Solesence, Inc. Common Stock (SLSN) Q1 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to the Nanophase First Quarter 2013 Financial Results Conference Call. At this time, all participation are in a listen-only mode. Later, we will conduct a question-and-answer session, and instruction will follow at that time. (Operator instruction) As a reminder, this conference call maybe recorded. The words expect, anticipate, plans, forecasts and similar expressions are intended to identify forward-looking statements. Statements contained in this news release that are not historical facts are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of important factors could cause actual results for future periods to differ materially from those expressed in this news release. These important factors includes, without limitation a decision of the customer to cancel or purchase order or supply agreement, demand for and acceptance of the company's nanocrystalline materials, changes in development and distribution relationships, the impact of competitive products and technologies, possible disruption of commercial activities occasioned by terrorist activity and armed conflicts, and other risks indicated in the company's filings with the Securities and Exchange Commission. Nanophase undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. I would now like to introduce your host for today conference, Mr. Jess Jankowski, President and CEO. Sir, you may begin.

Thank you. Good morning, everybody. We’re glad you’ve been able to join us for our first quarter 2013 financial conference call. After our recent year end call, this call always seems to come quickly. Even given the short passage of time since our last discussion, you’ll see we have some interesting things to talk about. Along with me today is our CFO, Frank Cesario. As we expected, quarterly revenue has improved to $3 million, for this recent first quarter. To give you a frame of reference, our quarterly revenue last year ranged from $2.1 million to $2.8 million, so this quarter represents another step toward our objective. Only a few years ago we reported $6.3 million in revenues for the entire year. We’ve also moved forward with some significant projects, each of which may offer us the chance to remake our company in a few years’ time. After Frank provides a short overview of our financial results, I’ll go into a little more detail about our position as we keep rolling into 2013. Frank?

Thanks Jess. Good morning. This is Frank Cesario. Before I begin today’s overview of our financial results for the first quarter, please remember that all financial results are stated in approximate terms. Revenue for the first quarter was $3 million versus revenue of $2.4 million for the comparable 2012 quarter. Gross margins were 30% versus 23% for the comparable quarter, as the benefits of our continuing revenue improvement coupled with sound operations practices have improved that gross number. This improvement on only $600,000 of additional revenue offers a very positive element of leverage as we add new sources of revenue to our mix. The net loss for the quarter was $500,000 or $0.02 per share, compared to a net loss of $800,000 or $0.04 per share in the comparable 2012 quarter. I will note that we tend to expend more cash for working capital and the timing of certain spending in the first and fourth quarters of the year, so the cash position while far stronger than last year includes that dynamic. During a typical quarter, without working capital changes, a few hundred thousand more revenue would yield a flat cash position based on how the company is structured today. Timing also plays a part, as our cash balance was $3.6 million at the end of March, $4 million on April 1st and $3.6 million again on April 2nd. We ended the quarter as we said with $3.6 million cash and our company remains debt free. Jess?

Thanks Frank. Well, we’re sure off to a solid start. Everyone who’s been listening knows that our goals well exceed achieving $3 million in quarterly revenue, but this does represent another step towards our next major milestone, achieving break-even on a cash-flow basis. We’re a stone’s throw from generating positive cash flow, at which point our net operating loss carry forward will begin to be a real asset to our shareholders. Before we get ahead of ourselves, let me be clear that we fully understand we have meaningful challenges ahead of us, yet my goal and vision is firmly set on accruing high value to our shareholders and stakeholders. That’s why I’m here. That’s how we drill our people and those are my expectations. Patience and persistence, along with lots of energy will eventually get us there. Nobody’s looking forward to saying “we have arrived” more than I am. But my sights are set much higher than only achieving positive cash flow. Now, in addition to quarterly revenue growth, our progress so far this year has permitted us to resolve a series of issues that will allow Nanophase to more broadly sell our products. These positive changes include removal of some overly broad and limiting exclusive relationships, in coatings, in polishing and in late Q1 of this year we regained the ability to enter Asian markets. Markets, we haven’t had direct access to for more than a decade, when our licensing agreement in that region became non-exclusive. We’ve also discussed the launch of Z-COTE LSA with BASF in late 2012. We expect to begin building volume soon, and we expect the sun care market in general to remain a strong one for us. There are still good tailwinds in this market for all of our products. We’re not sure which products will drive future growth most, but we believe our entire market will continue to expand. I mentioned in our last call that we’ve further expanded our franchise by developing products in a few new areas related to energy management. In particular, we’ve already submitted a patent application related to energy storage that will allow us, potentially, to leverage our technology and products in a more valuable way. We aren’t expecting to change the world with this one, but we hope to improve upon existing technologies by delivering solutions that are both cheaper and more efficient than what is currently used today in two different areas of the energy space. Again, we are playing to our strengths. Both products, while in different areas, were designed to address existing commercial problems, problems that our specific technology maybe uniquely suited to solving. We’ll have a better idea about when we’ll be ready to enter these markets by the end of the year. These efforts in energy are in addition to the work we’ve done to extend our existing technologies into new market applications, such as abrasion resistant coatings for graphic arts. We will be taking -- we'll be talking more about this area in the near future as well. A takeaway from today’s call should be that we have set the bar high for where we’re willing to invest our resources, financial and human, in marketing and product development. I expect a solid ROI from our investments in this development work and we are all on the same page here at Nanophase. In the end, most projects and initiatives don’t meet enough of our internal hurdles along the way to justify continued investment and we conclude them. The ones that survive and grow out of our product development process are potential game changers for our company. We are doing the right things. We are doing them in the right way. Lastly, you may recall our announcing the addition of Kevin Cureton to our team, as our new Vice President of Sales, Marketing and Business Development at the end of 2012. We said at the time that Kevin brings the energy, experience, judgment and sales leadership that we believe will help us to climb higher and faster. I had big expectations for his ability. And I told you originally that I expected Kevin to step up to the challenge. Now, that I’ve seen him in action, I can see my confidence was well-placed. His addition to Nanophase, the changes I’ve made to how our senior team collaborates and the talent and unyielding commitment of the rest of our officers and employees to Nanophase's success, has helped us step up our efforts toward achieving aggressive growth goals. Again, there will be challenges but I’m very confident in our ability to meet them. With that, I’ll tie things up for today. Although most of our investors listen to the webcast or review the transcript after the live call, we’d like to invite those participating in today’s call to ask any questions you may have or to share your comments. Samya, would you please begin the Q&A session?

(Operator Instructions) Our first question comes from [Ren Kay] of RKA. Your line is now open.

Good morning, gentlemen. How are you? Great quarter. I’m wondering if you could help me understand a little bit more about what the metrics involve for profitability or is it top line growth or is it more margin growth?

It’s going to be a combination of both. We’ve consistently brought down our break-even point. And right now, we’re in the $12 million range in terms of cash flow break-even. And what we’re doing now and with Kevin here, driving it hard, he is focusing on both top line growth and margin growth. So if you look at our business, we had a good quarter. It’s got to be a good year but we also have cyclicality to deal with. Then a lot of our new stuff is not going to yield significant revenue this year. I expect there to be some growth but that remains to be seen as we go. What we can control is how we manage that -- how we manage the cost of the business but also things that might include pricing and other things of certain areas. And we have certain products that historically have underperformed that we’re probably going to ratchet it up a little bit in terms of how we view those. There are -- everything has to be turned in ROI that’s acceptable internally. And it’s an area that we’re focused on. So I know I didn’t answer your question with an a or a b because we’re trying to do both. The initial work we’re doing is focused on for the revenue where we have, that’s in the pipeline, that’s commercial, that’s growing albeit incrementally or incrementally plus. We’re going to focus on margins to the extent that we can. For the new revenue, we are looking at not only top line growth which we expect to have been going out but also more profitable revenue. That being said, we are in a few industries that will be very desperate relative to potential margins and that’s just a nature of it. I don’t if -- Frank, if you like to comment.

Yeah. I think we always had an eye for a cost or process or flow for the gross -- for the margin aspect of our business. We continue to improve on that. But I do think we’re shifting into that focus on top line as we go forward because that’s where the new stuff that we’ve been developing is going to come into the business and give us a lot of plan. We start with our gross margins being highly, highly revenue volume sensitive. And the extent that we had even small amount of revenue. You’re seeing a big improvement profitability that magnifies as we go forward. So certainly, that’s a focus of our company.

One other question, gentlemen, in the core of your IP, does that revolve around the structure and materials of your product or more of the process. And what do you see is the advantage to keep the barrier of entry from competitors to infringe on your territory?

Well, we have both process and material patents. And both are important. I would say in addition and probably the most important piece is that, you could look at any of our patents and you could come up Rube Goldberg way of creating a piece of equipment that would not be capable of manufacturing our materials. And the other piece, I mean, a big part of our value, we’ve got two things. We like to say we’re primary in the particle. So we can make particles that look very different from everybody else’s material and that’s through our process. I don’t believe people can reproduce those particles, certainly not uniformly, certainly not across the pallets of materials. We maybe surprised one day when someone comes up with a material that looks a little bit like ours, but for the most part they are very different. The second piece relative to the value of the IP is an understanding the interphase between, we take a particle. We make it via a plasma process, so we basically make it via heat. We could change the characteristic of that particle, that’s already unique from what’s out in the marketplace and in-situ basis, then we either coat it or we don’t coat it, then we put into the series of liquid, we refer to as dispersion. And really that’s a complicated matter. So we expect the better part almost 10 years now and part of that started out with our relationship with book (inaudible) developing about 60 products through their process. And really understanding, how I could sell this material to somebody and have it work in their application because in theory all the stuff works in a lab, you put it on a glass slide, you get a pHD to hand pain of that, almost like, scrabbling the back of our ring or something and it works. The reality is, it’s got a go to work, most of our companies, our customers, our specialty chemical or specialty chemical product manufactures and it’s got to go over, somebody takes the pale, or drum, or toad and put it into a solution and it just works. We are in the of the BSF business, we are selling a particle with discrete coating of it, that become miscibles until whole series of water base and non-water base solutions. That is a big barrier to entry and we think that essentially, that gives us a great degree of protection. Now, I don’t want to seat back and enjoy the fact that we have this degree, this barrier to entry seating there and not continue to develop more technology. Part of that was we didn’t, we filed it in a close basis, so we are not going to talk about that last energy-related patent. But we are consistently looking at areas where we could put up a wall to people out of something or sometimes even better, force people to come to us, when they need our solutions to a problem. So, I’m confident that we have the IP. But when we talk about IP, I think most people outside of the technology world will think strictly about, do they or don’t they have patent. And I look at it and say, at one point we had three times as many patents as we have today. And many of them, not only when we are not practicing, but they weren’t necessarily all their valuable. Now I look at it and think, it would be very difficult for somebody to duplicate, what we are doing, pretty much across our customer suite. So it’s a combination of things.

Gentleman, thank you. I appreciate it.

Thank you.

Thank you. (Operator Instructions) Our next question comes from Bill Chapman of Morgan Stanley. Your line is now open.

Thank you. Good morning, everyone.

Hi, Bill.

We established with the last, the fourth quarter conference call that you have good pipeline build up in short-term, but we needed a larger customer to come forward to get us over the hump? Is that still the case or do you have enough doubles and or singles that can get us over the hump to get cash flow positive?

I look at it in two part, Bill, the perfect way to put it Bill. We have enough singles and doubles in the pipeline to get us to that point, whether the $12 millionish point in existing, our business plus within that. And occasionally I will frustrate some of our colleagues internally, because honestly that’s not a huge focus of mine. It’s important which is why I laid it out as our next major milestone. But the biggest thing is, I know, we need to be an exciting company. I know we need to return our ROI to our investors has to be bigger. I’m looking at our share price all the time and I say, hey, we’ve got more laid value in this, because we haven’t delivered historically to extent we saw we would, it’s been discounted. And we are going to be able to get there, if there in your mind is, just that cash flow level with what we have. I’m really focused on, okay, say, we get there. How do we get the $20 million, how do we get the $30 million, where is this, where is this next thing going to be? We are in a long lead time business, so it’s frustrating. This is probably one of my shorter call scripts over the past year, because in the last two months something has happened, but essentially we are doing a lot of this work in this energy storage, and I think it’s going to be end of the year when we know, how we are going to hit the market and then once we hit the market, it’s going to be a few years before it develops but our leverage is phenomenal. You are looking at, a million dollars in added revenue to this company is just a game-- it's not a game changer, but it moves the -- moves the die forward, moves the needle forward significantly, $10 million in revenue is a game changer. And what I’d like to focus on internally is, let’s talk about opportunities where, okay, our success rate is never going to be high, on these new applications, we are not going to hit 50% of them, we are probably not going to hit 20% of them. If we hit them, I wanted to see $5 million, $10 million worth of available revenue to this company. Otherwise they are not worth investing it. And I think those are the kinds of things we are doing and I think we are doing that more aggressively. I would also tell you which I find both exciting and reassuring that our Board of Directors is behind that mindset, the bulk of our investors that I speak to are behind that and I -- that’s my direction, I mean, that’s my. I spend my days looking at the horizon. Here you separate urgent from important, and urgent is, we keep flowing through the year and each quarter looks little bit better than the private -- previous one important is that we really get the company to take off, that’s why my heads up.

Okay. Can you elaborate any, shed more light on the energy products you guys are come up with?

Not really, we’ve got two things in two separate spaces and there is two reasons we don’t want to shed anymore light on it. One is, we filed a patent, where we were filing on everything in it. So if I start talking about that, that essentially gives people the right to demand that we disclose all the detail in the patent, which we don’t want to do. We believe we’ll have a competitive advantage in that regard. The other one, we are getting ready to position it and we are working our way through, what our go-to-market strategy is going to be and I will prefer that we don’t announce it before out there. I would say, a way to look at it is both -- they both allow the use of less energy which is important. Energy storage is related in this regard and that’s about I like, I’m, Bill, I’m starting to slip over my tongue as I’m thinking about what else I can tell you.

Okay. Okay. Go-to-market, is it, if all, everything goes well and I mean, goes well, which probably won’t, but we don’t know how business works, but could that be introduced before calendar year end ’13?

One of them could. I think one of those two opportunities could and I think it’s exciting. And the other thing is, I mean, we are hitting the drum higher in terms of being entrepreneurial going forward and saying, ways to do this. And part of the reason, I’m hedging on the go-to-market strategy is that, we’ve done things that certainly prepared to time, in some market they worked very well, but its not uniform treatment for every market. What works for the coating market, doesn’t work for all the energy markets. What works for the policy market, doesn’t work for the coatings market. And so we are working hard on trying to differentiate our strategies. And I think the advantage of, we’ve got a little strength built up on the financials, gives us some breathing room. Again, that’s the urgent stuff, that’s getting better and better. And advantage is that, first, they kind of look at and say, okay, I know that. We have to narrow our focus at some point, we can’t -- we are not going succeed with six big markets at one time. We could succeed in six big markets ultimately where two at a time, two at a time, two at a time. And we’ll to be open on how we do it. We’ve done I think some unprecedented outreach. We are in the middle of much of it now. I’ve not spent this engage, get a lot of things that I haven’t awhile, just there is a lot happening internally and it’s exciting. Beyond that I realized, I’m just, I’m showing you a shining object here. I’m not giving you a lot of detail but that’s about all we can talk about.

Well, can you give me kind of a general guideline on blockbuster potential deals you come up with, are you talking two to five things you are out, talking people about or?

I think blockbuster is probably a, it’s probably important term when you think about the fact that we are in the materials business, so…

Yeah.

Blockbuster to me…

How that (inaudible).

I mean, if we ended up with $10 million and do business.

Yeah.

It will probably take five years to get the $10 million. Now the beauty of it is, when it gets to $1 million or $2 million, you will know, it’s got leg to pick it up there, and you will see a ramp that could be established, but when I hate a term blockbuster, because I think of drug or software word.

Yeah. Right.

We sell in day one and day five…

Yeah.

You got it. But I think we’ve got a couple of things as we are working on that our true business developments that we are approaching in these energy areas that if they succeed, they could easily be that kind of revenue where they are almost equivalent to our revenue over a short period of time, short being five years, something like that. And my goal is to get a couple of those queued up, also to make sure that we consistently have more of those coming in the pipeline because as we’ve noted, we’ve seen some things did not materialized, probably at the exterior coatings business that we were after for a long time. It just hasn’t been there is one of those things. I will say though and I touched on this a little bit in the last call, but more so in the third quarter call. One thing that I’m excited about is I’m seeing launches fail due to -- not fail, not succeed to the extent I would like them to monetarily, due to the fact that they went to the marketplace. People are using them and they are using enough of them. Now that tells you are viable. Now, my push as the CEO of this company is hey, let’s be viable in bigger markets with a little more ramp for that, if we missed this the home run that we get a double or a triple there is more money involved. But we do see more of those things that are exceeding. Not only technical success is they are getting through a company’s launch cycle, in some cases through a company’s stage gate process, which is fairly kind of alluded and then they launched and now we are waiting to see what their customers do. I’ve seen more of that in 2012 than we’ve seen in the preceding several years and I see that as good trend in terms of how we do things. Now, it’s the matter of just owning it and being creative.

Okay. Let me ask you about your lab now. Are they coming up over the robust potential new product base or is it kind of you hitting kind of a maturity at that?

Absolutely, we are not hitting a maturity there. We've got a great team. Not only -- one of the things that is great about our R&D group. First of all, in our company we have an R&D group and kind of an advanced engineering team. And the events engineering team deals with moving things from R&D to production and also with making sure production is running. They work together very well. If you look at our -- we’ve got roughly 50 employees. But a quarter of them are in engineering and R&D. They are consistently generating more work now, more ideas, more things for the pipeline. Now, my push and it has been a push and I think now with the change to the sales marketing business development group is that the marketing in some cases is behind the technology, which you don’t want to do is to have a lot of really great people, come up with ideas, invest a lot of money in a new product of some sort, whether if that market pull for it. And I think that, what you are going to see from us, as times goes on through this year into next year is a stronger vetting process. I talked about our innovation and development cycle and investing in that, a stronger front ended vetting process. Some of that is just maturity. We are all learning more about how this goes. Some of that is the nature of the market. Some of that is the nature of the team that we are getting better and better with business we go. And I think that's really where the drives is going to be but we have absolutely, not only we have no shortage of ideas internally and technology. We are also open to things coming in from the external world that either we can add something to, maybe we could make it work better or we could do it in concert with our than I think the specialty chemical background we just brought it to the business, which is a little bit broader than we’ve had in the past is going to be really payoff and show that their investments is worthwhile there.

Okay. And one last question. Could you give an update on BASF getting European approval to move the products forward?

That’s an active discussion. The European approval, what we are waiting for there is to determine where the -- specifically, what the labeling requirements are going to be in Europe. So, Europe then said that zinc oxide is an acceptable UV Blocker for sunscreens, which before it wasn’t. It always was in certain countries like Germany but not throughout the EU. The next thing we are waiting on is to find out, if they are going to make a separation between nano and non-nano materials. That will be important. I think by the end of the year, we will know where that’s at. I would say here in the states, again the tailwinds are good here. And what we haven’t seen is -- it’s funny. You never know exactly where things are going to go. We have a couple of different products. We launch the LSA product. We are seeing our base product growing. The LSA product is out there and these things take a while to build. We are seeing a general positivity towards zinc oxide, which is big plus for us. And it’s funny the new monograph that came out last year that basically was very strong relative to zinc oxide and Nanophase’s business saying that you have whole spectrum of blocker, first thing to include when they change the labeling and you’ve got to include whole spectrum out of it. It really helped us and it disallowed some materials that could have potentially be competitive that were organic chemical. It took them something like I don’t know kind of 15 years to get that monograph updated and hopefully, the next update is about 15 years from now because right now we feel like we’ve got a nice position there and I think in Europe, we will develop that position. But probably not much is going to happen until they set the standard toward the end of the year.

Okay. Thank you very much.

Thank you.

(Operator Instructions) And our next question comes from [Doug Allison of Napsis]. Your line is now open.

Hi, Jess.

Hi, Doug.

Again, talk to you in a while.

Yeah. You bet.

Good. Good. A year so ago you had some cost problems with the Rare Earth suppliers, is that behind us, how much Rare Earth cost go into your products?

It’s our polishing business, which is a base business for us but it’s not a huge business. And as I mentioned, the Rohm and Haas business has been winding down the business now, that will be a relatively small volume this year, 100 and something thousand dollars. The fine optics polishing business is impacted by that and there is winding down, but I think it’s always going to be a risk because essentially that price was manipulated by Chinese export restrictions. We’ve gotten some mines up and running here in the states. Mali core put some things together but the rush to get best material out of the ground has slowed because I think China got what they wanted, our base price. I think I told the investment community that at one point in six months, our base cost went up 1400%. At this point, I think our base cost is something like three times what it used to be, 300% higher. So essentially their margin went up a lot, our margin went down a little. We probably got hurt in a few markets that could have grown had we not had that huge price restriction. I don’t see it as a big issue going forward, but I see it as something that we have to keep an eye on. I also see potentially that if some of the applications we can get in that require a lower quality of material due to them being smaller, it could be helpful in that area. But I am not looking -- today, I am not looking at polishing as nearly the same 2013 driver as it was say for 2011 where we had a couple million dollars with the business. It’s probably a sub $1 million line of business, today give or take. We’re starting to focus on it more as we’ve gone through this process and we’ve changed our exclusive relationship with Dow formally. Rohm and Haas has no DOW. It’s an area we’re looking at and I am not as concerned about it. But a long story short I still know that this is a manipulatable market and the risk is always there. I think they cut their nose up to this display their face a little bit and now they are in a nice position, so hopefully it’ll stay relatively flat. But the WTO has been all over China on this and they almost kind of ask forgive it instead of permission. They got their prices up 300% by raising them 14% and getting smacked now.

Yeah. It’s not a huge issue for the businesses that we’ve been running traditionally. It’s a bigger issue for new introductions that we’ve been trying to make. Customers are more sensitive to it. We write it in our filings. It adds an element of danger to customers looking at cerium oxide applications. Fortunately, cerium oxide is uniquely good in certain aspects and so there are ways to exploit that and build our business that way. But China is not doing anyone any favor with that policy that’s for sure. Fortunately, it’s no longer a huge element of our balance sheet which it became for a while.

Are there any other costs of materials that you use that might be the same situation or are they all pretty much commodity products input?

Typically it’s commodity input, I mean our biggest cost drivers you can imagine are things like zinc. Zinc elements that are widely used. Do we have a handful of relatively one-off brand, say, solve versus disperse the share but that’s rare. I think cerium oxide was highly atypical for our business in terms of our sensitivity to it and then something that we manage. We kept 6 months supply on consignments at all time just in case it was difficult to get. So we don’t expect to see that across the other business areas and certainly not anything new.

Okay. Thanks a lot.

Thank you.

Thank you. Our next question is a follow-up from Bill Chapman of Morgan Stanley. Your line is now open.

Jess, you just answered my question. Thank you.

Okay.

Thank you. And at this time, I am not showing any further question. So I’d like to turn the call back to management for any further remarks.

Well, I have a few remarks. We also received a few questions that came in and I’d like to. One thing is that I think we have a lot of investors that are really excited about the company. I am happy about that I got to say. One thing that has been happening is several of them I think they look at -- they realized we announced we are going to have our earnings and they start calling to get an idea we’re at prior to this call. And I pretty much and -- or Frank will not really return any anybody’s call or follow-up. When you get into the under the quarter and you get results in, you know it’s inappropriate to share information that we might not share. I have shared with the entire public. And I think that -- I don’t think there is anything that is barriers. I think people are just excited and they think about it because it’s on their ticker. So that’s one thing and it also say we’ve had a push from a series of investors to asking why we don’t get out and do more investor relations work and do more talk and put out more press releases. And essentially, I think that’s coming from the investors that really understand what we’re doing and they are excited and they’re saying, hey, at our current valuation that seems to me like if everybody knew who you were, you’d doing better. Well, I think the reality is that there was historically a lot of hype around this technology from outside the company. Lot of nano hype, our stock price was very high. It’s moved around and at this point I don’t believe that the position of the company in terms of the equity valuation is going to change other than by results. And given that we have a relatively long time in the market and things don’t change on a quarter-to-quarter basis, particularly until we get several of these things happening at once. So that we could actually have something fresh to talk about every few months. I just think we keep our own counsel and we have our calls and we just go through it. When it starts to percolate and we have more to talk about, we’ll out there. I think the potential is we can do more damage than good by getting people very excited not having them realize that okay, what he is saying is going to happen. He is talking about it’s going to happen by the end of this year and then it’s going to start next year and roll into a nice thing that isn’t typical to build blockbuster comment. I think there is some of that mentality with people they don’t understand the material business and we just want to avoid that. That being said, we are fully confident that we have the team, the knowhow, the products, the business strategy, and more than enough potential to achieve our goal. We appreciate your continuous support. I appreciate your continuous support. And as always, we do try to be available for any follow-up questions you might have. Thanks for your participation everybody and please enjoy the rest of your day.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program, you may all disconnect. Everyone have a great day.