Identiv Inc (INVE) 2013 Q4 法說會逐字稿

Welcome to the Q4 Identive Earnings Conference Call.

My name is Angela, and I will be your Operator for today's call.

At this time, all participants are in a listen-only mode.

Later, we will conduct a question and answer session.

Please note that this conference is being recorded.

I will now turn the call over to Ms. Darby Dye.

Darby, you may begin.

Thank you.

Hello, everyone and thank you for joining us today.

With me on the call today are Jason Hart, CEO of Identive, and Brian Nelson, our CFO.

In a moment, we will hear remarks from both of them, and then we will take questions from our sell-side analysts and registered investors.

Before we begin, please note that during this call, we will also be making reference to non-GAAP results or projections, including our non-GAAP gross margin, operating expenses, and adjusted EBITDA.

A complete reconciliation between each of these non-GAAP measures and the most directly comparable GAAP financial measure is included in today's press release, which is available on our website at www.identiv.com.

In addition, during our call today, we will be making forward-looking statements.

Any statement that refers to expectations, projections or other characterizations of future events, including financial projections and future market conditions, is a forward-looking statement.

Actual results may differ materially from those expressed in these forward-looking statements.

For more information, please refer to the risk factors discussed in the documents we file from time-to-time with the SEC, including our Annual Report on Form 10-K for fiscal 2012, and our subsequent quarterly reports on Form 10-Q.

Identive assumes no obligation to update these forward-looking statements which speak as of today.

Now, it is my pleasure to turn the call over to Jason Hart.

Simplified, focusing, growth this year.

Welcome, everyone.

Thanks, Darby.

I am joined today in California by our company's new CFO, Brian Nelson, Larry Midland, the company's President, and other members of our hand-picked Identive leadership team.

I want to thank them for joining me today.

As we discussed on our last earnings call, Q4 was a transformative year for the company -- or transformative quarter for the company, as it positioned us to build a platform.

So I wanted to spend a few minutes this afternoon and cover some of the highlights of that activity.

Also then cover a little bit of the forward strategy for the business, and then I will hand over to Brian, who is going to cover Q4 financial performance and give everyone the goodness on the numbers forward.

To get going and understand where we are going, we have to understand where we have come from.

We implemented a tactical simplification plan in Q4 to establish a single platform.

We took 37 different legal entities, 18 different operating businesses, we took countless IT systems and disparate email products, we took more than 250 domains and points of presence, literally 50 different marketing brands that were were out there to describe what Identive did.

And we took all of those and we developed a strategic plan, and we mapped the activities and the assets that we wished to keep that matched that plan.

I'm going to tell you a lot more about that plan today.

So through this project that I categorized as simplification on the last earnings call, there were approximately 13 major activities from changing the focus of the business, to investing in sales and marketing, investing in our product and technology to moving the corporate headquarters from Germany to the United States.

As you've seen through many of the 8-Ks that were filed, we were pretty silent about what we were doing, and as I said in the Q4 earnings call, that was deliberate.

We were very focused internally on re-transforming and building this platform.

So as we have come at the other end of that, I am pleased to say that we have completed the divestiture.

We'll shut down of more than 6 major assets.

We've taken our headcount from 460 people down to approximately 325.

We have begun to get our operating expenses in control, and Brian will talk more about that in just a moment.

As we executed the tactical simplification plan, we also developed a long range value creation plan designed to align the company and our core competencies with delivering trust solutions.

Trust solutions that are focused on this new connected world, a world where there are trillions of objects.

I am pleased to say that earlier today, we launched the first public view of our market alignment at Identive.com, marking the beginning of a broader launch of our new vision, a vision we internally call Trust Your World.

It's important to understand that we believe we are at the beginning of a new world that is rapidly connecting, and while the Internet of Things terminology has mostly focused on things that are online, we believe that it extends to all things that may be connected or may have a microprocessor if only for split second, things like toys, consumer goods, medications, passports, ID cards, and many of the other everyday items that you and your family may come in contact with.

But this new connected world lacks some of the foundations of trust and that Identive is uniquely positioned with the assets that we kept and the investments that we're making to capture this segment of a rapidly evolving market.

And we've had some early wins, which I am pleased to report, and you'll see some of those wins in some of the categorization of our numbers.

As we developed our strategic plan around this vision, it has allowed us to determine which of the 37 assets in the old Identive Group supported the vision.

The result was both a cash-driven tactical and growth-driven strategic focus to divest the assets, reduce the OpEx and align the company around this new Trust Your World vision.

While the broad strokes of simplification are complete, or we are in the middle of rolling them out, we have begun to turn our attention to growth and the value creating activities.

So what is Identive now?

We see Identive as a security company, a security company that establishes trust.

Trust in the connected world of all things, including premises, information, and even the everyday items I mentioned earlier, such as medicines and toys.

So broadly if you were to look at the new company, you would see that our technology focus is a priority, that being a Silicon Valley Californian company of about 325 people, with revenues that Brian will disclose to you in just a moment on an annual basis, with a goal of being EBITDA positive, with approximately 9 sales offices now across the world, two major global partners for delivery, almost 100 patents and patents pending, and more than 5,000 customers, and over 100 million licenses of product that had already being shipped.

When you look at the people distribution of the new company, the bulk of the people are in the United States, with a consolidation of activities out of many our European former subsidiaries, with Asia becoming the second largest headcount by region for the company, where most of our manufacturing is, as we look to become more efficient with our cost and accounts.

But we can do even better at leveraging what we have, and in particular, better at leveraging our strong customer base of more than 5,000 organizations.

There's a lot of work that we have to do, but we are evolving, and so you'll see as one of the main priorities for the business over the next couple of quarters, the investment in sales and marketing.

We have also begun to simplify our product alignment, making our products easier to sell ,and easier for customers to understand what Identive does.

So we have broken our products from across the remaining entities into a single product group that is focused on three product areas -- [fransisle] buildings by identity and credentials.

And then from there, we have looked at what the opportunity is as we begin to take the product categories that we have and we looked at the markets that we align to.

The company in the past had focused on fragmented markets, some good growth markets and other areas that were a distraction to us.

We've stopped those distractions and we're focusing on 3 global markets that trackable.

The first one is the employee ID market, which we believe is between 1 billion and 2 billion objects.

This is a market that we play in very well today.

The mobility market, we believe that by 2020, more than 80% of all information will be accessed through some type of mobile device, and that that information requires some level of trust.

And thirdly, the largest of all of the markets, the new market, the new opportunity for the company is the Internet of Everything, being able to connect and provide trust solutions to trillions of objects.

So as we've looked at the technology, and we analyzed what parts of the business to keep and where to invest, we rapidly realized that the technology that we used for our trusted government solutions over many years is also applicable to this new world, the new world where objects are connected and those objects require trust.

So we've taken that product and those markets and we've developed 3 very simple solutions in this new vision, and they are -- trust solutions for buildings, trust solutions for information, and trust solutions for everyday items.

And then it's gone and consolidated our sales organization, and we have produced from the disparate silo businesses, we pooled all the salespeople out, created 2 sales leaders in the business that report directly to me.

We've implemented a global CRM, so now we're able to improve our forecasting and pipeline across the entire company.

And we've looked at and developed now a direct and indirect sales model, leveraging the 75 customer-facing people that we have, the 300-plus resellers that have been loyal to the business for many years, our 2 major distributors, 2 new global service providers that we see helping the business and driving the business through 2014 and 2015, and a new OEM.

So where we going?

Well, we think that this market and leveraging the technology that we have, will continue to grow quite rapidly, and in a few moments after Brian has finished providing the numbers, I will give you some of the CAGR for the particular areas that we're focused on.

But fundamentally we believe, that the PC market is only going to have modest growth, and therefore as a business, we had to align ourselves with cloud and mobility, and delivering what our core competency is, which is trust.

So with that teaser to the new vision and some of the simplification activities that we've been focused on, I'll hand over to Brian, and then at the end of that I'll talk to you a little bit about some specific detail for 2014.

Brian.

Thank you, Jason.

As Jason has just discussed, we made the decision during the fourth quarter to divest certain businesses that were non-core to our trust solution strategy.

And as a consequence, these businesses were accounted for as discontinued operations for the quarter.

As such, the results we are reporting today for Q4 and our full year 2013, as well as comparable periods, will reflect our continuing operations.

The businesses we divested consisted of regionally focused systems integration and customization services that did not fit strategically, nor did it exhibit the capability to deliver the high growth potential.

In our continuing operations, we are leveraging our existing product portfolio with a focus on cloud and mobile technologies to deliver trust solutions to the 3 primary markets that Jason spoke of.

As a reminder, those are the trust solutions for premises, which include our readers, controllers and software products; trust solutions for information, which utilizes our smart card reader products and our cloud-based credential provisioning and management services; as well as our trust solutions for everyday items, which utilize our credential products, including RFID and NFC, tags and access cards.

Beginning with Q1, we will report our revenue and gross margin results and new product segments that align with these market areas.

Now looking at our financial results.

Revenues in Q4 were $19.9 million, a decrease of 6% from Q3 and 5% quarter-over-quarter.

This was primarily due to the weaker sales of our premises solutions in the U.S. as a result of the October government shutdown, and its impact on the budget and project cycles of our federal agency customers.

We believe the budget challenges impacting our premises businesses are temporary, and we are continuing to invest in new access control products and capabilities to address the emerging security standards, and other market requirements for the U.S. government sector.

Partially offsetting the weakness in our premises sales was continued strong demand for credentials, especially RFID tags to enable electronic game toys, and increased volume of smart card reader products in North America, Asia and Japan.

Both of these product categories delivered quarter-over-quarter growth in excess of 10% as well as sequential growth.

Adding to the quarter-over-quarter growth was our cloud-based credential provisioning services.

Our non-GAAP gross profit margin was 46% in Q4, compared with 49% in the previous quarter, and 43% in the comparable quarter a year ago.

The increase in the sales of our RFID products and associated higher manufacturing capacity utilization drove the year-over-year increase, while our lower sales on the high-margin premises products were responsible for the decrease from the immediately preceding quarter.

We do expect our gross profit margins to continue to improve based on our focus on selling our higher value and higher security trust solutions, and our focus on the higher-margin premises business.

In addition, our consolidation of global manufacturing facilities will lower our overall production-related overhead, and I'll speak more on that later.

Looking now at our operating expenses.

Our non-GAAP operating expenses in Q4 were $8.7 million, as compared with $9.4 million in the prior quarter, and $8.2 million in the comparable quarter of 2012.

Lower R&D expenses in Q4, primarily reflect a one-time $400,000 development tax credit.

In 2014, we do expect R&D spending to remain relatively unchanged as a percentage of revenue as we continue to invest in the products and solutions to deliver trust to our customers globally.

G&A expenses decreased due to cost reduction measures initially enacted in Q3, including a reduction in headcount and the use of external services in Q4.

We expect to see G&A decrease as a percentage of revenue in 2014, as a result of those actions and actions we initiated in the fourth quarter of 2013, and the continued focus on cost reduction measures.

These decreases in R&D and G&A were partially offset by increased investment in sales and marketing, program management, and personnel.

We expect to continue our focus on selling and marketing as we invest in a more robust sales and global marketing organization.

Our non-GAAP operating expenses exclude charges for goodwill impairment as well as restructuring charges in both Q4 and Q3 of 2013, in addition to several other items that we normally exclude from our non-GAAP results.

I will touch on the goodwill and restructuring in a few moments.

Based on our activities, we reported positive adjusted EBITDA of $400,000 in Q4, compared with adjusted EBITDA of $1 million in Q3, and $900,000 in Q4 of 2012.

Couple other items on the income statement, interest expense of $600,000, slightly higher than in past quarters, but primarily due to additional non-cash interest charges associated with our debt facility.

The goodwill impairment charge that I mentioned before, $4.6 million in Q4, as a result of the completion of our impairment review, which we began Q3 as related to our premises business.

This charge is also non-cash.

The restructuring charges in the quarter of $500,000 are primarily related to the severance for our former CFO and other employee related costs.

Other cost reduction measures we initiated in Q4 have continued into Q1, including the centralization of our corporate accounting and marketing functions in the U.S., and the centralizing of our production in Singapore.

We are in the process of closing our production facility in Germany, and we expect that these measures will begin to become impactful in mid-to-late Q2.

Now turning to the balance sheet.

Because of the discontinued operations, the balance sheet as reported for the quarter ended September 30, 2013 is not readily comparable with the balance sheet with the presentation at December 31.

For the purposes of this call, I will use a pro forma balance sheet for continuing operations at September 30 that provides a view into the relative changes between the two periods.

The reported cash and cash equivalents at the end of the quarter December 31, were $5.5 million -- or $5.1 million as compared to a pro forma of approximately $6.8 million at September 30.

The major uses of cash in the quarter include the service of financial and related party liabilities, which include the debt service and associated interest of approximately $1.5 million; working capital expansion of approximately $0.5 million; and a pay down of our accounts payable and certain other accrued expenses, partially offset by AR collections in the period.

A note on the working capital, and working capital defined for purposes here is our inventory, plus our accounts receivable less the accounts payable.

That number was $13 million at December 31, a decrease of approximately $700,000 at September 30.

This was partially due to the $1.9 million decrease in AR, offset by $1.2 million decrease in accounts payable.

With respect to our accounts receivables, our days sales outstanding remained at 59 days in Q4 as it was in Q3.

As for our inventories, our turnover remained 3.2 annually, with approximately $9.1 million net at each of the respective quarters.

Some other noteworthy line items in the balance sheet are as follows.

I addressed the goodwill of $4.6 million related to the impairment before.

And now to the liabilities.

Accounts payable, as I noted in our cash usage was paid down.

This decreased from $10.5 million to $9.4 million at the quarter ended December 31, as the company strives to improve its days payable outstanding.

Our liability to the related parties decreased from $6.9 million to $6.7 million, reflecting the payments made during the quarter.

Our accrued compensation increased from $3.0 million to $3.4 million, primarily reflecting liabilities associated with former CFO, but partially offset by payments made during the period.

Our other accrued expenses and liabilities remain fairly flat at $5.3 million compared to $5.4 million last quarter.

These amounts include restructuring charges, professional fees, as well as accrued expenses associated with the vested entities.

Our long-term financial liabilities decreased by approximately $1 million from $4.1 million at the end of the quarter September 20, 2013 to $3.1 million at the end of the quarter December 31.

This primarily reflects the principal payments to our lending institution.

On a reported and actual basis, the divestiture of our non-core businesses resulted in a reduction of our liabilities of approximately $12 million.

With regard to our cash position, we are actively engaged in seeking a commercial lending facility to strengthen our balance sheet and support our growth strategy.

With regards to guidance going forward, the company is providing guidance for fiscal 2014 of revenue between $80 million and $90 million, and adjusted EBITDA positive on an annual basis.

That concludes my prepared remarks, and I'll pass the call back to Jason.

Thanks, Brian.

Well, I think it's fair to say there has been a tremendous amount of work going on here ,and I am sure everyone on the call, and certainly people in this room have been feeling it.

As we look to 2014, I would like to give you some color as to what we are doing and where we are going.

I have outlined the new vision and from the top down, we have realigned the company around that vision.

We're not complete in all areas and there is a road map and plan to continue the roll out.

But all of the broad-brush strokes to achieve that have occurred.

As Brian mentioned, we do see cash as a priority for the business.

Certainly, as our working capital and our predicted growth is increasing, as we now have more visibility to our forward pipeline.

We're getting a lot more comfort around the need for the working capital.

As I indicated on the last earnings call, we had gone to market looking for commercial financing.

We will continue to roll out the new strategy, and one thing that's important in any integration of companies, is the development of a single culture.

And at all levels of the business with hand-picked and either board people in, or promoted from within to help develop that culture.

We're calling it our Identive culture, and it's a very sales-led, customer-focused, revenue-driven culture.

We'll continue to invest in our technologies through 2014.

You'll see certainly over the course of the year, the year unfolds, that our expenses in our technology will be diverted from G&A.

So we are putting the money, I believe, in the right areas -- sales and marketing to sell the things that we have, and technology because we believe we have some foundational patents and technology and some excellent customers that will help drive us and create a new leadership position for us in this trust, the Internet of All Things.

We will continue to complete the integration of the underlying entities, and we are moving to single systems.

One of the challenges for us in this business has been timely information, and being able to use that at a management level.

So we -- and we've identified that as a risk.

But under Brian's leadership, we've already begun a project to consolidate those systems and provide our managers with much more timely information.

OpEx, we cannot take our eye off OpEx.

We have done a lot of these to get the OpEx down, and the new architecture of the business supports a streamlined OpEx, where you will see cost coming our of G&A.

So Brian will - if you were on any of our management calls, Brian is pumping his fists, and we will not let up on OpEx.

We cannot.

We have an objective, and we will be EBITDA positive this year.

We of course are going to reactivate much of the investor relations activities that we turned off, late last year.

And we did that because our focus was internal and our focus was to deal with the OpEx.

So progressively, selectively, we will be coming to Street, and telling the Street more about the vision and our alignment with the market.

But we tend to do it in a very customer-led way, leveraging our proof points as we've begun to win new accounts and new opportunities.

We will of course continue to leverage those strategic brands as we get closer to our customers giving us permission to be able to publicly announce some of the many wins that we've had that we think are very exciting.

But unfortunately we are unable to disclose.

That of course, amongst all of the general management activities, makes 2014 an incredibly busy year for us operationally.

Let me tell you a little bit about why I get excited in the morning.

Market size in this company is incredible.

For the first time in my career, I can see a business that is at the right place, at the right time, with the right technology and now with the right people.

We are seeing CAGR in our premises business being relatively slow.

It's between 8% and 9%.

We're seeing CAGR in our information products, growing substantially at 17% ,and we are seeing CAGR in the market in general in everyday items as the largest potential at 38%.

So we'll continue to focus our areas of investment in these markets, ruthlessly cutting off product or technology that doesn't align with these 3 areas.

As we look at the opportunity in terms of alignment, today we consider ourselves to be in a crowded market in some of the individual segments.

Premises is pretty crowded.

Information has its players.

Everyday items is new.

So as we've made our investments, we are investing in our physical access and information technology to continue to provide a financial base to be able to piggyback and leverage -- to pivot us into the Internet of Things with everyday items.

As I mentioned earlier on the call, the technology and the parts that we use for the first two, are directly applicable to the everyday items market.

So we're in a pretty strong position this year.

So as I summarize 2014, there has been, in my opinion, an incredibly positive transformation to create a single Identive platform, with a single leadership, with a single product focus, with a single view to our global customers.

We're leveraging the position that we have to grow into the Internet of Things.

We believe that vision.

Our Trust Your World vision is revolutionary in many areas.

But it's one that we are capable of executing on the assets that we have retained -- one proven team, one set of resources to accomplish our mission.

So I think with that, I'd like to open up the call to questions.

I'll turn it back over to Darby.

Again, just in advance I appreciate many of you actually sending your questions electronically over the last few days, and we'll be sure to get to them.

Darby.

Yes, Operator, please poll for questions.

Thank you.

Thank you.

We will now begin the question and answer session.

(Operator Instructions)

Our first question is from Bryan Prohm from Cowen & Company.

Please go ahead.

Good afternoon, Jason, Brian, Darby.

How are you guys?

Doing well, Bryan.

Thank you.

Alright.

I have a lot of questions.

So, in no particular order.

I mean, this is a complicated turnaround story.

I totally get that, and I understand that simplification may not be as simple and straightforward as it might seem.

So you cited, Jason, 13 major activities or steps in the simplification process.

Are we done with all 13 now, or there are still more here to go here?

We're done with the bulk of them.

We reported to our Board a few weeks back that we have completed all but 2 of them.

2 of them are ongoing.

One of them I just mentioned, which is the system integration.

One of the areas for the management has been -- how do you consolidate 11 different accounting systems?

How do you bring together processes and expense control?

The first thing we did, of course, was get control of the checkbook.

But we are not complete, but we are at a macro level, we've completed all of the major tasks, except for the full integration of the underlying accounting system.

Makes Brian's job pretty tough.

He is rolling his eyes at me.

He is smiling too, I'm sure.

Okay, so the next phase then is the focus phase, and I -- it's a much cleaner messaging around the market segments -- trust solutions for premises, trust solutions for information, trust solutions for everyday.

It sounds like the premises business is still pretty heavily leveraged to governments, both in the U.S. and maybe in Europe too.

Is that fair?

Yes.

It is.

So then, sorry --

No, it is.

And we saw the weakness in -- it started with sequestering.

It started with what was followed on then by de-focusing sales and marketing activities here.

And what we've done in Q4 to arrest that is open the D.C. office with rehiring sales people with experience back into Washington.

It is where the largest portion of our premises business is.

We've got some unique technology in that space and I am pretty -- I'm quietly confident that as the government begins to relax on some of the budget constraints, we'll begin to see that part of the business improve.

As a pilot, I was very pleased to see that the Navy got the Blue Angels back in the air, and if they're going to spend money on Blue Angels, hopefully, we can spend some money in premises.

No, that's good.

Is it fair to characterize that you're comfortable with the company's store silos are now sufficiently broken down, and you're in the way to having a true single sales organization that can cross-sell premises information every day.

Bryan, I wish you could be in this room.

You would see executives and staff from the different parts of the business all wearing the same logo.

And it's -- I am -- it's always going to be a challenge.

We've always got some habits inside the company as being one quarter.

We certainly can take this up again next year.

But I am just thrilled really with the way the team has come together and embraced the single message.

I think everyone internally saw the need to have a simpler architecture of the company and a simpler message.

Okay.

Let me then move onto -- if the premises business, it seems like the most gross margin leverage lies there as the government business returns over the course of the year, and -- but the real volume driver, the real top-line driver ultimately is this everyday business, which is where a lot of the gaming or all the gaming RFID tags came in last year.

Is that in the current bucket?

That is too.

So, 100 million tags last year.

How -- I'm trying to reconcile maybe the everyday market TAM that you cited, the 38% growth rates, or maybe it's CAGR, actually, are we looking at a similar -- maybe the best way to -- alright, let's ask this question then.

What does the backlog currently look like segment-by-segment, by premises, by information, by everyday, and in total.

Yes, we're currently -- thanks for the question, Bryan.

We not prepared to provide that level of detail based on the new segmentation.

We'll roll that out, and it will be available in our Q1 discussions.

Okay.

Is there more of a general feel for the strength then of the everyday market based on your current customer profile in the gaming space?

I mean, was it more of a -- 2013 was an anomaly and it's going to be difficult to?

No.

Not at all.

That's alright.

Exactly.

Not all.

As a matter of fact, we're seeing some very strong commitments from customers that were existing in 2013, and potential for like customers in 2014.

So we expect some significant growth in that area.

Bryan, what I have enjoyed in this new structure is some of the elasticity.

We sold some of the decline in the premises piece of the business through 2013 for the reasons that we outlined.

But we saw strong growth in our new market, obviously, with -- of everyday items.

We believe that the TAM for that according to Gartner for like 2020 is about $300 billion.

So we're only at the very beginning of that market, and I think the projects that we've seen roll out so far are relatively rudimentary.

And as trust is being put into objects, the need to -- or as those objects are coming online, there is a need for fundamental trust, and trust by its nature is complex.

So, we've been able to deliver a solution now in that sector that simplifies that trust, and we'll talk more about that as we roll that through the course of the year.

But we're pretty excited about some of the patents we've got there, some of the technology, the integration of our cloud, our manufacturing capability in some of the legacy RFID.

Okay.

It's an area of growth.

You can look that up, the Gartner Report.

I have a subscription.

I have a subscription, I'll check it out.

Alright, so on OpEx, it sounds like you are guiding R&D roughly flat.

Sales and marketing sounds like it's going to increase as an investment there.

G&A is where the cost can be taken out of the business.

What's the right run rate?

Are we there?

Is the 4Q run rate something where this is more potential cost that can be taken out?

I am trying to figure what's the breakeven number that the model is going to put out based on the top-line growth, and your goal for positive EBITDA at some point over the course of the year?

So Bryan, remember there's an anomaly in the R&D expense for Q4 with the tax credit.

So if you normalize it, you're getting in the area of 7% on a percentage of revenue.

We expect that to be 7% to 8% on an annualized basis.

So we will increase from a dollar standpoint as well as moderately on a percentage of revenue.

The sales and marketing was approximately 23% for the quarter.

We are looking to see that increase slightly as well as we continue to invest in the sales and marketing organization.

And you are right, the G&A is where we really look to achieve the savings to invest in those other areas, so that we can get to the high growth that we are looking for, or the reasonable growth, I should say, and for profitability.

Alright, two quick questions, and hen I'll pass onto someone else.

About the growth rate overall, because you are guiding your growth rate of somewhere in the 10% to 15% range for continuing operations, do you have sense of how does that breakout between premises information, everyday, is one likely to be more meaningful.

I mean, given the CAGRs you would think everyday is a much more meaningful opportunity, but can you comment on that given what you said about the backlog?

Yes.

Thanks again, Bryan, for the question.

I think the critical part here is the focus strategy and the cross-selling.

We have an opportunity in each of the areas to bolster the foundation.

I do believe we have significant opportunity in the credential area.

We talked earlier about where we might get some higher-margin business.

That credential and the provisioning aspect of it contributed -- can contribute.

We talked about the premises business being somewhat weaker in Q4 based on the government structure.

We're looking for some recovery in that.

But that's not driving the high-growth or the significant growth.

Got it.

And then finally, any outlook on cash at the end of 1Q?

Any guidance?

Not at this time.

Alright.

Thanks for the time guys.

Good luck.

I'll talk to you soon.

Thanks, Bryan.

Yes, thanks, Bryan, we appreciate it.

So I have a couple of more written questions.

I won't disclose the names, because I don't have specific permissio.

What our current plans to raise cash?

I think at this stage we have already indicated that we are looking for and have begun activities for traditional commercial financing.

The first time I think we've been able to do that now with the new strategy, and some of the demonstrated activities that already occurred.

Focused growth, what are markets we're focused on?

I think, we have covered that.

Profitability in 2014.

I think we talked about the adjusted EBITDA, positivity is our goal.

Messaging to our investors, wanting to hear more about what we're doing.

I think that's an important topic to cover for just a moment or two.

As I said earlier, we have focused internally to build the platform.

It has taken all of our energy to do that.

There was no point coming out to the market with a press release about activities.

We felt it would set the wrong tone as we were cleaning things up.

So here we go from this point forward with the launch of the new vision, you will begin to see us talking more with some of the investor event.

You will see us beginning to announce some of the activities and partnerships, but meaningful news.

Do not expect to see a press release every week or every few days from us.

You won't.

But when we do put the press releases out, they will have some very meaningful outcome for us and for our holders.

I think they were the main questions.

Darby, do you have any other questions on the line?

Not at this time.

Great.

Excellent.

Well, I want to thank everyone here in this room and all of our shareholders for their support over the last quarter.

We look forward to getting back to everyone next quarter with an update on where we are for 2014.

Thanks.

Thank you.

Goodbye.

Thank you, ladies and gentlemen.

This concludes today's conference.

Thank you for participating.

You may now disconnect.