Flux Power Holdings Inc (FLUX) 2014 Q4 法說會逐字稿

Good afternoon. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Flux fourth-quarter conference call. Thank you. Mr. Eddy, please go ahead.

Today's call is available live via online replay via link on today's news release and on the IR section of Flux's website. Leading today's call is Ron Dutt, Flux Power CEO and acting CFO.

I would like to remind everyone that comments Flux management may make on today's call may include predictions, estimates, expectations and other forward-looking statements which are based on the Company's knowledge as of today. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Flux disclaims any obligation to update such forward-looking statements and encourages investors to refer to Flux Power's SEC filings for a detailed list of such risk factors.

I will now turn the call over to Ron Dutt, CEO.

Thank you, David. It's exciting to look back at what Flux has accomplished since our last call in May. In the past four months, Flux has successfully initialized the market for our Flux LiFT Pack lithium ion battery solution, designed to power Class III electric Walkie lift trucks or forklifts used for the movement of commercial goods. We have attracted the interest of national accounts, and the battery distributors and lift truck dealers that serve them have penetrated the market includes initial sales over the past few quarters. This is an impressive achievement for a dedicated team.

The outlook is very promising for Flux in this market. We are the early mover with the benefit of technical approvals from OEMs responsible for three-quarters of the Walkie lift truck market.

So what is a Walkie, and why is Flux focused on this market? Walkies are smaller forklifts where the operator walks in back of the lift and its cargo. They are ideal for use on semi-trailer trucks, delivery trucks, as well as for retail locations and warehouse uses. If you look for them, you will start seeing them all around. There are more Walkies in service than any other model of lift truck across the United States.

Until Flux's arrival on the scene, these material handling workhorses have been powered by lead-acid batteries, technology developed over a century ago. Flux recognized that lithium-ion storage, combined with our proprietary battery management systems and design and build expertise, enables an energy storage system that can deliver a better-performing, longer-lasting, more reliable, cleaner and safer solution.

Flux has developed such a solution, demonstrated these performance advantages and confirmed the substantial efficiency improvements and cost savings generated over a light truck's -- lift truck's useful life. We were uniquely suited to this task based on our five years of experiencing and developing energy storage solutions for the specialty automotive market, where we generated nearly $6 million in sales prior to refocusing our Company.

Let me be clear -- it's not easy to enter into an established industrial market and get its participants to change their thinking and adopt new technology. Procurement channels are in place, and there is skepticism and resistance to change when Flux was unknown.

Breaking through this requires a great solution combined with persistent, active customer support and impediment to customer needs. And once you gain their interest in the formative days, it requires actual piloting of the technology so they can experience the performance benefits for themselves.

Flux's small sales and marketing team has been engaged in this missionary work over the past nine months across the United States. We have made great headway in introducing the market to our solutions, and we have learned so much about the market -- its dynamics, and what features, functionality and performance characteristics are important to the end users.

Though this process has taken a bit longer than we have thought, I am excited to confirm the business is executing. We are seeing accelerating growth in awareness, interest, and actual contract activity in engaging with our solutions, and we have every reason to believe this will expand and continue over many quarters to come.

Our fourth-quarter revenues of $201,000 more than doubled over Q3 levels. And our Q1 OEM and national activity highlighted in today's release shows that our product is now being recognized and is moving beyond the piloting stage and entering the adoption stage. We are now receiving orders -- offers for distribution of our product, and requesting equipment bids includes our packs.

One note of clarification. While the adoption by national accounts has begun in Q1, as demonstrated by formal bids and negotiation, much of this activity relates to order lead times of 60 days or more because it's tied to staggered equipment purchase schedules. Revenues related to such bids and contracts will be recorded as revenue as the lift trucks are shipped to customers over the next 12 months.

So despite the solid progress with bidding and disability for initial orders, our Q1 activity will not be reflected in our revenues which will be below those in Q4. The good news, however, is that we have far stronger revenue and cash flow visibility in subsequent quarters because of our developing order backlog and positive feedback from national accounts who have been using and monitoring our packs over the past several months.

Given the difficulty of predicting the size, timing and delivery timetable for future quarters as we initialize the new market, we fully expect a fair amount of variability in our financial performance over the next few quarters. However, we are confident that the wind of awareness and demand is now at our backs and that Flux is well-positioned to further penetrate the rational lift truck market with our LiFT Pack battery line.

And lest you think we are doing this all by ourselves, I must acknowledge the substantial support and encouragement we are receiving from the major lift truck OEMs and their dealer networks, in particular from our gathering distribution partners, all of whom play a very important role in building awareness and support for Flux and our LiFT Pack solutions. And their efforts in testing, marketing and sales provide critical third-party support for our Company and our products and warrant our tireless efforts.

What was little more than a product and development roughly a year ago is now rapidly gaining visibility as a smart, compelling, environmentally friendly solution that delivers a very compelling ROI from a total cost of ownership point of view.

In looking at the bigger picture, Flux is far more than just Walkies. It's just that this market offers the most clear path to revenue growth in establishing a strong base on which we can build other product lines.

Our broader vision is the development of innovative lithium storage solutions that provide safe, reliable and cost-effective power for the following three key markets -- mode of power, which is providing power for industrial vehicles and machinery that is widely used in warehouse, trucking, delivery and other material handling applications. Walkies, stand-ons, and tug and pull equipment are our first area of focus in this market. And from there we do plan to expand into larger batteries, voltages, price points, and larger applications in lift equipment and other areas.

Secondly, portable power for military and entertainment applications in remote locations where we have already had some initial sales. And, thirdly, stationary power for larger-scale grid and industrial storage markets that are currently taking a back seat to near-term sales opportunities in other areas. We have entered bids with partners on three such projects and came in second on a large university project.

Our sales priority remains on larger customers where we can better leverage our limited sales and marketing resources. Fortunately, such customers tend to be more receptive to the longer-term cost of ownership savings they can realize by switching to our products. They also play a critical role in focusing our distribution partners on our solutions and validating Flux within the industry and, by the way, lithium ion phosphate batteries as the trend of the future.

We view our efforts as feeding national account interest and interest of battery distributors and equipment dealers as they recognize that certain of their key customers are interested in exploring lithium ion solutions. There is no more powerful driver in industry conversation than the news of leading customers and equipment OEMs.

Our other primary initiative for exceeding the market has been to seek OEM technical approvals for our LiFT Pack lines. While these approvals are not endorsements of our products, they are critical to opening the equipment and dealer networks to offer our product packs. In February, we secured product approval by Toyota Material Handling, the leading global provider of lift equipment. And earlier this month, we were able to add our third OEM technical approval in our end dialogue currently as to how we are able to communicate this to the market.

For now, what we can say is that our LiFT Pack lines for Class III Walkie lift trucks has been approved by three top-five lift truck manufacturers who together account for approximately 75% of the Class III market.

On our channel partner front, we have expanded our distribution network over the past four months. We are now in active dialogue with 18 regional battery distributors across 18 states and Canada, up from 12 distributors in 14 states and Canada in May. In the area of lift truck dealers, we have expanded our base of active relationships in equipment dealer networks that total over 400 dealers nationwide, meaningful growth over our base of 12 active dealers across 11 states just four months ago. And our customer base now expands to 18 states, up from zero a short nine months ago.

Of course, the expansion of our customer base and distribution network plays a powerful role in carrying the message that Flux and its high-performance, cost-effective solutions have arrived to serve the needs of those operating lift truck fleets.

Our sales and marketing efforts are increasingly balanced across new customer discussions, pilots, and initial one-pack purchases; and advanced dialogues looking at meaningful initial orders and/or 12-month purchase programs to supply LiFT Packs with new and/or replacement equipment.

We are also developing new features or LiFT Pack models to meet special customer needs. We will be offering another Class III product for stand-on lift equipment, which lifts heavier loads and, as the name suggests, enables the operator to stand on equipment versus walking behind it. Of course, this solution requires increased size and performance that will warrant a price that is significantly greater than our existing LiFT Pack products.

From an engineering standpoint, while working to manage our costs we continue to advance our development of the next-generation battery management system, or BMS, as we call it. Our focus is to steadily improve product performance while also working to identify ways to reduce costs and enhance margins. Investment in maintaining our leadership and competitive position in the markets we serve are critical to customer satisfaction and to our long-term success.

Our planned merger with KleenSpeed continues to move forward as well, though its pace has slowed as our attention has been focused on initializing our LiFT Pack business. Due diligence and the valuation process are nearing completion, however, and we will enable the negotiation and a definitive agreement. The transaction is designed to support new revenue opportunities by adding KleenSpeed's industry experience, patented grid energy storage technology and products, and its commercial relationships and marketing strengths.

Let me briefly turned to portable power, the second major application we are actively pursuing that I mentioned earlier. Portable refers to easy-to-use, reliable storage solutions that are ideal for use in remote locations, generally as generators. Of course, these solutions have a favorable environmental impact compared to portable generator noise and emissions. Power packs have been used with great success in the entertainment industry to power lighting and remote filming.

We are also working with a military integrator for an offering to the Army and Marines to power gear in remote operations. Our packs are currently being used in trial programs of solar units to provide continuous power for advanced military field operations. Our packs are instrumental in enabling use of solar solutions after sundown.

From a cash management perspective standpoint, over the past year we have substantially reduced our burn rate and begun to layer in a growing base of contract activity with current and future cash payments. To fund our working capital needs, we completed a $1.9 million private placement during 2014, converted $2.9 million of debt to equity and accrued interest -- debt and accrued interest into equity at a price of $0.24 per share and are currently negotiating a convertible credit line up to $500,000. And finally, we have raised an additional amount, approximately $150,000, via private placement.

And though we are making solid forward progress, and also because of this, we have recently been working capital constrained, limiting inventory levels and investments in various sales, marketing and administrative functions. We are working to find suitable ways to enhance our working capital position, balancing growth with a focus on shareholder values while not taking our eye off the ball for key customer opportunities.

We are still in the early stages of our product rollout. However, we are confident that we have developed a strong solution and have identified a very promising initial market. Solid progress on this opportunity should support our ability to secure additional growth capital.

In summary, it's a very exciting time at Flux, and we feel like we have largely derisked the Company by demonstrating a viable product, a very substantial market, and have secured initial orders that confirm our ability to execute. I thank all of the stakeholders for their efforts and support and look forward to updating you on our progress going forward.

So with that, let's open the call to your questions. Operator?

(Operator Instructions) Roland Perry.

I had a question about the $200,000 numbers is nice, but I was more curious about you said you are in 18 states. So how many accounts does that represent? It appears to me that it's more exciting to see a variety of customers using the product.

You are exactly right. As I was mentioning, we actually sell to the battery distributors and the equipment dealers. And in a number of cases, particularly so far, they take the packs, whether they buy them or they are demonstrators, and have customers try them. In many cases, we don't know all the customers that are trying them. So that's a little difficult to tell. We do track many large national account orders we have. But we do have packs.

And we've got about a dozen active distributors, and the distributors tend to have big areas in key commercial parts of the country. And then we have the equipment dealers, which are pretty much everywhere and who run a parallel channel as well. And of course, there are larger equipment dealers. And the larger ones tend to be more focused on the national accounts, which is our primary target audience.

So while it's difficult, we really can't give you a number of all the end customers. The distribution system we have is really a blessing because it's an installed sales and distribution base that has reached over the entire country, so we don't have to establish that. So in the future we will try to collect as much information as we can on the number of end customers that we have, but at this point that's the situation.

Pierre Sernet.

I just wanted to see what your burn rate was today.

Okay. Good question. Early-stage Company, everybody wants to know about burn rate. A year ago, we cut the burn rate in over half. As a public Company, we have a lot of auditing and legal requirements that we, of course, outsource. A lot of those are tough to squeeze too hard. But we have cut that burn rate down by half, as I said. Over the total year, our burn rates or our operating expense in total is about 30% less than the prior year. So given that some of those public company expenses are really not terribly controllable, we've had to make up the difference with a very lean staff and, like many early-stage companies, watching every penny. My experience as a CFO has certainly been helpful with that.

So as we sit here now -- and certainly an eye on balancing our cost effectiveness -- our cost reductions in the design of our equipment and at the same time ensuring that we have enough staff here -- essentials and systems and so forth -- to deliver product to our customers and keep them happy.

So it's a great question. It's really a balancing act. I think we've made good progress over the past year, as you see on the financial statement, and we continue to keep a very sharp eye on those competing challenges.

David Squires.

Real simply, I was wondering if you could kind of go out four quarters, the next four quarters, and have some sort of idea on what your cash need is for all your operations, including R&D, marketing, et cetera. What you currently have available and then how you plan -- what the plans are to raise the capital to make up the difference. I know you touched on some of this, but just in a real quick and dirty -- here is what we foresee our needs are for the next four quarters, here is what we have available, here is how we are going to make up the difference.

I guess if I really am optimistic about the product and the need on the market for the product, and I am wondering if there has been any recently deep-pocketed VC or private-equity people approach you concerning getting involved with your Company. Because on one hand, I appreciate the fact that you are trying to run super lean and be very efficient. On the other hand, I keep -- in the back of my mind, I can't help but thinking, boy, if they had a real nice amount of capital available, they could really expand faster and better, et cetera. So it's kind of a two-part where are we at and then what do you feel about opportunities of outside funds.

Great question. It's a topic that I spend a lot of time on here. For the narrower response, for the next four quarters we are in a private-placement round right now, just kind of early stages. My forecast, again, as I said earlier is it's a little tough to predict the pace of the uptake in the market. We are trying to reach cash flow breakeven in about a year or so. And to get to that point and to have the working capital that we need to build a ramp on buying inventory and selling product, we are probably going to need close to $1.5 million or probably closer to $2 million over that period.

So your question is, okay, that sounds fine. How do you get that? Well, we have one private-placement round right now going, and we will probably need another round of private placement. As we expand our investor base with those private placements, that enables the larger network to draw upon as investors see our revenue growth. So as a public Company -- and we are committed to staying public -- that, I think, is going to be a good source of funding.

As I mentioned earlier, we converted all our debt on June 11 to equity. So we have virtually no debt now. I think depending on the course and pace we go, we may want to take on some debt and limit the amount of equity placements. So we will be looking at that equation, that mix, that balance of debt and equity to support roughly that $2 million number I was talking about.

Your other -- the last point is really a good point. I like hearing that. The question of are you taking advantage of all your leverage points. I am very -- and along with Tim Collins, our Executive Chairman -- we both work very closely together, along with the Board, and are very keen to find those partnerships or companies that we can work with or combine in some form or another that would make sense to enable further leverage as we take on this industrial market space. Just the industrial equipment space is a $10 billion market. There is a lot of room there, and if you get some leverage and some working capital you can go faster.

So we are looking at partnerships. As we have stated publicly, we have a letter of intent with KleenSpeed to combine and take advantage of their technology. They have some really seasoned relationships in the marketplace, particularly in the stationary grid area, that can add a lot of momentum to our Company in terms of build and scale and size. So like a lot of companies, we are always being approached by people, talking to people about other opportunities, whether it be direct sales or partnerships. So we certainly have an open mind to that and see a great opportunity in that. Good question.

(Operator Instructions) Timothy Collins.

I think the team did a great job last quarter. We are way beyond the proof of concept for lithium replacing lead acid. You don't see any cell phones or any notebooks or any tablets, any hearing aids, any electric drills that have lead acid in them. And that's what built the lithium industry. And now you are getting into the larger-format area, which is replacing lead acid in moding equipment such as forklifts. That in itself -- just that one vertical is a huge market.

I guess I have two questions for you, and I think they would probably be of interest to the shareholders. The first one is, I think we would like to have some competition for replacing lead acid. I think the reasons for that is because we have a low-cost solution and a five-year warranty, and I think you can probably comment on that.

The reason we want competition is that just in the same principle as the electric vehicle -- is education. If you buy an electric vehicle, it changes your life. You never hear about an electric vehicle owner talking about range anxiety. So many people who don't own electric vehicles that talk about range anxiety.

So I would like to know what the experience is. And that's my second question, what's the experience of the user. We have got over 100 packs out there, and we are way beyond proof of concept. So it's a time when either the user is embracing lithium and liking it or not. So I think that's a question you can answer because you have had the experience.

So just to summarize, how can we deliver a pack that works that's guaranteed for five years? And if you can give us some details on that. And then the final thing is what are users telling you?

Good, good, good. Thanks, Tim. Those are very core questions that we deal with each day. You mentioned the competition -- yes, absolutely. We've said many times in the market as big as we are we would actually love some competition there. There have been some competitors try to put forth some initial products, and they haven't been very successful mainly because it isn't that easy. It's a terribly harsh environment.

In fact, our packs are really -- ourselves and BMS were initially designed for use in electric vehicles, as I mentioned earlier. That's a very different environment. It's on air-inflated wheels with a shock absorber environment. In the industrial equipment, it's not that way at all. It's a brutal -- or it can be a very physically harsh environment. So the electronics we have and the packaging all has to stand up to that in terms of the environment.

So we would like to see some more entrants. There has been entrants in other alternative fuel -- other alternative energy sources such as fuel cells. You may have seen Walmart trying them. I think fuel cells might work in maybe some type of environment. The people that we talk to, the OEMS that we talk to, really see the lithium cell as really the most exciting. We have this five-year warranty, which is 2 to 3 times longer than the lead acid because the lead acid just doesn't last that long.

There's certainly a huge interest in that because the equipment that they make has a five-year warranty. Our five-year warranty with that has a lot of distributors, dealers and end users very excited. And that really leads to the user experience. They are very connected.

Tim had asked that the users -- we have had over 100 packs out there, people trying them across the country. And our salespeople come back -- they are seasoned salespeople. We don't have rookies. And they said they have never sold a product where everybody loves it, everybody loves it. They said if this product does what it you say, it will revolutionize the whole sector. The added run times, the cleaner environment aspect of it -- we have electronics which can provide a lot of data going forward in the future. We are working with a lot of our OEM and distributors in that method, so it represents huge upsides from that respect.

So the users love it, and it's very gratifying to be out there in the market and having that reception. Our packs cost more than the lead acid batteries, but they last 3 to 5 times longer. So once they replace the lead acid battery once, they have broken even and everything is upside.

So the big national accounts, the larger companies, get this very quickly. They see the advantage of that. The five-year warranty, the fact that the research -- R&D third-party research has shown that lithium ion phosphate can last easily up to seven years. We have a product that is just really hitting the sweet spot of what gets people excited out there.

Thanks, Tim. I hope that answers your question.

David Squires.

Thanks, Ron. Please know that I really believe in the product. I believe in the marketplace for the product. It's just a matter of how does Flux get this product into the marketplace. I just had a couple of follow-up questions.

You mentioned how you virtually have no debt, which actually scares me as an investor because typically when a startup company or a really small micro-company has no debt it is because no one believes in them enough to lend them the money or the terms are not good. If you reach a point where you have a double-digit operating margin and your cost of capital is single digits, by all means leverage up.

So hopefully with the results that have come out today, it will reduce -- I love your statement, it reduces the risk. The perceived risk of getting involved with your Company declines. And what will decline right along with that is your cost of capital because there's tons of businesses that have had products that people love and have gotten huge sales orders but yet they can't execute it. The thought that comes up to my mind is, say, the Department of Defense comes up to you with a nice big order, and they want to have confidence that you can ramp up and produce the product that they need. Is there favorable financing lined up or that you are beginning to line up whereas if you do get a big order, funds, capital to generate the product at a reasonable cost is not going to be an issue.

That's kind of like where I am coming from as an investor. After years and decades of being involved in startups and small companies, a lot of times the issue isn't the product or how much the customer loves the product, it's financing. What is the cost of financing? And when you do get that nice order, do you have the capital to perform? So that is kind of where I was getting at and was wondering if you have any thoughts on that. Thanks. Thanks very much.

Thanks. It's a good question, it's loads of good questions. I think everybody appreciates them because I can't cover everything in my script, so thanks a lot.

Just a couple of points I would make on that. No, you are right on debt. If you can't get debt, maybe it's because nobody will lend it to you. But we did have almost $3 million in debt at 6%. And we actually had talked with a lender to see if they would convert because we thought that it would put us in a better light that we didn't have debt, so that when we go out and get private placement we are not going to use that just pay off debt. So we did have that. We chose that route.

I get people all the time that want to give us debt. But you are right. It's getting the good debt that's going to be much better as we start to ramp revenue and show some gross margin, show that we are really being taken up by the larger companies in the marketplace and getting that kind of traction.

Your comment on execution is terrific. I've been at -- geez, I don't know -- seven or eight companies, and go in with objectives of turning them around or growing them. So I think a lot of what goes into this is experience with what didn't work and what did work. It's a lot of hard work and a lot of artistry to align and focus resources so you can accomplish where you can do what you say you are going to do.

I think -- I am pleased that the fact that we are focusing on what we can do well and establish credibility. And the sector we are in, in industrial equipment, credibility is everything. We are not dealing with retail customers. We are dealing with people that -- we are finding that battery distributors and equipment dealers, they do business with people they like and trust and have long-term relationships with, and that's what we are after.

The final point I would make with that is that, fortunately, we don't have a lot of concentration in our business. It's really spread out over a lot of customers. I mean, you take a large national account who typically you work with on their needs for the next 12 months, and at the most that's probably going to be $1 million and spread over 12 months.

So as those orders come in, not in a block of a $75 million order where you got to scramble around -- because there's no way a little company can build up that quickly. So I think our spread of risk from that standpoint of the customer and the lack of heavy concentration I think is a help.

Some of the other sectors that we are starting to go into such as stationery grid and possibly the government, there can be larger, specific incremental funding requirements. But at the present time, we have a great facility to be able to ramp up production for the foreseeable future in a very planned and controlled way. I hope that answers your question.

(Operator Instructions) David Squires.

Last one, I promise. Thank you so much. I love your attitude. I know you have really -- I have to throw this out there, more of a curiosity more than anything else. Any comment or expectations at all on the stock price, what you feel about where it's at now and where you expect it to go? That is the last one, I promise. Thanks so much.

No, that's fine, David. You ask good questions. The stock price, as you have seen, has been under some pressure since the spring. In the spring when we announced technical approval by Toyota, which is very difficult to get -- the large global companies like that usually don't like you using their name. But they are very supportive and great to work with. But that had an impact on stock price.

The reality of it is we don't have a lot of free-trading stocks. A lot gets held by affiliate shareholders and a limited number of people on some private placements that we have had in the past. So anybody who decides for some reason or another they need to liquidate, it just puts pressure on the stock. And we really think that's what's been happening.

And also in conjunction that -- as I described earlier, the process of the Company is in is seeding the country -- distributors, equipment dealers and their end customers -- to try these packs. Well, you get some revenue out of that, but that's not the end game. You want them then to start ordering in 10s, 20s, 50s, 100s, 600s, and that takes a little while.

So I think some people -- there's a bit of, I think, of well, how are you really going to ramp here. And a little hesitation on that. It's speculation on my part, but I think that's understandable. And I think as we prove ourselves in the marketplace with Fortune 100 companies who, believe me, have a very, very diligent process to let a smaller vendor like ourselves in their network. The OEMs, which are fairly large companies, who -- again, the scrutiny is very, very high. So I think as that begins to provide the ramp for our sales, I think you will see more demand on the stock.

Are you sure you don't have another question, Dave? I will take that as a no. Okay.

Roland Perry.

Ever since the Toyota news -- I don't know if you called it an approval or a permission to sell -- they have 200 distributors. And then [Raymond], I guess, had 100. So that's 300 distributors of which they have national accounts. Am I right by that?

Yes, that's right. The way we talk about it is those are equipment dealers selling the equipment of those OEMs. So we call them the equipment dealers of those networks that you just mentioned. And then of course the parallel channel is independent battery distributors who sell batteries but not equipment. But they may well sell through partner with equipment dealers who are selling equipment to provide the batteries. So there is a little bit of complexity there, but it all seems to work in the marketplace.

Because I follow Plug Power closely. I remember that I spent most of 2012, 2013 struggling along, puttering along. The stock went from $1 down to $0.15. And then when they got the first Walmart order, which was huge, it was just for a couple 100 units, interest suddenly picked up in the Company.

I think when you get an account like that, that your financing questions go to the wayside. Suddenly everybody is willing to finance you when you get a national recognizable name like that. And then went you got the follow-up order is when the stock traded to $10 a share on massive volume.

So I would call it the when does the second should fall, when you got the permission. Is this something -- what type of things indicate it? Do you get phone calls? Your salespeople tell you? How does that work? How do you monitor interests of a national accounts coming through distributors? Is it just something you have to wait for?

No, actually it's our salespeople work with those larger battery distributors and with particularly the large equipment dealers. And then the OEM has the national account sales activity where they go after the Fortune 100 companies, so we work directly with them. But they are the ones who have the established relationship with the national accounts.

So the OEM and equipment dealers are very incented to sell equipment. And currently they are seeing or finding that an interest that they can sell more equipment if they can provide a lithium solution with that equipment purchase. So that's very exciting for us when you have equipment brands looking at a lithium solution as a way to sell more equipment.

So we have an approach where our people will go and meet with a large national account with either the equipment dealer or the battery distributor or and/or. So we have been doing that. That seems to work well because our people are probably best at explaining this product and how it's better than the lead acid. How the lower lifetime cost works, the warranty and so forth.

So, again, the exciting thing is our people, while few, leverage these relationships with the national accounts. Equipment -- investor equipment world has a number of other sectors of industry shows, conferences and so forth. And believe me, there is buzz about this new lithium product. So we have gotten some interest and solicitations independent of that network of efforts I just mentioned.

There are no further questions at this time.

I'm sorry, operator. Can you say that again?

There are no further questions at this time.

Okay. Well, thank you. And thanks to all of you for your participation on the call today. We greatly appreciate your interest and support and encourage you to introduce Flux to your friends or colleagues who can benefit from our solution. And with that, I will conclude today's call. Thank you.

Thank you. This concludes today's conference call. You may now disconnect.