Good day, ladies and gentlemen, and welcome to the VOXX International Fiscal 2019 Year End Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to, Glenn Wiener, Investor Relations. You may begin.

Thank you, Stephaney, good morning and welcome to VOXX International's fiscal 2019 fourth quarter and year-end results conference call. Our call today is being webcast live on our website, www.voxxintl.com, and a replay available for those who are unable to make today's call.

Speaking from management this morning will be Pat Lavelle, President and Chief Executive Officer; and Michael Stoehr, Senior Vice President and our Chief Financial Officer. Following their remarks, we'll have the Q&A session for those investors wishing to ask any questions.

John Shalam, Chairman of the Board is also with us today and will be available during the Q&A portion of our call as well. I'd like to remind everyone that except for historical information contained herein, statements made on today's call and webcast that would constitute forward-looking statements are based on currently available information.

The company assumes no responsibility to update any such forward-looking statements. And risk factors associated with our business are detailed in our Form 10-K for the period ended February 28, 2019. Additionally, I would like to reference today that we launched an enhance website with more functionality and several new lifestyle imaginary photos.

And encourage all of you to take a look at that when you have time and as always we appreciate feedback. At this time, I'd like to turn the call over to our President and CEO, Pat Lavelle.

Pat?.

Good morning and thank you, Glenn. As you saw from our pre-announcement on April 29th, and our results issued yesterday, we've got a lot going on.

For the past six months we have made substantial changes, combining our business groups, streamlining operations, rationalizing our product portfolio and restructuring to ensure we're better positioned to meet market demand and reach optimum operating efficiencies, resulting in significant future savings.

Our year-end results announcements highlights the actions we have taken and what I'd like to do today is provide you with more color around how we intend to operate moving forward with a focus on improving profitability and shareholder returns.

Our performance over the past several years has been inconsistent, positively marked by the improvement in our Premium Audio business, the success of new products and the entrance into new technologies, but also negatively impacted by changes at retail, disruptive technologies and delays in the launch of new projects by some of our OEM partners.

We remain focused on adjusting the business to respond quickly to consumer preferences and market fluctuations, which is critical to our future.

We've had a lot of new developments that are yet to positively impact our P&L, but we believe will come to fruition this year, namely growth at EyeLock, growth with our wearable program with UHC and others, and continued success in select Premium Audio categories.

One area we are watching very closely is the most recent developments with respect to the U.S.-China trade negotiations.

As for our strategy to unlock shareholder value, we previously announced the consolidation of Oehlbach and Schwaiger operations, our two international accessory groups, into one, resulting in lower headcount and expenses and we discontinued some older product lines.

This was and remains a profitable entity and we believe with the changes made we can enhance the bottom line further in fiscal 2020.

In addition, today we announced that we have signed a non-binding Letter of Intent to sell our real estate in Pulheim, Germany, which is expected to generate gross proceeds of approximately $12 million further strengthening our cash position.

In international Premium Audio, we combined the operations of Magnat and Heco, two of our high-end Premium Audio brands in Germany and folded them into the Klipsch Group. Again, lowering headcount and reducing expenses, allowing for the sale of our Pulheim facility. We're maintaining our office that houses sales, marketing and order entry.

And all that remains at this point is a conversion of VOXX's ERP system to the German system, which will be completed in June.

Our domestic accessory business has had the most change, as over the past few years, they have been negatively impacted by new technology from Amazon and Google that have dramatically affected sales of portable Bluetooth speakers and other related accessory products.

This combined with declines in some of our older legacy products and drastic changes at retail led us to the SKU rationalization program and the restructuring of the operation.

Going forward, we are focusing on more stable product lines, categories where we have leading market share or technology, and customers where we have higher volumes and opportunities to expand. Accessories will be a smaller contributor to VOXX, which should be more profitable, as we have reduced overhead and expenses to match anticipated sales.

As a result of our restructuring, we have combined our former Premium Audio and Consumer Accessory segments less EyeLock into one new reporting segment, Consumer Electronics, where we believe we can better leverage synergies, operate with lower headcount and on a lower cost basis.

This new segment will primarily contain our high-end, Premium Audio product lines and other audio product lines sold under various brands.

Commercial speakers for the custom installation market, digital antennas, karaoke products under our growing Singsation brand, all wearable products including our program with UHC, where we leverage our logistics and distribution capabilities for companies such as Apple, Samsung, Fitbit, Garmin and Striiv.

And finally the international accessories product lines across several categories. While these actions resulted in a $4.6 million restructuring charge and a $25.8 million non-cash impairment charge in fiscal 2019.

We expect operating expenses in this combined group to decline in fiscal 2020 with major cuts in our former Consumer Accessories segment, partially offset by modest increases within the former Premium Audio segment given some new promotional campaigns that are planned and tied to growth initiatives.

In addition, we expect sales in our new Consumer Electronics segment to be up modestly and as stated with greater profitability.

Driving the top-line will be the wearable category, which I referenced earlier, new and in some cases extended retail programs for antennas, remotes and speakers with retailers including Best Buy, Wal-Mart, Costco and Menards.

As well as some of the Premium Audio products as after a full year of market penetration the new reference premier product suite under Klipsch not only gained significant traction, it took Klipsch to an all-time high market share in the U.S., this is expected to continue.

In fiscal 2019, Klipsch grew in Canada and in the EMEA region, up nearly 20% and 10%, respectively, and there are further opportunities to expand internationally, especially in Asia and South America.

Klipsch will also continue to leverage its distribution and has new product launches scheduled this year in the speaker, soundbar and headphone categories. It's important to note the changes we implemented last fiscal year to limit distribution to enhance margins.

Next and for more clarity, we now established a Biometrics Group, which today consist of EyeLock and which was formerly part of our former Consumer Accessories segment. Many of the losses experienced by the group were result of the addition of EyeLock with its large R&D component and overhead structure.

With EyeLock now a standalone segments investors will have more visibility into the operation and anticipated improvements in the year, especially as we ramp up sales associated with ViaTouch AI machines and generate new revenue and income streams as we're nearing the final stages of completion with a partner in the healthcare space for EyeLock's embedded solutions.

We also have and continue to make progress in the security sector, as we will begin shipping the EXT Outdoor Reader in June. This is extremely important as this solution should jumpstart our access control business. There is currently no device like it on the market.

In addition, there are a few partnerships we've been working on for the past year and in some cases the past few years, which we expect will come to fruition. High-margin business, better volumes and some blue-chip partners are on our side. Once the contracts are finalized, we will have more news to share.

EyeLock is not expected to be profitable yet, but we do expect a positive ramp this year and have reduced non-core G&A expenses and reallocated savings to more sales, marketing and R&D driven areas. And finally, our last segment will continue to be the Automotive Electronics, which incorporates both OEM and aftermarket business.

Automotive, which has been a bright spot for us in recent years due to the successes we've had in rear-seat entertainment - where we hold the number one market position - and remote start, where we are one of the top suppliers domestically, is expected to decline this year both sales and profitability, not to any loss of any program, but rather the global automotive market will not be as robust and this has being felt industry wide leading to tempered expectations.

Despite that our EVO rear-seat entertainment system continues to grow in popularity and we're in the process of quoting new opportunities with several OEMs. Our business with Ford, GM and Nissan remains in full swing and we'll be launching on the Lincoln Aviator and the Nissan Armada later this calendar year.

While there will be fewer new launches of EVO-based RSC vehicles this year, we anticipate some offset with new remote start programs with Ford and the renewal of other programs. We had already combined these operations in our Florida facility and now have been enjoying the synergies resulting from that consolidation.

We are continuing to focus on developing new technologies for the OEM market and expanding our offering in the aftermarket where we believe we can leverage over 50 years of relationships. Now I'd like to shift attention to some of the more corporate initiatives underway and planned in fiscal 2020.

As you saw from our announcements the Board has increased the amount available to repurchase our stock to 3 million shares, an increase of over 1.6 million shares. We intend to utilize this program given our strong cash position and because we believe an investment in VOXX represents a good use of capital.

Of course, there are restrictions as to the number of shares we can purchase on a daily basis, but we have full intentions of beginning this program as we are able to under the securities laws.

As you saw from our press release we are in the process of negotiating new employment agreements with C-Suite executives for myself, Mike Stoehr, our CFO and Lori and Sheldon our COO with updates anticipated to be announced in our fiscal 2020 first quarter. The changes discussed are based on further aligning management interests with shareholder.

Additionally, our Founder and Chairman, John Shalam has agreed to forgo his annual cash bonus. Throughout all segments we will continue with our realignment plans and SKU rationalization looking to wind down non-profitable product lines throughout the year and primarily in the first quarter.

Wherever possible our goal is to leverage shared services, reduce cost and institute lean methodologies and automation tools to drive efficiencies. It's our belief that as we exit the first half of the fiscal year VOXX will be in a much stronger position to generate more consistent profitability on an annual basis.

There also remains significant interest in our brands, products and divisions so we may look to divest certain assets this fiscal year as we have done in the past. However the price has to be right, but we are going to be more opportunistic in this regard.

While concurrently continuing to look at potential acquisitions that can help us drive sustainable growth and improved profitability. And lastly given the strength of our balance sheet and anticipated improvements to our business the Board is evaluating potentially issuing a dividend later this fiscal year.

We'd like to first implement all of the changes that are underway, see how the markets progress and other changes that may come about as part of our strategy and we'll update the market on our plans sometime in the second half of fiscal year.

At this point, I'd like to turn the call over to Mike Stoehr, our CFO who will go through some of the numbers.

Mike?.

Thanks, Pat. Good morning, everyone. Pat addressed all of the changes we've made and will be making this year. So I'll cover our fourth quarter and fiscal year results.

Highlighting some of the key year-over-year variances and close with some comments on our balance sheet, starting with the fourth quarter, which is a quarter in which we had the majority of non-cash impairment charges and restructuring expenses.

Net sales of $107.5 million declined by $14.8 million, within this Automotive segment sales were down $8.2 million with approximately $5.1 million of decline related to OEM as we had a number of vehicle launched in last year's fourth quarter and higher take rates given the current status of the domestic car market.

Aftermarket sales comprised the remainder of the decline with the biggest drop in satellite radio category as expected as more vehicles are now equipped with this feature. Premium Audio segment sales of $36.7 million were essentially in line with the prior year period down approximately $600,000.

We experienced very strong growth in the home speaker category, offset by a decline primarily in sound bars. We had planned for this as part of our SKU rationalization, removing some of the lower margin product lines. The variance and other product lines are not material on a dollar basis.

Consumer Accessories segment sales of $33.5 million declined by $6.2 million compared to Q4 of fiscal 2018, again primarily due to the SKU rationalization program. We moved a number of SKUs in the second half of the year across a number of product categories.

Additionally the reception category declined as we had a higher load-ins to one customer last year's fourth quarter, which did not repeat. We no longer will be carrying some of our home audio speaker lines now that we've combined the Premium Audio and Consumer Accessories segments again tying back to the SKU rationalization program.

International accessory sales were also down as we limited online distribution, changed our international e-commerce model and due the timing of orders which are expected to be recouped in fiscal 2020. As an offset we experienced year-over-year increases in our Singsation karaoke line and digital audio and in our project nursery product line.

Gross margins of 22.1% were down 40 basis points with the vast majority of impact related to our Consumer Accessories segment with all of the changes it took place and specifically due to higher field warehouse expenses as a result of the German transition and also inventory obsolescence.

As Pat noted in Germany we introduced our non-binding Letter of Intent to sell the Pulheim facility. We consolidated warehousing and 3PL services and moving forward we expect better performance as we're focused on specific product categories and higher margin and more sustainable product lines.

For reference Automotive segment margins declined by 100 basis points due to the timing of programs and lower sales volume and Premium Audio segment margins improved by 80 basis points. As for operating expenses, total operating expenses of $54.2 million increased $17 million year-over-year.

However $20.6 million of expenses were related to intangible impairment charges of $16 million and $4.6 million of restructuring expenses. Our core overhead excluding the impairment and restructuring was down year-over-year as a result of reduced overhead and ongoing cost control measures.

This resulted in an operating loss of $30.4 million versus an operating loss of $5.5 million in Q4 of last year, primarily due to lower sales, lower gross margin, impairment charges, severance and restructuring related expenses. I'm going to switch to our fiscal year results.

As the vast majority of the impairment and restructuring charges took place in the fourth quarter. And rather than rehash it twice, it will provide you with greater clarity on our full year performance. Net sales of $446.8 million declined by just over $60 million, with $53 million of the decline attributed to the Consumer Accessories segment.

As we're exiting lower margin and older legacy product lines, there was also a large sale in fiscal 2018 that did not repeat. Premium Audio segment sales declined by $14 million due to some discontinued products and the fact that fiscal 2018 included a number of close-out promotions.

We saw increases in our home entertainment product lines in wall and in ceiling architectural speakers for the CI channels. Automotive segment sales increased by $6.2 million, primarily due to OEM programs for rear-seat entertainment. Gross margins of 27.2% increased 110 basis points with the Premium Audio segment a key driver, up 360 basis points.

Automotive segment margins were down 50 basis points and Consumer Accessories segment margins were down 80 basis points. As you see in our Form 10-K and press release total operating expenses increased by $11.2 million.

However, backing out the non-cash intangible asset impairment charge of $25.8 million and restructuring expense of $4.6 million, total operating expenses would have declined by $19.2 million, or 12.7%.

Selling expenses declined due to cost cutting measures including lower advertising costs, headcount reduction and lower G&A, as well as lower commissions due to lower sales. G&A expenses declined due to low professional fees, bonus accruals and incentive and ongoing cost cutting efforts related to our restructuring.

Engineering and technical support expenses also decline as R&D expenses came down as we completed product development projects related to the launch of our EVO rear-seat entertainment system. Headcount is also lower year-over-year.

We had two offsetting factors, one, an increase in healthcare costs and two, an increase in R&D expense in EyeLock as we're nearing the final stages of completion with new systems soon to come in the market. With respect to other expenses, we had a $12.8 million increase year-over-year.

Interest and bank charges declined by $1.6 million as we pay down our domestic credit facility in full. Equity in income of equity investees, which relates to our investment in ASA was approximately $600,000 lower, but still very strong and consistent contributor for us.

Within other expense in fiscal year 2019, we had a $3.5 million impairment on our Venezuela properties and a $16.5 million impairment on the notes receivable of 360fly, which we discussed previously.

And in fiscal year 2018, we have other net of $7.6 million which included $8.8 million of net losses on foreign currency, of which $6.6 million related to losses on forward contracts incurred in conjunction with the sale of Hirschmann.

So in total, fiscal year 2019 included $25.8 million of non-cash impairment charges record in operating expenses, $4.6 million of restructuring expenses, which were cash expenses also recorded in operating expenses, $20.5 million in non-cash impairment charges related to the 360 note, impairment in Venezuela and a loss on investment.

These expenses recorded in other expenses. Taken together, this totals $50.4 million of expenses or charges which are not expected to repeat. That's the key takeaway, when you look at both our operating loss and net loss for the fiscal year.

In fact on an operating basis, our losses shrunk year-over-year, even with declines in our Consumer Accessories segment and all of the restructuring activities. We reduced headcount since the beginning of the fiscal year by approximately 9% and with the changes, we made in our business structure, we will be operating more efficiently.

A better measurement of our performance would be adjusted EBITDA. As this takes into account all of the adjustments. In fiscal 2018, we had a positive gain from the sale of Hirschmann, offset by the loss on forward FX contracts.

In fiscal 2019 all of the impairment and related - In fiscal 2019 all of the impairment related restructuring charges also impacted us. We reported adjusted EBITDA of $13.7 million this year versus $10.7 million in fiscal 2018, an improvement of $2.9 million or over 27%.

Lastly, our cash position improved $6.5 million year-over-year, even with the restructuring charges and increase - restructuring charges and increased $9.5 million sequentially compared to November 30, 2018. We have net no debt outstanding on our $140 million domestic credit facility and our total debt of $17.6 million as of year-end.

A $1.2 million reduction compared to fiscal year 2018. Our debt should decline more upon the completion of the sale of the Pulheim facility, further non-binding LOI, we disclose today and upon closing, our cash position will increase by approximately $10 million net of closing costs and mortgages.

Our balance sheet is very strong, and we have access to capital to implement the strategy Pat has laid out. I'll turn the call back to Pat for the closing remarks.

Pat?.

All right. Thank you, Mike. In closing, obviously, we're not pleased with the past performance or the valuation of the company. But we've not stood by idly as we continue to make the changes that we believe will result in a stronger VOXX.

Our goal is sustained profitability through the realignment, although the realignment will continue in the first and second quarters, and we are anticipating losses as a result, not the case thereafter.

We have a strong balance sheet, cash on hand and access to capital and we intend to repurchase our shares to support the stock, strengthen our value and invest in our future. I know it's - this has been a long road, and it's been equally frustrating for me personally as CEO.

With the restructuring mostly behind us and a clear path forward to alter VOXX's course, I am more confident today that we will improve profitability and returns. With that operator, we're now ready to open up the call for questions..

[Operator Instructions] And our first question comes from Brad Leonard with BML Capital Management. Please proceed..

Hello, thanks for taking my question. First, what happened on the 360fly? The last time we spoke I asked some questions about this and you guys were sounded pretty confident that the company was changing directions, you're going to take control and they had some great new products that were coming out..

Yes, they did. We did take control, but we were not able to work out what I would deem as a profitable relationship with the customers that we were talking to, and based on that we made the decision to end it..

Okay. So that leads me to the nextI guess investment that you guys are making in EyeLock and you invested $16 million in 365, which is $0.75 a share, EyeLock you've invested more like $49 million or $50 million at this point. So it's $2 a share.

What gives you any confidence that EyeLock is going to turn out any better than 360fly?.

Well, when you look at - or the way we look at it is there's no question that we're all going to be identified by our biometrics. And that's just becoming more and more prevalent. EyeLock has a very, very strong IP position around iris authentication, which is the most secure form of biometric authentication short of DNA testing.

So based on that, based on the conversations that we're having with different companies where they plan touse iris biometric in a situation of much higher security we believe that the company is in a very good position to grow based on that.

Right now EyeLock has about hundred patents, of which about 70 have been issued and there is another 30 in application, which gives - their IP is very strong and we believe that in many, many cases people will have to license if they want to use iris in other application.

The other part of EyeLock that is different, we as an electronics company have to continue to reinvent ourselves and look for businesses that have bright futures and biometrics really is one space that we see has a bright future..

Okay. So, I guess, we've heard a lot of promises about EyeLock over the last few years in the different applications, the vending machine which always seem kind of silly to me. You had some sort of a partnership with slot machines and we haven't heard everything more about that.

So it seems like this is - you have been optimistic on this in the past and we have not seen anything to come out of it, the losses were slightly reduced last year, but you're still losing $13.5 million or something like that last year down from $16 million and $18 million year before.

So what do you the losses are going to be in that division this year?.

Well basically what we're looking at is, we're looking at a ramp up of income that we get from the ViaTouch as they start to deliver their machines.

We also are expecting to introduce in June our EXT product that we believe again is a one of a kind product because it is the first iris biometric that can effectively work outdoors and the interest level that we received that shows and the interest level from prior customers who bought our NXT give us a positive feel that the EXT will help drive top line revenue and return profitability.

On top of that there are some other embedded programs that we are working on that we could see develop this year, most likely because they are with OEMs, I'm not talking car OEMs, but we have to wait until they develop the product themselves and embed and use our technology.

So we've got a number of different customers that we are working on in that type of situation. You have mentioned slot machines; you've mentioned some of the others. These programs are still in the works, we're still moving forward, we're still working on fine-tuning the technology to work within those applications..

Okay. I will take your word on all that, but I mean I don't mean to beat a dead horse in this subject, but I mean three months ago you guys were positive on the 365fly going into law enforcement and all these different things you're working on and here we are three months later and the whole thing is just shut down..

The problem that we have there is prior to our conversations we were getting commitments from major customers that they had. We did not afterwards believe that the volumes that they were committing to would support the company and based on that we made a decision. So sometimes we are operating off of information that were being received.

But we could not get that into a contract and if we couldn't get into a contract we were not going ahead..

Okay, thanks for that.

So on the buyback here, you guys have announced an increase, you had an authorization that was outstanding and I think you have 1.3 million or 1.4 million shares left is that correct?.

Yes..

So we announced this with all this kind of ugly results and bad news and write-offs and write-down and what not, we're increasing the buyback, which is great. But you had an outstanding program in place and you have not purchased shares since 2015.

So it seems to me that we're just kind of coming out saying we got this, look at this, what about this buyback and we think the shares are good value, the shares have been trading here roughly for last year and you've had a plan in place that could have been utilized and it wasn't.

So, I just - I think the Board could sit there and this is my opinion, there's no - I mean, finish the first one. I mean, there's no indication that you've been buying back any shares, or we're going to see any buyback and the stock trades at a very low valuation to assets, not to earnings, but to assets it does.

And so it just seems to me that you're trying to put lipstick on a pig a little bit and saying, hey, here's this buyback. Well, you didn't utilize the other one. So, I don't need a response on that. My last thing is….

Well, let me just say this. I mean, as I indicated, our cash position now is strong. We anticipate some of the other things that we're doing that will increase our cash position. And, I guess, we'll just wait until we have a conversation in the second quarter..

That is fine. That's fair enough. And then lastly, you have these assets, you own a lot of real estate, you have some brands that are worth something. I mean, have we thought about just liquidating this entire company, or selling the company piece by piece, liquidating the assets. Because I think the assets are worth far more than the stock price.

But how do we ever realize that if no one's going to take any action to do this? So do I think the stock might be worth $8 a share, sure, plus or minus, I don't know, maybe even more. You've got a valuable RV business. You've got a lot of owned real estate. The Klipsch business is probably worth something.

And I mean you have these assets and the stock is trading well below this.

So how do we ever realize this because as investors we have no real say, because you have a controlled shareholder, who has got voting control? So how are we ever going to realize any value for this?.

Well, I think that the plans that we have laid out as far as improving, purchasing shares, possibly doing a dividend, possibly doing an acquisition, possibly doing a divestiture, as you've indicated, these are all things on the table, these are all the things that the Board has discussed. If the right opportunity comes, we will act on it.

You've seen us acquire and divest in the past. So, we believe that with the businesses that we have, whether they be in the premium audio space or the automotive space, these businesses are healthy, the investments are the ones that are causing us to spend money to break into new categories.

And if these new categories start to improve, and really take hold, I truly believe that you're going to see that reflected in the share price, along with all the other things that we're planning on doing. So that's our position at this point..

Okay, appreciate the answer. Thank you. That's all I had..

Thank you..

Thank you. [Operator Instructions] Our next question comes from Sheldon [Grodney with Grodney [ph] Associates. Please proceed..

Good morning, everybody..

Good Morning, Sheldon..

I have to agree with much of what the last questioner was asking about. Looking over numbers from where the company is today to where it was in 2010.

I would have to estimate that the return on investments for the company has averaged zero percent for the last nine years, the equity is about the same and I don't think there has been too much leakage from dividends. So that the question does come up as to why not do an orderly liquidation to realize the values.

I just think that that's an idea that has to be considered very seriously if the assets are real..

That's - obviously that's something that we've considered all along. Again, and I'll go back to what I just indicated to Brad. Again, if some, we've been up and down as a company since 1960. Businesses changed, technology comes through, we believe that, the healthcare space is one that has great potential. We believe that biometrics has great potential.

And we believe the two programs or the two segments that we have, both in the consumer and in the automotive are stable businesses. And therefore, if we can continue to grow those businesses, although modestly, and enter into new fields where we can get top line and bottom line growth, I think you're going to see an improvement in the share price.

And I agree there is equity in the company and there's valuation there in the assets. So we look at all of it..

I'd like to add a few comments to that..

John Shalam is - would like to make the comment..

Well heard your questions and totally understand your frustration and the need to materialize better results for our stockholders and I remind all of you that as well a major shareholder personally.

And however we're really undergoing a major restructuring and a major reorganization and I personally have a lot of confidence in the next several periods of time that we're going to see good improvements happening, many of our operations are doing quite nicely and have good potential.

We do have a problem in terms of the EyeLock situation, the cash frame, we're all very well aware of that and we're confident that we'll be able to start to show some improvements in the EyeLock situation as we go forward. The question is whether to liquidate the whole company or not is an interesting one. We spend a lot of time discussing that.

I have a lot of confidence, however, in the future of this operation and I think we can materialize better results for our shareholders by continuing to operate and proceed with our restructuring plan and continue to improve our operations and benefit from the market components.

That remains to be seen that decision is always available as we go forward..

Thank you..

Okay, operator..

Thank you and our next question comes from Eric Landry with BML Capital Management. Please proceed..

Good morning. Thank you. So I just want to follow up on the prior two questions. So as far as I can see this has been a wait till next year type of commentary on these calls for a few years now.

I'd like to know has the Board determined a red line as to how long they're going to let this go before they take some sort of action like try and just monetize the assets for instance, let me just go over something here.

I mean, so on January 10th, you talked about 360fly having a pretty decent - you criticized you spoke with a number of the customers so our decisions are ongoing continue into the product you didn't talked about profitability for the company once you get a refinance. Six weeks later you decide to liquidate the thing.

So I'd just like to know - so that $0.67 that just lit on fire gone see you that's it.

So I'd just like to know is there - I mean will the Board less the value of the assets get down to I don't know $0.06, $0.05, $0.04 what is the sort of the red line that the Board has here as far as asset value?.

Well, when you look at the things that we're doing now and the initiatives that we're taking it's all about trying to drive shareholder value and trying to improve the results of the company. In the case specifically of 360 we were in negotiations with some of their major customers that allowed the company to be profitable.

However, if we were not going to get those agreements in writing okay, we had made it very, very clear that we were not going to move ahead. And the results of the negotiations were not satisfactory and therefore instead of continuing with 360 and continuing to lose money we decided that was enough.

In the case of EyeLock it's a very different story, if you look at our P&Ls EyeLock is the big drain in cash and in loss other than some of the non-cash impairment things that we're doing to adjust to the realities of the new business that we have today within our accessory group. This is not something that doesn't happen from time-to-time.

Within the electronics business you are constantly evolving new product, developing new product and existing product and legacy products continues to decline and in some cases disappear that is part of the business that we're in. Okay.

With that said, we believe that we've adjusted the overhead, we've dropped 77 people from just November and expect that we'll continue to drop some overhead to make sure that the operations that are the let's say, legacy operations remain profitable, so that we can invest in some of the future businesses that we believe can take this company down the road for the next 10 years and increase overall value.

Now, certainly as what we've done with 360. If we get to a point where we do not believe that the businesses that - or the business that's coming on any one of our categories are not going to be enough to support the business or not going to be what we thought we will make that call and we will make that adjustment.

But if we just stay in place and do not invest in the future, everything will eventually start to disappear because that is the nature of electronics..

Okay. Let's switch over to EyeLock here real quick, you mentioned on this call as well as several other calls that EyeLock has strong IP. Yet, your competitor Iris ID [ph] is already in the airports, with another competitor that's already on a phone doing some stuff in India.

What gives you the confidence that EyeLock's IP product what have you is strong enough to compete with these other players in the industry that are already on these platforms that are already out there..

One is when we compare our products to our competition, our standoff distance and speed is greater, whereas competitive on a price standpoint, as they are, and some of the businesses that we're talking to are generating as far as our embedded solutions are set to generate some very strong volume.

And that's where we believe that as these programs materialize that - and then since the embedded program is a royalty based program, the margins will be very high, and we believe we can get it to the point to where it becomes profitable.

And from there, as more and more biometrics are used, we believe that EyeLock is in a good position to take advantage of those applications..

Okay.

So when you say very strong volumes, is the vending machine one of the products that is going to drive this very strong volume?.

There are 7.7 million vending machines in the United States..

Yeah, but I mean ….

The volume levels that our partner ViaTouch is indicating to us would be very impactful to our numbers..

Is there anything that you've done on your end to set those volume numbers?.

Yes, we speak with them on a regular basis. And we know - they're ramping up. Okay. And it is as fast as they can get machines is as fast as we can see them, get them located in different locations with different companies..

So they have signed contracts in hand..

Oh, yes, they do. Oh, yes..

Okay, well, thank you..

Okay. And Eric, this is John Shalam, again. And as a follow up to your question, the Board has made the decision now, we are restructuring, we are removing costs, we may divest and we may acquire. We do intent to execute the buyback program, we are exploring a dividend. So the answer to your question, yes, the line has been drawn. Thank you, Eric..

Thank you. And this concludes our Q&A session. I'd like to turn the call back over to John Shalam, for closing remarks..

Operator, that was the closing remark. You may conclude the call. Thank you very much..

Thank you all and have a good afternoon..

Thank you..

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may disconnect. Everyone, have a great day..