BIO-Key International Inc (BKYI) 2023 Q1 法說會逐字稿

Good morning, everyone. Thank you for standing by, and welcome to the BIO-key International's first quarter 2023 conference call. (Operator Instructions) As a reminder, this conference call is being recorded today, Tuesday, May 16 of 2023. I would now like to turn the call over to Mr. Bill Jones of Investor Relations. You may proceed.

大家，早安。感謝您的支持，歡迎來到 BIO-key International 2023 年第一季度電話會議。 （操作員說明）提醒一下，本次電話會議將於今天，即 2023 年 5 月 16 日，星期二進行錄製。我現在想將電話轉給投資者關係部的比爾·瓊斯先生。你可以繼續。

Thank you, thank you for joining today's call. Participating today are BIO-key's Chairman and CEO, Mike DePasquale; and CFO, Ceci Welch. I remind everyone that today's conference call and webcast as well as answers to questions will include forward-looking statements, which are subject to certain risks and uncertainties that can cause actual results to differ from those expected.

謝謝，謝謝你參加今天的電話會議。今天參加的有 BIO-key 的董事長兼首席執行官 Mike DePasquale；和首席財務官 Ceci Welch。我提醒大家，今天的電話會議和網絡直播以及對問題的回答將包括前瞻性陳述，這些陳述存在一定的風險和不確定性，可能導致實際結果與預期不同。

Words such as anticipate, believe, estimate, expect, plan, project, or similar words generally identify and express such forward-looking statements. These statements are made based on management's beliefs and assumptions today using information currently available pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

諸如預期、相信、估計、預期、計劃、項目或類似詞語通常用於識別和表達此類前瞻性陳述。這些聲明是基於管理層今天的信念和假設，根據 1995 年私人證券訴訟改革法案的安全港條款使用當前可用的信息做出的。

For a complete description of these and other risk factors that may affect the future performance of the company, please see Risk Factors in the company's annual report as filed on Form 10-K with the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on forward-looking statements, which speak as of today's date only. BIO-key undertakes no obligation to revise or to disclose revisions to any forward-looking statements to reflect circumstances or events that occur after today. And with that, I'll turn the call over to Mike.

有關可能影響公司未來業績的這些和其他風險因素的完整描述，請參閱公司以 10-K 表格提交給美國證券交易委員會的年度報告中的風險因素。告誡聽眾不要過分依賴前瞻性陳述，這些陳述僅在今天發表。 BIO-key 不承擔修改或披露任何前瞻性陳述的修改以反映今天之後發生的情況或事件的義務。有了這個，我會把電話轉給邁克。

Thanks, Bill, and good morning and thank you to everyone for joining us today. We held our Q4 call just six weeks ago, and so we can keep our comments brief on this call. After Ceci does a brief update on our -- the status of our filings, our 10-K and 10-Q to review our financials, and then we will open the call to investor questions.

謝謝，比爾，早上好，感謝大家今天加入我們。我們在六週前舉行了第四季度電話會議，因此我們可以對這次電話會議發表簡短的評論。在 Ceci 對我們的文件狀態、我們的 10-K 和 10-Q 進行簡要更新以審查我們的財務狀況之後，我們將開始向投資者提問。

We are very proud to report quarterly revenue growth of 59% from $1.9 million to $3.1 million for Q1 '23, along with a substantial improvement in our bottom line performance, reducing our operating loss by 70% from $1 million to $308,000.

我們非常自豪地報告 23 年第一季度的季度收入增長了 59%，從 190 萬美元增加到 310 萬美元，同時我們的底線業績有了顯著改善，我們的營業虧損減少了 70%，從 100 萬美元減少到 308,000 美元。

As we have discussed, our quarterly performance reflects our growing base of annual recurring software and maintenance revenue as well as strong new customer activity, reflecting our growing global base of partners in our channel alliance program as well as enhancements to our direct sales efforts, including a disciplined focus on larger enterprise opportunities. These go to market paths are resonating in the market we serve and are generating a growing pipeline of opportunities, including several large customer prospects in the mid to high six digits and above range.

正如我們所討論的，我們的季度業績反映了我們不斷增長的年度經常性軟件和維護收入基礎以及強勁的新客戶活動，反映了我們在渠道聯盟計劃中不斷擴大的全球合作夥伴基礎以及我們直銷工作的增強，包括紀律嚴明地關注更大的企業機會。這些進入市場的路徑在我們服務的市場中產生了共鳴，並產生了越來越多的機會，包括幾個中高六位數及以上的大客戶前景。

Specifically, our identity bound biometric solutions, which address customer mandates for phoneless, token-less, or passwordless authentication are really resonating in the marketplace. For example, at a recent Gartner hosted event, including the Gartner IAM conference in April, we have developed several significant IAM deployment prospects that we are now working to progress to formal engagements.

具體來說，我們的身份綁定生物識別解決方案解決了客戶對無電話、無令牌或無密碼身份驗證的要求，在市場上確實引起了共鳴。例如，在最近 Gartner 主辦的活動中，包括 4 月份的 Gartner IAM 會議，我們開發了幾個重要的 IAM 部署前景，我們現在正在努力推進到正式參與。

The Gartner events have proven to attract a very strong base of larger prospects with particular requirements that match well to our solutions. We are optimistic that a number of these larger opportunities will progress to formal deployments later this year, including a few that are already in proof-of-concept stages.

事實證明，Gartner 活動吸引了具有與我們的解決方案非常匹配的特定要求的更大潛在客戶的強大基礎。我們樂觀地認為，其中一些更大的機會將在今年晚些時候進入正式部署，其中包括一些已經處於概念驗證階段的機會。

Building on this traction, we attended the RSA conference earlier this month and we'll be attending the Identiverse Conference early June. We've also refined our focus in Africa, signing a number of new partners who will sell our PortalGuard solutions to the emerging markets in a number of countries on the continent.

在此基礎上，我們本月初參加了 RSA 會議，並將於 6 月初參加 Identiverse 會議。我們還細化了對非洲的關注，簽署了一些新的合作夥伴，他們將向非洲大陸許多國家的新興市場銷售我們的 PortalGuard 解決方案。

Concurrently, we continue to serve the larger contracts that we've executed two years ago, our work with NELEX in supporting the onboarding of young college level graduates to support the emerging identity and payment ecosystem is starting to gain traction, and you will be hearing more from us on this initiative in the coming months.

同時，我們繼續為我們兩年前執行的更大合同提供服務，我們與 NELEX 的合作支持年輕大學畢業生的入職支持新興的身份和支付生態系統開始獲得牽引力，你會聽到在接下來的幾個月中，我們會就此倡議提供更多信息。

First quarter developments included the expanded use of our biometric client identification system to 21 million users by Capitec Bank in South Africa from just 9 million users in March of 2020. Our solution delivers enhanced security, which streamline client identification in a highly scalable manner.

第一季度的發展包括南非 Capitec 銀行將我們的生物識別客戶識別系統的使用從 2020 年 3 月的 900 萬用戶擴大到 2100 萬用戶。我們的解決方案提供了增強的安全性，以高度可擴展的方式簡化了客戶識別。

Capitec has been a flagship banking client since 2015 when they took the pioneering step to leverage fingerprint biometrics to secure their clients against fraud and theft. Our work with Capitec has developed into a long-term relationship, a very valuable customer case study and of course, a growing base of recurring revenue for BIO-key.

自 2015 年以來，Capitec 一直是旗艦銀行客戶，當時他們率先利用指紋生物識別技術來保護客戶免受欺詐和盜竊。我們與 Capitec 的合作已經發展成為一種長期合作關係，這是一個非常有價值的客戶案例研究，當然，也是 BIO-key 不斷增長的經常性收入基礎。

Also in Q1, our Swivel Secure business launched a project to enable 1.5 million citizens in a Central American nation to securely access their country's online tax applications. Our solution will reduce long queues for tax delivery, providing substantial benefits to both taxpayers and the tax authority. We have also recently supported Dayton Children's Hospital with their migration to Epic Hyperdrive, the next-generation web-based medical records application.

同樣在第一季度，我們的 Swivel Secure 業務啟動了一個項目，使一個中美洲國家的 150 萬公民能夠安全地訪問他們國家的在線稅務申請。我們的解決方案將減少納稅人排長隊的情況，為納稅人和稅務機關帶來實實在在的好處。我們最近還支持代頓兒童醫院遷移到下一代基於 Web 的醫療記錄應用程序 Epic Hyperdrive。

Our PortalGuard solutions provide support for their existing deployment of our biometric authentication solution in this new web-based Epic environment. Our work with Dayton provides an excellent proof of concept for other Epic clients utilizing our biometrics solutions, who are now contemplating the migration to Epic Hyperdrive.

我們的 PortalGuard 解決方案為他們在這個基於 Web 的新 Epic 環境中現有的生物認證解決方案部署提供支持。我們與 Dayton 的合作為其他使用我們的生物識別解決方案的 Epic 客戶提供了極好的概念證明，他們現在正在考慮遷移到 Epic Hyperdrive。

Our identity bound biometrics or IBB capabilities create a personalized authentication solution that is both highly secure and frictionless for end users. Shared workstations are common in a variety of settings in healthcare, customer service centers, and even in manufacturing and industrial settings. Such shared workstation access creates the potential for security vulnerabilities due to password, token, or card sharing.

我們的身份綁定生物識別或 IBB 功能創建了一個個性化的身份驗證解決方案，對最終用戶來說既高度安全又順暢。共享工作站在醫療保健、客戶服務中心，甚至製造業和工業環境中的各種環境中都很常見。由於密碼、令牌或卡共享，此類共享工作站訪問可能會產生安全漏洞。

Our IBB Solutions allow customers to cost effectively deploy flexible authentication capabilities in a phone-less, token-less, and cardless environment, balancing strong security, expediency, and convenience. Another Q1 highlight was with Alabama Power headquartered in Birmingham, which selected BIO-key's PortalGuard and WEB-key to secure their 15 enterprise air gap networks, representing a new customer relationship for us.

我們的 IBB 解決方案允許客戶在無電話、無令牌和無卡環境中經濟高效地部署靈活的身份驗證功能，平衡強大的安全性、便利性和便利性。第一季度的另一個亮點是總部位於伯明翰的 Alabama Power，該公司選擇了 BIO-key 的 PortalGuard 和 WEB-key 來保護其 15 個企業氣隙網絡，這代表了我們的新客戶關係。

BIO-key serves over 600 customers around the globe with strong engagement in higher-education, county governments, healthcare, and financial services. Customers are attracted to our highly efficient, cost-effective solutions that deliver secure, scalable, easy to use, quick to deploy user access across hybrid user environments.

BIO-key 為全球 600 多家客戶提供服務，在高等教育、縣政府、醫療保健和金融服務領域有著廣泛的參與。客戶被我們高效、經濟高效的解決方案所吸引，這些解決方案提供安全、可擴展、易於使用、可快速部署跨混合用戶環境的用戶訪問。

As mentioned, we are seeing particularly strong engagement prospects that are seeking a more robust app authentication solution to meet their specific needs and eliminate commonly used authentication factors that are failing.

如前所述，我們看到特別強大的參與前景正在尋求更強大的應用程序身份驗證解決方案來滿足他們的特定需求並消除失敗的常用身份驗證因素。

To address this global opportunity, we continue to build on our technology and distribution partner efforts to position BIO-key's solution before a broader base of prospects. We're also working to more deeply engage with some of our larger and more influential partners. For example, our EMEA Group recently met with a leading global web service provider about quickly onboarding BIO-key into their accelerator program. We hope to have more to say on this next quarter.

為把握這一全球機遇，我們繼續依靠我們的技術和分銷合作夥伴的努力，將 BIO-key 的解決方案置於更廣泛的前景基礎之上。我們還致力於與一些更大、更有影響力的合作夥伴進行更深入的接觸。例如，我們的 EMEA 集團最近會見了一家領先的全球網絡服務提供商，討論如何將 BIO-key 快速加入他們的加速器計劃。我們希望在下個季度對此有更多話要說。

Additionally, we have an effort focused on building technical alliances with other leaders in the IAM industry, such as BeyondTrust and ForgeRock, where we can collaborate to bring the best-in-breed solutions to their customers. Though we had viewed these companies sometimes as competitors, we recognize today that there are mutually beneficial ways that we can work together.

此外，我們還致力於與 IAM 行業的其他領導者建立技術聯盟，例如 BeyondTrust 和 ForgeRock，我們可以合作為他們的客戶提供同類最佳的解決方案。儘管我們有時將這些公司視為競爭對手，但今天我們認識到，我們可以通過互惠互利的方式開展合作。

We continue talking with other industry leaders where we feel there are good synergies. We expect these tech partnerships to open new sales opportunities, both small and large, and we would not -- that we would not otherwise be able to pursue.

我們繼續與我們認為具有良好協同效應的其他行業領導者進行對話。我們希望這些技術合作夥伴關係能夠開闢新的銷售機會，無論大小，我們不會——否則我們將無法追求。

As partner source sales opportunities are increasing, we're building awareness, engagement, and understanding of our capabilities within our CAP program members. In that vein, we have launched the program, we call BIO-key University for channel partners to train online on BIO-key integrated solutions with the first version ready to roll out this quarter.

隨著合作夥伴來源銷售機會的增加，我們正在 CAP 計劃成員中建立對我們能力的認識、參與和理解。本著這種精神，我們已經啟動了這個項目，我們稱之為 BIO-key 大學，供渠道合作夥伴在線培訓 BIO-key 集成解決方案，第一個版本準備在本季度推出。

In terms of product development, we recently completed a WEB-key passwordless login browser for Epic, I mentioned that before. We're releasing two new PortalGuard family products, a PortalGuard desktop MFA for Windows and Mac this month and PortalGuard for MSPs this quarter as part of our effort to expand the capability and relevance of our suite of software solutions, especially for managed service providers, managed security service providers, and all of our other partners in our partner network.

在產品開發方面，我們最近為Epic完成了一個WEB-key無密碼登錄瀏覽器，我之前也提到過。我們將發布兩款新的 PortalGuard 系列產品，本月用於 Windows 和 Mac 的 PortalGuard 桌面 MFA 以及本季度用於 MSP 的 PortalGuard，作為我們努力擴展軟件解決方案套件的能力和相關性的一部分，特別是對於託管服務提供商，託管安全服務提供商，以及我們合作夥伴網絡中的所有其他合作夥伴。

On the marketing front, we have implemented an account-based marketing model where our marketing and sales resources are better focused and aligned to target new commercial account opportunities with larger deal sizes. Our goal is to increase our average project size by 50% this year. For perspective, we've contacted 35 new marketing qualified accounts in April alone, leveraging this new approach.

在營銷方面，我們實施了基於客戶的營銷模式，在這種模式下，我們的營銷和銷售資源可以更好地集中和調整，以瞄準交易規模更大的新商業客戶機會。我們的目標是今年將平均項目規模增加 50%。從長遠來看，僅在 4 月份，我們就利用這種新方法聯繫了 35 個新的營銷合格客戶。

Ceci will review our Q1 financials next, but from a high level, the strategic actions we have been taking enabled us to achieve record quarterly revenue in Q1 '23, while also trimming our operating loss. Considering this solid start to 2023 and our growing pipeline of new and existing customer opportunities, including larger engagements, we are confident BIO-key is positioned to deliver top line growth and bottom line improvements for the full fiscal 2023 year, with some variability in our quarterly results driven by timing of new business activity. With that, I'll turn the call over to Ceci.

Ceci 接下來將審查我們第一季度的財務狀況，但從較高的層面來看，我們一直在採取的戰略行動使我們能夠在 23 年第一季度實現創紀錄的季度收入，同時也減少了我們的運營虧損。考慮到 2023 年的良好開端以及我們不斷增長的新客戶和現有客戶機會渠道，包括更大的參與度，我們相信 BIO-key 能夠在整個 2023 財年實現收入增長和利潤改善，我們的業務存在一些變化由新業務活動的時機驅動的季度業績。有了這個，我會把電話轉給 Ceci。

Oh, thanks, Mike. I'd like first to address the status of our SEC filings. As many of you know, our filing of the 2022 annual report on Form 10-K has been delayed. After over a decade of never missing the SEC filing deadlines for our quarterly and annual reports, we were unable to file our 10-K on time this year. This was primarily due to our acquisition of Swivel Secure in March of 2022 and our auditors being acquired by Marcum LLP in February of 2022.

哦，謝謝，邁克。我想首先談談我們提交給美國證券交易委員會的文件的狀態。正如你們許多人所知，我們以 10-K 表格提交 2022 年年度報告的時間已被推遲。在十多年來從未錯過 SEC 提交季度和年度報告的截止日期之後，我們今年無法按時提交 10-K。這主要是由於我們於 2022 年 3 月收購了 Swivel Secure，以及我們的審計師於 2022 年 2 月被 Marcum LLP 收購。

The combination of the expanded operations in Europe and the transition to Marcum, a large national accounting firm increased the scope of work for both our internal financial team and outside auditors. Due to resource constraints, the completion of the audit process and the 10-K filing have been delayed.

擴大在歐洲的業務以及向一家大型國家會計師事務所 Marcum 的過渡相結合，增加了我們內部財務團隊和外部審計師的工作範圍。由於資源限制，審計過程和 10-K 歸檔的完成被推遲。

We now expect our Form 10-K to be filed by the end of this week, and we expect our Q1 '23 Form 10-Q to be filed early next week. Importantly, we have had no difference of opinion with our auditors, and we do not anticipate any material changes to our 2022 results or our first quarter 2023 results from the results disclosed in our news release.

我們現在預計我們的 10-K 表格將在本週末提交，我們預計我們的 Q1 '23 表格 10-Q 將在下周初提交。重要的是，我們與審計師沒有意見分歧，我們預計我們的 2022 年業績或 2023 年第一季度業績不會因新聞稿中披露的業績而發生任何重大變化。

Now I'll turn to the first quarter results. Q1 '23 revenue increased to $3.1 million or 59% over Q1 '22, reflecting higher software license and service fees and a full quarter benefit of Swivel Secure Europe, which was acquired in March of 2022. Revenue from software licenses increased 69% in Q1 '23, and [136 sequentially] to $2.5 million in 'Q1 23, reflecting strength from new PortalGuard customers, existing recurring revenue contracts, and Swivel Secure,

現在我將談談第一季度的結果。 23 年第一季度收入增至 310 萬美元，比 22 年第一季度增長 59%，這反映出更高的軟件許可和服務費以及 2022 年 3 月收購的 Swivel Secure Europe 的整個季度收益。第一季度軟件許可收入增長了 69% 23 年，[136 連續] 在 23 年第一季度達到 250 萬美元，反映了新 PortalGuard 客戶、現有經常性收入合同和 Swivel Secure 的實力，

Service revenue increased 33% year over year to [527,000], which is down from [587,000] in Q4 2022. Due to the timing of new customer projects and existing customer migrations to the PortalGuard IDaaS from their on-prem version. Hardware revenue was down 15% year over year and 43% sequentially, which was related to the mix of installations and other projects completed in the period.

服務收入同比增長 33% 至 [527,000]，低於 2022 年第四季度的 [587,000]。由於新客戶項目和現有客戶從本地版本遷移到 PortalGuard IDaaS 的時間安排。硬件收入同比下降 15%，環比下降 43%，這與同期完成的安裝和其他項目的組合有關。

We view ourselves as primarily a software solution provider and use hardware to support the sales of our software, primarily for biometric deployments. Gross profit increased to $2.3 million from $1.6 million in Q1 2022 due to revenue growth. As a percentage of sales, gross margin declined to 74% from 83% in Q1 '22, with a variance reflecting a full quarter of Swivel Secure revenues in Q3 -- Q1 '23, which reflects third-party software license fees. Sequentially, our consolidated gross margin improvement from 66% realized in Q4 due to a mix that included more high-margin licenses fees in Q1' '23.

我們主要將自己視為軟件解決方案提供商，並使用硬件來支持我們軟件的銷售，主要用於生物識別部署。由於收入增長，毛利潤從 2022 年第一季度的 160 萬美元增加到 230 萬美元。作為銷售額的百分比，毛利率從 22 年第一季度的 83% 下降到 74%，差異反映了第三季度 Swivel Secure 收入的整個季度 - 23 年第一季度，這反映了第三方軟件許可費。隨後，我們的綜合毛利率從第四季度實現的 66% 提高，原因是在第一季度''23 中包括更多的高利潤許可費。

Total operating expenses decreased modestly to $2.57 million in Q1 '23 from $2.60 million in Q1 '22 as higher selling G&A expenses related to Swivel Secure were offset by lower research and development and engineering expenses following the completion of significant enhancements to our MobileAuth app and the PortalGuard IDaaS enhancements.

總運營費用從 22 年第一季度的 260 萬美元小幅下降至 23 年第一季度的 257 萬美元，這是因為與 Swivel Secure 相關的較高銷售 G&A 費用被我們的 MobileAuth 應用程序和PortalGuard IDaaS 增強功能。

Generally, we expect lower R&D expenses in 2023 as the outside resources required in 2022 are no longer required. BIO-key has also taken a number of expense reduction initiatives that should help to reduce the overhead expenses in the coming quarters for the full year of 2023, particularly as a percentage of sales.

總體而言，我們預計 2023 年的研發費用會降低，因為不再需要 2022 年所需的外部資源。 BIO-key 還採取了多項削減開支的舉措，這些舉措應有助於減少 2023 年全年未來幾個季度的間接費用，特別是佔銷售額的百分比。

As a result of the higher revenue and slightly lower operating costs, BIO-key reported a Q1 net loss of $526,000 or $0.06 per share versus $1 million for a loss of $0.13 per share in Q1 2022. BIO-key ended the quarter with current assets of $9.3 million, including $700,000 of cash and cash equivalents, $3.4 million (sic - $3.5 million) of accounts receivable, and $4.4 million of inventory.

由於收入增加和運營成本略有降低，BIO-key 報告第一季度淨虧損 526,000 美元或每股 0.06 美元，而 2022 年第一季度淨虧損 100 萬美元，每股虧損 0.13 美元。BIO-key 以流動資產結束本季度930 萬美元，包括 700,000 美元的現金和現金等價物、340 萬美元（原文如此 - 350 萬美元）的應收賬款和 440 萬美元的存貨。

Our receivables are typically collected on and on payment terms of 30 days to 90 days. In terms of inventory, much of what we purchased to avoid the supply chain concerns in anticipation of ramping up requirements related to the Civil ID projects in Africa, has now been fully sold and liquidated to further strengthen our financial position. That concludes my remarks, and now we can turn the call back over to the operator for Q&A.

我們的應收賬款通常按 30 天至 90 天的付款期限收取。在庫存方面，我們為避免因預期與非洲公民身份項目相關的需求增加而引起供應鏈擔憂而購買的大部分產品現已全部售出和清算，以進一步加強我們的財務狀況。我的發言到此結束，現在我們可以將電話轉回接線員進行問答。

(Operator Instructions) Jack Vander Aarde, Maxim Group.

（操作員說明）Maxim Group 的 Jack Vander Aarde。

Okay, great. Good morning, guys. I appreciate the quarterly update, and really good to see strong growth and operating improvements. Michael, great to see as well record quarterly revenue of $3 million. I imagine the majority of that first quarter revenue is attributed to recurring license revenue.

好的，太好了。早上好傢伙。我很欣賞季度更新，很高興看到強勁的增長和運營改善。邁克爾，很高興看到創紀錄的季度收入達到 300 萬美元。我想第一季度的大部分收入都歸因於經常性許可收入。

Last year, looking at the second quarter and the third quarter, it did dip down below the first quarter. Just looking ahead for this year, do you expect a similar sequential trend or do you expect sequential growth throughout the year? Thank you.

去年看二季度和三季度，確實低於一季度。展望今年，您預計會出現類似的連續趨勢，還是預計全年連續增長？謝謝。

Well, we don't provide quarterly guidance, so I can't address that very specifically, but our base is growing, as you can see and getting much stronger. We did have a strong Q1 and Q4 last year. And so, if you think about our European business, for example, the summer is always a very slow period. So the third quarter in Europe might be lower than, for example, our domestic business.

好吧，我們不提供季度指導，所以我不能非常具體地解決這個問題，但我們的基礎正在增長，正如你所看到的並且變得更加強大。去年我們確實有強勁的第一季度和第四季度。因此，例如，如果您考慮我們的歐洲業務，夏季總是一個非常緩慢的時期。因此，歐洲的第三季度可能低於我們的國內業務。

So there will be variability, but we certainly believe that this business is going to grow our base is growing, our pipeline is growing, the size of the opportunities that we're pursuing is growing. And so all of this combined should put us in a very nice position to two things: number one, continue to grow aggressively, continue to build a significant base of customers, which we already have; but to build on that, and ultimately to get the company to breakeven and profitability, which we expect to happen as we proceed through the year.

所以會有可變性，但我們當然相信這項業務將會增長我們的基礎正在增長，我們的管道正在增長，我們所追求的機會的規模正在增長。因此，所有這些結合起來應該使我們在兩件事上處於非常有利的位置：第一，繼續積極增長，繼續建立我們已經擁有的重要客戶群；但要以此為基礎，並最終使公司實現收支平衡和盈利，我們預計這會在今年繼續進行。

Okay, fantastic. I appreciate the color there. And obviously, so the licensing side of the business and the PortalGuard side is clearly ramping. I do want to just touch on the Africa contracts, I know you're expanding with other opportunities in Africa and elsewhere in the world. But can you just provide an update on your visibility regarding the original two large Africa contracts?

好的，太棒了。我欣賞那裡的顏色。很明顯，業務的許可方面和 PortalGuard 方面顯然正在加速發展。我只想談一談非洲合同，我知道你們正在利用非洲和世界其他地方的其他機會進行擴張。但是，您能否提供有關最初的兩份大型非洲合同的最新情況？

Yeah, I made some comments, actually in my prepared comments mentioned that we are expanding our partner network on the continent to push and sell our IAM solutions. We do have a really nice space in the Middle East. And so we're continuing to expand our partner network to sell our traditional products there.

是的，我發表了一些評論，實際上在我準備好的評論中提到我們正在擴大我們在非洲大陸的合作夥伴網絡，以推動和銷售我們的 IAM 解決方案。我們在中東確實有一個非常好的空間。因此，我們將繼續擴大我們的合作夥伴網絡，以在那裡銷售我們的傳統產品。

As it relates to the two contracts we have, I mentioned that the larger one, the one that fundamentally allows for us to help the country employ college graduates, young college graduates, and get them into the identity and the payments ecosystem is progressing forward, albeit slow, but you'll hear more from us shortly. That program and the initiatives that we have centered around that contract are starting to take hold.

關於我們的兩份合同，我提到了更大的一份合同，它從根本上允許我們幫助國家僱用大學畢業生、年輕的大學畢業生，並讓他們進入身份，支付生態系統正在向前發展，雖然速度很慢，但您很快就會收到我們的更多消息。該計劃和我們以該合同為中心的舉措開始發揮作用。

The other contract as it relates to the hardware sales for identity and identity management, there was -- that's centered solely in Nigeria and there was recently a national election. So the new regime is taking over and we're hoping that the country will settle down and that will begin the initiatives to continue to enroll. All of the citizens there will continue.

另一份合同涉及身份和身份管理的硬件銷售，它只集中在尼日利亞，最近舉行了全國大選。因此，新政權正在接管，我們希望這個國家能夠安定下來，並開始採取措施繼續招生。那裡的所有公民都會繼續。

But we have a significant, as Ceci mentioned, a portfolio of inventory associated with that project. We're not sitting on it. We are actively selling that inventory off to other projects and other programs, while we expect in Africa that to begin to produce and bear fruit for us as we get through the rest of the year.

但正如 Ceci 提到的那樣，我們有一個與該項目相關的重要庫存組合。我們沒有坐視不理。我們正在積極地將庫存出售給其他項目和計劃，同時我們預計在今年剩餘時間裡，非洲將開始為我們生產並結出果實。

But we're not sitting on that. I mean, it's been nearly two years, and just the tumult in the country, the consternation with the World Bank just makes it very, very difficult for us to continue to sit on that inventory and wait for that project to move forward. So we've got, I'll call it a lot of irons in the fire right now, and we're progressing forward.

但我們並沒有就此坐視不理。我的意思是，已經將近兩年了，只是這個國家的動盪，對世界銀行的驚愕讓我們很難繼續坐在那個清單上等待那個項目向前推進。所以我們已經有了，我現在稱之為火中的很多熨斗，我們正在向前邁進。

Okay, great. And then maybe just one more follow-up for me on the liquidity side. Given the current cash balance, I know you mentioned you're rolling out some cost reduction initiatives, but can you just speak to your liquidity needs in cash runway? Thank you.

好的，太好了。然後也許只是我在流動性方面的另一個後續行動。鑑於目前的現金餘額，我知道你提到你正在推出一些降低成本的舉措，但你能談談你在現金跑道上的流動性需求嗎？謝謝。

Well, I think you can see we have a significant portion of receivables. And Ceci mentioned, we have -- our DSO is pretty good. Typically, we collect all of our receivables in the 30 day to 90 day period. Some customers again are net 45, most are net 30, but some are even up in that 90.

嗯，我想你可以看到我們有很大一部分應收賬款。 Ceci 提到，我們的 DSO 非常好。通常，我們會在 30 天到 90 天的期限內收回所有應收賬款。一些客戶再次達到 45 歲，大多數是 30 歲，但有些甚至達到 90 歲。

So we have a significant chunk of receivables that we expect to collect going forward, well over $3 million, and we have the hardware inventory that we expect to be selling almost on a weekly basis. So we expect that our cash flow from those two items right now will satisfy our business requirements.

因此，我們預計未來會收取大量應收賬款，遠超過 300 萬美元，並且我們擁有預計幾乎每週都會出售的硬件庫存。因此，我們預計現在這兩項的現金流量將滿足我們的業務需求。

Okay, great. Yes, I see that looking at your balance sheet now. Okay, that makes a lot of sense, very helpful. Again, congrats on the strong momentum and record quarter, it's great to see. Thanks, Michael.

好的，太好了。是的，我現在看到了你的資產負債表。不錯，說的很有道理，很有幫助。再次祝賀強勁的勢頭和創紀錄的季度，很高興看到。謝謝，邁克爾。

Thank you, Jack.

謝謝你，傑克。

(Operator Instructions) [Dan Kemmis], private investor.

（操作員說明）[Dan Kemmis]，私人投資者。

Nice quarter, guys.

不錯的季度，伙計們。

Thank you.

謝謝。

Yeah, I'm trying to understand the mix. Was there a large biometric deal in that $2.5 million of license fees or it was a big increase in license fees, mostly? So just trying to understand the mix a little bit.

是的，我正在嘗試了解混音。在那 250 萬美元的許可費中是否有大筆生物識別交易，或者主要是許可費大幅增加？所以只是想稍微了解一下混音。

Actually, it's a combination of all of our business. The large contract with Capitec Bank in South Africa is a biometric contract. So that is a substantial contract and that is biometric. So it's a fair piece of that total license revenue is biometric as well.

實際上，這是我們所有業務的結合。與南非 Capitec 銀行的大合同是生物識別合同。所以這是一份重要的合同，而且是生物識別的。因此，總許可收入中有相當一部分也是生物識別的。

I see. And was the Central American deal like six figures or something or you mentioned --

我懂了。中美洲的交易是六位數還是你提到的——

Yes, it's a high six-figure deal.

是的，這是一筆高達六位數的交易。

Okay, got it.

好，知道了。

Yes.

是的。

In the past, I think there have been some large seven figure foreign contract receivables and they haven't been able to be collected. I mean, is there any chance that any of these receivables, especially that 2 million increase in [AR] becomes uncollectible?

過去，我認為有一些七位數的大額外國合同應收賬款，但一直無法收回。我的意思是，這些應收賬款，尤其是 [AR] 增加的 200 萬美元是否有可能變得無法收回？

No, actually all of these receivables are solid contracted quarters, recurring revenue or new business that's solidly contracted. So no, the answer to that question is there's always a risk, right in any contract, but the answer is no, these are all I would consider low risk contracts.

不，實際上所有這些應收賬款都是固定承包的季度、經常性收入或新業務。所以不，這個問題的答案是在任何合同中總是存在風險，但答案是否定的，這些都是我認為的低風險合同。

All right, fantastic. In terms of variability, do you expect at least year-over-year growth each quarter?

好吧，太棒了。就可變性而言，您預計每個季度至少會出現同比增長嗎？

We don't provide quarterly guidance. I'm just not going to go there. I think, again, I don't want to repeat myself, I think you heard me. The base is growing. The deal size is growing. The pipeline is growing. We expect to grow this business. And we'd love to grow it on a record basis every quarter. I don't know if we can do that. We're certainly going to try, but we're going to grow pretty significantly through the rest of this year.

我們不提供季度指導。我只是不打算去那裡。我想，再一次，我不想重複我自己，我想你聽到了我的話。基數越來越大。交易規模正在增長。管道正在增長。我們希望發展這項業務。我們希望每個季度都能以創紀錄的速度增長。我不知道我們是否能做到。我們當然會嘗試，但我們將在今年餘下的時間裡實現顯著增長。

And goal and objective, Dan, is to clearly get to breakeven at a minimum profitability and be cash flow positive as we leave the year. I mean, that's our goal and objective, and we're on our pathway to do that. We've got to execute.

Dan 的目標和目的是明確地以最低盈利能力實現收支平衡，並在我們離開這一年時保持現金流為正。我的意思是，這是我們的目標，我們正在朝著這個目標努力。我們必須執行。

I understand. Maybe Ceci can answer a couple of these. The OpEx came down to $2.6 million from $3.4 million in the third quarter, which were significant drops in SG&A and R&D. On the fourth quarter you guys are giving estimates of $3 million to $3.5 million, was this an anomaly or is this the range moving forward?

我明白。也許 Ceci 可以回答其中的幾個問題。 OpEx 從第三季度的 340 萬美元降至 260 萬美元，這是 SG&A 和 R&D 的顯著下降。在第四季度，你們給出了 300 萬到 350 萬美元的估計，這是異常現像還是正在向前發展的範圍？

So the lower range for the first quarter is the one moving forward. The end of last year, we wrote off some of the, since we had been running off slowly, we just wrote them off in full at the end of the year. So yes, the first quarter -- the fourth quarter was very different from the first quarter. First quarter is more realistic for the expenses going forward. Yeah.

因此，第一季度的較低範圍是向前發展的範圍。去年年底，我們註銷了一些，因為我們跑得慢，所以我們在年底就把它們全額註銷了。所以是的，第一季度 - 第四季度與第一季度非常不同。第一季度對於未來的支出更為現實。是的。

That's fantastic. Can you say why or what happened to reduce the SG&A? I understand about the R&D, what came out of the SG&A?

這太妙了。您能說說減少 SG&A 的原因或原因嗎？我了解研發，SG&A 的結果是什麼？

Well, we've been writing off. We have a note receivable. We've been writing down slowly. We have been collecting it slowly, but just not fast enough to present a nice financial picture. So we wrote off the rest of that, which was [146,000]. It's in bad debt. Like I said, we expect to collect it, but more slowly than the GAAP likes to let you recognize. And then there was another receivable that we also wrote off, but we're not confident on selecting that one. So there was a couple bigger numbers in the fourth quarter to finalize, those -- in particular, those two items.

好吧，我們一直在註銷。我們有一張應收票據。我們一直在慢慢寫下來。我們一直在緩慢地收集它，但速度還不夠快，無法呈現出漂亮的財務狀況。所以我們註銷了其餘部分，即 [146,000]。它處於壞賬狀態。就像我說的，我們希望收集它，但比 GAAP 想讓你識別的要慢。然後還有另一項我們也註銷的應收賬款，但我們對選擇那個沒有信心。因此，第四季度有幾個更大的數字需要最終確定，尤其是這兩個項目。

Okay. The other thing I was curious about, Ceci, was there's -- the inventory was 4.9 in September. I think Mike said on the call that it was down to 4.8, but now you are down to 4.4. [But only 72 in sales], was that written off too or am I missing something?

好的。 Ceci，我感到好奇的另一件事是——9 月份的庫存為 4.9。我想邁克在電話中說它下降到 4.8，但現在你下降到 4.4。 [但銷售額只有 72]，是不是也被註銷了，還是我遺漏了什麼？

All right. Yes, we took a reserve on the inventory, 400,000. That was in the fourth quarter numbers. So it will be in the final K numbers, but we did take that 400,000 reserve against the inventory just based on slow-moving inventory, again, another GAAP requirement.

好的。是的，我們對庫存進行了儲備，400,000。那是第四季度的數字。所以它將在最後的 K 數字中，但我們確實根據緩慢移動的庫存，再次將 400,000 儲備用於庫存，這是另一個 GAAP 要求。

Okay. Well, let's see, I have one more question I think on that inventory. I'm wondering, can you give us, Mike, some color on -- little more color on how much of that inventory you expect to sell moving forward this year? And do you need to sell that inventory to be able to pay off the note? I think --

好的。好吧，讓我們看看，我還有一個關於該清單的問題。我想知道，邁克，你能給我們一些顏色嗎 - 關於你今年預計將出售多少庫存的更多顏色？您是否需要出售該庫存才能還清票據？我認為 -

Dan, are you done?

丹，你完成了嗎？

Yes.

是的。

Okay. Yeah, so the answer to that question is all the inventory. So remember that that $4 million-plus number is not all associated -- inventory associated with Africa. So we do sell, for example, to a number of our larger clients. We sell a full and complete solution. So we sell the hardware and the software to them, right. So we keep a decent amount of inventory on hand, so that we can quickly turnaround for them. So that's probably a $0.5 million or so, I mean maybe more, it depends on timing.

好的。是的，所以這個問題的答案就是所有庫存。所以請記住，超過 400 萬美元的數字並不全是相關的——與非洲相關的庫存。因此，例如，我們確實向一些大客戶出售產品。我們出售完整的解決方案。所以我們向他們出售硬件和軟件，對吧。所以我們手頭有相當數量的庫存，這樣我們就可以快速為他們周轉。所以這可能是 50 萬美元左右，我的意思是可能更多，這取決於時間安排。

But we expect to sell all of that inventory this year; not some of it, all of it. And certainly, sale of that inventory will help us pay off the AJB note that we have, which is a $2 million note. So the answer to that question is yes, on both.

但我們預計今年會出售所有庫存；不是一部分，是全部。當然，出售該庫存將幫助我們還清我們擁有的 AJB 票據，這是一張 200 萬美元的票據。所以這個問題的答案是肯定的，兩者都是。

Okay, cool. There is one more, Ping was bought out recently and you mentioned competitive synergies. Is there a capability that you guys have that competitors are particularly interested in?

好的，酷。還有一個，Ping 最近被收購了，你提到了競爭協同效應。你們有沒有競爭對手特別感興趣的能力？

Absolutely. I mentioned it in my prepared comments, and you'll see it as a common thread in all of our messaging on our website at every event that we do, and fundamentally, every talk that we give. It really is about providing token-less, passwordless solutions that don't require a phone. So in the context of kiosks and roving users and workstations that are shared, we have a solution that others, including Ping and Duo, a lot of the larger players do not have.

絕對地。我在準備好的評論中提到了它，你會看到它是我們網站上所有消息傳遞的一個共同線索，在我們舉辦的每一次活動中，從根本上說，在我們所做的每一次演講中。它實際上是關於提供不需要電話的無令牌、無密碼的解決方案。因此，在共享信息亭和流動用戶和工作站的情況下，我們有一個其他解決方案，包括 Ping 和 Duo，許多較大的玩家沒有。

And in larger accounts, for example, on the manufacturing floor or in the customer call center where they don't allow phones, we have a solution that can be complementary to what they may offer for SMS push or for again, a phone-token type option. So we don't necessarily have to be competitive, we can be collaborative. And I think that's what I was trying to get across, and we're working with a number of these very large players to integrate into their overall ecosystem to provide that kind of a solution for those types of users within larger entities.

在較大的客戶中，例如，在不允許使用電話的製造車間或客戶呼叫中心，我們有一個解決方案可以補充他們可能提供的 SMS 推送或電話令牌類型選項。所以我們不一定要競爭，我們可以合作。我認為這就是我試圖傳達的意思，我們正在與這些非常大的參與者合作，以整合到他們的整體生態系統中，為大型實體中的這些類型的用戶提供這種解決方案。

Okay, thanks a lot. Fantastic quarter, and good luck in the rest of the year.

好的，非常感謝。很棒的季度，祝你在今年餘下的時間裡好運。

Thank you, Dan.

謝謝你，丹。

(Operator Instructions) Showing no further questions at this time, the question-and-answer session has ended. I would like to turn the call back over to Mr. Mike DePasquale, for any closing remarks. Please go ahead, sir.

（操作員說明）此時沒有進一步的問題，問答環節已經結束。我想將電話轉回 Mike DePasquale 先生，聽取任何結束語。請繼續，先生。

Thank you, and thank everyone -- thank you everyone for joining today's call. We look forward to updating you on our Q2 call in August. As always, we'll provide news by press releases regarding anything that is appropriate. Once again, thank you for joining us this morning, and have a great day.

謝謝大家，謝謝大家參加今天的電話會議。我們期待在 8 月份的第二季度電話會議上向您通報最新情況。一如既往，我們將通過新聞稿提供有關任何適當的新聞。再次感謝您今天早上加入我們，祝您有美好的一天。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。