Peraso Inc (PRSO) 2008 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen. We are now ready to begin the MoSys First Quarter 2008 Financial Results conference call. (Operator Instructions).

I would now like to turn the call over to Ms. Beverly Twing of Shelton Group Investor Relations. Ma'am, you may proceed.

Thank you, Audrey. I am joined on today's call by Len Perham, President and CEO; and Jim Sullivan, CFO. By now everyone should have received the press release. However, if you haven't, it is available on the MoSys web site at www.mosys.com.

Before we begin today's discussion of the first quarter financial results I would like to remind you that this conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes, without limitation, statements about the markets for the MoSys technology; benefits and performance expected from use of the 1T-SRAM, 1T-FLASH or mixed signal technologies; licensees of 1T-SRAM technologies and their strategy; the development and production of products that use MoSys's license technology; license fees and royalties attributable to 1T-SRAM, 1T-FLASH, and analog mixed signal technologies; and the Company's anticipated or perspective financial performance.

Forward-looking statements made during this call are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Additional information concerning factors that could cause actual results to differ materially from any forward-looking statements made during this call are contained in the Company's most recent annual report on Form 10-K filed with the Securities and Exchange Commission, in particular in the section titled Risk Factors; and in other reports that the Company files from time to time with the Securities and Exchange Commission.

MoSys undertakes no obligation to publicly update any forward-looking statement for any reason except as required by law, even as new information becomes available or other events occur in the future.

Thank you for your attention. I will now turn the call over to Len Perham, Chief Executive Officer of MoSys.

Good afternoon, everyone. It's a pleasure to be talking with you again.

Last quarter, I identified three immediate priorities for the Company. They were organizing and focusing the Company on its primary objectives, the reorganizing the sales department and improving customer relationships, and third, product and technology development. I thought I might update you on each of those three areas.

First, organization and focus, Didier Lacroix joined MoSys on February 21 as our VP of Worldwide Sales. Didier has an MS in electrical engineering from Caltech and brings a wealth of experience in the area of analog and mixed signal sales applications and marketing. Since he joined us, we've added several more people into our sales and we've made some reasonably significant changes in our selling organization.

First, we've re-mapped the sales responsibilities region by region and we are now organized and staffed to sell either digital or analog IP and/or standalone application-specific system solution SoCs such as Blu-ray. We now have gone direct in Europe, Taiwan, and in China and are providing additional support to our sales reps that were already covering the regions. We've added significant technical depth and selling expertise to both the sales and the applications areas.

We are in the midst of reorganizing marketing and have added key additional strengths to the analog portion of that team as well. We've added key technical strengths, PhD-level guys with lots and lots of experience into our flash device and sell design teams.

More remains to be done. We need to break out business unit responsibility, add application-specific strength, especially in the area of complex analog SoCs, and rethink critical interfaces between R&D, the business units, sales, and corporate marketing.

We have completed the assimilation of our Romanian and Shanghai teams and I think we now are safe to call ourselves simply Team MoSys.

Let me talk a little bit about sales, customers, and business relationships. With Didier onboard and sales force reconstruction well underway, I went offshore to visit customers and partners for most of the month of March. I delivered the same message everywhere I went. MoSys wants to shorten the customer's time to market, shorten his time to market by developing complex, prepackaged building blocks and supplying them as robust and verified system solution macros. In short, powerful, complex building blocks, bullet-proof reliable.

Second, we want to solve the customer's difficult SoC challenges by supplying him a wide range of complex digital, analog, mixed signal system solution macros with the aim to simplify his SoC IP integration problems.

Third, we want to serve our shared customers by more closely partnering with the foundries in order to achieve a more optimum integration of construction physics and system design. In our business, it's safe to say that the performance of an SoC is going to be 50% construction and 50% design.

We want to provide a greater percentage of the key building blocks our customer needs in order to create his system-on-a-chip. We want to provide determinate macros, macros that determine the performance of our customer's system. And we want to own a larger percentage of the customer's system-on-a-chip floor plan.

Finally, in summary, we want to partner with our customer to drive down his costs, to optimize his system-on-a-chip performance and to shorten his time to market.

Some observations from my trip -- customers were glad to see us. I was particularly pleased at how warm MoSys was received on the first time that I was offshore with a MoSys hat on. And just for the record, I was in Japan for a while, Seoul, Korea for a while, Taiwan, China, and basically in most of the hot high tech areas of the Pacific Rim.

In discussions with the customers, I found there were many potential business opportunities for us, lots of opportunity with traditional customers, traditional applications, our 1T-SRAMs, our soon-to-be-released flash, and new customers with new applications, our mixed signal, our straight analog, or complex analog SoC capabilities.

The opportunities for our new display driver -- excuse me, the opportunities for our new display driver system solution macros are plentiful. The convergence of mobile with a connected consumer is going to expand the opportunities for our new display driver system solution macro family.

I found significant interest in our new analog IP macros and chaired several meetings to discuss partnering and developing technology that could support our customers [that was] heavily complex analogs.

Additionally, our current 0.13 micron 1T-FLASH technology and as well our roadmap to even 90 or 65 nanometer solutions generated lots of excitement, both from foundry partners, IDM partners, and potential customers.

Product and technology development -- we have received our first 1T-SRAM macro order at 40 nanometers and we've already started working on the project. Working together with our foundry partner, we have dramatically decreased device leakage on our 130-nanometer display driver. That's our high-voltage 130-nanometer technology. And this decreased device leakage was a result of a close team effort between foundry and MoSys and has yielded excellent results.

Our 130-nanometer flash technology is still on schedule, no delays since we last talked, and should have a May/June release into full production.

We are now confident in our 1T-FLASH direction, have plans in place to increase the cell robustness, to increase the speed of the device and the macro, and to improve the wear-out factor. We believe that we can make a really significant advance - advancements in each of those three critical areas of flash storage. We expect embedded flash technology to be a big success story at MoSys.

Let me touch on a few highlights or summarize what's been going on and then I'm going to turn it over to Jim to talk about the numbers.

We have completed the assimilation of our recent acquisition from Atmel and now our Romanian team and as well the Shanghai team are all part of the MoSys family. We've received our first major order for an analog project. This order will be handled primarily by the MoSys Shanghai team.

Our complex analog front-end SoC has successfully passed 100% characterization as a Blu-ray DVD reader or player. We are in very active discussions for large Blu-ray orders with four or five different customers.

The fact that we characterized this part and it did not require a single match change is just an enormously significant accomplishment and a testimony to how really good our Shanghai and Romanian teams are. They just did a great job on this project. We look forward to other equally big or even larger projects in the future.

We have received our first large order for a 40-nanometer 1T-SRAM macro. And as I had said earlier, work has begun on that project. We've continued to make good progress on our 1T-FLASH program and expect complete release of this 130-nanometer family later in the quarter. And we're in active discussions with several foundries and IDMs regarding bringing this capability to their wafer operations at 90 nanometers or 65 nanometers.

Orders for licenses and NRE in the first quarter greatly exceeded revenues for licenses NRE in the first quarter and we expect orders this quarter to be up again.

The sales force significantly restructured and in some cases re-staffed, we are equally capable in both digital and analog sales and look forward to bringing these opportunities to work together to many partners and customers from this point on.

I'm now turning my attention to the internal organization. I expect most organization changes to be completed within today's quarter. I expect further advancements in the technology development area. I expect increases in sales and I expect progress to getting our company into a range of sensible financials with a P&L back in the black.

I will now turn the call over to Jim, who's going to provide you with a more detailed review of our first quarter financials.

Jim, go ahead.

Thank you, Len. And thank you to everyone for being on the call today.

During the course of my comments, I will make several references to non-GAAP numbers. Unless otherwise indicated, each reference will be to an amount that excludes stock-based compensation expense and intangible asset amortization.

These non-GAAP financial measures and a reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related current report on Form 8-K, which was filed with the Securities and Exchange Commission today and can be found at the Investor Relations section of our web site.

With regard to the results for the first quarter, total revenue for the first quarter of 2008 was $2.8 million. This compares to $2.9 million for the fourth quarter of 2007 and $3.1 million for the first quarter of 2007.

Royalty revenue for the first quarter was $2.4 million compared to $2.5 million for the previous quarter and $2 million for the first quarter of 2007.

During the first quarter, we continued to see additional ramping of royalty revenue associated with the Nintendo Wii, which was partially offset by a decline in royalties from our foundry partners.

License revenue for the first quarter of 2008 was $432,000 compared to $388,000 in the previous quarter and $1.2 million in the first quarter a year ago.

License revenue for the first quarter was recognized from 16 customers, up from 14 in the fourth quarter of 2007. Royalty revenue for the first quarter was recognized from 18 different customers, which was the same as the fourth quarter of 2007.

On a GAAP basis, our gross margin percentage was 83% for the first quarter compared to 72% for the previous quarter and 82% in the first quarter of 2007.

Total operating expenses were $7.7 million for the first quarter, which were consistent with the previous quarter and compared to $4.7 million for the first quarter of 2007.

First quarter operating expenses included $1.2 million in stock-based compensation charges and $197,000 in amortization charges related to the acquisition of the analog and mixed signal design teams in the third quarter of 2007.

The year-over-year increase primarily reflects additional SG&A and R&D expenses related to the acquired analog/mixed signal engineering teams and their associated product development projects.

Selling, general, and administrative expenses or SG&A were $3.4 million compared to $3.3 million for the fourth quarter of 2007. Research and development expenses were $4.1 million for the first quarter as compared to $4.2 million for the previous quarter.

On a non-GAAP basis, total operating expenses for the first quarter of 2008 were $6.3 million compared to $6.5 million for the previous quarter and $4 million for the year-ago quarter.

Non-operating income was substantially comprised of interest income and totaled approximately $1.1 million for the first quarter of 2008 compared to $1 million for the previous quarter and $1.1 million also for the first quarter of 2007.

On a GAAP basis, the net loss for the first quarter of 2008 was $4.3 million of a loss of $0.14 per basic and diluted share and includes stock-based compensation and amortization charges of $1.5 million.

This compares to a net loss of $4.6 million or $0.14 per basic and diluted share for the previous quarter and a loss of $969,000 or $0.03 per basic and diluted share for the first quarter of 2007.

On a non-GAAP basis, the net loss for the first quarter was $2.8 million or $0.09 per share and excluded as I mentioned stock-based compensation and amortization charges of $1.5 million.

The net loss per share on both a GAAP and non-GAAP basis was computed using 31,673,000 weighted average shares outstanding.

Now turning to the balance sheet, as of March 31, 2008, our cash, cash equivalents, and short- and long-term investment balance was $77.3 million compared to $78.6 million as of December 31, 2007.

Cash expenditures during the first quarter of 2008 were primarily attributable to our net loss for the quarter, which was offset by an approximately $900,000 receipt of an income tax refund from the IRS related to an amended prior-year tax return.

At March 31, our investments consisted of money market funds, treasury bills, corporate notes, commercial paper, and student loan-backed auction rate securities.

As of March 31, 2008, we have re-classed approximately $8.7 million of auction rate securities from short-term to long-term investments in our balance sheet. This is due to the auction failures and resulting loss in liquidity experienced during the first quarter.

Based upon our evaluation of available information, we believe these auction rate securities are of high credit quality as they're based on pools of student loans. The issuers have AAA credit ratings and greater than 80% of the par value of these auction rate securities are guaranteed by the US Department of Education.

Accounts receivable at the end of the first quarter totaled $1.3 million compared to $895,000 as of December 31, 2007. The increase was primarily attributable to billings on customer agreements signed during the quarter. As of today, we have collected approximately 90% of the March 31 receivables balance.

During the quarter, we did not repurchase any shares of common stock under our existing stock repurchase plan.

As of March 31, we had 190 employees compared to 184 at the end of December. The six headcount additions during the first quarter were all in engineering, primarily in China and Korea.

This concludes my prepared remarks. At this time, I would like to open the call for a question and answer session. Please clearly state your name and company affiliation prior to asking your question.

Operator?

Thank you. (Operator Instructions). Our first question comes from the line of Chris Chaney with Stanford Group. You may proceed.

Hi guys.

Hi Chris.

Hi. A quick - a couple of quick questions here. First, Len, you were mentioning at the end of your remarks I think it was, just before Jim came on, you were talking about some of the orders, that orders and NRE payments actually exceeded revenues for the past quarter. Was that correct? Did I hear that right? I wasn't sure how to think of that actually.

Actually that was exactly correct.

It exceeded license and NRE revenue.

Yes, let me...

I just want to make sure I understand that all again.

Yes, hold on just one minute. I want to just be very specific about that, so let me...

Because it sounds like what you're saying is that book-to-bill was positive, et cetera, but I just want to make sure that's all clear.

Yes, orders for - I wanted to be very specific. I discounted royalty, so I didn't want royalty in there. I made the statement that orders for licenses and NRE in the first quarter greatly exceeded revenues for licenses, NRE - and NRE in that same quarter. And we would expect orders to be up again this quarter. So the point I wanted to make is when you are entering orders for licenses and NRE, your business is expanding.

And I made allusion to it, but didn't get too specific or quantitative at the last call that our plan for this year was that our new orders for licenses and NRE would be a dramatic increase over last year.

And we were middle 80s or high 80s percent of our goal for the first quarter in terms of total bookings. And we think it was just a timing issue that we didn't make the plan and we're optimistic we're going to be on plan for a higher number this quarter.

Now do you expect that the orders that you book will be shippable within 12 months? Is that sort of how you characterize that?

I think in our business, we have to allow somewhere like six or nine months for the customer to be ready to go and then for us - for work with him and get him what he needs and then maybe another six months to see him turn on to paying significant royalties. And probably 12 months is a reasonably good number. The answer is yes.

And just to go a step further on that, Chris, it's my opinion that this company sits on a platform that has a certain amount of royalty and that royalty stream looks to be good and our customers that pay that money to us seem to be doing well and we're designed into their future systems. And we're starting to layer new opportunities in the form of orders onto that so that if we go out 6, 9, 12, 15, 18 months, we're going to start seeing a lot of new things come in and we're going to see a substantial change in the revenue stream of the company.

Got you. Now on the analog front, and you also mention there there was an order, I guess the first major order and it's been 100% characterized. It sounds like it's ready to go and no re-spins are required for the chip. Does that suggest that this might shift or be generating revenue within one to two quarters? Or what's the time frame you think we could start seeing a revenue impact?

I think that we should expect that your answer is correct. And for me, when I'm talking to you guys, if it's a major order, it's going to be something in excess of $500,000. And I - this was a - this qualified as a major order. And I think it will convert into revenue over the course of this year.

And are the other four to five customers you're speaking to also in the classification of a major order?

Are you talking about Blu-ray?

Yes. It was - you mentioned you were in discussion with - on the analog front and of other - four to five other customers and discussions are underway with those customers. Are those also kind of classified as the major - as major orders, like $500,000 or more?

Every order that would - every one of the four or five customers that we're in negotiating - negotiating with right now, the guys in the funnel if you will, would also come under the heading of major orders, that's correct.

The 40-nanometer 1T-SRAM order you mentioned also, is that - what's the application for that? Is that another like a game system? Is it a communications component order? Or kind of where is that going?

Actually we've had a number of conversations with our partner on this. And it does have some application into the game space. But in the case of the 40-nanometer macros, he also sees a number of other applications. So it seems to me that he was talking to us in the area of five or ten different possible applications for these macros. So this one is a - at 40 nanometers, that scaling is such that there's quite a few opportunities for it outside of the game space.

Okay. And finally on the 1T-FLASH, the 130-nanometer release would be in June, in the June quarter. That's this coming quarter. But that's just I guess when you release it to the customer. Is it then a time frame of maybe six to nine months after that when they start to - when they would hopefully begin to run production and pay you royalties?

Well, let me be more specific. We had a small celebration here. I think it was in the early part of this quarter where we celebrated the delivery of our 1T-FLASH macro to the SoC company that wanted that. And what I'm referring to today is that we're in the final stages of a full certification of 130-nanometer flash technology at the foundry that our customer chose and that we've gone in sort of what I call a full-up certification.

You do runs from different date codes at different times and you can't get away from the length of time to do the life testing. I believe that two of those runs are completely done and the third one completes some time late May or some time between mid May and late June. And so basically the customer is already designing in the macro. And the - and I was referring to the fact that the foundry will complete the certification the - near the end of this quarter.

So think probably the answer to your question is I don't remember off the top of my head what our customer's schedule is for this SoC getting to the market, but I'm going to speculate that it's going to be in this calendar year, probably I'm guessing late third, maybe fourth quarter. I don't have that off the top of my head, but they've had it now for a while, so if we assume it's a nine-month job, they have a good shot at having it in the year.

Okay. And just the final question I had here was on the royalty revenue stream. You mentioned that Nintendo was a contributor to that. I'm assuming that TSMC's Xbox design win is also in there. And can you characterize how that's grown or what the change has been quarter to quarter with that particular piece of business?

Well, basically we don't get projects broken out inside of TSMC. So we can't identify which project it is that's selling. The Nintendo royalty stream was strong for the quarter and we're optimistic that they're going to have a very good year based on everything we hear. And we know there's a lot of projects either nearing completion or in progress or already into the - into being designed into an SoC somewhere with our partner TSMC. But they don't give us an itemized breakdown, Chris, so we can't tell you which is which.

Okay. In terms of the guidance, revenue guidance, do you expect at some point you might come back I guess to the traditions the company had before...

Yes.

...you came in and actually begin to give quarterly revenue guidance?

Yes, I do intend that I would one day not be able to avoid giving guidance again. But I'm still trying to understand exactly what the criteria should be. And I'm thinking that it would make me happy to give guidance if no deal that slipped a week from one quarter to another that was more than 10% of the total for the quarter. But as long as it's 40% and I miss it by a week and get brutalized, I probably won't do it.

So I'm still looking at that situation and trying to find out how to get MoSys onto a level playing ground with all of the other companies because I know it's not particularly advantageous to me not to give it. So you can be sure that we're going to get back to it eventually, Chris.

Understand that. And final, final question on breakeven, what - I haven't done the math just yet on my model because it's not all plugged in yet, but what is the breakeven level in revenues today and where do you expect that to be going in the next couple of quarters given some of your investments in marketing and sales and things like that?

When you factor in the non-cash, the stock-based comp, and the amortization expense, the simple math gets you up to about $8 million. The key thing on the expenses is we're really - we're certainly staffing sales. But as you probably noticed from the headcount statistics, we added sales folks, but didn't increase the headcount because they came out of other places.

The other thing we've done is we've kept that P&L neutral by adjusting compensation in some places and putting more focus on incentive comp. In addition, we had some folks with higher bases and made adjustments there.

And on the R&D side, the headcount we're adding is specifically related to new business, particularly on the deal we signed on the analog side, adding some heads in China to further support that. We added some folks on the flash side -- we hope that's kind of push it over the hump this quarter as Len described.

So I would think the expenses will really only increase significantly to drive new business. We're being very disciplined in that approach and keeping an eye on it. So if you call it at that kind of $7.5million, $8 million number on a GAAP basis, that's kind of where it's at.

I expect the interest income will stay pretty flat, so just putting that - just on an operating, talking more of an operating income side, we'll keep it about the $1.25 million. Our investments are in very safe instruments and we're not seeing a big reduction there.

Okay, great. Thanks a lot.

Thank you, Chris.

(Operator Instructions). Our next question will come from the line of Joel Achramowicz with MDB Capital Group. You may proceed.

Thank you very much. Good afternoon, Len and Jim. How are you doing?

Good.

Well, you've had two quarters under your belt, Len, and I - I'm encouraged by this quarter. I was expecting something a little bit lower, both in the top line and you beat that. So can I just ask you a subjective question right off the bat? What are your - you were guardedly optimistic the previous call. You obviously have a little bit more information. The team is expanding. You have a better 30,000-foot view of the business. And it seems you have stabilized. Would you say it's stabilized? And are you just as encouraged, if not more so, now?

I actually think the business is - the business - the word stabilize, yes, I think stabilize, we can use that term. We've - I'm very optimistic for the Company, probably more optimistic than I was. In my words today, one, I think that the - Didier Lacroix's work with the sales force has been extraordinary in such a short a period of time. And I think that our sales force is arrayed on the field now such that we can sell effectively into every market that we can - that's available to us on the globe. That's a huge thing because we need to be in front of our customers if we're going to grow and benefit from the value we have to offer.

And then we can say that the - nobody had a right to expect that the Blu-ray would be as successful as it was. We characterize it and last call I said it would be mere - complete characterization at the end of the quarter. And basically it's 100% good. It's just a fabulous accomplishment.

And then next I took - I hedged a bit last time. I wasn't sure or at least I intended to make the point that I wasn't quite sure how fast we could get the flash going and we've made enormous progress with our flash. Not only do we understand better than we ever have before from a device and cell point of view how good the flash we have is. We have a plan for increasing the three things that matter to flash.

The robustness has to do with how strong it is and how it can resist corruption. That is generating an error in information. And in that one, we can see how to better it. Two, we can probably get the distribution to be all at a higher speeds to move it from a very significant move in the performance of our macro. And third, we see how to improve the wear-out.

And fortunately or unfortunately, I'm a reasonably technical guy, so I've attended most of these meetings myself. And I'm beginning to remember some of the stuff to do with trapping and conduction and oxides and so on. So the answer is I'm feeling good about the Company. We got quite a bit done, have lots to do. But we're headed into the right place.

Very good. How - in terms of the Blu-ray, we've talked at one time, your previous - your predecessor was talking about like opportunities in the 50 million unit range and I think if not more on a limited basis as far as a fraction of a market that's growing or that will grow. What kind of royalties would you expect to receive per unit? Can you give us any indication of that?

The royalties in terms of percentages and all should probably be somewhere in the range of what we have now or maybe to the high end of that, the 2.5%, 3.5% or something like that.

And the - and I can't speak to the 50 million units, but the applications I can speak to. Well, first off, we're getting to the market perhaps a little later than he had anticipated. The GDS tapes were not sent off to the [math shop] until late - mid December after I got here. And so that was - that probably moves us out just a little bit in time in terms of the window of opportunity.

But we have customers that are talking about wanting to bring Blu-ray definition and resolution onto the screen of a PC, wanting to bring Blu-ray definition and resolution into a set-top box, wanting to bring it into a DVD, wanting to use our chip as a recorder. And then we have a customer, too, that I'm not completely sure yet what they have in mind. But our product is very, very good. It is what I'm going to call OPU-insensitive, meaning it can work with any OPU, can read or record and can do VD or HD. So we're - we are very well positioned here. And we've - we're cautiously optimistic that when we talk again, we'll have our first major order, maybe even more, but certainly our first one.

Well, we'll look forward to hearing more about that. In the past, we were looking at maybe on the display drivers seeing a royalty of like $0.10 to $0.15 per device. Is that still in the ballpark?

That sounds a little high to me. Or is that about right, Jim?

That's about right?

Is that what you think? Okay.

Yes.

And you would expect, Jim, to see some - that we're going to see some revenue and soon in that display driver area?

Actually we've - I believe we're seeing revenue now. I - our quarter VGA has already been designed into an organic LED-based LG phone that is on the market and selling in South Korea. I had a couple of them offered to me while I was there.

Now that said, we have - we're actively working with a few other customers now that have placed orders and we have a number of others in the wings looking. And with the convergence of mobile with the connected consumer, that is something like the iPhone, the level of opportunity for our display drivers is going to dramatically increase I think. And I made that position to a few of my partners that are foundries or IDMs on this trip. And the - they - some cases, they signed up immediately and some cases they looked. But we're seeing expanded interest for our display driver.

I was just at TTIA a couple of weeks ago, two or three weeks ago, and everything's video over mobile devices.

Not only is it video. People want more pixels, more resolution. They want to - if they're on the Internet, they want to transfer more complex files. So all of this takes larger and larger memories to convert a mathematical data stream into an image.

Well, great. I - one more question perhaps and then - and I'll get back in the queue. You had talked about utilizing your technical - new technical guys, both in Romania and China, in some productive new product areas and you said you'd give us more color in the future. Have you - do you have any handle on that yet? Or is it going to take a little bit more time? I mean, besides obviously the DVD, you had talked about some switch opportunities in the past, ATA technologies and things. Any other ideas or brainstorming of where you might want to take those groups?

Yes, we have a few other things that I - I'm not quite able to announce today. But I can say that we spend some time every week just talking about them and we also have got a - another application-specific system solution macro based on our 1T. It's a different field of application than the display driver that's just waiting for the - to be now taken out as a strawman spec to a few special customers.

But we are - we have every intention of be providing what I'm going to call application-specific solutions into the 1T area, into the flash area, and we expect that in the future we're going to do more very, very complex analog SoCs and that we will supply some very high-speed analog macros into communications and perhaps connectivity spaces.

Well, we'll look forward.

We have quite a range of opportunities here.

Well, I'm encouraged with your progress and you reducing the cash burn. And we'll look forward to getting more data in the months ahead. Thank you.

Thank you, Joel.

And at this time, there are no further audio questions. I would now like to turn the call over to Mr. Len Perham. Please proceed.

If there are no more questions, I would like to thank you all for joining us today and Jim and I will be presenting at the AeA Micro Cap Conference in Monterey on the fifth. Happens to be my birthday. I'm going to be 65 years old unless I croak due to the pace I'm keeping. We invite you to attend and it'll be a morning session and we will be presenting along with one of the six in the afternoon breakout sessions in Room 2318. We'll look forward to seeing you and if not we'll look forward to talking to you again in the near future. And I want to thank you very, very much for coming and listening to our story. We'll make it more exciting as time goes by. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. At this time you all may disconnect and enjoy the rest of your day.