Q2 2022 VerifyMe Inc Earnings Call
Thanks.
[music].
Welcome to the verify my second quarter 2022 results conference call all participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.
Please note that this event is being recorded.
I'd now like to turn the conference over to Nancy Meyers Senior Vice President Finance and Investor Relations. Please go ahead.
Good morning, everyone and thank you for joining us today on our earnings call presentation.
On the call today, we have Scott Greenberg Executive Chairman, Patrick White, CEO and Margaret because there are at least C. F O to give an update on our second quarter 2022 results followed in our management presentation, we will have a Q&A session.
I would like to bring your attention to the note on forward looking statements on slide three today's presentation and answers to questions include forward looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward looking statements caption and on the risk factors in the company's annual.
I'll report on Form 10-K, and quarterly reports on Form 10-Q, I will now turn the call over to Scott Greenberg, except for some opening remarks.
Thank you.
Good morning, everybody I would like to thank you for participating on our second quarter 2000, and spy two earnings call. We expect that these calls will continue on a regular quarterly basis.
Hopefully you were able to review our earnings release yesterday, which we believe clearly demonstrates the transformation of the company from a technology start up to a rapid revenue generating entity with a specialty in supply chain logistics anti counterfeiting and track and trace capabilities.
We believe that these these relate to each other and we are in a good position.
And in addition, we do expect positive adjusted EBITDA in 2023 next.
Next slide please.
A little bit about the financial and equity snapshot of Dissemble B E. R. M. A the stock price of approximately $1.86. We have received questions from many shareholders about the stock in the last few months and we have seen as well.
So the trading of the stock and the volatility in the stock and we're just as Mr. Yu are under reasons, but at the end of the day, we believe we're improving the company and it will eventually be reflected in the stock price.
Shares outstanding is approximately $8 5 million and our market cap is approximately 60 million $16 million.
Our cash balance is $3.8 million as of June 30 of 2022, and that's paying for the parish ship acquisition other than the note.
Which is $2 million as of June 30 of 2022 as I mentioned in 2023, we project positive adjusted EBITDA. So we really think the balance sheet the debt position the cash flow position will call them going into 2023, our revenue trailing 12 months as a $6.
32022 was $5 2 million. This is a company that base had minimal revenues in 2020 and that leads to my opening statement that we now are an operating company with specific expertise in supply chain logistics.
Our insider ownership is approximately 13% and based upon the positive developments at the company, we just announced a new share repurchase program of $1.5 million as of July one 2022.
Now I'm going to handle it over to Patrick who will go over our business update Margaret will then go over the financial report and then we will complete with a Q&A session. So thank you and enjoy the call.
Okay.
Thank you Scott and good morning, everyone.
It is my absolute pleasure to be speaking with you today and verify me and as transformational second quarter.
As Scott mentioned verify me completed the acquisition of <unk> Global Inc.
Cutting edge logistics management company.
I will give you a broad description on the parachute business later in this presentation, but first let me summarize this quarter's results.
One pair reshape our combined second quarter revenue reached $4.5 million, which represents an approximately a 35, 100% increase over 2021.
Merrily related to the acquisition of a very good business.
Yeah.
The acquisition closed in late April .
So Perry <unk> results were only recorder for approximately nine of the 12 weeks in the quarter.
Also historically peri strips peak quarters.
Third and fourth quarters, which are driven by large vaccine distributions for major pharmaceutical companies.
And then of course, the holiday gift giving season.
The fourth quarter historically accounts for approximately one third of the annual Perry ship revenue.
Turning now to the verify me legacy business revenue continued its year over year growth trend by recording 115% increase in sales.
Our adjusted EBIT for the quarter improved 66% year over year to a small loss of approximately $300000 compared to an adjusted EBITDA loss of approximately $900000.
The prior year period.
As we previously reported during the quarter, we recorded a one time non cash $11.2 million impairment write down of a spec asset it increased our net loss to $12 5 million for the quarter.
Finally, we are reaffirming our previously reported guidance.
Our new combined company will generate at least $25 million annual revenue.
On a positive adjusted EBITDA in 2023.
Now the next slide please.
Yes.
Let's now turn to the second quarter business highlights.
Impactful event of course is the acquisition of very ship.
In today's world anything can be shipped.
There are many types of perishable products ranging from vaccines, so fresh seafood.
And even peaks in pizza, they require extreme care as well as time and temperature control when being ship long distances.
Major carriers are graded handling massive volumes of packages to all parts of the world.
To support this build a sophisticated and effective network of ground and air transportation.
To facilitate quick malonis deliveries.
These same carriers deal with internal cost and.
And time constraints, there are often incompatible with providing the extra time and customer care.
Required to meet the needs of clients, whose businesses rely on quality time and temperature perishable type products shipping.
Barry shipped specializes in critical time and temperature perishable product shipping logistics.
Perry ship, therefore filled a service void for major carriers.
Also for your information Perry ship is headquartered in a lovely seaside town in Branford, Connecticut.
It is approximately 45 employees housed in their call center, including two fulltime meteorologist and multiple people, who develop and constantly improve the proprietary predictive analytic software.
Designed to prevent and mitigate clients shipping issues and improve <unk> overall customers.
Areas.
Perry ship services over 400 clients, which includes some of the largest global vaccine manufacturers.
As well as Alaska, and Hawaiian in Maine Sea food distributors, even about deep dish pizza providers in Chicago.
To support his clients Perry ship internally developed a sophisticated proprietary predictive analytics platform.
That is populated with major carrier data feeds and the other databases such as <unk>.
Hey, Jim flight tracking data.
Sure.
Slight Spanish monitoring systems in road traffic.
Perry since algorithms that analyze this data to provide shippers with web based dynamic dashboards.
With real time visibility into shipment transit.
Warnings, whether alerts and last mile events, which are managed by the parish of call Center.
Let me give you. An example of vaccine manufacturer can worry less that they're critical vaccines that they just shift will get lost or deal with temperature issues because Perry ship.
There to manage that whole process on their behalf.
Perry ship is assigned isn't assigned $24 17, who is familiar with the clients shipping needs and its call center, whom the clients can easily and quickly access for questions and decision making.
Thus improving outcomes saving critical time and significantly reducing the bureaucratic frustration of a large carrier.
One way exiting client of parish have told me that they used to experienced $38 million of spoilage per year.
Our resolve them carrier shipping delays and other incidents.
Switching them Perry ship at same client significantly reduced their annual spoilers saving this particular client millions of dollars per year.
Inhibition of <unk> 400, plus direct customer relationships.
We have also contracted with Fedex to service some selected time and temperature clients for a contract trophy.
<unk> is therefore, not only peri strips exclusive carrier.
But also a peri strips largest customer.
I am pleased to inform you that we have formed a parish of board of directors and includes two former senior Fedex managers.
David Admins retired senior VP of Fedex worldwide services.
And Mr. Kurt call, who worked in fat extra 17 years, where he helped develop Fedex is highly specialized cold chain suite of services.
Which led to Fedex as entry into the pharmaceutical market.
I am also pleased to inform you that occurred also serves as Perry shifts executive Vice President in charge of sales and business development.
Another highlight for the quarter is it verify me as a new research coverage are initiated by Barrington Research. It was an investment bank specializes in research for institutional investors.
And finally to take advantage of our severely undervalued stock price.
I am pleased and happy to inform you that verifying <unk> board of directors initiated a $1.5 million share repurchase program.
Let's go to slide eight please.
Okay.
So Hawaii Perry ship and what are the synergies with verify me.
Para-cymene parish of having a very strong synergy synergistic products centric technology platforms.
Verify may specialize in authenticating and realizing products as well as using those same products to engage with customers and gather rich business intelligence for the brand owner.
Paresh if on the other hand manages the logistics a critical time and temperature shipping products.
Yeah.
Perry shipping verifying these technologies, therefore revolve around products.
We believe combining these technologies platforms.
Is there a compelling suite of services the company should embrace to protect critical exposures.
As well as drive data and increase sales.
As I mentioned previously <unk> is approximately 400 clients.
Which are perfect starting point for cross selling.
Verify me salesperson, who have already engaged with some of our pharmaceutical clients of Perry ship.
Meetings have been set to explain how we can help this industry and meet their forthcoming 2023 drug supply chain Security Act requirements as well as protect them from product diversion and the counterfeiting issues.
We believe the reception has been very positive and we hope to win additional revenue from this cross selling efforts.
In addition to cross selling each company has certain market segments.
Which they sell into.
Combining these segments provides both Perry strip and verify me new entry ways to address the special needs of these segments.
For example, we believe Fedex itself has many areas in which verify me can offered technologies to improve tracking and protection of Fedex packaging.
Another synergy we believe verify me can help Perry shrimp expand its reach outside of the patent I know U S through the verify me global reseller network.
In summation, we believe verify me in pairs shipped complement each other's technology many ways.
Which we hope will drive new sales for the combined organization.
Go to slide nine please.
This slide shows what market segments, our combined company is operating at.
We want him to share. This with you. So you can understand the segments and what percentage of our sales are in each.
The largest of all of them are collected collective segments in the food and beverages, which represents 69% of total sales.
The second largest segment is pharmaceuticals, which comes in at 18%.
We believe this segment has a potential to grow into the number one position as we continue to gather wins in this space.
Agriculture, which includes cannabis comes in at a number of three segment with 6%.
Followed by a health and beauty apparel and all other.
Apparel is another area of expected growth.
And spare parts May also become a new segment in the future.
That concludes my portion of the presentation I will now turn it over to our CFO .
Geezer lease to the walk through you through the financials.
Alright. Thanks.
Thanks, Patrick.
Everyone. Thank you for joining I think her from Patrick we had a lot of changes this quarter. The acquisition of the parachute business has been a transformative deal next slide please.
As you can see from the trend indicated in this slide it has made a huge impact on results with significant revenue growth for the second quarter of 2022, and we continue to believe that fiscal year 2023 will show positive adjusted EBITDA on a consolidated basis.
<unk> consolidated revenue was $4 5 million for the quarter ended June 32022, an increase of over three five and 3500% when compared to the same quarter in the prior year.
<unk> 5 million, 94% was attributed to the parachute business well, we have strong revenues historically the business does fluctuate seasonally we expect stronger revenue in the second half of the year with a pickup starting at the end of August .
On the verified new legacy side, we have approximately <unk> 3 million of revenue, which increased by 115% when compared to the same quarter in the prior year.
We continued to show steady growth in our legacy business gross profit margin has decreased due to the nature of patients business, which has lower margin Ross at 36% due to higher competition on prices.
They're finally side, our gross profit margin decreased from 79% in Q2, 2021% to 66% in Q2 2022 due to a shift in product mix.
Operating expenses increased in the quarter again, due primarily to our acquisition of patient as of today, the parachute business consistent roughly 45 employees, which make up the better portion of the operating expenses, including approximately 40 employees in IP in operations and three in sales and marketing.
Our net loss for the quarter relates primarily to the write off of this back investment in the amount of $11 2 million or approximately 90% of the total net loss.
In July we had the option to extend the deadline for this back to find a business type position in order to do so we would have needed to invest an additional amount of at least half a million dollars and likely significant more significantly more.
Given the current climate for specs, we decided the best course of action was to cut our losses and keep our cash balance to support the growth of our company.
Our initial cash investment was made in July of 2021 of approximately $2 6 million, which was loss while the remaining loss of approximately $8 6 million was a fair value loss.
Adjusted EBITDA loss showed an improvement of 600000, when we exclude noncash stock comp and transaction related cost the improvements are directly related to the increase in revenue.
Next slide please.
As you can see illustrated on this slide we have made a huge jump in revenues and even though our gross profit margin has decreased gross profit on an absolute basis has increased by $1 6 million roughly of 640% increase.
Next slide please.
Next I wanted to discuss the balance sheet as of June 32022, we recognize goodwill and intangible assets of $10 6 million, including goodwill of $4 1 million related to the patient acquisition as part of the transaction of $10 5 million, we assume no payable of 2 million.
Which is payable in three installments over the next 14 months, our cash as of June 30th was $3 8 million and our working capital was $3 9 million given that we expect patients to generate cash we believe our cash to cover our operations for the foreseeable future. We believe we will grow organically, but we are always looking.
Opportunities to improve our shareholders value in the company.
Should such an opportunity arise based on the improvements of our current financial outlook. We believe we can secure financing to other venues such as commercial banking.
With that I'd like to conclude our presentation and open the floor to questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are 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.
And our first question will come from Chris Howe with Barrington Research. Please go ahead.
Good morning, everyone. Thanks for taking my questions. Good morning. Thank you.
I wanted to circle back to the pharmaceutical segment.
Where you highlighted.
The potential.
For this line of business to grow.
To become one of your largest.
As a percentage of the mix.
About that comments.
And also try to tie in your previous comments about working with a large pharmaceutical clients and introducing the verifying these services into those client needs.
Kind of give an update on the pharmaceutical segment overall.
And how it ties into what Youre seeing with the drug supply security.
Yeah, Let me start and then I'll hand, this one over the Patrick.
When you look at the world in the last few years.
Vaccine.
Whether its vaccines is playing a more and more important part.
Of the health care.
And basically what we do is make sure that the vaccines catch.
And the logistics are done on a timely basis in order to guarantee the efficacy of the product.
So basically you know where we are involved with a few large companies, but we hope to expand our relationship.
Among other companies as well, but when you hear things in this world whether it's co.
Covid with them Monkey pox, you see that the vaccines and the logistics of it are going to be playing in a more important role.
In health care in the future and that's why you know.
Obviously, we want good things happened in the world, but the same time, we want to help the world get these vaccines delivered on a fast and timely basis with that Patrick do you have anything else to add to that.
Yes sure. Thank you Scott.
Chris the drug supply chain Act of 2023, I think is goes into effect in November of next year and it requires all pharmaceutical companies to serialize.
And the ability to authenticate the products.
The products and then have counterfeit prevention measures.
Me is tailored for all four of those things all with our current technology portfolio.
And.
Now paresh if on the other hand.
Has the ability to ship vaccines in mass quantities.
Any parts of the continental United States at the moment.
And make sure that they are they're in temperature control environments, because I guess in two days.
If they're not at temperature control they lose their potency.
And Perry ship can even call the the Walgreens and Cvs has on the world receiving these shipments and making sure that they know, they're there and get them in refrigeration I mean, that's the kind of tender loving care of the mayor of Paris ship provides for these vaccine manufacturers one of their clients is one of them.
Our largest flu vaccine manufacturers in the World Santa Fe.
And they have we have met with them and we have meetings coming up in September so charge to start showing the four technologies verify me has to help them address their needs for the drug supply chain Security Act.
And they're very interested.
<unk> seen a little bit and they are bringing in a whole team do die.
Digest that information and we're hoping to enhance the.
Our ability to address this and bring in additional sales for the total company.
Now there's two other pharmaceutical companies I guess, we just signed one.
In Japan, that's starting up right there one of the top 20 in the world.
Through the Perry ship sales process.
<unk>.
H P are a strategic partner.
Which makes the machines that gives us the ability to print our technologies on labels and packaging.
Has bear.
Verify I mean working with.
Some hardware manufacturers to create some.
Hardware that will do the review of inline labels and packaging training for the pharmaceutical industry and they've mentioned additional clients international clients that need this.
So that process has begun.
And HP I can tell you is embraced us with both hands.
And they see the.
The strength of our technologies for that type of product.
There are a few other pharma companies.
Kurt Cole, who is a specialist in that as I mentioned earlier at HP.
Fedex.
And he is driving the sales towards a farmer additional pharmaceutical clients.
Thank you Patrick Thank you.
Thank you for the color and.
Just going along with this theme.
As we think about the 400 customers per ship.
<unk> technology can you talk about the process at which being the level of awareness for me across the 400 customers.
Where are you in that process I'm sure, it's a long process.
Maybe you can kind of put that into context.
Yes, I'll take that one I mean, if you if you look at the comp.
<unk> the company.
And in April .
And we just want to make sure all the transition area items are done properly and that companies up and running and we've really been focused on that.
As you can see.
The results in the quarter demonstrated that now with that being accomplished.
We are having team meetings and group thanks to.
To discover the best way.
Two market to join the home market to join technology and.
That's that will be more seed.
I believe in 2023, Chris.
Okay perfect.
I'll ask one more question here and leave the line open if there's any others.
If you can provide an update.
On your progress with the large beverage company switching over to the beverage part of the business I Remember you mentioned you've pulled the trigger on a pilot test not too long ago, maybe you could kind of give us an update on how that's moving along.
Yes, I'll take that Scott I I.
I spoke with the person in charge of that project on Friday.
Yes.
This is a project that we've mentioned to shareholders previously it's it's been literally two years in June that we started the sales process with this particular client.
They've shifted around a different types of.
Aluminum caps plastic caps.
Design engineering issues.
But in speaking to him on Friday.
He's going to give us.
More color as to when they are going to pull the trigger.
And their first product line around the end of this month I don't want to give you a specific date.
And the track record of.
This information has been.
It's it's it's.
Changes as we as things occur during the business cycle.
So.
That's the latest it would be.
A huge win as far as the type of company. It is.
It's one of the largest in the world.
Global.
And.
And then.
Millions of units. So we're really excited and hopefully hopefully we'll get over the finish line.
Perfect. Thanks for taking my questions I appreciate it.
Our next question. Thank you Congrats Jack Vander R T with Maxim Group. Please go ahead.
Okay, great. Good morning, guys nice results.
Thank you Jack.
So first one on the strong organic growth up 115% I.
I think Margaret mentioned it earlier, but just to check my math does that imply about 207000 barrel Corvair primary revenue.
And then I have a follow up to that.
Margaret.
Sorry about that I was on mute.
I was trying to find the mute button, but Jack here that's.
Exactly correct.
Okay great.
So just.
Just wondering.
You've thrown out you've provided some pretty solid 2023 guidance.
Positive adjusted EBITDA to that just as I look at the rest of 2022 from an organic revenue perspective.
Do you expect that revenue I know it can be lumpy for the core <unk> business do you expect organic.
Organic growth.
<unk>.
Getting traction and picking up from here.
We do know.
Sorry go ahead.
Yeah, we.
We expect organic revenue, but the amounts and get lumpy depending on contract wins.
I would say the answer is we expect the trend to continue but the percentages vary due to when and how you close the transactions, but I think the overall trend is in that direction.
Got you Okay. That's good to hear.
And then maybe.
In the past you guys talked about the pipeline in size in the pipeline. Just wondering if you can provide some color on the growth in the size of the pipeline or the backlog today.
And then maybe split that pipeline between core Gamify me and Paragon.
Yeah, I mean, when you look at parish.
We measure now.
Our pipeline by increasing customers.
And you know Patrick talked earlier about.
Some of the wins tab, new customer base, so and when you're dealing with the Paris ship side, you don't get more of a dollar value pipeline because it depends on the shipments, but you get the determination on new customer wins in expectations and in the lab.
So.
We started adding some significant customers. So we believe it's in the it's in the right direction.
You know when you when you're talking about verify may pipeline.
The pipeline is a is a multiple of the current revenue. So it's a much larger pipeline, but so far as we've seen some of the projects could take quite some time to come to fruition.
Yeah, it will be pretty often I come across something therapy, but it's not that's not the guidance at all that's 100 per cent correct was starting to feel optimistic but the guidance does not include it we tried being would've gone on guidance.
Okay, Great understood and then Uhm Patrick was talking about this a little bit earlier.
I understand it clearly it may just remind me Patrick can you talk about the relationship with the H P and you know just how active or how.
<unk> they are in maybe beginning to promote and sell to verify me solutions is are you seeing evidence of that what are your expectations there yeah.
Yeah Jack.
Great question, we I am had some very.
Quite a few new meetings with H P and the last past few months.
They are seeking to expand our.
Contractual relationship.
Into a much longer term of time.
Across all of their press models right now we're only on one press model. The 6000 series they wanted to put us on a much larger.
The big giant ones that do the heavy duty label and packaging for the world.
They've invited us to a trade show in Chicago in September to be and they're both they want a highlight us they've got a whole section further verify me team there'll be stationed in and I hope many of you would like to visit US there. We can show you some technology demonstrations.
It is their sales force.
Two.
Sal to verify me technologies. So it's a huge win I'm working on this project.
And as soon as it's completed there will be able to share that with our shareholders.
Right.
Just a quick follow up to that.
Chicago comprehensive inviting you guys could go into without them.
Maybe there's some details you can't you can't hear but just try them.
Is that a new development is that is that a completely new privilege. Our involvement that you haven't been involved with them in the past on.
We have we have I've been in Brussels, Belgium, or a European version of the show. This particular show is called the label Expo one year, it's in Europe , one year, it's in the United States.
Go back and forth.
The COVID-19 years, it shut it down and they're now bringing it back this year for the first time in a while.
And I got to tell you at HP inputs is the biggest presence in these shows.
And it's and it's the Premier company for labels and packaging.
It's just there is just hundreds of people going through this so it's a real opportunity you meet printers, you mean brand owners.
You mean people on brand protection security and it's a wonderful event and for them to put their arms around us.
M R. A station there for us to demonstrate and meet people.
It's a huge win for our company.
And its credibility.
Absolutely.
I appreciate the update guys I'll hop back in the queue.
Okay. Thank you Jack.
Again, if you have a question. Please press Star then one our next question will come from Daniel Carlo with Shield Street Capital. Please go ahead.
Good morning, congratulations on the quarter.
That's some sort of outlook questions here, if we can cover them because I'm trying to get a little sense of what percentage.
[noise] of Perry ships revenues are booked in the first half of the year versus the second half of the year. When you do they run on a sort of a straight line basis or do they come into more of a seasonality towards the second half of the year.
Yeah, Margaret already disgusted when you talk about bookings, we have customers and I mentioned this earlier, but then the revenue is determined by their usage. So it's now got full year bookings or or whatever we do have a you know historical what they do.
For example, the pharmaceutical companies start shipping them.
<unk>.
In the third quarter, and obviously Theres, a big Thanksgiving Christmas type of resolved, but I think Margaret mentioned.
And and I'll have it had to do it on how much is shipped in the fourth quarter and due to seasonality, which is our strongest quarter, but mark why don't you just go.
Go go over those numbers that you did prior.
Sure.
So.
So we do expect more pickup.
In August it's hard to predict exactly how much of the total revenue it will be all.
But to give you. An example in in 2021, the fourth quarter made up about 35% of the revenue. So the last quarter is really the strongest quarter.
The second strongest quarter in the third quarter.
So.
I'm not trying to.
You know look.
I'm just going to put out some numbers here and then I just wanted to sort of like frame. This properly because we keep talking about 'twenty 'twenty three but looking at this on that basis. Some of them are using roughly seeing 0.6 0.7 I'm coming in on a combined margin then.
For 'twenty three of <unk>.
Looking to expect either the business to grow by $3 million either out of Paris Shepherd by Verifying me and then we're looking at a combined margin in 'twenty two 'twenty three are between 15 and 22%.
That means that on a cash flow basis, you guys are going to be operating cash flow positive this year.
And I'm not sure why we're sort of waiting.
Waiting to 2023 as a public company as I talked about something that could be making 22 cents in.
In the second half of this year and on a run rate basis doing between 44 and 61 cents.
Meaning the stock's trading roughly speaking like three to four times earnings on an outlook basis for 'twenty, three and I'm not sure why we're being sort of careful about that these are very strong numbers.
And arguably.
Historically, the company never gave guidance before.
And when we looked at their results and the acquisition.
We would only have the acquisition this year.
And the second half as you know you know a big chunk of business in the second half of the year. It came in mid April So we felt that giving a.
Full year for next year was more and are more in the line of what we wanted to do.
But but but again you know this is a company that never gave guidance that we're giving the preliminary guidance for next year, but it's up to you know the analysts and the company that before them and demonstrate it.
What it could do going forward.
And.
Without without delving into your numbers at all because again, we don't give guidance. The company is a really three things as very positive going into next year.
Okay can we look at the combined margin of 20% to 22% for on a combined basis into 'twenty three because of the revenue mix that youre looking at on a forward basis.
Yeah, we haven't looked at.
We haven't given detailed margin going into next year, So I would refrain from giving that additional guidance. While we have done is Margaret has showed.
The profitability is she's given the profitability historically.
The quarter on both companies.
And you know I think you should use based upon what she said I Wouldnt Scott I was just going to cut you off and just say like you know historically the company never had revenue and has always been around inception concepts or like you know you should take credit for having been transformational here Oh can we well what we're saying is if you look at the verify.
<unk> revenue.
The guidance in the past that while it had 70% margins in the past based upon are getting more into some of the printing and everything else you should look at a 60% margin business and we gave the guidance this quarter on or we had the actual results.
Saying, what the actual verify me gross profit as you know with the Paris ship acquisition and what the parachute side is so you have those numbers on a historic basis that you could use and you are.
In your analysis.
I got it but on a forward basis, we're looking at roughly speaking mid point of the range using your numbers is about 50 cents in earnings for 'twenty. Three so I would just encourage you to buy back as many shares as possible because.
That's not the correct cost of capital on a long term basis for the business given the new business framework you've built.
Yeah.
Again that.
Again without giving guidance.
You figure it so things right.
For the time.
Alright, Thank you Dan.
Our next question will come from Ron Bazell with J P. J B financial please go ahead.
Hi, one of the questions you've identified such a large market in counterfeiting.
And there was a nice right up the Scott did in Forbes, but it seems that over the years here.
Since I've been involved in the stock.
It seems that you've got a lot of.
Deals in the Hopper, but you can't seem to really close any of the big ones and after numerous numerous.
Interaction with them so.
My question is why is this market so difficult to penetrate with such a good product y y.
If the market so large why can't we cap.
Capture some of it.
On a more prompt manner.
You you hit it right on.
The head myself being here only.
Two plus years.
I've seen that as well.
You know one of the things that we're hoping for Ryan is that the Paris ship, having the customer base already gives us an entre into selling additional products is always the hardest.
Got you our foot in the door and in addition, it's been particularly hard to get their companies to switch from.
The hologram.
They've been using all these years, even though it's easily duplicated reasonably counterfeit and it's been very difficult to get them to switch.
To a newer technology, regardless of the benefits and yet you know we.
We had no revenue for the first 15 to 20 years of the business when when this team came in and now we're expecting.
Two years of growth.
Is that.
As the overall history somewhat slow in this thing we'd have to we'd have to say yes.
But now it represents if you are looking at it.
Less than 10% of our total revenue so while we expect it to grow and expect it to be leverage we're not relying on that for our success going forward.
If we add to our success and we hope it does but now we have an operating company.
We project to do over $25 million and one thing that the combination will accelerate the growth of them verify the technology as well.
And.
Regarding the pair of ship the growth.
Over the past couple of years, what percentage of that was fueled by the vaccine and what are your plans if that market.
Well Oh.
You look at if you look at Paris ship they were in a transition period. So they did not have revenue growth. The last few years before we got involved with them.
Hoping that the vaccine and and some of the new contract wins and expanded relationship with our partners will start fueling.
That revenue growth and also our concentration.
And putting you know more.
Investment into marketing and sales so we think that the overall combination.
Led by parents ship.
Should give us good organic growth going forward.
The growth is based on what percentage in vaccine.
I would say you know I don't know the exact percentage, but if you listen to Patrick's Beach, He's saying he expects the pharmaceutical business to be the largest growth part of the company. So I would say a significant amount of organic growth will be done by pharma.
Suitable companies.
Mhm.
Okay. Thank you.
Thank you Rob.
Our next question will come from Joel sticks and map is a private investor. Please go ahead.
Yes, Sir.
Kind of.
Expanding on the last comments from.
That's the days all of them.
Russified, but.
The counterfeit market.
According to that article.
Massive.
Wanda.
One point something almost five trillion a year.
And the United States consumer.
Having to eat.
60% to 80% of it.
And.
I think most of that is non perishable.
And from what I.
Hard today, Eric Yeah, most of their business.
That we generate for them.
I'm grateful for is through perishables. So my question to you.
Is.
How.
How are we going to get into that.
Non perishables the wearables luxury items.
And knock.
Knockoff items through Paris, yet are we going to do that.
As time goes on with Terrify me with whatever method they can find.
Appropriate and profitable.
If they can even do it.
Well, because there's big opportunity there right now.
That's the that's what they've been focus has it gone.
For the last few years, and that's what's giving them the card growth. So the current growth is exactly in those areas that.
That you'd discussed Jules.
And theyre going to continue on with that but and they're looking at I mean, we talked about the the food and beverage potential Patrick that earlier, which has nothing to do with the Paris ship technology or their logistical support so we'll continue.
When you to do that and go on obviously the 400 customers. They have is not necessarily if they get the foot in the door that will be in the perishable side. It's just that you could get the foot in the door with these customers as well. So I think you know where we're not.
Our marketing was still a bit of market and do it the same way and we get a foot in the door of this large anti counterfeiting market.
But the but Paris ship does give us the ability to go into customers that they have a historical relationship with whether it's perishable, a nonperishable and being able to discuss with them. What we're able to offer. So we think that's a that's a.
Good process for her for us, but it's not going to affect what we've been doing in the pipeline all these years.
Yeah.
Okay.
But it is.
It's fair to say that the driving revenue source for terrified me right now is parrish yeah.
Well I would say if you looked at this year I mean, we expected a oh, we've had significant organic growth.
And verify me, but you know it's starting at a low base, obviously, but we've had significant GAAP.
Revenue growth in that.
So their marketing on their own but we do expect that the.
The combination will help in 2023.
Okay. Thank you Sir.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
Yeah, you know this and I'd like to thank everybody.
The questions were very thoughtful.
And we do appreciate them you do see yeah that was the impact of what has been done and we hope to continue to positively update you on a quarterly basis and thanks for joining and you know as usual if you have any additional questions or thoughts Please act.
To the extent that we can answer them, we will and thank for joining us and have a good day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.