Greetings and welcome to the Intellicheck Mobilisa First Quarter and 2014 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Enrique Briz, from Dian Griese International. Thank sir please go ahead.
Thank you, operator. Hello and welcome everyone. Thank you for joining us today for our 2014 first quarter conference call to discuss Intellicheck Mobilisa’s results for the quarter ending March 31, 2014 and to discuss other business developments. In a moment I will call upon our CEO, Dr. Nelson Ludlow to lead today's call and introduce the 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 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, expect, 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 management, identify forward-looking statements within the meaning of the 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. Management will use the defined financial term adjusted EBITDA in today's call. Please refer to the Company's press release issued this morning for further definition of, and context for the use of this term.
I would now like to introduce Dr. Nelson Ludlow, Intellicheck Mobilisa's Chief Executive Officer. Dr. Ludlow?
Thank you. Welcome to our shareholders and investors. Now let me introduce who I have with me on the call today. From our Board of Directors on line is both our Chairman, Admiral Mike Malone and Mrs. Bonnie Ludlow. From our management team and speaking with me today is Mr. Bill White, our Chief Financial Officer, also on the management team we have Mr. Russ Embry, our Chief Technology Officer; and Ms. Heather Flanagan, our Director of Marketing joining me on this call. Mr. Robert Streett, our Director of Sales is trying to make the call but he’s out traveling and importantly out making sales.
So the outline for today’s call, what I’d like to is I’d like to present Q1 results, the financials particularly the initial progress that we had in Q2, I’d like to discuss our new products and our business plans to 2014 and particularly to discuss the markets that we’re focusing on. I think that’s important to investors, I think it gives you better insight into the areas that we’re focusing on and why and which markets matter.
And then at the end of the call we’ll allow an opportunity for shareholders to ask questions.
So let’s talk about the Q1 financials, the revenue for the quarter ended March 31, 2014 is about 1.1 million compared to 1.6 million revenue the year before. Overall that means the revenue is down about a third, as you may remember last year at this time we had a significant component of enterprise wireless revenue, and as you know we’re now focusing our attention on identity systems and not wireless, not [indiscernible] systems, we’re an identity systems company and that’s where we’re going to focus on.
Let me just add one quick comment, as typically our revenue is seasonal, it’s been that way for the last five years since I have been analyzing this. Q1 is typically our lowest revenue, Q2 and Q4 are usually about the same and typically Q3 is our highest in revenues. And other than a couple of minor anomalies,it’s held through and we can discuss if you'd like some of the reasons for that.
Our adjusted EBITDA for the first quarter was a loss of about 710k which is roughly similar to the loss of 646k at the first quarter of 2013. Net income for Q1 was a loss of about 910k or a negative $0.03 EPS of a fully diluted share compared to about the same loss of 921k in the same loss of $0.03 per share a year ago at first quarter.
Now while the bottom line's roughly about the same encouraging was the new bookings were up 18% compared to that Q1 a year ago.
Now we’ve had a busy Q1 and particularly at start of Q2 if you look to our website you’ll see that we posted 25 press releases, copies of other new stories that have been picked up regarding our company since the beginning of the New Year. Now let’s talk a couple of the highlights that has happened since the beginning of the New Year. Since January 1st we received two patents one in January and another in April for a company total now of 19 total patents involving ID card reading.
The 18th patent was one that allows us a security system to change its level of detailed checking on an ID based upon a current threat level. Some of you may know there is different threat levels at military bases, homeland security has different threat levels, the coastguard does at seaports and this patent allows different levels of ID checking to intelligently adapt based on those threat levels.
A scoring algorithm can be provided on that and I am one of the authors of that patent. On the 19th patent it protectsour intellectual property when we compare two identity documents or more to each other. The fields of one ID are intelligently compared to the second ID and you can map the fields using artificial intelligence and our knowledge to realistically compare those two IDs in a scoring algorithm we described the matching that’s based on the degree of match and the importance of the data field. Russ Embry, our CTO is one of the authors of that patent.
In an age where just recently two people boarded the recent Malaysian flight MH370 with fake passports, officials are discussing they may someday require that two forms of ID are required. This new technology allows a comparison of these two identity documents to each other and that’s why I am [indiscernible] about that patent, it’s important and I think it makes sense for them so that’s another patent that we just announced.
In January we launched another product called MexiScan and MexiScan ID check offers our clients the ability to authenticate Mexican drivers’ licenses and other IDs. The product is basically an additional Mexican ID module that complements the U.S. and Canadian modules that we already have. A Latino night club in Illinois just scanned over 500 Mexican IDs recently using our new MexiScan capability. A law enforcement group in Ohio just last week specifically asked for Mexican ID capability. In a major hotel chain that’s interested in growing in to Mexico has just asked for a formal test of this software as well.
Now let’s talk about the capital raise, in January 2014 we successfully completed a secondary offering of common stock raising approximately 4 million in gross or 3.6 million in net proceeds that are being used to fund continuing research and development initiatives to expand and improve our product line but particularly this significantly increase our sales and marketing groups.
Now at the time this is the maximum financial ways under the rules of the S-3 filing. Because of the stock price increase in March and under the SEC rules we were allowed to raise an additional amount of capital under the original S-3 filing and with the same banker Aegis as our underwriter with really very little minimal additional work.
In our first stock offering,we offered to purchase new shares far exceeded the number of shares that were actually offered. So in early April, I think on April 3rd, we conducted a one day roadshow and raised an additional 2 million in gross proceeds or a net 1.8 million under the exact same S-3 and for the exact same purposes in January, that price is $0.80 which is about 78% higher than the raise in January we did at $0.45.
Now during those road shows we presented and published a market description and plan the use of the funds to significantly increase of our sales and marketing staff. In anticipation of this funding in late 2003, we promoted Mr. Robert Streett to the Direct of Sales and created a new position for our company of a Director of Marketing and that position was filled with Ms. Heather Flanagan.
Our sales team was completely restructured. We now have the sales people focusing on 10 individual verticals, we’ve nearly tripled the size of the sales team and now have sales staff focused on one market and a one sales person split amongst several markets. With the new sales force, formal marketing coupled with the change in our business model that you may remember we made last year from selling an enterprise wide license for our software to now subscriptions for software as a service or SaaS, the introduction of these several new products all last year and coupled with a stronger balance sheet, this has all significantly improved the health of the company.
Now let’s discuss some of our new products and markets. Now I’d like to talk a little bit in detail so that you can understand some of the markets and why they matter. Let’s talk about age related products. When Intellicheck was first founded this was one of their areas that they wanted to go into. We have a Director on our Board of Directors that works for Diageo which is the world’s largest alcohol distributor.
These things aren’t by accident. Age related products; the biggest one of all is alcohol. (indiscernible) other one, barZapp product that we have works for ID verification for other related products and services such as tobacco, age restricted movies, rental cars, adult magazines, gaming, casinos, some states even require ID for age for buying spray paint, certain over the counter medications, medical marijuana in many states, two states now have legal general marijuana sales. Future compliance with voter ID laws and pharmacy distribution of controlled substances, there’s even more. In Q4 we issued version 2.0 of our age related products, we added the capability of the product to now work both on the iPhone and the Android, and it’s sold on the Apple and the Google stores directly.
A couple of weeks ago we upgraded our servers to include our Mexican driver’s license capability within that barZapp product and as I just mentioned it’s being used at a Latino nightclub in the Midwest gaining hundreds of Mexican ID. We also offer a professional version for a subscription service of $9.95 a month. This offers unlimited scans, allows the users to visibly view sample IDs from appropriate state ID. What do I mean by that? Some of you may have seen that bars and restaurants have a little book that you can flip to the page for Indiana for example and look and see what an Indiana driver’s license is supposed to look like. Now you can do that right on your cell phone and the software is smart enough to know that if it is scanned in Indiana and it pops up from our library of official samples given to us by the DMV of what an Indiana is supposed to look like. This is the gold standard, it’s much better, it’s the way it should be done, on a cell phone essentially replaces the need for having one of those booklets. It also checks for fake ID and records a person’s age and all the other necessary information to protect those alcohol vendors from receiving fines.
Now the market is pretty large, a 6.2 million alcohol servers, about 3.8 of those are on premises servers more of the traditional one you think of at a bar where people are serving alcohol, but there’s another 2.4 million off premises servers such as liquor and convenience stores. So potential customers or bar and restaurant owners, chain restaurants, alcohol server related organizations and the convenience stores. State liquor control boards particularly their training groups as well as enforcement groups can also use this product. To date we sold approximately 6,000 barZapp units through the Apple Store and nearly 2,000 through the Google store for Android.
We just put out a press release today and I purposely wanted you to see that one and I wanted to be able to discuss that, that’s why we put out a press release. Today we just announced a small restaurant chain of 16 restaurants purchased the professional subscription version so that they could responsibly verify legal age for alcohol purchases in their restaurants. Now they’ve been it testing for a while in one of their restaurants and this is really our first restaurant chain to purchase chain wide, and we look forward to marketing to other restaurants and hospitality chains and this is exactly what I wanted to have happen with this product. We’ve been initially selling one and two even if some things like that through the store but it’s very nice to see a restaurant chain do that and as our sales force is growing to actually actively market to larger restaurant chains and hospitality groups.
We plan to attend trade shows, meet with other national associations and we’re also looking at adding the value added reseller of our program to continue and increase our barZapp Pro sales. We recently attended the Las Vegas night club and bar conference and I know a couple of the people that are on this call saw us at that show. And we are also attending a show called Hitec, H-i-t-e-c, which stems to the hospitality industry and technology trade shows that really the premier trade show in the hospitality arena and we will be at that next month June 23 through 26 in Los Angeles.
Now in the military market, originally was the mainstay of the Mobilisa portion of Intellicheck Mobilisa, we put out a press release on the very last day of March that an army base has purchased one of our new products with the software and equipment for us to upgrade their fort to scan IDs which they already can do that, but to upgrade it so they can also when the scan the ID to run an FBI national crime investigative check, or an NCIC check, essentially it’s the check that a cop does when they pull you over for speeding and they take your ID back to car and hand enters it into a terminal. So this military base wants to do that capability on their visitors and vendors, and that’s a good thing because in 2009 the Defense Authorization Act requires bases to perform an NCIC check on all their visitors and vendors to their bases.
Now while most bases do not yet fully comply with this federal law, the recent tragedies at military bases that have been in the news lately have caused the military, the DoD to relook at base security across the whole defense department. The fact that this is very good timing for this base to be innovative and to be doing this new technology.
We also installed these same advanced mobile readers for ID cards at other locations that are not military bases but we include in this group, and those are national security facilities and high end security government facilities across the United States where we’re currently at for their visitor centers. In 2014 we see the markets for these readers primarily as the U.S. Army, the Marine Corp., and U.S. National Security Facilities and for the first time we’re marketing this technology also to select foreign military sales for our military ID validation system. We expect about one third of our Q3 sales to be from this market alone.
So let’s talk about TWIC, which stands for the Transportation Worker Identity Credential. In Q3, you may remember 2013 TSA approved two of our mobile TWIC card readers which required passing 140 different tests by an independent third-party lab andit placed our products on the thing called a Qualified Technology List or QTL. We were the first in the world to be on that list. Just this quarter we’ve offered a hosted service solution at our facility. We've already had one major U.S. Port on the West Coast asked to host their services and along with the major oil companiesthat purchased TWIC readers for an initial set of equipment at their oil refinery location in the Midwest to determine if they wish to purchase TWIC readers for their other locations.
For those of you who don’t know, TWIC is an initiative of the Transportation Security Administration and the U.S. Coast Guard to provide tamper-resistant biometric ID cards to all of the port facility workers. The Coast Guard and TSA has given guidance with approximately 550 locations will require buying equipment that’s on the QTL list and approximately 1,500 other locations are on a recommended list. Currently we have readers all across the United States from the East coast to the West coast including all of the ports in the State of Hawaii.
Now let’s talk about probably the biggest market that’s outside the government and I like the commercial space and it’s the one I am probably most excited about. In the past, retail as you know Walmart,Target or some of our customers, we really had kind of a -- not fully complete sales force to tackle that market. And so instead of just people working part-time in the retail space, we significantly beefed up the sales team and now we've split the retail into four different sections that I would like to talk about, and tell you the size of that market.
One of the best products of offering our ability for customers is to safely apply for a store granted credit card or a loyalty card while you’re at the retail store. In addition they can also use ID scanning technology for greeting services, data entry for line busking, to apply for an account such as what the cell phone companies advice and an AT&T, they’re using our technology, the fraud preventers at merchandise return locations, the pharmacy pick up for controlled items.
Now most important was our new focus on reoccurring revenue streams, particularly software as a service. We offer this service to all of our new customers and we are working on converting our existing customers to this model. Customers pay a monthly or an annual fee for services they use and we offer the new SAS or cloud computing service for $99 per year per point of sale or per device per location where the scan is taking place. So if you’re in a store and they have 20 checkout lanes; then they would have -- they would purchase 20 subscriptions.
Now we do offer a discount for volume purchasers. They get better service as the applications interact directly with our servers, because that way they always have the latest version of our software. If one of the States changes their drivers’ license format, we have that loaded immediately rather than waiting for an update, and a CD to be mailed them or a DVD so they can update the software; much faster, much better service.
The company is also emphasizing software over hardware purchases, which gives us better margin and the pay as you go method is much easier for customers particularly if their purchase is an OpEx expense instead of a CapEx expense. So not only is this a win-win for our customers and the Company, the shareholders will find it provides a much more predictable revenue model.
Now I want to talk about -- I am just going to focus on tier 1 retailer. And tier 1 means that they do a billing [indiscernible], and revenue for themselves. It turns out there is 296 or about 300 of these tier 1 retailers and we’ve broken retail in the four markets with individual salesperson, in each one of these markets. So Department stores and clothing retailers, there's 77 companies, some of the existing clients that we already have in this space are companies like Walmart and Target.
And they benefit from the added ID verification and their loyalty marketing program and for processing credit card applications and also for reducing return drive. The total available market in that space is approximately $20 million a year, and potential hardware sales which would be essentially a one-time purchase of nearly 350 million of equipments.
Now the second market, is actually a very large market which is grocery and pharmacy retailer. There's 79 companies that qualifyas a tier 1 in that space. We did see as a grocery store that we saw equipment too for example, and sell software too.
They get the added benefit of ID verification at their point of sale for age-related products such as alcohol and cigarettes, they also have loyalty marketing sign up at most grocery stores and most pharmacies. They can do a credit application, video rental, check cashing and maintaining information for the pharmaceutical that are also located in most grocery stores and [indiscernible] within pharmacies. That’s a larger market of nearly $39 million total available market each year for recurring software. And then a much larger one of nearly over 700 million of potential hardware sales are possible within that space.
The third one is automotive and gas stations and hardware retailers, and there is nearly 80 companies, there are 80 companies that are on the list of tier 1 retailers. They get the benefit of ID verificationfor to automate their credit applications and they help reduce fraud returns in performing a check for age related products that they sell. Chevron Gas stations and, Hertz Rental Car are two of the companies that we work with that are in that space. That’s approximately $21 million total available market for recurring each year and 395 million in potential hardware sales.
Then the fourth one in retail is sporting goods, home furnishing, miscellaneous retailers and there's approximately 60 companies in that. Toys "R" Us, LOB are two of them that fall into that space, that may benefit from the ID verification particularly through their credit card process and to reduce fraud and some of them have loyalty branded marketing cards as well. That’s about $13 million total available reoccurring revenue stream and about 250 million hardware availability within that space.
So the total available market for these approximately 300 tier 1 retailers is just sort of $16 million reoccurring yearly, with little over about nearly 1.7 billion in hardware and installation services and fees. This is a large market and for the first time this company is putting the lion's share of their sales team into that market.
Now these two retail markets do not include these numbers that I have given you, do not include two additional optional products that our customers could purchase. First is called State Aware Software. We have several companies that are using State Aware Software now and what that does is it allows them to enable a specific search and storage of information based upon the U.S. State of where they’re located, of where the ID card is and for what the purpose of the ID card being scanned.
And an example, if you do scan an ID in New Hampshire for law enforcement purposes, that’s legal and allowed, if you did the same scanning of the ID in New Hampshire for use for some mailing list for example, that’s specifically prohibited in New Hampshire law. Now not all the states have this and it’s not a huge problem within a certain state, but if you’re a large national retailer, you don’t want to get on the wrong side of the law. So we help our customers and embed it right in the software, we help them. So for the few states that do have unusual laws we protect them.
We find that nearly all of our new retail clients want this product; they’re safely handling personal identity information with respect to individual state laws and Intellicheck’s State Aware Software guides the users who scan the drivers licenses in depending on which state is being used and what the date has been intended for.
Now there might be some websites out there that describe laws, but this is a far better technique that it incorporates the actually state requirement right into the software itself, all into one product. We sell that product for $50 a year per point of sale, that’s on top of the ID check scan and that equates to about an additional 30 million of total available market in reoccurring software sales.
The MexiScan, our product for Mexican IDs and we’ve already mentioned, this is another major offering that’s available to retailers. Now we offer MexiScan to be added to a point of sales for an additional $30 per year which is about 18 million of additional total available market just for the retail space.
Now there are discounts from the $99 a year for ID scan check, $50 for the State Aware Software and $30 for the Mexican scan projects when purchased in large numbers. Now if you’re a tier 1 retailer, you’re going to be purchasing in those larger numbers. So I want you to know that the volume discount price was already calculated into these total available market numbers that I have given you. It is not based on the $99 or $50 or $30, it’s based on the -- it’s the much deeper one that we would be doing as a discount.
So the volume discount was used and we did not count any of the smaller tier 2 markets that sell under $1 billion a year such as Phantom Fireworks, which is a company that’s located at 30 some locations across the eastern part of the United States that sells fireworks, and they were the company because they were using our software and they responsibly scan IDs of people that purchase it, help the FBI find information on the Boston bomber. They are not a tier $1 billion a year company, yet clearly they are very good customer of ours and we want to continue to sell to them. These (10) [ph] total available markets that I have mentioned are quite conservative, do not include anybody outside of tier 1 and do not include the full price. So again, I think the numbers are conservative.
Let me just briefly mention a couple of others and I know this is a little bit in detail, but as a shareholder that I am myself, I want to understand these markets and understand where the company going. In the telecom space we currently have two very good customers AT&T and Verizon and if you walk into one of their stores AT&T has 2,000 company-owned stores and Verizon has about 1,700. They use our software to scan the ID in either a tablet or when you are purchasing a new cellphone to get you through the line quicker. It’s tedious, especially on a tablet, to hand enter in somebody’s name and I think you will see in most of those places, line busting is the biggest thing that they can do. They don’t want you standing around in line to see who's next, if they could put your name into a tablet and record that on a big display screen, then you can go around the store and do more shopping. T-Mobile and Sprint are not our customers yet. T-Mobile has approximately 8,000 stores and Sprint depending whether T-Mobile acquires Sprint and that merger goes through or not, is an additional 1,400 stores.
In the rental car space, every single rental car in United States is proceeded by a check of a driver’s license, whether you stand in line to do it or if you are a frequent customer, you still have to show when you pick up the car. Rental car companies are concerned about people having fake IDs, pretending they are someone else, grabbing a car and leaving with it. So, the cost of a $200 fake ID that you buy from China, you could have theoretically just stolen a $30,000 vehicle. From checking-in to the loyalty cards, to scanning the driver’s license, it’s the most efficient way to speed the travel or along their way and you may have noticed that there are certain kiosks now that they have an ID card reader that’s using our software that gives them the automatic benefit of retrieving the information from the driver’s license and speeding up the whole process.
Hertz has bought Dollar Thrifty in 2012. Hertz is testing our software and is in use at certain locations. Avis bought Zipcar in 2011 and they do global sales of Avis and budget approximately to 8 billion where Hertz group does approximately 10 billion. Enterprise owns Alamo and National and they have 6,000 locations.
So, let’s go onto the financial bank area, there is probably 24 large banks that are in the market that can have the benefit of ID verification at all the branch locations for account applications, credit applications, home loan, cheque cashing, just to reduce low level dollar fraudulent transactions. We estimate the financial bank area to be $29 million a year total available market recurring each year with approximately over 1.5 billion, about 560 million in hardware sales.
Now hotels, they use ID check to speed up the process, our equipment is at nearly all G6 Motel 6 properties across the United States and asked us to speed up the process of pulling out the forms when you check-in. We are actively working on other hotels and we just recently submitted our driver’s license reading product to the leading manufacturer of property management systems to include our driver’s license reading as an official add-on to their product line.
Okay, let me just speak about one last product in market because to me it’s the most important. Last Thursday Apple approved our law enforcement product called Fugitive Finder that we put on a cellphone. It’s for resale via their Apple App Store and it'savailable to the nearly 1.1 million law enforcement agents across the country. It is not available to the general public because you have to be a bonafide law enforcement agent to use it but you can purchase it directly through the Apple Store.
Most law enforcement agents nowadays have a cellphone. In the past, we headed on a large barcode scanner, if you go to our website you can see that actually several years ago there were sheriff officers, FOX News did a four minute story on our product and it was a big clunky barcode scanner that worked quite well. The technology worked, the software worked, you could read the barcode and check if you are around the bad guy list. The problem is cops can’t carry something like that around. The other problem is it kind of looks like a weapon, it looks like a teaser or looks like some type of other weapon and that cause concerns to our law enforcement agents. It really wasn’t the right product. We had built a focus group of leading members of law enforcement personnel across the United States and they all concluded this really wasn’t the right product.
While we tested it in several locations and sold a few units, to me it wasn’t really a product. It wasn’t until we got it onto the cellphone and started adding other capabilities, active wants and warrants, direct DMV look-ups, being able to do photo retrieval of the person right through the department of motor vehicles, whether they have weapons, whether you can search on a license plate, things that cops want to do, things that they are doing already but now to be able to do right through the cellphone and right through scanning the ID.
So, that’s what we launched on Thursday and I had a few questions from shareholders that thought it had something to do with the patent or something. It is not a patent, it’s a new product and this is one that we've been working on. We intended to launch it in late March. We actually launched it in early May or rather we’re going to launch it in April and we launched in early May.
So, we were a little bit,took an extra couple of weeks to get this product right, make sure that we have the price right way and that we’ve got proper feedback from our beta users all across the country at existing law enforcement agencies that are already using the product.
I feel very good about this product, so now right now on the cellphone app you can run an FBI check just by simply scanning your drivers’ license and pulling the phone right at it. You can do other techniques with this and I think I mentioned on the last call that we’ve demonstrated something that’s not a product yet, but technology wise using Vuzix glasses which is like a Google Glass that you just wear, almost like a Robocop type of method you could hold the drivers’ license up to your glasses and then hand it back to the person in the car and you just run the check. Now that technology exists. Again, we want to take our time to get that as the right product and that’s going to take a little additional time but the cool thing about this isthis product is ready to go.
There's over 1.1 million law enforcement agents in United States, we sell these as subscription directly through Apple under our software as a service model for $49 a month per device and it provides a link directly between NCIC and their states' database searches and law enforcement agent's cellphone.
Now the total available market for this is approximately $650 million each year, this is a large space. Let me just add one more comment on this. We were at the Sheriff's office just a couple of weeks ago and they’ve stated when they have to call in a driver’s license over the radio to dispatch center charges and $7 per driver’s license processed, so just with 7 scans in a month, our system has now has a return on investment. Other ones that we spoke to was actually as high as $29 per radio call, so that’s just with two per month. In addition to the cost saving, officers prefer to see the results themselves on their cellphone and then not have dispatch filter out results or verbally state them over the radio, for anyone with a scanner with an earshot of a cop's radio to hear them.
So you can see there is a lot of market potential, we’ve hired dedicated sales people to each of these markets, that’s really something new for our company. We have multiple sales staff on these projects.
So thank you for (involving in) and talking more in detail about our market and where we’re going. At this point, let’s have Bill White, our Chief Financial Officer give you more detail on the finances for Q1. Bill.
Yes, thank you, Nelson. Good day to our shareholders, guests and listeners. I’d like to discuss some of the financial information that was contained in our press release for the first quarter ending March 31, 2014 which we released this morning. We anticipate that our quarterly report on Form 10-Q will be filed with the SEC this afternoon.
Revenues for our first quarter ending March 31, 2014 were 1.92 million compared to 1.633 million for the previous year. Identity system revenues decreased to 1.74 million compared to 1.36 million and wireless revenues decreased to 18,000 compared to 273,000 last year.
Booked orders for the three months ending 3/31/2014 were approximately 1.95 million, up 18% compared to the 928,000 for the first quarter of 2013. Our gross profit was 729,000 for the quarter or 67% of revenues compared to 895,000 or 55% of revenues for the first quarter of 2013. The increases in percentage is primarily due to the focus on identity systems that Nelson briefly mentioned earlierwhich typically have higher margins.
Operating expenses which consist of selling, general and administrative and research and development expenses decreased 10% or $176,000 to 1.639 million for the three months ending 3/31/2014 from 1.816 million for the three months ending March 31, 2013.
Adjusted EBITDA for the quarter ending March 31, 2014 was a negative 710,000 compared to a negative 646,000 in the quarter ending last year. The company posted a net loss of 910,000 for the three months in the current quarter compared to a net loss of 921,000 for the quarter ending March 31, 2013. As of March 31, 2014 our backlog which represents non-cancellable sales orders for products not yet shipped and services to be performed was approximately 358,000 decreasing 54% from [indiscernible] at March 31, 2013, and 6% from the 381,000 at December 31, 2013.
Interest expense was negligible, interest income was also negligible and we have loss carry forwards of approximately 42 million. As of March 31, 2014, the company had cash and cash equivalents of 2.7 million,working capital is defined as current assets minus current liabilities of 2 million, total assets of 20.1 million and stockholders’ equity at 17.9 million.
During the three months ending March 31, 2014, the company generated net cash of 2.446 million compared to using 609,000 for the three months ending March 31, 2013.
Cash used by operating activities was 1.31 million in 2014 compared to a use of 603,000 in 2013, we use cash of 11,000 in investing activities in 2014 compared to 6,000 in 2013. And we generated cash of 3,489,000 from financing activities in 2014 compared to 0 in 2013.
On January 14, 2014 the company completed a public offering of 8,947,000 shares of common stock at a price to the public at $0.45 per share. Net proceeds to the company from the offering before expenses was approximately 3,644,000.
During 2011 the Company entered into a two year revolving credit facility with Silicon Valley Bank. In 2013 the company extended this line to October (15) [ph], 2013. Maximum borrowing under the facility is 2 million and is 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 3/31/2014, there were no outstanding borrowings, and unused availability under the facility was 517,000. We currently anticipate that our cash available as well as expected cash from operations and available under the credit line will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months.
Now I'll turn it back over to Nelson.
Thank you, Bill. Let’s summarize. So, for this quarter, and start of 2014 we raised funds to significantly beef up our sales and marketing team. We hired two new directors, a director of sales and a director of marketing. We organized into 10 vertical markets, we nearly tripled the sales team and will focus more on identity systems in the path and wireless abilities. We are on track with this plan and we expect to see initial results in Q3 and Q4 of this year. We received an 18 and a 19 patent, we launched the Mexican ID scanning product called MexiScan,
Apple just approved our law enforcement app called Fugitive Finder, just last Thursday for on their Apple Store for more than 1.1 million law enforcement personnel to scan an ID and can get a law-enforcement check on the spot.
We closed on approximately $400,000 deal with United States Army for adding law-enforcement checks for their ID scanning which will primarily recognize its revenue in Q2. Thus we have a team on location today at that base. We sold nearly 300K and additional scanning software products to a major grocery store chain in March and in April.
And today we announced a restaurant chain of 16 restaurantsthat are now going to be using barZapp via subscription to safely ensure that their customers who purchase alcohol are of legal age.
We spent some time in this call to discuss the size of the total available marketsthat our new sales team is going after. We were on track with our business plan that we shared with shareholders in January. I’m particularly excited about our new law-enforcement product.
So let’s take questions. We’ll do our best to answer any questions that people may have. Please clearly state your name and what organization you are with, and who you are asking the question to on our end. Also please limit to one or two questions, and if you have a follow-up question, please rejoin the queue so that others may have an opportunity to ask questions as well.
So I’ll turn it over to the operator.
(Operator Instructions). Our first question comes from the line of (Robert Lambert) [ph] with [indiscernible] Capital. Please go ahead with your question.
Hi good morning. As you heard, (Robert Lambert) [ph] In your new product in the law-enforcement, number one, do you find there is prejudice with Apple phones that because it’s an American company, more police officers are buying Apple phones and the second part of that would be obvious, would be will you have this application ready for android phones?
Robert, thank you for the question. Right now we've launched it on the iPhone. We would intend to launch it on Android which is in our barZapp product that we’ve done for age verification, as it'sessentially the same technology in it. With just a camera in the cellphone it’s capable of converting that into a barcode, we process it, and pull the information out of it.
The additional part is that we also send it wirelessly and securely to a state switch for the FBI's server. So it’s essentially [indiscernible] help people, it’s essentially if we can get it to work for barZapp on an Android, we can get it to work for Android for law-enforcement.
The only slight difference is that there is some encryption capability that’s required for law-enforcement. We intend to place this on Android, we’re also looking at a third app format which is a Microsoft smartphone platform, that would be a later one, and one that we do not intend to do at this time is BlackBerry. And you can see, while with our barZapp, there was almost 3:1, 4:1 ratio of selling more on our Apple products than on our Android.
Thank you. And our next question comes from the line of Amy Norflus with Neuberger Berman. Please go ahead with your questions.
Amy Norflus - Neuberger Berman
Hi. Great quarter and great progress that you’re making. My question is kind of long. Nelson you did a great job explaining what the tam is and what markets are available. Can you take a moment and talk about the probability of achieving this, a timeline, some of the competitive advantages because we’re seeing some other competitive products out there. And what we should expect now, because now we have a SaaS model, so with a SaaS model it’s lower revenues initially but it’s a much longer duration of the revenues. So how should we understand what that means?
Okay, thanks Amy, but very good questions. Right because anytime somebody hears tam and we’re not good investor and start ups in other companies and someone says, hey look it’s a billion dollar tam and if we could just get 10% of that market we’ll be making 100 million a year, that’s a hand waiving and just not realistic when people say things like that. And then typically that goes within, there is a huge hockey stick curve and over here it’s all going to just work out. I am not a fan of that type of thing. So the first step was we needed to add the sales team and I know this wasn’t your question but it does need to be said, we just were not touching the customers that we needed to touch.
We just were too small of a company and had not enough focus on sales. The Company did very well in new product development and very cool in technology, very cool in patent protection, not so cool on touching the customers and we had no marketing previously and we had too small sales force. With the help of the investors, we put the funds that they gave us directly into those two areas, and into anywhere else, totally into those two areas. So it’s exactly the right thing. Now the competitive advantages we have are there other people that could enter on to a cellphone and maybe run an FBI check, yes there are, not with a drivers license, no one else can scan the drivers license and do it, could you hand jam into a cell phone somebody’s drivers license number and run a query, yes there are a couple other companies that do that, but not with the ease of doing with the drivers license.
The problem with -- everyone is shifting towards mobility, right, you don’t want to be tied to a desktop in your office, you don’t want to have to radio it in to somebody that has a desktop, you don’t even want to go back to your car and enter into a laptop and hand jam it in. The problem with mobile devices is they are small, people have fat fingers, it’s hard to get in there and type in what’s going on. The user interface is the problem. If you can speed up data entry, it’s far better. So that’s what we do. We read the drivers license all that information gets put in, you can check whether it’s a fake, you get accurate in the first time, most people when they are typing somewhere between three and 500 characters make a mistake. And these mistakes are made on names and addresses, stuff that’s very difficult to run spell check against.
So our competitive advantage is their drivers’ license capability. I had a question from a shareholder through our investor relations firm, is this new pat, is this new product through law enforcement patent protected, we answered as yes it is, because we scan the driver’s license to do that. Those are the patents that we have. Yes we have seen some other people and there are some very small companies that view sub quarter of a $1 million revenue particularly in the bar space that have said we’re going to also create an app. And a couple of those we’ve identified, found out about and with the help of our law firm K&L Gates and Bill White leading the effort on this as our CFO contacted them and have given them to see some of these letters and they have stopped.
I believe there are others out there and this is our hard earned intellectual property and the shareholders own that intellectual property and we have the responsibility to defend it. Now my main goal is to grow revenue, but at the same time if people are eating away of that and are biting this in the ankle from behind, we have to stop that. And so it is something that we’re looking at and there are all are some small companies that are out there doing that. And so we’re going to look at that. The last thing you mentioned was software-as-a-service.
Software-as-a-service is lower revenue, it’s easier -- it shows better numbers to make a one-time deal and then claim see we sold for two quarters of a million dollars to a retailer and that will bump up revenue. And so in the initial stages that we’re at in building the Company that can make a quarter look very good, just with one of these. What we’d rather do is something I have noticed which is none of our large retailers that we ever have has stopped using our software, it’s very sticky, it’s a useful product, it makes sense to them. The return on investment is absolutely huge, if we’re charging an approximately $100 a year per point of sale to scan IDs for the whole year and get new credit cards and if they buy over 10,000 units we’re going to give them a discount.
If that’s the cost to them and the upside is that for every new loyalty brand and credit card they get, they can increase the customer spend 3x, 4x, one of the retailers told us while we were there 4.5x is how much more spend that they get that’s in the terms of 1,000s of more revenue just for one credit card. So clearly it makes sense for the entire year to have that capability at that point of sale so the ROI is there. And you’re right we’re going to have lower reoccurring revenue I think what you’re going to see with Q1 as this kind was a base for us we didn’t really sign up any new thing of large customers it was of the existing recurring revenues that we’ve been getting. You can see that it’s healthier than that Q4 that we had when I back over and when I took back over what really hit me as a CEO coming back was what’s in the pipeline what’s the reoccurring revenue going to be.
The Company should grow this like a cash cow in a sense that it keeps the process and we just keep adding more and more and more. Q1 is our lowest revenue Q3 is our highest that’s primarily in the past because we did sell more enterprise-wide licenses and products as opposed to a continuous, more steady stream of software-as-a-service. The best part is as we shift more to this the management team can give shareholders a better projection of what revenue will be because you know we don’t do projections now because it’s too much of a crystal ball to say are we going to close a big deal on June 26th versus July 5th it’s just too hard to predict. As we shift more to SaaS it will be easier to predict it will be easier for shareholders to estimate what it will be.
Thank you. And our next question comes from the line of Steve Roth with USIT. Please go ahead with your questions.
Steve Roth - USIT
Hi. First off thanks for all the hard work it’s no easy of course you’ve undertaken that I know you’ve got your extremely high intellect and work ethic in it. I think the part that’s troubling me is I have been on a number of these calls over the years and each one almost recklessness on how fantastic the products are and you’re still so 1.1 million in revenue and I now you have a sales force coming on and that supposed to bring us over somewhere but why should we really think we’re going to get that I’ve been hearing this for a long time?
Right, Steve, good question and that’s exactly that’s both questions and we are good at good products the products are good their own are good markets where we’re failing in the past is putting the emphasis in the sales team. So when I invest in companies of this type and I am invested in this company I look for two things, a killer app that has wide application across everything not just one small slice that kind of makes sense but has a huge -- and it touches a lot of people and this one does. Every man, women and teenager in North America has an ID card in their wallet and we are the ones with the patents on that so how do we capitalize that and convert that into revenue how -- I mean the costs in this Company as you know the last year I reduced a lot of the costs we had to turn this around those aren’t along, it’s top-line growth is what we have to have and when you investment enough at hi-tech company like this you don’t want to have your CEO say while we’re going to try to grow at 6% more efficiently than a year before and during if you are in a disco or something maybe you can squeeze out 6% and it will be a good thing.
This is has to be more explosive growth but with higher risk and so to do that we have to take some risks and the risks that we’ve done is we went out did a raise, that’s something new that we had not done in this company before took those funds hired two new directors and completely revamped the sales team and tripled the size of it. Those are all new things I think most of the investors and all the ones that we’ve spoke to in person and the plan that we have talked about we didn’t say expect Q1 revenue and we are raising money in Q1 in fact Bill and I some of our upwards were around that activity and not what our activity should be each and every day which is sales. And so with that behind us we’re back focused our -- the two of us as well as this new sales teams we have every day on the sales.
So and we didn’t even say that Q2 you are going to see any in this whole huge results because in reality when we hire new sales person and everyone that I’ve hired done this well but really takes them about six months until you really start to see numbers actually coming in and orders coming in based on it. We’re generating a lot of activities but it takes a good six months for that to happen I expect to see results in Q3 and Q4 that’s what we said in January and I still believe that’s on-track.
Thank you. And our next question comes from the line of Joe Brunini, who is a Private Investor. Please go ahead with your questions.
Hello Nelson, regarding the you did a [indiscernible] one thing you brought up which I don’t think a lot of people are aware but I know I wasn’t, what was the cost of the information related to the check now that varies from $7 to $29 currently if I am correct?
Yes, in fact I’ll let Bill talk about that we was the one of have sheriff’s offices and if you want to talk about the entire budget just for doing this.
Yes, I own a small Sheriff’s office in Washington City shared with us that they have third-party dispatch oral dispatch and it was $29 per dispatch and the budget for the year was about 350,000 for that dispatch, so he was very excited to be able to do that same thing with our Fugitive Finder application.
Thank you. And our next question comes from the line of Robert Limper with RTO Capital. Please go ahead with your question.
Hi, going back to your law enforcement product, I would expect that state police that deal with high-speed roads and traffic would enjoy this technique since they don’t have to lead the person that they pulled over on the side of the road and they can actually scan them right there as they are talking or looking at them, so that these people don’t do anything crazy. Can you just talk about what you would expect as far as, I hate to say percentages since you said about that methodology but I mean if we got 4% of the police that would mean some very significant revenue to Intellicheck.
Yes, Robert, thank you for the question. What you are seeing here and you are hitting right on it is we have added marketing into the Company and what you are seeing is we are focusing more on the areas that have larger payout, the larger markets, so we are concentrating more on retail. Now, we are adding and having a real product that’s available for law enforcement. We didn’t have that before. Those two markets without a doubt are our biggest ones, some of the others that we have and we have some people working on them but with less effort are things like rental car companies and hotels, yes, good products but the total available market is much smaller. So, we have shifted to that. Also the way these things are going to rollout is probably and my favorite book is crossing the chasm technology sells by word of mouth.
It’s hard to believe, you do trade shows, you do marketing, you do all these other things but what happens is if one county sheriff office, if one large city starts using it and his friend that’s the cheaper place and another comes to visit and he sees them using it, and he says what is that that’s how it works for us when we start selling military basis. We pick up one base and then another and the base commander of another base would drive through on the sister base across the state over there and go what is that thing scanning IDs that’s pretty cool, I want that at my base that’s what’s going to happen here. There is a technology component where you have to tie into the FBI’s switch state-by-state and that’s a little bit of a requirement but that’s okay, it doesn’t scare us that’s exactly what we had to with state drivers’ licenses.
We had to work with each state DMV to get there while we are doing exact same thing on law enforcement piece of it and that’s okay. We know how to do it for all the states. This is very achievable but we are going to be concentrating on certain states because once we have hooked into one of their switches then we can add other police department, state petrol and county sheriffs quite easily literally on top of the other one that we have already done in that state. So, that’s what we are doing, that’s the one I am most excited about. I think what we should do is rather than say other than acknowledge yes a 4% number will be significant revenues for a company like ours in the markets there and these things are achievable. We did not have any dedicated law enforcement sales staff before, we do now. And so one of the states that we have picked, is on licensing state, since hiring of the new sales guy for licensing state, our law enforcement he has already contacted all 39 county sheriffs, he has already visited seven of them, have already talked to the state petrol and already visited nearly, and contacted nearly two dozen city police departments and that’s just having the guys within the last few months.
So, there is a saying that I like which is little-is-little but nothing-is-nothing and in the past if we were doing nothing on sales and contact that’s what would result in the revenue on that. So, we have significant room to do upside in this. I don’t know if anybody that’s competing with us in the space as far as leading the drivers’ license that they did, I would believe it would be violating our patent to me the product just makes so much sense. And it’s not just convenient and safety, you can argue from the return on investment dollar wise, and the one that Bill mentioned to that county sheriff, two scans in a month and they save money. He actually as a budget for running at least for plates and for IDs and here we have a tool that will help them save money. So, that’s the one that I am really gusts about in Apple, just to prove, and we have to get their approval on the app to review the product and they go through several tests and we just got that approved on Thursday.
Thank you. And our next question comes from the line of Amy Norflus with Neuberger Berman. Please go ahead with your question.
Amy Norflus - Neuberger Berman
Hi, Nelson, you stated that on the third quarter, one-third of the sales should probably be the army and then you also stated that we should start to see the fruits of all of the sales people in the third and fourth quarter. How do we -- can you I don’t know I don’t know if quantify or somehow give us some understanding as how we should understand that? And then also you didn’t mention anything about Homeland Security and airports and stuff like that?
Okay, thanks Amy, yes let’s talk about that one first, okay Homeland Security, I’m not, yes, I didn’t mention that in this, I don’t believe that’s a great market for example are they going to be scanning drivers’ licenses from a Homeland Security point of view, they had a program called credential authentication technology boarding pass, I am forgetting one of the last letters on it, but Homeland Security tried four times to launch a program like that and each and every time some other company protested and it stopped and we’re partnered with some large companies out there, I believe there is a bias within Homeland Security to issue contracts like this to large companies. I’ve had Homeland Security officials right out say that, I believe that is the truth whether the government wants to do that or not I believe that they are more comfortable with initiating contracts with very large companies with respect to things like this. So we would be partnered with someone. I’m not going to hold my breath if they’re going to do that.
I think we had a press conference a few years ago with Senator Chuck Schumer and he said right after the Times Square Bomber and we demonstrated how we could scan the guys Connecticut driver’s license and pop up the No Fly list and could have prevented easily that guy from getting on an airplane and almost flew out of the country. All the site system CEOs are gaining Deepak Chopra and Deepak told me that the government is not the best of customers and I tend to agree with that, they buy lumpy, they don’t plan out their programs very well, they cancel in the last second when another company can -- it’s, I don’t want to give shareholders a false impression and hype something and say Homeland Security is about to do something, isn’t this cool, sometimes when some event occurs and we rolled and it causes our stock to move rather well and the total available market of what Homeland Security would potentially buy and the likelihood that they get their act together, to do so I think is on the lower-end, so we have the technology, every RFP that they put out on that, we’re going to be there, we’re going to bid.
We even have patents that check two documents to each other like the one we’ve just issued. I mean these are very cool things and if and when they want to do something we’re going to be there, but in the interim we want to grow revenue and so, no, I didn’t mention it on this call and I’m glad you brought it up. I don’t want to hype that one, because I cannot count on that for our Q3 revenue. Okay, so let’s go to your, I said the US Army, well yes the army bought that in addition to the US Army the Marine Corp, and there’s some large national high-end agencies and groups that have very controlled locations and they use our products for visitor center and I believe that they typically will buy in Q3, the government often does nothing in Q4 and Q1 a little in Q2 and the lion’s share in Q3.
I expect about a third of our revenue, again it’s hard to predict and I can be off on that, but in the past that’s been about the number that we expect. I also expect that the new sales people that we brought on in Q1 will have an effect in Q3. Our activity level right now in Q2 compared to where it was last year is much higher, the things in our pipeline are much higher. The number of people we have contacted is significantly higher. We track, how many calls are made, how many customers we visit, again we didn’t have that implemented at this time last year and we do know, there’s a significant increase of professionalism and a significant increase of people on the road and touching customers, I think the products are solid, I think that the IP protection behind it is solid and I think the return on investment, is very clear and as we’re adding marketing we’re making it clearer for the customer to see that. What we have to do is follow through in the sales and the Company has not done a good job of that in the past, so that’s we’re doing.
Thank you. And our next question comes from the line of Joe Brunini who’s a Private Investor please go ahead with your questions. Sir, your line is live.
Yes, hi Joe we can hear you.
Okay, I’m sorry Nelson I was cut off before.
You’ve already in the Fugitive Finder, I know the subsequent caller came up with a good comment I just wanted to add a similar question, I mean every 1% comes out about $500,000 a month in revenue and I’m sure your margins are significantly high in that area. I believed in the products I believe in your patents, and having a vertical sales force now is one of the best opportunities that ever existed with your company, it truly is, most people have the sales push but no product, you had a product with no sales force, so take this as a compliment, it’s meant to be, but the Fugitive Finder, every percent of that market is $0.5 million a month potential, am I correct with that?
We believe that the market is 615 million, about total available market of that of 615 million a year. And so the other number is absolutely very large. And I mean we want to -- and you know these things don’t grow winterly, again they tend to as you skip through the innovators into early adopter format and again there is a cross in the [indiscernible] meaning to make sure that you don’t adjust with the innovators you need to be a standard, you need to have clear warranties, there needs to be a clean understanding of the process, and you need all the requirements. It’s a safe professional product to buy and that’s what the early adopters go after. Late adopters go after ten month, price after -- lots of competition in comparing between two and your 10% cheaper. That’s not where we are at. We need to go after these early adopters, maybe get into that market. That probably going to get adopted and we’re about -- and the growth in that tends to start out slower, and tends to be more explosive once it becomes adopted as a standard. That’s the goal right now and that’s where we are going to be with. Thank you for the compliment, Joe, and I am very excited that we brought this product out, that Apple has agreed to be the reseller for us. And I am very glad with the new sales people we have and how aggressive they are at getting the word out.
Thank you. And your next question from the line of Gus Allen with GA Financial, please proceed with your question.
Gus Allen - GA Financial
Thank you, Nelson that was a wonderful description of the things that you’re so excited about, right now. And with our question I think everybody who has asked the question, this law enforcement product is outstanding. What struck me, I wondered, since you had -- your research took you across the country and speaking with a lot of different kinds of law enforcement groups, I’m just curious outside of the state of Washington, has anybody else showed enough interest to really do some homework on it, are they looking at it seriously?
Yes. We were in Ohio, just last week. We believe the Sheriff’s Officer is going to be using it. We have also talked to Boston. We have talked to people in New York. No, now we’re not just doing Washington. I am concentrating on certain states. Again because if we can get a foothold in the state, then other agencies around it will be able to deal this, because literally what we do because we provide a server within one of those, and then other agencies wirelessly will hook into their server. And I am talking a little bit of the technical thing here, but what I am trying to say is, you probably will see us getting into a state and then put more emphasis into growing other agencies within that same space as opposed to this randomly going all over.
And as we do this, we’re going to have to grow our sales force within these states. And then again, that’s a good thing. I am very jazzed about this -- I didn’t answer Joe’s question properly. He talked about margins. Yes we have very high margins on this. We’ve sunk all the costs upfront. The technology, and how to convert a image to a camera into a barcode, that’s what we had to do. The software, all of the patent protection, all of the drivers’ license, to all of the software for the interstate into a state switches, all of the encryption and protection, so that we can do it safely. All that had to be put in there as well as all of the testing. And I did.
The focused group included John Hopkins University which is graduates more piece of police than any other university in the country. Their Dean of the Public Safety Group was on it. Remember that was of the number two guide alcohol tobacco and firearms, a person who is the head of the Bureau of Investigation of North Carolina. We had a lot of people on this group. That had a number of that was of the State Police in New Hampshire and it was a Sherriff in Rockingham County, and buys this. And these guys were accurately didn’t hold back. They knew the product they varied across the country, and basically they told us the technology is right on but the form factor is no good. It’s too big, it’s too clumsy. There is no room under belt to hold this thing.
And speaking with the CEO of TASER, Rick Smith, he gave me advice, and his advice was this must be on a cellphone. As I had several conversations with him and this technology needs to be on a cellphone he told me repeatedly, and I agreed with him. So it took us a little bit to do that. We launched the product differently this time. Instead of saying, hey, here’s some technology using this tool and then we’ll let’s try to get a sales guy and see what happens, we actually put marketing into this. We spent some time on deciding what the price was.
We looked at what some of the competitors’ products that don’t need drivers’ licenses, but their cellphones were competitive. We’re right in there, on the price that they generated. We looked at the features that they had. Initially our product did do longs and warrants that did not pull photos back from the Department of motor vehicle, and that the cops that we spoke to, that were testing our product, at multiple locations, across the country, not just in Washington DC, all said, hey I would like -- I need a photo, I need to run a license plate to see if the car is stolen. These weren’t things that we initially had in the product and so while we were in beta test and we added those features and we made sure we got it right before we launched it and then after we were ready to launch, we had to submit this product to Apple and get their approval as well.
So, it took a little bit to do it and I am very pleased last Thursday when they came back and said yes, it’s approved. Okay, well I would like to thank you all, that was quite a long call but I appreciate the intelligent investors and the intelligent questions that people are asking. It is interesting technology and it does require some thought to understanding it and so the fact that you guys sits good questions, it was very appreciated on our part. We mentioned the business plan that we are doing. I want to thank the investors that invested in us in the past and the new investors that invested in us recently, so that we could use those funding to tackle the problem that we all need to tackle which is in increased sales. So, thank you all for the call today and look forward to speaking to you again in about a quarter. Thanks.
Thank you. This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: email@example.com. Thank you!