Smith Micro Software Inc (SMSI) 2013 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Smith Micro Software second quarter 2013 financial results conference call. (Operator Instructions) This conference is being recorded today, Wednesday, July 31st, 2013.

I would now like to turn the call over to Todd Kehrli of the MKR Group. Please go ahead.

Thank you, Operator. Good afternoon and thank you for joining us today to discuss Smith Micro's second quarter 2013 financial results. By now, you should have received a copy of the press release discussing these results. If you do not have a copy and would like one, please visit smithmicro.com or call us at 949-362-5800 and we will immediately e-mail one to you. With me on today's call are Bill Smith, Chairman, President and Chief Executive Officer, Andy Schmidt, Vice President and Chief Financial Officer, and Carla Fitzgerald, Vice President of Marketing.

Before we begin, I want to caution that on this call the Company will make forward-looking statements that involve risks and uncertainties, including without limitation, forward-looking statements relating to the Company's financial prospects and other projections of its performance, the existence of new market opportunities and interest in the Company's products and solutions, and the Company's ability to increase its revenue and regain profitability by capitalizing on these new market opportunities and interest in introducing new products and solutions.

Among the important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are changes in demand for the Company's products from its customers and their end-users, customer concentration, given that the majority of our sales depend on a few large client relationships, including Sprint, new and changing technologies, customer acceptance and timing of deployment of those technologies, new and continuing adverse economic conditions and the Company's ability to compete effectively with other software companies.

These and other risk factors discussed in the Company's filings with the Securities and Exchange Commission, including its filings on Form 10-K, 10-Q and 8-K could cause actual results to differ materially from those expressed or implied in any forward-looking statements.

The forward-looking statements contained in this press release and call are made on the basis of the views and assumptions of Management regarding future events and business performance as of the date of this release and the Company does not undertake any obligation to update these statements to reflect events or circumstances occurring after the date of this release and call.

Before I turn the call over to Bill Smith, Chairman and President and CEO of Smith Micro I want to point out that in our forthcoming prepared remarks we will refer to certain non-GAAP financial measures. Please refer back to our press release disseminated earlier today for reconciliation of the non-GAAP financial measures.

Bill, please go ahead?

Thanks, Todd. Good afternoon and thank you for joining our conference call to discuss our financial results for the second quarter of 2013.

Total revenues for the quarter were $10.5 million, up 3.1% from the same quarter last year. Non-GAAP gross profit was $8.1 million for the quarter, with non-GAAP gross profit as a percentage of revenues of approximately 77.2%.

Our non-GAAP operating expenses for the second quarter were $14.2 million, resulting in a non-GAAP net loss of $0.10 per share for the second quarter of 2013.

Revenues in the second quarter were 9.6% lower versus the first quarter due to several factors, including the maturation of our initial deployment of our NetWise director solution, delays in commercial launch of new NetWise and CommSuite initiatives, and continued softness in our legacy Connection Manager business.

As a result of our lower revenues the Board of Directors has approved a restructuring plan that will reduce expenses by closing and consolidating certain facilities and by reducing our worldwide headcount by approximately 25% to 30%. We believe the cost savings from these actions will put us in a better position to achieve our goal of returning to profitability by the end of the year.

Before I discuss our Company progress and priorities for the remainder of the year, our CFO, Andy Schmidt, will present the details of our second quarter performance and restructuring plan. Andy?

Thank you, Bill.

First, let me go over our customary introductory items. As we have in past quarters, we have provided non-GAAP results and reconciliation of non-GAAP and GAAP results. The non-GAAP results discussed on this call net out stock compensation related expenses and noncash tax expense or benefit to provide comparable operating results. Accordingly, all results today referred to in my prepared remarks for both 2013 and 2012 are non-GAAP amounts.

Our earnings release, which will be furnished to the SEC on Form 8-K, contains a presentation of selected GAAP financial measures and related non-GAAP financial measures and a reconciliation of the differences between the two. The earnings release can also be found in the Investor Relation section of our website at smithmicro.com.

June year-to-date revenues for 2013 were $22.1 million, up from $20.3 million from June year-to-date 2012. Wireless revenues increased $1.3 million or 7.6% June year-to-date 2013 versus 2012 to approximately $18.8 million. Productivity and Graphics revenues increased $0.5 million or 16.4% June year-to-date 2013 versus 2012 to $3.3 million. From a non-GAAP perspective the June year-to-date 2013 loss per share was $0.19 as compared to June year-to-date 2012 loss per share of $0.25.

In terms of our currently completed quarter let me provide some detail. For the financial modelers let me provide the difference between GAAP and non-GAAP P&L metrics. In terms of stock compensation, stock comp totaled $1.1 million for the current period, broken out as follows -- $6,000 cost of sales, $361,000 selling and marketing, $220,000 R&D, and $512,000 G&A. We showed no GAAP tax benefit for the period due to fully reserving the tax benefit. We are showing a $2.3 million proforma or cash based tax benefit.

Okay, moving on, for the second quarter we posted revenues of $10.5 million and a loss of $0.19 per share GAAP and $0.10 per share non-GAAP. Revenue for the quarter compares to $10.2 million for the same period last year. International revenue was approximately $400,000 this quarter across all business groups. Our Wireless segment reported revenues for the quarter of $8.5 million as compared to $8.8 million last year. Our Productivity and Graphics segment posted revenues of $2.0 million as compared to $1.4 million last year. Total deferred revenue at June 30, 2013 was $1.6 million.

Switching to gross profit, non-GAAP gross margin dollars of $8.1 million compares with $8.4 million during the same period last year. Non-GAAP gross margin as a percentage of revenue was approximately 77.2% for Q2 2013 compared to 82.4% for Q2 of 2012. The reduction in gross margin is due primarily to product mix. Non-GAAP gross margins by segment were as follows -- Wireless 76%, Productivity and Graphics 82%.

Switching to operating results, non-GAAP operating expenses for the second quarter of 2013 were $14.2 million, which is basically flat with Q2 2012. From a year-on-year perspective engineering expense has decreased by a percent. Selling and marketing expense increased 13%, primarily due to severance costs. And administrative expense has decreased 4%. Total non-GAAP operating expense increased $111,000 versus the same period last year. Non-GAAP operating loss for Q2 was $6.1 million, as compared to a loss of $5.7 million in Q2 of 2012. Non-GAAP net loss for the second quarter was $3.8 million or $0.10 per share, as compared to a loss of $3.6 million or $0.10 per share last year. Cash decreased $4.8 million for the quarter, closing at $23.5 million at June 30, 2013.

In regard to other matters, the Smith Micro Board of Directors approved a restructuring plan that will be initiated in the third quarter of this year. This plan involves changes in management structure in order to streamline the organization, facilities consolidations, closures, and headcount reductions that will amount to approximately 25% to 30% of the Company's worldwide workforce.

These actions will result in a onetime restructuring charge of approximately $5 million to $6.8 million that will be recorded in the fiscal quarter ending September 30th, 2013. The cash based charge of the restructuring efforts is expected to be approximately $2.7 million to $3.1 million in 2013. I will provide updates quarterly as to the cash usage related to the restructuring efforts.

In terms of housekeeping, we expect to file our quarter end 10-Q by the end of this week, which will represent our final financial statements for the period.

At this point, I'll turn the call back to Bill.

Thanks, Andy.

As I've mentioned in the past, there is more than one path to profitability. The restructuring of our Company, which is now underway, brings us closer to profitability by better aligning our expenses to current bookings. However, we are here to grow the business, not just right size the organization. Many of the changes we are making are designed to improve our execution, including changes in sales leadership, refocusing our engineering teams on making products adaptable for new markets, and more efficiently engaging customers and partners who want to use our technology in unique ways. These are critical changes that we believe will allow us to grow our business with more efficient use of resources.

As evidence of the power of strong relationships we can point to the recent win of a new NetWise customer in Latin America, through our partnership with Gemalto. Known largely for their smartcards, Gemalto is a world leader in digital security and mobility solutions, and they are now integrating NetWise into their robust connectivity and device management platform. We are excited to work with Gemalto as they rollout NetWise to support Wi-Fi offload for an operator in Argentina, one of the fastest growing markets in Latin America. We believe our relationship with Gemalto will lead to more international opportunities for integrated device connectivity and traffic management.

We are also pursuing a similar integration strategy domestically with partners, like Manage Mobility, a provider of custom wireless solutions for enterprise, public sector, and government clients. By integrating our device management and traffic management technologies with their wireless campus manager product Manage Mobility can now offer a specialized connection manager for K to 12 schools that are now deploying tablets for mobile learning. The new solution provides secure, one-touch connection to preferred networks, manages cellular data usage, and uses advanced policy management to enforce data traffic through a content filter in order to block access to unauthorized websites and software downloads.

Integrating our technology with third-party products does require an investment in time and resources, particularly when industry standards for interoperability are still evolving. For example, the wireless network standard to enable automatic switching between 3G, 4G and Wi-Fi networks, called ANDSF, is still in its infancy from a commercial standpoint. We see this as a [curl] in moving operators to adopt advanced traffic management solutions like NetWise.

To address this problem we introduced a toolkit and partner program focused on ANDSF interoperability. Our objective is to mitigate risk for operators by working with partners, like OpenNet and others to validate our NetWise client and their policy servers that they can talk using ANDSF. By promoting standards based solutions that are proven to interoperate we pave the way for operators to build advanced policy management capabilities into their networks sooner rather than later, and we are well positioned with NetWise to enable those capabilities.

Continuing on the theme of integration with partners, recently we have integrated our CommSuite visual messaging solution with the Pinsight Media+ mobile advertising platform powered by Sprint to deliver targeted mobile apps to subscribers who opt in for advertising. Mobile advertising is a huge opportunity for operators, but it is critical that their advertising strategies are based on convenience and value for the subscriber. There is plenty of data that shows consumers are open to advertising that is relevant and non-disruptive.

The model we have implemented in CommSuite meets those requirements, giving operators the ability to promote advanced messaging services, while subscribers interact with more traditional voice and SMS based messaging services. Subscribers have the choice to subsidize a premium service by accepting advertisements or paying a monthly fee for a premium service to remove advertisements. Either way the operator can monetize the premium service with no upfront cost, and Smith Micro can share in the revenue generated by the monthly fees or the advertising.

This is an example of how we are making our products easier for operators to adopt by making them easier for subscribers to adopt. Despite being primarily a white label software provider in the wireless space, we know a lot about how consumers buy software through our Productivity and Graphics business, which I'm happy to report is doing very well.

In the second quarter of 2013 our Productivity and Graphics Group saw a 40% increase in revenue from direct sales versus Q2 of 2012 and a 42% increase over Q1 of 2013. Much of this growth can be attributed to the strong new product releases, Composer and Manga Studio, which were well received by our growing community of professional animators and graphic artists around the world.

We also launched a new solution for picture animation called MotionArtist, which performed reasonably well for an entry level animation product. We continue to expand our worldwide distribution for our consumer products with partners like [Avon Crest] in the U.S. and Europe, Cenex in Canada, and with Ou-Lei in China. We are also expanding into the electronic software distribution market with [NuWave] and Amazon.

As you now heard, the markets we participate in continue to offer up new opportunities that allow us to take advantage of our deep domain expertise and connectivity, device management, visual messaging, and wireless industry standards, while also leveraging strong partner and channel relationships that will help us to overcome the struggles we have had in sales execution. We have new sales leadership in place to help drive new go-to-market strategies and better overall execution to develop a strong and fruitful pipeline.

Our confidence in our product portfolio is still high, but we are not resting on what we have today. Despite our smaller size after the restructure we are still a Company of innovators. We will continue to invest, applying our technology as embedded software components for device and chipset makers, customizing and integrating our solutions to serve key enterprise markets and delivering more over-the-top applications for consumers and the network providers who service them.

Focus and execution are the Company's top priorities, and we look forward to sharing our progress with you in the coming quarters. With that, Operator, we can open the line for questions.

Thank you. (Operator Instructions)

And our first question comes from the line of Mike Walkley with Canaccord Genuity. Please go ahead.

Yes, thank you very much. This is Matt Ramsey on the call today for Mike. Thank you for taking our questions. I guess just to start off on the revenue side, Bill, maybe you could walk us through a couple of things? The first being you talked a bit about the maturation of NetWise revenue, maybe you could talk a little bit about what portions of that NetWise revenue and some of your current revenues are recurring in nature and how much you need I guess future sales to be driven to continue to grow? And, second, you talked about some delays in rollouts of some new programs, maybe you could talk about the nature of those delays, whether they're just I guess delays in getting deals done or whether they're technical in nature? Thanks.

Okay, let me try it, and if I don't answer all of your question, come back. I think the way to view the NetWise, the deployment we get paid as new devices are released into the field. In both cases of -- both parts of your question, most of this revenue predominantly comes from Sprint. The Sprint Executive Team and the Sprint Team, in general, have been very busy over the last few months with their transactions, both with Clearwire and [Softnight]. Clearly I think that, you know, it's slowed a few things down. We expect them to pick back up now that all these transactions are closed. Unfortunately, they did affect our revenue in this quarter, and that's basically how we look at it.

Hey, Matt, this is Andy. Another way to consider it is as well is a normal launch of a NetWise type product is going to include catching up with the, let's say, devices that are deployed in the field. So when we start out the program we're going to have an acceleration of devices where we're catching up with units in the field and then it normally migrates to brand-new units that are being brought to the market.

So, once again, that's going to have some seasonal affect, too, in that carriers don't always consistently bring new phones to the market, they follow certain patterns to match their marketing programs. It also depends on what phone device manufacturer is bringing a superstar phone to the market. A regular type phone will have X amount of units, where a superstar type phone, like an iPhone or a Samsung Galaxy 4, what have you is going to be X times more market penetration, for instance.

So, as Bill pointed out, we've matured in our Sprint rollout, but it will continue to roll forward as new devices are released, but will be somewhat seasonal depending on how new devices are brought to the market.

Great, thanks for the additional clarifications. I guess, Bill, just following up on that with the I guess well publicized different dealings that Sprint has had over the last couple of quarters and you talked about how that might delay some of your rollout, but obviously taking a pretty large and dramatic restructuring that you guys are now undertaking it sounds like you now are trying to lower the breakeven point and maybe your go-forward TAM or your go-forward opportunity for those products, in your view has that come down now and that's why you're taking the restructuring from that or is it more driven by the goal to breakeven by the end of the year rather than what the forward TAM looks like for those products? Maybe you could talk a little bit about the forward opportunity at Sprint given all of the changes they've had?

Okay, yes, I've said over and over again that our goal as a Company is to get profitable in the fourth quarter. I also said there are two ways to do that. One, which I sometimes call the right way, is to grow your revenues to a level that you just naturally turn profitable. And then I said there's that other way, and the other way represents a growth in revenues, but also a reduction in overall expenses. I've chosen to present to our Board and they approved a plan that takes the second path.

Now does that mean that I think we can't reach the level of revenue that we -- that I hope we could do if we were going to do it what I call the right way? No, I'm just pragmatic about the timing. This is really more a question of timing of revenue flow, and as than anything else. And, yes, yes, I think my job as CEO and Chairman is to try to bring value to our shareholders, and one of the best ways to do that is to get this Company back into profitability.

And, Matt, this is Andy, again. Just expanding on what Bill commented on, and much refers to timing that, frankly, Bill or our Sales Group will have somewhat limited capability to affect, and that has to do with how we book revenue and revenue recognition rules and what-not. So that's going to also play a factor on whether or not we're book profitable in Q4 versus profitable from let's call it a bookings perspective, and that's deals closed.

So there's a number of variables that are going to play in on that, and as Bill said being prudent we're cutting the workforce, but it's probably more of a midstream type cut. In other words, we're still counting on closing business that's going to bring us profit, making us profitable, while preserving a good portion of our R&D capability. So we still need to close deals, but we're confident that we will. The timing is such, will play out in the next couple of quarters, and we'll communicate each quarter how we're doing on the timing and we'll be clear with everyone about what portion of the deals we can recognize from an accounting perspective and what portion of the deals might be actually considered just bookings. So it's a bit of wait and see, but we feel we're on the right path.

Okay, great. And I guess one more question for me and then I'll pass it on. Maybe, Andy, you mention a headcount reduction target in the prepared remarks and in the press release, a couple of questions around that. I guess how does that relate to the overall OpEx, so what percentage of your total OpEx and the different line items is related directly to headcount? And, secondly, how much of the reduction in OpEx should we expect in the third quarter numbers given timing of reductions versus the Q4 number? And I guess it looks like just back-of-the-envelope maybe $12.5 million to $13 million is roughly the new breakeven point? Anyway, I guess that's more of a statement than a question, but I'd like a response to it. Thanks.

Sure. And this is probably a good time for everyone, just to give some broad parameters for modeling. As we've discussed before, we've talked about the size of our workforce, and I'm just going to use round numbers here. You know, post our restructuring here and as we've said in our 8-K and then what I said in my remarks here, our restructuring is actually going to take place between now and through the third quarter, so the third quarter is going to be more of a work in process to get us in the right place fourth quarter. Come fourth quarter we expect to be roughly 250 heads, which still includes 150 in engineering, R&D line. So, as you can tell, we're still preserving a big chunk of our engineering capability and we still have a very significant workforce at play here. That's a key takeaway.

When it comes to expense, again, I'll just give you some broad numbers. In Q4, not Q3 because Q3 again is going to be a work in progress as we go through these different aspects -- Q4 we expect to drop our OpEx from this quarter it was $14.2 million, you're probably going to see something right around $11 million, and that'll bring our breakeven down to somewhere a little bit over $13 million in recognizable revenue.

So those are the parameters we're setting forth, but that's all Q4. Q3, once again, this is the headcount reductions, the work on facility closures or consolidations, et cetera, that's going to occur through September 30th, in other words, it's phased and done in an orderly manner. And as we go forward we will keep you up to date as far as how we're using cash to affect those changes, but you will see a large charge in Q3 called a restructuring charge that we refer to once again in our 8-K and in our remarks that are going to be between $5 million and $6.8 million in our Q3 quarter, you'll see that large charge, and then you'll see a very clean looking quarter in Q4.

All right, thanks, Andy. And best of luck, gentlemen, with the restructuring.

Thank you. Our next question comes from the line of Charlie Anderson with Dougherty & Company. Please go ahead.

Yes, good afternoon. Thanks for taking my questions. Just to sort of hit on that $13 million breakeven point, you know, it's not far from where you were a couple of quarters ago, but it looks a little bit far from what you just reported, so I wonder just kind of taking your confidence level on reaching that goal?

Sure. And that's a good question. Clearly, I've shuffled the deck. I have new management running Sales, and this particular choice was one that was made about six or seven months ago and he ran strategy for that period of time to give him an opportunity to learn our business, learn about our customers, learn about the marketplace. And he comes into the job with just a different approach, and I think the approach is going to be very orderly and very methodical. And one of our biggest issues has not been could we have deals, we always had deal flow, we just didn't have bookings. And so we need to give him a little bit of time. I don't expect to see much change in the revenue level in Q3, but we have enough going on that we think we have a good shot at Q4.

Do we know we can make it in Q4? Of course, not, you know, what we can do is say that is our goal, that's what everybody is pulling towards. You have to have a goal or you don't know where to shoot. And so that's kind of where we are. Now, keep in mind, there's another key point, that if our total cost of revenue, business is around $13 million, there's also about a million of noncash expense in that. So one of the other things that could easily happen or could happen would be that we could at least get the cash flow positive where there'll be an offset for time, of course, but you get the drift of where I'm headed.

We're all about getting this Company out of this red ink stuff, back to black ink, and growing our business. We've adjusted the Management Team. We've taken new approaches in Sales that should lead to better execution. And as long as we perform then we'll have more fun calls than this one in the future.

And, Charlie, once again, Andy -- one of the key aspects that I referred to before is going to be the deals that we're looking at closing, as Bill said, they've been in play for some time so they're not starting from scratch, and of course the deals that we never can talk about until the product is out on the street because our customers won't let us, those deals are always in play. A certain part of it has to do with how the accounting recognition is going to play in Q4.

One thing, despite the fact that we have this hard goal to be profitable in Q4 and profitable as soon as we can, frankly, we're still choosing to do the right thing as far as how we structure deals. Oftentimes with our customers they have a CapEx requirement or an OpEx requirement or constraint in either area, and we work with them to structure deals that are a win, win, but we've always been and you've covered us for some time, very, very -- we shy away from onetime deals. We've always been a Company that looks for recurring revenue because the last thing we want to do is show a Q4 profitable number and run rate into Q1 and go back in the red ink. We're looking for sustained profitability, and that is all about -- and it's in our power to craft the deals correctly so that we have recurring revenue.

But we'll be very communicative as far as what that number turns out to be in Q4 and why it's built that way and the status of these particular deals that we're trying to land here that we've been working for some time.

Great, and -- sorry.

Let me kind of add to that. I mean this Company has the opportunity to talk to anybody in the industry. The doors are always open to us. We don't have trouble getting in front of key people, getting in front of key executives. We are well regarded. What we have to do now is make sure that we match our technical capabilities to match the needs of our customers going forward, and we're very busy doing that.

As we looked at the restructuring one of our biggest concerns was to ensure that we did not impact our current customers in any negative way. I had an opportunity to talk with a key executive at Sprint just a few hours ago to brief him ahead of this call of what we had done and to assure him that we had done everything possible to make sure that these changes would not be felt by our customer, at all. That's part of how we do business.

Now our job is to close deals, get our revenues back online, keep our revenues and our costs rationalized so that we are consistently posting black numbers. I believe we can do that, but it doesn't matter what I believe, it's what we actually do. So you'll have to stand by.

And then just real quick as it relates to the downtick in the quarter, was sort of the recurring elements of your revenue pretty stable? I'm thinking of like the CommSuite visual voicemail stuff, maybe some of the Connection Manager stuff, you know, kind of walk me through sort of what's the base here and then what's the variable portion here in your revenue?

All right, let me jump in and give you some numbers that I typically rollout, and Bill can follow. In our legacy Connection Management type products when you consider the $8.5 million in Wireless, we did about $3.5 million. That number fluctuates, let's say, within a million depending on order patterns, for instance, again on the enterprise side, the USB sticks have been alive over the last several quarters, but the ordering patterns aren't necessarily consistent, okay? So that's $3.5 million.

And then in all other category, which includes our CommSuite and our NetWise we did about $5 million. As we commented a little earlier, the NetWise product is somewhat mature in terms of its initial rollout and now we are relying on new future phones to be released, which are going to be a little dependent on our customers' release of new devices, which is not consistent quarter to quarter to quarter. Obviously, we're looking forward to adding more customers so that we don't see as much variability quarter to quarter that'll help even that out, but we're not quite yet there.

Let me add to that then that as you look at the various product areas for our Wireless products that while there has -- we have serviced the installed base at our first customer to a certain extent. We announced last quarter that we have procured a second customer, and we just talked to you about that we've procured a third customer. There are no revenues being recorded at this point for either customer two or three, they will come online in the coming couple of quarters. So that bodes well for us.

As far as for CommSuite the CommSuite product line is basically tied to the visual voicemail offerings at Sprint. That product area continues to grow. Some of the new initiatives that we have developed with Sprint that would increase the size of the pool of cash that we each split at the end of each quarter will be starting to be deployed now. It was held-up a little bit, it was slowed down a little bit, but things are getting back to normal and we look forward to seeing that pool of cash getting bigger each quarter, which will then give us higher revenues.

Perfect, thanks so much.

Thank you. Our next question comes from the line of Howard Smith with First Analysis. Please go ahead.

Yes, thank you for taking my question. Most of them have been answered, so it's just some recordkeeping here. The 10% customers this quarter?

Sure. Sprint was 51%, and Verizon was 18%.

Okay, and it's sometimes difficult, as we've talked about in the past, on international revenue, just given the size of the organization and its reach, et cetera, but it sounds like you're leveraging your partners there maybe a little better. In addition to this Argentinean win, you know, can you discuss a little bit what you're seeing on the international opportunity?

Not in much detail. What I can say is that in the case of our partner, Gemalto, we are joint bidding a number of opportunities. Gemalto in almost each case is presently a vendor to the carrier that we are bidding on, so they're well-known, and the general reaction is positive. So this is an opportunity to leverage what we do with hundreds of additional feet on the street that we don't have, and we share the revenue between Gemalto and us, but we think we're going to have a much higher close rate than we would have expected to have prior to this.

So there's a number of opportunities. I am very hopeful, and I look forward to having the opportunity to tell you we've closed even more in the coming quarters, and also look forward to the opportunity to eventually once they're all closed and the carriers tell us we can say who they are of actually being able to tell you who they are. So I just can't do that right now.

Okay, very good. Thank you very much.

Thank you. (Operator Instructions)

Our next question comes from the line of [Michael Omari] with [Amerco Incorporated]. Please go ahead.

Yes, hi. Could you please tell me, guys, how -- what is the cash per share now that you have?

We ended the quarter at $23.5 million in cash, and our total shares outstanding are 37 million.

So that comes out, what, $0.70 a share?

I don't have a calculator handy.

So if the stock is selling at $1, so which means the whole Company worth is like about $0.70? It's just a ridiculous price. Do you have any buyback even though you are restructuring?

Yes, there has been a buyback announced and the Board constantly looks at the use of our cash, and we'll see where we go from there. So we thank you for your question.

Operator, are there any other questions?

I'm not showing any other questions at this time.

All right, thank you very much. This is Carla Fitzgerald. I would like to thank everybody for joining us today. We look forward to updating you on our progress over the coming quarters. Of course, if you have any other further questions you can please feel free to give us a call at our main Corporate Headquarters in Aliso Viejo. This concludes our call today, and again we thank you for your time.

Thank you. Ladies and gentlemen, that does conclude our conference call for today. If you would like to listen to the replay of today's call you may do so by dialing 303-590-3030 or 1-800-406-7325 using the access code 4632986. Thank you for your participation. You may now disconnect.