Quicklogic Corp (QUIK) 2014 Q1 法說會逐字稿

Ladies and gentlemen, good afternoon. At this time, I would like to welcome everyone to the QuickLogic Corporation's first quarter 2014 earnings results conference call. During the presentation, all participants will be in a listen-only mode. A question and answer session will follow the Company's formal remarks. (Operator Instructions).

Today's conference call is being recorded. With us today from the Company are Andy Pease, the President and Chief Executive Officer; Ralph Marimon, Chief Financial Officer, and Brian Faith, Vice President of Worldwide Sales and Marketing. At this time, I would like to turn the call over to Ralph Marimon, Chief Financial Officer. Please go ahead, sir.

Thank you, and good afternoon. Before we get started, let me take a moment to read our Safe Harbor statement. During this call, we will make statements that are forward-looking. These forward-looking statements involve risks and uncertainties, including but not limited to stated expectations relating to revenue from our new and mature products, statements pertaining to our design activities, and our ability to convert new design opportunities into production shipments; market acceptance of our customers' products that could result in our financial expectations for revenue, gross margin, operating expenses, profitability, and cash.

QuickLogic's future results could differ materially from the results described in these forward-looking statements. We refer you to the risk factors listed on our Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and prior press releases for a description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statement.

This conference call is open to all and is being webcast live.

For the first quarter of 2014, total revenue was $11.2 million, which was above the high end of our guidance range. New product revenue totaled approximately $8.9 million and was above our guidance due to continued strong shipments of our ArcticLink III VX platform to Samsung.

Mature product revenue in the first quarter totaled approximately $2.2 million, which was above our guided guidance range due to higher-than-expected bookings. Samsung accounted for 70% of total revenue during the first quarter as compared to 69% of total revenue during the fourth quarter.

Our non-GAAP gross margin profit for Q1 was 37% and was slightly above our guidance. The increase in gross margin is primarily due to improved manufacturing efficiency resulting from the higher revenue level.

Non-GAAP operating expenses for Q1 totaled $5.4 million, which was just above the midpoint of our guidance. On a non-GAAP basis, the total for other income, expense, and taxes was a charge of $62,000. This resulted in a non-GAAP loss of $1.4 million or $0.03 per share.

We ended the quarter with approximately $37.1 million in cash. Cash declined by approximately $300,000 as cash usage from operations was offset by the exercise of employee stock options.

Our Q1 GAAP net loss was $2.1 million or $0.04 per share. Our GAAP results include stock-based compensation charges of approximately $732,000. Please see today's press release for a detailed reconciliation of our GAAP to non-GAAP results.

Now I will turn it over to Andy, who will update you on the status of our strategic efforts.

Though I am happy to report record quarterly new product revenue of $8.9 million, I am particularly pleased with the progress we have made towards realizing our long-term strategic objectives. I have quite a bit of news to share with you about our progress. But, first, I want to cover the tactical initiatives that currently are driving our new product revenue.

The new product revenue growth that began ramping in Q2 of 2013 has been driven primarily by our V-enabled ArcticLink III display bridge platform. This solution is used in both the Samsung Galaxy Tab III 7.0 and 7.0 Lite tablets. Because the -- Samsung's new Galaxy Tab IV 7.0 tablet uses a MIPI display, driven directly from the applications processor, a display bridge is not required.

In addition to supporting two out of the three 7-inch tablet platforms Samsung is selling today, our display bridge solutions are being used by a tier 1 PC manufacturer in two tablet designs and a variety of Chinese IDH customers. While we expect display solutions to be a good market for us in 2014, we have recently received forecasts from customers that there will be a period of inventory rebalancing.

A research report released last week by DigiTimes stated that worldwide sellthrough of tablets decreased approximately 30% sequentially during the first quarter of 2014. Additionally, Apple reported a 27% sequential decline for iPad sellthrough. When you compare this data with our 27% sequential new product revenue increase, which was driven by the tablet market, the logical conclusion is our customers were too optimistic.

Consequently, there will be a significant sequential decrease in our Q2 display solution revenue while customers rebalance their inventory. While disappointing, our total first half 2014 new product revenue is expected to be in line with the seasonal performance of the tablet sector.

I am very proud to announce that we initiated production shipments for a third design with Samsung in their new Galaxy Beam II smartphone which will be sold exclusively by China Mobile. The Beam II includes an embedded pico projector, which is supported by our ArcticLink III dual display bridge device.

During Q2, we expect to report production shipments for five unique handset designs using our one-time programmable, instant-on, smart connectivity platforms. These include four PHS handsets and the Kyocera Dual Digno smartphone that supports the PHS and 4G standards.

Additionally, we have a sixth PHS design win with a new customer that we expect will enter production in the second half of 2014.

The use of programmable logic solutions to deliver hardware differentiation in mobile devices has increased substantially during the last few years. These high-volume applications require in-system reprogrammability, a key architectural feature supported by our PolarPro 3 platform family that we introduced late last year.

Based on our research, most of the flagship Android smartphones that will ship this year will include at least one in-system reprogrammable logic device. We believe that market value for these devices will exceed $150 million in 2014. We continue to believe that our PolarPro 3 platform family will begin to generate production revenue during the second half of 2014.

The three most common functions supported by programmable logic devices and flagship smartphones today are driving one or more LEDs, TV remote control, and barcode transmission. We have developed proven system blocks of PSBs that have been fully tested in order to give our customers the assurance they can easily deploy these functions in our CSFP platforms.

We introduced the first of these PSBs to drive one or more LEDs last December. And the second for TV remote control earlier this month. We have completed the testing for our barcode transmission PSB and will issue a joint press release with our partner, [Mogim], next week.

A tier 1 mobile OEM has granted PolarPro 3 technical approval for use in a production design. Our goal at this OEM is to intercept a production device from an ongoing smartphone platform during the second half of 2014. At that point, we will be positioned to compete for the next major platform.

Other major mobile device manufacturers across multiple geographies have expressed a strong interest in similar mobile programmable logic solutions.

The market for mobile sensor hubs is growing dramatically and is considered to be one of the largest growth opportunities in the semiconductor industry. In fact, IHSI Supply expects it to become a $1.3 billion market in 2017. We intend to be a market leader.

And, since our last earnings call, we have made substantial progress towards realizing our goal, including we released our integrated development environment software tool, or IDE, and hardware development board that allows customers and ecosystem partners to port algorithms and accelerate new product development. We are actively engaged with a number of leading OEM customers on various mobile wearable and wearable products projects.

We define the next two generations of our sensor hub roadmap. Our roadmap is architected to extend the compatibility of customer and ecosystem partner intellectual property across future platforms. And our application for broad patent protection is pending.

Our IDE and hardware development board is a combined package that works out-of-the-box with a PC or a Dragon board using a Qualcomm Snapdragon processor. It also supports standard 9-axis sensors found in mobile devices today. The development package can be adapted to other host platforms and sensors, including customer-developed designs.

With our sensor hubs, we are engaged with numerous potential OEMs and are working on multiple smartphone and wearable designs. We have grouped these OEMs into three engagement models. First, several large OEMs that have their own algorithms and are using our IDE for evaluation and new product development; second, OEMs that have an interest in our catalog Android KitKat sensor hub solution; and, third, OEMs that fully utilize QuickLogic's CSSP engagement model.

For our roadmap, we have fully defined two follow-on platforms: the ArcticLink III S2 and the ArcticLink IV S3. The S2 is a pin-compatible extension of our S1 platform, which allows OEMs to integrate more functionality at two-thirds lower power consumption.

The ArcticLink III S2 has taped out and will begin sampling this summer, and will be production capable later this year. By hardening several of the functions we implemented with programmable logic in the S1, we doubled the computational capability to run more sensor algorithms, dramatically lower the power consumption, and increase the programmable logic capacity on the device. We believe this provides OEMs with a higher value proposition by enabling them to combine a sensor hub with the smart connectivity function typically implemented with the discrete programmable logic device.

The ArcticLink IV S3 is defined and currently on track to release in mid 2015. The S3 is substantially more than an extension of the S1 and S2 platforms. It is designed to enable the new applications and business models we believe will emerge during the next two years. To reiterate, the S3 will allow our customers and ecosystem partners to reuse the intellectual property they developed for the ArcticLink 3 S1 and S2 platforms.

With that, I will turn the call back over to Ralph for our guidance and rejoin you briefly before the Q&A session with my closing remarks.

For the second quarter of 2014, we are forecasting total revenue of approximately $6.5 million, plus or minus 10%. The $6.5 million in total revenue is expected to be comprised of approximately $4.5 million of new product revenue and $2 million of mature product revenue. The decline in new product revenue reflects reduced shipments of our display solutions into the tablet segment as earlier discussed by Andy.

We are forecasting a slight decrease in mature product revenues due to the expected booking rate from our aerospace test and instrumentation customers. As in prior quarters, our actual results may vary significantly due to schedule variations from our customers which are beyond our control. Schedule changes for existing opportunities and projected production start dates for new opportunities could push or pull shipments between Q2 and Q3 and impact our actual results significantly.

On a non-GAAP basis, we expect gross margin to be approximately 40%, plus or minus 3%. Gross margin is driven primarily due to the mix of customers and products shipped.

We are currently forecasting non-GAAP operating expenses to be $5.5 million, plus or minus $300,000. Non-GAAP R&D expenses are forecasted to be approximately $2.8 million. Our non-GAAP SG&A expenses are forecasted to be approximately $2.7 million.

Our other income, expense, and taxes will be a charge of up to $60,000. At the midpoint of our guidance our non-GAAP loss is expected to be approximately $0.05 per share. Our stock-based compensation expense during the second quarter is expected to be approximately $550,000.

We expect to use approximately $3.5 million in cash. The cash usage is -- the forecasted cash usage is primarily due to working capital needs and capital expenditures related to new product development.

Before we move to the question and answer session of today's call, let me turn the call back over to Andy for his closing remarks.

Even with the new product revenue decline we are anticipating for Q2, we continue to believe we will report significant year-over-year new product revenue growth for 2014. Our smart connectivity and sensor hub solutions are targeting the Android smartphone market, which is approximately 7 times larger than the Android tablet market we currently address with our display solutions.

Furthermore, the emerging wearable market represents an additional high-growth opportunity for our sensor hub and smart connectivity solutions. Looking beyond the first half of 2014, I continue to be extremely optimistic about our mid- to long-term opportunity growth and the progress we are making with our new strategic platforms. These platforms enable us to deliver a highly competitive disruptive product offering in the mobile segment, today's largest semiconductor market.

Now I would like to open up the call for questions.

(Operator Instructions) Krishna Shankar, ROTH Capital.

When you look at the second half of the year, you said that you folks would expect significant year-over-year growth in new products 2014 versus 2013. So, is that based on some of the design wins that you already have, for example with the Japan PHS customers? Or is that dependent on smart connectivity and sensor hub in new Android platforms for the second half of the year?

Sure. I think the answer is why we believe that is achievable is a two-part answer. I think tactically we are working to manage the inventory rebalancing for our display solutions in the tablet sector.

Just a quick side comment on that, I think that that was a very -- it was a surprise to all of us and it is very recent news. We only found out about this in mid-April. So we are still working that side of the story.

Strategically, however, I have shared progress on our areas for growth in 2014, both in smart connectivity and sensor hub solutions. So it is the combination of both that give us the confidence that we will meet that goal.

Okay. So it will be combination of both in new products for smart connectivity and sensor hubs, which you will see will be the basis for new product revenue growth this year [as to] last year.

Right. And we have been saying -- you may recall that we have been saying for six months now that these new platforms, based on our in-system reprogrammable logic, PolarPro 3 and ArcticLink III S1, will start to generate revenue in the second half of 2014. And we continue to believe that.

Great. And then, for the ArcticLink S1, will it be the CSSP version, which we will see the only revenue ramp? Or will it be the more customer-defined version?

Yes. The ArcticLink III S1 will probably be the catalog KitKat version that is being evaluated now, although there are also ArcticLink III S1 opportunities in the other more customized projects that I mentioned. So it is actually both.

Okay. And then you mentioned that -- I guess the existing markets for programmable in-system connectivity, something like $150 million for Android smartphones. And it sounds like you had one design win there already with the Galaxy Beam. Can you elaborate a little bit on that and other potential opportunities where you can capture existing sockets for smart programmable connectivity?

Yes. So, first, to be clear, the Galaxy Beam II is actually a display product. It is our dual port display product that simultaneously will drive the light engine as well as the display. So what we are talking about is actually smartphones. And I have tried to a lead to that when I was talking about the OEM that we actually are looking at a design that we are going to intercept the specific design of an existing platform this year, which will give us a good shot at getting onto a major platform.

Okay. Great. Thank you. I appreciate it.

Gary Mobley, Benchmark.

Congratulations on the good March quarter results. Speaking along that line, I guess the total relative revenue upside relative to your guide was about $1 million, and here we sit today with two-quarter guidance, assuming some inventory correction presumably at Samsung or perhaps your other tier 1 tablet OEM that just started ramping.

So I was just wondering, based on the information that you have received in the past two weeks, what drove the revenue upside in the March quarter and what is driving the inventory correction? Did perhaps Samsung or anybody in the supply chain misjudge how much the Samsung 7.0 Lite will cannibalize the existing 7.0 tablet?

Yes. That's a very good question, Gary. And I think to answer that, I think what drove Q1 revenue was the fact that they were introducing the Samsung Lite version to emerging markets. And, as we all know, with the mobile devices, when they are going through a major product introduction like that, they have to do a lot of inventory build to make sure that the channel is full of product so that when you and I order it, you can get it in a day.

So I think that that is why there is a buildup, and maybe they over scoped the size of that market. I really can't say. And, to tell you the truth, there is still a lot of inquiry being done on what happened and what will we do.

But, as I also said, remember, the overall tablet market suffered in Q1. So it wasn't Samsung. Apple as well, remember, had the sequential decrease in iPad sellthrough.

Okay. This design win intercept for PolarPro 3 possibly intercepting the existing product line mid-part of the year, could you talk about how easy it is to intercept that design? Or are you replacing an existing programmable logic solution and the existing product line? Or is this something that is going to be retrofitted as an additional feature to the product? And could you give us a sense of the magnitude of the volume for this particular SKU?

Sure. I think the best person to answer that is the guy that is pounding the pavement every day, Brian. So I will let Brian take a stab at that.

This is Brian. So I think to answer your question, to get into the mobile space with programmable logic, obviously you first need to have a solution that meets the right cost, size, power, and functionality. And, as Andy just mentioned, during the last quarter we have been building up this fundamental base of technology with our proven system blocks, the LED drive, TV remote, and barcode transmit. Those are actually allowing us to participate in this technical qualification at this OEM.

So, to be clear, it is not going to be swapping out a 10-foot pin with another programmable logic device. It is actually going to be a new PCB that would intercept this product, but we do feel like the basic building blocks are there to go do that.

And, as far as volume goes, we are not going to comment specifically about volumes of projects. But I think Andy did qualify and say this was a big OEM. So, you can put your estimates on that.

Yes. And I think what we are saying is, you actually get first production qualified. So we are technically qualified as we talked about last quarter. This is a matter of getting production qualified. Once you do that, then they have the confidence to put you in a major platform, which, kind of like the Tab III was for us, it was a platform that had many different SKUs sold across many different operators, with, frankly, many different APs attached to it.

Okay. Would you expect the PolarPro 3 to generate more revenue in the second half of the year versus the ArcticLink III S1?

Tough to say; I think it certainly has that potential, but we will have to fill you in more on the next call. I think it is too early to tell. We have got to be confirmed in a platform. And, you know, our style is not to talk about design wins, but rather to talk about production wins once we are shipping. So, certainly by next call, we will give you a lot more clarity on that.

Okay. Were there any other greater than 10% customers in the quarter?

No. Just the big one, Samsung.

Okay. Anybody close to 10%, other than Samsung?

No. Not with the volume that Samsung is driving. No.

Krishna Shankar, ROTH Capital.

Andy and Ralph, I was wondering, given the potential interest of the existing design, I know that you give guidance only one quarter at a time. But is it possible that with some of these new programs that you designed and just ramping up, you could see potential sequential revenue growth resume in Q3?

Krishna, we don't -- as you know, we don't give guidance out that far so we don't want to mention it. Yet, we have our internal plans. But, as Brian mentioned, we are in the process of evaluating where we are with the display solutions right now and it is going to take a little while for that to resolve itself before we can give any kind of firm guidance on Q3.

Okay. And, Andy and Brian, you mentioned three functions, LED driver; I understand remote control and barcode. I guess the barcode scanning helps -- it's a block that does hardwired conversion of the barcode recognition to the apps processor. What is the LED -- is that like a driver of functionality for lighting? What does that do?

Yes. If you think about your smartphone, you have a status LED. They will turn different colors if you get an email or voicemail or the battery is low. So there is generic ones that maybe just try to light LED. There are some that have color LEDs, and you need a little bit more sophistication in hardware to handle that off the apps processor. So that is one of the capabilities that we have developed and demonstrated to a few customers now.

Okay. And longer term, Andy, looking at beyond 2014, will the applications for smart connectivity be bigger than the applications for sensor hubs over the next couple of years?

Boy, that is a tough call. As you can probably tell by my -- the tone of my voice, I am equally excited about both of those. And, actually, remember that we are going to have the capability of combining the two. And we are going to be able to do something that we have never been able to do before, and that is integrate multiple chips on a single chip.

I see. Thank you and congratulations on the March quarter results.

Bob West, NI Technical Research.

Congratulations on a good first quarter. And, also, the clarity you gave on future product development, I had a question on your ArcticLink III S2. If I understood correctly, you indicated that it had sampled.

No. I think what I said, Bob, would be with the ArcticLink III S2 is that we have taped out and --

Taped out. Okay.

Yes. We will be sampling this summer, and it will be in production in the fall or towards the second half of 2014.

Okay. Thank you for clarifying that; then a follow-up question on that. If you have a current customer that is going through the -- an engagement process for the ArcticLink III S1, is it possible for them to slip over and go to production with the S2? Is that a lot of added effort or how would you characterize that?

This is Brian. I will take that question. So we have designed the S2 specifically to be pin-compatible with the S1, with that thinking in mind that a customer could go through the engagement process, work out algorithms, test it in the system, and actually migrate over to the S2 for production if the timeframes match up with what they need.

Great.

So, to be clear, there is no PCB change required.

Okay. Good. That is good news. So basically, you could theoretically ship S2s later this year.

That is the plan.

Okay. And, now, let's talk about the catalog engagement process a little bit. Could you give us any more color or metrics on your catalog version, the amount of engagement activity you have, that sort of thing?

Well, we won't quantify the number of engagements, but we have had several people interested in the KitKat catalog part that we worked in conjunction with Sensor�Platforms, our partner, and that actually was in a press release in Q1. So we have had good traction on that so far.

Great. And then, the ArcticLink IV S1, is it?

Three.

Three? Okay. Calling it the ArcticLink IV suggests a new platform. Would that be true?

I will let my marketing guy answer that.

Yes, Bob, we chose to name that ArcticLink IV because, as Andy mentioned in the prepared remarks, it is a pretty substantial increase in capability from the current generation. And we felt it was worthy of changing a family number.

Okay. Now, I have seen in writing from various people like Electrical Engineering Journal, they inferred that you might have a CPU -- embedded CPU in some future versions of your product. Would that include maybe an ARM core processor or something like that?

I think, Bob, there are a lot of people that have speculated what that their future products may have in them. I can tell you for sure we are going to continue on a flexible fusion engine track as the embedded processing element that enables the always-on computing, because that is how we get to such (technical difficulty). Beyond that, we are not ready to really disclose what is going to be on our roadmap for competitive reasons.

Okay, well, thank you for that. Thank you very much and congratulations on a good first quarter.

[Brian Goldman, Parheel Asset Management].

I just want to follow up quickly on the PolarPro 3 design that you are thinking might intersect a product that is already out with a major OEM. Is that essentially -- would that give you a second source position in that design? Is that we are talking about?

Yes. I think that Brian tried to say that the way this will work -- I mean, when people think about second source, they think of pin for pin, socket for socket compatibility. And that is not necessarily what (technical difficulty) be. This would be a different PCB that they would use on a certain device off of a platform family. So we hesitate to not say necessarily second source, but certainly there is another person in the market that is providing mobile programmable logic for the smartphone industry.

Would a design or device that -- if you intersected this device and it ends up in the market, would a user -- somebody -- a customer buying a phone, would there be feature differences? Or would it look invisible to the end customer whether this device included the PolarPro 3 or the latter chip?

From a consumer point of view, there is not going to be any appreciable difference. You wouldn't notice it.

Okay. That's fair.

The other person who is using these for TV remote controls right now and, as you know, that is available on a lot of high-end flagship smartphones today.

Yes. Okay. The per-use case, as you identified for the mobile programmable logic -- the TV remote, the barcode and the LED -- is that something that your competitor in the market is also qualified for? Or is there some difference in the blog posts you guys did during the quarter about the difference between your logic cell design and your competitor's? Is there some difference that you have in the architecture of your chips that give you the ability to do all three of those functions on a chip?

Yes, I don't want to get into a direct comparison with us versus anybody else in the market, but definitely the functions that we have developed have been used by OEMs with other people's technology. I think that from a power point of view, we are well-positioned to do these things at low-power, perhaps better than others in the market.

I think another important point to make, and I want to reemphasize what Andy said earlier, the fact that our sensor hubs also have programmable logic gives us the unique ability to actually take these functions that may sit as a discrete programmable logic device today in a system, and integrate that into what we do view as a higher value sensor hub solution in the market, still while doing the low-power on small cost? So I think --

And that is the AL III S2 you're referring to.

Correct.

Yes. Okay. And then my last question, you have been guiding for second half timetable for the smart connectivity and sensor hub. Is it too early -- is it possible that we see this in 3Q? Is it definitively 4Q? Can you just give us some idea on the qualitatively where in the second half this revenue might begin to hit?

I don't think we are prepared to talk about that yet, but we certainly are comfortable with the second half projection.

Okay. That's great. And actually, just one other question. The -- your standalone -- the non-catalog sensor hub solution, that requires OEMs with the proprietary algorithms to port the codes that were written for microcontrollers into your platform. And you came out with the FEAT software, i.e., whatever that is, to help with that -- the porting of that native code.

Can you just talk about how receptive that process has been with the OEMs? Is it a difficult technical process to overcome? Or is it a pretty seamless effort to port their code into the FPGA-based sensor?

I will take that question. So I think one thing to know, when we architected this whole solution from the beginning, we knew that the users would actually be software engineers or algorithm engineers, not hardware guys. And, as such, we have created that tool that you mentioned, our integrated development environment, so that they could take their algorithms that are typically expressed in a C-like language and can compile it down to the architecture. That has gone very well, in fact.

We have our ecosystem partners, Sensor Platforms, that we have talked about our relationship with. They use that tool to port some of their algorithms into our device to create the catalog sensor hub. And I think if you ask them, they would say it went pretty well. It is not that difficult a language or a tool change to use.

So I think we have met their expectations as well as some of the OEMs that have the tool as well.

I wanted to say one other thing. It is not just the non-catalog guys that we are engaged with, with that tool. It is ecosystem partners.

And then the last thing I want to say is that some of our custom CSSPs, the third category that Andy mentioned in his prepared remarks, they may not need the C-tool to do the development. We may actually end up customizing some things with partners for that customer. So, not everybody has to use the C-tool to engage with us if it is non-catalog. We still may end up doing work as part of a standard CSSP engagement model.

Yes. So I want to add just one thing in terms of engagement model. So, the first one you already mentioned is the catalog CSSP, which is really are most scalable model, where there is a minimum amount of port done on our part. Then there are people that have their own algorithms that are using our C-tool to port their algorithms to our solution.

And then there are people that want to have -- start with our algorithms, so the sensor platform algorithms, and add to it or customize it, still within our QuickLogic CSSP engagement model. So those are the three different types of engagements I am trying to talk about.

It is not really all custom or catalog. There is kind of this in between hybrid where they can tweak a good starting point, what we will call a known good starting point with our CSSP engagement model. If you think about it, it really gives the customers the ultimate flexibility in getting the right solution to the market quickly.

Okay. And after an OEM or something that gets done through the process of using the C-tool, how sticky does that make your sensor hub solutions in future designs?

My guess is very sticky. It is -- the C-tool is particularly an IDE environment that is architected for the way we bid our flexible fusion engine, which is the way we do the compute algorithms inside our chip.

Krishna Shankar, ROTH Capital.

My questions have been answered.

Rick Neaton, Rivershore Investment Research.

I have just a couple of questions. First off, since you were blindsided with the inventory -- you were surprised by the inventory rebalancing just recently, do you see any forecast that suggests that is going to seep over into the third quarter?

Yes. Rick, it is too early to tell. Like I said, this is very fresh information and we have not received any updated forecasts as of yet. So we don't know yet.

Okay. So you are not prepared to say it is a one quarter event only, but you don't see anything saying third quarter yet, either.

I can't even comment on that, because our customer is still working. They said be patient with us. We are working through the details. So we are complying.

Okay. For purposes of comparables, can you refresh my memory as to what the new product revenue was in 2013 that is the comparable for the significant growth in 2014? In other words, what was your total new product revenue for full year 2013?

Yes, $18.1 million I believe it was.

About $18 million.

Yes. (multiple speakers) North of $18 million.

Okay. And one last detailed question; a couple of years ago, in 2012, when you did a placement, you also issued some warrants that I think cover about 2.3 million shares. Are they still all out there, or are all of them -- have some of them been used and are they still set to expire in 2017?

The warrants on the 2012 financing are all still out there. None have been exercised.

At this time, I would like to turn the call over to President and CEO Andy Pease for any closing remarks or comments. Sir?

Yes. Thank you for your support. Our Q2 2014 earnings call is scheduled for Wednesday, July 30, 2014, and I look forward to talking to you then.

Thank you, Mr. Pease. And thank you, ladies and gentlemen, for your participation. This does conclude your program. You may disconnect your lines at this time. Have a great day.