Q2 2024 Genasys Inc Earnings Call
Operator: Good day, ladies and gentlemen, and welcome to the... Inc. Fiscal Second Quarter 2024 Conference Call. All lines have been placed in a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Brian Alger, SVP of Investor Relations and Corporate Development. Sir, the floor is yours.
Good day, ladies and gentlemen, and welcome to the <unk>.
Operator: Genesis incorporated fiscal second quarter 'twenty 'twenty four conference call all lines have been placed on a listen only mode and the floor will be opened for questions and comments. Following the presentation. If you should require assistance throughout the conference. Please press star zero on your telephone keypad to reach a live operator at this time, it's my pleasure.
Operator: Turn the floor over to your host Brian Alger S V P of Investor Relations and corporate development, Sir the floor is yours.
Pat: Thank you Pat.
Brian Alger: Good afternoon, everyone. Welcome to Genasys' second quarter fiscal 2024 financial results conference call. I'm Brian Alger, SVP of Investor Relations and Corporate Development for Genasys. On the call today are Richard Danforth, our CEO, and Dennis Klahn, the company's CFO. During today's call, management will make forward-looking statements regarding the company's plans, expectations, outlook, and future financial performance that involve certain risks and uncertainties. The company's results may differ materially from the projections described in these forward-looking statements.
Brian Alger: Good afternoon, everyone welcome to Genesis second quarter fiscal 2024 cause actual results conference call.
Brian Alger: Brian Alger, SVP Investor Relations and corporate development for Genesis.
Brian Alger: On the call today are Richard Danforth, our CEO and Dennis Quan.
Brian Alger: Paul.
Management: During today's call management will make forward looking statements regarding the company's plans expectations outlook and future financial performance and involve certain risks and uncertainties. The company's results may differ materially from the projections described in these forward looking statements factors that might cause such differences and other potential risks and uncertainties can be found in the risk factors section of the company.
Brian Alger: Factors that might cause differences and other potential risks and uncertainties can be found in the risk factor section of the company's form 10-K for the fiscal year of September 30, 2023. Other than statements of historical facts, forward-looking statements made on this call are based only on information and management's expectations as of today, May 14, 2024. We explicitly disclaim any intent or obligation to update those forward-looking statements, except as otherwise specifically stated.
Management: <unk> Form 10-K, I think it's just.
Management: At September 30 of 2023.
Speaker Change: Other than statements of historical facts forward looking statements made on this call are based on information and management's expectations as of today May 14 2024 weeks.
Speaker Change: We explicitly disclaim any intent or obligation to update those forward looking statements, except as otherwise specifically stated.
Brian Alger: We will also discuss non-GAAP financial measures and operational metrics, including adjusted EBITDA, bookings, and backlog, which we believe provide helpful information to investors with respect to evaluating the company's performance. For a reconciliation of adjusted EBITDA to GAAP financial metrics, please see the table in the press release issued by the company at the close of the market today. We consider bookings and backlogs as leading indicators of future revenues and use these metrics to support production planning.
Speaker Change: We will also discuss non-GAAP financial measures.
Speaker Change: Additional metrics, including adjusted EBITDA.
Speaker Change: And back.
Speaker Change: Please provide helpful information to investors with respect to evaluating the company's perfect.
Speaker Change: For a reconciliation of the adjusted EBITDA to GAAP financial metrics. Please see the table in the press release issued by the company at the closing remark.
Speaker Change: We consider bookings and backlog, leading indicators of future revenues and use these metrics to support production planning bookings is an internal operational metric that measures. The total dollar value of customer purchase orders executed in a given period we got.
Brian Alger: Bookings is an internal operational metric that measures the total dollar value of customers..., executed in a given period, regardless of the time and other related revenue reduction. Backlogs are the measure of purchase orders received that are scheduled to ship within the next 12 months. Finally, a replay of this call will be available in approximately four hours through the company's investor relations website. At this time, I'd like you to turn the call over to Genasys CEO, Richard Danforth.
Speaker Change: Right.
Speaker Change: Backlog is a measure of purchase orders received that are scheduled to ship within the next 12 months.
Speaker Change: Finally, a replay of this call will be available approximately four hours through the company's Investor Relations website.
Speaker Change: Yeah.
Speaker Change: At this time.
Speaker Change: Genesis <unk> CEO Richard Danforth.
Speaker Change: Okay.
Richard S. Danforth: Thank you, Brian, and welcome, everybody. After the market closed today, we issued two press releases in addition to our quarterly earnings report. The first, the expansion of our board with two fantastic additions, and the second, the closing of a $15 million debt financing. As we discuss our business and outlook on this call, I think it should be clear to everyone that Genasys is in the best position it has ever been. Adding Senators Bill Dodd and Craig Fugate to our leadership team is going to help open up even more opportunities in the coming months and years.
Brian Alger: Thank you, Brian and welcome everybody.
Brian: After the market closed today, we issued two press releases in addition to our quarterly earnings report.
Richard S. Danforth: First the expansion of our board with two fantastic additions in the second closing of a $15 million debt financing.
Richard S. Danforth: As we discuss our business and the outlook on this call I think it should be clear to everyone that Genesis is in the best position it has ever been.
Speaker Change: Adding Senate Bill Dodd and Craig Fugate, 12 leadership team is going to help open up even more opportunities in the coming months and years.
Richard S. Danforth: Bill Dodd currently serves in the California State Senate, representing the 3rd Senate District, which encompasses the northern San Francisco Bay Area and Delta region. Prior to his election to the State Senate, Bill served in the California State Assembly, representing the 4th Assembly District, which includes all portions of Yolo, Napa, Sonoma, Lake, Solano, and Coluso Counties.
Speaker Change: Bill Dodd currently serves in the California State Senate, representing the third Senate District, which encompasses the northern San Francisco Bay area and Delta region.
Prior to his election to the state Senate Bill served in the California State Assembly, representing the fourth Assembly Assembly district, which.
Craig Fugate: Which includes all of portions of your although Napa Sonoma Lake Solano and Colusa counties.
Richard S. Danforth: Craig Fugate served as the Themen Administrator from May 2009 to January 2017. Previously, he served as the Florida Emergency Management Director from 2001 through 2009. Craig led FEMA through multiple record-breaking disasters over the years. Moving on, our previously announced selection for the Puerto Rico Dam Project has grown in scope, and we now expect to receive up to $75 million from PREPA, contact contract terms and conditions of being actively work are expected to be finalized before the end of this quarter. The new program of record with the U.S. Army, adding AHDs to CROS, now identified as Crow 16, was written into law with the 2024 federal budget.
Craig Fugate: Craig Fugate served as the senior administrator from May 2009 to January 2017.
Craig Fugate: Previously he served as a Florida emergency management director from 2001 through 2009.
Frank led FEMA through multiple record breaking disasters over the years.
Frank: Moving on our previously announced selection for the Puerto Rico Dam project has grown and scope and we now expect to receive up to $75 million from PREPA.
Frank: Contact contract terms and conditions are being actively worked and are expected to be finalized before the end of this quarter.
Speaker Change: The new program of record with the U S Army, adding ahd's to chrome systems now identified as CRO 16 was written into law with the 'twenty 'twenty four federal budget.
Richard S. Danforth: We expect this current program to yield at least as much revenue as our prior program with the United States Army, which netted over $110 million. And, as we will discuss in more detail, our software business is continuing to grow, with Q2 recurring revenues and ARR growing more than 120% year-over-year this past quarter. Finally, we secured financing through a $15 million, two-year senior secured loan that fortifies our balance sheet, enabling profits from our major contracts and our investments in the software business to be realized.
Speaker Change: We expect this current program to yield at least as much revenue as our prior program with the United States Army, which netted over $110 million.
Speaker Change: And as we will discuss in more detail our software business is continuing to grow with Q2 revenues are recurring revenues and a R are growing more than 120% year over year this past quarter.
Speaker Change: Finally, we secured financing through a $15 million senior secured loan that fortifies, our balance sheet, enabling profits from our major contracts and our investments in the software business to be realized.
Richard S. Danforth: In summary, the company is now well financed with a very significant hardware business that will result in record backlogs going into fiscal 2025. Further, our software business is expected to continue to grow and get to scale that makes it profitable on a standalone basis, not only providing better visibility and consistent revenues but also additional profits for the overall company. Looking back, the second fiscal quarter was financially disappointing. While our software business was strong with quarterly bookings of $4.3 million, second quarter hardware bookings continued to fall short at only $2.1 million.
Speaker Change: In summary, the company is now well financed with a very significant hardware business that will result in record backlogs going into our fiscal 2025.
Speaker Change: Further our software business is expected to continue to grow and get to scale that makes it profitable on a standalone basis, not only providing better better visibility and consistent revenues, but also additional profits for the overall company.
Speaker Change: Looking backwards the second fiscal quarter was financially disappointment.
Speaker Change: While our software business was strong with quarterly bookings of $4 3 million second quarter hardware bookings continued to fall short at only $2 1 million.
Richard S. Danforth: One of the projects to slip out of the second quarter was a $2.7 million contract with the United States Navy to begin replacing LRAD units previously installed on the surface ship. That order was finally received today and is expected to be in our third quarter revenue. Another million or so was delayed by the late passage of the federal budget. However, these revenues are now expected to be realized in our fiscal third quarter.
Speaker Change: One of the projects are projects to slip out of the second quarter was a $2 7 million dollar contract with the United States Navy to begin replacing L. Rad units previously installed on the surface ships.
Speaker Change: That order was finally received today and is expected to be in our third quarter revenues.
Speaker Change: Another million or so was delayed by the late passage of the federal budget.
Speaker Change: While these revenues are now expected to be realized in our fiscal third quarter.
Richard S. Danforth: The low bookings, combined with the low hardware backlog entering the quarter, resulted in total hardware revenues of just $4 million, up sequentially but well below the prior year period that included roughly $5 million from the prior Army AHD program. As we look at our hardware pipeline and current activities, we expect sequential improvements in bookings and revenue in both Q3 and Q4, not including the Puerto Rico project or orders under the new Army Program of Reconciliation. International orders are expected to play a key role, as should shipments to the U.S. Department of Defense that were delayed by the budget process.
Speaker Change: The low bookings combined with the low hardware backlog entering the quarter resulted in a total hardware revenues of just $4 million up sequentially, but well below the prior year period that included roughly $5 million from the prior Army ADHD program.
Speaker Change: As we look at our hardware pipeline and current activities, we expect sequential improvements in bookings and revenue in both Q3 and Q4, not including the Puerto Rico project orders under the New Army program of record.
Speaker Change: International orders are expected to play a key role as should ship shipments to the U S. D. O D that was delayed by the budget process.
Richard S. Danforth: Additionally, we are pursuing a number of acoustic opportunities for both public safety and critical infrastructure protection that will diversify our hardware revenue base. As strong as the outlook for the second half is, the current expected improvements in bookings are not what we had forecasted at the beginning of the fiscal year. Though a couple of opportunities were canceled, we are still pursuing and expect to secure the projects previously identified, but we don't know precisely when we will be able to recognize their revenue. Excluding bookings from Puerto Rico and the CROW16 program, our expectations of what we will be able to close this fiscal year have dropped by approximately $15 million. Though hardware bookings and revenue from projects could pull forward, our recent history shows that is not a reasonable expectation; it is unreasonable to expect material movement forward.
Speaker Change: Additionally, we are pursuing a number of acoustic opportunities for both public safety and critical infrastructure protection that will diversify our hardware revenue base.
Speaker Change: As strong as the outlook for the second half is the current expected improvements in bookings is not what we had forecasted at the beginning of the fiscal year.
Speaker Change: There were a couple of opportunities were canceled we are still pursuing and expect to secure the projects previously identified but we don't know precisely when we will be able to recognize their revenues.
Speaker Change: Excluding bookings from Puerto Rico, and the CRO 16 program, our expectations of what we will be able to close this fiscal year has dropped by approximately $15 million.
Speaker Change: So hardware bookings and revenue from projects could pull forward. Our recent history shows that is not a reasonable.
Speaker Change: Unreasonable to expect material movement forward.
Richard S. Danforth: On a more positive side, our software business continues to do very well. Software bookings in the quarter included the announced EVAC contract with Los Angeles County, where the bookings in total were over four million. As mentioned previously, recurring revenues were up 124% year-over-year. ARR for the March quarter was $6.5 million.
Speaker Change: On a more positive side, our software business continues to do very well software bookings in the quarter included the announced evac contract with Los Angeles County.
Speaker Change: Where.
Speaker Change: The bookings in total were over $4 million.
Speaker Change: As mentioned previously recurring revenues were up 124% year over year, a or are exiting March quarter was $6 5 million with strong activity quarter to date, we expect to have another strong quarter of software bookings and as such we continue to believe software recurring revenues and a R. R will at least double for.
Richard S. Danforth: With strong activity to date, we expect to have another strong quarter of software bookings. And as such, we continue to believe software recurring revenues and ARR will at least double for fiscal 24 versus fiscal 23. As we communicated last quarter, the vision and strategy that Genasys has been pursuing for more than four years is being realized. We successfully adapted a business focused on military applications for acoustic hailing devices to serve a much larger market of mass notification, originally with hardware sold to Japan, but ultimately enhanced and improved with software development through the 2018 acquisition of Genasys.
Speaker Change: Fiscal 'twenty four versus fiscal 'twenty three.
Speaker Change: As we communicated last quarter, the vision and strategy that Genesis has been pursuing for more than four years is being realized.
Genesis: We successfully adapted a business focused on military application for acoustic hailing devices to serve a much larger market of mass notification originally with hardware sold to Japan.
Speaker Change: But ultimately that enhanced and improved with software development through the 2018 acquisition of Genesis.
Richard S. Danforth: From the get-go, our hardware business has afforded us the opportunity to develop our software capabilities both internally and through acquisition. Through the Zone Haven acquisition in 2021, zone-based software, combined with our market-leading mass notification software and market-defining hardware, is transforming and redefining the market for protected communication. Today Genasys is serving a multi-billion dollar market with differentiated software and category-defining hardware. Our selection in Puerto Rico and our announced developments in Europe validate this strategy.
Speaker Change: From the get go our hardware business has afforded us the opportunity to develop our software capabilities, both internally and through acquisitions.
Speaker Change: The through the Zone Haven acquisition in 2021 zone based software combined with our market, leading mass notification software and market defining hardware is transforming and redefining the market are protected communications.
Speaker Change: Today Genesis is serving a multibillion dollar market with differentiated software and category defining hardware a selection in Puerto Rico, and our announced developments in Europe validates this strategy.
Richard S. Danforth: Looking forward, we are going to aggressively pursue opportunities in public safety and critical infrastructure protection. Positioned with a fortified balance sheet, strong anchor winds, and the additional support of our new board members, who each bring remarkable experience and expertise in public safety and critical infrastructure protection, Genasys is entering a new phase of profitable growth. Through near-term and granular visibility may not be as precise as some may wish, there is no denying that the Genasys prospects over the next few years are dramatically improved, and we will secure resources to attain our potential. Now, I will turn the call over to Dennis to go through the second quote of financials and outlook in greater detail. Dennis said,
Speaker Change: Looking forward, we are going to aggressively pursue opportunities in public safety and critical infrastructure protection.
Speaker Change: Yeah.
Speaker Change: Oh, excuse me positioned with a fortified balance sheet strong anchor wins and the additional support of our new board members, who each bring remarkable experience and expertise in public safety and critical infrastructure protection Genesys.
Speaker Change: Genesis is entering a new phase of profitable growth.
Genesis: Through near term and granular visibility may not be as precise as some may wish theres no denying that the genesis prospects over the next few years is dramatically improved and we will secure resources to.
Genesis: Attain our potential.
Dennis D. Klahn: Now I will turn the call over to Dennis to go through the second quarter financials and outlook in greater detail Dennis.
Dennis D. Klahn: Thank you, Richard. In the second quarter, we continued to see strength in our software business, with year-over-year growth of 104% and recurring revenues growing 123% over the same prior-year period. Revenues for the second quarter of this fiscal year were $5.7 million, a decrease of 49% from the prior year's second quarter, which benefited from approximately $5.7 million from a prior program of record that was completed in 2023. Software revenue this quarter was $1.7 million, reflecting the 123% growth in recurring revenue. However, more than offsetting that growth, hardware revenue decreased 61% to $4 million.
Dennis: Thank you Richard in the second quarter, we continued to see strength in our software business with year over year growth of a 104% and recurring revenues growing 123% over the same prior year period.
Dennis: Revenues for the second quarter of this fiscal year were $5 7 million a decrease of 49% from the prior year's second quarter, which benefited from approximately $5 $7 million from our prior program of record that was completed in 2023.
Speaker Change: Software revenue this quarter was $1 7 million, reflecting the 123% growth a recurring revenue.
Speaker Change: More than offsetting that growth hardware revenue decreased 61% to $4 million.
Dennis D. Klahn: As we discussed last quarter, Genasys started fiscal 2024 with an exceptionally low hardware backlog; in addition to a low backlog entering the quarter, the delayed approval of the 2024 U.S. DOD budget resulted in revenue again slipping out of the quarter. Gross profit margin was 38 percent in the fiscal second quarter, a decline of six percentage points or $2.7 million from the prior year period. The drop in gross profit was primarily attributable to lower hardware revenue in this year's quarter and the related reduction in overhead absorption.
Speaker Change: As we discussed last quarter Genesis started fiscal 'twenty 'twenty four exceptionally low hardware backlog.
Genesis: In addition to a lower backlog entering the quarter the delayed approval of the 2024 U S. D. O D budget resulted in revenue against slipping out a quarter.
Speaker Change: Gross profit margin was 38% in the fiscal second quarter, a decline of six percentage points or $2.7 million from the prior year period.
Speaker Change: The drop in gross profit was primarily attributable to lower hardware revenue in this year's quarter and the related reduction in overhead absorption.
Dennis D. Klahn: We do expect gross margin percentages to recover with increased revenues in the coming quarter. Quarterly operating expenses were $9.2 million, up 10% from $8.3 million in the second quarter of fiscal 23. SG&A increased 10%, while R&D increased 11% over the prior year period. The difference was largely attributable to the acquisition of Evertel and increased professional services expenses that account for more than 50% of the incremental change. On a gap basis, our second fiscal quarter operating loss was $7 million compared to a loss of $3.4 million in the year-ago quarter. Adjusted EBITDA, which excludes non-cash stock comp, was at negative $5.7 million compared to last year's negative $2.3 million. The year-over-year decline in adjusted EBITDA was due to lower hardware revenues and subsequent reduced overhead absorption in the current year.
Speaker Change: We do expect gross margin percentages to recover with increased revenues in the coming quarters.
Speaker Change: Quarterly operating expenses were $9 2 million up 10% from $8 3 million in the second quarter of fiscal 'twenty three.
Speaker Change: SG&A increased 10%, while R&D increased 11% over the prior year period.
Speaker Change: The difference was largely attributable to the acquisition of <unk> and increased professional services expenses account for more than 50% of the incremental change.
Speaker Change: On a GAAP basis, our second fiscal quarter operating loss was $7 million.
Speaker Change: <unk> to a loss of $3 4 million in the year ago quarter.
Speaker Change: Adjusted EBITDA, which excludes noncash stock comp was a negative $5 7 million compared to last year's negative $2 3 million.
Speaker Change: The year over year decline in adjusted EBITDA was due to the lower hardware revenues and subsequent reduced overhead absorption in the current year.
Dennis D. Klahn: Cash, cash equivalents, and marketable securities totaled $6.6 million as of March 31, 2024, compared with $10.1 million as of the September fiscal year-end. Excluded from the cash figure is $3.5 million being held as a bid bond for the Puerto Rico business Richard discussed just a moment ago. Cash used in operating activities in the second fiscal quarter was $6.8 million.
Speaker Change: Cash cash equivalents and marketable securities totaled $6 6 million as of March 31, 2024, compared with $10 1 million as of the September fiscal year end.
Speaker Change: Excluded from the cash figure is $3 5 million being held as a big Bang for the Puerto Rico business, Richard discussed just a moment ago.
Richard S. Danforth: Cash used in operating activities in the second fiscal quarter.
Richard S. Danforth: $6 $8 million.
Dennis D. Klahn: As Richard mentioned in his remarks, we expect to receive both the return of our $3.5 million bid bond and an initial award payment after the terms and conditions of the Puerto Rico contract are finalized later this quarter. Strong Software Bookings continues to provide upfront cash, and the announced financing has fortified our balance sheet considerably. We believe we have ample resources to monetize the investments we have made in growing and diversifying our business.
Richard S. Danforth: As Richard mentioned in his remarks, we expect to receive both the return of our $3 5 million dollar bid bonds and an initial award payment after the terms and conditions of the Puerto Rico contract.
Richard S. Danforth: Idolized later this quarter.
Speaker Change: Strong software bookings continue to provide upfront cash and the announced financing as fortified our balance sheet considerably.
Speaker Change: We believe we have ample resources to monetize the investments we have made in growing and diversifying our business.
Speaker Change: Yeah.
Dennis D. Klahn: As we have discussed in our earnings release and this call, there are a number of large opportunities that we are excited about. Between the Puerto Rico and CROW16 businesses alone, we're expecting nearly $200 million in highly profitable revenue in the coming years. Our software business continues to grow rapidly, and it is on track to post triple-digit growth in ARR this year. We are confident that second half fiscal 24 hardware and software revenues will grow considerably from the first half, but we're not in a position to be more precise than that at this time. And now we'd like to open the call to Q&A. Operator?
Speaker Change: As we have discussed in our earnings release and this call. There are a number of large opportunities that we are excited about.
Crow's 16: Between the Puerto Rico, and Crow's 16 business alone, we are expecting nearly $200 million and highly profitable revenue in the coming years.
Crow's 16: Our software business continues to grow rapidly and it is on track to post triple digit growth in AAR are this year.
Crow's 16: We are confident that second half fiscal 'twenty for hardware and software revenues will grow considerably from the first half.
Crow's 16: We're not in a position to be more precise than that at this time.
Operator: Thank you. The floor is now open to questions. If you do have a question, please press star 1 on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing 1.
Speaker Change: And now we'd like to open the call to Q&A.
Speaker Change: Operator.
Operator: Thank you the floor is now open for questions. If you do have a question. Please press star one on your telephone keypad at this time.
Operator: <unk> has been answered you could remove yourself from the queue by pressing one again, ladies and gentlemen, Thats star one.
Operator: Again, ladies and gentlemen, it's Star 1 and our first question comes from Mike Latimore from Northland Capital. Go ahead, Mike.
Operator: And our first question comes from Mike Latimore from Northland Capital Go ahead, Mike.
Michael James Latimore: All right, we're good. Yeah, great. Thanks for the update here. On the CROWES revenue... You know, I believe that's in the budget, but do you have clarity on whether you'll get it by calendar year-end, funding for the CROWS order?
Operator: Alright, great. Thanks for the update here.
Michael James Latimore: On the CRO revenue.
Michael James Latimore: Yes, I believe that in the budget, but what do you have clarity on whether you'll get it in by calendar year end.
Speaker Change: Funding for the growth that order.
Richard S. Danforth: It's not currently in our internal forecast, Mike. The money is beginning to flow to the program office. The initial kickoff meeting is scheduled for the first week of June. After that, we'll have more clarity.
Speaker Change: It's not currently in our internal forecast Mike.
Mike: The money is beginning to flow to the program office. The initial kickoff meeting is scheduled for the first week of June after that we'll have more clarity.
Mike: Got it okay.
Michael James Latimore: and then. You gave some guidance for fiscal 24, excluding Puerto Rico, but it sounds like you're expecting maybe a payment from the right after closing of the deal. I guess, any clarity on how much revenue you might get from Puerto Rico this year?
Mike: And then.
Mike: <unk>.
Speaker Change: You gave some guidance for fiscal 'twenty, four excluding Puerto Rico, but it sounds like Youre expecting maybe a payment from the right after closing of the.
Speaker Change: The deal I guess any any clarity on how much revenue you might get from Puerto Rico that Sir.
Richard S. Danforth: I think we spoke about this on the last call; I'm not expecting any at this point; there's an initial phase of They need to accept our designs for each of the 37 dams. I think if we close the contract by the end of June, which is our expectation. It gives us July and August and September to get the approvals required, and then we're into our fiscal 25. There will be an initial deposit subsequent to the contract being signed.
Speaker Change: I think we spoke about this on the last call I'm not expecting any at this point there is an.
Sir: I shall phase of they need to accept our designs for each of the 37 dams.
Speaker Change:
Sir: Well I think if we close the contract by the end of June which is our expectation.
Speaker Change: Gives us July and August and September to get the approvals required and then we're into our fiscal 'twenty five.
Speaker Change: There will be initial deposit.
Speaker Change: Subsequent to the contract.
Speaker Change: Being signed.
Speaker Change: Okay.
Michael James Latimore: Yeah, okay. And then, um... on the revenue recognition on the Puerto Rico deal. Why was the reason it took 2.2 days?
Speaker Change: Okay.
Speaker Change: And then.
Speaker Change: On the <unk>.
Speaker Change: Revenue recognition on the Puerto Rico Dl.
Speaker Change: <unk>.
Speaker Change: What tell stories.
Speaker Change: <unk>.
Richard S. Danforth: There's been a lot of moving parts, Mike, since the last call we had. I believe we told you the contract would be worth, I don't know, $60 to $65 million last time, and now it's worth about $75 million, so the customer is at its scope, to each and every dam. So that all has to be included in our designs and our proposal, and we're doing that now. So I think we can, at our next conference call, Mike, I would expect to be able to provide way more clarity then than I can right now. I mean, is that something that could get deployed over?
Speaker Change: Excuse me this out like that.
Mike: So I mean, it has been a long over a lot of moving parts, Mike since the last call we had hmm.
Mike: I believe we told you the contract would be worth I don't know $60 million to $65 million last time and now it's worth about 75 million. So the customer is added scope.
Mike: To each and every damn so that all has to be included in our in.
Speaker Change: And our designs and a proposal and we're doing that now.
Mike: So I think we can at our next conference call, Mike I would expect to be able to provide more clarity than I can right now.
Mike: I mean is that something that can get deployed over like five years or Kenya.
Richard S. Danforth: No, no, I don't think so at all. The initial RFP had it done 240 days after approval of all the dams. It will not likely be 240 days; it will be more than that, but I'll know more on next conference call.
Mike: No no I don't think so at all the initial.
Mike: RFP had done 240 days after approval.
Mike: Approval of all the dams.
Speaker Change: I will not likely be 240 will be more than that but I'll know more of it.
Speaker Change: Next our next conference call.
Michael James Latimore: Okay, thank you. It should still be very good for 25 and
Speaker Change: Mhm.
Speaker Change: Thank you.
Richard S. Danforth: Still, he should be very good for 25 and probably 26.
Speaker Change: It would be very good for 25, and probably 26 as well.
Speaker Change: Okay.
Operator: And our next question comes from Ed Woo from Ascending Capital. Go ahead, Ed. Yeah, thank you.
Speaker Change: And our next question comes from Ed Woo from <unk> Capital go ahead Ed.
Edward Moon Woo: Yeah, thank you very much for the update. You know, my question is on a slightly different market than you guys have been used to, civil disobedience. You know, across the country, we've been hearing about all these protesters on college campuses and people claiming that they're not getting notified or whatnot. Obviously, that would be a great opportunity for your LRAD devices. Have you seen any upticks in, you know, civil disobedience-type opportunities with police forces?
Edward Moon Woo: Yes. Thank you very much for the update my question is on a slightly different market that you guys have been used to civil disobedience.
Edward Moon Woo: Across the country, we've been material, but all of these protestors on college campuses and people, claiming that they're not getting notified or whatnot, obviously they'll be a great opportunity for your <unk> devices have you seen any uptick then.
Speaker Change: Civil disobedience type of opportunities with police forces.
Richard S. Danforth: Yes, incoming inquiries, Ed, but it's just typical that during a crisis is not a good time to be selling. Most all police forces, major police forces here in the United States have LRAC. What this typically would do is shine a light on the need for more of them, and the acquisition of those would follow. But as you've watched some of the news over the last several weeks, there's been a lot of use of Elrod around the country.
Speaker Change: Yes, inquirer incoming inquiries, Ed but as is typical.
Inquirer: During a crisis is not a good time to be selling most all police forces major police forces here in the United States have already.
Speaker Change: What this typically would do is shine a light on the need for more of them.
Edward Moon Woo: And the acquisition of those would follow.
Edward Moon Woo: But as you watch some of the news over the last several weeks, there's been a lot of use of Alvarado around the countries.
Edward Moon Woo: Well, that's great to hear. I was going to say, you play some really loud music, and maybe some of these protesters wouldn't be so happy to be camping overnight.
Edward Moon Woo: Well, that's great to hear I'll, then say you placed on.
Speaker Change: Really loud music and maybe some of these protesters wouldn't be so happy to be capping overnight.
Richard S. Danforth: All right, well, thank you very much, and I wish you guys good luck with everything. Thank you. Thank you. Again, ladies and gentlemen, it's star number one to ask a question on the phone. Please hold while we poll.
Edward Moon Woo: Alright, Thank you very much and I wish you guys. Good luck with everything thank you.
Edward Moon Woo: Yeah.
Operator: Again, ladies and gentlemen, Thats star one to ask a question on the phone please hold while we poll.
Operator: And at this time, I'd like to turn it back to management for any closing remarks.
Management: And at this time I'd like to turn it back to management for any closing remarks.
Operator: Yeah.
Richard S. Danforth: Well, I appreciate everyone getting on the call tonight. Obviously, there are a lot of things going on over the past several months, and we look forward to updating you all on our next quarterly conference call. With that, I wish everyone a good night. Thank you.
Management: Well I appreciate everyone getting on the call Tonight, obviously, there's a lot been going on over the past several months and we look forward to updating you all on our next quarterly conference call with that I wish everyone. Good night. Thank you.
Operator: Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
Operator: Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
Operator: [music].
Operator: Hi.
Operator: Sure.
Operator: [music].