Q2 2025 Frequency Eletronics Inc Earnings Call
It has become clear over the last few years that a significant amount of this development needs to happen now and must be funded internally.
Our R&D expenditures are up this year because of this.
Currently about 10% of revenue compared to about 6% of revenue last fiscal year.
It's anticipated that R&D will remain steady at approximately 10% of revenue for the foreseeable future.
But we believe that the return on this investment has the potential to be extremely attractive in terms of new business wins with years of follow on business behind them.
In short, we should make it back in spades.
In October.
N V I hosted their quantum sensor summit in New York City, a technical conference, bringing together experts from around the world to share insights and expectations regarding this rapidly developing area of technology.
This event was well attended there were roughly 80 attendees.
Attendees and.
And we have obtained a lot of positive feedback from it.
Quantum sensors is a rapidly developing market, one which L. P. I is well positioned to participate and based on our existing expertise and what one which we are actively pursuing as an additional avenue to continued growth well into the future.
Much of the development and NASA Rana.
Be funded externally on U S government R&D programs.
And in fact, some government funded excuse me some government funding is expected within the next two quarters.
With a new administration to be sworn in in January we're cautiously optimistic that our government fiscal year 'twenty twenty-five budget will be passed expeditiously and that funding will thus be available sooner rather than later.
In parallel we're pursuing cooperative research and development agreements or crate does with NIST and other government laboratories in order to harvest their expertise in specific quantum technologies.
All in all I'm happy with our performance very excited about our future and proud Filipino workforce.
To and really dedicated individuals.
Who deserve most of their credit for our current success.
I'll now turn things over to our CFO, Steve Bernstein, who will fill you in on.
Steve Bernstein: Some of the financial details Steve.
Steve Bernstein: Thank you Tom and good afternoon.
Speaker Change: For the six months ended October 31, 2024, consolidated revenue was $30 9 million compared to $26 million for the same period of the prior fiscal year. The components of revenue are as follows revenue from commercial and U S. Government satellite programs was approximately <unk> <unk>.
Speaker Change: $1 7 million or 57% compared to $9 5 million or 37% in the same period of the prior fiscal year.
Speaker Change: Revenue on satellite payload contracts are recognized primarily under percentage of completion method are recorded only in the FBI New York segment.
Speaker Change: Revenue from non space U S government and Dod customers, which are recorded in both the <unk> and <unk> segments were $12 1 million compared to $15 1 million in the same period of the prior fiscal year and accounted for approximately 39% of consolidated revenue compared to 58.
<unk> for the prior fiscal year.
Speaker Change: Other commercial and industrial revenue were $1 1 million and $1 4 million for the six months ended October 31, 24, and 23, respectively.
Speaker Change: The significant increase in revenue for the period was primarily related.
Two an increase in U S government customer sales force based product.
Speaker Change: For the six months ending October 31, 20 for gross margin and gross margin rate increased as compared to the same period in fiscal year 'twenty three.
Speaker Change: The gross margin dollars increased as direct result of the increase in revenue.
Speaker Change: The gross margin rate increase was particularly attributable to a large space program that completed a major milestone as production as well as the older programs at lower margin are complete or near completion.
Speaker Change: For the six months ending October 31, 'twenty, four and 'twenty three SG&A expense was approximately 20% and 19% respectively of consolidated revenues the increase in SG&A expense during the three and six months ending October 31, 24 was mainly related to an increase in payroll related.
Speaker Change: <unk> cost from the realignment of employees from overhead to SG&A and the cost related to frequency electronics first quantum summit in October of 24.
Speaker Change: The annual run rate for SG&A for the year is expected to be approximately $3 million per quarter. It should be noted that the payroll related expenses, which are driving the majority of the increase approximately 25% are noncash transactions such as stock compensation and 401k expense.
Speaker Change: R&D expense for the six months ending October 31, 2000, and for increased to $3 1 million from $1 3 million for the six months ending October 31, 24, an increase of approximately $1 8 million and were approximately 10% and 5% respectively of consolidated revenue.
Speaker Change: R&D increased for the six months ending October 31, 24 was primarily due to our focus on advances and modernization of products as opposed to fiscal 'twenty for where the company was primarily focused on customer production orders, resulting in much lower R&D expense than initially planned the company plans to continue to <unk>.
Speaker Change: <unk> and R&D in the future to keep his products at the state of the art. However, actual quarterly spend is expected to vary.
For the six months ending October 31, 24, the company recorded operating income of $5 million compared to operating income of $3 million in the prior year.
Speaker Change: Operating income increased partially due to large based program that completed a major milestone its production during the three months ending October 31, 24 as discussed earlier. However, the increase is also a result of the successful efforts of the company.
Speaker Change: Complete complex and quality programs and to work more efficiently and bidding building and testing our products. The company believes the improved operating income results for the first half of this fiscal year, our tangible outcome of these efforts.
Speaker Change: Other income can be derived from reclaiming of metal refunds interest on deferred trust assets, while the sale of fixed assets interest expenses related to the deferred compensation payments made to retired employees.
Speaker Change: This yields pre tax income of approximately $5 4 million compared to $2 9 million for the prior fiscal year.
For the six months ended October 31, 24, the company recorded a tax provision of 272000 compared to 13000 for the same period of the prior fiscal year.
Speaker Change: Consolidated net income for the six months ending October 31, 24 was $5 1 million or <unk> 53 per share compared to $2 8 million or <unk> 30 per share in the previous fiscal year.
Our fully funded backlog at the end of October 24 was approximately $81 million compared to approximately $78 million for the previous fiscal year ended April 32 for the.
Speaker Change: The company's balance sheet continues to reflect a strong working capital position of approximately 23 million at October 31, 24, and a current ratio of approximately one eight to one. Additionally, the company is debt free.
Speaker Change: The company believes that its liquidity is adequate to meet its operating investing needs over the next 12 months in the foreseeable future I will turn the call back to Tom and we look forward to your questions soon.
Thanks, Steve I think we can now.
Tom: Ill take questions.
Thank you.
Speaker Change: At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. One moment. Please while we poll for questions. Once again. Please press star one if you have a question or a comment.
Speaker Change: Yeah.
Speaker Change: Okay. The first question comes from Chris Kotowski private Investor. Please proceed.
Speaker Change: Okay.
Uh huh.
Speaker Change: Hello, Congratulations on good results.
Speaker Change: The I wanted to ask you too.
Speaker Change: I'll talk a little bit about this new product to be developing for this.
Speaker Change: Scorers satellites.
Speaker Change: And tell us about what kind of a competitive advantage you have there presumably these products, we will not be as difficult as usual products as the satellites go shorter lifetimes and they don't require that much precision.
Speaker Change: So is the Oh, what is your what is your competitive advantage.
Speaker Change: Okay.
Speaker Change: Good question.
Speaker Change: I think that.
Speaker Change: Fundamentally or talking about the same products that we sell today to the satellite business.
Speaker Change: We're going to modify those products.
Speaker Change: To optimize them for the small satellite applications.
Speaker Change: Now one of the things to understand right from the start is that this whole thing is evolving.
Speaker Change: Fairly rapidly and it's a little bit unclear, where the world ends up in terms of.
Speaker Change: Just a spectrum of cheap and.
Speaker Change: I had an inexpensive and small on one side.
Speaker Change: Very very high performance and long lasting a on the other end of the spectrum.
Speaker Change: We believe that Ed.
Speaker Change: The portion of this that we're going to be able to address is not necessarily the absolute smallest and absolute.
Speaker Change: The cheapest but.
Speaker Change: Somewhere.
Moving in that direction from the exquisite long lasting kind of satellites that we're used to dealing with in the past.
Speaker Change: So we do believe that there is a sweet spot in there that are where we're well positioned to address and we think that's a we we have products.
Speaker Change: We we can develop that.
Speaker Change: Are much smaller than the things that we deliver today on the larger satellites and much lower power and lower cost, but still have pretty good performance not necessarily as good as the.
Speaker Change: Absolute best that we've been able to do when money is no object, but still high performance.
Speaker Change: And we think.
Speaker Change: This is the right place to be going forward.
Speaker Change: But this is something that we have to kind of.
Speaker Change: Monitor as we go so that we get this.
Speaker Change: This right going forwards, we you know it doesn't it doesn't pay to have better performance than what.
Speaker Change: People are looking for out there.
Speaker Change: Big.
Speaker Change: But on the other hand, it doesn't pay to have tiny.
Speaker Change: Very low cost products, but don't perform and deliver the kind of performance that's needed for the applications that are out there.
Speaker Change: So it's a bit of a challenge, but we do feel that.
Speaker Change: We.
Speaker Change: We have a pretty good idea of where we need to be and how to go about it.
So you were saying that the advantages just to history of designing high quality products and it'll be easier for you to debate your products and make them a little bit cheaper than somebody else come up from below.
Speaker Change: Yeah, I think the fundamental advantage that we have is we have technologies and capabilities that nobody else has and I think.
Speaker Change: A corollary to that is that.
Speaker Change: I think we have a pretty good understanding of the applications and what kind of performance is necessary to make those applications work.
Speaker Change: And so so yeah that's.
Speaker Change: What we bring to the table.
Speaker Change: Alright, that's good to hear.
Speaker Change: So this is a little bit playing Devil's advocate is there any danger of those smaller cheaper satellites of kind of thing.
Speaker Change: The way your business of the expensive satellite switches.
Speaker Change: It seems to be still 80% of your business.
Speaker Change: Well Oh.
Speaker Change: Sure, there's a there's a potential for that but.
Speaker Change: You know I think the the thing that we have to understand that there are small satellites that are up.
Speaker Change: The orbit as we speak and we.
Speaker Change: We have not participated in those programs and the reason we haven't participated in those programs.
Speaker Change: Because zeros.
Speaker Change: Now, saying our technology brought to the table.
But.
Speaker Change: Couldn't be procured from somebody else at a much lower cost.
Speaker Change: And so so there's definitely a portion of the business.
Speaker Change: The <unk> that we will never be able to address.
Speaker Change: But the higher end performance.
Speaker Change: Part of the satellite business requires.
Speaker Change: Precision time and synchronization.
Speaker Change: Thank God, we we will participate in.
Speaker Change: There are tradeoffs and we.
Speaker Change: This is something that we're monitoring very closely.
Speaker Change: There are various other technologies.
Speaker Change: Can be brought to bear that have an impact on just how much precision.
Speaker Change: Had the frequency.
Speaker Change: Is is needed for a particular applications are not something we have to monitor but we do believe that.
Speaker Change: As people demand more from these systems in the future the need for high precision frequency and timing hardware will will be there and we're gonna be ready to address those needs.
Speaker Change: Alright, so to simplify I think you were saying is that even if if your clients decided to serve the same functions with smaller satellites.
Speaker Change: We still need precise timing of those deemed it some kind of a product from you is that correct yes.
Speaker Change: Thats correct okay.
Speaker Change: Sure.
There are the applications that will require our products yes.
Speaker Change: Yes.
Speaker Change: Right, Yeah, that's good to hear and congratulations again and good luck.
Speaker Change: Thank you. Thank you.
The next question comes from Brent Derrickson private Investor. Please proceed Brent.
Speaker Change: Hello, guys congratulation on the.
Fantastic quarter, and I think I speak for everybody I really appreciate.
Speaker Change: The long hours and hard work you guys are putting in everybody. Your frequency just wanted to say a big thank you.
Speaker Change:
Speaker Change: My question is we've seen kind of a break out here in the <unk>.
Speaker Change: Backlog and.
Speaker Change: I'm just kind of wondering when do we start seeing a breakout in the revenue and EPS going forward. Thank you.
Well I'm not sure I.
Speaker Change: Understand the definition of breakout but.
Speaker Change: I think it's a revenue has been growing and.
Speaker Change: Ah yes.
Speaker Change: Thank God.
Speaker Change: Yeah, I don't know what else to say beyond that I mean.
Speaker Change: I guess, we can't can't necessarily look at.
Speaker Change: No.
Speaker Change: It's not fair to assume that a the percentage change in backlog is gonna be simultaneously reflected and the percentage change in revenue.
Speaker Change: But I think they do at least qualitatively track.
Speaker Change: Alright, Thank you very much I appreciate the answer.
Speaker Change: Okay. The next question comes from George <unk>.
Speaker Change: With Porretto ventures. Please proceed.
Speaker Change: Hey, Thanks, guys Hey, Tim.
Speaker Change:
Speaker Change: Along the line of this smaller cheaper satellite a direction.
Speaker Change:
Speaker Change: How would you describe the.
Speaker Change: The technical lift to get there is it do you need breakthroughs in physics, and engineering or how would you how would you characterize the difficulty in getting to a smaller cheaper version.
Speaker Change: What you have today to be competitive.
Speaker Change: Okay. That's a it's a really good question I think that the.
Speaker Change: The interesting point is that we actually have products that we sell for a terrestrial applications that are smaller and cheaper.
The problem is that.
Speaker Change: The fundamental ways.
Speaker Change: He will make a electronic products smaller and cheaper is you use a lot of our digital.
Speaker Change: Electronics and of course, we all know from our own experience that with cell phones, and everything else that the digital electronics gets smaller and lower power all of the time, so the fundamental way that we make things smaller.
Speaker Change: Cheaper is we employ more and more of those digital electronics.
Speaker Change: Hmm is one you want to utilize those things in space.
Speaker Change: You have to contend with the fact that there's a rate nuclear radiation in space there are.
Speaker Change: Protons and electrons and.
Speaker Change: Various other types of nuclear radiation in space, and it's well known that there's very Ah Ah hi.
Speaker Change: Density digital electronics are sensitive to what's called the single event upset so particles radiation particles in space can cause upsets they can they can cause a.
Speaker Change: Bits to flip and these can cause severe problems in those small devices.
Speaker Change: If we try to take the things that we use here on the earth and utilize them without any modifications up in space.
Space.
Speaker Change: So this this is the primary thing what we are really looking at is taking products that we sell currently.
Speaker Change: Ground.
Speaker Change: And adapting those to be able to survive and function properly in the space environment.
Speaker Change: And so this is actually a fairly big challenge in some cases, we have to replace some digital parts with a radiation hardened digital parts, but that's difficult because a lot of the things that are designed for space that our radiation harden.
Speaker Change: And our bigger than the the are the same kind of devices that don't have those features.
Speaker Change: And in other cases, it's a question of doing adequate testing of the parts on the ground in order to verify that they will survive in space now now a lot of the applications and space for these small lower cost devices.
Speaker Change: Our at low Earth orbits, whereas a radiation isn't as severe in higher Ed is in a higher orbits.
Speaker Change: We have radiation and of course.
Speaker Change: The lifetimes.
Speaker Change: These devices are shorter so we can get away with some radiation problems, but so so it's one of the biggest challenges is just figure out how to do this.
Speaker Change: Good enough you know, we need something thats going to survive and be effective for three to five years.
Speaker Change: And these are low.
Speaker Change: The orbit kind of environments.
Speaker Change: So so I think that's not the whole story, but that's a huge part of the story and the biggest challenge in the developing these things Tom have you have you looked at the.
Speaker Change: It is in the final phase, it's not commercialized today, but there's a.
Speaker Change: The project being done for Sky water with quick logic and Honeywell.
Speaker Change: Which is an FPGA radiation hardened technology per space.
Speaker Change: Have you worked out.
Speaker Change: I, we've we've looked at any number and worked with any number of those radiation hardened F. P. T. A's and there are various different levels of them. So you know that part of the challenge.
Speaker Change: Is figuring out what's the most effective thing some of those devices are extremely expensive and you know FERC for our small products.
Speaker Change: We don't require huge F b G as to have a tremendous amount of capabilities.
Speaker Change: We need smaller things and so sometimes the larger.
Speaker Change: F P G age aren't really are.
Speaker Change: Appropriate for for our needs.
Speaker Change: And and also there are just different levels of radiation.
Speaker Change: Solar on solar in tolerance and again the challenge is getting the the lowest cost smallest are items that we can get away with using without having problems and some of it's trial and error a lot of testing et cetera in order to.
Speaker Change: To optimize things.
Speaker Change: And one last thing about government budgets I was happy to see the backlog increased by it looks like just rough math 25 million in the quarter over last quarter.
Speaker Change: Given an election and the new administration I was happy to see that during this time.
Speaker Change: It appears from all you know all available information that the space race is really going to be amped up for the next several years.
Speaker Change: There's a lot of talk on on Orbitz based services NASA is doing stuff D. O D is a lot of plans.
Speaker Change: How would you describe the budgetary environment and in the next few months and you kind of made some comments about 25, hopefully but is it right now in the transition period. There are a lot of things getting gummed up or not necessarily.
Speaker Change: Well, yes, not necessarily I think the.
Speaker Change: The one thing where you where there's always a certain level of frustration with the.
Speaker Change: You know government funding, it's never as fast as we would like it to be.
Speaker Change: And of course, where we were pretty concerned with the election this year and the way things turned out in independent of once a political leanings I think are the good thing about the result.
Speaker Change: Is it it looks like we will not have a divided Congress and so I think there is at least some hopes that we get an actual budget. Some time soon after the inauguration.
Speaker Change: And that will just be helpful. You know the continuing resolution the thing.
Speaker Change: Our limits the ability of a number of these programs to move forward.
And so so.
Speaker Change: Usually what these kind of things mean your comment about us.
Speaker Change: Base.
Speaker Change: Growing for the foreseeable future I think is correct and so it's not a question of.
Speaker Change: The business disappearing. It's just a question of moving to the right moving out further in time and.
Speaker Change: You know, where we are we have a pretty pretty good handle on what things look like over the next few months and I think we're in really good shape. After that is anybody's guess I think will start to get some clarity on that hopefully in the next few months.
Speaker Change: Okay. Thank you, Tom and I'm glad you're hitting the gas pedal on the innovation and have a good day okay. Thanks.
Speaker Change: The next question comes from Michael Eisner Private Investor Michael. Please proceed.
Michael Eisner: Great job all around.
Michael Eisner: And my company.
Michael Eisner: Good job.
You know.
Michael Eisner: Your gross margins went up to 48%.
Michael Eisner: It was very impressive.
Michael Eisner: You went up on the.
Michael Eisner: Of course to R&D.
Speaker Change: R&D, rather do you see that coming down and that's going to continue at this point until you get government funding.
Speaker Change: Well lets see I think.
Speaker Change:
Speaker Change: Several comments first on the gross margin I think we've been talking over the next couple of or the last couple of years about.
Speaker Change: Gross margin and I think our we've been targeting just the kind of numbers that we're delivering at this point in time, we want to always be able to do that it depends on the mix of work.
Speaker Change: You know that's kind of where are we.
Speaker Change: We want to be.
Speaker Change: With respect to R&D I think I did talk about this a little bit just a few minutes ago I think.
Speaker Change: It's up significantly.
Speaker Change: Significantly from last year.
Speaker Change: I guess the thing to say is we we.
Speaker Change: We probably under spent where we really <unk>.
Speaker Change: Need to be in terms of R&D last year, and I think we're about where we need to be in terms of R&D spending right now so I like to look at it as a percentage of revenue and we anticipate that the for the <unk>.
Speaker Change: Seeable future right now this year, we're at about 10% of our revenue and I anticipate being somewhere near that point over the next couple of years.
Speaker Change: Alright, and then one thing on the gross margins a lot of companies say they are going to get the gross margins up but they never do you did so well.
Speaker Change: It's a very impressive number.
Speaker Change: I hope it continues.
Speaker Change: And I need to what was it.
Speaker Change: I hope, so too more work and hard to actually achieve it so yeah.
Speaker Change: Yeah.
Speaker Change: <unk>.
Speaker Change: Is any of the revenue that you had this quarter is any from quantum sensing.
Speaker Change:
Speaker Change: <unk>.
Speaker Change: Uh huh.
I hesitate to.
Get into any specifics in this regard.
Speaker Change: Suffice it to say, there's not a significant amount of revenue this quarter from a quantum of sensors.
Speaker Change: I didn't even expect you to have anything really because everything is getting going we're at the beginning of this and always thinking.
Speaker Change: That's why I thought the gross margins won't be high until like next year sometime I think you reach them like six months to nine months before I thought you could get there even.
Speaker Change: Is leal the future.
Speaker Change: Of the company.
Speaker Change: Leo Leo as in low Earth orbits yes.
Speaker Change: Yeah.
Speaker Change: It's part of it but it's not the whole story.
Speaker Change: And.
Speaker Change: I I think.
Speaker Change: Lots of times for people, who follow satellite stuff.
Speaker Change: The lower as harvests are or talked about a lot, but we're looking at a small low cost satellite applications that are not legal or bets. So it's not exclusive.
Speaker Change: Leo and are in.
Speaker Change: In fact.
Speaker Change:
Speaker Change: Leo or.
The legal environment is going to get pretty crowded here.
Speaker Change: Over the next.
Speaker Change: A decade or so so exactly what that's going to mean for some of the stuff is is not 100% clear.
But where.
We are.
Speaker Change: There's going to be a lot of legal stuff, but that's not that's not the only game in town.
Speaker Change: Who do we work with a G E. L also an Emmy Omega medium Earth orbit.
Speaker Change: Yes, absolutely.
Speaker Change: Yeah.
Lot of our heritage satellite work is geosynchronous orbits our G O.
Speaker Change: And of course are the most are well known medium Earth orbit satellite system is a G. P. S and there are some other.
Speaker Change: Global navigation satellite systems that are also in the.
Speaker Change: Meal medium Earth orbits so yeah, we're involved in all of that stuff.
Speaker Change: Hi final question are we working on.
Speaker Change: <unk> G. P S with astronomy I don't know if you can answer that.
Speaker Change: [laughter] backup with P S by spin like space Yeah.
Yeah, we're we're very familiar with alright, thanks, guys.
Speaker Change: Resilience the GPS and we're actively pursuing that that the that's one of these are programs that we'll see with the new administration.
Speaker Change: How things go to funding for that is very limited.
Speaker Change: At the moment.
We are we are working actually the government has funded four different prime contractor teams.
Speaker Change: Strong US who you mentioned is one of them.
Speaker Change: And we are actually.
Speaker Change: Talking to and working with a three of the four.
Speaker Change: Contractors at this point in time.
Speaker Change: Oh, you're working with three out of four.
Speaker Change: Yeah, that's very impressive I always hold all right.
Speaker Change: I want to I want to emphasize we're not under contract with anybody at this point in time, but where we're working.
Speaker Change: Working with three of the four.
Speaker Change: And if.
Speaker Change: Yeah, Yeah that program moves forward and get some additional funding.
Speaker Change: I think we're in a pretty good position to be involved with.
Speaker Change: With the several of the.
Speaker Change: The prime contractors.
Speaker Change: Because it seems like it would be kind of all these companies are I mentioned work with different types like it's trying to seize a G O <unk>.
Speaker Change: Space <unk> and.
Speaker Change: So I'll leave it there.
Speaker Change: There is nothing.
Speaker Change: The resilient G. P. S. R. G P S.
Program is specifically targeting a meal.
Speaker Change: Orbits at a at this point in time.
Speaker Change: I never say the medium Earth orbit before I don't think he said mentioned that.
Speaker Change: Alright, that's.
Speaker Change: All around it's a fantastic job.
I'm very impressed thank you for your time.
Okay. Thanks, Mike.
Speaker Change: Yep.
Speaker Change: Once again, if you have a question or a comment please indicate so by pressing star one. The next question comes from Frank.
Speaker Change: With Natzke private Investor Frank Please proceed.
Frank: Good day and good evening.
Speaker Change: And Oh.
Speaker Change: First I was glad to see you were appointed to the board.
Speaker Change: Well deserved.
Speaker Change: My question.
Speaker Change: <unk> is on the non space U S government and D O D business decipher and because of our West coast operations, they've continued to be weak and I assume when you were talking about the funding difficulties the continuing resolutions and such it referred mainly to this area of your.
Speaker Change: Business could you give us a little feel for whether you expect any recovery in the revenues from those operations in the next six months.
Speaker Change: Yeah, I think a it's a it's certainly true.
Speaker Change: That the the Nam.
Speaker Change: This government stuff.
We we are you know.
Speaker Change: Definitely programs get pushed out and and there are challenges there I think that I do anticipate some yeah. You know what we've seen is it are there there is a fair amount of various.
Speaker Change: Ability quarters a quarter so.
Speaker Change: You know.
Speaker Change: I don't think were on a downward trend in any sense with that business.
I think it's solid.
Speaker Change: For the call.
Speaker Change: And we do see some we anticipate some significant growth the timing is just a very very challenging to.
Speaker Change: Predict at this point in time.
Speaker Change: Thank you and what would the would.
Speaker Change: Would your backlog be primarily space business.
Speaker Change: Well, it's certainly a big chunk of it as face business I don't I don't have the exact breakdown at this point.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: The next question comes from Tim Hazara with <unk> capital. Please proceed.
Speaker Change: So just curious what's the prospects for.
Speaker Change: More G O contracts, where the upgrades to some of your existing <unk>.
Speaker Change: Programs that are had been out there for a while and just over the next six to nine months here.
Speaker Change: Oh, we are.
Speaker Change: No we do anticipate a significant amount of work in that area.
Speaker Change: Definitely within the next six to nine months.
Speaker Change: There.
Speaker Change: You know we have proposals out to multiple primes on several different.
Speaker Change: Different programs.
Speaker Change: Again, we have a new administration and exactly how things play out says a little bit hard to say.
Speaker Change: But we are we are.
Speaker Change: Definitely anticipate a continued business there and and.
Speaker Change: Feel that that's quite important for us because.
Speaker Change: Those are the programs where I think.
Speaker Change: We.
You know when we do things right and I think we bid those programs properly. We are we should be able to get a oh good margins on those programs should give us a little bit of leeway to to to try to do some of what we need to do to get to.
Speaker Change: Positioned properly for the small satellite stuff.
Speaker Change: Great. Thank you I appreciate it.
Speaker Change: We have a follow up coming from Michael Eisner private Investor. Please proceed.
Speaker Change: Tom had meant to congratulate you on joining the board.
Speaker Change: Thank you.
Thanks.
Speaker Change: Okay. The next question is from George Maremma with Porretto Ventures. Please proceed.
Speaker Change: Yeah, Hi, I didn't want to.
Leaves <unk> as the odd man out how does the XI for unit performing.
Speaker Change: They're doing a pretty good actually.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: Uh huh.
Speaker Change: Uh huh.
Speaker Change: Thank you.
Speaker Change: Youll see.
Speaker Change: Some specifics on that.
Speaker Change: But I.
Speaker Change: I think we're pretty happy with their performance at this point.
Speaker Change: Are there any R&D I'm, sorry are there aren't any R&D priorities for XI for or any new areas or new new things going on there.
Speaker Change: Yeah, Yeah, we do we definitely have some R&D activity going on at <unk>.
Speaker Change: Thank a are they.
Speaker Change: I think the the main area there.
Speaker Change: We.
Speaker Change: Uh huh.
Speaker Change: So a variant of the same we see in the satellite business.
Speaker Change: Smaller cheaper.
So we have some development to do some of the same things that they've been doing for years, but in a smaller packages.
And and then.
Speaker Change: I think the other thing is to take some of their product.
Speaker Change: <unk>.
Speaker Change: Traditionally.
They take they incorporate a GPS receiver.
Speaker Change: And perform our timing and synchronization functions.
Speaker Change: Utilizing a GPS receiver and the precision clocks locked to the G. P. S a receiver.
I think one of the things going forward is to add to that some capability for.
Speaker Change: Navigation.
Speaker Change: In the absence of a G. P S. So.
Speaker Change: Initial navigation.
Speaker Change: And and the.
Speaker Change: Potentially our alternate alternate means of mapping and navigation.
Speaker Change:
Speaker Change: So yeah and that kind of gets leads to some.
Speaker Change: Some of the quantum sensors that we've been looking at.
Speaker Change: And so we're looking to potentially incorporate some of that technology into a safer products in the future.
Speaker Change: Any cyber security connections any of this with them.
Speaker Change: Well cyber security is a is a huge thing with everything that we do.
Speaker Change: Hum.
Speaker Change: It's.
Speaker Change:
It's a means to an end.
That's not really a an end in itself but.
Speaker Change: It's very important yeah.
Tom: Okay. Thank you Tom.
Tom: Yeah.
Speaker Change: As we have no further questions in queue I'd like to turn the floor back over to management for any closing remarks.
Speaker Change: Okay I'd like to thank everybody for participating in this call and I'd like to wish everyone, a happy and healthy holiday season. Thank you very much.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.