BIO-key International (NASDAQ:BKYI) Q4 2020 Earnings Call

0:00 Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Bio-key International's fourth quarter and full year 2020 conference call. During management's prepared remarks, all participants will be in listen-only mode. Afterwards, listeners will be invited to participate in a Q&A session. As a reminder, this conference is being recorded today, Thursday, March 25, 2021. I would now like to turn the call over to Kimberly Johnson, BioKeys Vice President of Product Marketing. Please begin.

0:34 Thank you, and thank you for joining us this morning. Participating on today's call are BioKeys Chairman and CEO Mike DePasquale, Chief Revenue Officer Fred Corcentino, and CFO CeCe Welch. I'd like to remind everyone that today's 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, will, or similar words generally identify and express forward-looking statements.

1:19 Such forward-looking statements are made based on management's beliefs and assumptions made based on information currently available. pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For a complete description of these and other risk factors that may affect the future performance of Bio-key International, please see Risk Factors in the company's annual report filed on Form 10-K and in its 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 the date hereof. The company undertakes no obligation to disclose any revision to forward-looking statements to reflect events or circumstances that occur after today.

2:07 Now, I'd like to turn the call over to Mike DePasquale. Mike?

2:13 Thank you, Kim, and good morning, everyone, and thank you for joining our call today. As I begin, I want to thank the entire BioKey team for their hard work and commitment during a very challenging year. I want to also acknowledge our customers who have stepped up to secure their assets in what has been an unprecedented time in our history. Speaking on behalf of the entire Bio-key global organization, we have never been more enthusiastic and opportunistic and optimistic about our future as we are today. Despite the challenges posed by the COVID pandemic, 2020 was a transformational year for Bio-key. And importantly, during 2020, we were able to accomplish a major recapitalization of the company, putting us on a very sound financial footing for years to come.

3:08 And we also completed the acquisition and integration of Pistol Star, the developer of PortalGuard Identity and Access Management Solutions. The purchase substantially enhanced our suite of security, ID, and authentication solutions, our talent pool, customer base, and our addressable market, and also provided a very significant contribution to our second-half performance. In late 2020, we began to see business activity gradually moving towards more normalized levels following COVID-related disruptions to our sales and marketing dialogues. Our business benefits from IT security challenges driven by the shift to remote work and studies, which obviously grew very rapidly in response to the pandemic.

3:58 As a result, we believe virtually all enterprises have been irreversibly altered to allow for a broader variety of workflow paradigms and the resulting far more complex demands on security, authentication, ID and access management, challenges that BioKey is uniquely positioned to provide. Now with the gradual normalization of business activity, we are ramping our sales and marketing initiatives to build and engage with a growing list of customer prospects that can benefit from our biometric and identity and access management solutions. We're developing growing interest and engagement for our portal guard solution across enterprise markets and in higher education.

4:46 particularly now that we are able to offer it as an on-off-premise solution as well, meaning hosted in the cloud. Identity as a service solution, as we call it. We launched PortalGuard IDaaS in the fourth quarter, less than six months after closing the acquisition, and it has been very well received in the market as more and more enterprises are transitioning their IT infrastructure to an asset-light cloud model that better supports remote users. We believe this trend has been accelerated by the pandemic's impact on work-from-home and study-from-home trends. And having let the genie out of the bottle, it seems that such hybrid work models are here to stay, creating significant IT security challenges as more users require access to mission-critical data and applications outside the enterprise firewall.

5:45 These challenges complicate cybersecurity for companies of all sizes and across all industries. A recent study by Infosys suggests that it has not just lost revenue or profits, but hundreds of billions of dollars of brand value are at risk from security breaches. Unfortunately, prominent security breaches like SolarWinds continue to occupy headlines. But these terrible events do serve to keep IT security risks top of mind and have led to high-profile endorsements that value solutions like ours can provide. In the wake of the SolarWinds breach, the cybersecurity and infrastructure security agent, CISA, recommended the use of multi-factor authentication strategies essentially everywhere.

6:36 Separately, FBI private industry notifications and advisory alerts suggest incorporating a biometric into multi-factor authentication strategies. Microsoft also continues to use growing passwordless as a central theme for their enterprise messaging, including alternatives such as biometrics and FIDO2 tokens. In practice, many use mobile phones as FIDO tokens, but last year the FIDO Alliance recommended providing users with multiple FIDO token options. We think this posture builds on the value proposition as PortalGuard now accommodates FIDO2 tokens amongst a total of over 15 different authentication factors.

7:23 We're also looking at other factors to add to our already robust platform in the coming year that will be easily integrated and provide the broadest possible universe of customer application implementation capability. One constant that continues to differentiate BioKey in the market is our core strength in biometrics. We have unique capabilities as the central biometric management system for enterprise or school system, and our technology is scalable to any size ID platform, such as those required in mobile communication networks, large bank networks, and even enormous national or Civil ID programs.

8:08 To that end, BioKey has established a beachhead in some very large projects in Africa, and we are pursuing other opportunities across the continent, both direct as well as through our channel partner program. We just recently initiated commercial hardware deployments in support of our large contracts in Nigeria, whereby we provided fingerprint reader hardware to support biometric enrollment. As a result of a range of factors outside of our control, primarily related to the pandemic and some protests in Nigeria, these initiatives were delayed in 2020 but are now moving into gear, and we expect activity to grow in future periods. These projects represent what can have significant upside to our revenue plan in 2021 and beyond.

9:03 We entered 2021 with a very strong balance sheet and cash position that positions us to execute on our growth strategies and fully tap the sales potential of our expanded team, enhanced product portfolio, and growing partner and customer relationships. Our sound financial position also serves us well when dealing with large enterprise and government customer prospects and partners regarding our ability to support them over the long term. Financial strength also allows us to make prudent investments in our business, including potential tuck-in acquisitions, new product development, as well as sales and marketing resources and initiatives.

9:48 As CeCe will review shortly, our Q4 and fiscal 2020 top-line results show year-over-year improvements, and we expect these positive trends to accelerate in 2021. supported by a pipeline of opportunities, recurring revenue, contract backlog, and strong outlook for our solutions on a global basis with particular emphasis in North America, Africa, and Asia. For the full year 2021, we anticipate revenues of $8 to $12 million with potential upside primarily related to our Africa business as well as some other opportunities. The midpoint of this range would represent more than 250% growth over fiscal 2020 revenue and approximately 150% growth over the $4 million annualized revenue run rate based on our 2020 second half performance, which benefited from the PortalGuard acquisition.

10:53 Let me now turn the call over to Fred Corsentino. are CRO to highlight a few key developments and opportunities that we see in our business. Fred?

11:04 Thank you, Mike. I'd like to highlight a few areas that underscore our optimism for the business. First off, as Mike mentioned, we launched our software-as-a-service model for the PortalGuard business to build on our on-premises solutions and position BioKey to participate in the trend towards asset-light or cloud-based IT infrastructure solutions. Our Port of Guard Identity as a Service Platform, or IDaaS as we call it, includes a highly scalable framework hosted within an AWS cloud infrastructure that can integrate with our customers' other cloud-hosted data and solutions. This new paradigm provides a range of benefits to all parties, including a scalable procurement experience with a far lower upfront cost for the customer while providing a stable and far more predictable recurring software revenue stream for bio-key versus variable or episodic license sales.

12:03 Our teams are very focused in building traction for our cloud solutions and building a growing base of annual recurring software revenue. I mentioned on our last call that we have integrated our sales and marketing functions around three primary verticals. Education, Financial Services, and Government. Within the higher ed vertical, one of our priorities is to target larger institutions. Given our recognition in the market, our significant installed customer base, and the value we provide, we will continue to strengthen our position in the education segment. As discussed in today's release, we are very excited about BioKey's Channel Alliance Partner Program which we consider to be a key force multiplier in our go-to market efforts. As a result, we are focusing a significant portion of our time on this program, working to steadily build and support our base of productive partnerships. The CAP program expands our paths to market by leveraging partner contacts, market knowledge, and sales reach to new customers where our technology solutions are a great fit.

13:15 We have more than 50 partners and I am confident that we can more than double that base in the coming months and continue to grow the channel on a global basis. We are fast becoming a channel-centric company and expect our partner revenue to grow significantly in the short and long term. We are also developing programs to support each of our partners and have incorporated a direct assist program to help them close deals. As for ongoing investments to main our technology leadership, We recently completed development of BioKey's Core Vector Segment Technology, or VST, which provides intelligent device driver management via cloud delivery and our new WebKey platform to leverage VST for managed software installation and updates, providing better performance and a better user experience.

14:06 Our PortalGuard 6.5, which was released in Q1, adds a number of new cloud and mobile capabilities. For example, It supports Microsoft Azure Active Directory as a primary real-time directory in the cloud, thereby eliminating the need for on-premise Active Directory and providing a stronger cloud-only option. In terms of market direction, we think that mobile ID, including for payments, as well as work from home and study from home, are enduring trends that also create very significant IT challenges related to security, ID, Authentication and Access Management. We also believe that BioKey, with its core biometric technologies, is uniquely positioned to solve these and other challenges that today's organizations face.

14:57 We're making progress on revenue and on recurring revenue growth as seen in our Q4 results. And as Mike mentioned in his remarks, our growth goal exceeds 100% for 2021. With that, I'll pass the call over to Ceci for a brief review of our financial results. Ceci?

15:17 Thank you, Fred. Bio-key's Q4 2020 revenues doubled to $1.1 million from $535,000 in Q4 2019, mainly due to the revenue contribution related to PortalGuard, which was acquired as of June 30, 2020. Revenues for 2020 increased 25% to $2.8 million from $2.3 million in fiscal year 2019, with the increase due largely to the acquisition, which more than offset the impact of IT project delays and disruptions related to the pandemic. Sequentially, revenue increased $120,000 in Q4-20 from $943,000 in Q3-20, with Q3 and Q4 being the first two quarters to include portal card. Gross margin improved to 71% in Q4 and 72 for the full year from negative levels in the prior years, neither of which is truly comparable due to non-cash and non-operating charges in 2019 that did not recur in 2020.

16:25 Excluding the prior year one-time impairment charge of $7 million, Bio-key's Q4 operating loss improved 34% to $1.4 million from a loss of $2.2 million in Q419. Likewise, for the full year 2020, operating loss improved 21% to $5.2 million from $6.6 million in 2019, also excluding the prior year impairment. On the bottom line, BioKey reported a net loss to stockholders of $1.4 million, or $0.18 a share, in Q420, compared to a net loss of $9.5 or $5.29 per share in Q4 2019. For the full year 2020, the net loss was $9.8 million or $2.08 per share versus the $14.6 million or $8.21 a share in 2019, including the one-time impairment charge.

17:10 In 2020, net loss included $4.2 million of interest expense plus half a million costs related to the extinguishments of debt, partially offset by the gain of a $341,000 for the Paycheck Protection Proceeds Loan, which has been fully forgiven. Following the recapitalization, net interest expense was reduced to less than $16,000 in Q4 as compared to $396,000 in Q4-19. As mentioned, we recapitalized the company in July via underwriting of the common stock and warrants, and we paid off prior indebtedness.

18:04 There was $232,000 note payable related to the Pistol Star Portal Guard acquisition at the end of the year, and we had more than $19 million of current assets, including about $17 million of cash and cash equivalents, or $2.17 per common share. With that, we can now turn the call back to the operator for investor questions. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. Our first question today comes from Jack Vanderard with Maxim Group.

18:53 Great. Good morning. Hi, Michael, Fred, and Cece. Thanks for taking my questions. Let's start with a question on the revenue guidance for 2021, between 8 to 12 million, which is encouraging. This exceeded my expectations, certainly. So can you provide maybe some more color as to the drivers of this revenue guidance, Michael? Maybe how much from, and if you can't break out things, that's okay, but whatever you can maybe share roughly as a breakout of portal guard versus core bio-key, and if there's any Africa contracts, revenue contribution embedded in there, that'd be helpful.

19:35 Thank you, Jack, and good morning. I appreciate the question. I think I can share some color on the revenue guidance. Certainly 8 to 12 million, we are attempting to be conservative. As we mentioned in our press release and I mentioned in our prepared comments, We see there's also significant upside on the Africa side. As you know, the contracts are significant. They've been delayed now nearly a year. So remember, we had expected to begin generating revenue in the second half of 2020. That has slipped. We've now begun to deploy technology, but everything is certainly behind, you know, approximately three-quarters to a year.

20:22 So there is significant upside here. in that guidance range if, in fact, the African business accelerates more significantly. So we do have some revenue associated with the African business in that guidance range, but the bulk and the base for that range is our core business, which is fundamentally our biometrics and our identity and access management portal guard solution right now. That's the way we're looking at it at this point in time.

21:01 Got it. That's helpful. I appreciate the color there. And then just maybe between the, I don't know, maybe the lines are getting blurred now that PortalGuard's been integrated for quite some time now. But is there anything you can share in terms of maybe the growth, the revenue growth rates you're expecting for 2021? between the core bio-key biometrics business and then PortalGuard. Would you expect them to grow at a similar pace, or is one going to outpace the other as far as 2021 goes?

21:34 You know, it's an interesting question because there's an integration of the biometric technology that's also in the PortalGuard solution, right? So, you know, fundamentally they're going to grow together for sure, but we are expecting to see significant growth in our Identity and Access Management, our PortalGuard platform. And remember, in my prepared comments and as you have heard us say before, we support over 15 authentication factors. So biometrics is only one of those factors, right? There are 14 others that we support, PINs, tokens, cards, keys, you know, all those things, FIDO tokens. So, you know, we will see both of those businesses grow Thank you very much.

22:44 and then just maybe as I'm going to have two more kind of questions as it relates to the first quarter. So you did mention this 500K revenue expectation for the first quarter from the Africa contracts with Nigeria. You're already commencing the delivery of the first shipment. If I just back up from that just in general for total revenue in the first quarter, Just given seasonality, if there's any other factors, would you expect the first quarter total revenue to be flat, up, or down from fourth quarter, or is it too hard to tell?

23:18 Well, we don't provide quarterly guidance, as you know. We're providing annual guidance because we don't feel yet we're able to be predictable enough to do that. We really want to make sure, again, we're as accurate as possible as we come into 2021. I will say this about the quarter. We did announce earlier this week that we would generate approximately half a million dollars from our Africa contract. And if you look at our run rate business, it's pretty clear that we will see sequential growth from Q4 of 2020 into Q1 of 2021. You know, where we'll end up, we'll see, but we're certainly believing there'll be significant potential and opportunity for sequential growth from Q4 to Q1.

24:18 Okay, gotcha. And then, if I may ask as well, just because it is March 25th, there's only a few days left in this quarter, what's your confidence level or certainty of receiving that $500,000? Payment, or at least recognizing that 500K of revenue for the first quarter. Is there a risk that a portion of it or all of it slips into the second quarter?

24:44 Right now, it's high.

24:48 Okay. Fantastic. And then maybe just, Michael, what's your overall sentiment, your current sentiment or feeling of just regarding the status of Nigeria and Africa as a whole? Is there a clear positive trend that you can point to or any visibility just in terms of like the reopening of their economy and the country altogether?

25:11 Well, you know, the economy is open. The country has been open, but certainly been stumbling. You know, their economy is solely based, not solely, but mainly based around oil, and oil has recovered, although It's been episodal in the context of price. So that's been challenging for them. But I will say this about our projects and our programs there. There is an edict on the streets supported by the World Bank, funded by the World Bank to the tune of $480 or so million, almost half a billion dollars, to put in place an identity management solution that can help create an ecosystem for Prosperity in Nigeria. So right now, the edict is in place to enroll every citizen and provide them what's called a Nigerian Identity Management Number or a NIM number. That number is akin to our Social Security number here in the U.S.

26:23 If, in fact, individuals are not enrolled and do not get that number, they will have a very difficult time participating in everything that the country offers, including on the commercial side, having a cell phone because their SIM card is going to be tied to the NIM number. Any of the social services programs that the country provides, welfare-based healthcare, all of those things, They will not be able to participate and partake in those services without a NIM number. So there's a lot of pressure right now to get this done. It's been delayed, but everything that we're seeing leads to, and you can look at the, you can Google Nigeria and NIM and registrations and enrollment.

27:17 It's not going exactly smoothly for them. But it's moving, and it's going to move very aggressively. So we feel encouraged right now that 2021 will be a breakout year there for us. And we're not relying just solely on Nigeria. So you're going to see some other things coming from us in other countries and with other partners that can expand our opportunity base, including selling portal guard across those territories. You know, Kenya is emerging as a high-tech hub spot, not only in Africa, but in that whole sector of the world. And so there's plenty of tech opportunity there for growth and upside potential.

28:02 So, yeah, we're pretty encouraged right now about the potential and the opportunity.

28:10 Fantastic. Okay, excellent. And then just maybe one more question, maybe two more questions for me. Michael, you talked about your strong backlog and maybe you said pipeline as well in the prepared remarks. Are you able to quantify anything with regards to the backlog or pipeline or maybe you want to keep that undisclosed for now? But is there any comments or additional color you can provide with regard to the backlog and pipeline?

28:38 Yeah, we don't have the numbers now to share, but I can say it's growing. Some of it is obviously the opportunity and potential we have in Africa, but a significant part of it as well is within our core business in biometrics, in portal guard, and also with our CAP program. I think Fred, in his prepared comments, made it clear that a force multiplier for us is the expansion of our China Alliance program. So getting more and more feet on the street through this partner network to sell our solutions. And now that we have an iDesk, we have a cloud-based solution available. MSPs, managed service providers, MSSPs, managed service security providers, love selling the cloud solution because it doesn't require a lot of on-premise installation and support. So that's going to be a big, significant part of our growth as well going forward.

29:40 Okay, great. And then just one final question. You know, the biometrics capability you cited remains the core differentiator of bio-key versus competitors or other solutions that are out there in the space. So maybe either Michael or Fred, can you maybe just talk about what you're seeing in the marketplace when negotiating new potential contract wins or customer wins? Are there any competitors you're consistently seeing at the deal table or the bake-offs and How are your win rates kind of tracking or trending?

30:14 I think I'll let Fred handle that.

30:18 Yeah, Jack. So biometrics is definitely a differentiator. And where we're seeing the most traction right now is with our cap partner growth. So we offer something very different and that they know and understand the certain markets customers require. So that's where we've seen the most traction right now. As it relates to competitors, you know, there's always the typical competitive landscape, so there's no one particular competitor that stands out. And when it comes to our biometrics, unparalleled, we certainly have the best solution integrated into the port of our platform.

30:59 Okay, fantastic. Well, guys, I appreciate the added color, and congrats on the strong finish of the year, and I wish you the best of luck in 2021. That's it for me.

31:09 Thank you, Jack. And again, if you do have a question, please press star and then 1 to join our queue. Our next question comes from Dan Kamis, a private investor.

31:25 Hi, guys. Well done on getting at least initial or done on Nigeria stuff. But I was wondering, was there any movement on the telecom deal that you can tell us about?

31:37 Are you talking about the African deal, Dan, or domestic? Similar in nature, everything is starting up together, and so both of our contracts are moving forward.

31:52 So does that guidance that you gave us include revenues from both those Nigerian deals?

31:59 As I described before, we've taken a conservative approach. I won't repeat myself again, but we've taken a conservative approach. There is certainly revenue in the guidance from Africa, but at a minimal level.

32:16 All right. So much talk in the news about chip shortages. Do you have the hardware inventory necessary to – or can you manufacture it or get it to ramp the way you'd like to if the revenues do come in?

32:33 Well, that's a great question. You know, it's interesting. We were a little bit limited in our ability to supply hardware this first quarter because of some chip shortages from some of our suppliers. So that was a bit of a challenge. But we are now very well prepared to be able to deliver product in the coming quarters. And so we Thank you for joining us.

33:26 The product in China, are they ramped up?

33:32 Yes, the answer is yes. And we are now in a normalized state right now. So we're back to where we need to be. And that includes manufacturing products like our SideSwipe, SideTouch, EcoID, those products are now fully available and our manufacturing lines are back open in full swing.

33:57 That's great. What do you expect your quarter break-even number going forward to be? I think it was about 1.8. Is that changed or is that still a good number?

34:10 Yeah, we think based on the mix, and so it really depends on the mix, but we're looking at now about 2 to 2.2 million.

34:19 I see. So that's because of lower margins on the hardware. You might be selling more hardware. Is that it?

34:28 You know, not necessarily. We've made some investments, as you know. We've expanded our staff. We've certainly opened our African subsidiary. So there's some upfront costs and expense that we're experiencing right now. Some of it, again, is mixed, right? The margins on hardware. If it's our hardware or one thing, if it's third-party hardware, they're a little bit lower. So it takes all of that into consideration.

34:57 So then have you begun hiring staff for the African office? I know you hadn't done that yet, except for –

35:04 No, we're right now on the cusp. So, you know, as things are opening and we see the need and we'll have a requirement for support and so forth, we will do that. But we have not made any significant investment in staff in Africa as of this point today.

35:23 I see. and what would you consider a fully staffed African office if you could make that kind of a statement?

35:29 I can't even imagine. It really depends on the ramp, how fast and how significant. You know, those contracts have, you know, had a face value of approximately $75 million. And so if they ramp more quickly, more aggressively, and our other business continues to expand, for example, if our partner network and the Sale at Portal Guard across the territory gets more significant. There may be more staff required, but right now I couldn't answer that question.

36:03 Okay. Let me ask a couple questions on Portal Guard, then I'll get back in the queue. Are you seeing any Portal Guard sales where the customer is also interested and buys the biometric component?

36:18 Absolutely. Absolutely.

36:21 Okay, and do you charge extra for the biometric capability, or is that just built into PortalGuard now?

36:29 That's a good question. The answer is it's an authentication factor within PortalGuard. There is an upsell for the hardware, right? That's required to, if it's finger scanners, to support the solution and the system. And, you know, it's part and parcel of our offering today. and it needs to be part and parcel of our offering.

36:54 Okay, thanks. I'll get back to you. And again, if you have any further questions, please press star and then one at this time. It looks like our next question will be a follow-up from Dan Kamis, private investor.

37:24 Okay. I just got a couple more here. What was the SG&A in the fourth quarter? Do you have that broken out?

37:35 CC?

37:41 As far as, I mean, what the sound cost, the general administrative marketing, et cetera?

37:47 Yeah.

37:49 I do, I don't have them in front of me, but the total, the 1.7 million, I'm going to say that there was probably 400 in selling, maybe 500 in marketing, and the rest in DNA.

38:11 Okay. Just off the top of my head.

38:13 All right, thank you. What were the one-time charges? The one-time charges must have been down the fourth quarter. I'm wondering how big they were.

38:23 Yes, we had paid the debt off in the third quarter, so on the press release we put out the one-time interest charges, et cetera, are down, and our non-cash charges were down as well for compensation expenses, et cetera.

38:39 Okay. And I noticed that the The cash flow was down $1.4 million. Is that because revenues counted in the quarter weren't collected until the first quarter?

38:54 We actually did have a larger shipment at the tail end of the quarter versus the beginning.

39:01 Okay. What was the accounts receivable in deferred revenue?

39:12 What was the deferred revenue? And the accounts receivable, yeah.

39:17 I guess I can wait for the queue, but I just thought you might have the numbers.

39:20 Yeah, no, I have, so the deferred revenue at the end of the year was, we had long-term and short-term or current and non-current. So we had a total of almost $700,000 there for deferred. And accounts receivable was $548,000.

39:42 Okay, got it. Last question from Mike. Price is about back where you made purchase in the fourth quarter. Are you looking to add more shares? If you don't want to answer, that's okay. Just asking.

39:56 Yeah, probably.

39:58 Okay. Okay, that's all I got. Thank you.

40:03 Thank you, Dan. And again, to join our queue, simply press star and then 1. Our next question will come from Ashok Mehta, a private investor.

40:22 Yes, hi. Thank you for taking my question. I have a couple of questions just on the African contracts. The two that you won, you know, the value is $75 million of the contracts. I just wanted to understand, I think the, When the contracts were won, it was supposed to be over a two-year period that the contracts would be performed. And, you know, I understand about the delay and so on. So if we reset, you know, let's say it's starting out kind of around now in terms of the first quarter, is the company expecting that we're going to be earning, you know, approximately $75 million in revenues this over the coming two years. Is that a reasonable assumption?

41:15 I just wanted to understand, assuming that these contracts get executed, you know, according to how they were won. So that was my first question, is in terms of eventual revenue from these and kind of the timeline that we expect. I know the ramp-up is a little bit waiting to be firmed and so on, but I just wanted to clarify that.

41:39 Great question, and the answer is yes. Our expectation is now, on a two-year basis, that the potential for those contracts continues, we believe, continues to be $75 million. So we expected the ramp to be a gradual ramp and then to hit full swing a couple quarters after the start. So that's still our intention and our plan. Again, as I mentioned a number of times in my prepared remarks and also in the Q&A, we're being very conservative about our guidance because it is unpredictable. We've seen, again, the delays. Everything that we're seeing indicates that things are going to start up, and our goal and objective is to hit that 75 million over the next 24 months.

42:34 And then if I can ask in terms of, you know, sort of a mix in terms of hardware or software in terms of that revenue level over the life of the contract as well as kind of what kind of bottom line kind of impacts can we expect, you know, if these are performed according to plan?

43:04 Well, for sure in the beginning, as we've mentioned a number of times through the past year, there's a lot of hardware up front to be able to facilitate the entire ecosystem, identity management and authentication ecosystem. So there's a lot of hardware up front, as you saw in our announcement this week, in fact. The first shipment is finger scanners to support the enrollment for individuals across the country. So that's going to be a big part of it. And obviously, the margins on hardware are not like the margins on software. So our software margins, especially in portal guard or biometrics, could be upwards of 80%, 90%. Hardware obviously ranges depending upon hardware that we manufacture or third party.

43:52 And that can be anywhere from 20% to 50% or 60%. So it's a wide range. But for sure, we wouldn't do it if it wasn't profitable. And so on the significant numbers that we could be talking about here, you know, the large numbers, we think it'll have a very positive impact to the bottom line as we move forward.

44:20 All right. Okay. The other question that I had was just in terms of the other opportunities. You actually mentioned that you're – I think looking at other opportunities in Africa. So I think just a general question, is this a lot of things that you, a lot of potential kind of opportunities that we're talking about just in terms of kind of volume of RFPs and so on that you might be going after? And is the size of some of these similar to kind of potentially the size of some of these other ones that you've won last year.

45:05 Well, there's some of that, and there's also what I would consider our standard business. So, for example, selling portal guard, as I mentioned before, across perhaps banking, finance, and healthcare, or in manufacturing. So selling our core product for identity management and authentication to the commercial and government agency topology in Africa. We're doing the same in Asia. We're going to start ramping up there again, outside of China, of course. But in Japan and Singapore, we're going to be selling portal guard and portal guard-like solutions, including our biometrics, across that landscape. And so that's not episodal.

45:52 That's more, you know, again, it's more mainstream. It's more of what we do, similar nature to what we do here in North America and in Europe. That's our goal and objective. To build that base business as well, not just the event-based business, but the recurring kind of ARR-type business that we're building here in the U.S., to build that across the globe.

46:17 Okay. Okay. Okay, yeah, that's all I had. Thank you very much for taking my questions.

46:26 Thank you for the questions. Thank you. Our next question comes from David Flooring, private investor.

46:37 Good morning. Good morning, David.

46:41 I'm a long-time investor going way back to when Tom C. was with Visage. And I'm just curious with How do you guys announce your contracts? Why don't you ever put a dollar value, even for some of the smaller ones? And if it's not worth putting a dollar value on there, what good is it to even make the announcement of the contract?

47:06 That's a great question. I get that question probably 10 times a year from investors and other interested parties. The challenge that we have in general, and this has really gotten It's ramped up for us over the last 24 months or so. The customers we deal with use our technology to secure their infrastructures. And they do not like their competitors or hackers or anyone else to know, number one, what they're using and what they're doing. and so we have a very difficult time, forget the dollar value, we have a very difficult time sometimes naming our customers.

47:59 And when we do, sometimes we take a risk, there's a backlash. Let's put it this way, it happens. And so we have to be very cautious, number one, in naming who we're doing business with. The second part is from a competitive perspective, we do not want to share because people can extrapolate on a per-user basis knowing the size of the company. We don't want to share our pricing with our competitors. We don't think it's good business. We don't think it helps us in any way, shape, or form. And so we're very cautious about that. So that's the simple answer, and those are the facts. This will conclude our question and answer session.

48:49 I'd like to turn the call back over to Mike DePasquale for any closing remarks.

48:55 Thank you, everyone, and I appreciate the time that you took today to participate in our call. We look forward to updating you on our first quarter call in late April or early May, and we will continue to provide interim news and updates as warranted. Thank you very much and have a great day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.