Andrew Sculley - President and CEO Jeff Lucas - CFO

Mike Malouf - Craig-Hallum Capital Group Kevin Dede - H.C. Wainwright Nehal Chokshi - Maxim Group Dennis Van Zelfden - Brazos Research

Good day, and welcome to the eMagin Corporation First Quarter 2018 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Jeffrey Lucas, CFO. Please go ahead.

Thanks. Good morning everyone. We are very glad to have you join us today for our first quarter 2018 earnings conference call. During today's call, we may make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the company's current expectations, projections and beliefs and are subject to a number of risks and uncertainties. Such statements include references, projections of future revenues, plans for product development and production, the company's ability to ramp up production, future contracts and agreements, product benefits, operations, future financing, liquidity and capital resources as well as statements containing words like believe, expect, plan, target, etcetera. You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. Please refer to our earnings release for the first quarter of 2018, and the company's filings with the Securities and Exchange Commission for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. We undertake no obligation to update or revise any forward-looking statements to reflect future events or circumstances. With that, I'd like to turn the call over to Andrew Sculley, President and CEO.

Thank you, Jeff, and welcome everyone to our first quarter 2018 conference call. Let me start this morning by saying that I'm very pleased with our progress this quarter and believe that we're off to a great start this year. We continue to enjoy strong demand for our microdisplays, both domestically and internationally, as evidenced by the growth in our backlog. The production process improvements, which we are making will result in better throughput in yield and will allow us to handle the additional demand at better gross margins. We're seeing broader accelerating interest within the consumer AR/VR market. New opportunities continue to surface for our high brightness, direct-patterned OLED microdisplays. Consistently, we hear from prospects in the consumer segment that our cutting edge technology is a key enabler for the next-generation HMD products. I'm also happy to say that the design of our next-generation display is on track and going well. We look forward to having prototypes available for customers by the end of the year 2018 or early 2019. So far this year, we had inquiries from four new potential consumer electronics customers about designing and developing displays. Discussions are also moving forward with potential mass production partners to help scale production. Our discussions have expanded, as we were recently approached by another group and need to evaluate the best path forward that will give us the broadest application of our technology and the best return for our shareholders. It is encouraging to us that we have seen renewed interest that underscores our belief that we will be a very active player in the AR/VR marketplace. We have experienced a notable upswing in our business both domestically and internationally. Our backlog at the end of the first quarter was $11.8 million, a greater than 20% increase from the end of 2017, this is on top of the 54% increase in our backlog at December 31, from a year earlier. It is noteworthy that we're accelerating this deliveries based on customer requests, particularly for our international customers, this in turn has led to additional orders. Demand is growing across the board, particularly with new and existing international customers an area that we have targeted for growth. We believe that we are well positioned to broaden our presence in foreign, commercial, industrial and military markets. To further this effort, we are participating in numerous trade shows and exhibiting both here in the U.S. and abroad throughout 2018. As an example of this, we recently launched a major push into the rapidly growing Indian defense and commercial markets through our participation in early April, at the DefExpo 18 India show. Our superior microdisplay performance was of great interest to both the commercial customers as well as the Defense Ministry of India. Looking at our ongoing military programs, we continue to make progress with a major aviation prime contractor for an OLED upgrade to a potential -- to a production helmet for a multi-service fixed wing aircraft. We completed and delivered the first set of new microdisplays for which an initial qualification has been completed, and we are on track for delivery of a subsequent set in the second quarter. This is a very important program for us, and we continue to receive praise on the performance of our displays during flight testing. Domestically, we have continued to deliver displays for the low rate initial production phase of both the U.S. Army's Enhanced Night Vision Goggle III and FWS individual programs in connection with these $3.7 million worth of contracts received previously. During the quarter, we also delivered displays for prototype systems for the FWS-Crew Served program for two defense prime contractors. Additionally, we deliver displays for the Light Weight Thermal Sight program, which will continue through 2018. We continued to support a major U.S. Army helicopter helmet upgrade program, and we delivered 2Kx2K direct pattern displays to a major aviation prime in support of the next-generation fixed wing helmet. On the International front, we delivered displays to European military prime contractor for a see-through, head-mounted system to support, airborne and ground mission requirements. And we provided technical support to a major foreign defense contractor for high brightness 2Kx2K microdisplays used in an aviation helmet prototype with initial test scheduled for this month. Finally, we are continuing to develop new products for both consumer and military applications and are pushing our technology to the next level, to achieve our objectives such as producing microdisplay with a brightness of 10,000 nits in full color. We are designing further improvements to our direct patterning equipment that will provide, will improve production yields and [technical difficulty] devices. We would like to have these changes completed by the fourth quarter of this year. In addition, we are upgrading our production equipment to improve display performance and increase yield for all our products. With that, I'll turn it over to Jeff to review the financials.

Thank you. As Andrew mentioned, we are having a good solid start to the year. Revenue for the first quarter was $6.9 million, up 13% from the same period 2017. Breaking down the revenue components, product revenue increased by 34% to $5.9 million versus $4.4 million in the first quarter of last year. This increase is due to the ramp-up of new U.S. military programs and the strengthening demand from international customers. Contract revenue is $1 million versus $1.7 million in the first quarter of last year. The contract revenues this quarter were from the number of consumer and military projects, whereas last year's first quarter contract revenues were primarily earned from one large consumer customer. Gross margin for the first quarter was 29% on gross profit of $2 million compared to a gross margin of 30% on gross profit of $1.8 million in the prior year period. During the quarter, we made significant improvements in manufacturing yields and in throughput volumes, which positions us well with anticipated growth in product revenues. However, these were offset during the first quarter by changes in product mix versus the prior year quarter, higher unit material costs and lower contract revenues, in which the company generally earns a higher gross margin. Now moving to our expenses. Total operating expenses for the first quarter 2018, including R&D expenses, were $4.5 million, up from $3.8 million in the first quarter 2017. Operating expenses as a percentage of sales were 66% this year compared to 63%, the first quarter of last year. The increase in operating expenses was due to higher R&D expenses related to the company's direct patterning technology and greater spending on professional services, legal and travel expenses for negotiations with prospective consumer electronics customers and potential volume manufacturing partners. Also, included were about $240,000 per transaction fees incurred in the January 2018 equity raise associated with the fair value of the warrant liability in accordance with GAAP treated as an operating expense. Operating loss for the first quarter was $2.6 million versus an operating loss of $2 million in the first quarter of last year. Net loss for the first quarter of 2018 was $2.1 million or $0.05 per diluted share compared to a net loss of $2 million or $0.06 per diluted share in the first quarter of 2017. The net loss includes a $500,000 gain in the first quarter of 2018, reflected in other income for the reduction in the fair value of the warrant liability associated with the May 2017 and January 2018 equity raises. There are no such gain in the year-ago quarter. At the end of the first quarter, the company had cash of $9.8 million, working capital of $16.5 million and borrowing availability under our working capital facility of $4.4 million, and against which there were no borrowings. During the first quarter, we completed an upsized underwritten public offering and received net proceeds of $11.7 million, significantly improving our financial position. In addition, certain of our directors and officers participated in a private placement alongside the offering, from which the company received an additional $0.3 million in net proceeds. We are making progress in all aspects of our business, worked with consumer electronics customers and potential new ones, manufacturing partners and mass production, advancing our leading OLED technology for microdisplays, including our direct patterning technology and improving our production processes to meet increased demand. We believe that we are taking market share from competitors, especially, in the multi-market, both here and abroad as well as expanding the market for microdisplays into new applications. We continue to see a tremendous amount of opportunity for our technology and are pursuing all avenues of growth. And with that, we will now address your questions. Operator?

[Operator Instructions] Our first question comes from Mike Malouf of Craig-Hallum Capital Group.

Great. Thanks guys for taking my questions.

Hey Mike. Good morning.

So it sounds like you've had a little bit of development on the manufacturing partner and with this new partner, potential partner coming into the mix. Can you talk a little bit about how you think the timing is affected by this other -- by this other partner? I know that you were sort of hoping to get something wrapped up very soon. It almost sounds like perhaps this could be a little bit extended as you sort of consider your options, can you give us a little color on that?

Yes, we do have to consider the options, we're very happy with this other potential manufacturing partner coming to us. So really there is a few now that we're dealing with, so one that we talked about earlier and a couple more, and we really need to do the best for the company and that's what we're working on now, and it will likely take a little longer than we thought because of this.

Okay. All right, thanks. And then when you -- you're talking about a lot of OEMs coming in and having interest in your next generation, you sort of specifically said that you have expectations to put out prototypes by the end of the year or early next year. Are those prototypes 4Kx4K, or they higher than that? And then can you give us a sense of what kind of prototypes should I aim into, delivered to these OEMs?

Yes. This would be -- what we're working on is like a 4Kx4K. I can't give you the exact numbers because we don't witness anyone divulge that. But it's the design that when we go to companies and talk to them, this is the type of display they want for VR or mixed reality, and so we are designing that display with this one company that's funding this design. We've recently had, as we said, a number of other companies, one of which has asked us for three different scenarios and one scenario fits very well in this camp. So it is 4K like -- 4Kx4K.

Okay, great. And then maybe a question for Jeff. As we look into the rest of the year, can you give us a sense of where you think R&D and SG&A will trend. I know that SG&A was up a little bit this quarter because of the transaction in January, but that level still was above, I think where the average was last year. I'm just trying to get a sense of what the go-to rate is right now.

Yes. So the expectation is that the R&D will be a little lower by hundred to a couple of hundred thousand in the quarters going forward, and SG&A will be lower for the primary two reasons that we pointed out. One of which is we had the $240,000 of expenses, as you noted Mike. So with the financing, which, of course, I'm not going to repeat. And also, we did laid a foundation for lot of the negotiations that we were doing in the past quarter and encourage some pretty steep legal fees in the process. While we will continue to incur legal fees in our discussions and negotiations going forward, it will not be that level. So these -- the SG&A I anticipate will be a couple of hundred thousand dollars lower by each quarter as well. So this is -- to answer your question, in summary, I think this quarter was a little bit of an aberration in terms of what we saw, primarily in the SG&A into a lesser degree on the R&D.

Okay, great. Thanks for the help.

Sure.

Our next question comes from Kevin Dede of HCW. Please go ahead.

Thanks. Good morning Andrew and Jeff. Thanks for taking my call.

Morning.

So Jeff, you brought up a really interesting point, I thought in your remark about taking share from competitors. And I was wondering if you wouldn't mind elaborating on that a little bit, specifically, I guess in foreign military applications, but I'm wondering, which technology your displacing and why you think that's happening?

Yes, I think I could argue that foreign market is well as the U.S. market. U.S. market we're taking share from others, and the technology really is OLED versus what was in there formally. I did mentioned during my part of the conversation that we're with two primes in the one of the programs, and usually the government doesn't take more than two prime. So OLED is displacing the legacy technology, and you can see that in the aviation market as well. We are displacing what's there. On the foreign military, we're -- foreign military, we are seeing interest in, as we mentioned India is gearing up their military, and we are participating. We have participated in European militaries in the past and we still are. They're gearing up as well. So things look very good to us.

What's really bearing fruit here, Kevin, is the fact that we've launched a concerted effort in our foreign markets to really gain greater exposure, as referenced by that note in the release about our present participation in the India -- in India show. And that in a sense, the growth that we're seeing in those markets and potential growth, certainly is far better. I should say the growth that we're seeing in our sales in those markets is far in excess of the growth in those markets. And just to give you an example here, we sold as much to India in this first quarter as we did almost all last year. So in that sense, we are gaining share because we are seeing some pretty impressive increments in terms of revenues, and we're looking for that to continue moving forward.

I should mention one other thing and that is the technology. When you compare our technology to others, and here, you can speak about two sides: one of them is the high brightness color, no one can match that, no company has demonstrated anything like the brightness we have in full color with high-pixel density. But on the other side, even the monochrome green, which is what the aviation market wants today, tomorrow they want color, but today, they want monochrome green. We've looked at every microdisplay company, and no company can make that technology, the brightness we had and the enormous contrast we have even at the very bright colors or very bright luminance. So we -- our technology is really better than everybody else.

Okay. Andrew, could you be a little more specific about which ones you're showing the, I guess the most market improvement over, and I guess, the ones that you think probably have the largest share to lose.

By which ones you're talking about, which countries?

No, no, no, which competing technologies, specifically?

There's two competing technologies. One is competing technology in the OLED space. And as you know, we are the only U.S. manufacturer of OLED. So that the U.S. military favors us, and the other technology in the, for example, we always hear in the F-35 today is LCD technology. And in aviation, in the future, I would expect that all to be OLED.

Okay. Fair enough...

And just to make it clear, we are much better than the other microdisplay companies in terms of our technology in terms of brightness and contrast for the one...

I wasn't sure if maybe we're seeing some LCOS out there still? And is it -- is it still LCD primarily holding share in foreign military and monochrome green?

In monochrome green, LCOS or LCD is the aviation today, but the problem is you've heard this before, it's when the pilot, especially the aircraft carrier landing pilot dials that luminance up. The entire visor turns -- emits light and, therefore, it obscures the vision and that's the green glow problem, you've heard of. So the idea is you need a much higher contrast display. Our display is much higher contrast because it's OLED. But I have to tell you it's much higher contrast than other OLED companies as well.

Okay. You both mentioned yield improvements. I was wondering if you may just talk about it a little bit. You're running both deposition machines. I'm just kind of curious as what the details are there. And given sort of this 30 gross margin percentage on products side, where do you think that goes?

Well, certainly, with better yield. I'm not going to tell you the numbers, but with better yield, the gross margin goes up. Let me just mention some of the things we're doing. We're -- with the new Manufacturing VP, we're up putting in new equipment, new processes, which make our throughput much better and with the better -- we've got better uptime, better yield and better throughput. And that is that we're demonstrating in -- now in the first quarter and on into the second. So although new equipment, I have to caution you, if you put in a new piece of equipment, it takes a while to bring it up to speed and qualify it. So we look for that more later in the year. Let me expand upon that just a little bit because a key part of it truly is yield because that actually lowers the unit material costs and allows for higher throughputs. And the very important -- because of some of the improvements that Joe, our VP of Operations, has made is that we are now seeing -- certainly, we have a higher capacity here and given that fixed costs, the substantial portion of our overall cost structure on a unit basis. Those volumes increase and the yields improved, not only do you see material cost on the unit basis coming down, but also certainly your head portion -- or the fixed portion of those costs coming down as well. So collectively, given the volumes that we're anticipating and that we are seeing. We are expecting considerably a few percentage points improvement in the margin, of course, targeting better than that.

Okay. Fair enough. Jeff, will you offer the backlog figure each quarter going forward? I mean, in the past, it was just on an annual basis.

Yes, we plan on doing so.

Okay. I guess the next question from me and last. I'll turn the floor over. Just -- could you talk a little bit about the manufacturing runs. How you're able to switch from product to product, given that your product portfolio is broader, and whether or not that's played into the change in yield?

Well, what we have done here is we've made a concerted effort to say that within a period of time where the machine is running continuously, we don't want to change products. I mean, that's the smartest thing to do. The older machine can take a day to come back up again, the newer one takes eight hours or so. So it doesn't make sense to do that. And we've put that process in place, and actually, we're following it. It's working very well. I'm impressed.

Actually, Kevin, we love that question because we're having such great success, we feel, on the operation side. But we have longer production runs and that's -- we've talked about at the last earnings call in the late March, part of our goal was to build a little bit of inventory because where these longer production runs, obviously, you can't get better yield and much better performance, and that does involve sort of building up some of the products over time. Actually, if you do take a look at our -- when the Q comes out, you'll see that our finished goods inventory came down about 12% from the end -- from the December 31. And while we are actually working towards sort of building up a little more inventory, we're also, of course, shipping quite a substantial volumes, and that's working certainly in our favor. So I know we did mention in the past earnings calls, we have the inventory reduction initiative in place. We are making some good inroads there, as I mentioned by our finished goods coming down. What you will also see just to make a note here, is that our raw material and our WIP did go up actually in the first quarter. And now it's too early in anticipation of the higher volumes that we're producing and shipping in the second quarter.

Okay. So is it fair to assume that inventory levels should still come down a little bit, but you're -- the idea is still to maintain what your -- or I guess, inventory levels of product that you know you'll need for, say, the next six to 12 months.

Well, let me answer it a little more specifically. We do anticipate the finished good to actually inventory levels coming down, continuing to come down as part of our plan, our concerted plan here. As what's happening in the material and the WIP side, that's really driven largely by our order book and by our demand. And so with that in mind, given the fact the strength that we're seeing here, we may continue to have an increase in those components of inventory, but again, the finished goods, we do anticipate coming down a little bit.

Okay. Fair enough. Thanks Jeff. Thank you, Andrew, for indulging me. I will pass the floor.

Thanks Kevin.

Our next question comes from Nehal Chokshi of Maxim. Please go ahead.

Thank you. And glad to hear that you're going to be disclosing backlog going forward, which means that we're all going to be asking questions about your order book. And that question would be for the March quarter, it sounds like you had about $8 million in product orders? Presumably, that's all military. That's the first question, and then I'll have a follow-on.

No, we don't have all military business. We have some medical and industrial. So part of that is in there.

Okay. And so now the big story here is that you've had a significant uptick in your international business for that $8 million in product orders. Can you give us some sense as far as what percent of that was international?

You can argue, it's pretty much proportional to the actual -- the sales that we had in the first quarter into the how much is international. So actually, a little more than the majority of that was actually international.

Okay. Great. And then my final question is that, can you just remind us of what you expect breakeven to be? What revenue run rate? And I do recognize that's dependent upon what gross margin you'll have, which is return upon your yield. But should you answer, it would be helpful.

So I mean probably we're pretty good at answering this by now, since I think we've been asked in every earnings call that we have, justifiably. So we've indicated in the past that our breakeven is around $7.5 million to $8 million and that number remains there. I would argue that at this point, it sorts of towards the higher end of that range, but as we continue to see our yield and operational improvements, that number will be coming down to the lower part of that.

So just to be clear then, that's implying a 30% gross margin at that $8 million run rate, correct?

Yes, a little, actually. I think not quite that 30% margin, but that's correct.

Okay, great. Thank you.

Thanks Nehal.

[Operator Instructions]. Our next question comes from Dennis Van Zelfden of Brazos Research. Please go ahead.

Thank you. Good morning Andrew and Jeff.

Good morning Dennis.

Hi Dennis.

I just want to follow-up a little bit on your potential new manufacturing partner. I'm curious, did these one or two new partners approach you? Did you approach them or the terms that you are potentially going to get on your existing potential manufacturing partner not good enough, just a few more details, if you could.

Well, the one has talked to us for a while, and now is coming to the point. This is not the one that we've been talking to for a while and told you about. The other ones, there's 2, the one came to us, but through another partner. So another partner put some pressure on and said, "Please don't talk to them." And they are -- they're very interested. So the terms that we take should be the best for you, the shareholder, and that's what we're looking at. We're looking at can we broaden our -- can we broaden what it is we're doing, so that we become a larger part of the market more quickly. So that's what we're looking at. And there's one other one that has now made it a plausible path forward in terms of what they're -- what they've talked to us about, and I apologize that I can't tell you what these things are.

Well, that's fine. I'm just -- it seems like the original one that you've been talking to them for, I don't know, maybe a year or so. I'm just wondering if you're just starting with the new partner, potential new partners, are we looking at another year delay or?

Well, no, I wouldn't say that at all because the real thing you have to look at is the market. Now as you know, we're coming out with a new display at the end of this year and that's the thing or the beginning of next, and that's the thing that we've got a target. That new display will be something that no one else is built. It will have the pixel density that's needed. It's designed for the optics that this company is building, and it will have the brightness that's needed for the VR. It also has other things in it that I can't mention, so I apologize, that are -- what is really needed for the VR market. And one of the things I can mention a 120 hertz, of course, in terms of speed. But many other things to make this work very well. So I think that's what is needed, and so now it's not going to take another year to get there because now we have some competition here.

Okay. Well, I guess it kind of follows into my next question. My last question is that, given some sort of a delay here, months maybe, and given the long lead times than any, whoever you end up going with, given the long lead times of the ramp-up and stuff, what -- does that delay due to a Tier 1's plans to roll out a product. I don't know in the 2020 time frame. And does that impact all that?

Well, in the 2020 time frame, to put in an OLED line, we've said in the past that 18 months. So we're not impacting it yet, the ramp of the product will be reasonable on the side of the consumer company, right. It won't start at millions per month, but will grow to that. And 2020 is the year we have to hit.

Okay. Well, I guess, my last question is that I'm sure the Tier 1 that you're working with knows all of this about what you're doing in terms of negotiating with these many manufacturers? Are they saying come on eMagin, pick somebody because we don't want to be delayed, if we decide to go ahead with the product.

Yes. Well, certainly, they want to see the success that they are. What can we do to help you that's, that's the thing that we're asked. And we are using those Tier 1s for that help.

Yes. And they are part of the discussion as well, Dennis. So they are intimately aware of how they are contributing or in another respect, I'm slowing the process down here a bit.

And we've had three-way discussions with that first manufacturing partner with these Tier 1s, and we've had three-way discussions with one of the companies and the new manufacturing partner as well, the newest one.

Okay guys. Appreciate it. Good luck.

Thank you, sir.

Take care Dennis.

Our next question is a follow-up question from Kevin Dede of HCW. Please go ahead.

Andrew, since you're on the consumer partner topic, would you mind just sort of reviewing where you are with, I guess with other partners, not on the manufacturing side, but on the interest to have you manufacture a product for them. You mentioned four inquiries in the March quarter, and I know that you're -- you know you had five or six relationships before. Can you just kind of summarize that for me, please?

So although the numbers getting large. So it's tough. I'm going to speak to a few of them that I'm really excited about. The one that we've mentioned that we're designing a new display, and I've said some of the qualities of that new display. And we had a design review this month, and it went very well. So it's on track, and this company can't wait to get their hands on it, and to tell you the truth neither can I because it will be an outstanding display. So that was going very well. We had mentioned in the past, the chip partner, they're helping us with a number of things in terms of sourcing, but also with -- helping us with manufacturing partner as well. And we mentioned some new companies coming to us. The one company is very powerful in the space and is interested in -- and we're putting scenarios together on a few different displays, AR and VR, and they're also interested in the display that we're building that I've mentioned for that other company, and we asked the other company if it's okay to share. So we've had another new one come to us that is also interested in number of displays, and we're putting together scenarios for them. And I think that this is a very good story. We're hopeful that the display we're building will be -- satisfy a number of customers and the company for whom we're designing that is interested in having others use it. I mentioned one other one because there's no other company that is building a headset with our 2Kx2K display, which is important to us because we already make it.

Okay. So with these inquiries, are there any NRE dollars associated?

Well, if we do design a new display, there would be, yes.

But at the inquiry level, no. It's just still negotiations.

Yes, the negotiation we're putting together scenarios for the new guys, let's say, here's what this display looks like, here's the cost, here are the features, and if they take the one we're already designing, that's fine. If they take a new one, we have to build it or design it. So that would be NRE.

Okay. And last question from me. Just on the fixed wing development there, the display that you need, meets the specs -- or the display that you need to meet the specs is designed and built. It's just a matter of the integration process, correct?

Yes, we did design a special display for this, and the OLED is monochrome green. And you may recall the past that 17,000 to 24,000 nits, and even at that, so very high brightness, your Apple phone is 500. Even at that very high brightness, the contrast ratio is enormous. That's why LCD can't compete, and that's why other OLED manufacturers cannot compete with us. So the display is designed, and what it's doing is going through qualification. And we're putting it in a very expensive airline -- airplane, not airline, airplane and, therefore, the qualification is a long process. But we're on schedule to sell more displays to them. Go through the second stage and this will be ramping up, and display, it's actually what's in there for the other company.

Okay. Could you just give us a hint on the time line there? Do you think qualifications finish this summer and you start shipping volume this year or...?

End of the year. End of the year is more likely and, therefore, next year or 2.

Okay. So next year would be --

The real volume -- Kevin, I'm sorry. The real volume we're going to touch here is probably be in 2019, particularly in the second half of 2019.

Okay. Fair enough. Thank you, gentlemen.

Sure.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Sculley for any closing remarks.

So I just want to say thank you for everyone for being on the phone, and thank you, for the questions. This is a very exciting time for us and it's exciting because of the success we've seen is designing that new display, other companies coming to us and liking what the specs of this new display in terms of the brightness, the size, etcetera and the manufacturing partners additional ones coming to us and talking to us is couldn't be better. The other thing is internally in terms of the operations that's going very well, and the eMagin team is, as usual, working like mad to get things done. So I want to thank eMagin team as well. Thank you, all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.