BIO-key International, Inc. (NASDAQ:BKYI) Q2 2021 Earnings Conference Call August 17, 2021 10:00 AM ET

Company Participants

Kimberly Johnson - VP, Product Marketing
Michael DePasquale - Chairman and CEO
Fred Corsentino - Chief Revenue Officer
Cecilia Welch - Chief Financial Officer

Conference Call Participants

Jack Vander Aarde - Maxim Group

Operator

Good morning, ladies and gentlemen. And thank you for standing by and welcome to BIO-key International’s Second Quarter 2021 Conference Call. During management’s prepared remarks, all participants will be in a listen-only mode. Afterwards listeners will be invited to participate in a question-and-answer session. As a reminder, this conference is being recorded today, Tuesday, August 17, 2021. [Operator Instructions]

I would now like to turn the call over to Ms. Kimberly Johnson, BIO-key’s Vice President of Product. Please go ahead, ma’am.

Kimberly Johnson

Thank you, and thank you for joining our call this morning. With me on today’s call are BIO-key’s Chairman and CEO, Mike DePasquale; Chief Revenue Officer, Fred Corsentino; and our CFO, Ceci 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 or will or similar words typically identify and express forward-looking statements. Such forward-looking statements are made based on management’s beliefs and assumptions made using 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, please see Risk Factors in the company’s annual report filed on Form 10-K and in 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 today’s date. The company undertakes no obligations to revise or disclose revisions to such forward-looking statements to reflect events or circumstances that occur after today.

With that, I will turn the call over to Mike DePasquale. Mike?

Michael DePasquale

Thank you, Kim, and good morning and thanks to everyone for joining our call today. After my prepared remarks, I'll turn the call over to Fred to review some of our key initiatives followed by Kim, and then Ceci will briefly review our financial results and solid balance sheet position.

In past calls, we've discussed the favorable work and study from anywhere trends that have rapidly increased demand for the identity and access management solutions that we provide. We've also reviewed core capabilities that differentiate our solutions, including our industry-leading biometric capabilities and our support for a broad array of other identification factors that allow our solutions to easily integrate with most customers’ existing infrastructure. These factors continue to support our optimistic growth outlook.

Through the first half of 2021, our performance is showing growth in progress we envisioned, following last year's recapitalization and the strengthening of our team and our product offerings, including the acquisition of PortalGuard’s parent Company.

In particular, we are seeing strength in demand for our PortalGuard IDaaS cloud offering, including migrating existing customers, from our on-premise solutions to our cloud-based Software-as-a-Service or what we call ID-as-a-Service or IDaaS. We are also seeing strong interest in our channel alliance partner program, which Fred will touch on.

In Q2, we expanded our reach to over 55 high rated customers in the California College System and we continue to migrate other colleges and enterprises to our PortalGuard IDaaS offering. For example, Rio Hondo College selected our IDaaS platform to improve the security and user experience for its over 19,000 students, enabling them to securely and seamlessly access more than 20 of the school’s enterprise-wide applications.

Regarding BIO-key Africa, after starting initial hardware shipments in Q1 to support our large-scale ID projects in Nigeria, the reemergence of COVID-19 challenges caused a suspension of activity, impacting Q2 shipments. Though we continue to expect a reacceleration of activity in these efforts, it's very difficult to predict the exact timing with certainty though we do expect to recommence at some point in Q3 and through the remainder of 2021.

As I've mentioned on each of our recent earnings call, the challenge is balancing the equipment and services required with the availability of cash that is flowing through to our partners.

The good news is that we are now in process of receiving bank guarantees, so that BIO-key will be paid directly by the bank for what we deliver through to the partners and other service providers that are undertaking the mass enrollment and verification activities in Nigeria.

The World Bank is now pushing the funds down to the National Nigerian banks to accelerate the deployment process, much of which has been held up, because of funding. This is a seminal event because it now means we have surety of payment as the contracts evolve reducing or eliminating any risk on our part. Our managing director in Nigeria has been heavily engaged in this process over the last 30 days.

As for our financial performance in the quarter and year-to-date, we were able to increase revenue - Q2 revenue by 223% and revenue for the first six months of 2021 is up 247% versus the year ago periods. The performance keeps us on track to achieve our full year revenue guidance of $8 million to $12 million the midpoint of which would represent growth of 250% over 2020.

We continue to position BIO-key to achieve profitability within this revenue guidance range. However, that would depend on the mix of hardware and higher margin software revenues.

Given our strong balance sheet, expanding portfolio of solutions, building demand for our IDaaS cloud offering, and the substantial growth potential presented by our Africa initiatives, we made - we remain very excited regarding our prospects for the balance of this year.

Let me now pass the call to Fred to highlight a few key business development highlights.

Fred Corsentino

Thank you, Mike. As you have heard over the past several quarters, BIO-key is focused on building a sustainable, high margin, recurring revenue business that leverages our technology strength and the benefit of a Software-as-a-Service business model. We have started to see the benefit of this transition in our Q2 and six months revenue performance.

And now I'll provide an update on the key initiatives that are driving this progress. First, our channel alliance partner or CAP program continues to expand as we were able to add over 40 new partners in the first half of 2021 bringing our total to over 100.

We expect this program would substantially expand our sales and marketing reach on a global basis to be a key part of our long-term growth, particularly, as it cost-effectively expands our reach into new customers, new verticals and geographies.

Earlier this year, we expanded the program beyond system integrators and value-added resellers to include managed service providers, MSPs and managed security service providers MSSPs as they provide an ideal fit with our sales and marketing objectives. So we had less than 100k of revenue derived from this emerging program in Q2 2021.

We have built a pipeline of $1.6 million of opportunities targeted for the second half of 2021. This includes anticipated revenue from a new agreement with a large Silicon Valley-based IT distributor that we expect to commence in Q3. As we work to further expand the scope of this core program, we expect to provide further updates on our progress.

Turning to our cloud-based PortalGuard solution launched in Q4, which we call PortalGuard IDaaS or Identity-as-a-Service. We are very encouraged by its progress as most customer prospects are interested in having their new IT investments in asset light infrastructure with low upfront cost.

We continue to see strong demand for PortalGuard IDaaS, particularly in high education and certain enterprise markets that are grappling with security challenges related to the sudden increase in remote access demands for critical data and applications from outside the enterprise firewall.

Our attractively priced cloud IAM solution support a wide variety of multi-factor authentication options, including BIO-key’s core biometric and patented capabilities. Approximately, 10% of about 200 active PortalGuard on-premises’ customers have been migrated to our cloud solution and we expect this penetration to steadily increase in coming quarters, building a base of more predictable recurring revenue software subscription revenue.

Innovation and new product development remain a core element of our growth strategy and during the second quarter, we launched our mobile app, BIO-key MobileAuth with PalmPositive, a touchless palm scanning technology for IOS and Android mobile devices.

This easy-to-use app requires no specialized hardware as it utilizes the device’s camera to offer fast registration and enrollment while providing a very secure biometric factor to enable single sign on solutions that streamline logins.

We plan to add other biometric modalities such as facial authentication and voice recognition to expand biometric and multi-factor authentication options.

In Q2, MobileAuth was selected as the Winner of the 2021 Technology Innovation Award for Biometrics by Lucintel, a premier market research and management consulting firm. MobileAuth builds upon our substantial biometric offerings and PalmPositive adds a touchless biometric capability to the 16 authentication factors already supported by our PortalGuard platform.

We also introduced our SSO Concierge product, which eliminates passwords of sick client applications or applications that run from the client side with security is dependent on the local server, and we were awarded the eighteenth patent for continuous biometric authentication further expanding our IP library and providing another new method of authentication.

Continuous biometric authentication is somewhat similar to behavioral recognition as it uses continuous biometric readings for more robust, ongoing authentication versus a single point of time typically at the start of the computing session. We are excited about these next-generation capabilities and continue to focus on developing solutions that deliver great value to our customers and drive our continued top-line growth.

Now, I'll turn the call back to Kim Johnson to review some recent customer wins and other marketing-related updates.

Kimberly Johnson

Great. Thank you, Fred. As Mike mentioned, we had several significant customer announcements in Q2. We added another large outsourced call center customer to implement biometric authentication with a 500 user pilot that could grow to 20,000 users. We increased our footprint in higher education to over 55 colleges within the foundation for California Community Colleges System with the addition of Mendocino College as a new customer.

The Rio Hondo College IT team selected PortalGuard in Q2, as well to improve their end-user experience by streamlining access to critical applications using PortalGuard’s single sign on capabilities, while also having the flexibility in security from the wide variety of multi-factor authentication options that our systems provide.

As Fred mentioned, we are also focused on migrating existing PortalGuard customers to our IDaaS software model. We are increasing our direct customer communications to drive such IDaaS migrations, and have already seen at least five migrations due to this direct outreach including Barstow Community College and Southeastern Illinois College.

We will be working to expand our IDaaS penetration in coming quarters. The benefit of the IDaaS solution is that it allows customers to move their IT off-premise and benefits from the reduced resources required to host and maintain a system. For BIO-key, it creates a new recurring revenue stream that will provide greater predictability to our business as the program builds.

In Q2, we added two technical associates to further expand our customer services team and support future growth in the business. We hired our first dedicated business development representative for lead development and we executed several lead generation campaigns, which included multiple webinars, including a PortalGuard IDaaS virtual demo and we were a proud sponsor for the EDUCAUSE Cybersecurity showcase in order to build our brand visibility before key customer prospects.

We also hosted our first CAP program quarterly update webinar to our valued channel partners to increase awareness around BIO-key and our solutions.

In addition to webinars, we continue to create content such as the state of multi-factor authentication custom survey and Ebook and a SAML single sign-on Ebook, both released in Q2. We continue to optimize the ROI of our marketing efforts with defined quarterly goals and analysis. These efforts keep us focused on driving new business, customer retention and brand awareness.

Our cyber-focused, public relations partner, Matters Communications continued to help build our brand recognition and credibility in the market by securing coverage in several publications during the second quarter. Through these initiatives, we believe we are making solid progress and positioning BIO-key for further growth and success.

At this time, I will hand off the call to CC Welch for a review of BIO-key’s financial performance.

Cecilia Welch

Thank you, Kim. Q2 2021 revenue increased $658,000 or 223% to $922,000 from $307,000 in Q2 2020. The increase is primarily attributable to the $632,000 increase in license fee revenue, which included revenue from the PistolStar, PortalGuard acquisition that closed on June 30, 2020 and therefore, it did not impact the year ago second quarter results.

The prior year period was also somewhat negatively impacted by Covid-19 disruptions at the beginning of the pandemic.

For the first six months of 2021, revenue increased 247% to $2.9 million from $830,000 in the first six months of 2020. Q2 2021 gross profit increased to $753,000 from $159,000 in Q2 2020 principally, reflecting an increase in higher margin license revenues, as well as an improved gross margin.

Gross margin increased to 76% in Q2 2021, as compared to 52% in Q2 2020 as license fees comprised of much larger proportion of revenue in the current year period.

For the first six months of 2021, gross profit grew 237% to $1.9 million from $557,000, primarily due to the revenue growth.

Operating expenses increased 22% to $1.9 million in Q2 2021from $1.5 million in Q2 2020, which was significantly lower than the growth in revenue. This increase in expenses is attributable to higher product development and engineering costs, as well as higher SG&A costs reflecting continued investments in sales and marketing and customer service, along with the inclusion of the PortalGuard operations in BIO-key’s results.

BIO-key reported a reduced net loss available to common stockholders of $1.2 million or $0.15 per share in Q2 2021, compared to a net loss of $1.6 million or $0.60 per share in Q2 2020.

In the first six months of 2021, BIO-key’s net loss to stockholders improved 60% to $2 million from $5.1 million during the first six months of 2021. Weighted average basic shares outstanding were approximately 7.8 million for Q2 2021 and the first six months of 2021, which compares to 2.6 million and 2.3 million for Q2 2020 and the first six months of 2020 respectively, with the increase primarily reflecting the shares issued in the company's successful fundraising in July 2020.

We ended 2021 with current assets of $17.3 million including $11.5 million of cash and cash equivalents and no debt outstanding. This compares to current assets of $2.3 million and $2.7 million of notes payable outstanding at the end of Q2 2020, again, reflecting the July 2020 recapitalization.

We've also invested about $3.8 million in net working capital through the first six months of 2021, primarily in inventory and prepaid inventory as we prepare for the increased business volumes and manage through potential supply chain issues.

With that, we can now turn the call back to the operator for investor questions.

Question-And-Answer Session

Operator

Thank you. [Operator Instructions] And the first question will come from Jack Vander Aarde with Maxim Group. Please go ahead.

Jack Vander Aarde

Great. Good morning, guys. Appreciate the quarterly updates. Just a couple questions for me. I'll start with a question for Michael on the Africa contracts. In some of your comments that you mentioned in your prepared remarks.

First, can you provide – can you revisit what you said - restate what you said and then, provide some additional color regarding your comments in terms of the change of how you are now being paid. It sounds like payments are more of a guarantee now with the World Bank and how you're being paid.

Just, what has changed with that relationship exactly? I didn't quite catch that. And then, what does that mean going forward if we assume we move beyond COVID?

Michael DePasquale

Yes. Good morning, Jack, and thank you. I can add perhaps a little more color around that. Fundamentally, what I said was that, the reason - one of the reasons, right? Obviously, there has been COVID-related issues and that kind of thing that played literally every country around the globe.

But, one of the other challenges is and has been that getting the money from the central repository down to the vendors at the street level that are actually doing the work, meaning that are enrolling and creating the verification ecosystem has been slow.

In fact, so slow that the World bank has stepped in and has put in place a system such that the local or national banks in Nigeria can now do equipment and service financing directly to the vendors so that they can get the process moving.

Because only $60 million of the entire population has been enrolled to-date and there was a plan that originally said by the end of 2021, 80 plus percent of the population would be enrolled in this system, which is a couple hundred million people.

So in order to remedy that and really start to get things moving, now there is a process in place that will guarantee, for example, BIO-key is a vendor and there are other vendors, but guaranteed BIO-key payment for the products and the services that we provide directly from the bank. So, vendors like BIO-key will get more aggressive in ensuring we have, for example, the inventory where we have the resources on the ground to be able to support these programs.

Jack Vander Aarde

Yes. And then, just a follow-up to that, does this mean the dynamic you are kind of the chicken or egg kind of scenario you had before in terms of like you don't want to ship hardware without being paid. Does this now expedite?

Or does that – does this remove that friction altogether? And now the only bottleneck to your hardware shipments are just the fact that the country is kind of re-closing down a bit or being more strict because of this delta variant?

Michael DePasquale

Absolutely. It absolutely means that. And compounding the financial scenario that I just described was of course, the chip shortage. So, getting products has been challenging across the globe in virtually every industry in every sector within technology. But this absolutely alleviates that scenario, because we'll now be more comfortable.

And as you can see, when you look at our financials, we do have a reasonable or, I'll call it sizable inventory of product ready to turn into shipment, into revenue and obviously into cash in the coming months. So we're in a really good position in that regard. And having the capital to be able to do that, especially at this time was really critical for us and I think it's going to serve us well going forward.

Jack Vander Aarde

Great. I appreciate the color there. And then, maybe just one more on the Africa contracts. In the first quarter, just looking into the 10-Qs, the first quarter you had hardware sales over - almost $685,000. Looking at the second quarter here, you didn't have hardware shipments to Africa. You did generate - it looks like licensees fees within Africa of almost $250,000.

Is this related to – or is this not related to those two contracts? Or is this tied to that initial hardware you delivered there and this is the license revenue that's associated with that first quarter hardware deployment?

Michael DePasquale

I don't believe that license revenue was associated with Africa. CC maybe you could opine, but I believe that was licensed revenue associated with our PortalGuard business. And our, biometric business as well, our international biometric business.

So, the Africa, for example, we have a large customer in South Africa, Capitec Bank that has purchased well over 7 million or 9 million user licenses from us for a bank verification identification – identification and verification project.

So, the revenue associated with that perhaps might have been through the South African opportunity, but not the Nigerian or the Nigerian contracts that we have.

Jack Vander Aarde

Yes, that’s exactly right. Yes.

Michael DePasquale

Yes.

Jack Vander Aarde

Okay, great. Now, I appreciate the, clarity. Just curious there. And then, just switching gears, maybe a question for Fred, on the channel alliance program. Can you just remind me again of what you mentioned the revenue contribution was during - in the quarter? I think it was small, but just so I have as a baseline.

And then, if we assume you reach your target number of channel alliance partners, how much revenue would you expect to generate on an annual basis?

I know it's just the near term target, as well, but just – so what was the revenue in the quarter from the channel alliance? And then, what's your target if you add all your targets?

Fred Corsentino

Yes, as we said, I think that it was less than a 100k. So, it was close to the less than $100,000 last quarter. And we will see a growing percentage our revenue and that will go on a ramp over the course of the remaining year and into next year and as we highlighted in the statements, we recently signed on with a new distributor and are onboarding and training right now.

And you'll see some information about that shortly. But that will dramatically increase the number of partners. So I don't have total handle on that yet, but that won’t be a dramatic increase in the number of partners. So, probably more information to come on that if that progresses.

Jack Vander Aarde

Okay. Great. I appreciate the color there. And then, just one more question for anyone, maybe Michael, in terms of the guidance, you maintained your guidance of $8 million to $12 million for the year for revenue. Just wondering, is there any more color you can provide in terms of - that's a wide range, but just can you remind us, again, what factors are embedded in that guidance?

And why you remain confident that you are going to hit that target? What needs to happen business as usual or is there anything - is there any aggressive targets baked into that? Thank you.

Michael DePasquale

Well, I think – I think there are three things. Fred just described the CAP program and the partner acceleration that we expect in the second half. It's always been planned for the second half. And so, we're encouraged that that's going to help us and contribute to significantly to our growth. That’s number one.

Number two, we discussed Africa, obviously, with the guarantees and the finance flowing, which makes us feel pretty comfortable that we are going to achieve our objectives there. And then, just in general, the growth and the migration to the cloud increases our ARR and increases our revenue for each installed base customer.

So, that's another factor that we expect to contribute to our growth. So, all around blended, we feel really good about growth in the second half and expect to achieve our objectives. And hey, whether we can overachieve our objectives? Obviously, if things really fall into place, that may happen. But we're comfortable staying with the guidance we have right now.

Jack Vander Aarde

Okay. Great. I appreciate the time guys. I am going to hop back in queue. Thanks.

Operator

The next question will come from Richard Arnold, investor. Please go ahead.

Unidentified Analyst

This is Richard Arnold. I appreciate the opportunity to speak to you. I am impressed by the domestic side. My concern is totally in Africa. And I have really a three-part question. As the $680,000 that was billed in the first quarter been paid.

Secondly, what part of the $8 million to $12 million projection and I understand that $8 million was in the previous conference, a breakeven point, what part of the $8 million to $12 million is dependent on Africa?

And then, thirdly, the prepaid expenses and investment went up by $3 million, which would account for the decrease in cash. What part of that was sent to Africa, as well? I am concerned about Africa, since that represents a big shot for the company to improve. Thanks.

Michael DePasquale

Great. So, let me knock down the questions, one-by-one. The first was the payment from the first quarter shipments. That's in process right now. And again, with the change in the - I’ll call it process again, with the change in the payment process where the banks are going to pay us directly, we expect to see that cash very shortly. So that's the first.

The second is, you mentioned the inventory levels or cash reduction, i.e. turned into inventory levels. Obviously, a portion of that is clearly related to our Africa contract. But we're very careful not to get too far ahead of ourselves. But on the other hand, we had to take advantage of the opportunity to get equipment with the chip shortages and the difficulty in that most manufacturers are having right now, we wanted to be sure that we got ahead of the curve.

The third component, or second component of that inventory position is our traditional products. We are working on some new and innovative technology that we are going to introduce in the second half. And so, there is some money associated with that development, as well. So, I think that addresses the inventory question.

The other question you had was around our guidance and how much of that is related to Africa? Well, if you look at the last two quarters for example, and look at our PortalGuard business just in general at a steady state, if we didn't grow the business at all, it would represent probably about five – and our biometric business, probably represent about $5 million to $6 million independent of Africa.

So, as you can see in our guidance, we don't have a tremendous reliance on Africa although clearly, we do see significant, significant upside as the projects begin to roll out, because remember, there is tens of millions of dollars in opportunity there, not just - not just millions or single-digit millions. So, I hope that answers your question, as well.

Unidentified Analyst

It does. I don't think it answers the question, if you look at the stock this morning, at least the last I saw it, it doesn't represent the confidence in what we are projecting. But I try to be confident and I try to be positive and I hope you do well. Thank you for answering my questions.

Michael DePasquale

Thank you, Richard.

Operator

[Operator Instructions] Our next question will come from Dan Pamus [Ph] with investor. Please go ahead.

Unidentified Analyst

Hi guys. It sounded like from your initial comments, the bank guarantees are not a done deal. Is that correct?

Michael DePasquale

Yes, they are.

Unidentified Analyst

There is no other barriers you have to get over to actually get the guarantees?

Michael DePasquale

There is always barriers in Africa.

Unidentified Analyst

So, what does that mean, that they're done, but there is still barriers?

Michael DePasquale

No, no. I am being a little precocious there. I mean, again, their - that process is in place, it's in place and ready to go. So, that's the latest we have. We monitor this on a - almost on a daily basis. And that's the situation. But I'm precocious about there is always something in Africa, as Richard mentioned, the confidence in being able to deploy such a significant program is challenging. But the funding is there.

The requirement is there, especially again given that in order to really get the country, especially in Nigeria, out of the doldrums. And to begin to build an ecosystem that could put people to work and can create an economy outside of the government.

This is the only option. So, it's a challenging business. But for those of us who - I believe this. I very, very strongly believe this. For those of us who have invested and hang in here, there is going to be significant reward.

Unidentified Analyst

Okay. Can you say how much of the - I don't know if it's $45 million or $75 million in contracts will get guaranteed.

Michael DePasquale

I think it will be iterative. So, as things get deployed, obviously, our goal is deploying all of the initial hardware right, to get things moving. And I think it'll be iterative over time. We're not going to get that as I mentioned to Richard, we are not going to get too far ahead of ourselves.

We know we have to have the inventory in order to be able to immediately ship it. On the other hand, we don't want to be committing to huge amounts of product, if in fact the payment is going to be there. So, it's a balancing act. But the contracts are still of the magnitude that we discussed. Clearly, if they get fully deployed, it could represent near $100 million in business.

You will also see some as I mentioned before, you'll see some additional products that we're going to be introducing in the second half that will also have a significant impact on the revenue opportunity in Africa going forward.

Unidentified Analyst

Okay. Well, the last question on this. So will you at least, for 2021 or the next twelve months or something, get guarantees for the $4 million in inventory you've accumulated?

Michael DePasquale

We believe so.

Unidentified Analyst

On the continuous biometric user authentication patent, a few years ago, there seem to be a lot of buzz about in-screen fingerprint sensors, but to my knowledge, they haven't come to fruition and I don't think are there issues with the technology? And are you going to be able to monetize that patent going forward tangibly?

Michael DePasquale

Well, two things. In-screen fingerprint sensors, you are right, there was a very aggressive move at one point to get them embedded, in particular in mobile devices. And we haven't seen much innovation around that area recently. But the continuous biometric patent is not just associated with fingerprint scanners.

So, keep in mind that continuous authentication across, perhaps facial biometric read or a behavioral biometric read can also apply to that patent. So, it has a broader use and a broader perspective beyond just fingerprint scanners.

Unidentified Analyst

Okay. I got a question on the National Identity Management Commission. They've been putting out releases touting the increases of ten million users in the last four months and increase of enrollment centers to 3800 and what not? They have some - they tout this much awaited android enrollment system is now ready for deployment. Does that have anything to do with your system? Or is that something else?

Michael DePasquale

No, absolutely does. We are very focused. So they are touting again up to 60 million enrollees with - which is again only 20%, 25% of the total required enrollment over time. The centers that are set up are set up in the larger cities. Our vendors, the partners we're working with are very, very focused on mobile enrollment. And if you look at our Pocket10 fingerprint scanner, it's very, very small device that does 4 4 2 scanning.

And it's a device that is low power very, very portable. And in order to get the country truly enrolled, there have to be mobile center set up and you have to actually go to the people to get them enrolled. And that's what we're very, very focused. So the majority of the enrollments are going to take place in a mobile venue over time, because it's going to be out in the remote areas that collecting that data and getting those people enrolled is going to be critical.

And then the verification services that are going to be provided above and beyond the initial enrollment create a whole new level of opportunity for us where - for example we'll be creating that was the whole initiative around creating one million new jobs within the Nigeria ecosystem for payments, payment processing, financial services. So that's where all of this comes together. It is a huge, huge opportunity.

And the end game also for us beyond providing the hardware is providing the identity management ecosystem, the software and the service, our IDaaS is perfect for remote authentication on these mobile devices. All of these mobile POS devices will have fingerprint capability, as well as cameras and barcode capability, all of those things. They'll have printers.

So that's where the real, I’ll call it, I'll solid, high, high margin recurring revenue will come. And that will follow the initial equipment deployments, the enrollments, and then ultimately the verification services.

Unidentified Analyst

The thing I am not sure about is, they were touting that these 60 million users each have about three to four SIM cards and that's covers all the mobile devices in the country. So I thought they were well on their way. So I am a little confused about, is it SIM cards or is it the actual people that they are trying to get covered or both - just a little confused because it's…

Michael DePasquale

No don't be - don't be – no, don’t be confused. It’s individuals. It's individuals. So it's citizens. That has nothing to do with SIM cards. It's individuals. It's people.

Unidentified Analyst

Alright. That's all. I'll go back in the queue. Let's see if anybody has got anymore questions. Thank you very much.

Michael DePasquale

You're welcome.

Operator

[Operator Instructions] The next question will come from Frank [Indiscernible] Associates. Please go ahead.

Unidentified Analyst

Good morning, Michael, and nice to chat with you. And thank you for the up-to-date. I don't know if you're aware, but I've been - still called gambler since 1961. You should know there is someone on the telephone call today who is trying to get the stock down to zero. You understand what I mean by that right?

Michael DePasquale

I am not so sure, but…

Unidentified Analyst

But you should do Michael, if you want to care for the shareholders, what you should do is call the SEC and tell them that there is someone fictitiously trying to destroy the company.

Michael DePasquale

Okay. We'll certainly look into that.

Operator

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Mike DePasquale for any closing remarks. Please go ahead sir.

Michael DePasquale

I just want to thank everyone for participating in today’s call. We look forward to updating you on our third quarter call, which will likely be in November. As always, we’ll continue to provide interim news and updates in the mean time. Also, we plan to present at the Lytham Partners Fall Investor Conference, a virtual event held in the first week of October. We will put those details out when we have them.

Again, thank you all for your time today.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.