Intellicheck Inc (IDN) 2012 Q2 法說會逐字稿

Greetings and welcome to the Intellicheck Mobilisa second-quarter conference call. All participants are in a listen-only mode. A question and answer session will follow the formal presentation.

(Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kenna Pope, with Intellicheck Mobilisa.

Thank you, and welcome, everyone. Thank you for joining us today for our 2012 second-quarter conference call to discuss Intellicheck Mobilisa's results for the fiscal quarter ending June 30, 2012, and to discuss other business developments. In a moment, I will call upon our CEO to lead today's call and introduce the other members of the Intellicheck Mobilisa management team who will be participating in today's conference call. Before I do that, I will take a few minutes to read through the forward-looking statements.

Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. When used in this conference call, words such as -- will, believe, expects, anticipate, encouraged -- and similar expressions as they relate to the Company or its management, as well as assumptions made by and information currently available to the Company's financial results management, identify forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances and the Company is under no obligation to, and expressly disclaims, any obligation to update or alter its forward-looking statements, whether as a result of such changes, new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained under the heading of Risk Factors listed from time to time in the Company's filings with the Securities and Exchange Commission. With that out of the way, I would now like to introduce Mr. Steve Williams, Intellicheck Mobilisa's Chief Executive Officer, to preside over today's call. Steve?

Thank you, Kenna. Welcome, everyone, to the Q2 2012 results for Intellicheck Mobilisa, and we are glad you joined us. Let me first begin by introducing our Board of Directors. Our Chairman, Dr. Nelson Ludlow, General "Buck" Bedard, Ms. Bonnie Ludlow, Admiral Mike Malone, Mr. Woody McGee, and Mr. Guy Smith. Our management team; myself, Chief Executive Officer Steve Williams; our Chief Financial Officer, Bill White; Mr. Russell Embry, our Chief Technical Officer; and Ms. Bonnie Ludlow, our Senior Vice President. Let me first begin with an overview of our Q2 2012 results. Revenues are up 9% to $3.44 million. It is our fifth quarter in a row with positive EBITDA, and in Q2, we saw government identity systems rise 23%. Our net income for six months was up $659,000, and our adjusted EBITDA for six months was up $658,000. Our new bookings were up 40% for Q2.

Let me now go through each of the divisions and talk briefly of some significant accomplishments through the quarter. In our Commercial Identity Systems, we have -- our focus remains on credit card issuance, loyalty, loss prevention, hospitality, and banking operations as we move from what we call the back of the banquet credit card issuance to the front, or teller transactions and banking operations. During this period, we released a new product. The new product is price-competitive, with products we previously polled. This particular product, our IM1750, not only uses our patented technology to read and parse or scan a bar code, but also captures an image of the driver's license, something our commercial clients had asked for, for about four years. We now have that device in production and available for sale.

Our second business unit, Government Identity Systems, our focus remains on access control, visitor and vendor validation, or checking for a bad guy. We will continue to look for new federal facilities and agencies. We now have over 100 locations and we are expanding to state and local. Two announcements we made this quarter. Lenel certification, that is significant for us because we previously did Lenel for our TWIC Reader, which I will expand on in a little bit. But most recently announced, a new certification with Lenel, one of the world's premier access control systems, so that we will integrate with Legacy Systems, most importantly, on several of the federal agencies that use a ProxCard as their entry badge. That is a significant opportunity for us and resulted in Q2 last year an award of a contract, with the certification this year a new award of contract for that type of a reader. Remaining in the Government Identity Systems, regard to transportation worker identification credential, we saw a port sale this last summer resulting in about $1.1 million. It is the largest TWIC sale by any company to date and we will continue to see that space grow as many of our competitors have left this space, and we are by far and away now the market leader in TWIC mobile reader sales.

The third business unit, our Wireless System, our focus remains on autonomous active sensor system, utilizing our trademark Wireless over Water technology. We will focus on both environmental and security. We recently deployed our 10th buoy and that's all the buoys we were required to build under our current Navy contract. So our system is fully operational and we are finalizing as we go to our demonstration. Most recently is our market development. We did a conference on the West Coast on small vessel threat conference, where we physically deployed a buoy to the conference in the water in the Puget Sound, so that many of our future stakeholders could actually touch the buoy. We have developed both a federal and commercial market for this buoy system, as well as an international space as we work through exportability, both through the State Department and the Department of Commerce. Now I will ask our Chief Financial Officer, Bill White, to give you an overview of some more details on the quarter. Bill?

Thank you, Steve, and a good day to our shareholders, guests and listeners. I would like to discuss some of the financial information that was contained in our press release for the second quarter ending June 30, 2012, which we released this morning. We anticipate that our complete quarterly report on Form 10-Q will be filed with the SEC this afternoon. As Steve mentioned, revenues for our second quarter ending June 30, 2012 increased 9% to $3.441 million, compared to $3.165 million for the previous year. Identity system revenues increased 12% to $2.838 million, compared to $2.535 million last year. There were increases in both commercial and government sectors during the quarter. Wireless revenues decreased 4% or $27,000, to $603,000 from $630,000 last year. Total booked orders increased 40% quarter-over-quarter. Booked orders for the three months ending June 30, 2012 were approximately $3.064 million compared to $2.188 million in 2011. Gross profits. The Company continues to maintain high gross margins. Our gross profit was $2.230 million for the quarter, or 64.8% as a percentage of revenues. For the three months ending June 30, 2011, gross profit was $2.148 million or 67.9%. The changes reflect higher equipment sales as a percentage of total revenue this year compared to last. Equipment revenues yield slightly lower margins than our other product offerings.

Operating expenses, which consist of selling, general and administrative, and research and development expenses, increased $148,000 or 7%, to $2.169 million for the three months ending June 30, 2012, from $2.021 million for the three months ending June 30, 2011. Approximately $73,000 of this increase, or 49%, is attributable to a credit- and stock-based compensation expense in 2011 that was due to a reduction in force. Net of this effect, the increase in operating expense was 3.7% over the prior year. Adjusted EBITDA for the quarter ending June 30, 2012 was $355,000, compared to $337,000 end-quarter June 30, 2011. The Company posted a net income of $61,000 for the three months ending June 30, 2012, compared to a net income of $125,000 for the quarter ending June 30, 2011. As of June 30, 2012, our backlog was approximately $918,000, compared to $773,000 for the same period last year, a 19% increase.

I would like to move now to talk about the six-month results ending June 30, 2012, and 2011. Revenues for the six months ending June 30, 2012 were $6.151 million, compared to $6.021 million over last year, or a 2% increase. Our gross profits, current year six months ending June 30, 2012, were $4.188 million, compared to $3.884 million last year. That is an 8% increase. Gross margins this year for the six months ending, 68.1% compared to 64.5% last year. Operating expenses decreased 8% for the six-month period, to $4.112 million from $4.462 million last year. Adjusted EBITDA was $669,000 this year, compared to a negative $19,000 last year. Net income for the six months of $76,000 compared to a negative $583,000, or a net loss of $583,000 last year.

I would like to now move and talk about the Company's liquidity and financing. As of June 30, 2012, the Company had cash and cash equivalents of $1.593 million, working capital defined as current assets minus current liabilities of $2.631 million, total assets of $23.342 million and stockholders equity of $19.885 million. The Company has not utilized any bank financing in 2012. During the six months ending June 30, 2012, the Company generated net cash of $199,000, compared to a net use of $14,000 for the six months ending June 30, 2011. Cash generated from operating activities was $244,000 in 2012, compared to a use of $13,000 in 2011. We used cash of $56,000 in investing activities in 2012, compared to $33,000 in 2011, due to slightly higher capital expenditures. Cash provided by financing activities was $12,000 in 2012, compared to $32,000 in 2011.

During 2011, the Company entered into a two-year revolving credit facility with Silicon Valley Bank. The maximum borrowing under the facility is $2 million. Borrowings under the facility are subject to certain limitations based on percentage of accounts receivable as defined in the agreement, and are secured by substantially all of the Company's assets. As of June 30, 2012, there were no outstanding borrowings, and unused availability under the facility was $1.5 million. We currently anticipate that our available cash, as well as expected cash from operations and availability under our revolving credit facility, will be sufficient to meet our anticipated working capital requirements for at least the next 12 months. We currently have effective a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission. Under the shelf registration statement, the Company may offer and sell from time to time in the future in one or more public offerings its common stock, preferred stock, warrants and units. The aggregate initial offering price of all securities sold by the Company will not exceed $25 million, and pursuant to SEC rules, the Company may only sell up to one-third of the market cap held by non affiliate shareholders in any 12-month period. I will now turn it back over to Steve.

Thank you, Bill. A quick market overview of IDN. As of 7/27/12, our price was $1.46. Our 52-week high was $1.96. Our 52-week low is $0.81. We have 27.5 million shares outstanding with a market cap of $41.2 million. Management holds 45% approximately, and our average daily volume is about 25,000 shares.

Let me highlight some of our growth initiatives and address some of our recent announcements. Something we have talked about for a while now is a distribution model to increase our sales and marketing capability. Our recent announcement with a large provider of hardware that we will license our software has multiple facets with regard to revenue generation. The first being the license itself, that the hardware manufacturer can license our software. What it does for us, is it now allows us access to other distribution channels, not only to this vendor but others. It's our new model. Sell a seat license, also sell the hardware, as well as use the sales or vendor channels or the channel partners, to help sell to the end users with established relationships from the large hardware manufacturers. Then we would also get recurring revenue on those licenses. So it is a three-pronged approach on a seat license, an enterprise license, and hardware sales by effectively using other partners' distribution channels. It is a very exciting opportunity for us.

Top line growth. We continue to focus on that. We saw a small incremental increase this quarter at 9%. Obviously, our goal is to continue to grow that top line, which ultimately will fall to the bottom line. And we are going to do that by increasing our organic sales force as we continue to look for the right people. Our new product launch, as I mentioned on that piece of hardware, we currently are looking to move that into banking operations, and many of our retailers have shown the desire to also capture an image of a driver's license. So we find that as a potential market for future growth on hardware sales. Our cell phone applications continue to get developed. Recently the Board demonstrated the initial capabilities to scan and read a driver's license from a cell phone. We are going to make that more robust and applicable to many cell phones because all of us have a cell phone, and obviously we can benefit from having a cell phone app around our patented technology.

Let me review Q2 2012 in the last six months. Our revenue is growing and we are up 9% for the quarter. We are focused on our top line growth. We will continue to grow our sales and distribution force through our partners and through our organic sales team. We launched new hardware with our image-capture driver's license capability, and software products on our cell phone. And our bookings were up 40% with Q2. With that, I would like to turn it back over to the operator and welcome any questions you may have. Operator?

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. (Operator instructions)

One moment, please, while we poll for questions. Walter Schenker, MAZ Partners.

Thank you. Hi, Steve. I'm not sure I followed the discussion you just had on the announcement this week with your arrangement with a significant hardware manufacturer. I understand that their sales force now may be selling your software. Is there an agreement -- part of the agreement that your software is automatically included in some of their hardware? Or when they sell the hardware, the purchaser of their hardware optionally gets to add your, and who pays license and seat fees if someone does use it.

Thanks, Walter. Let me try to explain. Rather than talk to specific terms of that agreement, I will talk in generalities as I am not allowed to disclose exact terms, but it will answer your question. The agreement that we announced, much like other agreements, is selling software, a seat license. So what we would do is, we would be the provider of a seat license that would be incorporated into a piece of hardware. It is what we talked about doing a year ago, where there is a variety of vendors out there to sell hardware to read driver's licenses. So effectively, we would license that software on a per-seat basis to a hardware vendor. What that then does is, it develops the market. For instance, a certain piece of hardware that is scanning a bar code only reads a fraction of the driver's license in existence. So then the sales channel is -- the channel partners, what they want to do is sell a complete solution.

It's what we do. So then they -- the sales channel is not part of the agreement -- could sell an enterprise license and they would do that by getting some points, 5 or 10 points, off the half to three-quarters of a million dollars enterprise license. So effectively, the hardware announcements we make going forward will be a small dollar figure relative to just the seat license embedded in a piece of hardware. The channel would then be rewarded to come to us to buy the enterprise license, much like we have done in-house for years with our organic sales force, in addition to the updates to any software that was sold either through a licensing agreement or through the enterprise. So it creates a varied approach to revenue generation. Does that help you understand?

Yes, somewhat. Part two of the same question, given that this develops as you hope it does, at what quarter might we see an impact on revenues?

Again, not to the specific agreement, but in the other agreements we are working on, the other vendors, you should start to see it in Q3 at a smaller amount. I think you will see the real impact moving forward in Q4 and Q1 next year.

Okay, thank you.

(Operator Instructions)

Gunnar Hansen, Sidoti & Company.

Hey guys, thanks for taking my call. I guess just a couple of questions, clarification questions. Could you guys go over each business segment revenue growth for the quarter? I think I missed that.

I will ask Bill, do you have those numbers readily available there?

Yes, Steve. The identity system revenues increased 12%, Gunnar, to $2.838 million compared to $2.535 million last year. There was a $27,000 decrease in wireless revenues from $630,000 last year to $603,000 this year.

Okay, got you, thanks. And then, I guess just going back to this recent hardware agreement. It sounds like some of the revenues will start to trickle in I guess in the third quarter, and then pick up a little bit in the fourth and a little bit more thereafter. What sort of dollar figures are we talking here? I mean, could you guys talk a little bit more at that?

Yes, we don't really disclose dollar figures because next quarter if we make it, you guys will say -- go bigger. If we don't make it, you will say -- you guys didn't make it. So we don't disclose dollars as we get closer to the end retailers, because they are going to have some restrictions, I suspect, on what we can and can't disclose. But for us, to give you an example, what the salespeople focus on in the commercial side are enterprise licenses. It is our bread and butter, it's where we make our most money, it's software. So the software I sold to Target or Walmart is the same one I would sell to any Tier 1 retailer going forward. So what excites us is, it allows us to use the thousands of people that are already in the channel of another hardware vendor or some hardware vendor, to have established relationships with the Tier 1s.

I will give you an example. In almost every case where we go in to sell an enterprise license, I need to bring in my hardware vendor with me in order to close the deal to get the hardware sales. And I use one in particular with AT&T. It is one of our biggest clients, it remains one of our largest clients, and we had to use the hardware vendor with us to get price exceptions and to create a solution that was feasible for the Tier 1 retailer, AT&T. So we will use those relationships to further what we have been trying to do with our sales force of 12 or so people. We will effectively use those people to go out to the Tier 1s who are already there. I would love to give you numbers but unfortunately, we don't give guidance in that regard.

Right, got you. Alright. And then maybe just talk a little bit about some of the SG&A expenses in this latest quarter and I guess, probably some of that is related to some of the sales force ramp-up, or talk a little bit about that?

Yes. I mean, the most numbers that Bill disclosed, there was a change based on some former employees and the way we had done revenue -- or excuse me, accounting, with regard to stock-based compensation that were reversed out as a result of their departure. Actually, if you take that out, and though I love my new CFO, there is a headhunter cost associated with the recruiter to get us a new CFO, which we gladly paid. So other than that, well actually expenses are down, but those were the two big changes for the quarter. And, remember, we are only talking about $100,000. We are not talking about millions. And we will see, or we can sustain significant growth without increasing SG&A substantially.

All right, guys. Thanks, so much.

Amy Norflus, Neuberger Berman.

Hi. I have a few questions. Number one, you speak about the prominent manufacturer. Can you talk about the competition and the probability of doing business with them?

Absolutely. So the theory on the distribution model was that we would get one of the larger companies to agree to and acknowledge -- not acknowledge, but accept that we have the patented technology. And frankly, what comes with that patent is, one, protection, and two, the ability that we are the Association of America Motor Vehicle Administrators' library. We have the best software, we have the best technology, and that gives them the ability to do that. Now that we have partnered with one of their competitors, or a competitor, the other competitors reached out to us immediately, saying -- we want to license with you as well. So what it effectively did is, it created a snowball effect that is an opportunity for them. As competitors they want to neutralize the field because right now, one hardware guy has a hand-up on the other. And we have already seen interest from all the competitors in that space. And there are only a handful of really large ones, and we know them all and we are discussing that with all of them.

Okay. So if you do sign these people up, can you talk about the recurring revenue stream that you would have, and I guess it wouldn't be with these manufacturers, it would be with your end-customer?

Exactly. What would happen would be, we would sell a license on a per-unit basis. And then most of these guys, if not all of them -- they are hardware guys, they don't want to get into software and recurring revenue with that regard. What would happen is, so we may sell a seat license to the hardware guys, who would then sell it and pay us. The recurring revenue is based on they have to keep it updated every year, and in those cases, the Tier 1 retailer or -- we have built a web application so that they would come directly to us on those purchases. So the recurring revenue, just on those initial licenses, could be substantial relative just to initial software. And again, it's recurring revenue. So we don't do anything special for the next retailer that signs up. It is the same software that we sell to our existing clients. They just -- they pay for the software update and download it like everyone else.

What about the hardware that is already in force?

So the negotiations with all distribution parties is, we would go in and retrofit the hardware that exists in the field today with our software that would give them the license protection from the patent, as well as generate revenue for us. So we have always prided ourselves as -- you don't need to be unique. We can go into any legacy system, help you update the firmware so that you can use our technology.

So it is imperative that they need to have some sort of update because I guess this information changes daily?

Exactly. They, in most states, change every four or five years, some a little longer than that. But frankly a lot of people like to get the updates as soon as they are in the field. Over time, we have seen our own clients, they maintain that. And the big Tier 1 guys, they don't want their software out of date and once they have integrated, they don't remove it from the system. It's just cheaper to keep it in place.

And then my last question. So, for a Tier 1 retailer to roll this out must be expensive.

It's not expensive, actually and it's one of the reasons we license with the hardware guy. Some of the cases in the CapEx were significant and it kept some of the Tier 1 folks from initially rolling it out. With this new license agreement, you don't need to buy the enterprise license initially if you don't want to. Obviously, there are some that still will, but some of the smaller companies tend to want to go slowly. We have one in particular that didn't buy an enterprise license initially, but now over time, it would have been a lot less expensive for them to do that. So in both cases, we have built a business model that will benefit IDN, whether they do the enterprise license or a per-seat license.

Perfect, thank you. I will jump back in queue.

(Operator Instructions)

Robert Edmonds, private investor.

Yes, gentleman, can you discuss the learning curve that you have to instruct the employees on the hardware side, what they have to amass? And can you also attract the kind of customers that this hardware manufacturer is going after and how it fits in your present scheme of clients? And if you can discuss with us some of the named clients like Target and Walmart, anyone else that we might know of that you can address their names.

Yes, absolutely. Let me start first with the employees. There is no learning curve. It is a technology that has been around since the patents, you know, with the IDN IPO 299, and it was based on those patents on reading driver's license. So it is very simplistic to understand. There is really not a learning curve for the channel. It is somebody -- it's vendors, the partners we have, who have been our partners for years, and that is what we are doing. With regard to the client base, or our clients, we have always had -- Target was around since the merger four and a half years ago. We have since added Walmart, Chase, GE, and we continue to expand on the client base. So from our profile in Tier 1, Toys 'R' Us, they are folks that have been around several years for us. Our Tier 1 base is very well known. We are actually starting to realize benefit from the brand, from our technology. People know who we are, what we do, and what have provided over the years. It's very easy to go into another Tier 1 retailer and when you say -- Walmart is my customer-- or -- Target is my customer -- or -- Toys 'R' Us is my customer-- you don't really have to prove yourself.

Most recently, I think last year, we made an [announce] with Motel 6. We start to see development in those areas with regard to other hospitality areas because -- I did several interviews that it's kind of a sticker of approval that you have done a flagged, named motel system that they recognize. Most recently, one of our salespeople attended one of the trade shows. The same show we were at a couple of years ago, we couldn't get an appointment with any of the named chains. This year, very different story. It led with -- oh, you guys did Motel 6, we need to talk. So it is really something called crossing the [cap]. You have the early adopters who then say -- well, I will take a risk because I want to be the leader. And then you have the early adopters that go, and the majority moves in on the curve. So that's where we are on hospitality. So our Tier 1 client base is still growing every day. And there was a third one. Robert, what was the middle one I missed?

Sorry, I forgot. Oh, I wanted to find out with the hardware manufacturers, the kind of companies they are going to be going out of. In Tier 1, are they national, international, are there any opportunities international? Do we have any problems to worry about?

Right, great, that's it. Thanks for reminding me. Exactly. So we are not -- one of the things that changed years ago for us, we moved away from the ABC liquor store down the street. Now effectively, with this new agreement, they could buy our software through the hardware manufacturer. We won't have any overhead on that. It will just be a software license. So that moves us in a space we have -- we will let somebody else service that. The reason we signed the agreement is every time they go to a Tier 1, I have to reach back out to one of the hardware guys because we want to provide a solution. I don't just want to say -- here is my software license, go away. I want to be a solution. When they need something fixed, I want to be the place they call.

So that is what this is about. This is about the Tier 1 guys. This is an international company. All the companies we are talking to are like that, are international. We are not trying to sell a license to someone that is going to cost us $100,000 to integrate with and result in $20,000 in revenue. That's not what we are doing. All the people that we know are international level companies, they sell hardware all over the world. And though I mentioned exportability on the buoy system, we have also applied with our attorneys for exportability on our software on reading driver's license. Obviously in the international space, we would have to add additional reading capability as a lot of countries outside, well obviously countries outside the US won't have US driver's licenses, so we will look for exportability on both the driver's license, as well as buoys.

Steve Rudd, USIP.

Hi. You mentioned that you did a shelf registration. Could you give us an idea of what is the earliest you think you would do an issuance based on that? And then, I think you mentioned, is it $25 million? I haven't looked at it. But give us an idea of what sort of size you might have in mind.

Yes, absolutely. Thanks for the question. The shelf actually was putting in place a lesson that we learned after a stock bump several years ago from an underwear bomber, where our stock traded 10 million shares and we dumped over $4 a share. At the merger, Nelson, our Chairman, when he was CEO, put that in place so that if we had another stock bump like that, that if we wanted to take some money off and go do some other things like acquisitions, it would be in place. We currently don't have any plans in place to use that shelf. It was kind of a -- it was put in place in case we did decide to do a raise, whether it would be an acquisition or growth or something like that. But right now, we currently do not have a plan in place to exercise it. It would expire next year if we don't. We would intend to extend that if that were the case and we haven't used it. But right now we have no current plans to use the shelf.

Okay, thanks very much.

Amy Norflus, Neuberger Berman.

Yes, hi. Can you tell us what the state and the local authorities are doing with regards to cell phones and capturing data, and give us some idea of the revenue model, and what to expect, and when a roll out [was tough]?

Sure. Thanks, Amy. So the state and local market for us has been a -- we have been trying to figure out how to penetrate that space. What we came up with was what I was discussing earlier about the cell phone application that state and local could get in by our system. The challenges in the federal space, a base will spend $300,000 to $500,000 initially to get a large capital expenditure to buy hardware. And that is hard for state and local, if not impossible. So we developed the cell phone application to do that. It is not quite where we want it to be yet. As we get it more solid, we will start to do that, sell that more often. We have several state and local law enforcement agencies that actively participate. We can do all that on our current hand-held readers. We just want to make it less capital intensive up front for state and local. We think that will open up that market space for us. So for that, there is a lot of [sworn officers] out there and we will continue to try and develop that market space, but we still have a ways to go in development to get that product as sound as we want it. Because we want it like all our other products. We don't want people fumbling and trying to figure out how to use it. It has to be a solid product when we deploy it.

Got you. Alright. Can I ask one more or we are out of time?

Absolutely, go ahead.

With regard to the government business, can you give us any update with, what is happening, budgets and if there is any money left and what you are seeing over there?

Yes, I think you saw -- actually we saw the reversal of what is going on here in Washington, DC, though I call this home. Last quarter we did 1.1 million in Hawaii and you saw government ID went up, as well as bookings. We are not experiencing those issues. Obviously, the larger companies would. But making a change of 1 million or 2 million is not going to save the budget. So we haven't really seen a negative effect. And frankly, we don't really get that from any of our clients that we are losing money, we have to cut purchases. We haven't experienced that.

So actually, are you seeing an uptake? Do you see that people have extra budget? I mean, there is extra monies on the budget that they can spend?

They will never admit to they have extra money, but it is end of fiscal year and we are going to try to find every bit that they want to spend quickly.

Perfect. Lots of luck.

Steve Rudd, USIP.

Sure. So our backlog was $918,000 at June 30, new bookings for the quarter were up 40%, we are 30 days forward from there, what do we look like right now?

Yes, unfortunately we wouldn't disclose anything on the call that we haven't disclosed already. So we don't have any reason to believe we are going to have a bad quarter or a good quarter. We haven't disclosed anything. As soon as we have anything material to give you, obviously we would put out a release.

Okay, alright. The part I didn't like is that we simply don't have any reason to believe that we will have a good quarter. The part of not believing we will have a bad quarter, I can get. But I think -- let me just put it this way, we have nothing that tells us that things are worse than what we just saw?

Exactly. When I say a bad quarter or a good quarter, if we had something that slipped dramatically, if we had -- the part that gets me excited when I put out press releases, I have 1.1 million of them. Obviously on the call, I wouldn't be able to disclose it. If I had a -- this wouldn't constitute a releasable event is my conference call, as we discovered last quarter.

Oh, okay, alright. Thanks very much.

There are no further questions at this time. I will now turn the floor back over to Steve Williams for closing remarks.

Thank you. Well, thanks, everyone, for joining. If you have questions, please feel free to call us or call IRG directly. And we look forward to the next quarter conference call. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.