Jason Holloway: Sure. No problem. Hey, Scott, how are you doing? So, as we stated on the call, we – we did – we did host this event and what we’ve been doing over the time that we’ve been working with K-12, we’ve gotten – we have a number of pilots that are active. We’ve gotten a lot of significant feedback from them in terms of how to make the deployment of our identity and access management solution a whole lot easier for them. So what we did is, we went into a development project and came out with soft search. So that this way we’re going more digital on the student side, so that – that way we’re not issuing a lot of the smart cards that have the – the chip that’s inserted. So they wanted more of a digital solution because they are handing out a lot of the Chrome, the Chrome workbooks and tablets and things like that.
So we did go in successfully develop that. And then the second thing we did is for the IT group and the teachers and all of the other staff members, they didn’t really want to have the smart cards plugged into the dongles that go into the side of their laptops. They wanted to be able to walk around freely and potentially jump from machine to machine. So what we’re doing now as part of the pilot program is we’ve gone to a Bluetooth reader in which you can insert that smart card credential what we call the PIV-I for them, and that gives them that capability of wirelessly connecting to these various machines. We’re using it in house at Y point successfully now, and that’s going well. And then – and then overall strategically what we’ve been doing is we are – we are positioning ourselves inside of K-12 to get more at the legislative level so that we can get – we can be a part of a bigger cyber security or security spending budget for these schools, so – and in order to do that we’ve been having to get the feedback from the K-12 schools, so that we can meet certain criteria so that we can be elevated and take advantage of again a lot of these state program to where we don’t have to go and deal with individual budgets of K-12 schools.
So hopefully this helps a little bit.
Scott Buck: That’s – that’s great color. I appreciate that. And then just last one from me. Jin, if you could kind of walk us through what your M&A criteria is, what are you looking for in a transaction?
Jin Kang: Well, we are looking for companies that are either horizontal and vertical integration opportunities, companies that – in terms of horizontal, we’re looking for companies that do the same thing that we do. Stable companies that do the same thing that we do and we can move them onto our delivery platform and we remove the redundancies to make the deal immediately accretive. We’re also looking for those companies that have specific intellectual properties or capabilities that’s going to deepen our capabilities and increase our depth of service. But, we are going to be concentrating more on organic growth and we’re not going to spend too much time looking around for these out of the blue M&A opportunities, because I think it’s critically important for us now that we are turning the corner here that we concentrate on organic growth.
But we’re not going to say no if somebody shows up with the right profile of a company that adds depth to our company or adds breadth of customers to our company as well. Just to allow – enhance what Jason had said about K-12, we do have several pilot programs going and we now have the capability for mass issuance to make the whole process of issuing digital certificates easier and more convenient. And he also talked – he already talked about the Bluetooth that’s going to make the form factor much more palatable for the K-12 community. And so we see a lot of good things happening there. We’ll be rolling out the Bluetooth capability here in the next week or so and we’ll see what kind of acceptance we get.
Scott Buck: Perfect. I appreciate the time guys. Thank you very much.
Jin Kang: Great. Thank you, Scott. I think we did receive an email question earlier. So, Bob, did you want to discuss that about gross margins.
Robert George: May need your help.
Jin Kang: Yes.
Robert George: Okay. The email question was during the call you noted that your gross margin percentage excluding carrier services revenues was 35% in the nine month period in 2022 and 34% in the nine months of 2023, what is driving the apparent margin compression? Good question. The recent gross margin excluding the carrier services is approximately 100 basis points lower in 2023 compared to the nine months in 2022, it’s a result of the increased noncash depreciation and amortization expenses in that period. The increase is a result of our investments in our delivered platforms being placed in the service during 2023 and the D&A and cost of sales for the nine months ended was $961,000 and $1.5 million in the nine months ended 2023.
This represents the entire difference in the 100 basis points of decreased margin. Including this item, cash margins are consistent from ’22 and are higher or – on higher revenues excluding care services. Also I’d like to highlight that we are have no debt other than long term leases, which are offset by right to use asset, as the accounting standards require. That’s all I have on that.
Jin Kang: Okay, great. Thank you. Operator, are there other questions?
Operator: There were no other questions at this time. This concludes our question and answer session. If your question was not taken, please contact WidePoint’s IR team at wyy@gateway-grp.com. I’d now like to turn the call back over to Mr. Jing Kang for his closing remarks.
Jin Kang: Thank you, operator. We appreciate everyone taking the time to join us today. As the operator mentioned if there were any questions that we did not address today, please contact our IR team. You can find their full contact information at the bottom of today’s earnings release. Thank you again and have a great evening.
Operator: Thank you for joining us today for WidePoint’s Third Quarter 2023 Conference Call. [Operator Closing Remarks].
