Turtle Beach Corp (TBCH) 2012 Q4 法說會逐字稿

Good day ladies and gentlemen. Welcome to the Parametric Sound reports fiscal 2012 results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions following at that time.

(Operator Instructions)

Now, I'll turn the conference over to David Mossberg of Investor Relations. Please begin.

Thank you, Tyrone. Good afternoon, and welcome to Parametric's fiscal 2012 conference call. Before we get started, we will be referring to today's press release announcing our results, which can be downloaded from the Investor Relations page at the website, at ParametricSound.com.

Please be aware that some comments made during this call may include forward-looking statements that involve risks and uncertainties regarding our operations and future results, that could cause Parametric Sound's results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in today's press release, and our filings with the Securities and Exchange Commission, including without limitation, Form 10-K and Forms 10-Q, which can identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

The speakers on today's call are Mr. Ken Potashner, our Executive Chairman, and Mr. Jim Barnes, our Chief Financial Officer. Now, I will hand the call over to Mr. Potashner for some introductory remarks.

Thank you, David. I'd like to welcome everybody to the conference call. The Company has demonstrated substantial progress over the course of 2012. Our technology has evolved from being a spoken audio solution for limited digital signage uses, to today, where we have a broad-based audio platform that will support a large array of consumer applications. The number of employees and consultants has grown from five to 20. So, a 400% increase in the employee count. With MDB Capital's support, the Company has successfully secured full financing to enable us to pursue our objectives. We have begun to build the collaborations, now, with potential licensees, distributors and integrators, that will enable us to fully leverage our technology. We are excited by both our near-term as well as our long-term prospects. Jim Barnes, our CFO, will review our financial performance, and then I would like to go much more in depth with our key strategic initiatives. Jim?

Thanks, Ken. We filed this afternoon our annual report on Form 10-K, and it is available on our website, and also linked at the SEC site. My remarks this afternoon will focus on our results for the fiscal year ended September 30, 2012.

We made a major transition during the year. In the first quarter that ended December 31, 2011, we were focused on digital signage. We were very limited in our ability to make technology and marketing investments, and we had effectively five full-time employees. Ken joined us as a Director and Consultant in late December of last year, and became our full-time Executive Chairman in March of this year. During that quarter, the second quarter, we launched our licensing initiative and began scaling up our operations. We added experienced sales and marketing personnel. We also hired key technical professionals, and ended the year with 14 full-time employees. We also employ other technical specialists, consultants, and contract assembly staff from time-to-time, as required. The net proceeds from our March secondary offering was approximately $8 million. This allowed us to ramp our marketing, development, and our IP activity.

Our monthly cash costs increased to approximately $250,000 to $300,000 per month, primarily for those activities. Actual cash expenditures vary each month, depending on the timing and amount of prototype and related development expenditures, patent-related costs, and licensing, legal and public company costs. We expect cash costs during the first quarter of fiscal 2013 to be comparable to these recent levels. But we also expect increased contribution from our digital signage sales, as we progress throughout fiscal 2013. Any licensing proceeds are difficult to forecast at this time.

Revenues for the fiscal year 2012 totaled $234,000, compared to $79,000 for the prior fiscal year. Last year, digital signage sales commenced in the third quarter, and shipped in the fourth quarter, so effectively, that represented six months of sales versus 12 months of this year. While sequentially quarter-to-quarter, and overall, we are seeing revenue growth, and we expect that to accelerate in 2013. We have increased the size of our direct sales force from one to four people, and we have also utilized commission-only agents and outside reps. We also anticipate results from our partnerships with integrators and distributors like Ingram Micro, Fujitsu, Four Winds and others. The sales process for digital signage involves multi-unit installs like Build-A-Bear, which can take three to six months to conclude, and many include pilot locations. These individual projects can be for thousands of units, and that is what we are pursuing with our direct sales force, focusing on these large opportunities. We recognized no licensing revenues in 2012. The GAAP rules for recognizing licensing revenues are restrictive. Generally, licensing fees will only be recognized after manufacturing commences, and all revenue recognition criteria are met. We expect licensing and collaboration arrangements during 2013, but the timing and amount of any reported revenues will depend on each arrangement.

For 2012, we reported gross profit of $114,000, or 49% of revenues. This is compared to $44,000 for the prior year. We continue to target digital signage gross margins of 40% to 50%, but margins depend on sales volumes and volume order discounts. Margins also vary from quarter-to-quarter, from production efficiencies and other factors. Selling, general, and administrative costs, and research and development costs, increased in 2012 as we ramped our activities. We ended the year with a net loss of $4.5 million, or $0.85 per share. This included $1.7 million of non-cash stock option expenses.

As of September 30, we had cash balance of $5.5 million, and working capital of $5.8 million. We believe we have sufficient funds for operations for 2013 and beyond, and as I previously stated, we expect increased contribution from the digital signage business during the year, along with licensing activity that could further contribute to our resources. This concludes my financial comments, and I will turn the call back to Ken.

Thank you, Jim. As you know, we have a strategy that has two key dimensions to it. The first is to give exposure of our current intellectual property to a limited number of market leaders. They lead in key sectors, where we can provide disruptive solutions with the intention being to derive technology licenses. The second part of the strategy has been to use the digital signage market as a sector where we can deploy low-volume product offerings to further evolve our technology, and receive customer feedback and valuable insights. I will give the updates on both parts of this strategy, and also give you insights on how we plan on handling a third opportunity that has presented itself in the healthcare sector.

On the licensing front, we have now achieved 100% success in gaining access to virtually every key target on our list. The list represents industry leaders in every case, and they have responded positively to the experience of our technology. We have now conducted technology discussions and reviews with each target company, and this has resulted in us signing in excess of 20 NDAs. The NDA is the first step towards moving down the path of a licensing relationship, so it's a key requirement for us to get that NDA. In addition to the NDAs, we have launched two co-development efforts, and are in the process of negotiating additional co-development projects. We also have been requested to do projects that we have currently turned down, due to current resource constraints.

We believe that co-development work will be key to demonstrate that our IP can be deployed into specific consumer products, and will result in broad-based licensing relationships. Given our current progress and dialogues, and negotiation status, we believe that we are on track to achieve our previously-stated objective of two to three licensing deals by the end of March 2013. In addition to our licensing strategy, we have laid the foundation to pursue a relevant revenue stream from our digital signage products. As we have begun to understand the digital signage sector better, we have concluded that the opportunity set is substantially larger than we have defined the boundaries initially, of just adding sound to retailers' marketing campaigns. We now have learned that the ability to direct and control where audio is heard is relevant to literally every retailer, restaurant, office building, airport, as well as content providers. We have announced initial distribution partnerships, but expect that list to grow substantially. As a matter of fact, today we announced a relationship with Ingram Micro. In addition, we are on trial phase at several large retail opportunities, and I look forward to give you updates on our progress there.

It is still not our intent to invest in the necessary sales and support structures, distribution, marketing and manufacturing necessary to scale this opportunity set, so it still remains our goal and our focus to align ourself with key strategic partners to facilitate these tasks. We have set an initial goal of building a demand of 24,000 units, which at 2,000 units per month, would represent cash break-even for the Company. I will be traveling to Asia this weekend with one of the two managing partners from Epsilon, to visit factories as potential manufacturing partners. Once we have clarity on the choice of partner and the ramping potential of that partner, we will be able to develop a full revenue model. We have already convinced ourself that customer demand is sufficient for us to achieve our volume objectives.

Since I mentioned Epsilon on manufacturing, let me update you where we are in the broader relationship. We are currently in the development stage with Epsilon, looking to transform our IP into key products that they consider relevant. Epsilon has committed engineering time and cost in assisting us on this process, and has helped us progress our technology. We are making good progress on key technology attributes, and have a roadmap of additional development activities to address the remaining objectives, and the key one being the deployment of our new enhanced DSP chip. As I mentioned, we are expanding the relationship to include support now, and manufacturing. We have also given Epsilon the ability to lengthen their development window to pursue a broader set of products, including sound bar solutions.

Next, I wanted to update you on our thinking relative to the healthcare sector. We have previously announced the relevance of the technology into the sector, and specifically into hearing solutions. We continue to run preference tests and pilot group studies, with results that indicate that we deliver improved volume and clarity to those with hearing impairments. We have launched a collaborative effort with hearing doctors and specialists, and have now created a subsidiary to focus on this opportunity. The resources required, both from a personnel and a financial front, to execute on this opportunity, which would include enhanced studies and FDA filings, is beyond the scope of Parametric's current resources. So, therefore, we plan to pursue external staffing and funding in a way that would enable Parametric's shareholders to benefit through an ongoing equity and royalty relationship with a subsidiary. This will also enable Parametric resources to remain focused on the current strategic initiatives. This approach will enable us to fund the initiative without diluting the existing Parametric shareholders.

Lastly, I would like to give you a technology update. So the technology continues to evolve and to improve. Our previous errata sheet had two key items on it, volume and improved distortion performance. We have made progress on both fronts. The volume performance has improved on the order of 100%, and that we are now able to achieve approximately twice the volume of our earlier generation offering. We have additional opportunities to enhance the volume further and we will pursue that, as well. On the distortion dynamic, we have required the introduction of a new DSP chip, and we have been successful now in bringing that chip on line, and also have been successful in porting over our previous code to the device. We are now in the process of generating supplemental code that will add equalization, as well as enable us to pursue a second level of recursion, which will have substantial positive impacts on our distortion performance. We believe that our current performance with our existing chip meets all the requirements of digital signage, and is also a compelling solution for video gaming applications, of which that would present an extraordinary market in its own right for the company. With the completion of the DSP chip, and the associated software, it will position us to be viable for all consumer segments on the roadmap.

So in summary, before we open it up to questions-and-answers, we feel we've made substantial strides with our technology and with our business relationships. We have added the technical and business development resources to execute the initial plans, and we have a roadmap for scaling the Company to go forward. I want to thank everyone for their support. With this, we will be in a position now to go ahead and open to questions-and-answers, and we have Austin Hopper queued up as our first.

(Operator Instructions)

First question is from Austin Hopper of AWH Capital. Your line is open.

Nice job. Thanks for taking my questions. Can you just comment on the Fujitsu relationship, you announced about a month or a couple of months ago? When you expect that, potentially, to kick into revenues? Are they actually selling product today? How do you think about that given the DSP discussion that you just talked about, and product development?

The way we approach Fujitsu, the way we're going to approach Ingram Micro, the way that -- and you will hear other names as we evolve over the next couple of months. So, what we've done is we put a key set of players in place that could create a very strong demand for the product. We have loaded them up with here's what we have, here's the potential of the product, here's the application set. We are in dialogue, the steps are going to be training their sales resource, setting up support capabilities. We are at the point already that we've convinced ourself through our relationships with Fujitsu and our initial discussion with Four Winds and with Ingram, that the demand will be out there to support the kind of volumes that we are going to set our first tier manufacturing targets at.

So, if I were to phase this thing off, then first step, get a sales/distribution resources in place. Have them convince themselves the demand exists. Secondly, now that we know demand is existing, position a manufacturing resource partner in place that can service the demand, and then we hit the go button in terms of again selling product into that customer base. So the timing, just to give you a sense, we are coming out of that first phase of does the demand exist, and again, the answer is yes. Now, we are entering into the phase of let's therefore, make these commitments and partnership investments, because it won't be our capital, but the partnership investment, in terms of a manufacturing facility relationship that can support that demand. And, we think that's a one quarter or so process. So the events there are selecting a partner and then ramping that manufacturer in place, and then we're in a position we can begin supporting demand.

So, from a development perspective, there are no issues? It's more about establishing manufacturing and working with the partners?

Yes. So, we think products we currently have meet the market requirements. So, there's not an invention phase or customization phase. We have the technology and product that meet the market demand, today, so it's a selling and support mechanism, and then of course, it's a how do you service the demand through supply mechanism that we are now approaching.

Okay. Hey, you talked about Epsilon for a little bit. I think, upon signing of the deal with Epsilon, I think they owed you $250,000. Have you that yet?

As I mentioned, Epsilon has committed substantial time and resource dollars to the project. They are key in supporting the enabling of a third-party manufacturing strategy with us. The fee, the upfront fee was fully refundable. Given that we could -- it was a royalty pre-payment and given that we can't book the revenue and accounting regulations won't let us recognize the revenue, we have supported Epsilon's proposal to defer that payment until anytime during the development phase, but it needs to be paid prior to us moving to the manufacturing phase with them.

Thank you. Our next question is from Joshua Weisbord of OpCo. Your line is open.

Ken, on the quarter in the year, it seems like the relationship with Epsilon has actually improved, and as far as I understand, you're heading to China this week. Based off your previous comments about manufacturing, do you foresee them being the sole partner to manufacture both internationally and domestically?

Josh, the demand is going to drive that. I am usually a big believer in that you don't sole source any capability of that nature, so we may find that Epsilon assists us in the first phase of manufacturing, but I would be -- it would be very uncharacteristic for me to have a sole source manufacturer. I would anticipate there will clearly be more than one. We have actually been approached by several different entities that would have a substantial interest in being that manufacturing partner. So, I think we will leverage the Epsilon relationship to get us going, but I would be very surprised if it ends up in a sole-source scenario.

Got it. Based off the previous caller's question, the $250,000 would be given before your manufacturing agreement would be signed?

That's correct.

Great. Moving onto the NDA, it seems like you made some progress, here. I think, the last call you had six or eight NDAs, and now you have about 20. Just for timetable and to talk about the co-developments, as well. The NDAs are separate of the co-development agreements, is that correct?

The co-development agreement -- one of the two co-development opportunities also has an NDA inside.

Okay. So I would assume 19 others?

Correct. More than 19, because I said more than 20.

More than 20, that's great. So, just on timetable, you again see nothing in your negotiations with these partners that you will have at least two to three co-development -- sorry, major licensing consumer deals done by the end of the quarter, March 30?

That's correct. And by the way, where all the dialogue is, the dialogue has clearly moved off is the technology compelling, is it applicable? Where the interesting discussions are on the front of who owns, co-develops IP. So, if the base -- if the core technology has improved through co-development effort, what is the ownership model for that co-developed IP and what are the rights around that? So that is the most challenging part of this equation. That said, we are on target.

Just my last quick thing. Of those agreements, I do believe you talked to at conferences, include both upfront payments and royalties. Is that correct?

Our stereotypical model is upfront payments, specifically, to get some advantage of exclusivity and then clearly an ongoing royalty stream.

All right. Great. Thanks. Good luck. I look forward to hearing more.

(Operator Instructions)

We have a question from Ankur Desai of MDB Capital. Your line is open.

Congratulations on a great quarter. I wanted to ask you a question about-- get a little more color on the signage deals you signed. What is giving you three signage deals? In what sense do you expand your reach into that market? Are you moving up and down supply chain? Are you moving geographically diverse? Or is it just more shots on goal?

I think Ankur, the key is that we are realizing that the demand for the capability we have is much broader than our initial definition. We are getting interest from everything from restaurant chains to retailers, to audiovisual applications, a broad, broad array of stuff. There's no way locally that we could have even begun servicing that breadth of sectors. So, the logic was, let's begin partnering with folks like we've announced, and the ones we will announce. It will give us a very substantial footprint and, then again, if we're getting it down in a capital-efficient way using third-party support, both on the sales, as well as the supply chain aspect of this, we will get a lot of leverage.

Behind it, as well, because in the path -- I also -- just to put out there, very front and center, I think for the Company to very rapidly get to a point that we cash-positive on our secondary strategy of leveraging some digital signage revenue, I think that will get people much less -- it will change the risk profile in a lot of people's minds in terms of can they execute the licensing strategy quickly enough and do they have enough runway, and all those sort of issues. So, one of the key thinking here, is it was available to us. Let's put a boost under the digital signage opportunity. Let's do at high margins, let's do it with partners, and let's put to bad weather not the Company as the runway to facilitate its objectives. These partners are the right guys to help us do that.

Okay. Thanks. That led into my next question. So, you think that you can get to EBITDA positive just with the signage business, even while you are still developing these other verticals?

Yes, I mean, the digital signage business, especially if we broaden the definition to the spaces that we are now seeing that we're very relevant to, I mean, when you talk about putting 30 or 40 emitters into a Build-A-Bear, to instruct kids how to build their teddy bear at different stations, that wasn't in our original thinking. When you think about going to restaurant chains and going into restaurants for different sound configurations, I mean, there are a lot of things that just weren't there, day one, that could drive a lot of volume. So, we are going to take advantage of that and give ourselves a nice financial boost, and it will enable us to be even broader as we pursue licensing pursuits.

Okay. I know that your economic arrangements with all of these different partners is probably different in digital signage and probably depends on market application. But, are we in general talking about a recurring revenue model? Are we talking about a single sale model?

So, at this point, we have had some preliminary discussions on what the service model beyond this. That may very well evolve, and there may very will be ongoing revenue model as a result of service and support. But, right now, the key focus is let's go ahead and get the penetration, get the presence and a broad set of locations. By the way, I mean, the fee -- as you can imagine, with these deals we're doing. They are success-based commission structured arrangements. So, the cash requirement on the Company to execute this is de minimus.

Okay. Great. I know you also mentioned, earlier in the call, talking about passing up on some projects, because you were resource constrained. I wanted to know if you were planning on building out some additional resources, or was it also a question of focus, and okay, we're going to stick with the team that we have and continue down this path, or do we need to grow it out significantly?

Yes, these are along the lines of, as we presented, and we said here's a list of today's things that we can do. Here's the tomorrow things. Like integration into displays. Here's the beyond tomorrow, integration to cell phones, things of that nature. So, we have been approached by leaders in the tomorrow and the beyond tomorrow application sets that we have identified, with the desire to do something now. The trick is, with our limited resource base, to do some of that stuff comes right out of our ability to move the ball forward on the today list. We have momentarily deferred rolling our sleeves up and creating relationships and the longer-term prospects, we think there are huge opportunities downstream, but we think there's enough on our plate now to give us focused on the current project list.

Okay, great. And last thing, I heard you say something interesting when you were talking about Epsilon, I think you mentioned soundbars, and I previously had been thinking about the Epsilon arrangement as one for the automotive market. It sounds like maybe there is more opportunity there. I wonder if you could give me a little more color on that?

I need to be careful not to go out of school in terms of announcing Epsilon product strategy and things of that nature. If you look at that contract that we signed with them, it had an exclusivity in the automotive space, but it allows them to participate in consumer sectors in a non-exclusive fashion, and they have demonstrated some interest in doing so.

Terrific. Thanks very much. I look forward to hearing more.

Thank you. Our next question is from Jeb Besser of Manchester Management. Your line is open.

Quick question on the health care subsidiary. What do you see as the timeline for attracting outside funding to that? Sort of putting in place as a pure equity investment for the Company versus a wholly-owned subsidiary?

Yes, so, we are at the point, we've identified a couple very key resources, medical doctors who have run the tests and have been wowed, to the point that they want to get involved with the thing in a very big way. So in terms of identifying some of the initial resources that can move the ball forward on testing side, we've gotten work at this point with FDA consultants, and have clarity in terms of that whole direction. So, we've kind of virtually identified the team that could move this thing forward from a resourcing view. Secondly, we've got a couple banking concerns that have expressed an interest and have displayed confidence in being able to bring the right investors to the table on a transaction like this. So, things are falling into place on those fronts.

We are still going through the process of understanding what the correct transaction would be for the Company, I'm highly cognizant of the path of, it's different enough that I clearly don't want to burden the current Parametric investors with a FDA process, testing all the things with some very cash-intensive activities that would shorten our runway and our core mission. So, I characterize it, Jeb, is it worth the point that a lot of the pieces are falling into place? I would say it's probably going to be another quarter before we can fully demonstrate, here is the plan.

But, we have come to the conclusion that we cannot finance this involvement within our current four-wall structure and we've also made the intent, or the decision, that we don't have the in-house resources to execute the work to be done. So, it does. And thirdly, we've gotten clarity that the opportunity, here, is a substantial one, based on the results that have been secured at this point. We are putting into place the pieces that enable Parametric to benefit broadly, but not distract ourself or dilute our shareholders.

Okay. Great, thank you.

Our next question is from John Grimley of Craig-Hallum. Your line is open.

Jeb asked, I was going to ask about the healthcare product, but just a follow-up question. Can you just update us on where the technology stands today versus, I think I first heard the speakers in September. I know you were talking about a new DSP chip and that expanding the capabilities. Can you just update on where that is, and then, the follow-on question will be, do you feel like the technology is where it needs to be to get these license deals done that you are working on?

Yes, I believe I covered it, but let me give you again the short version. So, a year ago the Company had a solution that could be addressed to deliver spoken audio for digital signage. It could not support music, the distortion levels were just too high. So, through generating the capability to cancel out the disruptive effects of air on Ultrasound, we moved into a phase of now we can produce audio at a level of distortion that is acceptable for specific applications -- very low volume tied to it, but a roadmap to get further improvements.

Where we sit today, we've done some clever things that have substantially improved the volume profile of the product. So, we think we are there from a volume from a volume perspective for the target applications. Secondly, we have gone through the various sectors that we know are relevant to us. The full video gaming sector, which is a very substantial one for us. We think we have the sound quality, as well as the sound volume that makes us viable for those markets, today, and the dialogues we are having with key players in that sector, that one that we are looking to progress very quickly.

Then, when you look at the technology and asked the question, can it support ultra hi-fi GoldenEar type applications, that's going to have the requirement for our more powerful DSP chip. The status update I gave on that is we've now got the chip online. We have ported existing software over to it and we're doing the coding development to realize the potential of that chip.

Great. And then just one follow-up question. I think you touched on this and you talked about the 2,000 emitters a month will get you to break even, hopefully in fiscal 2013. Do you feel like the balance sheet you have today is what you need to get you through the next 12 months, or hopefully through to profitability?

Yes.

Great. Thanks a lot.

I was going to say -- the 2,000 per month is an initial target. Right? So, by no means is that our endpoint. Right? That's a let's get to here is the first step. There are clearly steps beyond that. The big play that we're betting on is then we, of course, kick in the entire licensing revenue stream. We think we have the resources and to do that, I would say that the only challenge to the resources would have been, let's in parallel try to finance the entire healthcare opportunity, because it's the substantial one, as well. We've chosen that we don't want to take that risk.

We should be thinking about the healthcare opportunity as a potential something we will have ownership in over time as you without dilution.

Ownership and receiving royalties from.

Got it.

(Operator Instructions)

Next question is from Austin Hopper of AWH Capital. Your line is open.

It sounds like on the Epsilon front, that you are allowing them to pursue soundbars on more like a non-exclusive basis. Does that mean that you will not be able to offer any major player soundbar opportunity on an exclusive basis?

It gets more complicated than that. But, we are creating -- we have created a carve-out. By the way, this carve-out was in there from day one. This is not a new dimension to the contract. This is something that was within the contract day one.

But, Epsilon, who does not have a real presence in that space, we believe is -- well not limit us in any form or fashion from being able to give a larger player either advantageous rights or possibly even exclusivity minus a carve-out. So, we've made the decision, and we made it really early on, we made it to the point that we put the contract in place with Epsilon, that them having some products in that sector would not compromise our ability to bring other people into the sector. As a matter fact, they could act as an accelerant to others entering into the sector by creating a first presence for the technology, there.

Okay. Ken, you have been pretty vocal, or not vocal, but you've certainly disclosed and discussed this 15% royalty rate that you have with Epsilon. I think, you or others have described it as being well above market and something not to expect in other deals. I just was curious if we should expect a 15% royalty rate on the soundbar opportunity with Epsilon?

Well, the 15% rate is for all products. So, the answer would be -- if Epsilon were to roll out a soundbar with our technology, the royalty rate would be 15%.

Great. Thank you.

(Operator Instructions)

Your next question is from Harold Weber of Morgan Stanley. Your line is open.

Could you give me a comment on what the, why, on possible reasons of the extreme volatility over the past, let's say, quarter on the shares?

So, the question was our comments on the volatility of our shares?

Yes. Everything was going nicely and quiet and then all of a sudden, everything just went to hell and I didn't see any -- I was not aware of everything negative that should be so extreme.

So, it actually wasn't nicely and quiet prior to that. We have a very aggressive run-up in the stock. I thought the stock had some momentum and dynamic to it. We exhibited, unfortunately, and equally dynamic descent.

A lot faster.

Our focus is that we believe the Company's value is going to ultimately be determined by our execution. What we got done and what our current status and the opportunity set in front of us. We feel good. We think we're going to get done, and we think that our valuation ultimately will be tied to that execution.

For sure, and you're doing it. Just curious if you had some explanation? That's all.

We have no -- I mean, we have seen the movement. We understand the dynamics that are going on there. But, in terms of our efforts, our efforts are focused on executing our plan.

Was there any major shareholders that departed during this past quarter?

There's none that we are aware of. I mean, we don't monitor that activity.

I'm sure you have things that show you your shareholder basis and you see that on a regular basis.

We don't have specific information on that. But, we do see that most of the major institutional shareholders, institutional ownership has stayed the same or gone up, so overall, we are seeing strong institutional support for our Company. Okay.

Thank you. This ends the Q&A portion of today's conference. I like to turn it over to management for any closing remarks.

So in closing, again, I want to thank everyone for their support. I think this is the Company's first formal conference call. So, obviously, we will plan on continuing these and keep you abreast. I think the next quarter and the quarters beyond that should be exciting ones. So, we look forward to sharing our successes with you. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.