to licensing required K-TIG to stop sales to prevent further K-TIG units entering the market on a fully-owned basis. This reduction in revenue is temporary, and the unsatisfied demand will subsequently be met through systems being made available via long-term licences. This decision resulted in a significant and expected reduction in revenue relative to last year.


The move to high-margin, long-term licencing is expected to deliver significantly higher revenues and margins going forward. The US remains K-TIG’s largest market. K-TIG surveys all customers after commissioning, and routinely receives 90-100% customer satisfaction, reflecting the customer-centric approach which underpins every aspect of the business.


K-TIG’s next-generation system, the K-TIG 1000 Evolve is in full service and provides enormous technical and functional advantages over K-TIG’s first generation system. The new cloud-linked control system has been extremely well received by customers, and will form the technical backbone of the ‘Welding-as-a-Service’ model going forward.


In line with expectations K-TIG achieved revenues of $1,069,198, a gross profit of $588,446 and an operating loss of $1,690,187 reflecting the strategic decision to stop sales, significant costs associated with the preparation of the company for public listing on the ASX, continued investment in our research and development program, further development of the K-TIG system components, and the purchase of a significant amount of stock prior to the end of the financial year in preparation for execution of K-TIG’s new Welding-as-a-Service business model.”

possibility that the old model ( with no cloud software integration) was sold for discount, hence similar cost of sales.....

IMO