Digital Ally Inc (DGLY) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the 2020 third quarter operating results conference call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

This conference call may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words believe, expect, anticipate, intend, estimate, may, should, could, will, plan, future, continue and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions and are subject to various business risk and known and unknown certainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements made during this conference call, and call participants are cautioned not to place undue reliance on such forward-looking statements. Digital Ally, Inc. will undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements made during this conference call will, in fact, transpire or prove to be accurate.

I would now like to hand the call over to Mr. Stan Ross. Thank you. Please go ahead, sir.

Thank you. Thanks, everybody, for joining us today for our third quarter call. Well, as I say, is what a difference a quarter makes. I know that second quarter was a little tough for us all. Obviously, with the country being shut down as much as it was, and things have dramatically changed. And I think that, first of all, I want to just tell all of the employees of Digital Ally, how proud I am of them for staying focused through the last few months and being able to achieve the quarter that we just have posted for you all.

Today with me is Tom Heckman, the company's CFO. And I'd like Tom to go over the numbers, and then I will go over a little bit of insight, what we're still seeing for the remainder of this year and what our expectations are a little bit for 2021. Tom?

Thank you, Stan, and welcome to everyone. I appreciate you joining us today. We just filed our Form 10-Q earlier today. And I would suggest everyone to go look at the 10-Q for a more complete review of what happened during the quarter, and it is available now on EDGAR filings.

So anyway, from a highlight standpoint, any way you look at it, the third quarter was a very good quarter for us. I view it as a turnaround quarter. We had revenues up 23% year-over-year. And more importantly, we had $3.6 million in revenue for the quarter, total revenues, and that was our best showing since the first quarter of 2017 on the total revenue line. So that tells me that we're turning it around. Also, and probably even more importantly, we had our best earnings and earnings per share reported since the first quarter 2013. So given the impact of the COVID pandemic and its effects on our law enforcement and commercial customers, reporting those kind of numbers is impressive, and we're pretty proud of those.

Just to kind of go over a little bit about the effects on our main law enforcement customers, commercial customers. From a law enforcement standpoint, when you're trying to convert a new customer or upgrade an existing customer, generally, they like to have demos and install where they could use them and have time to evaluate and those sort of things. And obviously, with the restrictions on travel and the distance -- social distancing that's been preached out there, we have been virtually unable to do on-site demos and install or upgrades and so on and so forth. So obviously, the law enforcement revenues were constrained during the quarter.

But in order to abate that, we introduced a new monthly subscription plan for our in-car video systems. And earlier this year, we did that for body cameras. And quite frankly, they've been accepted very well. We've gotten a number of subscriptions, and we've been informed of a major subscription to expect during the rest of 2020 that would involve a full-scale implementation. So the monthly subscription model has helped abate some of the effects on our law enforcement customers. But again, with the

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model, you don't get the high hardware sale upfront and revenues reported from that revenue turning into a monthly subscription impact, mailbox money is what I call it. So we get a check every month, and we get to recognize this pretty much the same revenues and maybe even a little more over an extended period of time. So we look forward to good impacts from that down the road.

From a commercial customer standpoint, I'm talking about our major commercial customers like the cruise lines, Royal Caribbean cruise lines. It's obviously the impact that coronavirus has had on the cruise lines, and they pretty much docked all their vessels. But I will report that we've been in discussions with Royal Caribbean, and we expect that -- or they expect to be able to start releasing vessels for cruises early next year, which is a good sign for us since they're on one of those monthly subscription models. And as soon as they start sailing vessels, we'll be able to recognize that revenue and receive that income. So that's good news.

Other commercial customers, taxi cab business has obviously been affected in general. But I think we had a nice implementation by one of our largest taxi cab, zTrip, earlier this year. So they seem to be turning around a little bit.

Hard hit, though, is our event business. And the event business is surrounded by the sport venues, the sporting events, like footfall, Chiefs and Giants and Jets and that. They've been very constrained in the number of fans that they could even allow in the venue. So our revenues from those sort of events has been very subdued. We're hoping that, that gets improved once the vaccine is out and things get more back to normal. I don't think it'll ever get back totally to normal, but I think we're looking up in 2021 for that business. So given the headwinds we had in our law enforcement and commercial lines, that makes the reporting that we did of revenues and earnings for the quarter that much more impressive from our standpoint.

One of the big drivers for the quarter from the revenue line and the bottom line impact, of course, is our -- the acceptance of our new Shield and ThermoVu product lines. They combined contributed about $1.1 million of revenue in Q3, and we started virtually from 0. We just picked up those lines in late second quarter, early third quarter. So that's rather impressive for how new that product line is. And we do expect a continuation of the revenue generation from those new product lines. Once the vaccine is out there, it will be somewhat to do, but I think from -- on an ongoing basis, this sort of product lines are going to be essential to open up the country and maintain public health the way they want it to.

Also contributing to our bottom line is a decrease of $400,000 year-over-year in our SG&A expense. That's a 12% improvement. And obviously, the restrictions on travel and that had a good impact, but I will tell you that the insurance impact to us has been tremendous. We've been able to absorb the increase in the insurance rates and still show a 12% improvement year-over-year in SG&A expense.

Also reported during the quarter was a $2.3 million gain from the extinguishment of the PIA, the proceeds investment agreement. And just to remind you, that is a litigation financing mechanism that we entered into 2 years ago -- 2 or 3 years ago with a provider that basically funded our litigation against both Axon and WatchGuard. During the period -- and you'll read about it in our 10-Q, we failed to gain any kind of approval of our appeals and have pretty much abandoned our pursuit of Axon in the courts. Unfortunate that, but the good side of that is that we were able to negotiate an extinguishment of the PIA liability. And I'll remind you that we we received a total of $10 million in funding. And all in total, we had to pay another $1.25 million during the quarter to extinguish that liability. But in total, we only paid $7.25 million. So we're -- we received about almost $3 million more in funding than we were required to pay back to extinguish that liability. So that liability is gone from here forward.

Other items that I'll point you to is on the balance sheet. We have 8 -- and this is at the end of the third quarter. We had $8 million in cash and cash equivalents. We have $14.5 million of working capital and alike amount of net equity as well. So very, very strong balance sheet. The only debt that we have, the only interest-bearing debt that we had at the end of the third quarter is a $1.4 million PPP loan that we received. We are in process of applying for forgiveness of that debt, and we believe it will be 100% forgiven based on the numbers and the documents that we pulled together for the forgiveness application. So we think that will be gone, hopefully, by the end of this quarter, the December quarter. But if not, certainly by the end of the first quarter 2021. The only remaining interest-bearing debt that we'll have after that is we did get $150,000 EIDL Loan, which is also part of the CARES Act or the COVID-19 rescue model. That's $150,000 loan at a 3.75% interest rate, amortized over 30 years. I think the monthly payment is like $700, a little over $700 for 30 years. So it's very manageable debt that we have on the books. And based on our liquidity, we may, in fact, even pay that off, and we haven't made that decision yet. So again, our balance sheet is very, very strong, and it sets us up well for the remainder of 2020 and 2021.

I will also remind you that in July of 2020 we filed a shelf registration statement for up to $125 million, which the SEC declared effective. So we have that shelf statement out there if we would ever need liquidity for either our business operations or potentially acquisitions or product line improvements. So that gives us a lot of liquidity should we decide to use it.

Obviously, 2020 is ramping up very nicely after having been hit with the COVID effects in the first half of 2020. And I think Stan will probably talk more about it, but we're excited looking at the fourth quarter 2020 and on into 2021. And the reasons we're so excited is that the new Shield and ThermoVu products are generating meaningful revenues already, and we see that continuing and hopefully improving in the upcoming quarters. So we believe that, that will become a very good product line for us and generate some good revenues with good gross margins.

The COVID effects on law and commercial customers should decrease and allow for at least normal revenue streams to return from those customer channels, especially if this so-called vaccine works and is generally and widely available as they say it might be. You look at -- our balance sheet is now an asset force in the past and sometimes it's a bit a detriment to us. And given the strong liquidity position and the working capital we have, Stan and I and the Board are all looking at new products to offer upgrades or additions to existing product lines and even acquisitions. And I would tell you that the good part of the COVID process has been that there's some good companies with good product lines that have fallen on hard times during the COVID and may be available at attractive prices. So we're open to all that. And I think Stan may even address that a little further.

So overall guys or people, I think -- I really thank you for your patience in the past quarters. And we believe the third quarter results are just the beginning of better quarters to follow.

So with that, I'll turn it back to Stan.

Yes. Thanks a lot, Tom. And again, I just sort of want to reiterate what Tom was talking about. I mean, there was still quite a bit of headwind in what we've seen in the third quarter. But the Shield product and product lines and ThermoVu really contributed. And just to give you a little idea on why we're still so excited about that particular product line and opportunities there is that we did, if I'm not mistaken, roughly $6,000 as all in the second quarter, because we just -- really just got the product completed and was able to get out there. And even in the third quarter, I know that the $1.1 million is a good number and contributed quite a bit, but you got to realize we're really only in a little over 90 days into this new product line. And even there, you still are establishing yourselves, you're making -- creating new customers and proving your product is worthy of being in their companies and in their stores and being utilized as a cleaning product. So it just keeps growing on a daily basis that we get to continue to put our product in front of different entities, and very large entities are starting to take us seriously, because of the relationships and the doors that we have through, let's say, whether it be NASCAR or the NFL or the RLL race team. We really are getting some great, great massive exposure to some very big opportunities. So again, you got to realize that, boy, this -- the Shield product line and ThermoVu is an absolute new, new, new product in our product line, and we look for that to continue to be able to contribute and grow in these days coming.

I will also tell you that we look to, because of the success of those products, expanding that line. And very soon, you'll hear us talking about additional products that are coming in there, such as electrostatic sprayers, which are in great demand and will be in great demand for many years to come, as it's probably the most effective way to disinfect or clean a room and keeps kids safe, sterilize buses, police cars, ambulances, whatever it may be. So we're thrilled about some products that we've designed along those lines, patents we've filed along those lines of the innovations, and we'll continue to expand on that.

And again, as Tom said, we have been put into a nice position with our balance sheet to where some of our competitors have fallen on some tough times. It's not that they don't have good product lines or may have real good, what I want to say, extensions of our existing product lines. So in other words, we don't compete head-to-head, but they are in somewhat the same sector. We'll have talks with them and keep looking at it. So again, like Tom said, we're very thankful that you guys stuck with us and that we're here. And we do have this opportunity going forward to continue to try to prove you were going through the tough times with us and get after and really give the stock the appreciated value and do the right things to build a very successful company.

So with that being said, we'll go ahead and open up the lines for Q&A.

(Operator Instructions) Your first question is from Bryan Lubitz with Aegis Capital.

Congrats on the quarter. Hopefully, it's one of many more to come. Can you guys -- can we get any clarity on your -- you mentioned it earlier, Tom, as far as the Metlife and the Kansas City partnerships as well as the potential for your new product lines, the Shield products as well as the ThermoVu to be implemented there at any of those stadiums?

Well, yes. The Chiefs are actually allowing a small amount of fans in the stadium for games this year. And we have had a very minor number of units out there. So we are generating a little bit of revenue from the Chiefs. As far as I know, the MetLife Stadium has not or has not been using the security cameras that we anticipated. We've put this unit in a couple of other venues, including soccer stadiums in that being a ThermoVu and that to great success. So I think, obviously, when fans come back in rows and are allowed into events like football games and soccer games and basketball games and so on and so forth, that this ThermoVu product will be front and center and be a key component of being able to do that. And that's what it's made for, really. I mean it's made for high speed, large crowds coming through. And can read accurately temperatures as they walk through the turnstile. So yes, I really believe that once the event stadiums are opened up for full-scale customers and fans, that, that will also lead to growth in the ThermoVu sales.

Bryan, this is Stan. I want to elaborate a little bit on that. Obviously, the net life of those guys are still utilizing when they do have an event. I'm not sure what their status is with the body cameras. But the thermal units, I want to really touch on this a little bit. I mean, we have everything from very large stadiums that are utilizing it to hair salons. I mean it is so wide spread and been received, restaurants and venues and police stations. And I mean, we got -- we have cities buying it for all their city buildings and any access that coming and going in within the city buildings. We have them at fire stations. I mean I don't -- there's not a sweet spot other than any place where there's going to be some type of gathering. I mean businesses are buying them just for the safety of their employees. So that thermal unit is continuing to give a lot of traction, and people are understanding it. And more importantly, and I can tell you this, and you may be familiar, but we have one of our employees here who -- son went to visit in a college campus. And of course, they wanted to take his temperature. Well, they took and then he had some pretty high reading. So they went and got another one of those handheld guns and the reading was totally different. They finally went through 3 different guns before they said, "Well, this one looks acceptable and let's go ahead and run with this and have them come on in." I mean that's the inaccuracy of some of the cheaper products, and people are seeing that. And so they're going ahead and going with the higher quality thermal units. So both do we see that the thermal device continuing to grow and get into the bigger venues, but also, we will start seeing much more of the situational security with the body cameras coming into play. And that may be a scenario, too, to where we're -- not only are we outfitting people with body cameras, but we're there at the gates with our thermal units as well for a particular event, whether it be a football, a concert or whatever.

That sounds excellent. It sounds like you guys are really excited about the product. Now Tom, did you say you guys already have a couple of units at the Kansas City stadium? And moving forward, would you guys looking to leverage those relationships with Kansas City and New York to other cities for the NFL, et cetera?

Well, yes, let me clarify. We have body cameras on security assets out at Chiefs' stadiums. So we don't, at this time, have ThermoVu, although we've shown it to them. And I think, obviously, the NFL is a prized customer of ours, and we'd like to push it throughout the league. But right now, they're dealing with some pretty large issues and they're not ready to commit to that full-scale and throughout the league, because, obviously, some of these stadiums aren't even allowing fans in. So there's no need for ThermoVu because they are not having fans in the stadium. So it's kind of a hit and miss right now with NFL, but I think when things kind of calm down, that obviously, they would be a very, very rich target for us to go after for the ThermoVu as well as the Shield disinfectant as well.

Awesome. Now moving on, you guys recently announced that you shipped your first shipment out to the military? And I'm assuming it's regarding the military contract you guys were awarded earlier this year. Can you guys talk about the potential of that contract? And where you see that going as well?

Yes. I mean, as we know and most of are telling us, Bryan, is that they were ready to go ahead and receive the first batch of body cameras and there may have been some, if I'm not mistaken, EVO or EVO-HD involved in that as well. And that I have to -- while this is a full blown -- they've acquired the product, I think they are watching to see how well it's received and how well it works, and then they could go ahead to some of the other branches or divisions and get it expanded. That's about all they're telling us. They're being pretty tight-lipped.

Yes, Bryan, understand we're on the GSA contract. We have a GSA contract. And so all of the DOD, the Department of Defense, whatever, the federal government can buy through that contract. Now we're still pushing to get ThermoVu on it as well as Shield. And I think once we're successful in getting that on our schedule, on our contract, then that will open up a whole new host of potential customers for that -- those products.

Awesome. And then last one for me, guys. Recently, I saw for some research that you guys had acquired or leasing a warehouse here in New York. I know that your products are very well received down there as you guys have said schools, hospitals, sporting events, et cetera. Is that warehouse that you guys are leasing out here, is that for the new product line? And obviously, when I say out here, I'm talking about New York. Are you guys looking to expand, obviously, ocean to ocean, if you will?

Yes. We're definitely looking going ocean to ocean. And the -- what you're seeing out there, maybe one of our distributors, Bryan. But right now, we're looking at -- as far as getting the -- as much coverage as we can as quick as we can. We do have enough margin in the products with the new product line to show products in thermal that we have been entertaining distributors that have been coming in and some of them coming in and sizable. Trust Inc. products here in Kansas has done a phenomenal job of getting involved and a phenomenal job of selling to tremendous amount of schools and even have been entertaining some large state contracts. And so they'll actually inventory the product and service the product. So that we can get a lot quicker and faster, broader, what I would say, coverage very soon. Again, like I said, we really only have had this product a little over 90 days. The third quarter is really the only quarter of note. It's being able to show how well it can contribute.

Awesome. Well, again, guys, congrats on the quarter.

Thank you, Bryan.

Your next question is from Rommel Dionisio of Aegis Capital.

First of all, congratulations. It's funny. A lot of companies issued a lot of press releases after COVID hit with new products. And I can't think of a sale one now that companies are reporting third quarter earnings that had the kind of impact that you guys did. I mean, there's nearly 1/3 of sales for these new products. So that's a real testament to you guys and new product development and ability to really react quickly. So a couple of questions on these new products. First of all, is it possible to break down the Shield versus ThermoVu of the $1.1 million?

Yes. Actually, the ThermoVu is the lion's share of that. It's probably around the $900,000 range or $200,000 from Shield. But Shield is a -- not a onetime buy. It's a recurring buy generally. And so whatever sales we have, we expect that to recur month in, month out.

Yes. And I imagine you'll gain customers for that business as well. On the -- I did notice that ThermoVu has an optional facial recognition feature as well. And obviously, to improve facility security, that's pretty intriguing to combine that with the temperature. Can you discuss how that -- of the units you've got noticed for from Kansas and from Lynn County and some of the others you're talking to, I was just curious how many of the -- or what sort of percentage of them are really sort of strongly considering or have taken on the facial recognition optional feature in addition to the temperature?

Yes, absolutely. So basically, real quickly, there's 3 different models. And all these models have different capabilities in regards to triggers. And that trigger meaning can you open up a gate, can you open up a door, can you clock somebody in to keep scoring who's coming in. It has a lot of capabilities, just manual type of stuff that you would do with the card, but then they want a little higher and that's our basic system. Let's call that the 500, the Thermal 500. The ThermoVu 600 is where the facial recognition comes into. And that has been utilized, and they used it like at the sporting KCs to where they wanted not so much to worry about who's going in what areas. In other words, worried about a who's going back into engineering or into a hospital room or something like that. But they wanted to just to make sure, not only are we checking your temperature, but do you have a mask on, because you have to have a mask to have your temperature in. So that -- I mean if you had all the above, you have your mask on, your temperature is fine, then you could proceed and go on through the ticketing side of things. So the facial recognition really comes into play on the ThermoVu 600. And again, there's a lot of features there for us, unlocking doors, telling you to go to the Nurse's office, doing what you need to parts of the school.

And then our -- the top of the line, our ThermoVu 700 is actually a unit that's permanently installed and installed in most of the time at a hallway or maybe a rather populated entrance where people are coming and going. And it will constantly scan those people that are coming and going. Now you can go as far as trying to get the facial recognition and capturing people coming and going. But I think they've been most of them utilizing it to make sure that they tell you have a school that all of a sudden it's mid-day and kids are going to cafeteria and they pick up little Johnny's got -- appears to be running a fever, let's go pull him out of class and get him in the Nurse's office, so he's not exposed to a lot of people. So there's 3 different models. The thermal units, the 500, obviously, because of the sophistication of it, meeting the real need, and that is like at a restaurant or as I mentioned the hair salon or some of the basic businesses, it's the hottest selling item by far right now. The 600 is right behind it because you're having much higher, what you would say, security areas coming into, whether it be a city building, a police station or whatever, they want to make sure that the individuals that are coming in there not only are not running a fever and possibly contagious, but also it's the right person getting access to certain areas. So that's where the 600. And then obviously, the 700 being the most expensive. It's taking a little more time, but I'm seeing a lot more of schools and hospitals intrigued by it than the other 2.

Okay. And maybe just one last one for me. I definitely see your comments in the press release on the significant foreign contract for the 5,000 body cams, just want to -- just maybe delve in with that a little more. Is this -- obviously, there are some countries that are trying to adapt to this second wave type of things as we're getting into the winter in the Northern Hemisphere anyway. Is this something -- is this a cold weather country? Is this a country that probably could be delay things for at least the next several months? How should we sort of think about tying out this?

I think there's still some fear of what's going on. And so while I hope things appear to be getting a lot better. I mean, I don't know about you, Tom, but I think it's going to be something in regards to going into next year for sure. And depending on the vaccine and travel restrictions and everything getting lifted. Well, I don't see it in the fourth quarter.

This is a location or a country that is going through initial implementation. And with that, we've got to fly people down there to do the infrastructure install and all the training of their people and they have to commit to the training and so on and so forth. So there's a lot of things working against us right now. But eventually, when and if this vaccine comes out and is generally available and widely distributed, that those impediments should fall to the wayside, especially once we can travel people down there to install and train their people, I'm very hopeful that, that gets back on track quickly. But I can't say if it's this quarter, next quarter or a year from now, but I'm very hopeful that it does happen sooner than later.

Okay. Fair enough. Congrats again on the quarter guys.

Thank you.

Our next question is from Devin Conrad with Edible Impressions.

Congrats on your team getting a solid positive EPS since 2013. I was waiting for you guys to drop that. I just wanted to ask quickly about the $125 million shelf offering. I know you had mentioned something earlier this year that you weren't going to be proceeding with that any further. How comfortable do you guys feel going into the rest of the fall and into the New Year that you won't to have to exercise that or you will end up exercising some of that shelf offering?

Right now, as Tom said, in regards to our balance sheet, it is extremely strong. So far as operations side of things and what we believe is as we had a sort of a turning point within the company, we wouldn't anticipate needing to do anything concerning the shelf. We'll keep the open that if for some reason the acquisitions and new product developments and things that we're looking at do come into play. We're glad it's there. And again, provided the price is right and everything makes sense. But in short, it's there. I don't want to call it the safety net, it's there as a tool. It's there's a tool that assists us in identifying opportunities and, if needed, help us to go out and tackle. But right now, operations, as you can see, seem to be going the right direction.

Yes. I would say that shelf offering is just that. It gives us instant access should the market dictate it's time to do it or we have needs for it. And quite frankly, from an operating standpoint, we've got plenty of cash and plenty of working capital. So if there were to be an attractive acquisition or a new product line that we feel would be advantageous to jump on, then that gives us the flexibility to do so. So it's really there as a backstop for operations, but we don't see that need anytime soon. And then it's really more for not being able to pounce on an opportunity when it presents itself.

Absolutely. Taking a look at share price and insider trading, you guys have been able to really kind of give back to your employees and you guys are committed to the -- on your end as well. It seems like you guys are pretty confident. The other thing I wanted to ask was about the research costs that you guys have kind of developed, obviously, your new product line. Can you explain how kind of fluctuated with now increasing sales teams? Or how you -- how you envision that going forward? Obviously, with new products coming out, are you laying back on research? And I saw your sales team increase, so how are you proceeding with that? And then the amount of police departments that are on the subscription platform? I guess, as a second question to that.

Sure. So -- this is Stan. In regards to the sales side of things, I'm actively looking to continue to bring on individuals to assist us probably more on the Shield products and the ThermoVu side than law. We've got a great reputation in law. They know who we are. We've got to do everything we can to continue just to be in front of them, showing them our new products and making sure that they're aware of it. And remember, a lot of times when the department buys something, they bought it on some type of warranty program or a subscription. So they're pretty content for years at a time before they come back to you. So -- but we are actively looking on the sales side of things in regards to the commercial and clearly, the Shield products and ThermoVu. And then, Tom, I'll let you address it.

Yes. I would say, on the research and development side, if you look at the projects we've taken on and what have come out, EVO was brought out last year. It's our in-car platform. The amount of R&D that we spend on that now is really just new feature development and backfilling some of the features that weren't completely built out. So that's pretty well done. The commercial EVO or the commercial product that's really in a box rather than in a mirror is almost done and should be available here in the fourth quarter, if not the first quarter. So that project is nearly done. Stan mentioned the electrostatic sprayer. It's done. We're in beta test right now, and that looks very, very good. And you're talking about timing, my gosh, with all the COVID stuff, and this is really an outstanding addition to our Shield and ThermoVu line and goes hand-in-hand, especially with the Shield disinfectant. And that should be out here in the fourth quarter and widely available in the first quarter. So we're on the downhill slide of a lot of our major product development cycles, but that doesn't mean that we're not going to continue to do that. And we've got a good core group of engineers. We supplement them on an as-needed basis.

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our bang for buck on the research and development side. In terms of subscription acceptance, I would say, we've probably got 25 to 40 subscriptions out there that just came on with the introduction of the body camera subscription program as well as the in-car video program. And again, I think I've mentioned this earlier, but I'll reiterate, when we go to that subscription model, we don't get the big revenue bump upfront from a hardware sale. Rather, we get a monthly check, if you will, mailbox money as we go through it. So you're not going to see a huge spike in revenues when those things are signed, but you'll see a nice rollout of revenue through the life cycle of the contract. And generally, we're looking at anywhere from 3- to 5-year contracts for that.

Your next question is from

So first of all, I would like to congratulate you for the latest results. Great. My question is, when are we expecting to see contracts with the government? And what are we expecting exactly as investors from the shares? So is it probably going to go higher? Or what's going to happen next?

We continue to get inquiries. We continue to fill out bid requests, and we continue to call on new opportunities with all the government agencies that are out there. And what we try to do is make sure that if there's anything real material that we're out there doing a press release and trying to show the significance of it. And so hopefully, we'll be putting ourselves in a position and what we're trying to do every day is to show appreciation in the stock price for our shareholders. And we will continue to keep our head down and do that for you all.

Yes. We can't predict stock prices, honestly. And all we can do is try and put results up on the boards and again, this third quarter was a nice turnaround quarter for us. But that I think Stan and I both realize and understand that that's just the beginning. We got to do this quarter after quarter and improve those results quarter-after-quarter, and we're ready to do that based on the product line that we have.

And where do you see the company by the end of 2021 with all the events and everything going on?

Yes. That's a great question. Depending on what transpires in regards to how quickly the country can get back to some normalcy, we feel very, very confident that we put the product lines and have the product lines in place to benefit from, what I want to say, the law enforcement side of things. I mean, EVO is an amazing amazing product. We'll have the next-generation body camera first quarter, it's coming around the corner. So I mean, as far as law enforcement, I feel very confident. We just issued the -- our software out there that now allows -- if they would so like prosecutors and others to have access, much easier to video that they would need for prosecuting and those type of things to save them money with -- in regards to time. And then the Shield products, I do not see this country wanting to do a step backwards and not continuing to take a better effort of disinfecting and cleansing and sanitizing. And so those efforts I see for years to come. So that's a great question. And if I really had a feel for how this pandemic was going to start to wind down, I think I could give you a little clear insight, but it still revolves around that and the functionality of our country and other countries getting back to some normalcy.

And there are no further questions at this time. I'll turn the call back over to management for closing remarks.

Listen, thanks, everybody, for calling in. We've taken up quite a bit of your time today. We had a very good turnout on this call. I know the call will also be up on our website and have access to the replay. So if you do have some questions that were out there and we weren't able to answer them, feel free to give us a call. We will do our best to answer it if we're so permitted. And again, thank you for your, what I want to say, again, hanging with us, and we look forward to continuing to be very aggressive and try to expand on what we've already created from this quarter on. So thank you all very much. Be safe.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.