Alarum Technologies Ltd.

Greetings and welcome to the Safety Group Limited second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Steve Gerson, Director of Investment Relations for Safety Group. Thank you. You may begin.

Thank you, Melissa. Good morning, ladies and gentlemen. Welcome to the Safety Group's second quarter of 2022 Earnings Results Conference Call. I'm Steve Gersten, Director of Investor Relations for Safety Group. Before we get started, I will read a disclaimer about forward-looking statements. This conference may contain, in addition to historical information, forward-looking statements within the meaning of the federal securities laws regarding Safety Group. Forward-looking statements include information about plans, objectives, goals, strategies, future events of performance, and underlying assumptions and other statements that are different than historical fact. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that may result in expectations not being realized and may cause actual outcomes to differ materially from expectations reflected in these forward-looking statements. Potential risks and uncertainties include those discussed under the heading Risk Factors in Safety's Annual Report, filed with the Securities and Exchange Commission on March 29, 2022, and in any subsequent filings with the SEC. All such forward-looking statements, whether written or oral, made on behalf of the company are expressly qualified by these cautionary statements, and such forward-looking statements are subject to risks and uncertainties, and we caution you not to place undue reliance on these. At this time, I'd like to turn the call over to Shakar Daniel, the company's CEO. Go ahead, Shakar.

Thank you very much, Steve. And welcome, everyone, to today's 2022 second quarter corporate update conference called for safety group. With me is Shai Avnit, our CFO. I am very proud to share our great financial results and our tremendous business developments. The last quarter is another milestone in the execution of safety's long-term strategy. At the beginning of 2019, after we concluded 2018 With revenues of $1.4 million, we initiated a new acquisition start strategy in order to straighten and expand our product portfolio. Today, probably three years after the launch of our new path, we can say that, one, we are at a sales rate that is almost 20 times higher than in 2019. Second, we moved to a recurring subscription-based revenue model, which means that our revenues are more predictable and that the company will benefit from these revenues over the coming years. Third, the company's losses in the last two years were mostly due to IP-related litigation expenses, as well as the investment in cyber for enterprises. We managed both issues efficiently, by reaching a final settlement with respect to the IP-related dispute and transferring the cost of cyber for enterprise for a business partner. As a result, you are now witnessing a decrease in our loss at the rate that will continue to improve and accelerate in the coming quarters. Furthermore, driving much of the company's losses are investments and not losses. expenses in acquiring customers that will bear fruit and pay itself in the coming years. Fifth, the company's business model, our talented team, and the growth over recent quarters allowed us to bring on both strategic findings that will allow us to continue and grow our business. Looking forward, we remain firmly focused on our cost reduction plan improving the efficiency of the business, and together with our new products and investment into our customer acquisition program, we expect to not only drive significant additional revenue growth, but deliver improved financial performance in the month ahead. The second quarter of 2022 was highlighted by the achievement of several operation milestones in our mission to continue our growth. In the first half of 2022, we delivered record revenues of $8.8 million, an increase of 181%, and $4.8 million in the second quarter, an increase of 168%. This increase in revenues is attributed mainly to our consumer business, but was supported by our privacy business for enterprises. Our enterprise privacy business unit NetNet reached break-even, excluding non-continuous legal expenses related to the patent litigation, which was dismissed following our settlement. Since we acquired NetNet, it has achieved rapid growth in revenues, started at $800,000 in 2017 to $5.3 million in 2021, and reached $3.6 million in the first half of 2022. It is our intention to implement some of the successful elements from NetMap acquisition into our working plan for our consumer privacy and cybersecurity business. As mentioned earlier, in May 2022, we announced the dismissal of patent litigation against NetMap, which was resolved by settlement. As a result, We expect a substantial reduction in general and administration cost in net net, which will be reflected also on a consolidated basis. We achieved a reduction of our net loss by 33% in the second quarter of the year compared to the first quarter of 2022. This cost reduction is expected to accelerate in the third quarter of 2022. During May and August, we secured $2 million in non-dilutive credit line from a leading Israeli bank and a strategic financing of up to $4 million. This strategic financing includes potential future funding, which would be priced at a premium valuation for the company. We are extremely proud to have secured those additional funding to create the financial initiative that support the company's growth without impacting our shareholders at the current market valuation. Those recent initiatives, which can add more than $5 million to our working capital, are not reflected yet in our current cash resources, as this reflects the status for the period ending June 30, and will enable us to facilitate our continued growth. We plan to allocate this fund to support our customer acquisition program, Customers in our business are our main assets, and investment in user acquisition tries to translate into future high-margin recurring revenues. As we discussed in the past, our model estimates revenues for each acquired customer for the duration of their lifetime, LTV period. Under this lens, a significant portion of our certain marketing expenses reflected in our P&L is simply our investment in acquiring users, which we believe that according to our model will translate into more predictable future revenue streams. We started our investment in customer acquisition in the second half of last year, and we successfully generated a growing future revenue stream from subscribers. These customers are and will be an important asset to be a driver of value for safety and the shareholders. After several months of investing into sales and marketing to acquire a current customer base for our first consumer product, we are confident in the sales and marketing efficiency of our acquisition program and its ability to attract profitable subscribers. Our priority solution for consumers includes thousands of paying users that utilize our products today. These solutions are keeping online users' information private and secure, and in an encrypted, secured layer for online privacy. Over the past few months, we substantially expanded our reach by launching solutions that support a leading operating system in the world. Building upon the strong revenue foundation produced by our initial customer, Apple iOS products, we started the expansion of our portfolio, which will drive additional mutual growth. This effort began with the launch of AdWalker Pro, and anti-malvertising, which is a malicious advertising solution for Apple iOS devices earlier this year. In July, we launched our first consumer privacy solution for Microsoft Windows. The new desktop privacy solution prevents the user's personal data, online activity, and history from being accessed or monitored by Internet service providers, advertisers, and third parties. Our latest release was the introduction of our consumer privacy solution for Android mobile devices, including smartphones and tablets. Utilizing advanced encryption technologies, this new privacy solution prevents the user's personal data from being accessed or monitored. By blocking the ability to track or monitor users' online activity and history, their personal information remains private. Importantly, this new product across multiple untapped platforms with general additional revenue streams for the company. It is our intention to continue developing and launching new and advanced, easy-to-use privacy and cybersecurity tools to help protect consumers no matter which platform or operating system they use. As for our enterprise cybersecurity solution, we continue to preserve our position in the market throughout the strategic collaboration with Terrazone on sales and development of our Zone Zero, Zero Trust Network access software. We believe that these steps will allow us to maintain the value of our IP and partnering in sales while enjoying a reduction in expenses, which are just now starting to positively impact our operating results. But before going further, I would like to turn the call over to Shai, discuss the financials for the quarter. Chad.