Smith Micro Software Inc (SMSI) 2005 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Smith Micro Software Quarter 1 earnings conference call. [OPERATOR INSTRUCTIONS]. As a reminder, this conference is being recorded today, Thursday, April 21st of 2005. I would now like to turn the conference over to Bruce Quigley, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good afternoon, and thank you for joining Smith Micro's discussion of its first quarter 2005 financial results for the quarter ended March 31st, 2005. By now, you should have received a copy of the news release. If you do not have a copy of the release, you may acquire it either at the Company's website, www.smithmicro.com, or by calling 949-362-5800, and we will fax or e-mail one to you immediately. On today's call are Bill Smith, President and Chief Executive Officer; and Bob Scheussler, Senior Vice President and Chief Financial Officer; and myself.

During the course of this conference call, we may make forward-looking statements regarding future events or the future performance of the Company. Actual events or results, of course, could differ materially. These forward-looking statements speak only of today's date and are based upon the information currently available to the Company. The Company disclaims any intent to update publicly any such forward-looking statements, whether in response to new information, future events, or otherwise. We refer you to the documents the Company files from time to time with the Securities and Exchange Commission, specifically the Company's most recent Form 10-K filed last month. These documents contain and identify important factors that could cause actual results to differ materially from those contained in any forward-looking statements.

At this time, I would like to turn the call over to Bill Smith. Bill?

Thanks, Bruce. I, too, want to welcome you to our first quarter 2005 earnings conference call. As always, I will give you an overview of the results before Bob Scheussler gets into the financial detail. I will then come back and provide some overall details on the current market opportunities and then open the call for questions.

As indicated in our press release, and as we guided earlier this year, the first quarter 2005 was a soft quarter for us, with net revenues coming in at $2 million, versus Q1 2004, when we recorded revenues of 2.5 million. Net loss for the first quarter 2005 was $128,000, resulting in a loss of 0.6 of $0.01 per basic and diluted share. This compares to net income of $103,000, or $0.01 per basic and diluted share in the same quarter last year. We entered the second quarter with a backlog of a hundred -- of $820,000. The Company finished the quarter with cash and cash equivalents of $29.5 million, versus $3.8 million a year ago. During the first quarter, we raised $20.8 million, after expenses, with C.E. Unterberg Towbin through the sale of equity to select institutional investors. We plan on using these proceeds to further diversify our product line, as well as to acquire technologies or companies that may fit into our business plan. We have engaged investment banking firms to advise us and to screen potential candidates. As soon as any material developments occur, they will be publicly announced.

Looking at the first quarter, we experienced challenges as a direct result of what we consider to be growing pains in a very early stage market segment. At our largest customer, we saw inventory backlog issues in Q1, due to delayed -- to the delayed launch of 16 EVDO cities, as well as some carrier transition issues with regard to new EVDO handsets that are replacing older 1xRTT handsets. We believe that these transitional handset issues will be corrected by mid-year. While we have encountered these challenges in the first quarter, we are confident that we will continue to build upon the momentum we started last year as the leading provider of wireless connectivity software and expect the remainder of 2005 to show growth over 2004. In such a new and growing market, we know there are bound to be -- we are bound to experience growing pains and we have to understand sometimes our customers will, as well. In short, with the close of Q1, we believe we will deliver a solid 2005 when all the numbers are in.

Before continuing, I want to touch on the 8-K we filed this afternoon. On April 15, 2005, Deloitte & Touche provided notice to the audit committee of the Board of Directors of Smith Micro that it declined to stand for reappointment as independent registered public accounting firm for the Company, based upon staffing considerations and capacity constraints at Deloitte. During our ten-year relationship with Deloitte, there have been no disagreements between Smith Micro and Deloitte on any matter of accounting principles or practice, financial statement disclosure or auditing scope or procedure which would have caused Deloitte to decline reappointment. The audit committee will immediately commence a search for a new independent public accounting firm to replace Deloitte, but we have not yet had the opportunity to begin to identify candidates, as we were given no advance notice in which to prepare. We will, of course, give notice of such appointment once a new firm has been retained.

I would now like to turn the call over to Bob Scheussler, our CFO, to describe the first quarter financial results in more detail. Following Bob's discussion, I will go into more detail regarding the industry outlook. Bob?

Thank you, Bill. In summary, results during the first quarter of 2005 resulted in a loss of $128,000, compared to a profit in the first quarter 2004 of $103,000, a decrease of $231,000. First quarter revenue decreased $458,000 to $2 million, down from $2.5 million in the prior year first quarter, a decrease of 18.4%. Segment revenues for Q1 of 2005 are reflected in the consolidated financial statements. Regarding revenues from our individual business units, wireless and OEM products posted revenues of $1,660,000, and internet and direct solutions posted $370,000. Wireless and OEM revenues in the first quarter of 2005 decreased 15%, or $304,000, compared to the first quarter of 2004. This reduction is the result of reduced shipments to Verizon. The Internet and direct solutions unit ended the first quarter 2005 with a decrease of $154,000, compared to the first quarter of 2004, a decrease of 29%. The change in revenue is primarily the result of lower web and direct product sales.

Looking at gross profit, total gross profit percentage in the first quarter of 2005 was 83%, up 10.7 points compared with the first quarter of 2004. Product gross profit percentages in the first quarter of 2005 increased 12.8 points to 85.5%, compared with the first quarter of 2004. This is reflective of the reduction of data kits as a percentage of product sales. Services gross profit percentages in the first quarter of 2005 decreased 11.8 points compared with the first quarter of 2004. This is the result of changes in the project and consultant mix. Operating expenses increased by $209,000, or 12.3%, compared with the first quarter of 2004. This represents, primarily, an increase in G&A, including -- legal, accounting, IR, and employee benefit costs offset by a rent reduction for the Aliso Viejo facility.

In closing, the balance sheet summary, cash balance is $29.5 million, or $8.7 million net of pipe proceeds. The $8.7 million net is an increase of $100,000 from the prior quarter, and an increase of $4.9 million over Q1 2004. Accounts receivable is a very solid and current $1.7 million. Accounts payable is current. Inventory levels, nominal; and no long-term debt. This concludes the review of our first quarter financial results. And now let me turn it back to Bill.

Thanks, Bob. As is evident by the challenges we faced in the first quarter, our carrier customers are still in the development and early growth stages of deploying their high-speed data service roll-outs. We believe that the quarter's PC Card inventory challenges have corrected themselves. Based on conversations with our carrier customers, we remain confident in the deployment strategies being used by our customers for their high-speed data networks. Keep in mind, the roll-out of EVDO service, Verizon being the first, effectively started only seven months ago. As a result, we remain confident about our business case and the outlook for the remainder of 2005.

Moving forward, Verizon Wireless has continued to roll out its wireless broadband access data service at a manageable pace, adding 16 more cities in January, as we mentioned earlier. In addition, they have been expanding the footprint of a high-speed wireless service in the metropolitan markets previously announced. This is welcome news, and will continue to be an important factor for Smith Micro, as we are the sole provider for Verizon Wireless' data connectivity kits and PC Card software. Although Verizon Wireless is our largest customer and is clearly the largest wireless data carrier in the North American wireless market, they are not our only carrier customer. In fact, in the first quarter we added ALLTEL to the list of domestic carrier customers. According to the license agreement, Smith Micro has customized its QuickLink Mobile and QuickLink Mobile Phone Book software for inclusion in ALLTEL's data connectivity kits to support all 1xRTT handsets and PC Cards available for ALLTEL's new access broadband high-speed EVDO service.

We are excited to be working with a company like ALLTEL, which is committed to expanding and developing its wireless data network. In fact, ALLTEL launched three new cities for its EVDO high-speed service in Q1 and we anticipate that they will expand the service to other cities in the remainder of 2005, as they have announced an investment of $1 billion for the EVDO deployment. We view the addition of ALLTEL to the high-speed wireless market as a positive driver for consumer adoption of high-speed 3G wireless service. As there becomes more competition in the emerging high-speed wireless market for the service, we'll -- the -- for -- excuse me, the service will become more competitively priced for the consumer. We believe that the closer the price gets to that of DSL and cable service, the result will be a significant increase in high-speed wireless subscribers, as they opt for the more versatile wireless option. As our customers add more subscribers Smith Micro will obviously benefit as the sole provider of wireless connectivity software to Verizon, ALLTEL, Dobson, and Teles, who collectively garner a very large market share in a current wireless data market in North America. We are very excited about the opportunities that lie ahead with each of these carriers in 2005 as they expand their high-speed wireless data services.

Moving forward, we anticipate, after a long wait, adding a new international carrier in the second quarter of 2005. We still believe that the international carrier addition is on track, and we look forward to announcing them shortly. We believe that this additional carrier will further accelerate growth and minimize our dependence on a single large customer.

In March, we announced the availability of QuickLink Mobile Enterprise, a connectivity manager that delivers a secure, reliable, and consistent wireless experience for corporate deployment. It takes advantage of high-speed wireless WAN data networks and Wi-Fi technology to create a powerful, bi-modal, secure business tool. This allows enterprise-level customers to find all available wireless connections, whether domestic or international, and supports over 180 carrier networks worldwide. QuickLink Mobile Enterprise is a beefed up version of our OEM product. Among other enhancements, the primary addition to the OEM version is added security, which is an important issue for the enterprise IT managers. We announced the enterprise initiative last fall and began the sales and marketing effort then.

We are selling the product in two different ways. We are partnering with our carrier customers and are helping them to sell a private labeled version of QuickLink Mobile Enterprise into the corporate accounts. As of today, our carrier customers have taken the lead on selling into several large corporate entities, of which we have helped seed early versions of the product. Response to date has been very positive. Where an enterprise might not want to standardize on a single carrier, we are selling direct and have several leads that we have been working on for the past few months. We believe this enterprise business has a long-term potential to be as big as our OEM business. But we are at the very early stages of this roll out, with the first evaluation shipments of the product just occurring last week. As many of you know, the sales cycles in these large enterprises can be long, and we don't anticipate significant revenue from this product line until 2006.

We exhibited at the CTIA show last month, and I can say with certainty that high-speed wireless data service was the hottest topic of the conference. Companies are working quickly to position themselves to take advantage of what will certainly be a large and fast-growing market. The good news for us is that we are already to the position to succeed in this market. Our sole source arrangement with Verizon Wireless, the leading wireless carrier in North America, ALLTEL, Teles, and Dobson, among others, continues to stand as a great endorsement for Smith Micro as we attempt to add new carriers and continue to grow our revenue and bottom line. As I stated earlier on the call, we raised $20.8 million in February, which, obviously, strengthened our balance sheet, but also gives us a great opportunity to add to our existing product offerings and add new underlying technologies.

I would like to finish by focusing on our anticipated 2005 results. While this quarter proved challenging, we have emerged with a positive outlook for the rest of the year, and we continue to expect year-over-year growth in both revenue and profitability and believe that most of the growth will most likely come in the second half of the year. We are very pleased about the continued execution across the board by everyone at Smith Micro, and look forward to delivering strong results in 2005. With that, I'd like to open the call for questions.

Thank you very much, sir. [OPERATOR INSTRUCTIONS]. Our first question comes from Edward Ching. Please go ahead with your question, sir.

Hey, guys.

Hey, Ed.

Just a question, what's the price point for QuickLink Mobile Enterprise and the difference between when you sell it on your own and when you sell it with a carrier?

Yes, it is, first off. There is a difference. The price point that we can talk about is our published price list. It starts at $60 a seat, goes down to $30 a seat, depending upon volume. There's two ways of looking at this area. We have the QuickLink Mobile client, which is sold by -- per seat. And then we also have the server product, the QuickLink server product. The server sells for anywhere from $2500 per server to $25,000 per server, depending on the number of concurrent users. On top of that, there's a 20% annual maintenance fee that would be charged.

Okay. And how many guys do you have right now in the sales force for the -- when you do it direct?

There are three people working in that area, and they've got a pretty good prospect list already built up.

And are these three reps also the ones working with the carrier guys?

No, they are not.

Okay. And how many guys -- ?

The carrier sales force is totally separate.

And how many guys are -- how many reps do you have working with the carriers?

There's three on that side as well.

And you said you booked orders so far?

No, I did not.

Okay.

I said that we have been aggressively selling and marketing, and that we just started shipping, for the first time, evaluation copies into the field to our direct prospects.

Okay. Thanks, guys.

Thank you, sir. Our next question comes from Ian Gilson with Granite Financial Group. Please go ahead with your question, sir.

Hi, good afternoon, guys. I have a few questions. Maybe I can give the questions first, and then you can give your answers in any order you like. From your comments, I assume that the second quarter comparison may not be positive. Next question is -- are you generating revenue from ALLTEL yet, and when we -- if not, when may we expect that? Third question is -- are we including the product sales direct in the wireless division? And finally, will you -- when you get some break out the enterprise revenue for us, either on a quarterly or on a line-item basis? Okay?

Could I get that last question again? Because that was the only one I missed.

Yes, the direct sales revenue?

Yes.

Enterprise revenue, will you break that out separately? When you have some?

Okay. Is that it?

That's it.

Okay. Let's take them in order. Let's first talk about the first one. No, I don't mean to allude that we think second quarter is not going to be a great quarter. I just want to be pragmatic about it. Typically, when you have a downturn quarter like what we had in the first quarter, it doesn't jump up to the run rate we experienced in the third and fourth quarters of '04 overnight. I also kind of alluded to the fact that there's still a handset issue there because we are going through the transition from 1xRTT to EVDO, and that will probably soften, somewhat, our data kit sales. We do believe, however, that the problems with the PC Card inventories had been worked through. And we expect to start to see a more normalized buying pattern for PC Card software. So, I guess to sum it up on the first question, we view that the second quarter will most likely look as an uptick to the first quarter, as we move it back into what we consider to be a more normalized rate of sales and we look for stronger sales, then, in the third and fourth quarter. And just because there's three quarters left and two-thirds of them are in the second half, that kind of says most of it's got to come in the second half.

Second question, ALLTEL revenues. Yes, we have sold product to ALLTEL. Product was shipped last quarter to ALLTEL in the area -- in both the area of data kits and PC Cards. And we look for that business to grow. Something that -- for those of who you have heard me out on the road, I typically talk about new accounts in the following manner -- I say that when we announce a new carrier, we probably have been working with them for anywhere from six to nine months getting ready. We probably have booked NRE revenues during that period of time as we were doing work for the carrier. Then comes the actual product announcement or relationship announcement, and we start shipping product to that carrier. But it takes about six months for it to really achieve a more normalized run rate of what we might expect. So, while we did sell product to ALLTEL last quarter, we look to sell product to ALLTEL this quarter. We think over the next six months or so, you'll see that those sales will start to really ramp to a more normalized rate.

Direct sales. The question was -- oh --

Going into the wireless segment, when you report two segments? All of QuickLink mobile, no matter how derived will be treated?

No. Okay. Thank you. The QuickLink Mobile Enterprise product if it is sold through a OEM will go into OEM sales. If it is sold direct, it will be reported as part of direct sales. And then, will we separate out the QuickLink Mobile Enterprise sales, I can't answer that. That's something we'll have to look at. As soon as we have some, which will be a really nice problem, because I'll sit down and figure out how we're going to talk about it.

Okay. One last question. I understand that Verizon is concentrating their PC Card sales to two, rather than more than two suppliers. Is this likely to cause any dislocation in your revenue?

Okay. Let's see. What can I say on that? We can say that there are a number -- there are a number of PC Card vendors to Verizon Wireless. Three have been publicly announced. Sierra Wireless was, of course, the first then Novatel Wireless, and now, Kyocera Wireless. We do expect there'll be a fourth provider of PC Cards in the not-too-distant future. It doesn't impact us in any way, no matter who builds the card, the software that goes with it is VZAccess from Smith Micro, which is built upon QuickLink Mobile. So, hopefully that answers your question.

Thank you.

Thank you, sir. At this time, we have Richard Church from Unterberg Towbin. Please go ahead, sir.

Thanks. Good afternoon, guys.

Hi, Rick.

A couple of questions. First, Bill, could you give us any more color on, I guess, the Deloitte situation? Did I -- how recent was that, and did it have anything to do with the current quarter?

No. Yes, I can give you some -- we found out about this on Friday, the 15th. That's also tax day. So, I guess we get all sorts of good news on that day. This has been an ongoing situation. It's the outgrowth of a lot of the work that's going on in the Sarbanes-Oxley area. The big four accounting firms are operating on complete overload. And as such, you can look around. There's a lot of -- there's smaller clients are being told to go someplace else.

We were disappointed at the -- Deloitte's decision. We were disappointed that they couldn't find a way to give us a little bit of advance notice, so we could have simultaneously announced their replacement. But some things in life are just out of your control, and this is one of them. So, there is no issues of disagreement between Deloitte and Smith Micro management about anything that has to do with the financial or the accounting practices or the business practices of Smith Micro. This is strictly a matter that Deloitte & Touche does not have sufficient manpower to staff all the customers that they had, and as a result, find themselves in the far-less-than-enviable spot of having to tell certain customers that they can't cover them. That's all there is to it.

And so, is this going to impact your getting the 10-Q out on time?

We don't believe so. Deloitte & Touche has given us assurances that they will work with us during this transition, not only for the 10-Q, but for anything required as far as getting the S-3 effective for the pipe and the investors.

Okay. So, they're still going to sign off on the current quarter's results?

Yes. And they have assured us that they will most definitely do that and do it in an expeditious manner.

Okay. Great. With then with regards to the comments about 2Q, you're entering with less backlog than you entered Q1 with. So, what gives you confidence that you can grow sequentially?

Yes, and I think that's a good -- good question. Frankly, on the backlog issue, again, for those of you who have heard us talk when we're out on the road, we've always talked about how we spend, or we enter a quarter with a backlog, we spend the first and second month of the quarter selling for that quarter, and then -- we're shipping throughout the quarter -- but then, on the third month, we're pretty much focused exclusively on building the backlog. Because this quarter was rather challenging, and we were -- we didn't give up on it at any point, we stayed pretty focused toward selling all the way through until the last week or so. And as such, we really didn't focus in like we normally would on building the backlog for the next quarter. Having said all that, we are -- we're starting to get some indications of run rates as far as PC Cards and growth rates in that on a quarterly basis. And based on that and based on the fact that we believe that inventory issues have been bled down substantially, we feel very positive about that.

On the PC card side, inventory levels are relatively low, as they enter a period where they're going to be transitioning from 1xRTT handsets to EVDO handsets. And as such, we are seeing that they're just watching it, and that's the one area that we are watching closely as well. So, if it wasn't for the data kit area for handsets, we probably would feel very bullish. But we understand there's still a ongoing transition, and that may affect us during the second quarter. We do believe that's over and we're moving forward in a normalized fashion in third and fourth.

And the handset issue, is that the technical issue with getting the data kit available that you're referring to?

Yes, there is a technical issue as well. The initial EVDO handsets, we will ship what's called a phone book kit. It will be the data cable and the phone book software, but will not include the VZAccess product. VZAccess product will be added this summer as they work out some technical issues for the deployment of EVDO handsets.

Okay. And just -- with regards to Verizon, I note that you have a -- you've never really indicated the duration of the exclusive relationship. Can you give us any color on how that relationship stands, and is there any risk there or anything --or could you tell us how long that lasts?

I'll never say that there's never any risk in any relationship -- a business, marriage or otherwise. So I think there are risks. But I would tell you this -- that the relationship with Verizon Wireless, and now with ALLTEL as our second large carrier, is incredibly strong, incredibly positive, and moving forward very nicely. There is a strong kinship between the people at the carriers and our staff. We feel very confident in our relationship and we feel extremely confident in the ability of our carriers to execute their business cases and grow their wireless data businesses. And that will flow back to us. That's the essence of the OEM software business.

Okay. And then with regard to your comment on the international carrier that -- were you saying you expect to win a new carrier in the second quarter? Or you expect to announce the one that you've alluded to?

I sort of said tongue in cheek that I finally expect to announce who that carrier is in the second quarter of this year. You could be very crude and tell me I probably said that in first quarter, and you would be right. But, sometimes good things are worth waiting for.

But you have already seen some revenue from that particular -- ?

Yes, sir. Absolutely.

Okay. And the contract is done, it's just a matter of announcing it?

Yes, sir.

Okay. All right. And then, Bob, if I could, on the OpEx side, could you just give us some color -- I mean, you mentioned there are some costs related to the transaction. Is there -- should we expect Q2 to look more like Q4, or how should we trend our costs?

I don't know that I commented on any transaction costs, because the transaction costs would be charged against the transaction.

Right. Okay.

I would say that if you were to look at last year's OpEx and trend that against, maybe, what we're looking at this year, I would say it might -- you might see a slight -- a slight increase, just because we do have the pipe funds. We're looking at some M&A activity so we would anticipate some higher cost there, just to go through that process.

Let me add, we also are spending some marketing dollars in the launch of the QuickLink Mobile and Enterprise product. We believe in this product. We believe in this market. And we're putting some money behind it to make sure that we reach the level of success that we think it really can get to.

Okay. All right. Great. Thanks, guys.

Thanks, Rich.

Thank you, sir. Our next question comes from a Joe Hudak from Wachovia Securities. Please go ahead, sir.

Good afternoon, guys.

Hey, Joe.

Two quick questions. Where do you see the share count on a fully-diluted basis at year end?

At year end 2005?

Yes.

We would probably see it in the 23 million range.

Okay. And also, Bob, do you -- could you give us a quick break out of what the backlogs were at the end of each quarter in '04? Do you have that handy?

I don't have it handy, but I would say at the end of Q4 --

About a million dollars.

About a --

Yes, you know --

Yes, I think --

We'll get back to you, Joe. I don't have it in front of me.

They're in our Qs.

Right.

And rather than mislead you, we can do a follow-up.

Okay. And out of the -- out of the 22.5 million, roughly, in cash, did we -- was there any other -- did we generate any income from that in the past quarter?

Yes, we did.

And can you give us roughly what that is?

I don't think we break that out, but I can tell you that we invest our funds in generally repurchase agreements and master notes. You can kind of see what the yield is. And I guess, in round numbers, I'd say from the pipe funds we've generated probably 100K that was booked in Q1.

Okay. And do you -- where do you see that in Q2?

I would say -- it's -- that's probably about two months, or a month and a half worth of funds. So, it's -- and so you could put that in your spreadsheet. If we got $100K for a month and a half, if we had three months, what that might be.

Yes, I was just trying to get a little bit more of a pointed question in there.

Okay.

All right.

And we will probably take a look at, maybe, some other things that might have a little different yield.

Okay. Great. Thanks, guys.

Thank you, sir. [OPERATOR INSTRUCTIONS]. Our next question comes from a Paul Solit from Potomac Capital Management. Please go ahead, sir.

It is P.J. Solit. I apologize if it's been asked, but presumably, the pipe was done to look for some acquisitions, put the money to work. Any update on that front? Are you seeing a decent pipeline? And how are evaluations there?

Okay. Well, yes. That was the stated use for the proceeds of the pipe was to go out and purchase added product, added technologies, and doing so, probably buying some companies. We have, as we said in the script, we have a number of banks working on our behalf. And we are -- we're working diligently in that area. And as soon as we have something that we can talk about, we'll be right out to tell you about it. But we think that this is a exciting opportunity. And we're working hard to execute very crisply in this area.

Obviously acquisitions are of interest. But given where the stock price is and what you guys believe is a pretty big ramp coming in your business, have you given any thought towards taking some nominal amount, maybe 3 million, $5 million worth and buying back some stock here just -- obviously, it makes sense financially at this price, and it would also send a pretty healthy signal of your confidence in the ramp.

In previous years, the Company has bought back its stock. We think that there is a significant growth opportunity in the wireless market and the wireless data market. And while I understand your comment and I take it in the proper light, we think that the best payback for our shareholders is to put that money to work and really exploiting the wireless opportunities.

So, do you envision using all of your cash in an acquisition?

I can't say that yet. I cannot answer that question. As soon as we have deals and we can get them priced and we can really talk about them, we'll come to you and we'll tell you all about them. Not hiding anything, we just can't talk about it at this point.

Okay. Thank you.

Thank you, sir. At this time, we have Edward Ching with a follow-up question. Please go ahead, sir.

Hey, guys, question on Verizon Wireless and EVDO and their new network and applications. This as they start rolling out VCAST is there any way for you to play in that opportunity? And what would that be? I mean, if you're sort of game planning it right now.

Well the whole -- it's more -- let's make it broader than just VCAST, let's talk about the wireless data opportunity as it relates to the handset in general, and that could be VCAST, could be BREW, it could be Java, could be any combination of that. And the answer is, of course, there's a play. And that's an area that we have a great deal of interest in. It's a very broad market. And it's something that we're exploring diligently right now. So --

Well, how -- I mean, how are you exploring it? What would you do?

If I told you that, I might have -- I think I'd have to put out another 8-K, so I guess -- I guess, what I --

All right. Save -- all right. Save Bob some work, and don't tell me anything.

Okay.

Yes, we have a two-per-day limit, Ed.

I got you, Bob.

Any other questions, Ed?

Thank you.

At this time, sir, there are no further questions. Please go ahead.

I would like to thank everyone for being on this call. We look forward to our next call, which would be our second quarter 2005 earnings conference call in July. Should you have any additional questions, feel free to contact us or our Investor Relations firm, MKR. And once again, thank you. Good day.

Ladies and gentlemen, this concludes the Smith Micro Software Quarter 1 earnings conference call. Thank you, very much for using ACT Teleconferencing. You may now disconnect.