Globalstar Inc (GSAT) 2012 Q2 法說會逐字稿

Welcome to the Q2 2012 Globalstar, Inc. Earnings Conference Call. My name is Eric, and I will be your operator for today's call. (Operator Instructions.) I will now turn the call over to Dean Hirasawa, Director of Public and Investor Relations for Globalstar. Mr. Hirasawa, you may begin.

Good morning, everyone. Thank you for joining us for today's conference call to discuss Globalstar's three-month results for the period ended June 30, 2012.

Before we begin, please note the following -- this call may contain forward-looking statements within the meaning of federal securities law. Factors that could cause results to differ materially are described in the Safe Harbor section of today's press release and in Globalstar's SEC filings, including the quarterly report on Form 10-Q for the period ended June 30, 2012, which will be filed later today.

The press release, this conference call, and the associated slide presentation, which is available on the Investor Relations page of our Company Website, include discussions of certain non-GAAP financial measures as defined under SEC rules. The press release provides a reconciliation of each of those non-GAAP measures to the most comparable GAAP measure.

Please note that the information in this call is accurate only as of today, Thursday, August 9, 2012. Today's press release, containing certain financial information, is available on the Company Website, at www.globalstar.com. Later today, an audio recording of this conference call will also be made available via telephone dial-in and a webcast recording, along with a copy of the slide presentation, which will also be made available on the Company Website.

Today's call is being hosted by Jay Monroe, Chairman and CEO of Globalstar, Inc. Joining Jay are Corporate Controller Rebecca Clary, and President of Global Operations, Tony Navarra. Each will be available for questions following the prepared remarks.

At this time, I would like to turn the call over to Mr. Monroe.

Good morning, everyone. I'm pleased to report that Globalstar concluded the second quarter of 2012 by continuing the positive momentum in growth and adjusted EBITDA that we began late last year. With over 42,000 gross activations, not only did we add a record number of subs during the quarter, but we also continued to improve our coverage and service quality as we deployed additional second-generation satellites.

Significantly, during the quarter we also reached a settlement with Thales Alenia Space, effectively resolving our differences regarding the purchase and delivery of second-generation satellites. Therefore, we are back on track to complete the final launch of the new constellation.

I'll discuss these events in more detail shortly, but first, Globalstar's Corporate Controller, Rebecca Clary, will lead off with a financial review. I'll then provide a short operational update for the Company, and we'll conclude with a Q&A session in which Rebecca, Tony and I will be available to respond to any questions. I'll turn it over to Rebecca.

Good morning, everyone. I am pleased to report that in the second quarter of 2012, the Company had positive adjusted EBITDA for the third consecutive quarter. The Company's adjusted EBITDA for the second quarter was $2.9 million, an improvement of $4.9 million from the second quarter of 2011. This improvement was due to a combination of increased revenue and a reduction in operating expenses.

Our revenue was $20 million in the second quarter of 2012, compared to $19 million in the second quarter of 2011. Service revenue accounted for most of the increase in total revenue, while equipment sales grew slightly. The growth in service revenue resulted primarily from a $1.6 million, or 33%, increase in SPOT service revenue. The continued growth in our average SPOT subscriber base, which increased 28%, was the primary driver of this increase.

The growth in SPOT service revenue was offset by a decrease of $900,000 in Duplex service revenue, compared to the second quarter of 2011. This decrease was due to the mix of rate plans our subscribers were enrolled in during the respective periods, as well as attrition in our average Duplex subscriber base.

Lower rate plans in effect in the second quarter of 2012 were the primary reason for the ARPU decrease from the second quarter 2011. However, when comparing the second quarter to the first quarter of 2012, there was an increase in both Duplex service revenue and RPU.

We expect this trend to continue as our coverage and call completion rates continue to improve. We expect that these improvements will not only allow us to regain our subscriber base, but also to offer rate plans that are more commensurate with our call quality and dependability.

As discussed over the last couple of quarters, the cost-saving initiatives we implemented in late 2011 continue to benefit the Company's operations and liquidity position. In the second quarter of 2012, operating expenses decreased by $3.9 million from second quarter of 2011, excluding EBITDA adjustments.

The Company's net loss in the second quarter of 2012 increased by $13.4 million to $27.5 million. This was driven primarily by a $22 million accrual for the termination charge related to the settlement with Thales, a $7.1 million reduction in the value of our first-generation satellite constellation, and an increase in depreciation expense of $3.1 million as additional satellites were placed into service. These items were offset partially by a $16.6 million increase in a derivative gain compared to the second quarter of 2011.

Now, a few comments about liquidity. As of June 30, 2012, the Company had cash on hand of $4.8 million. The funds to be drawn from the COFACE facility and a contingent equity account are $3 million and $22.8 million respectively. In addition, we hold a total of $47.5 million in restricted debt service accounts.

During the second quarter, we drew down a total of $4.5 million from the contingent equity accounts, and expect to draw all remaining funds from this account by the end of the year.

While we are benefiting from our continued ability to control expenses as well as our improving cash flow from operations, particularly as a result of the success of our SPOT and commercial Simplex lines of business, the contractual obligations upcoming over the next 12 months will require outside financing. We are currently seeking financing and amendments to our existing debt obligations and expect this process to be completed by the end of the year.

Concurrent with the debt financing and similar to our 2009 COFACE financing, we plan to raise additional equity and/or subordinated debt by an amount that will fully fund our business plan.

Looking forward, with the Thales arbitration matter and the principal terms of the new commercial agreement for the purchase of additional satellites agreed upon, our long-term capital expenditure requirements are more defined. We are now able to focus on rebuilding the business by continuing our improvement in financial performance and arranging the requisite financing needed to complete our network infrastructure.

I will now turn the call back over to Jay.

As you just heard, we are pleased with the financial momentum that began in the fourth quarter of last year and are encouraged with our progress. These past three quarters of positive, adjusted EBITDA demonstrate a turnaround for our business and are the result of the hard work of everyone at Globalstar.

As I discussed in May, with increased discipline in sales, marketing, and product development, plus a new constellation offering vastly improved coverage and the return of the industry's highest quality voice service, we're laying a strong foundation for the business.

Globalstar continues to make the necessary investments and operational improvements to realize the opportunities that lie ahead, and we are focused on increasing our revenue and our adjusted EBITDA through the end of this year and beyond.

As announced on June 25, we reached a settlement of our prior disputes with Thales, and both companies agreed to the principal terms of commercial proposal for the purchase of six additional spacecraft. The mutual settlement also provides that Thales will complete their current work and timely deliver the remaining Batch 4 satellites.

With the resolution of our disputes now behind us, we continue to plan the fourth and final launch for later this year, subject to the delivery of the remaining satellites. All of us at Globalstar, as well as our satellite and launch partners, Thales and Arianespace, are working diligently to make this happen as soon as possible. We will update you with further information once the launch date is finalized. We're back on track and just one launch away from restoring full coverage, even as we deploy previously-launched satellites into the constellation, which further improves our call completion rates.

Our customers in key markets are already experiencing connection rates of greater than 80% today from placing more satellites into service since the May earnings call. These connection rates will increase further in the near-term, as even more satellites start operating over the next two to three months. In fact, we now anticipate that some of our key market areas will approach 90% call success rates even before our final launch. Increasing service levels are expected to drive both usage and new subscriber additions later this year.

Also, the momentum wheel issue that we discussed affects only one satellite, and the others are performing nominally. We're working diligently with Thales on the development of a software patch designed to correct the problem. Once the solution is installed, we expect the one affected satellite, launched in 2010, to return to service and successfully complete its 15-year mission. The software will also allow us to implement the same solution, should any other satellite ever be affected by a momentum wheel issue.

Throughout the quarter, we worked hard to expand our retail consumer market segment. Due to the continued success of SPOT and its related consumer products, to date Globalstar has sold more than 395,000 SPOT units to over 10,000 points of retail distribution worldwide. As the number of SPOT subscribers increases, so do the number of SPOT-initiated rescues.

Since its introduction in late 2007, SPOT products have been used in more than 2,000 rescues around the globe. Indeed, this year already, our customers have used SPOT for over 300 rescues involving more than 660 lives. For some perspective, that's more than one rescue per day from this remarkable product.

I'd like to acknowledge our partners at GEOS International Emergency Response Center for contributing to the success of our SPOT products. They are literally on the front line of each and every rescue.

With regards to our spectrum initiatives, as most of you are aware, the FCC's National Broadband Plan recommended additional spectrum, including Globalstar's, be freed up for delivery of wireless terrestrial broadband services. We view the FCC's implementation of this plan as a significant, future value driver for our shareholders.

In March of this year, the FCC initiated a rulemaking to permit another MSS Company, DISH Networks, to provide terrestrial broadband service within its 2 gigahertz spectrum near Globalstar's own spectrum. We have consistently supported the FCC efforts in this regard and are pleased that they appear ready to take final action in that proceeding soon. Perhaps as early as September.

The FCC has indicated that it intends to use the DISH proceeding as a model for providing spectrum flexibility to other licensed bands. Given Globalstar's spectrum bands, we believe we are uniquely situated to provide specialized, terrestrial broadband applications that will be unlike any other MSS providers.

We are fully engaged with the FCC in discussions concerning flexible use of our spectrum, and our recent discussions with them have been favorable. We look forward to continuing this dialogue over the next several weeks, and we expect this will lead to the commencement of our own proceeding. Of course, we will update you in the future on this exciting opportunity.

Also, as we previously discussed, Globalstar is a part of a joint venture with ADS-B Technologies, Inc., which is developing a space-based air traffic surveillance system utilizing Globalstar's second-generation constellation in our bent pipe architecture. ADS-B is a recognized leader in the development and installation of air traffic systems around the world, including the largest such system ever deployed in China.

During our first quarter call, we discussed ADS-B Technology's recent successful test flights in Alaska using a small, inexpensive set of hardware installed on an aircraft that forwards the ADS-B data from the aircraft up to the satellite constellation and then down to our ground stations located around the world.

This Globalstar-based system is the least expensive, lowest latency, most easily deployable space-based air traffic management solution imaginable. Moreover, because the electronics of our system are on the ground rather than in the satellites, our system is easily upgradeable to the changing requirements of the air traffic industry over time.

And finally, unlike any other competitive offering, our technology is proven, and no hosted payloads or other modifications to our satellites are needed to bring this solution to the market. Our solution is ready now. This opportunity represents one of many new uses for Globalstar that could prove very lucrative over time.

In sum, for the third consecutive quarter, Globalstar has reported positive adjusted EBITDA. Combined with our record subscriber growth, the continued deployment of the new constellation and the encouraging trends regarding utilization of our spectrum for terrestrial purposes, we're laying the product and business operations foundation necessarily for long-term revenue in EBITDA growth for the second half of 2012 and into the future.

I thank you all for your time today and look forward to speaking to you again. Rebecca, Tony and I are now available to answer your questions.

That concludes the prepared portion of the presentation, and we will now proceed with the Q&A portion of the call. Operator, can you please proceed with the first question?

Thank you. (Operator instructions.) Marco Rodriguez from Stonegate Securities.

Had a pretty strong quarter in SPOT and Simplex from a sub basis. I'm assuming the SPOT was positively affected by the 6,000 order for the US Forest Service. So if we exclude that, is that kind of a fair assumption, as far as what are the normalized number there? And can you talk about those Simplex adds? Was there a large one-time order? Or did you have any pricing promotions in the quarter, given the lower ARPU?

It was obviously an exceptional quarter as it relates to our SPOT and Simplex subscriber additions. The Forestry Service sale -- it obviously helped, but it also -- seasonality played a role in that as well. We are experiencing strong demand for our product, so we expect to continue to see additions. I don't know if you can expect to see them at the same level as we did this quarter, because we had several large sales, like you mentioned with the Forestry Service and like I mentioned with seasonality.

Marco, to embellish that a little bit, the order with the Forest Service is one that you still have got to account for over a long period of time. It's a contract for the first year. Secondly, we are working on a series of opportunities like that globally. Lastly, the commercial Simplex business is growing and will continue to grow.

The nature of it is that it can be a little bit lumpy, so I guess you can see things in one month, not see them for a month or two, and then see big hits again, because those are going to operators of large numbers of commercial Simplex units.

That's helpful. On the Simplex side, are you seeing increased demand there? Or increased interest? Any kind of additional color you can give there on the end markets?

Yes. Definitely the Simplex units, non-SPOT -- so not consumer products, but commercial Simplex -- is a growing marketplace. We've developed less and less expensive solutions for people, and it's what I fondly refer to as data heroin. As soon as you give people data, and they can acquire that data inexpensively, they want more and more of it. And that's the kind of things we're seeing in the commercial Simplex market.

People used to be unable to monitor devices because it was expensive or difficult to gather the data. Now they can do that readily, and so the enabling technology is Simplex. And the markets takes off and people find out more and more about it. And as they do, word spreads rapidly. We're now monitoring things, for instance, in the oil field, which are small. Historically, people wouldn't have cared about them, but they're individual items of high inventory value, so they're getting monitored today.

Got it. Then, kind of shifting gears, here, to your Duplex services, I believe, in your prepared remarks, you said that currently you're at about 80% call completion rates, and the expectation is for that to hit 94%, I believe you said in September. Is that having all of your satellites that are up in space right now in service? Or placed in service? Can you give a little more color around that?

Tony, I think you can probably do that one best.

Marco, the anticipation is that we will have all of our Batch 3 -- and those with the satellites -- the six satellites that we launched in December of last year, they will all be in service by the end of September. We're very pleased, number one, with the performance of the satellites, and we're very happy with the amount of service that they're taking. So, that's why we expect to see the services and the number of subscribers really get a better quality of both their calls as well as the SPOT and consumer products being served well on the Simplex side.

Got it. Then, in terms of marketing the service there, have you started to aggressively turn on the marketing program? Or is that still kind of being held back a bit until you get to a higher level of call completion?

Well, there's actually a little bit of both. We are reaching out to our historic customers and starting to convert the plans that they're on to higher value plans and make people aware of the increased utility. We will begin more aggressive marketing here in the near term for new customers.

Okay. Can you provide any kind of color as far as how that marketing plan is being set up from a strategic standpoint?

Can you elaborate on the question just a little bit, Marco?

Yes. Just wondering what the approach is. Is it trade shows? Is it going to end customers? Or -- any kind of color there? How you're going to kind of launch that aggressive marketing campaign?

Sure. It comes in a lot of different categories, all of which you've mentioned and then more. We have a ton of dealers, agents and resellers who we have reengaged, and those agents and resellers have been on the sidelines for Globalstar for the last couple of years as we repopulated the constellation. So, we're going back out to all of those.

We're absolutely in the trade show business. We were just at the outdoor trade show, which is the biggest in the world for the outdoor retailers in Salt Lake City last week. The week before that, we were in Osh Kosh for the General Aviation Show. Both of those are important aspects.

We also have a very long customer list of folks who have stuck with us, and those are commercial vertical market and government customers. Those customers we are re-contacting to make certain that they turn on the phones that they have and become paying customers again and fulfill additional needs by using Globalstar instead of some other solution. We're attacking all of those plus a few more.

Got it. Asking you here now to kind of bring out your crystal ball here for Fiscal '13. Just kind of wondering, with the additional or the aggressive marketing campaign that you'll be rolling out here shortly, how are you guys kind of thinking about the Duplex subs -- the ending subs or average subs? Obviously, directionally they should be higher. Just kind of trying to understand some of your thinking. Any kind of color there would be helpful.

In the short-term, Marco, obviously we expect to have churn that exceeds our gross additions, but once we have the coverage levels to the commercially competitive levels that we expect, at that point we would expect an increase in our subs.

But, I think, Marco, if the question is - - are we willing to give forward guidance on the anticipated number - - that is not something that we have historically done. Until a constellation is up and the final launch completed, I don't think it's something that we want to do right yet.

Understood. Then, you mentioned on the call the financing. You're looking for equity and debt financing to fully fund your business plan. Is that inclusive of the 5.75 convertible that is putable in April '13?

Obviously, that is a capital consideration for us, and we're in conversation with the holders of those instruments, and we will be.

Okay. You have had discussions with them, in terms of what to do there?

Yes. We're in conversation with -- it's a small group in number and very important people to us that we have conversations with frequently. So, we are in discussion about how to resolve those.

Okay. Got it. Just a real quick housekeeping item. What was the diluted share count in the quarter?

Great question.

You might want to give us a minute, Marco. We don't have that in front of us.

Okay.

Can we connect after the call?

Yes, that's -- I'll look for it a little bit later.

Lyman Delano from Beck, Mack and Oliver.

I've got a couple of questions, but I just thought I'd say one thing, anecdotally. I was in a remote part of Iceland last week fishing, and I used my Globalstar phone on a number of occasions and using the Calls Time tool. But, I must say that I was very, very impressed by the call availability as well as the quality and the speed of the calls going through.

I'm just trying to say that your call completion rate is already dramatically better than it was 6 or 12 months ago. That's great.

Thank you. We've spent a lot of money making that true.

My first question is related to ground operations. I'm curious -- I have sort of three-part question to it. One is sort of the timing and expense of the second-generation software upgrades for the gateways around the world. Two, do you have any new gateways planned? Three, could you just sort of update us on the relationship that you have with the IGOs, the independent gateway operators? And then, I have a follow-up question.

First of all, the IGOs are -- we'll take them in reverse order. The IGOs are engaged, but they, like we, have been waiting for a period of time until we get the new constellation up. They are important partners to us in the regions of the country, world that they operate, and that's really about half the world to us.

Secondly, for gateways planned, absolutely. We're always looking at additional gateways. We're looking at gateways specific to the ADS-B opportunity, which would handle certain air traffic routes. We're looking at a number of other things around ADS-B which would broaden the appeal of the already-appealing opportunity there. We're always looking at gateways to fill in different areas of the world.

Lastly, in terms of the ground upgrades that you were talking about, Lyman was that to see the second-generation ground infrastructure holistically? Were you asking --?

Yes, that's what I'm referring to. Just the -- preparing for the second-generation equipment. All of that.

Right. As you know, we time the second-generation ground to occur approximately a year or two after the satellites are places in service. There were several different reasons for that. So, we still look at the ground infrastructure as lagging the last launch by somewhere between one and two years. I mean, from today, you might look at it as two years from now, plus or minus.

Okay. Fine. My other question is related to ADS-B. You talked about it in the May call and just talked on it briefly here as a potentially valuable business model for Globalstar. Could you update us, particularly in respect to some of the news that we've seen coming out of Iridium about their own ADS-B solution, which has had a fair amount of publicity? They've talked about their joint venture partner, NAV Canada and suppliers Harris and Exelis.

I saw, in one publication -- I think it's the Air Traffic Control Newsletter from last week -- that your counterpart at Iridium had said something to the effect -- and I think it's a quote of his -- that Globalstar does not provide real-time connectivity over the oceans and poles and never will.

Could you just comment about the competitive aspects? And how to make sure that you can provide this question? Could you address his commentary? Whether you have a solution for that?

Sure. A couple of points. One, our solution is almost exactly real-time. The solution that is planned by Iridium, just by nature of its constellation, is different, so the latency involved in our solution is much more satisfactory, and that's because of the bent pipe architecture.

Secondly, I addressed the gateways. A couple of strategic gateways allow us to pick up additional aircraft routes, and we can place as many or as few of those as are required because gateways, as you know, are not an expensive undertaking for Globalstar.

Lastly, there's nothing that prohibits us at all from launching a couple of polar orbiting satellites at our elevation. Nothing at all. It's just a function of the business model. The business model is a good one. We'll launch additional satellites to cover the poles.

Historically, that was not a good business for us because there's relatively little usage, but the ADS-B opportunity would change the polar opportunity. So, no reason in the world that we would not do that.

Okay. Thank you.

[Tony Lodier] from [Starsale Equity].

First, I'd like to congratulate you guys in getting through this difficult period and for the job you've done.

Really, I have two questions. The first one is whether you could shed any light on whether, as a result of this most recent agreement, Thales has agreed to a date whereby they would deliver to you the remaining six satellites?

The second question I have is that given the improvement in the performance of your system and the continuing degradation of Iridium's system, it seems to me that we're close to a crossover point where your service, shortly, is going to become better than Iridium's even without the launch of the six satellites, and that given that fact, at some point, the Duplex system should kind of get a, how should I say, hockey stick type of acceleration boost in revenues from taking business away from Iridium. I'd like you to comment on how close we might be to that point and how much revenue that might involve.

Tony, why don't you take the delivery of the satellite issue, and I'll take the other one?

Sure enough, Jay. Thales is working very closely and, frankly, has been, even through the settlement period, in getting all of the remaining six satellites for delivery to include one additional what we call prototype flight model available by the end of September.

We're doing additional testing to make sure that the momentum wheels are operating properly. We're making certain that all of the final subsystems are ready for flight worthiness. Their current date is that they will be available at the end of September, which will therefore give us the opportunity to make the final launch for Globalstar's second-generation satellites in December.

Obviously, we're still dependent upon their date that they select for all of the satellites to be ready, but the current plan is for them to be done at the end of September, which will have us be able to launch the fourth launch in December.

Tony, to the question of the competitive positioning of Globalstar versus Iridium, clearly Globalstar is back. We have got the least expensive handset by a large margin, and it's a terrific one. We have $40 plans that allow people all they can eat, which are unprecedented in this industry. We have voice quality that is unimaginably clear, if you haven't used it. It's almost landline quality. So, those are very significant competitive differences.

We have seen some releases by Iridium over time, and of course we're in discussion with many of their customers. There is no question but that they are experiencing some of the difficulties that we experienced in our constellation, or seem to be, and as a result, there will be a crossover.

We expect that that crossover is very, very soon. Though we're not testing Iridium's system carefully to know exactly what their call completion rates are and their call durations, they're making announcements about ways that their ganging satellites together in unique and creative ways in order to solve challenges in their constellations.

So, we expect a tough competitive environment with them, but I believe that history has shown, where customers have the choice with two constellations operating at similar quality levels, they have traditionally chosen Globalstar in the areas that we serve, which is the land masses where most of the population of the world is.

Your costs are much lower than theirs, I'd say -- I would guess, right? At least on an incremental basis?

Well, if you look at the operations of the constellation, I can't speak to that precisely because any number of differences. However, if you look at the total cost of constructing their new constellation against the cost of us constructing ours, theirs will be three times more expensive. So, the cost of the total operating cost, inclusive of depreciation, will of course be vastly more expensive in their case than it is in ours.

If you want to be in the consumer business, which is what we want to be in, you have to be the low-cost provider of the service, and Globalstar has said to anybody who would ever listen, that that's exactly what we intend to be. We want to be in the consumer marketplace, which we view as the broadest marketplace, and we want to be the low-cost provider. And by virtue of our constellation, we will be.

Jim McIlree from Dominick and Dominick.

It seems that as your constellation improves its coverage, you should be able to increase your ARPU. When is it reasonable to expect that to show up in the financials?

As we said in our press release, we expect the coverage levels to reach 90%, approximately, by the end of the third quarter. That will really allow us to penetrate the market with our coverage levels at those commercially competitive and acceptable levels. I would expect increases in revenue subsequent to that.

So, there should be an almost immediate increase?

I think so, Jim. The way to think of this is on a couple of different prongs. We have customers that have been on inexpensive plans, historically, some of them on plans which don't require them to pay anything except when they are using the system. Those people will be converted to higher plans. That will roll through ARPU.

As you sell new plans to people that are not $40 all-you-can-eat plans but something more tailored to a higher-quality constellation, if you add a new customer and he's paying you $60 a month or $80 a month, that rolls through ARPU as well.

So, I think that ARPU will be a choppy number to look at over the next couple of quarters, as those things happen, but generally speaking, it will be up and to the right as we add new customers.

Is there a significant amount of Duplex subscribers who have gotten a deal where they're going to have low prices permanently or for --?

No.

An extended period of time?

No. The extended periods of time have largely run, and so those customers are changing plans now.

Operator, is there one last question at all? Or is the queue [empty now]?

I do have one additional party.

Go ahead (inaudible).

Brian Davidson from Stark Investments.

I might've missed this during the prepared remarks, but how much is left on the contingent equity line?

We have just under $23 million left.

Okay. You said you expect to draw that by the rest of the year, right?

We do.

With respect to the comment about raising additional equity in [in our sub-debt] to full fund the needs of the Company, can you give some guidance as to how much that would likely be?

I can't give specific guidance at this point, but think about, Brian, any additional CapEx that we do. It is CapEx that plays out over many years, so it's not necessary for us to go and do a financing which includes 100% of the whole future. I mean, if you think about the term fully funded business plan, as we have used it, if you did a single lump sum financing, you'd want to do it that way. But, the actual needs of the capital are over many years.

Okay. How about in terms of the $23 million that's left on the equity line that will be drawn through the end of the year. Will any of that be used for CapEx? Or is that mostly to fund the operations?

Well, we do have Launch 4 planned, obviously, before the end of the year, so our operating expenses will be funded by the remaining amount in the contingent equity account, and then our operating inflows will go to fund the launch. Anything in addition to that, we would need external financing.

I assume you've retained someone to help you raise the funds?

We're in conversations with some, but we're not in market right now, Brian.

Operator, are there any other questions?

We have no further questions.

With that, we'll end the conference call today. Thank you again, everyone, for joining us. We appreciate your patience at the beginning for the delay, and hopefully you didn't too much of the thunder from a local storm that just went through.

Please be reminded, later this morning an audio recording of the conference call will become available. The telephone dial-in and the webcast recording and a copy of the presentation will also be available on our Website.

Thank you and good morning.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.