Ladies and gentlemen, thank you for standing by, and welcome to the VOXX International’s Earnings Call. At this time, all participants are in a listen-only mode. Please be advised that today’s conference is being recorded. [Operator Instructions]I would now hand the conference over to your speaker today, Glenn Wiener, with Investor Relations..

Thank you, Carmen. Good morning, and welcome to VOXX International’s fiscal 2020 third quarter results conference call. I’m here in Las Vegas with our Chairman, John Shalam; and Pat Lavelle, President and Chief Executive Officer.

Today marks day four of the Consumer Electronic Show and if you haven’t already, I encourage everyone to visit the news release section of our IR website to view our product and partnership announcements, many of which will be discussed in today’s call.

You can also view our earnings release, updated Investor Presentation and Form 10-Q on the IR side.Michael Stoehr, Senior Vice President and Chief Financial Officer of VOXX is also on the line, dialing in from New York.

I like to remind everyone that except for historical information contained herein, statements made on today’s call and webcast that would constitute forward-looking statement are based on currently available information. The company assumes no responsibility to update any such forward-looking statements.

And I’d like to point you to the risk factors associated with our business, which are detailed in our Form 10-K for the period ended February 28, 2019.I like to thank you all for your continued interest in VOXX.

If anyone has any follow-up questions, by all means, please feel free to reach out to me after the call, and at this time, I’d like to turn the call over to Pat Lavelle.

Pat?.

Thank you, Glenn. Good morning, everyone, and let me start by wishing you all a Happy New Year. As Glenn mentioned, we’re here at CES and like past years the meetings we’ve had at the show and the reception to the new products introduced has been very strong.

There were also new partnerships unveiled and others that are in work, which hold great promise for the future.As for our results in our progress year-to-date, it’s somewhat mixed. On the positive side, the restructuring initiatives we’ve executed have worked resulting in the lower spending and far greater efficiencies throughout the company.

Our consumer electronics segment backed by the continued strength of our premium audio product lines delivered 9.6 million of pre-tax profit, a 4 million increase when comparing the three-month periods.Our Biometrics segment had 1.4 million reduction in pre-tax loss is 2.8 million, compared to 4.2 million for the comparable three-month period, a trend we believe will continue as new program starts and others are finalized.

With respect to automotive, we anticipated lower OEM sales coming in for the fiscal year due to lower projected car sales and certain end-of-life programs.We expected to offset a significant portion with the start of new programs that unfortunately did not materialize, due to delayed vehicle launches and program implementations.

This should improve as we move into the first and second quarter of fiscal 2021. Additionally, the segment was modestly profitable in the third quarter and year-to-date, but the lower segment results have impacted our consolidated numbers.Long-term, we see our OEM business growing significantly.

This is based on being selected as a tier 1 supplier for rear-seat entertainment with one of the big three U.S. automakers. Last quarter, I announced an award of approximately 275 million over five years with a projected launch of September 2021.

We also have new business coming online with Ford and Nissan in fiscal 2021 and anticipate meaningful new awards within the near-term based on programs we have bid on.One of the more exciting developments fueling our optimism is our new partnership with Amazon to bring the Fire TV to the automotive market.

Amazon recognizes our market leadership in vehicle entertainment and has chosen VOXX to be their domestic systems integrator.

Together, we will deliver solutions and services that can significantly accelerate the development cycle for OEMs in bringing the Fire TV experience to the car.As announced, we will initially be working with FCA, one of the larger global automakers in making this a reality with more OEMs anticipated as we get closer to commercialization.

This is a very positive development for our automotive business as we bring more streaming content into the vehicle, which enhances the consumer experience and drives customer satisfaction for the OEMs.Another exciting development is a crossover between our automotive group and the biometric segment.

This week, we announced a collaboration agreement between EyeLock and SiriusXM.

On display and in our booth and throughout Las Vegas was the first prototype of a SiriusXM e-Wallet that leverages EyeLock’s proprietary iris biometric authentication and e-Wallet was introduced last year at CES by Sirius and Visa.With this new agreement, EyeLock will provide the iris biometric touchless gateway that enables drivers and their passengers to use e-Wallet, while on the go and make purchases in the car.

The EyeLock solution will activate and authenticate a payment through voice and touchscreen commands granting enrolled users secure access to the e-Wallet with passenger authentication taking place in under one second.In my meetings with the SiriusXM team this week, they expressed that the reception thus far has been excellent.

We also entered into an exclusive license agreement with Save-Our-Loved-Ones or SOLO, the developers of a patented device to prevent pediatric heatstroke in the hot vehicles.

With the growing number of deaths and current legislation that is gaining steam in congress for the auto industry to address this problem, we believe the device we’ve demonstrated is an affordable and effective solution.We will be following up in the weeks ahead with demonstrations in DC with Congressional sponsors of the Bill and around the country with our OEM customers.

We also had a number of after-market announcements at CES.

We expanded our advanced driver assistant programs and introduce the new Gentex mirror with streaming video capability and HomeLink connect, which allows for the programming of cloud-based home automation devices that can be controlled from the car.Also, within the ADAS category, we announced a new partnership with motion intelligence, an emerging leader in driver distraction prevention technology and VOXX will be distributing the motion intelligent app-based product to car dealers, fleets, and traditional retail specialists.Motion intelligence is the only distracted driving device that can detect cell phones, unauthorized computers or road devices and will eliminate texting and e-mail, while allowing for navigation and phone service while a vehicle is in motion.

This product can have huge safety implications, and as with our security products, we are in discussions with insurance companies to incentivize the utilization of this technology.

We expect to launch in the first quarter of this coming year.ASA, our 50-50 joint venture that is reported under other, had a down quarter compared to the prior year, due to a few factors that Mike will address. However, their inventory position is clean.

They have completed their tariff mitigation plan to reset pricing, which will result in more historical margins moving forward, and ASA is coming off their highest revenue in the company's history.

We expect revenue to continue to improve and with better margins profitability should as well.Within our Consumer Electronics segment, we’re continuing to gain traction in the sales of premium mobility, wireless and Bluetooth speakers and the prior launches of soundbars and our wireless earbuds have contributed to that success.

New distribution partners for our premium custom installation speaker products have also led to stronger sales, a trend we believe will continue.This year at CES, our focus was on the personal audio and soundbar markets, growth categories that represent the way people consume media today.

Our new product assortment with advanced technologies like True Wireless, active noise cancellation, and Dolby Atmos immersive sound will reflect this as will the new line of headphones, which we will be launching through a partnership with McLaren Racing, which is now the official headphone and portable audio partner of the McLaren Formula 1 team.Some of the other products to call out were – that where debut at the show, a quick showcase to new lineup of True Wireless and over-ear headphones with active noise cancellation technology and the next evolution of True Wireless smart earphones; the Klipsch T10 and T5.

The T10 is significantly smaller and lighter than other True Wireless earphones in the market and will be available this fall.

The T5 smart earphones also available in the fall were designed with an optimized signal boost antenna to improve Bluetooth connectivity and the travel case will hold up to an additional 24 hours of battery lives.We introduced three new soundbars, major upgrades from the prior line and similar in look to our acclaimed Reference speakers.

The Klipsch Bar 54 with Dolby Atmos works with Google Assistant, Apple AirPlay 2, and Amazon Alexa.

The Klipsch Bar 48 with Dolby Atmos, which could be paired wirelessly with up to three additional Klipsch speakers for a 5.1 surround sound quality and the Klipsch Bar 44, the smallest in the series that provides a 3.1 sound experience and features Dolby Digital Plus enhanced audio coding and Bluetooth connectivity.The first two speakers will be available this fall and the Bar 44 will launch this summer.

Within our accessories line-up, we introduced Qi charging radios and clocks that will simultaneously charge cell phones, new sensation products and a 360-degree Bluetooth speaker with charging called the Grip.

All launch releases can be viewed on our website.At this time, I'd like to turn the call over to Mike, who will go through the numbers and then we’ll come back with a few closing comments and open it up for questions.

Michael?.

Thanks, Pat. Good morning everyone. Fiscal 2020 third quarter net sales were down $19.5 million, compared to last year's third quarter. Our Automotive Electronics segment was the primary driver, down $15.1 million with the OEM business comprising the majority for the reasons Pat discussed.

Aftermarket product sales were down modestly and virtually flat, excluding satellite radio fulfilment sales.Sales in our Consumer Electronics segment declined by $4 million, compared to fiscal 2019 third quarter, primarily due to SKU rationalization programs and lower sales in Europe.

This was partially offset by growth in reception product and wearables as we added a distribution of Fitbit and the new Apple products for the UHC Motion program.Klipsch continued to build momentum and the newest product launches for soundbars and wireless earbuds are contributing to growth.

Additionally, new distribution partners for the customer store marketplace favorably impacted sales.

The Biometrics segment reported a 300,000 decline in net sales, primarily due to product mix as we sold more higher dollar Hbox products in last year's third quarter and many of the programs we are working on have not contributed to P&L yet.Gross margins for fiscal 2020 third quarter were 28.6%, down 140 basis points.

The decline was mostly attributable to our Automotive Electronics segment, which was down 540 basis points, due to OEM sales decline, which impacted the absorption of fixed overhead costs.

Aftermarket headrest product sales also declined, which typically generate higher margins for the segment.There were two other factors contributing to automotive – lower automotive margins. One, tariffs; and two a business partner investment payment that was made in the third quarter in anticipation of a future OEM program.

This program is expected to positively impact margins in the latter part of the next fiscal year.The Consumer Electronics segment had a 30-basis point improvement year-over-year for the third quarter, driven by higher sales of premium audio products.

The increase was partially offset by the impact of tariffs, as well as lower European sales and higher European warehouse costs.The Biometrics segment had negative gross margins due to product set to customers for testing at no charge.

The year-over-year decline was primarily due to the sale of certain inventory in fiscal 2019, which was previously written off and contributed to higher margins in fiscal 2019 third quarter, as well as higher sales of licensing fees in the prior year, which earned higher margins for this segment.

Additionally, the fiscal 2020 third quarter included certain tooling and defective repair costs.Total operating expenses of $31.3 million in fiscal 2020 third quarter declined by $1.9 million year-over-year.

Selling expenses declined by approximately $800,000, principally due to headcount reduction as part of our restructuring, lower commissions, and lower advertising costs and display amortization expenses.G&A expenses increased by approximately $200,000.

Note, however, we had a reimbursement of 1 million in fiscal 2019 third quarter from a favorable lawsuit, and excluding this one-time event, G&A expenses would have been down 800,000 for the comparable quarters.Engineering and technical support expenses declined by 1.3 million, again principally due to headcount reductions associated with the restructuring.

We also have lower R&D expenses as several projects were completed and we transferred some of the work that was done by outside contractors in-house.

We are continuing to lower fixed expenses and looking at areas where we can reduce our spend further without impacting our operations.We reported other income of 4 million, compared to other income of approximately 800,000 in last year's third quarter, a $3.2 million increase.

Interest and bank charges declined by approximately 400,000 as we suspended our domestic supply chain financing in the second quarter of fiscal 2020 resulting in lower fees.Equity and income of equity investees declined by approximately $700,000. There were three events, which led to lower income.

One, the initial impact of the tariff duties; two, an increase in warranty costs; and three, a product recall expense. As Pat mentioned, profitability is anticipated to increase at ASA.Additionally, we recorded a 4.1 million gain on the sale of our Pulheim, Germany real estate.

On September 30, 2019, we sold this property with net proceeds of 9.5 million after transactional costs and the repayment of our outstanding mortgage.

Concurrent with the sale, we entered into an operating lease arrangement with the purchaser for a small portion of the property as we are continuing to operate a sales office in Germany.Lastly, other net declined by approximately $600,000 as we had a charge of $800,000 related to the final settlement of the working capital adjustment from our sale of Hirschmann.

We reported operating income of approximately $100,000 as compared to $5.7 million and pre-tax income of $4.1 million as compared to $6.5 million, a decline of $2.4 million.For the quarter, we had a tax provision of 66.6% or $2.7 million versus a tax benefit of $4.1 million last year, a $6.8 million swing.

Our net income after non-controlling interest was $2.5 million or $0.10 a share. Impacting our tax provision is a U.S.

taxation of foreign earnings, non-deductibility of permanent differences, non-controlling interest related to EyeLock LLC, an increase in valuation allowance, state and local taxes, and income tax in foreign jurisdiction at various tax rates.This resulted in net income of $1.4 million and net income attributable to VOXX of $2.5 million when taking to account our non-controlling interest in EyeLock in the fiscal 2020 third quarter.

This compares to net income of $10.6 million, and income attributable to VOXX of $12.2 million in a comparable year ago period.Lastly, we reported adjusted EBITDA of $6 million versus $11.6 million for fiscal 2020 and fiscal 2019 third quarters, respectively.

Taking into account the impact to the gain on the German real estate, stock-based compensation, and the final settlement of working capital adjustment associated with the Hirschmann sale.Moving on to the balance sheet. Cash and cash equivalents as of November 30, 2019 was 32.2 million, compared to 39.3 million as of August 31, 2019.

The cash usage is principally based on seasonal working capital needs, stock repurchases and the repayment of debt. As noted in our Form 10-Q, we had temporarily suspended our domestic supply chain financing programs as we do not need the funding.

Had we used the program, our cash balance as of November 30 would have been approximately $15 million higher. We expect improvements in quarter four.The sale of our Pulheim real estate was completed in fiscal 2020 third quarter and other mortgages and expense. We had available 9.5 million.

We used a portion of this to lower our European debt outstanding and pay accrued German-related severance cost.

Our total debt position stood at 8.4 million as of November 30, down from 17.6 million as of February 28, 2019.We had no balance on our 140 million domestic credit facility and overall our balance sheet continues to be strong, provides us with the flexibility needed to execute on our share repurchase program, fund operations and carry to our plan as Pat discussed.We entered into a 10b-5 program as recommended by the shareholders on the second quarter call.

We set up a small program to – as this was new to the company, we will hold in renewing until we are out of the quiet period with no material transactions, but do intend to continue to support the stock.I'll turn the call back over to Pat for closing comments.

Pat?.

Right. Thank you, Mike. To recap, although this year has declined in revenues, primarily in our OEM business and there is no doubt alarming, our Automotive segments is coming off a strong year.

Unfortunately, the length of time to develop and launch OEM products is long and getting longer and we are not in control of vehicle launch dates.This year it may seem like a setback, but with the selection of VOXX Automotive as a Tier-1 supplier to one of the big three U.S.

automakers, and the new collaboration with Amazon to develop an automotive rated Fire TV experience this year may end up being the most transformative as we fully expect to win new programs and new awards based on these developments.Within our Consumer Electronics segment, Klipsch has performed well and we expect to continue to lead the market in premium loudspeakers.

And we'll also grow in the Custom Installation market with the new partnerships created this past year.

Additionally, with the success we've had with our sound bars and true wireless, we have the momentum to continue to expand our market share at retail in personal and home theater products.We are seeing increased sales from our market leading reception products and expect continued growth of our wearable products in the healthcare space, with the addition of Fitbit and the new Apple products, which were recently added to our line.

The Biometrics segment has not lived up to expectations and we know that.However, we continue to have meaningful realistic engagement development and testing with a number of companies for our embedded solutions in healthcare, gaming, automotive and computing. Any one of them having the ability to bring EyeLock's to profitability.

We expect our perimeter access sales to improve, now the testing for our new EXT and the new revision of NXT is complete. And we will continue to work to bring these opportunities to completion.Overall, we have lowered overhead and will be innovative to bring expenses down automating systems and ops wherever possible.

We have instituted a new 10b-5 program for the authorized repurchase of shares, as well as suggested on our last call and have modified the C-suite comp programs to be aligned with shareholders and focused incentives on the appreciation of our company's valuation.To clear up any confusion in my particular case, the bulk of my incentive compensation is triggered by $15 share price.

We will continue to explore current divestitures and acquisitions that may improve, any one of our segments’ profitability.

And finally, our plan for this year includes actively marketing VOXX's story, as some of our initiatives and opportunities materialize, they will be catalyst for our shareholders.So, with that, I will open the call for questions..

Thank you. [Operator Instructions] We have a question from the line of Brad Leonard from BML Capital Management..

Hello. Thanks for taking the question.

On the Auto announcements, this – if I can get to Fire TV announcement with Amazon and you've got this SiriusXM give me – what's the timeframe and the potential dollars involved in something like that?.

We announced last quarter that the program that we won was FCA was approximately $275 million over a five-year period and that's, part of the Amazon program. We anticipate, we have bid on additional business in excess of $300 million.

I cannot say that we were well with it, but we are confident with the position we are right now.So, we believe that this collaboration with Amazon, where we actually bring whatever you watch at home into your car is something that is going to help grow the market.

The response that we've gotten at the show has been excellent, we've had a number of different car manufacturers that we do not do business with that have come in and expressed interest.Now, expressed interest, turning that into sale will take some time, but we're confident that this new collaboration will bring additional business to the Automotive Group.

Most likely, as you can see the first program will start in September of 2021, it may be as early as July. So, there is a lag time between the award and the development of product and the delivery of product to generate revenue..

Okay. So, on – two more questions on that.

Of the $275 million five-year contract, how much of that is, I mean, guaranteed?.

Well, when you become – nothing is guaranteed, but we are on the vehicles as the production system. So, as they sell more and more vehicles we will – the sales will reflect that..

Okay.

So, it could be a five-year, $100 million deal?.

It could be..

People don't like – if they don't order the rear seat entertainment and they just decide to put a tablet in their kids' hands, then it'd be a much smaller contract?.

That's possible, but based on what we're seeing and based on the content that will be coming in these programs are primarily – rear-seat program is really not for a teenager, and yes, we know that teenagers in many cases like to use their own device.

These programs are really designed for kids that are tied into baby seats, you know, a one-year-old to five-year-old, to keep them entertained. But as the content improves, we expect to see more of a take rate due to the fact of the richer content..

Okay.

And then on the Fire TV, are you guys the exclusive provider of this Fire TV? Or could somebody else come in and get a deal with Fire TV and Amazon?.

We are exclusive with the ones that the OEMs that have selected with us. There was an announcement the other day that Amazon is also working with Garmin and BMW, but that's primarily a European operation..

Okay.

And what about the SiriusXM announcement? What is the dollar figures on this, the timeline?.

Well, you know, this could be – this is the potential of EyeLock. EyeLock business could be very explosive from this standpoint. This is a program that SiriusXM being the supplier that they are and the importance that they are to the OEMs. This is an e-Wallet program.

If any one of the car manufacturers select to have the e-Wallet program in their vehicle, let's say Cadillac, and they decide to put this e-Wallet across their entire line, we then would be on every vehicle that's produced because [with the] authentication process.So, from that standpoint, depending on the number of people that work with Sirius on a program like this, it could be very explosive in terms of revenue and in terms of profitability, and from what – the confidence we have coming out of the show was the responses that we were seeing to the system as prospective customers were being driven around town with the system in the car, pulling up to gas pumps, putting gas in, driving away and everything being built seamlessly.

So, the response that we have received from the Sirius people was very, very positive..

Okay.

And where is the authentication embedded? Is it in the mirror?.

It could be in the mirror, it could be in the visor, wherever the OEM would choose..

Okay. And I have one more question on auto, then I’ll move to EyeLock.

What about the – this refundable payment to customer in the auto segment that it was mentioned in the press release and the 10-Q?.

Yes, this is part of the program to get established as a business partner and this is something that we would – you know based on where we are, and based on the finances of the program, you know, this would be reimbursed at some point through the business that we have established with them..

What if you don't win the business?.

We've won the business. We've gotten the POs [already]..

Okay. Alright. Onto EyeLock, last quarter you mentioned the healthcare program..

Yes..

I didn't hear anything about that follow up..

Health program, this is – we are in testing and validation at this particular point. There are machines that are being produced that we will have to put our product into to demonstrate everything is working properly. We believe that will be the case. And then, we expect this to move along to production..

Okay.

What's the status of the vending machines?.

They are out now delivering machines and we are on those machines. And again, there are a number of test programs that they are doing with one very large retailer that so far of the tests, have gone very well, and you're talking about thousands of machines. They win that business; it's going to be very positive for the EyeLock Group..

Okay. I mean you realize that I think investors are a bit skeptical on the EyeLock. We've heard a lot of stuff about EyeLock over the years and they’re still sitting here with basically zero revenue and $2 million, $3 million in losses on a quarterly basis. So, I will….

Your frustration and the frustration of the shareholders is no less greater than ours.

We expected this business – we expected this business to materialize sooner than it has, but at this particular point with who we're working with and the volume that those companies can generate, it gives us the confidence level that iris biometrics, not just ours, but iris biometrics will become the selected authentication process, because one, of its higher security than facial; and two, it does not have the political problems associated with facial where we are now starting to see pushback because of the privacy issues.

The iris program is an opt-in program. So, it's not something that you could be monitoring anywhere..

Okay.

So, how long – how much longer do you expect to see losses? Or how much longer do you – are you going to tolerate the losses in EyeLock?.

It will depend on winning and getting the approval to move ahead. We – any one of the programs that we're working with, whether it be in healthcare, automotive, any one of them will bring EyeLock to profitability and depending on what we’re hearing and what we're seeing from those customers that we're working with we’ll formulate our decision..

Okay. Okay. So, a couple other things here, strategic actions, I guess I'll call them, what are the plans for any major strategic actions? I mean we're sitting here nine months later from when I think John said on the call, your line has been drawn in the sand and the stock price is pretty much where it was.

Have you taken some actions to sell off some divisions if one of them fell through? What are the plans for looking at something larger to create value? I mean you've said many times in the past, you think you can sell Klipsch for more than you pay for it. If that's the case that’s significantly above the current stock price.

Your ASA business while it didn't have a very good quarter here, it seems like those things are probably more one-time in nature than not..

Right..

Either one of those businesses would – a sale of them would, I think, dramatically increase the value of the company. Now, you might be less with less of a profitable business going forward in some of those divisions, but they might need to be divested as well.

So, what’s the appetite from John, who’s I believe on the call, and the Board? It really doesn’t matter with the Board.

John’s the decision-maker, I think ultimately of, you know, selling off one of these bigger assets that likely holds the most value?.

Well, this is an interesting subject and we spend a lot of time thinking about that and reviewing our strategies, but realistically, many of these operations are becoming exciting, have tremendous potential, and could become very profitable, and to just divest one of them like Klipsch, for example, would weaken the rest of the structure at this moment.

So, we have to review and we’re open to all discussions. There are a lot of things going on that come up all the time, and we’re well aware of the situation and we’re keeping in mind what would be the best possible outlook in the long-term..

Okay, fair enough. And then lastly on your investor outreach program, my personal opinion is this is a waste of time. I mean the performance of the business is going to improve the stock price and the value of the company in going out and pitching it to investors without putting better numbers is just a waste of time.

So, that's my two sense on that, and those are all my questions..

Well, our game plan, Brad – our game plan there is, is as we introduce and as we have the positive news to report, we're going to market that story because some of the business that we have is long term in nature, but you know, we can extrapolate what that means to us on a go-forward basis and that's where – you know that's where we think it would make sense for us, especially if we win contracts where we're going to be embedded into much bigger company’s product.

That's a story to talk about. Even if that situation is a year from now or 18 months from now..

Okay, fair enough. Thank you..

Okay. Thank you, Brad..

Thank you. [Operator Instructions] And we have a question from Eric Landry with BML Capital. Please go ahead..

Good morning, thanks for taking my follow-up..

Good morning..

I have a follow-up on the EyeLock discussion.

So, EyeLock inventory went from [300,000] to over 3 million in the quarters, anything you can say about where that inventory is going? Or what is the plan with that inventory, it seems like quite an increase?.

The inventory was originally held at VOXX and the inventory is moved back to EyeLock, that inventory, we are working on a program in India, where we expect that a portion of that product to be disposed of..

Be disposed of or sold?.

Sold. Profitably sold..

Okay, good. Okay.

Also, the Q mentioned a cancellation of an auto program is that, was that in the quarter that it got cancelled?.

No....

Is it a [indiscernible]?.

No, no, no, no, it's not a cancellation of the program.

It was an adjustment by one of our car manufacturers to use our remote start products on keyed vehicles only, not push to start vehicles and that had impacted the overall sales of that, but we – nothing was cancelled, it's just a different number of vehicles that we're going to be on, it has impacted sales negatively, but we remain in very good stead.

In fact, we had won their golden supply award from this maker of this past year..

Okay, alright.

You mentioned that EyeLock, if any one of the programs that it's working on now hits fingers and toes crossed that EyeLock would become breakeven to profitable, does that include the Vicki vending machine program?.

If Vicki was to hit some of the numbers that they are projected, yes..

Okay. Alright, well, like I said fingers and toes crossed because as you know….

I totally understand. I fully understand, you know everybody’s skepticism, but not everyone is aware and having the conversations with the different companies that we are having. The companies of the size that we are working with not be spending the time or money to bring a technology like this to market. If they weren't serious.

Now, that being said, that doesn't necessarily mean it's a 100%. That's what gives us the level of confidence that one of these programs will get finalized and will start generating meaningful revenue..

I'm sorry, what gives you the confidence, Pat?.

The fact that the larger companies we're working with in this space are working hard to bring the technology to market..

Okay..

So, if they weren't serious, I would understand everybody's skepticism, but we see it from a different standpoint because we're working with them..

Got you. Okay. Yeah.

Excuse me, you mentioned to me just recently here India with regards to the EyeLock inventory, I think I read that India was working with another iris company I think that's been in the press, correct?.

India has a very, very active Iris program and that they use iris for a lot of authentication. I believe they even use it for their so-security system. They have iris already.

The issue is that there are iris programs that we see are clunky, out of date, and do not have the speed of recognition and imaging that ours does and therefore, we believe we have an opportunity there as do others..

Okay. I got you. And finally, on the on the e-Wallet, you mentioned for an example of Cadillac, so if Cadillac were to decide to do this, they would put this on an entire line of vehicles, for instance, the escalated – every escalate…yeah, go ahead..

Yes, but let me make this perfectly clear. I mean, I've only used the Cadillac as an example. Okay..

No, I understand..

Anyone of the car manufacturers that would choose to use e-Wallet most likely this program if the OEM community deems it a program that they have to have most likely will start like most of their other popular options, which started in the higher-end vehicles.

And if you're going to have an e-Wallet program in many cases you would make it stand along a particular trim level and in that case, we would be in every one of those vehicles.The potential for it to proliferate into other cars and other vehicles and other car manufacturers based on the implementation of one large one is it would be very, very possible and is a very normal course of action within the Automotive space..

But the operative word that you said was it is an option; it will be in a trim level that could be selected it's not just standard. Yeah..

If you look back on putting a modem in the vehicle, which gives you cellular connection into the car and originally it was an option and now most of the high-end vehicles. It's standard. So, that's the way the market works..

Okay, so you said that the authentication could come either on something on the visor or the mirror, as I understand it, if it's a Gentex mirror, Gentex already has a partnership with another iris company doesn't it?.

Yes, they do..

Okay.

So, how would that work if it's in the mirror like on the video?.

Gentex, is not the only manufacturer of mirrors and depending on how the OEM wants to work we don't have to be in the mirror there are so many other places where we can have our screen and everything that it doesn't necessarily have to be in the mirror, mirror is a good spot, but it's not the only spot in the vehicle..

Right.

It seems to me to be the best spot just off the top of my head, but...?.

The instrument cluster is another very good spot for it because the standoff distance that we have with our product is greater than any one of the Iris systems that are out there. So, being in the instrument cluster would not be an issue for us..

Okay. But I just want to sort of clear up.

I mean, Gentex, is by far the dominant mirror supplier, as far as I understand and so if it is in the mirror, it's not going to be in EyeLock hardware algorithm or not?.

No, that's not necessarily the case. In many cases, we could be a [directed source] because of the technology that we have, which we believe is superior because of our standoff distance. So, it’s not necessarily that if it's in the mirror it belongs to any one company.

And again, it's going to be the decision of the manufacturer as to where they would want to have the Iris images and stuff like that..

Okay. Alright. Well, again a good luck, and let's – I hope something comes to fruition here. Thank you for taking my call..

Yes, thank you..

Thank you. And our next question is from [Craig Stover]. Please go ahead, sir..

Yes, thanks for taking my call.

Yes, I think it’s a more detail on this 10b-5 filing, like what's the, what's been filed with the timeline number of shares to be a purchase?.

Mike, do you want to?.

It was filed – the program ends on January 14 that we filed for 200,000 shares..

So, why only 200,000 shares when you're authorized for 2.4 million? I mean, the last call, the way it was kind of misled that is a great, you had 3 million shares to repurchase authorized and we plan to move ahead and purchase when the window opens to us [indiscernible] 200,000 shares that’s nothing.

Why only 200,000 shares, why not 2 million? Share price is low?.

No, we want to try the program out to see how it work. It was the first time that we have done it..

But you don't need to utilize, you can buy 30,000 to 40,000 shares a day..

No, you can't, and that's the problem is that – in many cases we enter into quiet periods based on whether or not we're reporting our numbers, but whether or not we have anything that's material going on in the way of an acquisition, in the way of a divestiture, so suggested on our last call that to get around those issues, maybe we should consider to look at a 10b-5 program that would allow us to continue to purchase even though we may be in a quiet period, so long as we set it up, when we were not in a quiet period.So, what the financial team had done this past quarter was look to see how a program like that would work and we started with a small program, but that does not necessarily mean that it would stay that way..

Alright, so this program ends – what you say, January 14, that's January 14, 2020?.

Yes..

Alright.

So, do you have a plan to initiate another program and for more shares?.

I think as I stated in our – we stated in our remarks, as long as we're able to do it we can look at it..

Look at it or are we committed to buy..

Excuse me Mike. That would not prevent us from in an open period from stepping in and buying.

The 10b-5 program was specifically set up to get around the issue of periods of times where we may want to buy the shares and continue to buy the shares when we were closed and could not that does not mean that in an open period that we could decide based on whatever the share price is to buy additional shares..

I understand that. I'm just saying, as a shareholder, it's very disappointing that's all the shares you bought. I mean, that's not very many shares in that period. So, hopefully, you've got more confidence in the stock.

With all these positive things going on to take out some of these – support the price of the shares in the higher stock market in history and we’re languishing down here [in the fours]. That's all I have to say..

Thank you. And this concludes our Q&A session for today. I will turn it back to management for any further remarks..

Operator, we didn't end the Q&A session. So, if anybody has any further questions, please open up the queue..

Okay. [Operator Instructions] Sir, I'm not showing any further questions in the queue..

Okay. Alright, if there are no further questions, I want to thank you all, again wish you all a Happy New Year and look forward to be reporting on some of these new projects and these new initiatives that will come out of this show. Thank you. Have a good day..

And thank you ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a wonderful day..