Resonant Inc.
Q2 2019 Earnings Call Transcript

Published: 7 Aug 2019

[Operator:]

Greetings and welcome to the Resonant Second Quarter 2019 Corporate Update Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.I'd now like to turn the conference over to Moriah Shilton, Senior Vice President of LHA Investor Relations, Resonant’s investor relations firm. Thank you. You may begin.

[Moriah Shilton:]

Thank you operator. On the call today are Resonant’s Chairman and CEO, George Holmes; and CFO, Marty McDermut. Earlier this afternoon, Resonant released financial results for the second quarter 2019. The earnings release that accompanies this call is available on the investor section of the company's website at www.ir.resonant.com. Additionally, some of the information this conference call contains forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects, as well as words such as believe, intend, expect, plan, and anticipate and similar variations identify forward-looking statements, but their absence does not mean that the statements are not forward-looking.Such forward-looking statements are not a guarantee of performance and the Company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in Resonant's most recent Form 10-Q and 10-K and subsequent filings with the SEC. These forward-looking statements speak only as of the date of this call and the Company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this call.With that, it is my pleasure to turn the call over to George.

[George Holmes:]

Thanks, Moriah. Good afternoon and thank you for joining today's call. Joining me today is Marty McDermut, our CFO. I’d like to begin this call by discussing the outstanding progress related to our three foundational pillars of Resonant

[Marty McDermut:]

Thank you, George and good afternoon everyone. The amounts I talk about are GAAP except where noted.For the second quarter of 2019 as compared to the first quarter of 2019, billings, which include deferred revenues were $51,000 as compared to $54,000 last quarter. Revenues totaled $63,000 compared to $134,000 last quarter.Research and development expenses of $4.6 million compared to $4.4 million last quarter. Sales, marketing and administration expenses of $3 million comparable to last quarter. Operating loss of $7.6 million compared to an operating loss of $7.2 million last quarter. Net loss of $7.5 million or a loss of $0.27 per share based on 28.2 million weighted average shares outstanding, compared to a net loss of $7.1 million or a loss of $0.26 per share based on 27.5 million weighted average shares outstanding for the first quarter of 2019.Non-GAAP adjusted negative EBITDA of $5.9 million or negative $0.21 per share compared to negative $5.6 million or a negative $0.20 per share last quarter. Cash, cash equivalents and investments of $10.5 million compared to $15.2 million at March 31, 2019. The decrease resulted from the $5.9 million negative adjusted EBITDA and $400,000 from capital expenditures, partially offset by $400,000 higher liabilities and $1 million from the exercise of warrants from Park City Capital, one of our largest shareholders.Excluding the higher liabilities, we expect amounts to be comparable in the coming quarters. As George noted in his opening remarks, we expect to raise $10 million. The first closing is expected on or around August 12. Additionally, I want to remind everyone that we have$2.3 million warrants outstanding at an average exercise price of $4.76, which could generate an additional funds of over $10 million of exercise. And finally, we ended the second quarter with a total 73 employees, 18 of whom have a Ph.D. and 54 of whom are part of the technical staff.I’d now like to turn the call back to George. George?

[George Holmes:]

Great. Thank you, Marty. In closing, I’d like to highlight some of the key takeaways for our investors. That 14 quarters of solid execution building our company. They – we believe we’re in the strongest position we’ve ever been in. Our business model is unchanged and we have seen tremendous validation, key strategic customers.We have great relationships with real customers. They signed contracts, write us checks, take our designs and build and sell them to OEMs, ultimately delivering royalties to us. As a royalty business, well, we don’t control the yen conversion in revenue. We do control getting more designs with current and new customers. Number of designs contracted to date is a – our foundry partners provide more choices to our fabulous customers and create options for our library products.Tier 1 partners are engaged delivering on multiple technologies. We are aggressively developing new resonator structures with even greater possibilities. The development of the ISN platform is expanded, design efficiency, designs per designer per year is approaching double-digits. We’ve added new capabilities to the tool set, allow even greater precision during the design and design verification process. We’re partnering with the Tier 1 design automation firm, create broader customer reach.The investment in commercial agreement with a Tier 1 just the first of what we expect to be many of its kind, as our business continues to mature and we get continued validation of our business model. Our asset light, there is great leverage in our patent and trade secret protected IP licensing model. And our IP portfolio contains greater than 175 patents pending an issue. We are monetizing our investments, ramping revenues and strategic engagements. Our strong team guided by a recently expanded and outstanding advisory team in corporate board.Now I’d like to turn the call over to the operator for Q&A. Operator?

[Operator:]

We’ll now begin the question-and-answer session. [Operator Instructions] The first question comes from Rajiv Gill from Needham and Company. Please go ahead.

[Rajiv Gill:]

Yes. Thank you for taking my questions. I appreciate it.

[George Holmes:]

No worries, Rajiv. How are you?

[Rajiv Gill:]

I’m good. Thank you. Wanted to discuss a little bit about your traction in your standard IP library. I think the last couple of quarters you stated, you had like to see for this product and additional customers both existing and new are expressing kind of great interest. And you kind of expect to convert them in coming quarters. Just wanting to get a sense of kind of a traction there and kind of what’s – I think about the revenue opportunity you see from the IP Standard Library?

[George Holmes:]

Hey Rajiv, great question. If we sort of what I’d say about that, our IP Standard Library get a shorter time to market for sure. And what we saw this past quarter, even in the – even during the time where the market is somewhat depressed, whether it’d be coming out of the fourth quarter, first quarter or even the second quarter with some of the things that are going on in the macro markets. We saw that the – our IP Standard Library, we’re starting to gain traction. As we look and what happened in July, we feel real good the fact that we saw a very strong month as things started around a good portion of which are Standard Library products that are coming to fruition.So I think it’s going to be one of the things that as we look at the business over time. We’re going to see a transition today. Our IP Standard Library is a very significant opportunity for us, but customs or where the business was and where the business will be for the balance of this year. I think you could see that, well, in the macro sense, we hope to have a business that transitions to about 20% customs, about 80% Standard Library products. Today, it’s virtually the other way around is where the opportunity is, just because the near-term work that we have in front of us and executing on the contracts that we had over the first two years of our existence.So the opportunity is great. I think we’re seeing that we’re getting great traction, we’re seeing the guys wanting to move very, very quickly. I think it’s going to be a bigger piece of our business in the long run. It’s something that allows us to touch many more customers. And I think that now you see additional validation points by third-party, Tier 1 EVA companies wanting to integrate our IP Standard Library into their offerings. So that a Tier 2, Tier 3 companies using their tools can actually drag and drop those designs right into their designs. It’s going to make our footprint and our reach much greater. So we see that it’s going to be a tremendous opportunity on a go forward basis. That answers your question.

[Rajiv Gill:]

Yes, thank you. That was very helpful. And on this strategic investment, with Murata, congrats on that. That sounds like it’s a great kind of an arrangement. I’m wondering if you could maybe elaborate on that agreement, what was kind of the rationale for both parties. How do you think about Murata as a partner going forward? Any kind of insight on the nature of this multi-year commercial agreement utilizing your technology.

[George Holmes:]

Okay. Fabulous question. Let’s see if I can touch on a bunch of those topics. So I think the first thing that, we want everybody to kind of keep in mind, there’s a lot of work that goes on underneath the covers here at Resonant, lots of longstanding customer relationships that take a very long time to develop. And as they get to maturity, they end up in fantastic announcements like the one that we had today. Relationships that started maybe two or three years ago. We’ve talked about that in the past of how long it takes to get engaged with a Tier 1, lots of work goes on. We don’t talk about our customers in advance. We don’t talk about engagements. We don’t talk about these kinds of deals until they come to fruition.And quite frankly, we don’t like talking about the customer names. We’d like to keep those things tight and very close list about it, because of the nature of those engagements on a go forward basis. So you will hear us from here on out talk about this customer as are our Tier 1 or one of our Tier 1s that we have a strategic engagement with. But these are long time in the making. That said, you want to talk about some specifics about this agreement in and of itself. Clearly, we had lots of opportunity in front of us after Mobile World Congress. 20 plus companies came to visit us. All very actively engaged since then wanting to gain access to some cutting edge technology, specifically, focused on 5G and we had to make some choices. I mean, obviously not everybody that we met wanted to sign an agreement with us, but lots of them were very engaged, wanting to see and understand what the technology can do.And when you have an opportunity to deal with somebody that is as large as this Tier 1 is, with greater than 30% market share on duplexers and in some cases greater than 75% market share on modules, depending on the OEM. That makes you stand up and take notice. They clearly understand this marketplace. They clearly have a trajectory into the major OEMs on us having a good fortune to be a partner with them and have the opportunity to provide some of our technology is going to be key. But here’s the way I look at it.I mean, I’ve been – as you may remember, I’ve been a sales guy for a very long time. And so when I worked with our team here and we engage OEMs, one of the things I really encouraged them to do is we work to develop these relationships is use them as foundational. Hardest thing to do is to get that first order. We have a licensed to work with or what we like to say, sales speak licensed the hunt here. We’ve got an engagement, we’ve got to capitalize, we’ve got to deliver, we’ve got to do what we said we’re going to do. But as we do all of those things, I think this is going to be a tremendous opportunity for us. Is that helped?

[Rajiv Gill:]

Yes. Very good. Thank you.

[Operator:]

The next question comes from Cody Acree with Loop Capital. Please go ahead.

[George Holmes:]

Hey, Cody.

[Cody Acree:]

Thanks for taking my questions and good afternoon. George, if you can just elaborate a little bit more on that last point. If you could maybe talk more about the specifics of the economics. I think you mentioned an additional royalty possibility of up to $9 million. Can you just talk about what kind of licensing fee might be associated with this engagement, timing of any kind of revenue streams that would be tied to this?

[George Holmes:]

Oh, all the good questions and all the ones that I don't want to answer today, but I'll do my best to try to give you the details of it. As you know Cody, we're not giving long-term guidance yet until we have kind of predictable, incredible performance underneath our belt. And we've got a way to do a little bit of work left to do there. But here's what I can tell you about the agreement today.It is two parts, obviously a strategic investment as well as a commercial agreement. We had the good fortune to also sign a side letter that defined the terms that we expect to close on in the commercial agreements. So I think that gives us a lot of confidence because we pre-negotiated all the things that are typically very hard, royalty structures, payment terms, licensing fees, IP ownership and things of that nature.And I think we were able to do that satisfactorily to both companies, so that was very good. There is a $9 million component attached to the commercial agreement that is associated with prepaid royalties for the devices that are under contract. Obviously this is new technology and we don't know what the volumes of those devices are going to be in the marketplace. So giving you a royalty rate is really, really hard to do. But as you might expect, if a company is going to give prepay, an advance payment in exchange for some discounts, that's what you would expect on these kinds of deals. And it's usually a reasonable discount to get the money upfront.We don't have to wait until they're successful in the marketplace, which we have to do on every other contract that we have. We get to hit milestones and when we hit those milestones, we get a check. And this has four equal milestones that start with the signing of the agreement. So that is a fantastic opportunity for us. One of the things I've talked about in the last several calls is one of the opportunities that we're looking at, because when you have average royalty rates at the level that we do in the 7% to 15% range from an average rate perspective, you can give up a little bit and still have a massive business opportunity by taking a prepaid.And what we know and I think everybody knows, that's in the royalty business, the biggest challenge is you do all this work and then you have to wait for your customer to be successful, these deals we don't have to.

[Cody Acree:]

Great. Thank you for that George. And then maybe just on similar topics or to different set of customers. Obviously one of the hardest things for us to explain to investors is, it's your number of customers, your number of engagements and yet the very small level of revenue stream coming in, some of that will be helped with this moral engagement it sounds like, and I understand from the beginning when you were trying to get your foot in the door, you needed to give those discounts and you needed to work on with very minimal upfront fees. But we're now a few years past that time and your engagements have grown, you've proven yourself, but it still feels like we're in those early days where you're not getting paid for the benefit that it sounds like for bringing to customers.

[George Holmes:]

That's a great question, but it's one that I would actually point you back to previous calls, because we've talked about some of this. And clearly, you sign an agreement early and it takes 30 months to 36 months to develop a product, plus our customer’s qualification, plus the end-OEMs qualification to get these things into the marketplace. Those are very early designs that we engaged in, we expect to start shipping in the first half of this year, we tried to pull it in and as you know in the last year we were unsuccessful.We're starting to see a ramp now, it's not being helped by the macroeconomic environment, but it is ramping and we are starting to see those volumes increase. We have great traction with five devices that are already out there gaining traction and momentum. We think we'll get five more in this quarter that'll start converting and start really kind of building on that royalty stream that we believe will be the ongoing validation of what it is that we're trying to do.As it relates to upfront and how do we make sure that all of our new agreements actually contributed to the level that we want them to and not have to wait, clearly, one of the things we can do is prepays like we've done here. I think it's pretty significant that we have been able to secure prepay, couldn't do that three years ago when we'd never done a single design. Now we can and it looks like this is going to be a tremendous opportunity for us. We can do that for new designs potentially. I think that one of the things as we transition the business to a more heavily centric IP standard library set of products. We won't need those up fronts, because those parts will be ready to go, and guys that are taking those parts will be ready to pop into the marketplace and we'll shorten that time to revenue trajectory. I think that's going to be very, very good for us. I think that the customs that we do will likely come with a higher price tag on a futuristic basis. It's going to take us longer to negotiate those because once you ask for more money, guys tend to take a little bit more time, but we have the time. So I think we'll take it. Does that answer it?

[Cody Acree:]

It does. Thank you George.

[George Holmes:]

Yes, no worries.

[Operator:]

[Operator Instructions] The next question comes from Kevin Dede with H.C. Wainwright. Please go ahead.

[Marty McDermut:]

Kevin how are you?

[Kevin Dede:]

Hey George, Marty. I'm good. I'm good. Hey, thanks for taking my call.

[Marty McDermut:]

No worries. What's going on?

[Kevin Dede:]

Apologies for dragging you back. Sometimes you cut in and out on me. So I'm sorry. I might be a lousy connection on my end, but try to bear with me a little bit on this, sorry. Just back to Murata the four milestones, obviously you don't want to offer, I guess, volume attachments there. Can you give us sort of your hope on when you think you might start ticking them off?

[George Holmes:]

Yes, I mean, I think we've already said that Kevin. And I apologize if I wasn't clear enough. I think our goal is to have the commercial agreement done in very short order. As we sit back and look at the typical things that would be ahead of us, we need to be able to knock down the regulatory requirements for this deal. I think we've got a good line of sight on that because of the work that we've done already, both ourselves and our Tier 1 customer. We've got great line of sight on converting that. I think it's going to be 45 days-ish until we can get that cleared. Once we get that cleared, we complete the negotiation of the commercial agreement. And here in two to three months we'll have that bang down. And we will be off to the races in developing handful of parts for them.So I think that is how this thing starts to play out. And, as I noted, it's got 30-month duration on development at 36-month duration on payment. And divide by four and you're going to get milestones. That's kind of a rough estimate for you on how you get milestones. And that's kind of how that whole thing plays out.

[Kevin Dede:]

Okay. That's really helpful George. I couldn't do the math without your guidance, apologies. There seems to be a – there seems to be an exclusivity attached to it. Can you offer some parameters? Or what those parameters are so it's clear how you're able to market XBAR to other potential customers.

[George Holmes:]

So we have – there's a couple things attributed to the agreement. There is a 30-month exclusivity period. We will continue developing XBAR, it's about a 30-month development to take it all the way to completion because as you might imagine, part of what you have to do with a new technology basis, you have to qualify it. Part of qualification is reliability. There is a lot of work that goes on there. I think as you sit back and look at how this comes to play, clearly our Tier 1 partner will be first into the market with the technology, which was our intent by this agreement. So, we think we put them and have negotiated with them in good faith to give them the access to the technology early. And we're going to do everything we can to make them as successful as possible because the more successful they are with these devices, the greater the opportunity is for us.And keep in mind this company has greater than 30% market share. There is, as you sit back and look at that, I mean, you heard me talk about them anecdotally last quarter when I said companies like them that have 30% market share today on a market that has 54 billion units, 15 billion units, and that market is now growing over the course of the next five years from 50 billion units to 200 billion plus units. And they still want to keep their 30% market share. They're going to ultimately be growing the number of devices they have to deliver in the market from 60 billion to 75 billion, almost taking the number that they have today and basically having to deliver a greater number of units in the entire market today. I think that creates a tremendous amount of opportunity in the fact that they tapped us to work with them on it. I think it’s huge.And you’ve given – if you sit back and look at this and look at the opportunity, this is created clearly, this Tier 1 has looked at every single technology that's out there in the marketplace, whether it's SAW, TC-SAW, BAW or some derivative thereof. They know what's going on. They have a finger on the pulse, they're touching everything and they tapped us to help them. Clearly we're going to leverage a lot of their expertise. They're going to leverage our expertise. And we’re going to get into the marketplace with some of the best devices on the planet and hopefully dominate this segment of the market. I think this is a tremendous opportunity for us. And it's a tremendous opportunity for them as well, I hope, because if it is, that's going to be a real opportunity for us to expand that footprint with them as a customer.Does that help?

[Kevin Dede:]

Yes. No, that's great. Thank you very much George. One last question for me. Kind of your view, given your team's close touch with technology development in Asia and elsewhere around the world, I was hoping you could just sort of give me your view, the 20,000 foot view of 5G rollout where we are and when you see infrastructure going out and the demand for compliant handsets?

[George Holmes:]

Well, you know what Kevin, you just – you asked almost – you've got a question that’s so close to the one that answers it. Let me give – let me give you the answer that I think it is. I mean, we've had the very good fortune to add a member to our Board, Ruben Caballero. Ruben has this tremendous depth of experience in the marketplace. He started with arguably the premier handset manufacturer on the planet building this anchor tenant device back in the mid-2000s. He created the RF infrastructure for that company and the devices associated with it. He built the team from zero to almost a thousand people that actually delivers those devices into the marketplace. He's got to touch on what the – what's going on in the market, both historically, what's worked and what hasn't worked and what's going to happen in the future.And he has an – he has a view, I think that augment our view. You get somebody that is now got a tremendous space of knowledge. Just macro, I'm not concerned at all about what's happening at that company in particular, but in the macro sense, what are the macro trends and validating what's happening, whether it be in the North American market in Europe and Asia. I think he has got his finger on the pulse, clearly much closer than anybody that we've ever come across.And that's including some of the big OEMs that we work with. And so I think this is a tremendous opportunity for us. And as such having him come-in and bounce ideas off of our guys and challenges with the ways that we're thinking about how things are done and helping us focus on the right segments of the marketplace where we can be successful, I think we’ll be invaluable.I mean, we’ve got a great Board already. We've added to the Board a tremendous advisory team. We don't talk about them a whole lot, but they are guys out of industry that are doing very interesting things or have done very interesting things at multibillion dollar companies and they're there helping us navigate not only where we are today, but where we're going in the future. And when it comes to 5G, this isn't something that's going to happen tomorrow. It's something that's going to roll out over the next several years.You got to make the right choices; I mean I think we're fortunate in the fact that we've got people helping us from a guidance perspective inside. We've got one of the largest players in the planet on the outside that we're supplying technology to. And I think between those two coming together, we're putting ourselves in a position to dominate with basically a core technology that we've already validated at third-party Tier 1 labs that does what we said it would do.We're not 80% there, 70% there we're there – we're actually beating the specs in most cases for what things people think are important. So I think when the market – as the market evolves and guys start putting real 5G filters into devices, I think we're going to be right there supporting the people that are doing that work, and we think that person is going to be doing that work more than anybody else as our partner.

[Kevin Dede:]

Okay. Thanks, Georgia. I appreciate the additional color, and congrats on adding some great insight to your Board. It sounds like to be very promising for you on your outlook.

[George Holmes:]

Yes. We’re very excited about it. Thank you, Kevin.

[Operator:]

The next question comes from Greg Huston with Oppenheimer. Please go ahead.

[Greg Huston:]

Hey George.

[George Holmes:]

Hey, Greg.

[Greg Huston:]

Congratulation on all the progress between the strategic engagement and your new Board member. That validation is extremely comforting, so well done.

[George Holmes:]

Thank you.

[Greg Huston:]

My question is when you were the second caller in our response to one of his questions, you said no – you talked about these things taking years from first contact to actually having the kind of engagement that you now have with the Tier I customer. And then you went on to say, others will take time but now we know we have the time. Is that to suggest that obviously cash that you have on hand, the cash that you're raising the prepaid royalties, and perhaps other things that you anticipate that you can now see a clear road to cash flow breakeven. And if you can, I know you're not going to put a time on it, but so I want to ask that part, but I mean can you see that pathway at this point?

[George Holmes:]

Well, there's a couple of things that you have there and I'm going to let Marty chime in at the end and kind of answer your question. But a couple things I want to touch on first, because in case we haven't been clear up into this point, this race is done. It hasn't been closed yet, but we're done.Murata came in as part of the announcement today and took down seven million of the ten million that we’re raising, the balance of the 10 million was taken by a couple of our very long-term supportive investors that wanted to participate alongside that company.So it's done, it won't – the first close is anticipated to happen with – coming of the next four, five days, I think we've said the 12th. And then the second close will happen when the Tier 1’s money comes in once we complete the commercial agreement, so that'll take that stuff off the table. And once we signed the commercial agreement, we'll have another turn of the crank to get the first payment out of the prepaid royalty stream. And that will give us another chunk, that will come in that we're pretty excited about that significant.Additionally, we said we're focused in a couple of areas to make sure that we are in a position to capitalize on the opportunities that we have in front of us. One of the things we've talked about and Marty touched on it today, is converting them remaining warrants that we have in cleaning up the cap table that presents a fairly significant opportunity which will take advantage of the opportunity presents itself and give our shareholders that have been supporting us historically an opportunity to convert.Additionally, we are looking at other strategic deals that we've had in the works for a number of years. These customers, when you're talking Tier 1s and this is what I was talking about, it's just more about the sales process. Sales process, when you're talking about Tier 1 company, you don't show up even with the greatest technology on the planet and have them say, hey, I want to buy some today, it takes time. Startup companies, if you sit back and you look at taking a new piece of technology into a Tier 1 OEM, you might get to sample that product and you feel very, very good about it, but that's when the work starts.We're fortunate that we’d license our devices to Tier 1 OEMs and Tier 2 OEMS, that actually have already been through factory qualifications going through GPO or Global Purchasing Organizations, audit requirements. These things take, can in some cases take six months to a year before you actually get a real production order. I hate to be in a position to have a start-up that was doing all my own work, having to take my own products into a Tier 1 OEM and think that I've actually 1, once I’ve actually got my first sample order, that's when the work starts because if that sample works, then you've got six months to a year of hard work before you even know you're really going to get an order because you've got to go through that qualification. You've got to go through that global purchasing audit and those things are hard.And you talk about these Tier 1s that can take easily six months to a year. And if you misstep during an audit, then you'd have to go through a re-audit and that restarts the calendar. So I think we are in a much better position than when I say it takes time, it does, we've had a full funnel since I've walked in the door. And so different Tier 1 OEMs are in different stages of engagement, whether it's an OEM directly, handset manufacturer or whether it's a Tier 1 component manufacturer, different stages of engagement. What I – the point I was trying to make with Cody, was these things are going on every day kind of under the surface. We don't get out and talk about them, we're not trying to give a look ahead and start talking about customers before their time. We're trying to get it done and bring it to the forefront when it actually converts and it actually happens. But that's really, that kind of lead up to kind of where we find ourselves.I'll tell you, we've got a lot of things in the funnel, there is a lot of hard work that's going on by our sales and marketing team and our engineering team to deliver on the promise. I mean we talk about our XBAR technology and a lot of people think that that's where it stops. I mean, I can tell you from a high frequency resonator perspective, that isn't where it stops, there's other devices in – currently in development. We have also some very significant work that we're doing provides greater performance on some of the lower frequency devices as well. And we've presented some papers in that area over the last several quarters.So now let me end and I'll hand it over to Marty to finish up on your last question is do we have line of sight to what will get us to cash flow break even? What I would tell you is we have a nice cast position once we get through completing at the commercial agreement and getting the regulatory requirements off the table, we've got to – we'll have a very nice cash register at that point in time. We have some opportunities that we're working on that we think can generate more cash. We have the warrants that we think will help us generate more cash and we do have a revenue stream coming from this agreement and from the devices we currently have under contract. We've still got work to do. But I think from my perspective, we know what it's going to take to get there and we just going to do the work to get there at this point, Marty?

[Marty McDermut:]

Well, the progress in the last quarter is very impressive.

[George Holmes:]

Marty, do you want to touch on real briefly the – just kind of that last bit to finish off on Greg's question?

[Marty McDermut:]

Yes. I think with the current cash, the investment from a Tier 1 execution on the commercial agreement and some growth in revenues, we have cash to get us into the second half of 2020m, that doesn't include all the other things that what George talked about, if the stock price moves where that warrants like that exercise, if doesn't count any other strategic deals that we're going to work on, and some other things that were possibly know that could generate additional cash. I think we're in really good shape, we're executing, we said we were going to do this last quarter and we're doing it, we're picking it off. And I think we're doing a pretty good job at getting there.

[Greg Huston:]

Super. Thank you both.

[Operator:]

[Operator Instructions] This concludes the question-and-answer session. I would like to turn the conference back over to George Holmes, Chairman and CEO for any closing remarks.

[George Holmes:]

Great. Thank you, operator. Well, hopefully for everybody on the call today, you'll see that the work we've done this past quarter provides tremendous validation to our business model. By a Tier 1 filter manufacturer coming in on a strategic investment of $7 million, the commercial agreement of $9 million. Clearly we have some work to do to get those over the line, but it's all out in front of us, we know what has to get done and we have a short timeframe to get it done and we believe we'll get those executed here in the next several months.A Tier 1 EDA company integrating our IP Standard Library of products, providing easy access to third-party OEMs to get our technology into their devices, ramping unit volumes of designs. First half 1.5 million units shipped in July, over 400,000 shipped. We see this as kind of that first stage of getting back to the revenue and royalty ramp that we're looking for. Let me close by thanking Murata for their competence and validation of the technology and to our shareholders for their ongoing support. Thank you very much. Have a great day.

[Operator:]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.