Resonant Inc.
Q4 2014 Earnings Call Transcript

Published: 28 Feb 2015

[Operator:]

Welcome to the Resonant Incorporated Fourth Quarter 2014 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to your host, Ina McGuinness. Please go ahead.

[Ina McGuinness:]

Thank you, Stacy. Earlier this afternoon Resonant released financial results for the fourth quarter and year-ended December 31, 2014. If you did not receive the release it is available on the investor relation of the company's website at www.resonant.com. This call is being webcast and a replay will be available on the website for 60 days. Before we begin we would like to remind you that some of the information contained in the news release and on this conference call contain forward-looking statements that involve risk, uncertainties and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects as well as words such believe, intend, expect, plan and anticipate and similar variations identify forward-looking statements but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not the 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 Form 10Q and 10K and subsequent filings with the SEC. These forward-looking statements speak only as of the date of this release and the company undertakes no obligation to publically update any forward-looking statements or supply new information regarding the circumstances after the date of this release. Participating on today's call from the company is Chief Executive Officer and Co-Founder, Terry Lingren and Chief Financial Officer, John Philpott and with that I will turn the call over to Terry.

[Terry Lingren:]

Thank you Ina and good afternoon everyone. I'm pleased to be here today to provide you an update on our progress. Looking back on 2014 we had a very productive year and I will go over some of those highlights mostly in bullet form. We raised net proceeds of 16.2 million in our IPO, we made significant progress on the company’s first product design for a major customer. We commenced development of a prototype tunable RF filter design. We expanded the patent portfolio to more than 50 issued in pending patent. We build out the senior management team and added technical staff to the R&D team. We developed much new software and have enhanced Resonant's filter design and development capability and we have moved into new offices and built an electronics laboratory/ As you know our goal is to improve upon the RF filtered use and mobile devices. There are two types, bulk-acoustic wave or BAR and surface acoustic wave or SAW. Our methodology enables us to replace complex BAR with cheaper, simpler SAW filter that deliver the same performance, driving a meaningful value to our customers and to their in-customers, the mobile phone manufacturer. This is the core value proposition of our first product line which we call single-band filtered. In parallel we’re pursuing our second product line tunable filters which will enable significant size reductions in addition to the cost savings, these product platforms are pretty independent of each other although the learnings from each will enhance the other. Sometimes called the holy grail of front end filter, the tunable filters form the heart of Resonant division or transforming RF finance for mobile device. Note that this is also a more complex problem and as such is a longer term project. It's important to know that Resonant is not an overnight creation nor people rely on a single technology or methodology that could be easily replicated by others. Resonant was spun out of a company called Superconductor Technologies or STI in 2012. STI made the world's highest performance BARF filters for some of their base stations from 2005 to 2010. They created the foundation what is now Resonant's ISN platform. In 2010 STI decided to focus solely on the superconducting wire side of their business and stop work on RF filter. We have spun Resonant out of STI in 2012. As a licensing company, our IP is one of our most important asset that will enable our future success. We’ve now passed an important milestone and have more than 50 patents covering our methods and circuit design. We see our patent filing following in lock step, the increasing pace of our RF filter development. Our target market for RF front end filters is extremely attractive as it's growing at an estimated 18% CAGR in terms of dollars. There were over 20 billion mobile device filters sold last year and this is predicted to grow to over 35 billion by 2017. If you look at the RF front end leader, Avago, Skywork, [inaudible] you will see the massive that is occurred over the past few years. The conference calls have added confirmation of these posted growth occurring in the filter market. Now I would like to dive into the overall status of the company and comment on our plans for 2015 and beyond. Let me start by providing an update on our first product line which we call single band filter. Our first product development is the design of a SAW filter with BAR performance for a leading RF manufacturer. This customer remains an excellent partner for Resonant having large market share in complex smartphone and purchasing a variety of filters with high volume. As planned we have delivered a completed impressive design for consideration to our first customer. Our design is not meet all the specifications in the development agreement but we believe it delivers competitive performance which we view as major accomplishment. Our customers' design whether to use our design is complex based on a number of considerations many of which are beyond our control. As the standard in this industry we do for a particular band in the use of multiple product over an extended timeframe, therefore our design will be used in several products. We’re selected for the first production in this serious we believe we will have revenues by the end of this year as we’ve been guiding, regardless we believe there will be opportunities on a regular basis to compete in subsequent products using the same bands with this customer. I'm tandem let me emphasize that we’re in discussions with other potential customers. We have made substantial progress on this front in the past few months. We anticipate engaging with at least one new customer in the first half of 2015. We believe that the improvements we have made in our tools and models over the course of our first project will greatly accelerate future design and improve our efficiency to drive this increase of the concurrent project. Our goal is to have five or more single band projects in development simultaneously by year-end fully consistent with the goal of doubling the size of our design team. Interestingly most of the industry is stretched from a design capacity standpoint, as a result we’re seeing a number of new opportunities within each customer. For example some are looking at Resonant's capabilities as a potential way to help discover their own product goals particularly emerging requirements the complex products needed for career aggregation. Our second product line is tunable filter using acoustic wave technology. These products would replace the functionality of multiple fixed band filters and twitches with a single tunable design producing both cost and size. This would allow the mobile device manufacturers to produce footprint of their RF front end or add more bands in the same footprint. Further no one has been able to successfully create a tunable filter is cost and size effective of mobile devices to say. On a personal note I find it encouraging how enthusiastic our technology team is in regarding the start of our tunable filters. As you know may recall we commenced development of our prototype tunable filter design in Q4 of 2014 as planned and we expect to complete this design by the end of 2015. Now I would like to turn the call over to our CFO, John Philpott to walk you through the financials for the quarter.

[John Philpott:]

Thank you, Terry. I'm going to summarize our financial results for the year unless otherwise stated. For the year-end 2014 research and development expenses were 2.9 million which was an increase of $1.8 million from 2013. This increase relates to our activity during the year on our duplexer and to the development of a prototype tunable filter which we started at the end of 2014. Decrease also reflect the effect of the company and any employees until late June 2013 whereas we have 13 employees in the R&D department as of year-end 2014. G&A expenses for 2014 totaled 2.9 million up from 1.6 million in 2013. The increase is primarily due to cost associated with growing the G&A staff and being a public company. 2013's G&A cost primarily consisted of non-cash charge of $700,000 for the fair value of warrants that were issued for business consulting services. If you exclude this $700,000 the G&A expenses increased $2 million for 2014. Interest expense for 2014 was $2.8 million compared with $1.6 million in 2013. The increase was primarily due to the conversion of subordinated and convertible notes into common stock in connection with our IPO in May 2014. Interest income also increased to approximately 29,000 in 2014 primarily due to the increased cash balances from the net proceeds of our IPO. Our net loss for 2014 was $9.7 million or $2.16 per fully diluted share which is based on 4.5 million of weighted shares outstanding. This is compared with a loss of $9.4 million in 2013. There were no earnings per share calculated for 2013 since the company was an LLC for the first part of the year. Our cash balance at the end of 2014 was $13.8 million compared to $13.3 million at last year end and our working capital improved to 13.2 million at December 31, 2014 compared to a working capital deficit of $8.8 million at the end of December 2013. The increase in cash and working capital primarily related to the IPO proceeds. Consistent with previous statements regarding our cash position, we believe we have sufficient cash to support our planned operations since early 2016 even assuming no revenues. As we have indicated previously revenues from our first project could begin before the end of 2015 and we have more clarity on this in the coming months. Further we’re in discussions with other potential customers as Terry indicated which could provide sources of revenue later in 2015 as well. And at this time Terry I will turn it back over to you.

[Terry Lingren:]

Thank you, John. I will turn it over to the operator to open up the line for questions.

[Operator:]

[Operator Instructions]. Our first question comes from Krishna Shankar with ROTH Capital. Please proceed.

[Krishna Shankar:]

Can you talk about in the process which the test in terms of evaluating a prototype and what will impact their design to most of the production [inaudible] or wait for new design iteration?

[Terry Lingren:]

Krishna, I'm having trouble hearing your question. You asked for the desk from this point on?

[Krishna Shankar:]

Yes I just wanted to get a sense of the technical and performance milestones [Technical Difficulty] in terms of evaluating the first prototype and what decisions and how will they decide to move this to production?

[Terry Lingren:]

Many of their decisions are internal and their criteria for making those is internal. We have submitted our part and is under evaluation now. We do have regular calls with some of the answered questions and bring [inaudible] on their board and so forth details of the design. We’re working through that with them. They are now going through thorough evaluation of the part and they will get to us with performance in the near future.

[Krishna Shankar:]

And can you describe the feedback so far from the customer on [Technical Difficulty] performance ratio from the customer, how would you describe it?

[Terry Lingren:]

Sure. We do have a very good ongoing relationship with the customer. They don’t always reveal much about their decision making process and having been on the other side of this where I was making earlier phones [ph] for 20 years I can understand that. You want to try to treat every vendor the same and so there isn't much that that maybe until you get to the end of the process. So we do have a very positive and ongoing relationship with we having interactions with them.

[Krishna Shankar:]

Okay. And then can you describe the focus on the tunables and in terms of getting the first -- that’s done and your customers you will engage?

[Terry Lingren:]

Sure, we started this prototype actually with input a number of different customers and some of the bands that they had expressed interest and then have gone back to them with some of our initial results. We’re not yet to the point of manufacturing circuits but we’re going through our beginning as being familiar with kind of where our process evolves we are at the beginning of going through the mathematically model for this design [inaudible] and beginning to look for potential, actually circuit.

[Operator:]

Thank you. Our next question comes from Quinn Bolton with Needham & Company. Please proceed.

[Quinn Bolton:]

I apologize, I missed the first couple of minutes of your prepared comments but you talked about the design not meeting all of the specifications in the development agreement. Did you provide any more color on specifically what types of specs perhaps didn’t meet the customers' requirements?

[Terry Lingren:]

No I did not give any where detail around that, relatively in detail. It's as of yet pretty technical pretty quickly and plus it's pretty confidential between our customer. So that’s about it.

[Quinn Bolton:]

Yes, understood it's very sensitive on the detail side. I guess the next question is so the lead customer is now evaluating the first design, they have not it sounds like made a decision whether to or not to use that product, they are still on the eval process?

[Terry Lingren:]

Correct.

[Quinn Bolton:]

If they decide not to use the first generation, do you have, are there discussions going on another iteration of that filter or of that duplex or for that specific or other bands that you’re discussing with this customer or is it too early to talk about other bands? A Terry Lingren I respect the confidentiality with our customer. That said it is industry practice to have a series of products all of these big manufactures making modules for the phone manufacturers have series of products. They are looking at 18, 24, 36 months and have their own road maps and so we have had discussions around those products and continue to look at those two. I think that there are products behind this one and then another one, and then another one. We feel we have got competitive performance right now. Not too much detail around that but hopefully gives you some flavor.

[Quinn Bolton:]

There is nothing perhaps exclusive or is there anything exclusive that would not allow you take to the knowledge or perhaps some of the more specific product aspects of this first band design and apply to other customers. I know it probably is going to be very dependent on where you’re manufacturing the SAW but to the extent you’ve got polynomials that were for specific bands. I assume you can take that and apply that to designs for other customers, is that the right way to think about it?

[Terry Lingren:]

Sure. And there are different ways of different modes exclusivity if you will but that’s the basic knowledge itself, we’re finding it very affordable form band to band, from customer to customer and even from [inaudible]. So yes we have learned a lot from this one and we feel already applying to other product we’re looking at.

[John Philpott:]

And Quinn, if I can add, this is John Philpott. Again remember we’re just going to license the design, so we’re not licensing any of the IP which is really around some of those software tools and some of the know how that we come across. So they will just have the design itself so we absolutely can take a lot of what we have known and our IP and use it for other band.

[Quinn Bolton:]

And then just the last question, I assume that there is no reason you would be excluded from doing just receive filters. I mean I think your first project is a duplexer but obviously in more and more these phones I think we’re seeing received diversity modules incorporating a ton of filters, it's just a number of bands increase. Is that -- I assume that’s an opportunity for you, it may not be same dollar value as designing a duplexer since it's just sort of a receive only but are you looking at the receive filter opportunity in some of these discussions with customers?

[Terry Lingren:]

Sure, we’re seeing a ton of interest around that. And yes they are a single filter is a less complex design than a duplexer. So you’re right, royalties might be lower prices are lower but investment is lower also.

[Quinn Bolton:]

And would there be any advantage I know you’re looking at tunable filters, would there be any sort of advantage to your technology where you might be able to come up polynomials that you can do sort of receive filters that are actually capable of receiving multiple signal for simultaneously around a single chip or are these more likely to be discreet designs implemented by your customers?

[Terry Lingren:]

Yes, we think that there are as a matter of fact, a couple of different ways for doing that and I won't go into the details because we’re still looking at some of the very early similar work on that but yes I think that there are multiple solutions but looking at kind of single solutions for multiple band.

[Operator:]

Thank you. Our next question comes from Lou Basenese of Disruptive Tech Research. Please proceed.

[Lou Basenese:]

Can you give us any color around when you delivered the duplexer to the customer?

[Terry Lingren:]

Well we have been delivering designs all through the process, we have gone through that path 15 months or so of development work. The last design which we’re calling the final version of this designs was delivered within the last month.

[Lou Basenese:]

Okay, is there a time period that they have to accept is it, can you give us some color on that, is it less than 30 days? Less than 60? Less than 90?

[Terry Lingren:]

Well they have their own time frame and we certainly like to go around their decision making process, they are the ones making this discussion and it's very large business for them obviously. So the time frame I expect will be fairly short.

[Lou Basenese:]

Okay, and I just wanted to get some clarity I think you mentioned in your prepared marks about this being for this band there is multiple products that it work for those customer and is that the case if it wasn’t and selected for the first product that you’re already working on other products that it might be incorporated into?

[Terry Lingren:]

Well that’s not quite what I said, I was trying to speak more generally without discussing at this particular customer and it's best thing to have it now [Technical Difficulty]. You know all these customers have, they have successions of product especially as they get more and more successful. Each line spins off multiple versions for different customers, for different applications different phone and so they are always working on evolutionary sessions of product. So yes we feel that there are opportunities for this same band one after the other. In addition that’s just for this band.

[Lou Basenese:]

Right and just one last question more in general about the design cycles, you talked about, you mentioned that there might be revenue from additional customers in 2015, is that a reflection of your design cycle for on the other projects and can you give us idea of maybe how much there is advances in software and can you give us an idea how much that process has improved?

[Terry Lingren:]

Well we’re finding that ourselves to go through, it's also very dependent upon the product itself. While we believe there is interest as I mentioned in my prepared remarks about there is design capacity or the way the design capacity within the industry stretch and so there are even some opportunities or maybe some simpler quick turn filters. But we’re seeing a lot of interest in more complex [inaudible] which is very interesting because that’s really it's Resonant's sweet spots that’s what our tools allow us to do. I don’t know if that answered your question.

[Lou Basenese:]

Just trying to get clarity, if you announced an additional customers that might generate revenue this year, I want to make sure I'm not making your own conclusion that might be the design cycles for those that are shorter.

[Terry Lingren:]

It reflects that, it partly reflects perhaps other licensing opportunities without getting too much into the detail of our financial plan, that’s kind of what that reflects. John I don’t know if you want to add any more color around that.

[John Philpott:]

I think that’s true, there is variety of ways we can recognize revenue not only from just royalties but license and other and so we think all those opportunities are available to us.

[Operator:]

Thank you. Our next question comes from Sid Sinha with Canaccord Genuity. Please proceed.

[Sid Sinha:]

Terry, quick one on the first product, you made the comment that the performance is competitive. I just want to know what the benchmark, is are you comparing this with a commercial shipping BAR filter or is it perhaps, there is soften [ph] during the same band. Just any color on that would be helpful.

[Terry Lingren:]

Some of it is feedback from industry stores, some of it is based on our own research looking at competitive product. So it's kind of a combination of the two.

[Sid Sinha:]

And then with respect to the second product with the tunable filters, as we work through the design cycle are you targeting a particular frequency band or sporting the high band, the ultra-high band and the mid-band or is it more aggressive and you’re targeting the typical cellular spectrum I guess.

[Terry Lingren:]

We’re looking at, we’re looking first product at a particular band it's more of in the mid-band, so definition is kind of carried are different from customer to customer and what calls mid and another might call high. Yes, without getting into the details of the design itself. They are high volume filters, and one of the higher bands, they are few of the higher bands.

[Operator:]

Thank you. Our next question comes from Jeff Kone with Wall Street Capita Partners. Please proceed.

[Jeff Kone:]

I wanted to get some more color on delivering the design, why would you deliver a month ago if it didn’t meet the specifications, the agreement, why wouldn’t you just continue working on it until it's done and the parts where it didn’t meet, does that have to do with cost or efficiency or what type of area, is it a material area where it didn’t meet the agreement?

[Terry Lingren:]

The specs we’re talking about are all performance specs and it sounds like they are lot but there aren't. It's around the -- you’ve to understand filters and what all of the list of specifications that a particular part has to meet and some of those we don’t. But we thought that we had a design which was competitive. In addition our customers clock -- they are getting anxious and so we felt we have a competitive product but we have submitted that for their consideration.

[Jeff Kone:]

So if you would have worked it out longer could you’ve gotten to the point where it would satisfy the agreement or what was the problem there?

[Terry Lingren:]

We will continue to work on. As I’ve mentioned in one my previous answers, we believe that there are this is a continual evolution of specifications including not only the segment performance but size and cost the way this market proceeds. So we will always be working this. I think that this is part of the original development contract which is getting a little longer than two [ph] at this point. But we’re moving into more of a vendor relationship with our customer now and out of the development. I think this is very positive. This is exactly where we wanted to be.

[Jeff Kone:]

Okay, it just doesn’t read that way in the release, that’s all.

[Operator:]

Our next question comes from Brett Conrad with Longboard Capital. Please proceed.

[Brett Conrad:]

I just have some questions, one back on the software design I get that it's somewhat of an incremental process being that things change with the vendor and you’re going through the getting to the point where they give you thumbs up where they want to use the actual design. I heard that it's rear that you would meet all the specifications anyway but they wanted something that’s going to work for them and their product. But I'm just wondering on the back and forth with the company, has it given any specific areas they want you to work on that once those are tuned up more you figure they will be ready to go or they have been more like--

[Terry Lingren:]

We constantly get that kind of feedback. It's an iterative process with them too. They are getting other component supplier, their module is very complex and so they are making their own amplifiers for instance and switches and putting all these together in modules and very complex assembly and they find that at each of those a little bit squishy if you will in terms of performance and so we have continual feedback from them on where to improve and where we might even be able to give up a little bit, you know where other things are better in their module. So that kind of feedback is constant.

[Brett Conrad:]

Right. So what they are looking is to lock in all of these different components and they won't give you probably the thumbs up for everything kind of lock down in that and then it goes, -- are there other vendors in [inaudible] too?

[Terry Lingren:]

Yes that’s a good description. Yes to the question, yes they are trying to get everything lock down. They are trying to meet their customer spec and they have flexibility with some extent within the module itself, within the black box, the outline of what they own they have some flexibility in there. So they are looking at trade off internally to meet their own customer spec and compete against their competitors.

[Brett Conrad:]

And then on the cadence on the tunable filter, so it sounds like at the end of this year you will have the design ready and then you think about take another 12 month pass that to be starting to be these trying to be incorporated into designs. Is that how it goes and then few months after that before actual products made with the designs in them?

[Terry Lingren:]

Right. That’s kind of a timeline we have discussed in the past. We certainly -- the prototype is under our control right now, so we can -- we do -- we will have that end by the end of the year. We fully expect that that will gain the interest of our customer based on that then we would expect in rough terms another year of development and then revenues following year. But it's certainly not cast in concrete at this point, we’re on the first step of the path.

[John Philpott:]

I wanted to add too. Maybe there is just the kind of clarify something's, not meeting specs doesn’t mean that we don’t have an opportunity to be a product for our customer. It seems like you’re getting a variety of questions on that and I just want to be clear that our statement around not meeting spec does not mean we don’t have an opportunity to get there still.

[Brett Conrad:]

Right and even with the current design.

[Terry Lingren:]

Absolutely, sure. I was explaining someone this yesterday and it reminded me of the joke where two guys are camping the wood and all of a sudden they see a bear charging their camp sites and one guy starts putting on his tennis shoe and his buddy says, hey what you’re putting your tennis shoes on for, you cannot out run that bear. He goes, I don’t need to outrun the bear, I just need to outrun you. And it's kind of the way it is with this. We’re in a competition, we’re flock [ph] and it is somewhat independent on this development contract. Hopefully that makes sense.

[Operator:]

Thank you. Our next question comes from Mark Bronzo with Nudge Capital. Please proceed.

[Mark Bronzo:]

You spent a lot of time talking about the main customer and of course the different durations you’ve gone through. Can you shed some more light on the other potential customers that you’re speaking to? Are they also in the same segment? Are they in other segments? And how close are you to delivering a prototype to them. Just if we get a better sense for the rest of your potential market looks like that would be great.

[Terry Lingren:]

Sure. I'm going to do this a little bit carefully just to make sure we’re not giving confidentially of our customers but I want to be as forward as I can with you also. We have a number of discussions going on right now and some of them are further longer than others as you would expect. And for a variety of different products too, each one of our customers has different goals in mind, different areas that they think that we could fill and different niches they are trying to compete against others with. So we still fully expect to announce an engagement with the second customer during the first half of this year.

[Mark Bronzo:]

But Terry, if I could say it this way, I mean are you talking to one or two other potential customers? Or are you talking to 5 to 10? I know you don’t want to put specifics in terms of names and alike but can we get a sense for the breadth of the number of customers you’re potentially speaking to?

[Terry Lingren:]

Yes, the industry itself is pretty small. You know there are five times maybe eight that saw manufacturers and integrators through control the more majority of this market in fact well over 90%, so we have had conversations with practically all of them and continue to have conversations with most of them on a regular basis. As I said some are farther along, some are going more slowly.

[Mark Bronzo:]

And then Terry, one follow-up question, one follow-up question and then I will let go the next person. In terms of your product and you’re having these conversations, I know you feel although you’ve very competitive product. If you’re product from a performance standpoint is superior what would be the reason that the other manufacturers or the other choose not to use you and can you. I know you talked about it's a very complex decision but if you add the superior product, it makes it easier because it's one filter and improves performance and all of that, why isn't it that your product is sort of at the top of the food chain in terms of what people are looking to use?

[Terry Lingren:]

Most of the discussion so far has been around the bottom [inaudible] single band and we’re also as I mentioned [inaudible] software filters designed just because of the lack of capacity and the design within the industry. But [inaudible] our replacement, what we’re achieving is making SAWs that have outperformed and even with our different designs that’s there is some skepticism around it, let's put it that way. The value we bring is that SAWs are cheaper in the end than BARs, that’s the value proposition for our customers. So they are looking at something that’s maybe new putting the SAW in where they have a known BAR product at this point. So again having been in this industry for a long time, you get very entrenched you don’t want to change horses if you don’t need but the cost savings are significant. I think that’s the value we bring, it's also very cost driven industry. So I can't answer for why not, I certainly can answer for the value proposition we believe we bring.

[Operator:]

[Operator Instructions].Our next question comes from Quinn Bolton with Needham & Company. Please proceed.

[Quinn Bolton:]

Terry, just a quick follow-up, you talked about this sort of set of specs that you’re trying to reach. Is there a BAR solution today that those specs are based on are is that almost an ideal set of specs that that was the wish list that the customer had that perhaps even existing BAR filters might not achieve every spec.

[Terry Lingren:]

Well I’ve not evaluated every BAR in the industry in this band whereas our customer probably has. These specs are very aggressive and certainly for the size that we’re targeting. So I don’t know, I don’t know for sure and I hesitate to speculate on the call. I do think that these are very aggressive specs, there is certainly nothing in the public literature we think that we all of the specs that are in our -- at the moment.

[Quinn Bolton:]

So some of the existing BAR filters that you’ve seen may not have met those specs either? I'm not trying to put words in your mouth but it sounds like that maybe a true statement.

[Terry Lingren:]

It's possible. I don’t want to speculate on something that I can't offer 100% confirmation on.

[Operator:]

Thank you. I would like to turn the floor back over to Terry for closing comments.

[Terry Lingren:]

Thank you, operator. So we believe Resonant has a unique technology advantage in a huge market which is growing very rapidly with a potentially highly profitable business model. The demand for more spectrum which means more bands and more filters continues to increase. You only need to refer to the recent $45 billion spent on spectrum in the FCC's most recent auction which covered 55 megahertz in the AWS3 band and next is the 600 megahertz auction. It's now slated for mid-2016. AT&T, one of the primary buyers in the AWS3 auction said that to quote them, "growth in their customers mobile data use continues to explore and the growth." The complexity of these financial [ph] mobile phones and the number of filters needed to create a tremendous opportunity for Resonant, we’re more confident than ever in our capability and our ability to participate in this rapidly growing market. Thank you for your time today and we look forward to reporting to you on our progress in the coming weeks and months.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.