Q4 2019 Earnings Call
Ladies and gentlemen.
You are holding on for today's conference call, we or something to these audience I've tried to be underway. Shortly please remain on the line and thank you for patients.
[music].
Good afternoon.
Thank you for joining us today to discuss one stops systems financial results for the fourth quarter and for your ended December 31st 2019, with us today or the Companys interim Chief Executive Officer, David Ron and Chief Financial Officer, John Morris.
Also joining today is the company's chief sales and marketing officer, Jim I.
Following their remarks, well open the Colts your question, but before we conclude today's call I will provide some important cautions regarding forward looking statements made by the management during the call.
I would also like to remind everyone that today's call will be recorded and will be made available for replay by the instructions in todays press release in the investors section of the company's website no I would like to trying to coal overture S.S. as interim CEO, Steve It wrong. Please go ahead Sir.
Hi, good idea and good afternoon, everyone.
We're taking the time to join US today, especially during challenging times I hope, you're only say placed or your families and friends are doing well.
Especially like the first sorry.
Yes teams around the world for their contributions.
Yes, I keep saying I call site, while also continuing to spike product RP customers and partners.
You are especially thankfully no.
It's a cold that might change among ourselves.
Okay.
Sure.
Yes.
Due to the must <unk> military other critical applications served by our products.
Well under Secretary of State has requested that we weren't even operation continued to provide central structured products that we design manufacture.
Given this responsibility early on we took appropriate.
Measures to protect the health of our employees, while continuing on dating business operations.
Measures taken so far fewer directi notes.
To do so.
It was you can't work from home.
Multiple chips disinfect frequently and check employees temperature daily.
The ball spread to work space out to allow the appropriate social Justin thanks.
We are production staff.
We continue to.
I had to continue to post the latest information related to the virus virus that kind of impact to us on our home page one stop systems Dot com.
About five weeks ago on February 15th.
One stop systems Board of directors decided to change and leadership was exceptional to take the company to another level.
Based on an existing succession plan and my background public company CEO close related space I was asking takeovers and really CEO.
The board is currently interviewing considering candidates, including me portable electronics.
Oh supply side, you have had channel or challenges and we've seen some longer lead times as of today.
I'm pleased to announce docking facing any major bottlenecks parts availability.
On the customer Brian Lawlor activity business remains solid for most part youre seeing some potential softness for future quarters, what customers, who had been significantly impacted particles virus.
Disguised as an example.
Well, there, but just be focused on be concert and large sporting event markets.
That's a result, you're experiencing extended payment terms from disguised and currently have about 5.8 million.
Outstanding receivables, you're working very closely with those guys to ensure collections and to properly manage this liquidity.
Sorry, it's Texas market to recover first in Asia, where some events are starting to be plan for the May June timeframe.
This part of the World is smoking coming back to normal.
Meanwhile, corning's at skies nursing, a growing interest in their virtual product line, especially with major universities gone through remote learning.
On the other hang on many of our business. It was either certain boats free voice central government projects for our critical such that they believe that or critical such that we believe the impact will be less or not at all with respect to these programs.
Fortunately these businesses also tend to be our higher margin products.
This is backed by a strong pipeline of close wins came in 2019 that will help fuel revenue for the year.
Yes, I was working with our customers and partners. We've now moved to a point virtual model to keep our business moving forward everywhere, we see them.
Today's call I've been invited Jim I said, our chief sales and marketing officer to provide additional color.
On our customers and new opportunities.
First like to turn the call over to our CFO, John more someone who will take you through the financial results for the quarter.
Sean.
Thank you David and good afternoon, everyone like your for joining us today.
Well here today, we issued a press release with our results for the fourth quarter ended the year end December 31.
The 19.
Releases are available on the Investor Relations section of our website what stops system.
Column.
Starting with our statement of operations for the fourth quarter revenue in the fourth quarter 2019 totaled 8.4 million.
28% from the same year ago period.
Yes, it was a new quarterly revenue record for the company.
No greater revenue was primarily driven by increased shipments on our media and entertainment products military grade flash storage arrays, and computer accelerator for satellite signal processing.
Operating expenses in the fourth quarter of 2019 decreased to 12.1 person decreased 12.1% to 4.7 million worse than your go quarter.
The decrease was primarily due to decreased expenses.
Oh sure what.
<unk> costs there were occurred in the prior year, so were attributable to the acquisition of Cds and Brashear.
Net income honored you on a GAAP basis was 1.1 million or six cents per diluted share in the fourth quarter.
This is in comparison to a net loss of $120000 or a loss of one cents per basic and diluted share, let's say a year ago period.
Non-GAAP net income totaled 1.3 million or seven cents per diluted share in Q4, as compared to 1.4 million or nine cents per diluted share demonstrated year ago period.
Adjusted EBITDA was 2.4 million Q4, that's compared to 856000, let's say a year ago period.
No.
Turning to our operating results for the full year 2019.
Revenue in 2019 increased 57% 58.3 million. This again, there's a new all time record for revenue for the company.
The increase was primarily driven by revenue from acquisitions, which totaled 16.3 million.
Oh, the total increasing revenue Rush American contributed 14.5 million or 68.1% of our growth.
<unk> contributed 1.8 million or 8.4% crazy with our existing Oh assess business growing $5 million, representing 23, and a half a percent of the overall revenue increase for the year.
On an organic basis revenue for 2019 increased 12% to 41.5 million.
I'm not sure.
Let's see Oh, FSS business revenue increased 5 million as compared to the prior year.
More Georgia. This increase was attributable to Sherman associated with flash arrays under our airborne military flush contract.
Well as improvements and ourselves of media and entertainment products.
Compute accelerators for Eylea powered signal processing of satellite data.
So all flash arrays and accelerators for kids field mobile AI data centers, performing RF signal analysis and show up on accelerator, all flash arrays for high speed ERP data management.
Well, it's also a flaw comparative decrease year over year revenue of approximately 850000 doors attributable the sky scale, which was involved last year.
Gross profit in 2019 increased 71% to 19.4 million with overall gross margins improving to 33.3%.
That's in comparison with 30.6%.
Oh, no pull back up 2.7 percentage points.
For our existing poet <unk> core business. The gross margin percentage for 2019 was 39.2%, which is up 5.6% percentage increase.
As compared to our prior year not 33.6%.
5.6 percentage point increase is attributable to a change in mix attributable to higher sales of our flash array systems.
See I contributed gross margin at a rate of 22%, 22.6% due to cost of generic projects on a fixed price on fixed price contracts.
Brochure contributor in gross margin at a rate of 22.5%.
Which is consistent with the resale or type business model.
Operating expenses in 2019 increased 39% to 20.2 million.
This increase.
Oh, Oh this increased 1.7 million was attributable to a write down of goodwill on city I and the full inclusion of expenses for C.D. I am pressure, which contributed an incremental 4.4 million, which increase was offset by a decrease in art.
Shifting Oh, a self business up $394000.
Net loss on a GAAP basis totaled 900000, or a loss of six cents per share for the year.
As compared to one net loss of 1.1 million or nine cents per share 2018.
For the year of 2019, non-GAAP net income was 2.3 million or 14 cents per diluted share that's compared to non-GAAP net income of 1.4 million or 10 cents per diluted share in 2018.
For 2019, our annual adjusted EBITDA was 3.2 million as compared to 584000 in 2018 now moving to our balance sheet.
Cash cash equivalents totaled 5.2 million at December 31, 2019, our current cash balances approximately 3.1 million.
For additional liquidity, we have executed it turns shape for a long commitment for non interest bearing though and the amount of $5 million I wish stream. We all you can be drawn upon following finalization of terms.
An additional 2 million available in the seventh month following closing.
We expect that the trends we expect this transaction to be completed within the next 15 days.
Now I'd like to turn the call over to Jim.
Thank you John.
As David mentioned earlier and why did the challenges created by the Terrata virus outbreak, we've taken a number of proactive measures on the sales and marketing side to adjust to the current market conditions and continue to operate efficient efficiently.
We have shifted our marketing approach from a 50 50 mix of trade shows and digital advertising to a much heavier digital mix focused on the content marketing lead generation and larger opportunities always remain a priority.
Instead of physical trade shows and show those at industry conferences, like and videos GTC see airspace and National Association of broadcasters, we've launched our own digital series using virtual trade show tours of each event and Webinars along with the organizers.
As with the rest of the company our sales and marketing resources are working remotely we'll know travel in the schedule, we've increased our customer outreach via telephone emails and video conferencing to L. keep our global sales targets are 2020 moving forward.
Interestingly enough, we're finding our customers more engaged with meaningful projects because their travel trade shows and corporate meetings have also been minimized.
Although clearly there are some uncertainty out there the strong virtual activity, we're seeing appears solid and very positive so far.
In 2019, we significantly increased our focus on opportunities over a million dollars.
You've heard US mentioned several of these wins on our calls and in press releases during the year.
In 2019, when coal 16 of 21 programs valued at a million dollars a more with this representing a strong 76% win rate.
This was up significantly from the 30% to 40% win rates of the previous year.
At least 16 closed opportunities, 75%, where new customers.
It was three other potentially be valued at $10 million or greater over the next three to four years.
We currently have 20 additional large opportunities that our pipeline to start 2020.
Ladies and all of our leadership in our high margin piece Expressjet for products and we see just reflecting the beginning of the market shift to high performance Genfour.
We have over $2 million lawyers were existing gen four products to date.
During 2020, we were introduced for new Pizza Express Gen. Four platforms, we're seeing significant early interest and usually being at standard products, which doubled the performance of gentry and we'll expect to start converting this into additional genfour revenue later this year.
In regard to Raytheon, our largest government second a customer we expect a similar level of bid lists and schedule of business in 2020, as we had in 29 team.
We have planned our material purchases and pre orders to be consistent with their requirements to deliver in Q2 in Q3.
There's been this offer significantly higher margins and businesslike disguise.
So far or government contracts it left that affected by the Corona virus in fact, as David mentioned the U.S. under Secretary of State has requested that we continue to provide the critical infrastructure products that we design and manufacture.
Another growing lets us application area includes autonomous vehicle GPU accelerated hardware.
We have reached over 1.3 million and autonomous vehicle system orders from a large rideshare provider and European auto manufacturer for 2020 delivery.
Overall, our market diversity sales capabilities and the lets us product offering strengthened considerably in 2019.
Well no one can be 100% prepared for the impact uncertainties caused by the point of virus and 2020, we believe we've taken appropriate action that we've continued to book and ship business and we expect to benefit as a world economy gets back on track following your ventral defeats of the global pandemic.
Now I'd like to turn the call back over to Dave.
Great. Thank you John a gem yeah, John outlined so close the year strong record total revenues totaling 58.3 million representing growth of 57% year over year, while increasing non-GAAP net income to 2.3 million, that's compared to one point form.
2018.
And Jeff and Jim shared strong wind it depends I will turn into future Robyn.
Filed recently there have been on many unexpected challenges.
Leave our team a great job proactively addressing them and keeping us on track.
Given that were near the end of the first quarter.
Depending on the timing of some final shipments we expect revenue to come in between 12.5, and <unk> point 9 million. This would represent an increase of 24% to 20% over the quarter.
Looking beyond the first quarter, we expected spirit its normal challenges with our business tends to be much stronger in the second half the year in terms of revenue and margins.
Seasonality now and now being combined with uncertainty around the economic impact of the crude by this.
Our management team has been taking some walt bought out steps to ensure or so it's kinda stand it for a long period of uncertainty while also laying a strong foundation that can take full access to the next level.
These efforts, including include strengthening our balance street by securing balance sheet bike securing additional capital that John mentioned as well as deep from view all of our operational structure priorities.
We expect this to lead to significant cost reductions and increased efficiencies.
They will be designed to ensure our long term sustainability, especially as we work through the current period.
And allow us to become stronger in the process.
Certainly this is not to be accomplished overnight and we need to manage several challenging things in the process through it all expecting better define anything uncertain unique value proposition begin to focus more on specific markets, where we can establish clear leadership.
As part of this process will also accelerate deeper integration of C.B. I can grow somewhere in two hours to us and collectively pursue opportunities, where we can leverage or can find strengths and capabilities.
We will be challenging our organization and our partners to discover innovative ways to increase our IP and sticking this and along the way the greatest barriers of entry for competitors.
This will include a greater flow of scalable standard products and reduce the market, while increasing our value a key customers need or custom products.
As a result of this process I believe will become an organization that takes additional property being the Fisher fall driving revenue margins profits and shareholder value over time.
This will be a challenging process, but I'm confident in our revolving vision capabilities and I'm very proud to be part of the or sets team.
Now I'd like to open the call to your questions Natalie.
No I'm, sorry, [laughter], absolutely if you'd like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using speakerphone. Please make sure your mute function just turned off 12 lie you're sick.
Well to reach our excitement.
We'll take her first question. Please go ahead Mr. Ruben Roy from benchmark.
Thank you David a nice to meet you over the phone and congratulations the team for for solid execution in 2019.
David I was wondering if we could start with just sort of the commentary I understand and thank you for the.
Some of the details around disguise and Raytheon, but in terms of.
Getting.
Through the month of March here, you're almost done that Q1 and you have.
Sort of the commentary around seasonality being combined with uncertainties around the impacts of the virus you didn't give any more detail on what that.
The implying there as it relates to Q2 and how we should think about you know waiting on second half persons first half this year that'd be helpful. Thanks.
Yeah, John do you want to pick that instead or.
Sure.
So it's good there so to speak with you.
Right now John Hayden.
[laughter], Oh, I'm, sorry, [laughter], our job, though right.
Sorry about that.
Our second quarter tends to be it tends to be a little softer yeah as David mentioned, it's really all back out revenue in the third and fourth quarter, where we're going to.
Where our shrink there we are currently operating as projected in our budget.
So we feel comfortable well what works well, we're out but adds consistent with prior years, you'll see the same seasonality that we've had in the past.
Okay.
Got it adds to that.
Yep got Rubin, let me just add to it wasn't they sick when the dynamics since that seems pretty bullish about what's going on like like and no. One likes perspectives. Its you know companies are trying to close out this quarter, yeah, it'll be interesting note what the type of they're posturing becomes you know month. So again we're.
The positive stuff for the type of a business, we normally would have into Q2 timeframe, but a little bit on certainty for the dynamics I just mentioned.
That's helpful. Thanks, David I guess, it's quick follow up Virgin that maybe its good to hear that you guys are continuing on with the sales and marketing process virtually I I'm wondering if you've seen any changes over the last couple of weeks in design activity and also be kind of comment on the supply chain.
No. There was some mentioned Oh, you know some extension of lead times, but no significant bottlenecks in any specific components that you guys are having problems procuring or how you see got playing out we're hearing that supply chain activity at least in Asia has started to a return to normal so any color on I guess a.
Design activity from your customers and then your perspective, there and then you know how you think that supply chain ends up looking over the next several weeks would be helpful.
Yeah, So as I mentioned in the.
Earlier that the the level of activity is actually seems to be increasing seem to be getting more meaningful work or out of a customer's towards finishing out projects and they're kinda, taking the time to get all the paperwork and get the stable to works and and and actually placed the orders. So that's part of it hasn't slowed.
Down the team is actually said that there busier than ever.
Which is.
Distraction less.
People out of the office those type of thing.
Because they're working from home, but on the supply side, we've had several of our vendors set of.
Even done as much as a said that they were going to shut down then turned around and said Oh wait we can't shut down because of these critical projects.
Re opened their doors and we were getting letters everyday even from companies like of Synnex, who is one of our distributors.
Well as a supplier.
That is telling us a in providing say intel's guidance that they have they have product in the supply chain you can count on them.
You know those type of things.
There's a few vendors here in the other lighter shutdown, but just like when we have the tariff issue come up is vendors tend to find a way to make the business happen.
They shifted their manufacturing to Taiwan to get out of China to stop the tariffs problem. The same thing is happening around this its one vendors shut down we're moving.
I will say metal that to another vendor so that as you know kept our operations people on their toes does it seems to be moving forward.
And we haven't hit those issues, yet with any particular component or metal or anything like that.
Just to clarify that I think that you know we saw some like four to six week push outs on PCB boards, but again like Jim said, an operations team has done an awesome job adjusting to that it put more stressed cost pressure on March versus February and that's kinda dynamics, we've seen man.
But we've been able to find supplies and really get its working with our customers getting alternate sources and if we have additional costs doing everything we came to pass on to them.
Right. Okay. That's that's very helpful. Okay, well, that's all I had for now thank you guys.
Thanks Rubin.
And we'll take our next caller, Joe Gomes from double capital. Your line is open.
Good afternoon again, David pleasure to meet you and over the phone. Thanks for taking the questions here. The first one I want to talk on the CEO search.
You got big I have been type of timing around that is being pushed out because of the corona virus situation. We're in if you could just give us a little update on that.
Yeah, I don't want to speak to the board in its entirety, but the the general consensus is with all the dynamics of the world they're trying to.
Makes this a fairly quick process.
Okay.
Okay and when you when you talk on the.
In your.
Press release about looking to get some significant cost reductions I'm wondering just give us a little more color around where you guys. Looking are thinking that you might be able to take additional cost.
Yes.
It's from you know, it's looking at a company all aspects of it which includes.
HM Ah different services are things, we don't necessarily need.
That includes the structure of the organization and Unfortunately have to include people also.
The jeez.
Perceiving a fair amount of that coming out of being able to.
The odd deeper integration with the CDIY and breadwinner.
Yeah, we'll get some of it from that for sure.
Okay, and you know we've got a.
Our deep your box has done a really good job working on cost reductions of products and that will continue to help also.
Okay.
And it seems.
You know sitting here you guys talked about those guys.
And you know that obviously with all the shutdowns of all the events.
Where that would seem to be the company no major customer that is gonna be the most impact of at least here in the near in the near term.
And if he can can you kinda give us you know kind of.
You know how does the revenue from this guy's normally slow across the income statement two years it fairly equal throughout the years that their revenue stream more concentrated historically in one quarter or the you know the back half of your like you were saying, but typically the company has a stronger back half.
You know.
Are we looking at potentially just a second quarter impact.
Any color you can provide and that would be appreciated.
Why don't you start that Jim and I might add up to it.
Sure So SKYSITE.
In addition, what David said, they typically have a really strong fourth quarter, which they did then they typically will back off a little in first quarter, and then vacillate similar large too small to a large true at small back and forth.
They do.
I'm getting in front of the the Chinese new year shut down that then went extended.
Did take extra product to hedge against those the shutdown. So from that aspect you know first quarter looks pretty robust compared to say last year.
Okay. I'm back then so usually didn't go up and down every quarter.
Okay.
And one last one for me.
You guys had a great job last year and getting all those design wins and.
We talked about you know the commercial side and you know could be at six to nine month process, where you building upon the for the product before you really start to see significant revenues on that.
Have you seen and even though the 16 you know they kind of like pump the break sandals and say you know, what's the slow down or was it still you know you seem to be indicating more business as usual.
Yeah, so far it's been business as usual I say about half of those or commercial wins have already entered some kind of pre production or production.
The military let's take a lot longer but I'll just 16 I believe it was.
There's a 60% where commercial.
And that range.
So so yeah, that's where you're seeing the being good traction that I talked about earlier with the autonomous vehicles to different vendor to different customers there and in the PCIA Gen. Four which is three different customers. There those are already ramping up.
So far the pumping the brakes.
Yeah. There is there a few government projects that are just take a longer so I wouldn't say pumping the brakes on that one I haven't seen it yet.
[music].
Well I'm sure I'll be the first the shit.
If it does.
Yeah. Thank you guys I got a water.
I've just said it was I call yesterday with one of our government contractors and they were all ore body line.
I didn't catch that I'm sorry.
I'm, sorry, I said I was on the comp and.
Viewed with one of the bar.
Large contract contractor type customers and they were all forward bodies mean, moving forward kinda back to not letting this slow them down it was kind of the perspective I guess.
Okay, great. Thank you for for taking the questions.
Thank you Joe.
Thanks, Joe.
Thank you for question and to remind everyone. If you'd like to ask a question. Please signaled by pressing star one on your telephone keypad well next take Brian Kimstone Jerks from Alliance Global Partners. Please go ahead.
Great. Thanks, so much I guy.
In terms of your government business, you talked about the supply chain already.
What about capacity utilization that your facility with a different shift you talked about and then the ability to meet that government demand since it sounds as if that was unchanged.
Yeah. So.
We did two things last year that have really are actually prepared us more than we thought it would for the for what's going on here, we did a oh hey.
Enlargening of our production floor.
And a redesign and are building that actually has helped us to be able to maintain our full production staff with the local guideline regulations of six feet for personnel on 10 persons in each room.
So actually those capex that we did last year and the building I'm really came in handy to be able to handle a what we're doing now on the production for to keep them moving.
The second thing that really help from last year was we got to ERP system online on November 4th that New Air ERP system has allowed us to within three days transition our process that kinda was a mixed between electronic and paper into a fully paperless process although.
Away through the system, because we had that infrastructure in place so it actually if needed.
It patients something that we were how does it go anyway, and we were able to make it happen because of those two infrastructure pieces.
Great. Thanks, and then.
Can you.
Maybe quantify or at least roughly the margin profile I think you alluded to on the defense business, where it sounds like demand is gonna be strong this year compared to maybe the and entertainment and media side your business, where you might see some near term weakness.
Yeah well.
Usually it comes from the more value added we have to hire the large until it's gonna be and in the media and entertainment space is we do say one level of rugged nation, that's needed for that that's a above what a tier one dell HP or any of our substitute potential customer.
On the vendors could could make so the margin in that is not as large but for something like a military when we put a lot of.
Rugged innovation testing reports requirements all that is all value add stuff that allows us to have much larger margins for those type of products based on how much touch you have to do in say a rugged server versus one that's got all these GP is in high speed network.
King and things like that that specialized for.
Military or autonomous vehicles.
Got it Okay. Lastly in terms of the outstanding a 5.8 million dollar receivable I think that with a number they had disguise communicated a timeline for payment and then delaying the Olympics impacted business. This summer with that customer I'm not sure. If the sky has a role in that event. Its I'm just checking my notes.
They may you know they may have been in past event.
Yes. So we are currently working with them on a payment plan, it's actually a fairly consistent with their business and they have last year we had.
At yearend, we were in the same situation, where we had a big fourth quarter with them and they had a large receivable balance. So we had to extend terms on last year I would say, we're kind of repeating that exact same behavior from the prior year, where a this outstanding balance for beep.
Paid out over approximately 120 day period of time.
Right.
And I couldn't help make the.
Olympics question, usually a large live events like the Super Bowl or the Olympics or something like that.
Where between five to 10 systems total to run.
Since we shipped a over 300 every year 400 every year the impact of any one event is fairly small, but the impact of many events like we're having the short term is a is a little larger. They also have another piece of their business that we didn't talk a lot about.
That is there XR business, there generative content and their virtual business, which has been one of the growing market segments and their business that side of the business tends to be picking up speed as people are doing more virtual events that used to be in in the live event category.
So that's why we have a mix in the next quarter's good.
That's helpful. Thanks, so much of your time.
Thank you Brian.
Thank you for a question, we'll next go with Michael Potter from Monarch capital. Please go ahead.
Hey, guys good to talk to you or a lot of my question something [noise].
So far but I guess, just just to be clear John you mentioned, the 5.8 million. They are with the sky. That's the same level that it was at this time last year.
Yes, that's correct.
Okay. So it's not something that's so far field, but that that we need to be.
Overly concerned.
The concern this year is that's the nature of the business due to be slow down in the concert arena across the world. Obviously, there's concern that there and whether or not their customers will pay them, which were then again what effect out so I'm, just bringing it to the attention when the market.
Place that given the nature of what we are in this business climate that there is up you know more risk associated with collection on these receivables.
Okay.
And the 5.8 million, that's the year round number or that's the card number.
That is the current number.
That is the current number okay.
But there is a plan in place since you've agreed to with its guys, where they're going to pay that down over 120 days.
We're currently working on plan and that has been proposed it has not been fully agree to we're continually working with them and making sure that we match their collections with the amounts that they owed to us. So we're trying to a line both of the company's goals along with what the plan.
He has loan collection versus payments to us.
And Michael This is Dave I'd, just like bad. This you know we're hitting this on multiple fronts. The CFO John the CEO with me so we're in constant contact with them and pushing hard.
Okay.
Understood.
The [noise].
Pipeline of Oh, I guess, you have 20 additional opportunities.
For a new business activity side, each over a million dollars have we want any of those opportunity so far this year.
Yeah, we have thought to win so far in the first quarter.
Yeah.
Okay. Congratulations.
Can you give us some color and do they are and what their for.
One of the minutes military.
Oh for a new follow on program.
For the a similar product to what we're doing with a them the Raytheon business.
And one is a commercial.
Customer at this time I'm going to go any further with that.
Okay.
Got it we'd be making a release regards the commercial customers at some point.
But typically our releases are only have material wins of Ah think the lawyers said over a million dollars.
Actual peos.
A lot of restaurants, because they're OEM well placed a P.O. for say a prototype products then a pre production will order. Later then a production order later and that's kind of how the the Gen. Four has creeped up to that 2 million dollar level that we have it wasn't any one order of a million that would have been can.
Scitor material for the.
For the lawyers tell us too to press release those.
But it happens overtime.
If we have any big ones, Oh definitely will hit the wires.
Got it.
The 16 design wins from 2019, you mentioned, 50% have entered production.
For pre production.
6% commercial 40% military.
I guess, how much of the how much revenue do you anticipate generating from those 16, new design wins for 2020.
Yeah, I don't have that number in front of me for those broken out.
Yeah, I don't want I guess on a call like this.
Well in aggregate you have to break it out by by customers. Let me now do that how much do you think that will add to our organic world.
I think we've put out.
We haven't put up guidance for this years.
So so oh.
Well we are currently in our plan is that we are looking at our organic growth of basically a plan in excess of double digits of 10, 10%.
We didn't do a bottom up four cap on revenue for 2020, I don't have the exact list in front of meet the but we get built in anticipation of these contracts that Jim alluded to add it will basically put us they are out an overall positive double digit growth a year over year.
I can persist swanee.
Okay.
Double digit growth, that's coming off of a Q1, when you're and we are anticipating.
24% to 28% growth.
We are I'm talking about year over year, not <unk> not off the run rate that we came off or from 18 2019 excuse me so for us.
Looking at a 10% growth rate over the 58 million.
Excuse me.
Organic revenue year over year.
Okay.
Okay.
And you mentioned also be.
It's 5 million notes.
Ah that's what the commercial lender and can you walk us through the turns again.
Yeah, So what didn't hear that.
It's a convertible note me total value was $5 million of which it would have to talk to associated with it. The first tranche is $3 million with deferred payment starting after six months from the date of close.
Sell at our option, we have the ability to draw down an additional 2 million. It has a 24 24 month turn with pain.
With payments over our 22 month period.
Okay, and you mentioned that it's it's a zero coupon convert.
Ah, Yes that is correct, 10% whole I'd on it.
Okay. So it's a 10% of I'd.
And then it's the convertible at what price.
What was 135% premium.
Yeah.
Two.
To whatever the current market prices on that day of a conversion and there are limitations on how much can be converted at any one period of time, but that is always yet that the company does not have to work with all to make the payment as long as we are paying Mickey not payment in cash lunder does not have the right.
Exercises conversion feature.
Okay.
So this is not a commercial lender I'm, assuming this is a specialty structured debt lender.
That is correct.
Yeah.
I'll get back in queue. Thanks, guys.
Thank you very much good talking to Michael.
Thanks, Michael.
Thank you for a question. We'll next go with that flowers who's a private investor. Please go ahead.
That's right.
Thanks for the magazine.
Peak important net profit congratulations I take it was about 6% of revenue.
The question is can you you need a position do share your expectations for 2000 2020 on that number.
I'm, sorry, I missed the Craig's question there David would you repeat it please.
Okay with my faulty math I came up with 6% of revenue, but that brought in Q4.
Okay question is.
Well, what do you think is going to happen in 2020, I didn't catch that expectation.
[noise] right now we are currently holding on providing the expectations for 2020.
I will tell you that the fourth quarter is always our strongest quarter. It has the greatest gross margin.
The year and typically it's because of the mix of products that we haven't there it tends to be our most profitable quarter every year and so I wouldn't be projecting after that fourth quarter run rate I will tell you that the way we have budget in 2020, we are looking for significant improvement.
Year over year, both in revenues as well as bottom line growth.
Yeah, and I think that's about the best I can give me a with respect to expectations on revenue on a profitability and revenue for next year.
That's good thing.
Thank you.
Thank you for a question we have no more questions I'd like to spend the conference back to our speakers for closing remarks.
Okay. Thank you Nadia I got your name right. This time.
And thanks, everybody else for joining us today, we look forward to talking to you on the feature and reporting our progress. Meanwhile, still fleet of course to reach out to John John on me any time.
Operator.
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