FOCUS Enhancements, Inc. Q1 2006 Earnings Conference Call Transcript (FCSE)

FOCUS Enhancements, Inc. (FCSE)
Q1 2006 Earnings Conference Call
May 11th 2006, 4:30 PM.

Executives:

Kirsten Chapman, CFA Lippert/Heilshorn & Associates, Inc.
Brett Moyer, CEO, President and Director
Gary Williams, EVP of Finance and CFO
Thomas Hamilton, EVP and General Manager, Semiconductor Group

Analysts:

Edward Ching, Rodman & Renshaw, LLC
Robert Engbinder, Montauk Financial
Doug Ledewitz, Pronto Investments
Debbie Earnest, WR Hambrecht
Brian Ladin, Bonanza Capital

Presentation

Operator

Welcome to the Focus Enhancements First Quarter 2006 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we'll hold a Q&A session. Operator Instructions As a reminder, this conference is being recorded, today May 11, 2006. I would now like to turn the conference over to Ms. Kirsten Chapman. Please go ahead, ma'am.

Kirsten Chapman, CFA Lippert/Heilshorn & Associates

Thank you, Derrick. Good afternoon and welcome to the Focus Enhancements first quarter 2006 conference call. We're pleased you are joining us today. Thank you for waiting to the delay. We are waiting for the wire service to post the 8-K/Q to the SEC. With us today from management are Brett Moyer, Chief Executive Officer; Gary Williams, Chief Financial Officer; and Tom Hamilton, General Manager of Semiconductor Group. If you need a copy of the press release, please visit our website at http://www.focusinfo.com/.

As a reminder, this conference call may contain forward-looking statements, including statements regarding management's intentions, hopes, expectations, representations, plans or predictions about the future. Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include statements regarding management's expectations of funding requirements in 2006, demand for Focus Enhancements products, which impacts revenue, revenue expectations including the amount of revenue contributed by its business units, gross margin percentage and the cash from operations, and management's plan to complete it's Ultra Wideband known as UWB semiconductor chip design.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially include customers acceptance of recently introduced products; changes in customers order patterns; unforeseen increased costs, and delays in research and development; the company's ability to maintain adequate funding to deliver, to develop, and implement UWB technology; the ability of the company to migrate its UWB technology to silicon; the performance and acceptance of its UWB technology if and when successfully moved to silicon; and the risk factors specified in Item 1A of the company's Form 10-K for the year ended December 31, 2005, as well as other periodic filings with the SEC. These statements are based on information as of May 11, 2006, and the company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Now I will turn the call over to Brett.

Brett Moyer, Chief Executive Officer, President

Thanks, Kirsten. Good afternoon. First, I will summarize our results, then Gary Williams, our CFO will follow with a review of the financial. Then I will provide greater detail of our business, vision and outlook. We are off to a very strong start in 2006; we are excited about the progress in our future. Revenue for the quarter was $7.1 million, up 31% year-over-year, and up 17% sequentially, due to solid growth in both our Semiconductor and System businesses.

As announced in April, these results meet our expectations. We also increased our revenue guidance for the full-year of 2006 to approximately $34 million, which represents an approximate 40% increase in annual revenues over 2005. The Semiconductor business is performing well, we are very pleased with the progress we have made regarding our Ultra Wideband development effort. We just recently received first silicon of the digital chip, and we expect to begin shipments for the evaluation kits in June. This begins its sales cycle for strategic partnership discussions and customer acquisition.

Semiconductor revenue growth was primarily attributable to the increased sales of video conversion chips for portable media player manufacturers. PMPs represents the largest potential revenue growth opportunity in our Semiconductor business this year. And with our reference designs with Applied Micro Devices (AMD) and Freescale in place, we expect to fulfill chip orders, and to benefit from this growing market. We experience increased sales in the Systems business as well. This was a result of higher than anticipated FireStore sales to the high definition camcorder market, a trend which we expect to continue throughout 2006.

Our FireStore line has historically driven the majority of growth in the System business. While at the National Association of Broadcasters Convention or NAB in April, Focus Enhancements FS-100 received the Superior Technology Award for TV Technology magazine. As announced during the quarter, we began shipments of the FS-100 to Panasonic. The FS-100 was developed and is a dedicated solution for Panasonic high definition camcorders. The FS-100 had a very strong show in NAB and is expected to be one of our strongest products, I will discuss more later in the call. Now I would like to turn the call over to Gary for a review of the financials, Gary?

Gary Williams, EVP of Chief Financial Officer and Finance

Thank you, Brett. Revenue for the first quarter of 2006 was $7.1 million, up 31% compared to the $5.5 million for the first quarter of 2005. During the first quarter of 2006 the Systems business contributed 81% of revenue and the Semiconductor business contributed 19%. Gross profit, as a percent of sales for the first quarter of 2006 was 37% compared to 32% in the first quarter of 2005. Operating expenses during the first quarter of 2006 totaled $6.1 million compared to $6.5 million in the first quarter a year ago.

During the first quarter of 2006 in accordance with Generally Accepted Accounting Principles or GAAP, the Company reported approximately $3.8 million in non-cash expenses associated with the adoption of FAS 123R, accounting for stock-based compensation; and FAS 133, accounting for derivative instruments and hedging activities. These expenses were not incurred in the first quarter of 2005, consequently we have provided non-GAAP net loss, which is defined as net loss excluding stock-based compensation and derivative accounting charges. Management believes the presentation of non-GAAP net loss better reflects the underlying business performance of the company and as a meaningful metric.

Our net loss for the first quarter of 2006 was $7.2 million or $0.11 per share. Non-GAAP net loss for the quarter was $3.4 million or $0.05 per share. This compares to a first quarter 2005 net loss of $4.8 million or $0.08 per share. On a non-GAAP basis, this was a year-over-year improvement of $1.4 million or $0.03 per share.

Accounts receivable at March 31, 2006 was $4.4 million compared to $3.2 million at December 31, 2005. DSOs were 48 days in March 31, 2006 compared to 52 days in March 31, 2005. We expect DSOs to run in the mid-to-high 40s for the second quarter of 2006.

Inventories at March 31, 2006 were $4.6 million compared to $3.7 million at December 31st. We expect inventories to decrease in the second quarter of 2006. Sales order backlog at March 31, 2006 was $2.8 million compared with $900,000 in December 31st and reflects orders for our video convergence chips and the FS-100.

We ended the quarter with cash and cash equivalents of $1.1 million, and the ability to borrow a total of $6.5 million from our existing agreement. On March 31, 2006, total shares of common stock outstanding were approximately $69.1 million. I will now turn the call back over to Brett. Brett?

Brett Moyer, President, Chief Executive Officer

Thank you, Gary. I will start with our Semiconductor business. According to InStat, PMP shipments are expected to reach $7.5 million in 2009. We’ve already begun penetrating this growing market as we have active reference designs with AMD and Freescale. We announced the adoption of our conversion chips in the Toshiba’s Gigabeat and products from Pioneer and Digital Cube. At the International Consumer Electronics Show in Las Vegas earlier this year, Bill Gates and the Microsoft's team highlighted the Gigabeat in their keynote address. Additionally, the Internet Protocol Television or IPTV market also continues to grow at a rapid rate. As previously discussed, we have active reference designs with AMD and Intel. We have also announced partnerships with Biostar, Hyundai, Tcom and Tatung.

To address this growth and prepare for the UWB launch to existing and new customers, we are expanding our reach by opening sales offices in Korea and Japan. This will expand the sales and application engineering teams, increasing our focus on customer support in Asia.

As noted, we intend to leverage our strong relationships to commercialize our UWB efforts. We are the largest sales producer of silicon for consumer electronics and a key player in the PMP market. We feel confident that we are in a strong position to offer our UWB technology to our top customers.

Today, we are one of the few companies with UWB technology that has the strong, that has revenue generating operating business, supporting its development and more importantly, we're already included on the approved vendor lists for many of our UWB targeted customers. I will now turn to our progress with our UWB development efforts.

During the first quarter, we taped out the Digital Chip and recently received first silicon of this chip. This marks the completion of the first phase of our UWB development. Now, we’ve begun the sale cycle with customers and strategic partners, next we expect to ship the evaluation and product development kits in June, containing both the analog and digital UWB chips. We’re currently taken orders for chips, which will enable manufacturers start the product development testing process. We expect initial customer feedback from the evaluation kits in the third quarter and designing starts to begin in the fourth quarter this year.

Finally, while at NAB last month, we hosted a UWB Symposium, we use this event as an opportunity to spotlight the current sale of UWB market. It’s incredible potential and also highlight the broad range potential media and broadcast applications. The event was successful as that demonstrated a growing interest in UWB.

In our System business, our FireStore line continues to be the digital acquisition technology of choice for all four of the world’s largest professional camcorder manufacturers: Canon, JVC, Panasonic and Sony. Since the beginning of the year, we introduced three new custom FS-4 products. Last month, the FireStore FS-100 portable HD disk recorder began shipping to Panasonic. As I mentioned, we had a strong showing in NAB and particularly with the FS-100 disk recorder, which won the Star Award. The FS-100 provides extended recording time to professional video recorders, and have lessened the cost to the memory stick on the Panasonic cameras.

The FS-100 is the first disk recorder in the market to begin with 100 megabit data streams, and has a faster processor than its closest competitors. Furthermore, the FS-100 is the only disk recorder endorsed by Panasonic and marketed with its high definition camcorders.

JVC has been a long time supporter of Focus Enhancements Direct To Edit (DTE) technology. And during the quarter, we announced the availability of the FireStore HD100 for JVC's ProHD camcorders. The third deal we announced was the FireStore FS-C HD60 and FS-C HD100 portable DTE recorders, which were designed specifically for use with Canon's HDV professional camcorder. We anticipate ship in the FS-C to Canon beginning in June.

In addition, Sony is selling and marketing the FireStore FS-4 HD, which is paired with its HDV camcorder, and demonstrates real-time tapeless acquisition of HDV video. While at NAB, we displayed a full line of products with the FireStore DTE digital disk recorder being one of the more prominent solution showcase for video professionals at the show. Industry’s leaders like Canon, JVC, Panasonic, and Sony demonstrated compelling solutions for workflow applications utilizing Focus Enhancements technology. Also the onsite news crew at NAB use our FireStore DR-HD100 disk recorder as its tapeless video acquisition choice.

Overall, FireStore is really exciting, we have marketing agreements with the four largest camcorder manufacturers and for three of them we have made custom products with the DTE trademark and FireStore brands. In addition, we strengthened our media asset management product line, ProxSys, and expanded our U.S. customer base. With the release of version 5.0 software for the ProxSys Media Server, ProxSys provides comprehensive media asset management solutions for customers that have the need to organize rich multimedia format including HD content.

Our ProxSys Media Server was deployed at Vattikuti Urology Institute and Henry Ford Hospital in Detroit, and addresses the fast growing market of high-end telemedicine. Since the launch of ProxSys in July 2005, we’ve seen increasing interests from a variety of markets and applications all with the same needs to efficiently organize hundreds of hours of digital media.

We believe media asset management solutions like ProxSys are logical expenses of our product offering that can be sold through the FireStore customer base. We expect this impact of revenue in 2005 with the launch of two 5.0 software.

Now on to our guidance. For the second quarter, revenue is expected to be between $7.7 million and $8 million, which will represent approximately 30% growth over the second quarter of 2005. We’re targeting gross margins approximately 40% of revenue for the second quarter and the full-year 2006.

Operating expenses are expected to be approximately $6.1 million in the second quarter excluding stock-based compensation expenses. We expect a non-GAAP loss per share of $0.04 to $0.05 in the second quarter of 2006, which excludes non-cash stock-based compensation derivative accounting charges.

For the full-year 2006, we expect revenue of approximately $34 million, which represents growth of approximately 40% compared to 2005. We believe, we have a funding in place to finish commercialize UWB technology, which includes production quality silicon, customer design starts and wins and receiving production orders.

In summary, we are penetrating the growing digital video market in both our Semiconductor and Systems business. Semiconductor revenue grew over 180% a year in the first quarter, and we expect continued growth of 100% on a full-year basis. We are already in the Toshiba's Gigabeat, and growth in both IPTV and PMPs are expected to continue positively impacting sales in our Semiconductor business in 2006 as technology continues to be adopted in the industry. In addition, we received first silicon or digital chip or UWB chipset. We expect the evaluation kits to be available for shipment in June. It will mark the beginning of the Talaria sales cycle for strategic partnership discussion with the customers.

In the Systems business, we expect to continue seeing growth of approximately 30% and we’ll continue to benefit from the growing HD market, where the industry’s leading camcorder manufacturer utilizing our FireStore line of products, we believe FireStore has established as the disk acquisition technology of choice, and HD camcorder adoption growing, we are in very well position. Finally, the completion of $10 million financing deal in January, we are in a position to finish commercializing our UWB technology would have additional financing. I will now open the floor for questions. Operator?

Questions & Answers

Operator

Operator Instructions Your first question comes from Edward Ching with Rodman & Renshaw.

Q - Edward Ching

Good afternoon guys.

A - Brett Moyer

Hi, Ed.

Q - Edward Ching

I guess my first question would be, can you sort of have, give us more color when you will shipping the evaluations that, do you have, what industries, what OEMs has been building in the last couple of months?

A - Brett Moyer

Yeah, I mean in general, Ed, we have a strong customer base already for the TV-Out Chips, but I can let Tom give you some more color on that, which is going to reflect our existing customer base plus new markets.

A - Tom Hamilton

Yeah, we’ve got customers in basically mostly in Asia and the orders that we have on hand for the people in CD business as well as the PC peripheral business, those are the people we expect to be shipping to.

Q - Edward Ching

Okay, and I guess another question I have is, the offices you guys have – are they open now or will they be opening in the second quarter? And how many sales reps do you sort of have in each office?

A - Brett Moyer

Yeah. Ed, I mean, these are -- we do have a top sales person, those offices engaged already. The actual offices themselves would be opening up in the next 90 days and these aren’t exactly large office but there are significant office to our operations. So, it will be a sales person, a little level admin and then we will start sending application engineers as we get more reference designs and more design starts in place in the country.

Q - Edward Ching

So the reps are basically had been with the company for a while and they are not new guys?

A - Brett Moyer

Well they were on our payroll for a short period of time but the one in Japan, for example, has been an independent rep for us for years.

Q - Edward Ching

So, they are up to speeds of business –

A - Brett Moyer

Absolutely, absolutely.

Q - Edward Ching

Okay, and I guess my last question would be --

A - Brett Moyer

Hey Ed, the one at Japan was actually largely instrumental in bringing the Toshiba deal for the PMPs to us.

Q - Edward Ching

Okay, great.

A - Brett Moyer

So, I mean you know --

Q - Edward Ching

So, they’re definitely experiencing that. Okay, and on the R&D side, how much more can you cut, say can you get that down to, here, as we go into 2006, 2007?

A - Brett Moyer

Well, what we said is, and there is obviously from ’05 there is some push of expenses out into ’06 on the R&D. So, we look at ’06 being relatively flat to ’05 but Q4 is when we see the drop-off from having completed the initial chip development initially, and a lot of design in the mass charges for that.

Q - Edward Ching

Okay, yeah I understand that. Okay, thanks guys.

A - Brett Moyer

Yeah.

Operator

Your next question comes from Robert Engbinder with Montauk Financial.

Q - Robert Engbinder

Good afternoon, Brett, Gary.

A - Brett Moyer

Hey Bob.

A - Gary Williams

Hey Bob.

Q - Robert Engbinder

How are you?

A - Gary Williams

Good.

Q - Robert Engbinder

Congratulations on the progress that you guys are making.

A - Gary Williams

Thanks.

Q - Robert Engbinder

I guess my question goes to both you and Brett, you’ve touched upon the $10 million financing that took place in January.

A - Gary Williams

Yeah.

Q - Robert Engbinder

And the subsequent raising of guidance, I am just trying to get a handle on what the drop-off and expenses with R&D as it refers to UWB. How long the current cash that you have on the books would take you and when you think you might see return to profitability?

A - Brett Moyer

Well, let’s deal with the cash question first, those are two important questions. So what we defined in the call is, we have sufficient cash to finish commercializing UWB, which means we’ll get Eval itself, we’ll start to the sale cycle, we’ll get design starts done, we’ll get design wins done, and we expect to have production POs, before we have to address any additional financing concerns, which essentially does rollout in to 2007.

Q - Robert Engbinder

Okay, very good. And just on the semi IPTV market a little bit. Can you give a little more color as to the type of sales cycle that we would see in that market for Focus?

A - Brett Moyer

Gary, you want to address that?

A - Gary Williams

Sure. Basically we have design wins and many production orders in that market from customers primarily in Taiwan and Korea. And their customers are system operators, mostly in Europe and Asia. And so we are getting production orders today, it’s growing, it’s growing well. But as Brett mentioned in the formal remarks, we expect to really the large growth this year to come out of PMPs.

Q - Robert Engbinder

Great, thank you very much gentlemen.

Operator

Operator Instructions Your next question comes from Ed Ching with Rodman & Renshaw.

Q - Edward Ching

Hi guys. Can you give me some more color on the backlog, how much of it has been booked, and how much further there is to go?

A - Brett Moyer

Well, the backlog at the end of the quarter, which usually runs 800 to a million dollars unless there’s something unique going on. It was up to 2.8 at the end of the March. And the two things that are driving that up is the backlog on the FS-100s, and the backlog on the chips for the portable media players. And I don’t know what the exact backlog today is, that’s we are asking, but that’s continue to grow and probably is over $6 million or so right now.

Q - Edward Ching

Okay great, and can you give me some more color on what’s going on with digital signage?

A - Brett Moyer

Signage is a good business for us, it’s been growing inline with the market industry, which is probably 20%, 29%, 30%. It supports our dealers in our channel, we've had steady business. The piece we are highlighting this time Ed, because we haven’t made a lot of talk about, it was the media asset management or ProxSys, is basically when we are at the show, one of our initiatives was validated, in our opinion that we will be able to move ProxSys sale to FireStore customers. And, I mean keeping the order of magnitude if you move about 2% of the FireStore customers in the ProxSys that would add another $10 million to $12 million of revenue for us in ‘07. And that’s where we focused on, that will be new revenue for the company, and that’s what is part of our basis obtained, we’ll still continue to get 30% growth in that division.

Q - Edward Ching

Great thanks, guys.

A - Brett Moyer

Okay.

Operator

Your next question comes from Doug Ledewitz with Pronto Investments.

Q - Doug Ledewitz

Good afternoon, I have a few questions. Have you disclosed who the primary investor was for the $10 million of convertibles?

A - Brett Moyer

Sure. On the SEC filings --.

A - Gary Williams

Yeah Doug, this is Gary, that was in the F3, and then on the 10th I believe we filed the registration statement, it was Ingalls & Snyder out of New York.

Q - Doug Ledewitz

What’s the Carlsberg relation to them and the other investors there?

A - Gary Williams

Well, he has a relation that he released his first lean, Doug.

Q - Doug Ledewitz

Okay.

A - Gary Williams

Prior to that to co-share, first lean on assets with them to facilitate this deal, which is a critical deal.

Q - Doug Ledewitz

Do you have any direct relationship to the investors?

A - Gary Williams

No, we are not -

A - Brett Moyer

No, we may know them, I want to tell that but –.

Q - Doug Ledewitz

Okay.

A - Brett Moyer

We are not aware of any direct relationships now.

Q - Doug Ledewitz

Has there been any development with chip sales for use in cellphone?

A - Brett Moyer

Not at the primary market.

Q - Doug Ledewitz

Okay, what about chip sales, have you had any design wins and any DirecTV Dish network type portable video players?

A - Brett Moyer

As in PMPs?

Q - Doug Ledewitz

As in PMPs.

A - Brett Moyer

And Tom, you want to talk about that?

A - Tom Hamilton

Yeah, we have a bunch of design wins in PMPs, we’ve talked about some that are public and announced right now but Digital Cube and GigaB, then turn another one was Pioneer but we’ve got some others that people haven’t released their products yet.

A - Gary Williams

Doug, some of the PMPs couldn’t have cell phone technology in them.

Q - Doug Ledewitz

Okay.

A - Gary Williams

But my answer was, do you have a Motorola RAZR type design win and that’s now.

Q - Doug Ledewitz

Okay. You know just from a purely number standpoint, cell phone sales are, higher winning sales than any other potential product line, that used to be know what advancement had been made there, I guess you answered that. All right, I think that’s it for now. Thank you.

A - Brett Moyer

Thanks.

A - Tom Hamilton

Thanks.

Operator

Your next question is a follow-up question from Robert Engbinder with Montauk Financial.

Q - Robert Engbinder

Hi Tom, I guess this question is directed to you. In the UWB space with the chip -- the Talaria chip that you have coming available soon for testing, have you seen any competing UWB chips available that compared to the chip that you have coming on to the market?

A - Tom Hamilton

Well, we haven’t seen anybody who has demonstrated the kind of performance that we’ve demonstrated with our prototype. We of course support with Talaria, we support of course our own mode that has much better performance but we are also standard compliant and are operably with the way media standard. There are some more media chips out there.

Q - Robert Engbinder

Okay, I guess I wasn’t as clear as maybe I want to be. The ability to be able to transmit high definition data over the distances that Talaria is able to do, is there anybody else out there that right now is able to do so?

A - Tom Hamilton

We have not seen anybody able to do that. No.

Q - Robert Engbinder

Great, thank you very much.

Operator

Your next question comes from Daniel Amir with WR Hambrecht.

Q – Debbie Earnest

Good afternoon. This is Debbie Earnest (phonetic) for Daniel Amir.

A - Brett Moyer

Hi.

Q - Debbie Earnest

Hi, I had a question on your stock-based compensation, could you break that out between research and development, if you may?

A - Brett Moyer

We have not provided that level of detail, the total charge for the quarter was 173,000. So, total operating expense is not related to that material.

Q - Debbie Earnest

Okay and going forward, how should we look among them now?

A - Brett Moyer

We would expect at least for the next couple of quarters to be approximately 200,000 to 250,000 of stock-based compensation directly related to expensing of options in accordance with FAS 123(R).

Q - Debbie Earnest

Okay, on the 123 stock-based compensation, can you give me like the rest of it between SG&A, like how much you should attribute to each one?

A - Brett Moyer

I would guess about half of it going to be R&D that’s because the semiconductor team is highly motivated through stock option.

Q - Debbie Earnest

Okay great. Thank you very much.

A - Brett Moyer

Thank you.

Operator

Operator Instructions Your next question comes from Brian Ladin with Bonanza.

Q - Brian Ladin

Hi, Brett.

A - Brett Moyer

Hi, Brian.

Q - Brian Ladin

Hey, can you give us an idea of what you are seeing, first commercial applications will be for Talaria chip? And then also, is there any thoughts on may be using Talaria and FireStores, kind of a lower volume application but since the captive in-house products maybe you can hit it to market sooner?

A - Brett Moyer

Yeah, I am going to answer your second question first. And then I am going to let Tom answer your first question because it’s not often you guys get a chance to talk and hear his opinion, okay?

Q - Brian Ladin

Okay.

A - Brett Moyer

So, there obviously in the system group, the whole host of ideas of how to use UWB, they are just starting to look at those in earnest now that the chip is back. And clearly the one thing that it would be a significant improvement to the FireStore product line if you will take that 1394 cable away from connecting FireStore to the camera making it wireless. So, clearly been thought about, clearly we would like that to it, they just needed as with every other potential customer to our semiconductor group, they need to see the chip, right?

Q - Brian Ladin

Okay.

A - Brett Moyer

And then, I think I'll let Tom talk about both low volume and high volume opportunities in the sales cycle that they represent for UWB separately.

A - Tom Hamilton

Sure, we expect that probably the first application of UWB technology will be wireless USB, only because in the PC market adoption cycle surrounding in the matter of months. We are in the EC market -- excuse me in the CE market they run in the matter of year. So, we are starting with both simultaneously but we will certainly see PC-based products coming out sooner simply because of their product development cycle. We are focusing largely on high volume applications as opposed to low volume applications in the semiconductor division, simply because you got to sell a lot of chips to make the profit. So, we are working with the systems operation in their applications for low volume stock for professional applications. And certainly, low volume people who as were happy to supply information to, but we expect that our primary targets in most of our support effort will be going into applications at a very high volume.

Q - Brian Ladin

And can you give us any idea of, do you have any guess, what do you think other than wireless USB, customers’ application maybe?

A - Thomas Hamilton

Sure, we expect there will be applications to ship video around a room or house in wireless networks, high bandwidth wireless networks, we also expect to see applications like remote attached storage, disk drive sitting in the closet that had accessible as a backup for media volt, we even get lot of bunch of information out of it. And other media applications we expect to see things like PMPs being able to sync to PCs and PVRs, personal video recorders like TiVo to get video transferred between a PMP and large disk large storage. So, these are the kinds of applications we are targeting that we think that UWB will apply to.

Q - Brian Ladin

Great thank you.

Operator

At this time we have no further questions, please proceed with your presentation or any closing remarks.

Brett Moyer, Chief Executive Officer, President

All right, I would like to thank everybody for joining us today. We are off to a great start this year, I think it’s going to be a breakout year for us with both divisions doing well and delivering a great revenue growth and topnotch technology. If anybody wants to reach me in office, I will be in the office extension 104 for the next couple of hours. Thank you.

Operator

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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