Q1 2022 Vuzix Corp Earnings Call
Greetings and welcome to the Vuzix first quarter, ending March 31, 2022 financial results and business update conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the call. Please press star zero on your telephone keypad.
As a reminder, this call is being recorded.
Now I would like to turn the call over to Ed Mcgregor Director of Investor Relations at Vuzix. Mr. Mcgregor you may begin.
Good afternoon, everyone and welcome to Vuzix first quarter 2022, ending March 31 financial results and business update conference call.
With us today are music CEO , Paul Travers and our CFO Grant Russell.
Before I turn the call over to Paul I'd like to remind you that on this call management's prepared remarks may contain forward looking statements, which are subject to risks and uncertainties and management may make additional forward looking statements during the question and answer session.
Therefore, the company claims the protection of the Safe Harbor for forward looking statements that are contained in the private Securities Litigation Reform Act of 1095.
Actual results could differ materially from those contemplated by any forward looking statements as a result of certain factors, including but not limited to general economic and business conditions competitive factors changes in business strategy or development plans the ability to attract and retain qualified personnel as well as changes in legal and regulatory requirements.
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In addition, any projections as to the Companys future performance represent managements estimates as of today May 10 2022.
<unk> assumes no obligation to update these projections in the future as market conditions change.
Today's call may contain certain non-GAAP financial measures when required reconciliation to the most directly comparable financial measure calculated and presented in according with GAAP can be found in the company's Form 10-Q filing at SEC Dot Gov, which is also available at www Vuzix Dot com.
I'll now turn the call over to Vuzix CEO , Paul Travers, who will give an overview of the company's operating results and business outlook.
Paul will then turn the call over to grant Russell <unk>, CFO , who will provide an overview of the company's first quarter financial results.
Paul will then return to provide some closing remarks, after which we'll move on to the Q&A session.
Paul Thank you Ed Hello, everyone and welcome to the Vuzix Q1, 2022 conference call on this call we're going to review our results and recent developments and then give you some perspective on where we see things headed the first quarter of 2022 was a challenging one for vuzix, our customer suppliers and partners due to the obvious combat.
<unk> of macro conditions related to Covid and geopolitical tensions in Europe .
These issues generally and their impact on timing related to certain anticipated customer orders resulted in our Q1 revenue falling short of expectations.
Revenue growth and profitability are important objectives for Vuzix that said the industry is at its early beginnings and as such difficult to predict month to month and even quarter to quarter frankly.
But the underlying trends in communications from our key accounts reflect indications of growth that the industry expects.
We remain focused on delivering value added hardware and solutions to our customers base and.
And expanding our global sales channel and sales teams in select high growth regions to support our core product offerings at the same time, we continue to prepare the company for our growth by investing in our core technologies, including waveguides and display engines as well as our manufacturing capacity. These investments will enable us to better address and support the.
You expected broad industry growth, including in and around the met averse that is projected to ultimately span the enterprise defense and consumer markets.
For the reasons just stated total first quarter revenue was $2 5 million a.
A decline of 36% compared to the prior year historically Q1 for Vuzix has been our slowest quarter of our typical fiscal year with the exception of 2021, when Q1 represented record product sales for Vuzix.
We consider these results to be anomalous.
And largely associated with timing delays of customer rollouts.
And the general World market conditions mentioned above.
By way of example, if just to key accounts, we're not pushed out our first quarter numbers would have met or exceeded consensus street expectations.
Further from a customer engagement perspective, the first quarter was encouraging across our core smart glasses business with the M 400, continuing to be our flagship offering during the quarter. We continued to expand our international sales channels and work diligently with our key independent software vendors to support the needs of our collective customers as they were.
Through final optimizations ahead of expected enterprise wide rollouts.
On the OEM side of the business upon which I'll expand shortly there is growing momentum with existing and new customers, none of which was reflected in our first quarter revenue in them.
Yes.
We feel that visibility into our smart glasses customer base and their commitment to product rollout is improving despite the numerous current headwinds we still expect our core smart glasses revenue in 2022 to grow over 2021, driven primarily by larger deployments within logistics and warehousing, but also by steady expansion within <unk>.
<unk> care we.
We have a growing number of customers and the warehousing and logistics space well along in their implementations feedback from our largest customers in this space remains very positive and additional units continue to be ordered deployed and software fine tuned in preparation for a companywide rollout. These rollouts are in some cases within critical.
Restructure areas for many of these companies and with the global challenges stressing their businesses, both from supply and Labor force challenges. They are being extremely cautious to make sure. There are no glitches that might impact our business as the rollouts commence.
All of our major health care Isps continue to expand the availability of their views it's powered surgical solutions.
Last month <unk> launched their next day, our shoulder augmented reality surgical platform in both Europe and the U S.
In March fixing medical announced the commercial launch of its <unk> plus our computer assisted orthopedic solution in the U S.
This solution was launched commercially in January 2022 in both Europe and Australia Roger.
Rods and cones is now active in more than 600 hospitals across more than 30 countries.
101, with Tel Aviv, who are also expanding their network and over the last months, they joined Vuzix and donating their solution, both time and remote software with our donation of M. Four hundreds to Ukraine hospitals to help support the need for medical assistance.
Beyond these firms we continue to see our glasses, showing up almost daily across social media and more and more hospitals around the world.
Most recently Rene University hospital in France, and Osaka, SSA, Cai <unk> hospital in Japan.
We anticipate health care in 2022 will be another solid growth contributor for Vuzix.
Overall, our sales pipeline for 2022 remains healthy.
And our biggest challenge is managing and understanding customers' expectations around the timing of deployments from these key accounts.
Movement of which can have a material impact on our quarterly sales again. Despite Q1, we expect our full year's Mark lessons revenue for 2020 to grow significantly over 2021, especially as we move through the back half of the year.
During the first quarter. We also remained very active in terms of pursuing numerous strategic and key initiatives that should drive the transformation of vuzix.
On the acquisition and investment front Vuzix continues to be engaged with several companies that could broaden our service offerings across key market segments, and broadened our technical capabilities and Knowhow.
As a result of internally driven initiatives and potential acquisitions, we expect vuzix to shift from being primarily an enterprise smart glasses supplier to a more diversified supplier of smart glasses, SaaS based solutions and OEM components and products for the broader markets.
On this front, we are planning to hold a conference call early next week to provide an update on developments in this area. It will be open to everyone. So please set aside some time to join the call and learn more.
To support the number of inbound requests for access to Vuzix technology.
And to proactively offer it to third parties, primarily in the broader markets, we created a standardized OEM platform.
New platform announced last week meets the increasing market demand for our technology in the coming need for high volume waveguide manufacturing capabilities to support these broader markets.
As a U S based manufacturing company Vuzix has a competitive advantage in the core technology to offer solutions to the U S military and Allied foreign defense markets. We continue to make significant improvements in our waveguide manufacturing quality and our ability to produce at scale at what we believe could be the industry's lowest cost and highest.
Arming solutions available.
The total addressable market for wave guides is expected to be in the billions of units annually within five years Vuzix with our OEM platform and high volume and you're factoring is preparing to deliver to this broader market opportunity through large defense consumer and industry Third party partners.
In this regard we are now seeing ever growing customer interest and orders from aviation and defense customers for head worn waveguides and display engines at this juncture vuzix has expanding relationships with five major defense contractors, and we are receiving rfps from new and existing customers alike.
Theres been a lot shared in the public domain regarding the U S Army <unk> program and some of the challenges the program has faced.
The U S. Army is clearly committed to wearable displays but have publicly made the point that they are rethinking the best path to success. We believe this rethink has been helping vuzix to foster business relationships with key defense contractors and in order to explore new solutions.
<unk> goal for Vuzix from these defense related OEM programs as qualification and selection into volume programs, which typically range anywhere from hundreds to even hundreds of thousands of units over the course of the widely deployed program, which are typically spread out over three to five years and can take several years to be qualified.
<unk> is well underway with several of these programs and is expecting initial volume deployments as early as this year.
As a reminder, in five weeks the exploration of our noncompete related to the defense markets will expire this will allow vuzix to directly engage with any U S or allied defense and homeland defense forces around the world.
This should make a big change for how vuzix will be able to conduct its business in the defense markets going forward.
Leading consumer customers are also approaching vuzix driven by new interest in the level of performance, we have achieved with our shield next generation smart glasses.
To reiterate from the experts at Youll.
The shield was by far my most convincing visual experience of any type of AR glasses. So far.
Besides being comparable to where with the good weight balance the image was crystal clear with no Hayes, nor artifacts between the display the waveguide optics and the projection module units have done a remarkable job of optimizing performance and quality.
Our strong IP portfolio and the ability to produce these components efficiently in volume with price points significantly lower than other competitors is opening these new doors, the consumer smart glasses market requires products that can meet specific price points and volumes.
In the end competing companies can make hero devices or one off prototypes, however, producing them in high volume and at price points that fit the broader markets, it's very difficult and we feel that vuzix has the best recipe.
Vuzix has the waveguide production capacity now to meet the level of volumes required for both internal and current external programs to deliver against expected future demand. We are expanding our facilities to address the ability to manufacture the millions of units of wave guides associated with the business, we see coming.
This is an effort that has been underway for some time now at Vuzix with our newest production line well underway, we will be sharing more on this in the coming few months.
In summary.
Business activities announcements and ultimately revenue from our OEM business group is expanding and we expect it to grow significantly over the course of 2022 and beyond.
Vuzix has three next generation products to be released over the next several months supply chain and staffing resource challenges in 2022 have negatively impacted the timeline related to the introduction of these new products.
Despite these challenges our teams are managing our delivery and project schedules Accordingly, and we expect the three new products to enter production just a few months behind schedule.
Vuzix shield as far advanced versus the competition and its form and functionality have garnered significant early interest from enterprise customers that require a more traditional eyeglass form factor and capabilities afforded to them by the shield to solve operational challenges commercial production of the first shield model is now.
All expected to commence in the third quarter of this year.
With enhanced versions being introduced when components are available, including ultimately full color.
The Vuzix <unk> hundred fee, which is effectively on schedule is our second generation USB C based windows PC and phone compatible smart glasses.
They take full advantage of the robust design and camera afforded by the Vuzix <unk> hundred including IP 67.
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We have shipped a limited number of initial production units of the <unk> 402 of Windows mobile computer manufacturer and we anticipate their first volume production orders will be received by the end of the second quarter of 2022, we expect to introduce the <unk> hundred <unk> to our standard channels also in this quarter.
Vuzix is also working on a new follow on waveguide based smart glasses product that will feature our latest advanced waveguide optics, a larger field of view and have the ability to run Android 11 out of the box. We believe this new product will answered the call for many of our enterprise customers that love the blades.
Some factor, but require an upgraded OS to support their application architecture.
We expect to formally announce and commenced volume production of this follow on based wave guide product in Q3 of this fiscal year.
Barring any last minute supply chain issues.
Finally, we have been diligently working on our first Vuzix developed SaaS based solution built on the Microsoft Azure platform.
We expect we'll begin beta testing for the first customer feedback over the summer we will share more on this when we formally released this solution to the markets.
I'd like to now pass the call over to grant for his financial review.
<unk>.
Thank you Paul as Ed mentioned the 10-K, we filed this afternoon with the SEC offers a detailed explanation of our quarterly financials. So I'm just going to provide you with a bit of color on some of the numbers now.
Our first quarter.
Total revenues for the three months ended March 31 2022.
Over the prior year period to $2 5 million decrease was primarily the result of reduction in smart glasses.
Sales.
<unk> Q1 of 2021 quarter, which was our strongest first quarter too.
To date from selling smart glasses in that period, which is typically the slowest.
Quarter revenue wise of our fiscal year sales of waveguides and display engines totaled $1 million in the quarter versus none in the previous year's period. Conversely, We had no engineering services revenues in the quarter versus <unk> 1 million in the prior year's period.
There was an overall gross profit of $2 6 million or 26%.
For the three months ended March 31, 2022, as compared to a gross profit of $1 1 million or 28% for the same period in 2021 portion of the decrease in gross profitability was due to the absence of any high margin engineering services in the current 2022 curves.
<unk> versus <unk> 1 million earned in the prior year's first quarter period.
Our relatively fixed manufacturing overhead costs, while down in absolute dollars by 27% climbed as a percentage of <unk>.
Total product revenues to 60% or by two percentage points R&D expense was $3 1 million for the three months ended March 31, 2022 compared to two two.
$2 million for the comparable 2021 period, an increase of approximately 41%.
The higher R&D expense was primarily due to increases in external development expenses related to our field smart glasses and increased salary and benefit expense due to head count increases.
Sales and marketing expense for the three months ended March 31, 2022 was $2 million as compared to $1 3 million in the 2021 period, 55% increase over the prior year period due primarily to increases in salary expenses from new hires.
$3 million increase in trade show expenses, which rose as a result of a return to attending trade show events in person post the broad Covid Lockdowns in 2021.
General and administrative expenses.
The three months ended March 31, 2022 was $5 5 million as compared to $6 million for the 2021 period, a decrease of 10% versus 6 million in the prior year period.
This decline was largely due to a $6 million decrease the lung cash.
Stock based compensation, which was significantly higher in the first quarter of 2021 due to divesting of an equity market capitalization milestone under our <unk> long term incentive plan.
Net loss for the three months ended March 31, 2022 was $10 5 million or <unk> 16 per share versus a net loss of $9 2 million or <unk> 17 per share for the same period in 2021.
Now for some balance sheet highlights our balance sheet remains strong with cash and cash equivalents.
Physicians of a 113.
<unk> 3 million as of March 31.
And networking capital position of $126 6 million cash used in operations after adding back non cash operating expenses.
Primarily consists of stock compensation expenses, but excluding changes in our working capital totaled $5 7 million for the first quarter of 2022 as compared to $3 8.002 million 21 period cash used for investing activities for the first quarter of 2022 was <unk> 2 million as compared to <unk> 7 million in the prior year's period.
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During our first quarter of 2022, the company repurchased 36685 shares of our common stock at an average cost of $6 and maybe 4%.
Under the $25 million common stock repurchase plan.
Approved by our board of Directors on March 2nd of this year as of March 31, 2022, B shares were held in Treasury.
As of March 31, 2022, the company continues to have no current or long term debt obligations outstanding.
Looking forward to the balance of 2022.
We are confident we have the resources to execute on our business plan and invest further in our future.
With that I would like to turn the call back over to Paul.
Thanks Grant to.
To close I would like to reiterate a few important points the world's adoption of AI and smart glasses is gaining momentum and by most accounts unstoppable, we're seeing no loss of enthusiasm to deploy this new technology throughout enterprise with medical leading the charge and supply chain right behind it.
All the while the broader markets are coming to life with some corporations, even completely rebranding their organizations around vuzix has been preparing for this for years and we have developed the IP and manufacturing capabilities to supply to it.
For the rest of 2022, you'll start to see significant activities happening around the OEM portion of our business as we engage with the broader markets, while our smart glasses to begin major deployments throughout enterprise.
And to deliver to this growing opportunity vuzix has the balance sheet to get it done.
With that I would like to turn the call back over to the operator for Q&A.
Thank you.
At this time, we will be conducting a question and answer session.
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One moment, please while we poll for questions.
Our first question today comes from Christian Schwab of Craig Hallum. Please proceed with your question.
Hey, guys. This is Tyler on behalf of Christian Thanks for letting me ask a couple of questions.
So first Paul I was wondering as we're kind of about halfway through the quarter through Q2 here any update on COVID-19 impacts you're seeing the customers now in Q2.
Trending better maintaining kind of the similar level of impact any color there and then you know.
Just on that would you expect Q2 revenue could possibly grow year over year.
Oh.
Q2 revenue is going to be.
Q1 revenue.
We feel pretty good about that in fact, the second quarter is starting to trend pretty well.
Okay.
The effects of Covid come and go in and each one of the bigger companies, especially right now that we deal with that are in the supply chain.
Where they're using our glasses. It's so critical for them right now not to have glitches in those processes. So that they don't have bottom line and topline problems of their own.
They are just taken a little bit longer on this front end for deployments, even though we're starting to move to more facilities, they're doing that consciously so.
There is an impact but the impact Tyler is really just moves sideways a little bit.
Months, two quarters kind of thing so we expect that.
A better Q2 than in Q1 for sure back half of the year should be phenomenal.
Everything that we can see that's in the queue.
Yes, I guess.
Or is there, but it's not gone away, but it is moderating and things are coming.
Alright.
Great color and then.
On the Opex level I understand you guys are investing some more here.
For the opportunities you see ahead, but how should we think about opex trending from that $11 million.
We did in Q1 any help there would be great.
Greg do you want to take that one.
Well it shouldnt be.
Throwing a big chunk of that remember is.
It is.
These non cash charges related to the.
L Chip long term incentive plan, we implemented in 2021.
Accounting for a large chunk of the increases.
And sales and marketing and R&D.
Made.
Many of the hires we expect to we're still looking for some more.
So on the R&D side and a couple of strategic.
Buyers and sales overseas, but it.
It should be moderating and of course, there's not going to be any more.
Big increases due to the <unk> in the short term until we earn those milestones.
We're ways away right now.
Tap in Switzerland.
That'd be a good problem.
And then last one just a little bit of a clarification, maybe Paul you mentioned five major defense contractors that you are expanding relationships with.
Are those all new contractors does that include some of the contracts that you had previously been engaged with that you're now expanding relationships.
Hum.
Clarity there almost five defense rehab.
We have not lost any.
We have gained some.
And there are five that were in.
Programs with right now and we've got Rfps and the lights that were responding to one three other new ones.
The whole access to wave guides in the U S defense markets is becoming something important U S suppliers. It's a really big problem right. Now you think about most of the folks that make that make.
<unk> guys do they are doing it in China.
And <unk>.
If you can have a U S supply that becomes very problematic for the defense markets and Vuzix is a U S manufactured right here in Rochester, New York.
And.
Last thing is it's an important program for the U S defense markets.
Although there there'll be rail just a little bit.
Because of this first round and some things they won't change.
What's been the metal from what we can tell.
That sounds great all right that's all for US thanks, guys.
Yes.
The next question is from Matt Vanvliet of BTG. Please proceed with your question.
Yes.
Yes, thanks, guys for taking the question.
I guess looking at the health care market.
You announced a few programs that continue to see a lot of traction.
Just wondering if you could maybe dig a little deeper in terms of what what order flow looks like what kind of the pipeline that those organizations are especially in terms of sort of how much wallet share you feel like you've captured so far relative to the overall opportunity in front of you.
Yes, there is like 400.
And hospitals on the planet Earth today, and guys like rods and cones are only 600 of them cellphone.
It's just the very beginnings of this bundle and the size of the opportunity.
If you look at the.
Kinds of operations that Pixie does and <unk> do they do upwards of 600000 operations annually in North America. So this business and by the way there's a few other new companies in the medical space that are starting to buy from us for different kinds of applications. So I think youre going to see it continue to step along and grow.
And step along and growing we're just at the beginnings of health care.
There's lots of research that's been done on the health care and the size of it and how AR smart glasses are going to impact it.
It's projected to be a significant part of health care, especially when you're operating room in the coming couple of years.
Alright, and then as you look at sort of the shift that you're talking about on becoming a little more of an OEM.
[noise] program going on here.
How should we think about any incremental costs that might be associated with getting that up and running.
And maybe how much is diverting current resources from other endeavors to be more focused on the OEM opportunity.
From the beginning if you'd go back and some of our previous conference calls.
Our OEM strategy has always been pretty clear the higher and broader markets. Our goal was to be a supplier into them. The facility that we built here was built and the processes and the equipment was all built to be able to deliver in volume into those markets ultimately.
That said to go from 300000 100000 to 300000, great guys annually to $1 million then tens of millions of course, you need to do upgrades to the plant floor, but that will come.
Excuse me as that business unfolds for us.
We're doing a phase one right now.
At the end of summer early fall should put us in position to where we could get upwards of a couple million dollars wave guides annually.
The upgrades that we're putting on the plant floor. So and then a couple of million is a good start but.
Some of these companies actually tipped the iceberg, that's like monthly kinds of numbers. So you could see us spending more improving the plant floor and stepping it up for more and more volume, but that's going to happen as the business unfolds.
Alright, great. Thank you.
Yes.
The next question is from Jack Vander <unk> of Maxim Group. Please proceed with your question.
Great Hey, guys appreciate the update.
My question.
Paul.
Major defense.
OEM project.
Maybe just a couple of questions.
While we are not seeing any engineering services revenue from any of these.
First quarter.
Maybe help me understanding it will be lumpy.
Yes.
David within the engineering services revenue agreements with the $5 million.
Yeah.
This is all a function of development programs.
Phases that these companies go through as they go through them there is a need for demand in a quarter.
Two quarters based upon how we might develop for something and then the folks on the other end are consolidating the stuff that we put together with their final programs that they're delivering against and so it's just like you described lumpy now.
Not much showed up in Q1, it's very true, but there is a fair amount of stuff thats already happening here in our second quarter. So it goes from one quarter shifted into the next one some of the new programs and folks that were involved with it is going to be less lumpy through the year, because they're reasonable sized programs that will take the entire year.
To develop against.
Okay, and then just kind of a follow up in the past you used to talk about.
Outlined in the presentation.
This four phase III testing for these OEM projects can you maybe just outline what the five projects are in the testing phases of production cycle or is that kind of.
David.
That's not really true anymore.
Well I mean these guys are all going through development phases from an initial phase develop prototypes qualifications, then finally deployments and they are all in those throws some of them are literally at the point where they are.
We talked about this before and this in particular, one that we've been working on this supply agreement that you will see is done here shortly.
And these guys. These folks are rolling out this fall. So those guys are going to be in production.
Sorry.
For those.
For that project.
When they are in production and will that just as a reminder products revenue line in the income statement, then and not engineering.
I would have to ask grant grant with <unk>.
<unk>.
Finally wave guides that we would deliver into a defense program pointed out of engineering.
How are we going to report that.
As products.
Still lies.
A wave guide component yes.
I mean.
At this stage.
If it becomes a.
But we hope a material segment, then we start disclosing.
Components from Vuzix branded product sales it would be unexpected, yes, but it would be unlikely we would break it into those kinds of things. It just could be a bottom line number yes.
Okay understood and then just one more follow up question on the.
The product side, the smart glasses.
You mentioned you expect your I think you call. It your core smart glasses product revenue year over year 2022.
By core smart glasses price does that mean from the existing smart glass models do you have already on the market or does that also include the three new products that are planned for launch this year.
Okay.
Yes.
Our core <unk>.
<unk>.
Even without the stuff that we're going to launch.
<unk> will be bigger than 2021.
Going to be more contribution to the newer products as they rollout here towards.
Second quarter and into the third quarter.
Does that makes sense.
Yes, yes.
Models will grow year over year.
And then the new products will be additive to that.
That's correct.
And I got to say Theres, a fair amount of interest.
And especially the two new wave guide devices, even though we haven't made a formal announcement on that one that we allude to.
There are certain companies that we're working with that have requested that particular product and its feature set so for.
For 2022, the majority of our revenues will still be our core 400, smart glasses Thats correct.
Okay. That's helpful. I appreciate the color guys I'll hop back in with you.
Okay.
The next question is from Jim Macquarie of Dawson James. Please proceed with your question.
Okay.
Thank you and good afternoon.
Thank you Bill.
See the shifts toward the transition or the increased OEM focus that youre going to announce soon.
Does that mean that youre going to reduce the amount of resources personnel or capital that you're putting into the.
Enterprise business or it's just you're going to put more resources into OEM, while keeping the enterprise business.
Contribution of the same.
We plan on.
Owning the enterprise space for smart glasses.
Youll see us get smarter when you've been working on doing that all the time, we have initiatives now that look at everything here costs, all kinds of things to try to improve the performance of Vuzix.
But.
The initiatives around OEM.
Our sense right now.
Jim the plant floor the production equipment everything that we do is interleaved here the wave guides that we build on our plant floor.
Our hand in glove with the kinds of wave guides that these other companies need so it's not like all of a sudden vuzix has got to be on this brand new paths to address the market that market.
Yes, we're going to probably we are going to have to increase our production capacity, but those are problems that are great to address.
We get to leverage a lot of cost in the case of <unk>.
OEM that maybe it was something specific we usually charge at all.
Accordingly.
Covered those incremental costs, but as far as.
Maybe program project managers and others as the business grows there'll be some some resources there but.
We think it would be.
Quite additive.
And the increase in capacity that Youre contemplating now.
How much is that going to cost you ballpark.
I really can't get into those kind of numbers at this juncture Jim.
Sorry.
Okay, well I mean, we will see them soon enough.
But yes, kian and yet.
Yes, maybe I can help with a range can you hold on just one second.
Okay, Jim Yes, I mean, the equipment is not that expensive actually for us to do this and it will make wave guides.
Significant numbers of them and the increase in capital is.
$3 million plus.
Alright Thats helpful. Thank you.
And then lastly, I'm trying to understand.
This OEM relationships that you talked about in the presentation. Thank you said Theres five currently and then in your.
In your verbal comments you.
You said three more.
Are those eight distinct.
Companies that youre working with or are those eight distinct.
Programs, which might have the same company doing multiple.
Programs and.
And Thats, all defense or mostly defense those AAR defense aerospace.
They are eight distinct companies.
In some cases, there are more than one programs they plan on using our wave guides.
So it is like.
Eight.
10 to 12 programs.
And it sounds like.
I'm sorry go ahead.
Okay Jim.
It sounds like at least one of them is trying to displace the current vendor on I've asked is that a reasonable assumption.
I think that it is.
Okay.
Alright, great. That's it for me Thanks, a lot.
You bet Jim.
There are no additional questions at this time I'd like to turn the call back to Paul Travers for closing remarks.
Thanks, everybody for listening in on our conference call looking forward to early next week. When we have this follow up conference call associated with some of the.
Next generation efforts that we're working on it should be a good call.
Stay tuned I think we will probably have a press release out on Monday or Tuesday in that regard to tell everybody the coordinates for where the callers.
Thank you everybody and have a great evening.
Okay.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
[music].