TransAct Technologies Inc (TACT) 2006 Q2 法說會逐字稿

Greetings, ladies and gentlemen. And welcome to the TransAct Technologies Second Quarter 2006 earnings results conference call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [OPERATOR INSTRUCTIONS]

A replay of this conference will be available immediately following the end of the call and will be available until August 9, 2006 until 11:59. The dial in number to access this replay is 201-612-7415. The account number is 3055 and the conference ID number is 208297. This replay also will be available on our website at www.transact-tech.com.

It is now my pleasure to introduce your host, Miss Denise Roche. Thank you.

Thank you. Good afternoon and welcome to TransAct's Second Quarter 2006 results conference call. Joining us from the company are Bart Shuldman, Chairman, President and Chief Executive Officer and Steve DeMartino, Chief Financial Officer.

The format of the call will be a brief business review by Bart followed by Steve providing details on the financials. We will then have time for any questions. If you have not yet received a copy of today's results release, please call 646-536-7003 or go to TransAct's website.

Before we begin the formal remarks, the company's attorneys advised that this conference call contains statements about future events and expectations which are forward-looking statements. Any statements in this call that are not a statement of historical fact may be deemed to be a forward-looking statement. Actual results may differ materially depending on a number of risk factors. For a full list of risks inherent in the business of the company, please refer to the company's SEC filings including the company's most recent annual report on form 10-K. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the day of this call.

At this time, I'd like to turn the call over to Mr. Bart Shuldman.

Thanks, Denise. And good afternoon everyone. And thank you for joining us on today's call. I'm very pleased to report that TransAct had a very strong second quarter. In fact, our second consecutive quarter of record revenues.

Revenues in the second quarter of 2006 were $16.9 million, a 37% increase from the second quarter of 2005. Earnings per share in the second quarter were $0.09 per diluted share, an increase of three times the $0.03 we reported in the second quarter of last year.

Our strong financial performance in the second quarter is also further validation that the investments we made in the business last year are starting to translate into results for both revenue and market share growth. The increase in EPS also shows how our leverage model works. As revenue rises, EPS grows faster.

In addition, I'd like to mention two major milestones for the company. First, in the second quarter of this year 2006, we shipped over 50,000 printers in the quarter. A first for TransAct. I'm extremely proud of the work our operations people are doing. And this milestone marks a new level of production for TransAct, still with only one shift per day.

The second occurs in just a few weeks, our 10th year anniversary being a publicly held corporation. Given all that has happened since 1996, both politically and economically, I'm especially proud of our employees who are dedicated and hard working, and are making this milestone happen. And, of course, I want to thank our shareholders, some of you might still be with us from the start, for the support you have given us over the last 10 years.

I'm very pleased with our results in the second quarter and the first half of the year. As you read in our press release, TransAct is off to a solid start in the first half of 2006. Now we made investments in different parts of our business last year during the difficult gaming market. But we felt it was important. And now those investments are helping to grow both our revenue and more importantly our earnings. These investments help to spread our reach, spread our potential growth over different areas of the markets we serve, and to open up more opportunities for the company. We have just begun to see the advantages these investments have provided to TransAct and encourage the next couple years to be exciting as ever, where long-term focus and use these investments to grow over the long term.

All three of our sales units have demonstrated growth this quarter. During the first 6 months of 2006, we experienced growth in our gaming and lottery business, driven by strong sales to GTECH and by solid gains in our worldwide gaming business.

Also contributing to our success in the first half of this year was strong sales in our POS and banking business, which are a result of the best in class product offerings and our expanded sales team.

And finally, TSG, or TransAct Services Group, continues to be a revenue driver for the company.

Before going into detail of each sales unit, I'd like to provide you with some additional information on two items that had an impact on net income this quarter. The first was a currency translation loss in the quarter that we did not forecast of approximately $70,000, resulting from currency exchange rates, more specifically the weakening of the U.S. Dollar versus the British Pound. The Dollar weakened by approximately 10% in the second quarter alone, something we just did not forecast.

Also, the second, was a $220,000 expense incurred related to an acquisition that was not consummated. The acquisition was presented to us and appeared to be of significant opportunity that would have materially changed the size and scope of TransAct. We spent a lot of time working on this acquisition in the second quarter and were disappointed when the company to be acquired pulled out of the deal at the end. We will continue as we always have to evaluate M&A opportunities. However, our acquisition strategy is to identify possible partners that complement our core business and increase the size and scope of our company. We view our acquisition strategy as opportunistic, and not just for growth's sake.

I will now go into some commentary about each sales unit and then turn the call over to Steve DeMartino, who will take you through the financials in more detail.

First, I'll start with our gaming and lottery sales unit, which experienced significant revenue growth. We grew by 52% compared to the second quarter of 2005. The growth was primarily driven by international casino sales and lottery sales. The domestic casino market remains challenging. But we believe we continue to gain market share as a result of our relationship with JCM.

I'm pleased with the growth we are seeing in our international markets and our latest initiative off-premise gaming, a market for which we launched two printers and that is still in its infancy. While we don't expect sales for off-premise gaming printers to begin to ramp up until late 2006 into 2007, we're anticipating this to be a significant opportunity for growth for TransAct. That said, we see opportunity for growth in the worldwide gaming market overall. The market we address today has more than doubled since we entered the business 3 years ago. The growing number of slot machines and gaming devices provides a very attractive market for TransAct. And we believe it will continue to grow. When we add in our business in Australia, New Zealand, Europe. Latin America and now adding in Macau, China, Singapore, Japan, and the rest of Asia, and adding in the expected growth here in the U.S. from new states and expansions of existing casinos and our new off-premise market, we believe will give us a market opportunity that at least 3 times larger than it was when we first started. And this does not account for the new potential new upgrade cycle here in the United States coming at the end of this year for server-based gaming or downloadable games.

Turning to our POS and banking sales unit, we grew revenues by 41% compared to the second quarter of 2005 to approximately $4.4 million. This was attributable to the continued success we've had in penetrating the banking market. As we have said in the past, this segment of the business tends to be lumpy. And the sales cycle to large financial institutions is longer than it is for our other products. And this also a project-based business which can affect results in different quarters.

Our investments in our expanded sales team and products for this banking market are now turning into everyday sales for TransAct. And we are now seeing this business turn into repeatable sales, banks adding new branches and buying printers for these additions. And these printers use our ink jet technology so the more printers we sell, the more ink jet cartridges we will sell every year after.

Looking at our POS revenue for the quarter, I am encouraged with the growth in unit sales for all the new printers in our portfolio. All our newer products sold well in the second quarter including our line of POS printers for just our distributors and then our ink jet printers, the KITCHENjet and our POSjet 1000 and including our iTherm Thermal product. We are seeing continued adoption of these products and believe they will continue to contribute to our growth.

And just this month, July, we sent into production our new Ithaca 8000 thermal printer. We call it the Print-It, Stick-I printer. It is a label printer that has no peel away backing. You print it and immediately stick it to whatever you want. We are focusing on different applications for this printer and in different markets. And we hope to have more to say in the quarters to come.

Now turning to our TransAct Services Group, or TSG, which includes sales of our repair services, spare parts and consumables. TSG is now a significant part of TransAct's business and it truly complements our businesses and allows us to offer services to our customers that also further enhance our relationships with them. TSG revenue for the quarter was $3.3 million. Revenue growth in the second quarter was driven by increased sales in almost aspects of this sales unit, including refurbished printers, consumables and service products.

As I said earlier, TransAct is off to a solid start in the first half of 2006 with all three of our sales units growing. We remain excited about the long-term prospects for our business. We see great potential in the international gaming market and expect to continue to gain market share in the domestic gaming market through our relationship with JCM. The TransAct Services Group will continue to deliver growth led by our three fully operational service centers and an expanded sales team focused solely on this part of our business.

And in our POS and banking business, we continue to expand our product portfolio. As I said earlier, we just started production of our new printer, our Ithaca 8000 for the POS market. And we also entered into production of our Epic 430 for the international off-premise gaming market. Both printers that I just mentioned are already in trials as soon as we got into full production of each. We expect to see continued demand for our innovative products across our POS, banking, gaming and lottery markets.

As we stated in our press release issued earlier today, TransAct will no longer issue quarterly revenue and EPS guidance. This is a fast growing trend amongst public companies that we emphatically embrace. We believe in this volatile environment issuing such estimates is not consistent with the way we manage our business. That being said, we have provided the market with our yearly revenue guidance for 2006. And we are maintaining our guidance for 2006 annual revenue which is $65 to $67 million.

As we look out into the future, we remain excited about the potential growth for TransAct. We still have many things to do and remain committed to growing the business and delivering growth for our shareholders.

With that, I turn the call over to Steve for our financial summary. Steve.

Thanks, Bart. I'll begin with a quick review of our financial results for the second quarter. As Bart said, we've experienced much improved financial results during the first half of '06 as the investments we made during a difficult year in '05 are now paying off.

Net sales for the second quarter of '06 were $16.9 million, another record sales quarter for us. In fact, this was our second consecutive record sales quarter. This represents a 37% increase over our second quarter of '05 sales of $12.3 million. We experienced year-over-year revenue growth across all three of our sales units this quarter. 52% in gaming and lottery, 41% in POS and banking and 5% in our TransAct Services Group.

Gross profit in the second quarter of '06 was $5.7 million compared to $4.3 million in the same quarter of '05 on the higher sales volume. Gross margin for the quarter was down slightly at 34% compared to 34.5% in the same quarter of last year due mostly to a less favorable sales mix.

Operating expenses for the second quarter of '06 were $4.4 million, compared to $3.9 million in the second quarter '05. As Bart mentioned earlier, we incurred approximately $220,000 in unplanned legal and consulting expenses in the quarter related to a potential acquisition that was not consummated. We don't expect these expenses to recur.

Excluding the acquisition expenses, the increased level of expenditure for the second quarter was in line with our expectations and reflects the full quarter affect of initiatives and staff additions we made to our organization throughout '05. They also included, as we explained in our first quarter earnings call, higher legal expenses related to expanding our patent coverage into international markets and higher expenses for trade show and promotional marketing activities.

Our operating income in the second quarter of '06 increased to approximately $1.4 million, from $400,000 a year ago. Our operating margin also substantially improved to 8.1% from 3.1% in the second quarter '05 demonstrating the operating leverage that we expect to experience in our business as our sales volume increases. In fact, for the quarter, our sales grew by 37% and our operating expenses, excluding the $220,000 of acquisition expenses only grew by 7%.

We earned $23,000 of net interest income in the second quarter this year, consistent with the $20,000 of interest income we earned in the second quarter of '05.

We also incurred an unexpected currency exchange loss of approximately $70,000 in the quarter. The loss resulted from transaction exchange losses recorded by our U.K. subsidiary due to the weakening of the Dollar against the British Pound. The U.S. Dollar lost on average approximately 10% of its value compared to the Pound during the quarter.

We recorded an income tax provision at an effective tax rate of 35.5% in the second quarter of '06, just about the same as the 35.4% rate recorded in the second quarter of '05.

Net income for the second quarter '06 was approximately $860,000 compared to $270,000 in the second quarter '05. Even with the $70,000 loss resulting from currency exchange, and the $220,000 of acquisition expense mentioned earlier, we still posted much improved EPS for the second quarter at $0.09 per diluted share compared to $0.03 per diluted share in '05. So our bottom line earnings tripled on a 37% increase in sales. Again, demonstrating the operating leverage in our business.

Now looking at our cash flow. During the second quarter we generated approximately $600,000 of cash from operations. You should note that we used about $1 million of our cash from operations in the quarter to fund our increasing inventory level due to the growth we are experiencing in our sales. We spent approximately $800,000 on capital expenditures during the quarter largely for tooling for our new Epic 630 off-premise gaming printer, tooling for cost reduction programs for certain existing products and our ongoing implementation of the local software. We also benefited from about $500,000 of cash and tax benefits from stock option exercises in the quarter.

So overall, we grew our cash balance by $400,000 during the quarter and we still have no debt outstanding.

Our working capital increased to $16.5 million at the end of the second quarter '06 from $15.5 million at the end of the first quarter '06, again, largely due to increased inventories to meet our increasing sales demand. Our current ratio remains at 2.5 to 1 at the end of the second quarter, consistent with the current ratio at the end of the first quarter.

Our EBITDA for the second quarter more than doubled to $1.9 million compared to only $900,000 in the second quarter of '05. Depreciation and amortization for the second quarter totaled $400,000. And non-cash compensation expense, which now includes the expensing of stock options as well as restrictive stock was $150,000.

Let's now take a look at our balance sheet at the end of the second quarter. Our total assets were $35.4 million compared to $29.3million at the end of December. We ended the quarter with about $5.7 million of cash and cash equivalents compared to $4.6 million at the end of December and $5.3 million at the end of the first quarter. Keep in mind our cash balance also reflects $700,000 of stock repurchases made in the first quarter '06, which I'll talk about in more detail shortly.

So even with our stock buy-back in capital expenditures, we continue to grow our cash balance sheets each quarter.

Receivables were $10 million at the end of the second quarter, consistent with the end of the first quarter and up from $8.4 million at the end of December reflecting increased sales volumes for our second consecutive record sales quarter.

Like the first quarter, even with the record level of sales, we again continued to improve our average days outstanding and our overall collection experience continues to be excellent.

Our inventories are up to $8.3 million at the end of the second quarter, compared to $7.2 million at the end of the first quarter, and $6 million at the end of December, '05. As I mentioned before, since we now see our business picking up again in '06, we are increasing our inventory purchases and inventory levels to keep pace with the demand.

Shareholders equity was $23.6 million at quarter end compared to $21.3 million at the end of December.

And lastly, as an update on our stock repurchase program, we did not buy back any shares during the second quarter due to the potential acquisition we were working on. So to date, our total stands at 580,000 share repurchased for a total of $4.6 million, which represents about 6% of our total shares outstanding as of the beginning of the program. Just as a reminder, we are authorized to repurchase up to $10 million of our common stock through March '08.

And finally, I'd also like to make mention that we just filed an 8-K this afternoon to announce that we've extended the expiration date of our $11.5 million revolving credit facility with TD Banknorth until the end of November, '06. The facility was set to expire on July 31, '06. Due to the potential acquisition we were working on during the second quarter, we were busy working on lining up the financing for the deal. Since the deal did not come to fruition, this extension to our existing credit facility will give us time to get back to working with the bank on financing alternatives for our revolving credit facility. Just as a reminder, we currently have no outstanding borrowings against our credit facility.

And that ends the financial portion of the discussion. And with that, I'll turn it back to Bart.

Thank you. And operator, we'll open up the call to questions. Nice job, Steve.

Thank you. At this time, we will be conducting a question and answer session. [OPERATOR INSTRUCTIONS]

Our first question comes from the line of Jeff Martin with Roth Capital Partners, LLC. Please proceed with your question.

Thanks. Hi, Bart and Steve. I'm wondering if you could give us a little more detail on what kind of acquisition you were looking at and what business line and what size it was? Give us an idea of what kind of -- along what lines you're thinking?

We can't. We have a non-disclosure that we signed. And we can't talk about it at all. Sorry. We're just not allowed to.

Okay. Fair enough. And then along the lines of your pulling -- or not pulling, but no longer issuing quarter EPS guidance, you didn't mention whether you're still comfortable with that $0.42 to $0.46 EPS for 2006. Should we assume that's still a good number?

Yes. The margins -- Steve, do you want to take that on the margins?

I think our margins are going to be holding pretty much at the level of the second quarter, Jeff. And we're not pulling guidance, but we are reiterating our revenue guidance for the year.

Yes. The only change, Jeff, would be something like what we saw in the second quarter where we had this $220,000 of extra expenses that we didn't plan on for this potential acquisition. And the $70,000 of currency. So that was not planned on for when we looked at what our expenses would be for the year.

Got you.

But the margins will be -- should hold.

The operating should be right around the second quarter level.

Yes. Yes. Jeff, in regards to your comment about pulling guidance, we're not really pulling guidance. We don't run our company quarter-to-quarter. We've never have. And Wall Street is changing to not -- the public companies are changing not to give our quarter-to-quarter guidance. I emphatically believe in that. And look what happened in the second quarter with this potential acquisition that would have been wonderful for our shareholders. And when you start focusing on whether that could affect whether it's $0.09 or $0.10 or $0.11, it's just not the right thing for a company of our size. So, it's not good for us to look at quarter-to-quarter when we have opportunities like we just had in the second quarter that could affect it one way or another.

Sure. Sure. Let's cut to some of the trends within the different business lines. One thing that I remember you saying was that the lottery business should actually be down a bit in Q2 and it looks like that came in a lot stronger than what you had thought. And I was just wondering if we should expect that to tail off a little bit in the second half.

Clearly the second quarter, the lottery business was a bit stronger than we planned. And that's just a movement of some orders that shake out from Q3 into Q2, plus our lottery customer that had a little better second quarter than they were planning. So there could be a little shift, a little out of the second half that went into the first half.

Okay. And then on the international side of the gaming business, what do you see as the purchasing patterns in the second half of the year? Are they more likely to come more in the third quarter or the fourth quarter? How do you see that playing out? Anything that could swing it one way or the other?

Right now we're really pleased with what's going on in the international gaming market. When we looked out and saw how quickly Ticket-In and Ticket-Out went into the domestic market, we knew eventually that there wasn't going to be that many printers sold like there was with the big rush. So we moved quickly into Australia, New Zealand, Europe as you know. We're very involved in the Wynn Casino opening in Macau. That's with all of our technology. What we're seeing right now is a pick-up in Australia. And they started with what they called Ticket-Out and they did not allow Ticket-In. And that's why they had turned the phrase TOTI, Ticket-Out, Ticket-In. First they allowed some of the slot machines to print a ticket, but they did not allow the ticket to be put back into a slot machine. Well that has changed. And that legislation is now changing. So we are starting to see a pick-up in our Australian business.

We're also seeing some nice growth in Europe and also Latin America. So we expect to see that international business to continue to be solid in the second half of the year. And that's without our 430 or our 630 for the off-premise market, which we're just rolling out to our customers and our partners right now. As you know, we service the international markets through some partners. Actually JCM Gold sells for us in Macau and Japan. And they're now getting educated on our 430 and 630 for those markets. The Bright Group handles New Zealand and Australia. And they're starting to get educated and trained on our new 430 and 630. And Eurocoin which handles what we call EMEA, Europe, the Middle East and Africa, they're now being trained on our new 430 and 630 for that off-premise market. So that won't even kick in until the very end of the year or the beginning of next year. So all that international growth is strictly the 950 casino-type business.

Okay. And then on Point of Sale in banking, sounds like you're starting to get some traction with some newer products. Should we look at that as a good ramp-up in the second half versus the first half?

I think it's going to be a little bumpy because of the banking business. That gets project-by-project. And so it's going to depend on which projects we close. We are seeing a good up tick in our thermal business. One of the things that we're experiencing is as our Legacy printer sales come down, our impact printer business, those were at higher average selling prices than our thermal business. So our volume is actually up more than our revenue in our POS business because the thermal printers sell for less than an impact printer.

I think what we're most encouraged with in the POS market is our new Print-It, Stick-It printer which has many applications. And without the liner on the back of it, you just imagine what a fast food restaurant when you're going through a drive-through, instead of dropping the receipt in the bag on top of your food, you can now put the receipt and stick it right to the bag. And we're seeing tremendous very solid interest in the product. And that's just one of the applications that this printer has.

And now it's going to take us time. It's going to probably take us another six months because a lot of these customers like to go through significant trials, make sure it works. The technology is pretty cool. We're running a piece of paper with a sticky backing over a platen and not having it stick. And we did some pretty cool technology to make that work. But of course, the customers want to trial the product. But we feel that coming out of '06 into '07, we should be seeing that product line have pick up in sales.

Okay. Great. That's helpful. Thanks, Bart.

Sure.

Our next question comes from the line of Jim Bradshaw with Bares Capital Management. Please proceed with your question.

Thanks. Good afternoon. Congratulations on a nice quarter.

Thanks, Jim. Most of my questions have been answered. But, I did want to ask in the banking POS strength, did that come from just a number of smaller stuff? Or was that one or two larger orders?

The banking business was -- The interesting thing about the banking business was it came from existing customers placing additional orders for either new branches that they opened or banks that they actually bought or branches that they bought. And that to us is very encouraging because that business is getting to a level where we're getting repeat business, not just project-by-project.

The POS market was spread across our distributors which we're focused very heavily on. And a lot of the business in the POS market goes from us to a distributor to a VAR to the end user. So a lot of that business came from our distribution partners, two of them in particular. And then one -- two major VARS that we have a relationship with. So in the banking industry, it was spread across our existing customers. POS, it was kind of concentrated on our distributors. But that's how we go to market. And two large VARS that we've had a long-standing relationship with.

Okay. That's helpful. Appreciate it. And then with the 5% growth in the services group, I was a little surprised actually that it was not a big larger. When do you think that may increase? Or is that something that you thing 5% is a going-forward kind of a --?

No. Actually, Jim, it's a great question. And we should have done a better job of explaining. One of the things that we see in TransAct Services Group is our Legacy printer sales, printers that we sold to GTECH years ago, the spare parts for those printers is going away. So actually, Jim, who -- Jim Stetson who manages our TSG business, if you look at the new stuff, the consumables, the service contracts, paper sales, that's up a lot. It's just that Legacy old printers that one, are fading away, getting thrown out so there's no spare parts or new service on or GTECH with our old 27 wire impact printer.

Remember, we're now selling them a thermal product, a new thermal printer that's replacing a lot of our -- or some of our old impact printers. Those impact printers that are in the field, we would have got spare parts orders for. So we're replacing some of our population with our new GTECH thermal printer. So what we're seeing is and what we track is things like paper sales, which is new to us. We just got into that over the last two years. Ink jet cartridge sales is way up. And we just won another large contract so that's going to continue to grow. Service contracts, like with the banks when we go in and sell printers to the banks, we actually have 2, 3 and 4 year service contracts with them. Some of our large VARS, we're actually now doing all of their service for, so while they're selling the service to the customers, we're the backbone to that. All of that business is growing nicely.

So mixed in there is that old Legacy business that will fade away. And so Jim is actually growing nicely the new business.

Okay. Understood. Great. Well, thanks for the help.

Yes. We should have explained that a little better.

No problem. Thanks, Bart.

Our next question comes from the line of [Terry Frank] with [TF Trading and Company]. Please proceed with your question.

Hi, Bart.

Hey, Terry. How are you doing?

I'm doing well, thanks.

You guys finally get electricity on in St. Louis?

I'm sorry?

Forget it. It was just a question.

I'm in Delaware right now. And it's just as hot as St. Louis though.

Okay.

Obviously this printer, the Stick-It is a new printer, is that correct?

Yes, it is.

And you're just starting with the introduction of this?

Yes. Yes. We just got into the production.

I'm sorry if somebody's already answered this. But with besides the POS, is there -- what other applications do you see whether it's in the banking business, whether it's in the gaming section or what other applications do you see going forward with this product?

Well, the hospitality market is clearly a major focus of ours because of the opportunity to remove the receipt from inside the bag where the food is. Today, a lot of the hospitality -- our hospitality customers and customers that we don't have, are actually putting a thermal piece of paper in the bag. The thermal paper has chemical coating on it. And they're putting it on top of food. And that clearly is something that they'd like to get out of. And this will now help them from putting a receipt in the bag with food in it and actually attach the receipt right to the bag.

The other application is on special orders. They can actually put the receipt with what the special order is and just attach it right to whatever it is. You can imagine a pizza box with your order and you're going to do a take-out order, you can attach the receipt right to the pizza box. Deli counters where they're packaging meat and packaging sandwiches. They now can have a printer that can print not only the information, but stick the packaging closed.

Banking applications where you might be rolling up money and you want to stick something on it. So what we're seeing is, and our sales force is seeing, every time we go to a trade show, more and more people coming by and looking at it and giving us -- telling us their opportunity and their application for the printer.

Terry, the big challenge that we had was getting the paper manufacturers up and running to be able to manufacture the paper in a form that our customers liked it, whether it was too sticky, not sticky enough, where the sticky needed to be. We worked very closely with two major paper companies to be able to provide us the right paper. Plus we had to get it through our printers so that it wouldn't jam the printer. We waited for the paper. We've had customers waiting for the paper manufacturers to catch up to us. And we now have one manufacturer up, running and qualified. So we're out there now going back to all these customers that contacted us that saw the printer at the trade shows. And now that we're in production, we're now shipping them, evaluation units to get started.

It sounds like a very, very big investment to me.

The big savings, the big issues that the customers had was in a typical label printer, that backing that you had to peel off -- first the label is very expensive. And the backing has environmental issues. So when they're peeling that label off and throwing the backing out, the backing sometimes has environmental issues. So the fact that there is no backing at all, it literally comes out -- if for better words, it's like a post-it note. So it prints like a post-it note. And some of the paper that we're working on, you can actually pull the receipt off and put it onto something else, just like a post-it note. So that's why we call it the Print-It, Stick-It. You can print, stick and then stick it to other -- you can stick it on one thing and then if you want to stick it to something else you can. Or you can leave it on the box. We're thrilled that we got through the engineering of the printer and the paper. And now we're excited about the opportunity.

Thanks very much.

[OPERATOR INSTRUCTIONS]

Gentlemen, there are no further questions at this time. Do you have any closing comments?

Yes. We'd like to thank everybody for coming to our -- attending the call today. We'd also like to thank our shareholders for their support over the last 10 years. We'd also like to let our investors know we will be presenting at the Roth Capital Conference. I believe it's Wednesday morning at 8:00, September 5th. And look forward to seeing those that are attending the show. And we thank you for attending. And we'll look forward to talking to you on our next conference call.

Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.