1 Predictmedix AI Inc. P M E D $0. 10 CSE Exchange | OTC QB : PMEDF | Ma rket Cap $ 1 4 M Description and Introduction: A speculative micro - cap stock with an equit y valuation of just C $14 million, Predictmedix AI Inc. (PMED) has developed a remarkable non - invasive device that can accurately predict , on a real - time basis , a variety of health issues through artificial intelligence ( AI ) / machine learning software These health issues include drug or alcohol impairment, fatigue, influenza, and the presence of infectious diseases To make its conc lusions, PMED ’ s software has access to the clini cal records of around 80,000 patients (to th is point) The creation of the predictive software product culminates four years of intense work by the PMED team. The company ’s Safe Entry Station , which resembles a body scan machine at an airport, u tilize s multispectral camer as and infrared thermography to monitor blood flow patterns in a user’s face as well as a microphone to assess speech patterns See Figure 1. Multispectral cameras imag e different wavelengths of light to measure subtle c hanges in the blood flow pattern in the face, and these changes yield key conclusions regarding a user’s health condition. J ust 10 - 20 seconds after the user briefly stands in front of the device and then walks through it , PMED’s technology can read the vi tal signs of a patient or determine whether an employee is fit for duty – all with reported accuracy of around 92%. The data collected is sent to a central cloud server for analysis and a nearly instant alert is sent back in the case of positive detection. Individual privacy is protected by u tilizing individual servers ; furthermore, no video data is stor ed Tormont 50 Growth Report Tormont50 : Identifying timely topics and trends in the sub - $ 2 00 million market. Research Type: Emerging Timeliness : Current Date: Ju ly 1 7 , 20 2 3 2 Figure 1 : Predictmedi x AI ’ s Safe Entry S tation Source: Predictmedix AI Inc. Applications for PMED’s Technology: Health care screening and employee fit for duty determinations are the key applications for PMED’s invention. Being able to quickly read a patient’s vital signs and triage a patient’s condition when she arrives at a medical center or hospital has obvious positive implications for patient well - being and hospital efficiency, particularly when staffing qualified docto rs, nurses , and other medical professionals is a huge challenge. At the workplace, even aside from potentially cannabis - or alcohol - impaired employees, fatigued and sleep - deprived workers can cause serious accidents , particularly in higher - risk mining, transp ortation, and manufacturing industries. Indeed, a recent National S afety Council study concluded that more than 40% of workers are sleep deprived. (Note that PMED eventually hopes to begin screening for opioids or other drugs , but the company has not yet acquired sufficient clinical datapoints to be able to accurately detect the presence of such substances.) Importantly, the Safe Entry Station is a low - cost, rapid, and non - biased way to ensure workplace safety. For example, laws in many countries limit a company’s ability to test employees for drug usage on a regular basis. Even if more frequent testing were permitted, the costs of doing so could be quite high and such testing does not determine whether an individual is actually impaired. PMED’s device could be a ready solution for these issues. 3 Safe Entry Station Performance Validation: The performance of the Safe Entry Station has been validated by four main sources : • MGM Healthcare , a s pecialty hospital in Chennai city in India, tested Safe Entry at one of its busier facilities for 18 months beginning in 2021 to read more than 400 patients’ vital signs such as temperature, heart rate and respiration rate. See Figure 2 MGM reported th at the device had validated accuracy of greater than 92%. The hospital has subsequently ordered, and is now operating, five Safe Entry Stations. See page 4 Figure 2 : Operating Theatre at MGM Healthcar e H ospital in India S ource: MGM Healthcare • The University of Raharja, a prominent university in Indonesia, completed a similar 1,600 - person study to screen vital signs. The university reported a 93% accuracy rate in the program In turn, t he president of the university enthusi astically stated, “We look forward to getting this approved as a me dical device for Indonesia and assisting with commercial deployment.” See page 4 • In March 2023, t he U.S. Patent Office granted PMED a patent for its cannabis and alcohol impairment screening process. In addition, Safe Entry Stations are CE mark - certified by the European Union. 4 • P MED’s technology has been positively peer - review ed by medical professionals in four Indian medical journals. Agreement with MGM Healthcare: On March 30, 2023, MGM Healthcare placed orders for five Safe Entry Stations. The health care provider signed an agreement to lease the devices for 3 6 month s and will pay PMED a usage fee of approximately C $2,800 per month per device, or C $14,000 per mont h in total. MGM began using the stations in June. PMED plans to use this software licensing contract framework with its clients as it moves to commercialize its invention. Such agreements will create a growing stream of recurring monthly revenue which is highly prized by investors. PMED should realize high margins on th i s business as the fabrication cost for a Safe Entry device is only around C$5,000 For exampl e, PMED recovers its investment from providing the device to MGM in less than two months. In addition, a capable India - based PMED employee , who earns aro und US$1,500 - US$2,000 per m o nth , can remotely monitor perhaps 50 units at a time Separately, in early March 2023, DefSpace , an India - based global platform for Defense, Space and Aerospace, signed a four - unit lease agreement for four Safe Entry Stations. DefSpace will remit C$2,500 per month for each unit over a four - year period, meaning PMED’s total revenue from the accord w ill total C$480,000. Hospitals in India Represent an Enormous Opportunity: The decision by India - based MGM Healthcare to lease Safe Entry Stations with PMED -- and in essence endors e PMED ’ s technology -- could prove to have much more significant ramif i cati o ns for PMED than just the cash flow the individual accord ge n erates India, a country with a population of 1.4 billion , has around 69,000 hospitals . If only a very small fraction of these medical facilities were to follow MGM H ea lthcare ’s lead, the business and cash flow implic ations to PMED would be enormous. (To put the number of Indian hospitals in perspective, c onsider that about only 6,100 and 1,300 hospitals exist in the U.S. and Canada, respectively.) Another factor which could push Indian hospitals to utilize PMED’s devices for triage purposes are chronic short ages of both doctors a n d nurses in the world’s second biggest country by population. I ndeed, India has only 64 doctors available p er one million people , far below the global average of 150 , a ccording to NIT I Aayo g , a public policy t hink tank of the Gov ernment of India. Similarl y, logicalindian.com reports th at India has only 1 ,700 nurses per one million people. By comparison, the number of nurses in the U.S., Canada and the U.K. range between 8 ,000 and 11 ,000 per million citizens. The presence of far too few doctors and nurses per capita in India causes overwork and fatigue , which in turn can pro mpt some to leave the profession , endangering a hospital ’s ability to properly care for patients. Implications of Well - Received Study at Indonesian University: Much as the MGM Healthcare contract could lead to further agreements with Indian health care facilities, PMED’s successful study at the prominent Indonesian university could ultimately lead to significant opportunities with the ASEAN (Association of Southeast Asian Nations) countries such as Brunei Darussalem, Burma, Cambodia, Indonesia, Singapore, Thailand, and Vietnam. Collectively, ASEAN 5 nations have population s and GDP e xceeding 700 million and US$10 trillion, respectively. The ASEAN group of countries represents the U.S.’s fourth largest trading partner. Mobile Devices: PMED is working to install its health screening software on mobile devices. T he company has no t yet surmounted all the technical obstacles to do so ; however, if a person were to be able to download a PMED app and use that in conjunction with a multispectral camera, the demand would seem likely to be strong. Law enforcements officials immediately com e to mind, but private users who might otherwise buy an Apple Watch for its health - monitoring capabilities could consider using PMED’s potentially more robust technology. Global Reseller Partnerships : PMED has signed joint venture reseller partnerships wi th several major companies. The resellers include Tech Machindra, the global information technology unit of the giant Mahindra Group ; and Paras Defense, an Indian defense contractor which will focus its efforts on the South Asian market. See Figure 3 . These reseller accord s will allow many potential Safe Entry Station buyers that PMED might otherwise not be able to reach to become familiar with the product -- and limit PMED’s cash outlays as the company works aggressively to commercialize the product. Figure 3 : Predictmedi x AI Reselling P artners Source: Predictmedix AI Inc. Valuation Considerations: As PMED begins to reach agreements with addition al customers (most likely in the Indian and South Asian health care industry), its Software - as - a - Service (SaaS) annual recurring revenue run rate will increase. In turn, PMED seems likely to be valued by investors as an SaaS company , which would be a favorable development for PMED shareholders. 6 Figure 4 shows that as of March 31, 2023 , the average SaaS company traded at just over a 7x multiple of enterprise value to current annual run - rate revenue. This 7x multiple falls at the lower end of the multiple range seen in the public markets over the last ten years and is doubtless higher now after the market’s rally in 2Q 2023. Another factor to consider is investors te nd to assign a higher revenue multiple to a company for which the costs of the software development have already largely been incurred , and a lower valuation to a company in which substantial further development costs seem likely. PMED falls in the first o f these categories, not the second. Figure 4 : Average Enterprise Value – to -- Annual Recurring Revenue Mu ltiples for SaaS Companies Source: S aaS Capital. If PMED were able to reach agreements at some point in the future with , say, fifty Indian hospitals that were structured similarly to the MGM Healthcare accord, it is possible that its future monthly recurring revenue could be approximately C$560,000 (50 hospitals times 4 Safe Entry Stations per hospital times a monthly per - unit usage fee of C$2,800), equivalent to around C$6.7 million of annual recurring revenue . (Keep in mind that about 69,0 00 hospitals exist in India.) In such a theoretical case, it is conceivable that PMED’s enterprise value could reach about C $ 47 million (C$6.7 million times 7.0 revenue multiple), which would equate to a share price of about C$0. 30 , at some future point. Of course, if one were to use a less conservative fair value revenue multiple, the resulting share price in this exercise would be higher 7 Successful Recent Private Placement Bolsters Financials : In June 2023, PMED raised C$1.05 million from the private placement of 10.5 million PMED units at C$0.10 per unit. Each unit consists of one share of PMED common stock and one warrant which entitles the holder to pu rchase one share of PMED stock at C$0.15 per share. The warrants expire in June 2025 Given the lack of capital intensity associated with PMED’s software licensing business model , as well as cash starting to flow to PMED from the company’s early adopting cli ents (MGM Healthcare and DefSpace ), the proceeds from the private placement should be sufficient to fund PMED’s operations for some time. To illustrat e this, PMED’s quarterly operating cash flow losses (prior to commen ce men t of license revenue s ) have averaged C$2 3 0,000 o ver the last fi ve q uarters. See Table 1 T able 1 : Predictmedi x AI Inc. – Selected Financial Statistics (in Canadian dollars, except shares outstanding) Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended 30 - Apr - 23 31 - Jan - 23 31 - Oct - 22 31 - Jul - 22 30 - Apr - 22 Operating Cash Flow ($629,402) ($53,061) ($368,046) ($3,284) ($109,784) Capital Expenditures $0 ($45,178) $0 $0 ($49,648) Operating Income ($477,565) ($950,874) ($459,227) ($373,008) ($324,368) Cash $37,348 $79,250 $107,190 $283,436 $31,420 Debt $0 $0 $0 $0 $0 Strong, Heavily Invested Management Team: CEO Sheldon Kales has significant operations, business strategy and capital markets experience. He has held leadership roles in R&D companies in the U.S., Canada and the Middle East. PMED’s COO, Dr. Rahul Kushwah, was previously a member of the National Research Council for the Government of Canada in Human Health Therapeutics. Dr. Kushwah developed the world’s first genetic test for cannabis pharmacy genetics. In aggregate, Mr. Kales and Dr. Kushwah o wn about 40 million shares, equivalent to around a 25% stake in the company Investment Summary : PMED is a small company with a hi gh degree of insider ownership , wh ich investors have not yet discovered It has developed an AI - based , highly accurate med ical screenin g device , wh ich appears t o hav e broad app licability as a triage function at hospitals and med i cal ce nters , and as a fit f o r duty assessment tool in a variet y of w orkplace s, particularly in the mining , transportation and manufac t uring industries. Importantly for shareholders, PMED is n ow keenly focused on the commercialization of its technology 8 PMED has already made significant pr ogress in India and Indo n esia , and the company s eems t o have enormous growth potential in India and ac ross South A sia Aside from being huge population and GDP centers, those regi ons generally welcome AI - based solutions more than North Amer ican govern ments and compa nies do. North American governme nt s are more s ensitive to potential privacy issues related to widespread AI adoption than t heir A s ian counterparts. PMED i s alread y generat ing highly prized SaaS recurring revenue from at least two Indian entities , one of which is MGM Healthcare, an Indian ho spital . Furthermore, PMED potentially co uld reach similar accords with many health care - related entities , especially In dian hospitals India h as 69,00 0 hospitals , man y of wh ich must be cons idered possible cust omers in light of MGM ’ s constructive assessment of PMED ’ s tech n ology SaaS recurring revenue is generally accorded high multiples by investors, and PMED could soon be valued according to this methodology. PMED cur ren tly collect s data on an individual ’ s vital signs as well as potential cannabis or alcohol impairment -- all extremely valuable information. The company hopes to be able to expand its capa bilities so that it can eventually detect signs of opioids and mental illnesses, including depression , dementia, and Alzheimer’s disease. Obviously, if PMED can achieve th ese goal s , its technology wou l d become even more prized by larger companies In addition, the large quantity of clinical data which PMED will be collect ing from users could prove increasin gly va luable over time as bui l ding blocks for future projects of large health care companies PMED will not provid e personal information regarding its users , but the acquired clin ical data co uld be extremely relevant to a variety of pu blic a nd pri vate entitie s Jim McFadden, CFA, MBA Tormont50 Research 0 7 / 1 7 /2023 Tormont50 is a venue for highlighting timely ideas and trends in individual stocks and the stock market. Tormont50 is not an advisory service, and does not offer buy, sell, or any other rating on the securities we discuss. The companies we discuss fo r comm entary are derived from an accumulation of publicly available data and information. We encourage all to submit stocks or topics for discussion. 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