Greetings. Welcome to Senstar Technologies 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. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Doron Kerbel, Senstar Technologies’ Company Secretary. Thank you. You may begin.

Thank you, Operator. And welcome to our second quarter earnings conference call. With me today are, Mr. Dror Sharon, CEO of Senstar Technologies and Tomer Hay, CFO. Dror will summarize the key financial and business highlights followed by Tomer, who will review Senstar's financial results for the second quarter. We will then open the call for the question-and-answer session. Before we start, I'd like to point out that this conference call may contain projections or other forward-looking statements regarding future events or the company's future performance. These statements are only predictions, and Senstar cannot guarantee that they will, in fact, occur. Senstar does not assume any obligation to update information. Actual events or results may differ materially from those projected, including as a result of changing market trends, reduced demand and the competitive nature of the security systems industry, the unanticipated, and unknown effect of the coronavirus, including on our operations and our clients, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, we have reconciled our non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Regulation G requirements. You can also refer to our website at www.senstartechnologies.com for the most directly comparable financial measures and related reconciliations. And with that, I would now hand over the call to Dror. Dror, go ahead please.

Thank you, Doron. Thank you for joining us today to review Senstar Technologies' second quarter financial results. In 2022, we've closed several large projects in our key verticals. We have successfully landed significant recent customers win that we cannot announce since our customers requested us to keep it confidential. In the Americas, we have closed win with new customers, including critical infrastructure sites such as ports, airports and power plants. In EMEA, we have also been successful in critical infrastructure vertical course in several countries and then secured wins with a large logistics facility and a high profile government site. APAC has been a productive region as well. A large airport has been -- deployed our PIDS and software solution in two terminals. We will be rolling out to an additional terminal and the upgrading equipment purchased over five years ago with our updated product. We also closed a power company project and have a long standing contract with corrections facility customers upgrading its systems with new Senstar products. However, in the second quarter, we experienced delays due to several factors that cause new business to take longer to close, particularly in the U.S, while many projects are tied to Federal fundings. As a result, second quarter revenue declined by 10% to $9.1 million. Notably, we have not lost business, and we continue to expect the world in our favor in the coming months. Last year, we received subsidies from the Canadian Emergency Wages Subsidy Program to approximately $0.6 million in the second quarter, which expired in the third quarter of 2021. This has impacted the year-over-year comparison to cost of goods sold and operation -- operating expenses. Additionally, higher prices impacted the cost of goods sold despite mitigating some of the increase by raising our prices. On the prior…

Thank you, Dror. Our reported revenues for the second quarter of 2022 was $9.1 million, a decrease of 9.7% compared with the reported revenues of $10.1 million in the second quarter of 2021. As Dror discussed, the decrease was primarily due to a new business taking longer to close, particularly in the U.S. The geography breakdown as a percentage of revenues for the second quarter of 2022 compared to the year ago quarter is as follows: North America, 41% versus 46%; Europe, 28% versus 22%; APAC, 29% in both periods; and Latin America, 2% versus 3%. The second quarter reported gross margin was 60% of revenues versus 69.8% in the year-ago quarter. The decline in gross margin was primarily due to the challenging comparables. The second quarter of 2021 included subsidy granted to our Canadian subsidiary as part of the Canadian Emergency Wages Subsidy plan that were allocated partially to the cost of goods sold. Additionally, cost of goods sold was impacted by higher price despite our mitigating some of the increases by raising prices. Our reported operating expenses were $5.4 million, an increase of 11.2% from the prior year second quarter operating expenses of $4.8 million. Similar to the increase in cost of goods sold, the year-over-year increase in operating expenses is primarily due to a portion of the Canadian subsidies being allocated to operating expenses in the prior year quarter. The increase in operating expenses was also driven by an increase in travel and sales-related expenses. Our reported operating income for the second quarter was $0.1 million compared to $2.2 million in the year ago period. The financial expenses were $0.1 million in the second quarter of this year compared to $0.2 million in the second quarter of last year. This is mainly a noncash accounting effect we…

[Operator Instructions] Our first question is from [Barry Pasternak], Private Investor.

My question is regarding the onetime dividends that were paid in December 2020 and September 2021. It's been almost 2 years since the first dividend payment? Are we still waiting for the Israeli tax authority to make a decision regarding the tax treatment?

So thanks for the question. I can tell you there is a long struggle with the tax authorities. They were waiting for some kind of calculations. They receive it. It's a back and forth, and now they are just waiting for 2021 tax returns to be filed in order to combine the decision of both of them. So yes, it's a struggle. Everybody is involved as much as we can. We are pushing and hopefully, we will get some results in the upcoming months, 2 months, I don't know, but we are struggling and pushing with all what we can.

Okay. So -- but the 2021 tax return has to be filed before a decision -- a final decision is made?

That's why they're waiting. Yes, they decided to hold, they want to examine what are the numbers that will become after the divestiture of the project division because they know there is an impact there. That's why they don't want to use the assessment. They want more detailed numbers based on those results. But I hope we are getting there much more positive than what was in the previous call. So hopefully, on our next investor call, I'll be more -- give more information.

[Operator Instructions] There are no more questions. I would like to hand the conference back over to management for closing comments.

Thank you, Operator. On behalf of the management of Senstar, I would like to thank you for your continuous interest and long-term support of our business. I look forward to updating you next quarter in around 3 months. Have a good day, and thank you.

Thank you. This does conclude today's conference. You may disconnect your lines, and have a pleasant day.