Greetings and welcome to Intellicheck's Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Mr. Gar Jackson. Thank you. You may begin.

Thank you, operator. Good afternoon and thank you for joining us today for the Intellicheck second quarter 2019 earnings call. Before we get started, I will take a few minutes to read the forward-looking statements. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. When used in this conference call words such as will, believe, expect, anticipate, encourage and similar expressions as they relate to the company or its management, as well as assumptions made by an information currently available to the company's management identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs about future events. As with any projection or forecasts, they are inherently susceptible to uncertainty and changes in circumstances. And the company undertakes no obligation to, and expressly disclaims any obligation to update or altered forward-looking statements whether resulting from changes, new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained under the headings of Safe Harbor statement and risk factors listed from time-to-time in the company's filings with the Securities and Exchange Commission. Statements made on today's call or as of today, August 1, 2019. Management will use the financial term adjusted EBITDA in today's call. Please refer to the company's press release issued this afternoon for further definition, reconciliation and contacts for the use of this term. We will begin today's call with Bryan Lewis, Intellicheck's Chief Executive Officer; and then Bill White, Intellicheck's Chief Financial Officer, who will discuss the Q2 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to one hour and I will now turn the call over to Bryan.

Thank you, Gar. Good afternoon, everyone and thank you for joining us for the Intellicheck Q2 2019 earnings call. As you can see for the numbers, the changes we put in place over the past year are making a difference and we continue to March towards the goals we've set for ourselves for 2019. Identity theft is not going away and we believe that we are well positioned to capitalize on stopping fraud and reducing the sales of age restricted products to the under age. Our SaaS revenue was up 79%, over Q2 2018 and was a 30% sequential increase from our Q1 2019 numbers. One-time revenue was up this quarter, because as I have previously said, we no longer do custom development for free. In Q2, we received the second payment for the completion of the development work for the bank we signed in Q3 of last year, which for clarity, I will call bank 3 going forward, since I've been asked to give names to the banks we assigned to help people keep better track of the progress we are making with each of them. I believe growth numbers like these demonstrates that we are a very different company today than in February of 2018, when I joined. On today's call, I'm going to focus on 4 major changes that I've made since joining the company just over a year ago that I believe have led to the growth we are seeing. I reset where we are focusing our resources, how and who we sell, how we price the products, and finally how we implement? First, we identified financial services specifically for the purpose of stopping identity theft, as our primary target market that we believe would be the fastest route to revenue and profitability. The is now our main focus. This does not mean we are not devoting effort to age restricted products in law enforcement, just the percentage of time and the resources devoted to each has been rebalanced. Identity theft is a massive pain point for financial institutions. According to Javelin strategy and research 14.4 million Americans had their identity stolen in 2018 at a cost of $14.7 billion. Add to this the estimated $6 billion, banks lose to synthetic identity theft and you can see why banks would be looking for a simple, frictionless way to combat this theft. The ability for thieves stealing identity is not going away. The data is already out there on the dark web to do so. And the data breaches just keep coming. 2018 saw a 120% increase in the amount of personally identifiable information breached over 2017. This year breaches continue at a record pace with the first quarter of 2019 seeing a 56% increase in a number of reported breaches and a 29% increase in the number of exposed records, compared to the first quarter of 2018. And just this week, we saw the data of 100 million people exposed at Capital One. I myself had been part of 5 sets of package data sales this year. It isn't a question of if, but rather when for most of us. The data is so plentiful, it has become ridiculously cheap. A social security number cost $1 on the dark web, a driver's license information is $20. All the deep needs now is an authentic looking driver's license with their face and your information and they are ready to go shopping posing as you stealing your identity to open new credit card accounts where you don't have an account and posing as you pretend you have forgotten your credit cards, where you do have credit and what is known as cards not present transactions. Think how simple, this crime is to pull off. It seems as if every time I make a purchase, the sales clerk asked me if I want to open an account. If you say yes, they ask for 3 things, social security number, income and a driver's license. If you say you forgot your credit card, they usually ask for even less. The last word, your social security number and your driver's license. All this can be bought online for less than $200. The irony is that the most expensive part of this package is a fake ID. And the stakes are good. So good that over 55 law enforcement agencies use our products, because even their most trained and seasoned officers can't spot them. So what chance to store clerk have? None without authentication software. Another change is now in place is how we sell and who we sell to. Whereas previously, we've been mostly trying to sell to retailers, we now focus on banks. Why? Because the banks, who issued the white label or private label credit cards typically take the hit for fraudulent accounts. And this amount isn't trivial. We asked several of our clients how much the average loss per fraudulent account opening is, and it is staggering. For department stores, it was $2,100, for tool and equipment stores, it was just over $2,500, for furniture stores just over $2,900 and finally for jewelry stores just over $3,500 each time. When you consider we stop a fraudulent transaction on average every 90 seconds. You can see how quickly the losses add up, and why they like our frictionless and easy to integrate solution. We also began to sell with data. We know how often we stop fraud for each of our retailers and now how often it happens by retailer type. When we combine this with the average loss reported to us, we have a pretty accurate idea of what we save for a prospect. This gave us the confidence to stand much firmer on pricing. As we analyze the data on fraud stopped, and with our new focus on banks, we changed how we priced our retail ID product. In the past, we priced it on a per store model with a flat fee for each store with a product was installed. We did not feel this was adequately compensating Intellicheck for the value we brought to the table. So for the most part, we have moved to a per scan model. This model made much more sense as the banks are used to a transactional model, and it allowed us to be more fairly compensated for the return on investment we were bringing. We structured the pricing model to count all scans from every client a bank brings on-board. This pricing is tiered in trenches and the price per tranche goes down as total monthly scan volume goes up. This incentivizes the banks to bring more clients on-board. Since their margin costs of stopping fraud goes down as a number of retailers using the system increases. Driven by the data presented in our focus sales process, I am pleased to say the changes have led us to closing deals and bringing on additional banks and retailers. The final and critical change to enable us to capitalize on these opportunities was to improve the processes and professionalization of our implementation team. I felt, we were too reactionary. And the reporting lines of the people cash with implementation were split between sales and development. This meant, there was a lack of accountability and no single person I could point to get things done. As a result, we wanted distinct team reporting to build light. And whereas before we were reactionary, now we are proactive and lead the process. Each implementation gets a little faster and easier and this new structure led by Bill's working much more efficiently. So what did we achieve with these changes? Let's start with an overview of the banks we have signed. So far, we have four of the top 10 banks' customers. I've received feedback from some shareholders that it's sometimes difficult to determine what bank I'm talking about. Since confidentiality agreements prohibit us from naming them. As I mentioned earlier, I will now refer to them by number. Bank number one is the smallest of our bank clients in terms of credit cards issued. They are however, a fantastic reference client, who will speak with any prospect we have regarding the accuracy of retail ID and the reduction in fraud. We are currently working with their innovations team on new projects within the bank. And I am happy to say they recently reported to us that they team tested 277 takes against our system, and we caught all 277. Bank number two is our longest standing client and had a tremendous legacy deal with us in terms of pricing for them. Even with a fantastic deal though, I saw that they had not brought live any new retail clients in at least 2 years before I started. In addition, they hosted our technology, which was cumbersome for us as it meant sending updates to the software, we used to catch fakes. Their contract was up for renewal last year and I was steadfast that we would not renew at their low per store pricing. We successfully negotiated a new agreement that migrated them to our SaaS web service model hosted by Intellicheck and also move them to the per scan model. Since that renewal and the reestablishment of the relationship, they have brought us 11 new retailers. 4 have gone live so far, and the rest of various deployment dates running through Q1 2020. Bank number three was signed in Q3 2018. This is a testament to the effectiveness of changing how we sell. This was a prospect that the company had been trying to sell to through a third-party and it begun nowhere for over a year. We decided it was best for us to engage the bank directly to sell our products. Within six months, we signed them as a client. Also under the new per scan pricing model. This also represented another first it was the first major engagement where we charged for custom development. This bank wanted it that spoke process and they paid for. Half last year and as I said earlier happened Q2. They are now live and it started paying us monthly SaaS revenues and are working with our implementation teams to bring their 4 largest retailers by volume live, in addition to their retail branches. Bank number four was even faster from a sales cycle perspective. The first use case for this bank within their call centers. If you see their commercials on TV and decide you want their credit card and call them to apply. The final step in the process is a text sent to the applicant's phone. This text is a derivative of our retail ID technology that uses a camera on a customer's phones to scan and authenticate the driver's license. From discussions to contract for what was to be a 60-day pilot took about 30 days. And 30 days into the pilot, they were so impressed it went to full rollout across the call centers. They now have over 4,500 call center personnel using Intellicheck's authentication technology. In addition to the call center, they recently signed a statement of work with us to deploy our technology at their retail branches and with their merchant channel. Integration for the branches is underway and they brought to us 2 of their largest retailers to start using retail ID. One of these large retailers is already in a very successful pilot, and the other is doing integration work for an upcoming pilot. I'm very excited about an upcoming meeting with this bank to discuss additional ways we can partner together with them. Our newest financial services partner is an online bank, we will call bank number five. This account was sold in conjunction with applied recognition. One of our facial recognition partners as a bank wanted a two part authentication. As a part of the online account opening process with this bank, the first step is Intellicheck technology authenticating the driver's license. And if it passes, our partner's facial recognition technology matches the face to the picture on the license. We're not sure how large this opportunity will become, but it proves that combined technology works, and we believe it will lead to future revenues and new opportunities. The speed at which we can install clients' is proof that the new implementation team is working. Having a single person to point my finger at namely Bill sitting here next to me has brought the accountability and leadership we needed. To speak to the difference of the before and after. In 2018, we did integrations with 3 retailers. So far in 2019, we did integrations with banks 2, 3, 4 and 5, as well as seven integrations with retailers and a visitor management system. Currently in Q4 implementations through Q1 2020. We have 12 retailers, 3 retail bank branch systems, and an automotive dealership management system. That brings us to look at some of the retailers we brought live this quarter. For the purposes of this part of our discussion today I'm focusing on 4 major retailers with an extensive retail footprint. One of the stores, we brought online is a leading sporting goods chain. This Midwest based discount store chain has more than 200 locations largely in the South to Midwest. Many of you likely are familiar with its store product selections that include clothing, shoes and equipment for almost any sport or outdoor activity. We also went live with an East Coast based chain of home focused merchandise retail stores that include more than 1,500 locations, including its subsidiaries. No doubt, many of you have visited one of their stores focused on kitchen, bath and other home products. A leading beauty retail chain store company went live this quarter as well. Focused on beauty, cosmetics and personal care products, their reach includes over 400 stores in the Americas. Another leading U.S. national retailer that went live with us is an outdoor gear and apparel retailer with over 200 locations across the U.S. As you can see, these are powerful results that speak to the reality that we are not the same company as we were in February 2018. To further highlight how different we are. We recently had in-bound calls from a major online bank and a traditional brick and mortar back. Both told us that they were at an industry roundtable run by the Aramia Group, a payments and leading advisory group. At this roundtable, these 2 banks spoke of their fraud problems. They both told us numerous attendees said call Intellicheck. Like I've been saying over the past year, the market is coming our way. Another key element to measure growth are scan volumes. So we're going to look at percentage changes. Since we had no visibility into the scan volumes of bank 2, when they were hosting the software absolute numbers would not make much sense to report on at this time. As I said earlier bank 2 has transitioned to our SaaS hosted solution and a paper scan model. And going forward we intend to disclose those scan numbers. But I can tell you right now is the total scan volumes for financial services were up 13% sequentially comparing Q2 2019 to Q1 2019. This compared to a 9% sequential increase Q2 2018 versus Q1 2018. And there was an 8% year-over-year increase comparing Q2 2019 versus Q2 2018. Well, I spent much of the time speaking about the financial services vertical, I do not want to downplay the age restricted product market. We continue to make great headway here. In Q2, we on-boarded 86 new clients, 4 which were law enforcement agencies. This represents a 10% increase in sales over Q1. If legislation changes, where the pressure to curb team basing motivates one of the large chains being targeted by the Food and Drug Administration and makes them decide to do the socially responsible thing this vertical could explode. Much discussion has been going on in DC regarding raising the age of tobacco products. I met with most of the legislators proposing these changes and have asked that they include ID authentication in their bills. I've been very clear about what will happen, if they don't, because the change will have no cheat. I remind them, that we raised the age for alcohol from 18 to 21 back in 1980. Yet the CDC reports 11% of all alcohol consumed is by under aged kids. In the meantime, it is a great business for us to be and because a law enforcement validation, which provides tremendous credibility to our financial services prospects. So what can you take away from what you've heard here today? Our changes are working. We're making headway in financial services. For the top 10 banks for just the private label credit cards alone, we estimate the total addressable market could be $180 million to $250 million annual SaaS revenue opportunity overtime. And our clients are now looking beyond private label credit cards and to put our technology in the bank branches and on their mobile apps. And even more importantly want to partner with us to see where else is very effective authentication solution can be used. I believe we are just scratching the surface. We are not the same company. And I think all of us at Intellicheck couldn't be more excited about that and what is yet to come. I will now turn it over to Bill White to discuss the financials.

Thank you, Bryan. In a good day to our shareholders guests and listeners. I'd like to discuss some of the financial information that was contained in our press release for the second quarter ending June 30, 2019, which we released this afternoon. I'll begin with the second quarter results. Revenue for the second quarter ended June 30, 2019 grew 57% to 1,558,000 verses 1,001,000 for the same period last year. Our SaaS revenue was approximately 1,121,000 for Q2 2019, 79% increase from the 625,000, we posted in Q2 of 2018. And was a 30% sequential increase from approximately 861,000 in Q1 2019. Our gross profit as a percentage of revenue was 85.9% for the quarter ended June 30, 2019, compared to 91.8% for the quarter ended to 30, 2018. Operating expenses that consists of selling, general and administrative and research and development expenses increased 10% or 196,000 to 2,259,000 versus 2,063,000. This increase was primarily driven by an increase in development personnel and annual bonus plan, which is contingent upon achieving certain goals established by the Board of Directors and compensation committee. The company close to the net loss of 874,000 for the 3 months ended June 30, 2019, compared to a net loss of 1,100,000 for the quarter ended to 30, 2018. The net loss per diluted share was $0.06 versus $0.07 in the prior year. Adjusted EBITDA for the quarter ended June 30, 2019 was negative 785,000, compared to a negative 1,018,000 in the quarter ended do 30, 2018. Interest and other income were negligible for the quarter's ending June 30, 2019 and June 30, 2018. Now, I'd like to focus on the company's liquidity and capital resources. As of June 30, 2019, the company had cash of $3.1 million working capital to find those current assets minus current liabilities of $2.9 million. Total assets of $13.4 million and stockholders' equity of $11.5 million. During the 6 months ended June 30, 2019, the company's net cash of $1.3 million, compared to a net cash use of $1.5 million during the 6 months ended June 30, 2018. Net cash used in operating activities was $1.6 million for the 6 months ended June 30, 2019, compared to 2.1 million for the same period in 2018. Net cash provided by investing activities was 14,000 for the second quarter of 2019, compared to net cash used in investing activities of 107,000 for the 6 month period ended June 30, 2018. And we generated cash of 268,000 from financing activities for the 6 months ended June 30, 2019, compared to 688,000 for the same period last year. On February 6, 2019, the company entered into a revolving credit facility with Citibank. This agreement allows for maximum borrowings of $2 million secured by collateral accounts and bears interest at Citibank's base rate minus 2%. As of today, there are no amounts outstanding under this facility. We currently anticipate their available cash, as well as expected cash from operations and available under the revolving credit facility will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months. At December 31, 2018, we had a net operating loss carry-forward of approximately $15 million. I'll now turn the call over to the operator to take your questions. Operator?

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from Mike Grondahl with Northland Capital Markets. Please proceed with your question.

Yes. Thanks, guys and congratulations on the progress. The first question it sounds like the pipeline or the backlog is got like 12 retailers in it. Three bank branch systems and kind of an auto DMS system. I guess that's not really the pipeline. That's what's on track to be implemented. Is that how you think about that?

Yes. That's exactly the way you look at it, Mike. Those are people that have committed to coming onto the system, it's just a matter of where they are in the implementation queue. Some are in active development, some are beginning to roll out and some are saying this is something that we have resources allocated for on January 1, 2020. So it's just a matter of where they are in that queue. But yes, as opposed to saying, it is a pipeline of people or prospects we're talking to. These are people, who have committed to installing the system.

Got it. Got it. And then was the one-time payment in the quarter for implementation? Was that roughly 185,000 kind of the amount you would call out a quarter to go?

Correct.

Got it. And then, as you work through -- I guess, we really see the first 7 months of the year. Did anything fall out of your funnel?

If you're saying, is there anything that we thought we were going to sign that we didn't sign? I would say the answer is no. We have had a couple of retailers, who might have moved, right. But we've also had a couple of retailers who move left in terms of implementation and the time frames. I think that -- the more that we have committed, the less those movements really matter, because they offset each other. But it's not like somebody come to us and said, I'm thinking about this and then said, no.

Got it. And it's not like, you haven't lost any customers still, right? Your retention is still a 100% or close to that?

Yes. The only time, we ever lose a client is if a bar goes out of business in that one age ID subscription, which is by itself inconsequential. Since I've been here, we've never lost a retailer or a bank.

Got it. Got it. That's what I thought. And then is it probably, for you to rank those banks, in terms of potential revenue?

It's really hard to say, because I haven't gone through and analyze the makeup of each one of their programs, right? So again, if we go back to some of the things that we've discussed at some of the conferences. Bank number two has over 160 private label credit card programs they run. But as I said, I don't think somebody's going to steal identity to get their kids braces, and they do a lot of dental offices and things. So we whittled it down in there, I think it was 57 different retailers that made sense. They are similar to other clients we have on-board. Haven't done yet the same analysis, but it also depends on the size of the retail, some of them have more of the 15 to $5,000 store -- 5,000 store location retailers than others. They're all in that top 10 those, what I'll say and the top 10 does control around 99% of this particular market.

Great. Okay. Thanks a lot.

Thanks, Mike.

[Operator Instructions]. Our next question comes from Ronald Romahauser [ph], a Private Investor. Please proceed with your question.

Hey, Bryan. This is Ronnie Romahauser. I'm a Private Investor. I have a pretty tricky question based on what we discussed earlier in this call. Last week, we saw a breach of Capital One, I don't know, if they're number one, number two, number three, number four, number five, or any of them. But that type of thing, it's huge. I was wondering, how generally would our company be able to take advantage of something like this? If this were to occur to one of our clients? Would we -- would they have to reissue 140 million credit cards? And would we be part of that? And the second part of my question is, there's a big move afoot about securing data. So these breaches that, we had Equifax and we have constant breaches that take place. And if they were to shore up the controls, would they possibly include driver's license verification, or an authenticity, we will have to say that moment. With that cost would be part of some tightening of controls? In hence, that would be a big advantage to us. Could you discuss that?

Yes. So I see, there is a three part question. Part one, how do we capitalize on breaches in a way. And I think the Equifax breach was probably -- I hate to say it bad for people good for us. Because that was a lot of data, and pretty much everything you need to steal somebody's identity that was 145 million American. Studies have shown by Accenture that said, that it takes about 18 months from the date of a breach to the time that the data begins to show up for sale, get season, gets packaged and then get sold. And I believe -- in that put it at Q4 of 2018, would be that 18 months mark, and we did see a spike in fraud attempts. The Capital One breach, we're not really involved in the reassurance of credit cards. I -- maybe the good thing about that is I -- what I've read is, they don't believe that data was published yet by the woman, who hacked them. But it still -- there is a lot of information about 100 million people. And if it is out there, it's just adding to the ease at which criminals can buy the data, which I think makes it all the more important that banks buy a system like ours. As far as cyber security and reaching data. I think that's a completely different market. If you look at how that woman broke in, she found, there was a deficiency in the way that something had been set up by Capital One on the Amazon Cloud. And I don't know whether from her experience at Amazon, she was able to exploit that or find it. But that's certainly not a market that we are -- I don't see how we would bring anything to that other than authenticating that the employees who they say they are.

All right. What about changes that might take place in the future? Would they use driver's license benefit of this occasion, of driver's license to help secure information?

It's conceivable right now I'm focusing on the market that we have right in front of us that I want to be the dominant player in, which is the issuance of credit in the financial services space.

Okay. Fair enough. Thank you.

Thank you.

Our next question comes from Roger Liddell with Clear Harbor Asset Management. Please proceed with your question.

Bryan. The 12 to 18 months lag figure Accenture, I think you said. That's been a constant over the period that you've alluded to it. Is there any thesis for an acceleration, just the things happening faster and an incentive to rush before certain authentication gets in place? Can you just elaborate on that?

I don't know that I've seen it, but it seems logical that just because there's so much data out there, that, I would expect that before, maybe some monitoring gets put in place or other things like that. They might be rushing to use the data. That could be why, I saw myself in 5 package deals. Whereas, I hadn't been involved in anything and the previous year that I've been monitoring myself. This year -- in the first quarter, that's when those 5 deals went down. So it sounds like people are selling the data, packaging the data and getting it out faster.

Okay. So we may see the spike earlier. That would be a nice tailwind. Can you elaborate on the facial recognition that you talked to regarding bank number five? I know Intellicheck had or perhaps still has some intellectual property in that area. But there are pros and cons of facial recognition. So would you take a few minutes and just walk us through how you think it's going to play out?

Yes. I believe in an increasingly mobile world. You're going to need to be able to authenticate people from afar. If I'm in a store, and I'm looking to do something, we can authenticate the license, and then the clerk or the bank teller can visually compare me to the picture on my license and make sure that I'm, who I'd say I am. When you're doing it on a mobile device, that obviously doesn't work. So I look at it sort of as a 3 step process, if you want to be very complete about it. The first step is the application will authenticate that the driver's license is real using the barcode. Then take a picture of the front of the license. And through OCR, you authenticate that what is written on the front, is actually what is encoded in the back. So my name on my license. And doing so, you now have my picture. And then the next step is, let's make sure I'm still holding that license. So take a selfie that proves liveliness. So that it's not just that I'm taking a picture of a picture to compare. But it is actually my face and I am alive and see the match against the photo on the license. And now I know that it's a real license, and I'm still holding it. And now I can continue with that application. So there's a lot of mathematics that goes on in that facial recognition software. And this one particular partner like recognition, we found very good at it. And it certainly worked in the sale the bank five.

Do you foresee other major issuers going this route?

Yes, we're in talks with a lot of people about it. Any one of the banks that is moving to online enrollment is looking to have this technology. So I would say that it is something that banks, one through four, are also talking to us about.

Okay. Timeframe is this a one quarter of one year or two year?

Really depends on the particular banks and what their innovation teams are doing. And I'll say some banks move at warp speed and others that, like going to the DMV of old, in terms of how quickly things move. So, I anticipate, this is something that will probably take several quarters to get completely done. I will also say that it's going to take a long time before more things, most things are mobile, as opposed to in person. So it's -- to me, the big revenue stream is still our bread and butter business of authenticating somebody at a physical location.

Thank you. Finally, the FDA opportunity or if it's in FDA some other entity that propagates a standard or let's called a performance standard. Is that a one quarter or one year or two year, that's going to happen? I understand, you are not asking anybody to put this into their model. But can you give a sense of the probability of it happening and what's the timeframe?

If it's -- if they're going to put anything in legislation that says authentication. I think it's going to happen soon; those bills are all being written and they'll pass in short order. There's already some states or cities that have raise the age to 21. I believe everybody I spoke to in DC understood the fact that without authentication, it's -- they'll never be able to do it. I took a ton of fake licenses with me, and especially licenses from the state, so the people that were meeting with. I dropped them on the table. And they were shocked that they couldn't tell, and it's their own state, they're pulling out their licenses and comparing it. And then they realized how good these fakes are. Now, just a matter of, are they going to fight enough to get that through. And I don't know, I haven't seen anything come out of Washington in a while. So it knows what will actually happen. I'm thinking that there are some of the larger companies that are realizing that they really have to do something from a PR standpoint. And for the standpoint of they also legislation could be that they're not allowed to sell these products. And I think they'd rather have the revenue stream, the people who should be buying it, and block those that shouldn't be. Because that's really been the whole problem with the age restricted marketplace. The law only says that you need to visually inspect the license. I mean, you know these fakes are good enough that that doesn't work anymore. And there are plenty enough people out there, who would rather say, Hey, I comply with the law, and know that they're selling beer or tobacco products to a kid and pocket that revenue versus not pocketing the revenue and doing the right thing. So we got 86 new people last quarter, who wanted to do the right thing. I hope it's a trend that growth.

Okay. Thank you.

Thanks Roger.

Our next question comes from Scott Buck with B. Riley. Please proceed with your question.

Yes, good afternoon, guys. So I'm curious. Can you tell us how many of the banks at the current level of implementation or profitable on a standalone basis?

I'm not quite sure how to answer the question. I mean, what we've done for the most part is they're going to pay us a minimum that's going to cover most of our expenses for the hardware and other things like that. We're running at 85% gross margins, as is we don't expect that to change at all going forward. So I'm not quite sure how to answer that, I don't really, you got better idea.

I guess, what I'm really asking is each incremental relationship profitable from day one?

Yes. Yes, it is. Yes.

Okay.

The first can model takes into consideration and our cogs are so 15%. So, yes, we're profitable from the first day in the first slide.

Okay. That's perfect. Second question, obviously, there's a lot of implementation work to do. What kind of capacity do you guys have to go out and market to banks numbers 6, 7, 8, 9, I guess?

This is from an implementation standpoint, it's -- we could be doing 20 banks at once.

Okay.

It's really, from our end of it, we've done that girls giving me a shot face, since I'd be pointing my finger at him. But from our end of it, it's just teaching them generally. Two things we need to do. Teach them how to make sure their scanner is sending us the data we need, in the format that we need. And then how to write to our SDK or API. So from our end of it, it's mostly education. It's not like we're doing custom programming to bring somebody up, who's going to code just to our normal specs. And where we do have to do custom coding, it's got to be -- I'm not going to do it for a teeny tiny thing. It's going to have to be a big bank, and we charge them for it now.

Right. Okay, that's perfect. I appreciate it, guys.

Thank you.

Our next question comes from Mike Grondahl with Northland Capital Markets. Please proceed with your question.

Yes, guys. Just a follow-up. I think you talked about retail scans being up 8% year-over-year and SaaS revenue was up 79% year-over-year. So just help me think about both of those numbers. Are you basically getting it all on price? Because you've gone to the per click model and the 8% scan volume, I think that excluded that one bank. But just help us understand those numbers.

You got to remember; the age restricted products go into that growth numbers as well. Some of it is price, for sure. Because as I said, we -- changing the pricing model, and bringing on clients that we're paying us in the matter that we wanted. But I think is really what made the difference. So the banks two and three and four beginning to pay us on -- well just three and four beginning to pay us on SaaS revenue on a per scan model is a big part of the difference, as well as the innovative dedicated team that we have selling a lot of HIV that helps.

Okay. Okay. Thanks.

There are no further questions. At this time, I'd like to turn the call back to Bryan Lewis for closing comments.

So thank you, everyone, for joining us on this call. I'm very happy that the changes that we have put in place are making a difference. I think you'll continue to see that throughout the year. And I look forward to our Q3 call. Thank you everyone and have a good night.

This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.