Q1 2021 BIO-Key International Inc Earnings Call
Good morning, ladies and gentlemen, thank you for standing by and welcome to Bio key Internationals first quarter 2021 conference call during.
During today during management's prepared remarks today, all participants will be in a listen only mode.
Afterwards listeners will be invited to participate in a question and answer session. As a reminder, this conference is being recorded two day Friday may 14th 2021, I would now like to turn the call over to Kimberly Johnson of Bio Keyes, Vice President of product. Please begin.
Thank you and thank you for joining us. This morning with me on today's call are biopsies, Chairman and CEO, Mike Davis.
Chief revenue officer, Fred <unk>, and CFO Stacy Welch I'd.
I'd like to remind everyone that todays conference call and webcast may contain forward looking statements that are subject to certain risks and uncertainties that may cause actual results to differ materially from those projected on the basis of these statements.
Words, such as estimate project expect anticipate believe think plan may or will or similar words, typically identify and express forward looking statements.
Such forward looking statements are made based on management's beliefs and assumptions made using information currently available pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995 for.
For a complete description of these and other risk factors that may affect the future performance of bio key please see risk factors in the company's annual report filed on form 10-K and in other filings with the Securities and Exchange Commission.
Listeners are cautioned not to place undue reliance on forward looking statements, which speak only as of today's date. The company undertakes no obligation to revise or disclose the revisions to such forward looking statements to reflect events or circumstances that may occur. After today now I will turn the call over.
To my safe as well.
Thank you Kim and good morning, and thank you all for joining our call today.
Let me first congratulate Kim on her being named by CRA, and formerly known as computer reseller news to the woman of the it channel power 100 list the <unk>.
<unk> recognizes the strengths vision and achievement of female leaders from vendors distributors and solution providers in the it channel.
So we are proud that Kim's leadership is being acknowledged the in our industry and grateful for the contributions she is making to <unk> success.
Jim will say a few words about our marketing progress momentarily.
On our last call I said that we had never been more enthusiastic and opportunistic about <unk> future and our Q1 results demonstrate the momentum we are gaining across the business the foundations of which we began late last year.
To date in 2021, we continue to see customer dialogues and business activity gradually moving towards more normalized levels following COVID-19 related disruptions.
The silver lining of the pandemic. However was its impact on rapidly moving enterprises of all types into a remote work from home model around the globe.
We believe the work from anywhere or remote and hybrid work and study trends are largely here to stay.
The rapid increase in demand for off premises access to mission critical data and applications outside the firewall has created unprecedented IP security and administration challenges.
<unk> helps enterprises meet these challenges with the attractively priced identity and access management solutions that support over 16 different multi factor authentication options, including our patented industry, leading biometric capabilities.
The metrics of our core strength and the differentiator for <unk> in the marketplace and we continue to believe the biometric factors provide the highest levels of authentication security and access reporting and will increasingly be utilized to defend against network intruders.
We are also differentiated by our central biometric management system capabilities, which are scalable to any size platform such as those required in mobile communication networks large banks networks and even on a national level such as for civil I D programs.
As business activity gradually normalizes, we are ramping our sales and marketing initiatives and engaging with a growing list of customer prospects that can benefit from our solutions, both directly and through our growing network of channel The Alliance partners.
Reflecting the progress, we are making and expanding and strengthening our business. Our Q1 revenue rose more than 260% over Q1 last year and 78% sequentially over the fourth quarter.
Part of that growth resulted from the initial launch of our African contracts, but even excluding these revenues our core business grew 13% sequentially over Q4 2020.
We saw improving demand really across the business in the first quarter, including from our portal guard solution and particularly for our new cloud hosted version portal guard Eidos or identity as a service.
That we launched in Q4.
Portal Guard Eidos is an ideal solution for today's <unk>.
The environment, where enterprises and institutions are increasingly moving their it infrastructure to the cloud to benefit from less resource and asset intensive model.
Remote access challenges complicate cyber security for companies of various sizes across all industries.
While multi factor authentication is an essential part of any identity and access management strategy organizations, such as NIST, the national institutes of standards and technology as well as the FBI has made very clear statements that traditional methods such as passwords and bone.
The message such as SMS codes, and onetime password generators are very vulnerable to hackers and cyber attacks.
These vulnerabilities increase the likelihood of losing control over access to mission critical data.
The end users can share of credential or enroll additional users into their phones for example, without the relying parties consent.
Further tokens have lifestyle cost can be lost and present other challenges.
According to the 2020, Verizon data breach investigation report.
81% of hacking related breaches leveraged stolen or weak passwords.
These findings support the adoption of password less workflows using phone apps secured with use of controlled device based biometrics or other factors.
While more secure the passwords accounts sharing unauthorized delegation and Sim swapping have innate challenges that make it suitable for robust enterprise level security.
With that I'd like to turn it over to Fred.
Oh excuse me I have a couple of more paragraphs that I want to go through to advance the breadth of our biometric capabilities earlier. This week, we launched mobile off with Palm positive we made that announcement on Monday.
That's a mobile app that brings seamless biometric authentication to iOS and Android mobile devices.
<unk> is an easy to use app that requires no special hardware as it leverages the device camera to Kathryn the capture biometric data for authentication into cloud hosted assets. We are very excited about this innovative new technology as it expands our support into mainstream portable device.
<unk> and enables true cloud based authentication of the individuals seeking access versus device level of dedication based on factors that are not known to the network.
Also the startup of our African projects up in Q1 contributed to our strong first quarter performance with revenue of $680000 related to initial fingerprint hardware shipments to support by metric enrollment in Nigeria.
We expect increasing activities from these contracts throughout 2021.
And at the same time, we work to develop other opportunities in neighboring countries and across Africa.
<unk>, we are very well funded to execute on our growth strategies and fully tapped the sales potential of our expanded team enhanced product portfolio and growing partner relationships are.
Our financial strength allows us to make prudent investments in our business, including potential partnerships tuck in acquisitions, new product development as well as the fund additional sales and marketing resources and initiatives.
Fred will discuss some of our growth plans and <unk> will review, our Q1 financials we.
We expect the positive trends experienced in Q1 to build over the balance of 2021 supported by our contract backlog and growing pipeline of opportunities our growing base of recurring revenue and the improving outlook for IP security solutions, particularly in North America Africa and Asia.
We continue to anticipate revenues of $8 million to $12 million for full fiscal 2021 with potential upside mainly related to our African business as well as some other opportunities the midpoint of this range would represent growth of over 250% versus fiscal 'twenty.
<unk> 'twenty and depending on the mix of hardware and software revenue would likely position us for profitability for the full year.
Now I will turn the call over to Fred the highlight a few key developments and revenue opportunities that we see in our business Fred.
Thank you Mike.
As Mike mentioned, we demonstrated significant revenue momentum in Q1, that's just versus last year, but also relative to Q4.
We've been talking about building a sustainable high margin recurring revenue model the seats, which had been laid in the past year. We started to see a glimpse of this in late 2020, but believe Q1 provided confirmation now of the walk you through a few reasons that support our optimism for the balance of 2021 and be.
The.
The first off we completed development and launch the software as a service model for our portal got solution in Q4.
Port of got <unk>. The platform is hosted within in the AWS cloud infrastructure debt easily integrates without customers. Other cloud hosted data and software systems further political at <unk> since the scalable solution with significantly lower upfront cost for the customer than the hosted version four.
<unk> It provides a far more stable and predictable recurring software revenue stream versus the volatility of volatility of onetime license sales with potential maintenance.
Debt is really what more and more customers are demanding and the team continues to build transaction of cloud solutions from both new and existing customers.
The transition to the cloud has been accelerated by the pandemic and associated work and study from any way of trends, we do not see this going away as the economy reopens, creating a favorable demand potential.
On our last call I mentioned the growth potential of offered by mobile I'd and.
To tackle that opportunity, we developed and recently launched by Yoki mobile off with Palm positive.
This creates a new paradigm for identity.
Biometrics, which are very well suited for everyday use cases, including remote Workforces third party excess cash.
Customer identity access management or C I, a M and password less workflows.
<unk> pump positive requires no special hardware as it uses of the existing phone camera to capture biometric data and validated against the cloud hosted database.
On positive is up to 400 times more accurate than common use of controlled multiple biometric authentication options that are already widely available on cell phones.
Further palm positive integrates the biometric matching process with the centralized secured use of database, whereas all of the mobile biometric authentication is done on the device and the authentication data is not shared outside the device.
Touchless Palm authentication brings up to 16, the number of authentication fact of supported by the port of <unk> platform.
Stay tuned as we plan to add other touchless identity bound biometric factors such as voice in face of identification to the mobile all of that in coming quarters. We.
We are very optimistic for this product as we feel enterprises need to address deficiencies in traditional authentication methods. Further we expect mobile off will extend pool of guards leadership and reputation for strong multifactor authentication support with the highest levels of integrity security.
Accuracy and availability across devices.
I am pleased to report that our channel Alliance partner of cap program continues to build and remains key a key component of long term growth strategy. The cap program Leverages, our partners market presence to expand the reach of our solutions into new customers. We added more than two dozen new partners in Q1 bring us.
Bringing us now it's over 75 channel partners on the global basis, we are working to double the size of the program in coming quarters, having expanded the program to include managed service providers managed security service providers. In addition to the system integrators and value added resellers.
We continue to target point as in key verticals, such as finance government and higher education, where our solutions and value proposition of well established.
As we increasingly become a channel centric company, we expect our partner generated revenue to grow significantly both in absolute terms as well as the percentage of overall revenue.
As for ongoing investments to maintain our technology leadership, we recently completed an upgrade to <unk> core of biometric solution vector segment technology, the BST, which added intelligent cloud based device driver management further the new release of our web T platform version for the out one Leverages V. S T.
The managed software installation and updates providing better performance and an enhanced user experience.
Finally, we believe port of guard $6 five in the first quarter, adding a range of new cloud and mobile capabilities. For example supports Microsoft Azure active directory as the primary real time directory in the cloud, thereby eliminating the need for an on premise of active directory and providing a stronger cloud.
On the option.
At this time I'd like to turn the call back to Kim Johnson to discuss some recent wins and marketing update Ken.
Yeah.
Thank you Fred.
And in Q1, we have numerous highlight for customer announcements, we continued with the expansion of <unk> T and biometric of multiple customers, including the announcement of the expansion of web T with an international Defense agency, resulting in the total revenue growth of one $4 million after an additional <unk>.
275000 dollar investment they made in Q1.
In addition, the western states expanded their biometric deployment with an additional investment in secure access to their centralized voter registration database.
We are seeing more demand from our existing customers to migrate to the cloud and our portal guard <unk> platform with a total of 20 customers moving to the solution, including South Eastern Illinois College the.
On customer announcements one of the key investments we've made in our brand awareness effort has been the hiring of of cyber focused public relations firm, who is focused on building <unk> brand recognition and credibility in the market.
In Q1, we are pleased to announce the Cologuard Ida had been selected as the finalist for the 2021 as the Media Trust Award in the best authentication technology category.
This physician portal guard as a leader amongst some of the most well known I am brands in the market.
This award as well as additional awards, including the CRM women of the Channel Award, Mike mentioned earlier and media coverage in publications, such as health net security Hacker noon toolbox.
Security wire and CRM TB is the result of hiring the PR firm in Q1, and the key marketing and brand awareness investment.
In addition to the PR agency, we continue to make investments in our marketing efforts on team <unk>.
Q1 demonstrated the power of our marketing engine as we successfully launched multiple campaigns to drive thousands of leads and qualified opportunity.
It dissipate into virtual events create powerful content, including the launch of our Iam channel and continue to nurture the relationships with our existing customers.
After the launching our new website in Q4 of last year, we have continued to invest in our website and search engine optimization or at the L.
It does increase our traffic and our volume of inbound lead such as demo request and three trials by 73%.
With the mature defined process in place that measures every stage of the buying cycle. We are constantly optimizing the ROI of all our marketing efforts with the final quarterly call that keep us focused on driving new business customer retention and brand awareness.
Through the and other initiatives mentioned today, we are making solid progress on positioning <unk> for future success.
And now I will turn the call over to Stacy for a review of Q1 financial Stacey.
Thank you Kim or.
Our results were issued in todays press release, and we expect to file our 10-Q next week.
In Q1, 'twenty, one our revenue grew significantly to $1 8 million from 522000 in Q1 'twenty the.
The increase is due to more than 100% increase from license revenue.
1193% growth in our revenue our hardware revenue, including 680 day of the revenue related to projects in Africa versus none in Q1 'twenty.
License and services revenue.
The revenue.
Growth includes revenue from pistol Star acquisition that was closed on June 30 of 2020. Therefore of border Guard revenues are not included in Q1, 'twenty or Q to Q2 'twenty results.
Gross profit increased 182% to $1 1 million from 400000 in Q1, 'twenty, reflecting higher revenues.
Gross margin declined to 59, 4% from 70.
Six 2% in Q1, 'twenty do the hardware representing 55 per cent of revenue in Q1, 'twenty, one, including the fingerprint scanners for African project versus the only 15% in the front of prior year period.
We expect higher margin software to make up for a larger portion of the revenue in future periods.
Operating expenses were held to 7% increase in the two $1 8 million versus in Q1, 'twenty, one versus $1 7 million in the prior year period, despite much higher revenue growth.
The increase in expenses was primarily due the higher research and development engineering costs, reflecting the addition of the portal got operations and continued investment in new product development and product enhancements.
<unk> reported a net loss available to stockholders of <unk> 7 million or nine cents per share in Q1, 'twenty, one compared with the net loss of $3 5 million or a dollar of 84 per share in Q1 'twenty.
Weighted average shares outstanding of approximately seven point.
8 million in Q1, 'twenty, one versus $1 9 million in Q1 'twenty.
We ended the quarter with no debt and current assets of $18 1 million, including $13 5 million of cash on cash equivalents, providing for a very strong financial base to the to support our growth objectives at year end buyer. He had current assets of $18 9 million, including $17 million of.
The cash equivalents, our inventory increased by 270000, and prepayments increased 1.5 million due to investments made to secure contractual shipments to Africa in Q1.
Related to our increased business volume.
Is that I can now turn the call back to the operator for investor questions.
Operator, we will now.
We will now begin the question and answer session.
Ask a question you May press Star then one on your Touchtone phone.
Youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Today's first question comes from the Jackup Zander Rd with Maxim Group.
Great Good morning, guys.
Congrats on the solid results very encouraging to see.
Also just want to say congrats to Kim as well.
Okay couple of questions from me.
I'll start with the question for Michael.
The first question on the strong first quarter revenue results definitely exceeded my expectations.
Even without considering the contribution from the Africa contracts revenue was definitely strong compare to my estimates.
How are you guys don't provide quarterly revenue guidance. So I'm wondering if you can speak to how the first quarter revenue result, compared to maybe your internal expectations.
Jack Thank you by the way and good morning, you're right. We don't provide quarterly revenue guidance and as you know we've stated this the number of times before the reason for that is where we're still we're building our RR model in other words, our recurring revenue model and so we.
We're going to get more predictable and I think you can see over the last two.
Particularly now it'll be three quarters that we've reported.
Our iam business right, consisting of the portal guard and biometric components.
Are reasonably stable and our growing right. So theyre moving in the right direction.
Internally.
Where we're meeting our objectives, we always would like to do more.
Extremely cautious in particular about our African business, we know the potential is significant but our challenge is as always is ensuring we get paid right. The ecosystem. There is starting to really bill.
Build out.
The money from the World Bank is starting to flow through down now to the agencies and through the agencies through to the partners that we're working with who are going to acquire the hardware and software too.
Grow and develop the enrollment and the identity ecosystem, there and in Nigeria in particular.
So again, we're meeting our internal objectives, but we certainly would like to do more we believe we're heading in the right direction and we're on the right track to achieve our annual objectives, which we did flash.
Fantastic. Okay. That's helpful and maybe just to follow up into the sticking with the ask the contract scenario.
I'm.
Very encouraging to see these contracts you know finally getting deployed after many many months of unfortunate delays because of COVID-19 the games.
What it is but now it's happening this is the.
Reestablish confidence hopefully in from the market It does from me.
Wondering if you could share a little bit more of you just mentioned the world Bank is starting to.
Actually have those those funds allocated down to the ecosystem partners.
Just can you talk a little bit more about that and how how thats working is it sort of phased out agreement are these funds already.
Designated and is there a schedule of how the funds are allocated or is it really kind of uncertain.
No no.
Allocated funds the World Bank is actually allocated funds and has allocated funds for years.
To build out this ecosystem, but they've had many fail starts and stops over the years now.
They have come up with a very the finite plan on how to get the masses enrolled in Nigeria.
And that ecosystem is being built out on a structured levels. So.
The way this is working the fund surpassed through as for example of the equipment is acquired and the enrollments.
<unk> counted.
So banks telecoms independent agents all funded through this initiative I have to produce the number of enrollments in order to get reimbursement and get paid so it's pretty structured and it's it's what I've seen at least having experience in Africa and Nigeria.
Over the last 10 years, it's probably the best structured that I've ever seen it.
Okay.
That's helpful to know it's good to hear.
And then just another question on on these Africa. This initial deployment of the.
Of the fingerprint scanners, which I believe represented.
100% of the initial 680 revenue $680000 of revenue.
What what what can you expect or is there anything you can provide in terms of like what the next batch.
Of revenue is going to look like from a product mix will it be more hardware.
Or will there be some software and services mixed in.
And also of the size of the next revenue deployment is there anything you can provide there or is that something.
Kind of just want to be cautiously optimistic of not talk about that yet no I think.
We've mentioned before that the initial deployments will be a lot of hardware. So so we've stated that over the last few quarters. So I think we can answer that question pretty clearly we do believe that software and services will begin to become part of this as we approach the second part of the year and get to the tail end of the year.
Because once the hardware is now deployed the enrollment start to take place the ecosystem can be built and certainly there's a tremendous opportunity for for example for portal guard solutions to be deployed there.
We have a <unk>.
Side from the.
Of the contracts that we've been focused on and talking about right now we have a partner in Africa in Kenya Crystal We made an announcement the back of a month or so ago Theyre very enthused and excited about selling portal guard across the eastern part of the continent.
In Kenya in Kenya's now, becoming sort of of tech hub of.
Of Africa, So we're enthused about that but.
In terms of predicting exactly what those shipments will be on a quarter by quarter basis. We're just not in a position to do that at this point.
Okay.
Fair enough so it sounds like.
And yet you have said you know the initial deployments, we're definitely gonna be the hardware.
True to your word there and it sounds like that's going to continue to be the case likely in the near term and then software and services get sprinkled in.
Definitely in the back half of the year, assuming everything continues accordingly, so that's all good to hear.
Let me shift gears away from the after contracting back to maybe a question for Fred as well, but.
On the Channel Alliance partner program strength, you guys added 29, new members this quarter.
Can either.
Either of you maybe quantify or speak further to just how the channel Alliance program contributed to the first quarter revenue upside.
And how you see the channels revenue contribution of percentage mix.
The trending in the future quarters.
Yes, I'll, let Fred take that this is Mike.
Yes, so Jack the.
As you know the program is ramping and we had some deals that contributed.
It's not a significant percentage just yet that will grow though as the partner base grows training marketing and a lot of on boarding occur so you'll see an increasing.
Impact over the course of the ensuing quarters for the year and certainly into next year. It takes time to build it we're doing that.
And in building the base of partners.
Okay.
Got it.
And I'm sorry, how many just how many channel lines partners of you were at currently and is there can you remind me if there's a target number that you're approaching.
Yeah, we haven't set of unofficial target number right now it is officially 75 partners.
In the program and that will increase as we indicated we're looking at the double that over the course of this year and.
Look for some great things happening over the course with some new partners.
The rest of the year.
Okay.
And then next question.
Maybe for Michael.
Sure.
Can you just talk about maybe when we're talking about the non Africa related revenues.
And kind of looking forward into your revenue guidance for the full year, which is still at that $8 million to $12 million range.
Which is the exceptional growth year over year, regardless of its at the low end of the high end of the mid point.
But as it relates to the the non Africa related revenue between maybe the buyout of the core biotech business biometric business and then with the portal guard business I know the lines of blurred.
A bit now because of the cross selling but.
Is there any way you can kind of talk about how those two different businesses are.
Our growing in terms of relative revenue contributions from the first quarter and then kind of throughout the year of is it similar or is it kind of too hard to tell.
Well I think in our prepared remarks, we indicated that the core business aside from the Africa hardware.
Revenue for the first quarter grew about 12% over Q4. So that's sequentially grew about 12% so that business is growing very nicely.
And we.
Spect that to continue through the end of the year and more importantly that is mostly subscription revenue and so it is growing and it is predictable and it's high margin.
Got it okay.
I think thats it from me congrats on the strong results again in.
Encouraging to see the outlook.
It remains intact. Good luck guys. Thanks, Thank you Jack.
As a reminder, if you do all of a question. Please press Star then one on your Touchtone phone.
The next question comes from Daniel Camus, and Investor. Please proceed sir.
Thank you the great quarter guys.
I've got a couple of questions on <unk>.
Palm positive.
Is that patentable.
Palm positive is a licensed.
<unk> product.
That we've incorporated into our mobile platform.
And our portal guard platform that reads and matches palms.
Through a centralized database.
So that is a.
That.
Does have a number of patents we license it we do not own that technology.
At this point and stage, we believe the world doesn't need another algorithm.
And in particular for us to invest in that didn't make sense.
So it's a mode of authentication that we've incorporated into our platform, but the secret sauce for us are the wrappers, including what we do in web key.
And what we do in Porto Guard, so the secured transport of that data and information the way it's used the way the mobile App is designed how it integrates into.
Our back ends.
And the kind of user experience and functionality that it provides.
It's a product that we believe enterprises and.
The financial institutions.
Educational institutions government entities are going to be very very interested in.
It's touchless.
Personal.
It's highly secure it's highly accurate.
Similar in nature to the accuracy level of our core finger biometric technologies, not quite there but close.
And it will.
It will provide a positive absolutely positive identification of someone behind a mobile device.
And it also provides us an opportunity right now we are mostly a b to b cell of right. So we're selling too as I just described government agencies enterprises banks health care institutions.
It gives us an opportunity to extend.
B to C. So some of our customers.
You may want to use this technology for their customers many of them may be consumers or contractors and other enterprises, but they may want to use of this technology to secure access back to their portals through our portal guard solution.
So sorry, Dan for the long winded answer, but I figured I'd get all of that out there.
That's fine.
Since he uses the camera I'm just wondering if it.
Yes.
It has the same limits as face or something like that you need lighting or.
Are the same constraints or is there something special about this.
It works on any Android or iOS device. It will work on your computer with your.
The webcam.
It's fundamental universal.
And the.
I would say the lighting challenges that are in eight in capturing any image exists for this technology as they do for others. The one.
One thing that we are impressed with.
With this particular technology is the.
Of the algorithms and the physics behind the lighting controls really really good very highly accurate.
Okay.
Another question on patents.
I saw on your K that.
The patents expire and I don't know 18 months or something in a lot of your IP will expire in the next two to four years.
Should we be concerned about that at all as investors.
I don't believe so not at all the fact.
Quite frankly.
A number of those very very early patents.
You know, we really havent monetize nor have we.
You really gone out looking to monetize those early patents, it's the ones that.
I have been most recently.
Awarded that we think could.
Potentially have significant value like the one that we just recently announced back about a month ago. So those are the ones that we think can.
You'd have more I'll call it universal value overtime.
Great great. Thanks.
The switch over to Africa.
You are I guess reiterated the eight to 12 million in the last quarter you said the.
Bulk was.
From your core base not Africa did the.
The mix changed at all in that estimate or is it still pretty much.
Same kind of idea in terms of how much is coming from what.
So we haven't changed our guidance. So what we stated before is still accurate.
Okay.
Are there any other large scale projects that you can mention Africa that youre bidding on at this time.
Nothing that we will discuss right now.
Alright.
You did mentioned Kenya was that mostly in terms of portal guard or are there any projects that are going on.
Other than the.
The guard opportunity.
There are a number of different projects, but.
Chris Bell, which is what I discussed a few moments ago is the partner that is the largest in fact I think they have the exclusive right to sell bit defender across Africa in particular in the east and so they are very focused on security cyber security and they're going to be reselling our.
Portal guard solution to and through their partner network and into the enterprise markets.
Okay.
Let me ask this then do you.
Where do you expect to see greater portal guard growth in the U S or in Africa.
I believe North America.
We're starting to see some opportunities evolve in Asia.
You know and I don't mean, China, I mean, Singapore, Taiwan Korea, Japan. So we think there's very good opportunity there and we also see.
Areas of opportunity in Europe, as well and so we think there'll be significant growth in the already established markets.
Not only what may evolve and be significant potential in the emerging markets like in Africa.
Okay, Great I'll get back in the queue for right now.
<unk>.
Again, if you do have a question. Please press Star then one on your Touchtone phone.
Our next question comes from Dan canvas with the follow up please.
Please proceed sir.
Okay.
Kind of few more here.
Can you give us the split.
And what you would consider I mean, I assume that the $681 $8 million, so that leaves about 1.12 million.
From your core business.
Was it 50 50 with the portal garden and the peer of biometrics or can you give us any idea on that.
Once those are the SEC. It was just a little bit higher on the pivotal side aside because it's clear.
As we've stated before where we're selling through our channel too, but that was a little bit higher at that time.
Great and <unk>, what can you tell me what the deferred revenue was and the change over the prior quarter.
The deferred revenue.
You mean, what the total number was or yeah.
So the for the total number of deferred revenue was approximately 350000.
Okay and last quarter.
It's a little a little more than that we had from our purchase.
Of pistol style, we got but we purchased the bunch of things that were classified as maintenance or deferred revenue and so that there was a bigger chunk last quarter of that next quarter will be the last quarter that that part of the deferred revenue will be recognized so we expect that to go down a little bit on that ramp back up again.
Okay I'm sorry.
I understand the the cash use.
So $1 8 million in Opex of 700, K loss and you paid a $5 million or five excuse me of 500000 from <unk>.
Oil guard.
Am I reading that right and is that of like a run rate of about $2 5 million now.
For breakeven.
Yeah, well so couple of things the.
The run rate depends on on what's sold so there are a lot of hardware that's going to go up and if there's not goes down the second one we invested the unbeliever center.
In some material that we expect to ship and then recognize revenue on so there's a timing difference there.
And we also increased our inventory to have some stuff available for the fifth quarter that we're shipping.
Okay.
Is I had the question on and in the K. There was of one 7 million non current accounts receivable.
Is that.
The old Nigerian contract.
What was that $1 7 million, yes that was the old one.
Alright.
Uh Huh, Mike I got one more question on the.
Do your old the Chinese investors on board members still have a significant amount of shares or are they.
Yeah.
No actually they hold the the majority in fact, if not all of the shares that they held for Calvin Wong who was on our board still remains our largest single shareholder.
And the Calvin hasn't sold any of the shares.
And the other Chinese.
Invest or invest stores there were.
Two or three are also still have their holdings.
Alright, great.
So you see at the end of your statement you were talking about of $1 5 million cash payment.
I didn't quite get what that was about.
Oh that was for the investment in inventory.
Its bumped up our prepaid.
You'll see a breakout of it in the in the queue.
So you guys spent $1 5 million in cash on on inventories at it okay.
It's a deposit for the for some of the items that we need to order. There are long lead items. So we wanted to make sure we put an investment into secure those.
And.
Yep.
Okay, alright, well that'll come out of the mechanic in the queue I guess, okay, great quarter, guys nice job on.
I'm looking forward to see.
See what happens on the rest of the year. Thank you.
Thank you Dan.
And at this time there are no further questions in the queue and this concludes our question and answer session. At this time I would like to turn the conference back over to Mike Dipasquale for any closing remarks.
Thank you I just want to thank everyone for participating on today's call. We look forward to updating you on our second quarter call, which will likely be in late July or early August in the meantime, we will continue to provide interim news and updates. Thank you and have a great day and a great weekend.
Okay.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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