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TearLab Corp. (NASDAQ:TEAR)

Q4 2013 Earnings Conference Call

March 13, 2014 16:30 ET

Executives

Bill Dumencu - Chief Financial Officer

Elias Vamvakas - Chairman and Chief Executive Officer

Seph Jensen - President and Chief Operating Officer

Analysts

Jeff Frelick - Canaccord

Bill Bonello - Craig-Hallum

Chris Lewis - ROTH Capital

Ben Haynor - Feltl and Company

Operator

Good day, ladies and gentlemen. Thank you for standing by. And welcome to the TearLab Fourth Quarter 2013 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference to our host to Bill Dumencu. Sir, you may begin.

Bill Dumencu

Thank you, Eric. Just to remind everyone certain matters discussed in today’s conference call or answers that maybe given to questions asked are forward-looking statements that are subject to risks and uncertainties relating to future events and to other future financial performance of the company. Actual results could differ materially from those anticipated in these forward-looking statements.

The risk factors that may affect results are detailed in the company’s most recent public filings with the U.S. Securities and Exchange Commission and the Canadian Provincial Securities Administrators and can be accessed through the SEDAR and EDGAR data basis found at www.sec.gov and www.sedar.com, respectively.

Please note that the company is under no obligation to update any forward-looking statements discussed today and investors are cautioned not to place undue reliance on these statements.

I’d like to now turn the call over to Elias Vamvakas, TearLab’s Chairman and CEO.

Elias Vamvakas

Thanks, Bill, and good afternoon, everyone. Thank you for joining us. As with previous calls I want to update you on our progress with respect to the commercialization of the TearLab system. As we reported earlier today total revenues in Q4, 2013 were $4.4 million up 176% from Q4, 2012. Our net loss for the quarter was $0.13 per share and in terms of expanding our installed base a total of 359 system orders were booked in the fourth quarter, of those 259 systems were under our Masters Multi Unit Program, 72 were through our minimum use access programs, seven were direct purchases and 21 were purchased outside the U.S.

For the full year our system order booking totaled 1,783 units. That’s price down with expectations that were there at the beginning of the year. 2013 revenues were $14.6 million that more than triple the $4 million booked the previous year. The 2013 net loss was $17.8 million net of non-cash expense from the continual revaluation of outstanding warrants, more importantly cash used in operating activity was approximately $12.9 million in 2013 and we ended the year in a very strong financial position with cash and cash equivalents totaling approximately $37.8 million.

As many of you know we issued financial guidance for the first time in our history a few weeks ago. For 2014 we’re expecting our revenue to be in the approximate range of $30 million to $33 million which represents total year-over-year growth of between 104% and 125%. I’d like to focus my opening remarks on how we came to those estimates and what we’re doing to help ensure it become a reality.

Let me start off by saying that we continue to be very excited about the opportunity we see ahead of us and believe that Tear’s (velocity) and other lab techs will become the standard in the eye care industry as they are in medicine in general. In addition we believe the dry disease will become an increasing area of focus for pharmaceutical industry and our test plays an important role in providing doctors with a critical piece of the dry eye diagnosis and management puzzle.

While those underlying trends are obviously positive our 2014 revenue guidance wasn’t based on a 10,000 (foot view), rather we build it from ground-up factoring in our current recurring revenue base, new system placement estimates, and what our sales organization expects to accomplish over the course of the year with respect to utilization rates and revenue growth.

Specifically as we rolled up specific objectives and regional goals we plan for the utilization rates to increase over the course of 2014 from the current 70% to approximately 85% for our use contracts and from 30% to approximately 70% for devices in larger practices under our Masters agreements. As some of you might remember I mentioned in our Q3 call that we had begun the process of refining our sales organization and compensation structure to support our 2014 objectives.

We want to ensure that it is competitive in the industry while at the same time align at their overall corporate rules. The most significant being helping our customers integrate our test into their daily routine and that’s driving utilization rates of our device in the field. Let me give you some specifics. We thank that 115 to 135,000 is the appropriate target compensation to attract the kind of people we want as Territory Managers. What we’ve done is make a significant part of that compensation variable requiring them to hit their 2014 objectives in order to achieve that level of compensation, but also building in significant opportunities for overachievement.

We’ve also aligned our target this year with our corporate goals and further aligned them throughout the entire organization. This year’s targets are very simple. 70% of the variable compensation is based on meeting, revenue growth targets from existing accounts and 30% is based on getting revenue from new customers. There will be no payments on how many devices they place, how many contracts they sign, or how many cards sold and so on. Their compensation has been entirely based on revenue growth in existing accounts and revenue growth in new customers.

Our sales management team took each existing customer in every territory and together with the sales rep agreed to a revenue target of that account. In addition they set up individual territory goals for new accounts. Given the variability in territories both in location and a number of established accounts everyone’s objectives are different. When you roll that up you get the numbers that we got it there. And by the way that 70:30 focus that I’ve described for the field goes right up the chain with the sales team operations and the entire executive team, everyone is following us and compensate it with the exact same objective.

Let’s talk a bit about how we’re going to get there. Our primary focus in 2014 will continue to be on integrating the TearLab Osmolarity test in doctor’s practice. Just about all our efforts in that regard will be filtered down into two central aspects this year. First how doctors interpret and use the number therefore TearLab test provide and secondly making sure that doctors are reimbursed appropriately to focus on in the pack. Our focus of our marketing efforts will continue to be medical education. We’re excited at the continuing flow of peer review publication and expect to see a lot of research coming down that will clearly demonstrate the value of TearLab Osmolarity in the diagnosed treatment of Dry Eye Disease.

With respect to reimbursement we continue to find good support and reasonable reimbursement from third-party insurance companies. As we discussed a lot in the past while the past majority of private peers are not reimbursing for the TearLab facts, the level that reimbursement still bare to some degree across different states, insurance companies and clients.

Over the past few weeks we’ve added four regional reimbursement support specialists to our sales organization. Their role is to growing it for the field and support our customers with reimbursement. We’ve started to do audit in our customer accounts to help them understand the local reimbursement level and are very encouraged with what we’re finding. We get the compensation, reimbursement support and marketing initiatives that I’ve just described are going to continue to drive triple-digit sales growth in 2014 and on. Shifts are just getting implemented now. We expect to see their impact rate more in the second half of the year.

Let me close off my opening remarks by giving you some color on the planned acquisition of the AOA’s OcuHub platform that we announced last month. OcuHub is a health IT Company powered by AT&T. OcuHub facilitates an effective and efficient shared-care model with a single sign on portal which simplifies secure connectivity between doctors, patients, institutions and pay-outs. It’s a subscription-based service that to hit a compliant and eliminate the need through complex and expensive IT structures.

We believe that practices of all sides of benefit from OcuHub’s cloud-based technology advances and innovation such as electric medical record software, image management and storage. Doctors spend into our marketing programs were also be coming down this line. By TearLab our corporate mission is to partner with eye care community to deliver innovative technology that enable doctors to provide the higher quality capitalizations. We believe that OcuHub’s offering is completely aligned with that and by providing a share technology solution which will ensure the future viability of independent practices and practitioners; we will enjoy the mixed status as a key strategic partner among ophthalmologists, optometrists, payers and our patients.

While I can’t on this call disclose the financial details, I can tell you that we don’t expect the OcuHub transaction to have a material impact on our cash position. Everything is on track and I think you will hear that we’ll be closing the deal very shortly. As with previous calls I will end here by sharing with you where we stand with our device tallies. All the numbers that I’m about to give you are as of the close of 2013 and exclude devices used strictly for research and/or educational purposes. At the end of 2013, we had 2,431 commercial units ordered in the U.S. Of those, 2,252 are active while 179 have yet to be activated. Of the 2,252 active devices, 187 were purchased, 777 were under minimum use contracts and 1,288 were under our Masters program. In the rest of the world at the end of the quarter we had 482 devices.

Thank you again for joining us. And we’ll just open it up for questions at this point.

Question-and-Answer Session

Operator

(Operator Instructions) And our first question comes from Jeff Frelick from Canaccord. Please go ahead.

Jeff Frelick - Canaccord

Yes. Thanks. Hey Elias could you give us a sense of how long until the basically every underutilized Masters account has been revisited by a sales rep?

Elias Vamvakas

Well I think Jeff I think that varies. There are accounts where the reps are – they are in the middle of (indiscernible) and there is unfortunately accounts that have been smaller that we really haven’t got before quite a while. So I would say that, that’s something that that’s varied and it’s one of those things that we want to fix. We want to make sure that we put systems in place where we know exactly how often the accounts are visited, exactly what the touch points are and when we’ve done a research and Seph can talk a bit about this. But when we did our research one of the key elements that we found in terms of quick adoption is how often we visit those accounts we call it touches, the number of touches we had in those accounts.

Seph Jensen

Yes. So Jeff this is Seph. I think to add to Elias’s point we will and already have actually gotten back to all of our Masters accounts. So by definition these are large accounts, many times with not only multiple physicians and multiple tax but multiple locations. So I think that’s the detail that you’re looking for. We certainly have consistent and steady touches as Elias said and present in these accounts that it is going to take sometime to get all the way through these accounts and some of them were quite large.

Jeff Frelick - Canaccord

Well that’s right figure, Seph. You may need to kind of put a full-court press on to hit them early to the sales reps to kind of hit their utilization objectives for those accounts to kind of kick in early enough to kind of make the targets, correct.

Seph Jensen

Yes.

Jeff Frelick - Canaccord

Okay. Can you give us a sense of what percent of the Masters accounts kind of needed to be revisited and address the utilization?

Elias Vamvakas

Seph go ahead.

Seph Jensen

Yes. So I think I would say I don’t know if it’s addressed in a reactive way, I would say it’s a proactive way. You heard the numbers from Elias in terms of the new systems placement at the end of last year. So we’re still in the progress of I would just say onboarding and getting these accounts up and running. So we certainly have good adoption early on but there is a significant number of accounts that we brought on late in the year most of them in the Masters program. So they’re clearly getting addressed as we move forward, but I don’t know that it’s a reactive problem, it’s just a process of bringing them onboard and we have a large number of them.

Jeff Frelick - Canaccord

Okay. And what percent do you think of future orders as you go through 2014 will likely be Masters accounts this quarter, fourth quarter north of 70%. Is that number still kind of hover high, is it go higher, is it trend down?

Seph Jensen

Just you know we really don’t have an opinion on that. Internally we treat Masters and use the exact same. So we’re going to provide whatever solution is best for the customer. As we progress and as we learn more we’re finding more and more accounts simply benefit and operate better in a Masters environment. But we don’t have a predetermined target of a particular mix, we’re going to do whatever is best for that particular customer.

Jeff Frelick - Canaccord

Okay. Seph last question and I’ll hop back in the queue. But just on the systems placed this quarter. Can you give us a sense what the utilization percent was the Masters accounts placements versus the minimum used accounts?

Seph Jensen

Are you talking about the fourth quarter we just reported on?

Jeff Frelick - Canaccord

Correct.

Seph Jensen

I can – Elias spoke to what it – I can’t that we speak to and we haven’t broken it out the ramp-up period for an account to be utilizing after they get their CLIA waiver. And we do some of the onboarding steps that are necessary to get the account using. It takes usually a couple of months if not a few more. So the last three months of the quarter or so recent we don’t have an average to give you on those accounts. I think the annual number that Elias gave you of 30% from Masters is probably the most relevant accurate number we could tell you where we are with those accounts at this stage.

Jeff Frelick - Canaccord

Okay. Thanks, Seph.

Elias Vamvakas

And Jeff let’s also remember one thing and that is it depends on what part of the country and how long it takes to get a new account onboard. If we’re talking both the Californian market it will take us six to seven months to get our account onboard.

Jeff Frelick - Canaccord

Because of the CLIA license flag?

Elias Vamvakas

Correct.

Jeff Frelick - Canaccord

Okay, great. Thank you.

Elias Vamvakas

Thank you.

Operator

Our next question comes from Bill Bonello from Craig-Hallum. Please go ahead.

Bill Bonello - Craig-Hallum

Good afternoon guys. Thanks a lot for taking my call. Just a couple of questions. First of all thanks for the color on kind of how you built that to the guidance that’s very instructive. I’m curious if you can give us just any anecdotes of sort of progress you’ve made at individual accounts after you’ve been in there and worked with the account to establish sort of practice line protocols etcetera and what you’ve seen in the wake of some of that activity and then I have a couple of follow-ups if I can?

Elias Vamvakas

Sure. Bill I’ll just give you a bit of a feel for it. One of the things that we’re already excited about is – as I’ve talked before there is usually two challenges that we had across as we look at it. The first one is helping doctors understand how to use Osmolarity, how to use the number and what we’ve found is the one-stop (indiscernible) once they realized that it is a critical part of that diagnosis. And we had lots of meetings with our opinion leaders and the comment that we’ve heard is that it’s foundational cash that we need in order to be able to diagnose the disease. Once we get that then we do see significant uptake. The other area that we’re actually very excited about and I think I refer to it if not directly in my earlier call is we’ve been going and doing audits, we had – at the end of last year we discovered that we got a few accounts that we’re – they had stopped (indiscernible) life because they thought they weren’t getting reimbursed properly.

Bill Bonello - Craig-Hallum

And what you found I take it from that is..

Elias Vamvakas

Yes. So what we did was we hired a reimbursement specialist, we went into those accounts and actually found that reimbursement was great. And while the perception might be that there’s a couple of accounts that aren’t paying you’re not paying enough. The vast majority of the accounts that we’re doing – that we’re dealing with are actually going to take very well for us for doing with cash and almost as closest as Medicare overall. So it’s the reason why we hired a regional specialist in every part of the market and it’s the reason why one of our objectives is to going and do up a financial audit for every customer on an annual base because we like the data that we’re seeing. So once we gotten doctors to understand that they’re getting appropriately paid for the test and once we have them understand exactly how to utilize in the practice we do see significant uptake in that we’re doing.

Bill Bonello - Craig-Hallum

Okay. That’s helpful. And yes so that was the follow-up. So in those practices they buy into the analysis you’re doing and say hey (gush) we’re getting paid and start using again?

Elias Vamvakas

Yes, for sure. They buy into the analysis their numbers. What we do is we go into their accounting systems and reimbursement and basically breakdown the tests that they’ve done to tell the insurance companies and what the reimbursement is. So we’re doing a detailed analysis of their data. So it’s not hard to buy into it.

Bill Bonello - Craig-Hallum

That’s great. Okay. And then just one other thing on the reimbursement specialists, are there other activities that they are able to do in the market to tell actually improve the level of reimbursement that maybe the practices for whatever hasn’t been doing on their own?

Elias Vamvakas

Yes. I think they have become a bit of an extension of our corporate resources, because we are constantly trying to improve reimbursement. And frankly just knowing who is reimbursing and not reimbursing, it’s one of the keys to our ultimate success, because we have found the most insurance companies actually are very cooperative once that they see what the market is like, once they began sending slightly over the past. So I think the normal reaction for a new code by private insurance to say no. And then you have to make a case for why they should say yes. We I think have done a good job in making that case. In most cases, we don’t know that they are saying no until we actually have someone decline. So the fact that they are out in the field and the fact that they are bringing back and doing an analysis and showing it who is declining and who is not paying and allows us to go back and talk to those medical directors is actually helping improve the number significantly. And frankly, we have done a good job. I think we have added more than 50 million lives to our overall pool last year and I expect that we will continue on those trends.

Bill Bonello - Craig-Hallum

Okay, thanks. And just one last question and I will hop in the queue. Just the gross margins look like they were especially strong, is that anything unusual there? Is that a sustainable level? How should we think about that?

Elias Vamvakas

We have talked about our gross margins moving up and we always expect them to be in the 50% range. I think ultimately that’s where they will go. So I think they will keep creeping up as we go through the year.

Bill Bonello - Craig-Hallum

Thank you very much.

Elias Vamvakas

Thanks for your time.

Operator

Our next question comes from Chris Lewis of ROTH Capital. Please go ahead.

Chris Lewis - ROTH Capital

Hey guys. Thanks for taking the questions.

Elias Vamvakas

Hi, Chris.

Chris Lewis - ROTH Capital

First, I guess on the master units, I think you said around 1,300 have been placed or ordered, can you give us a sense of how many masters accounts you have now?

Elias Vamvakas

I will get that for you in a second. After your other questions, I will come back with that answer.

Chris Lewis - ROTH Capital

Okay, absolutely. And then maybe you could – you mentioned medical education is recommend increasing focus for the company this year, maybe just talk a little bit more about the marketing plan? What can we look for in terms of tradeshows, peer review publications this year?

Seph Jensen

Yes. I can answer that while Elias is getting the other answer. Certainly, when you look at the larger conferences in the space both in ophthalmology and optometry, we are going to continue to have a presence there typically with the booth and activity, but I think one of the things that we are also going to do and it’s a unique advantage for us, because this really is a new and exciting space and there is no competition as the traditional competition is defined, there is no other Osmolarity test out there. So it really gives us a unique advantage of having both a promotional opportunity available to us of which we certainly have plans to do. And you will see that from us as early as in Boston at ASPRS coming up in late April. That also gives us the chance for continuing medical education. And that obviously many times has the higher degree of credibility and attendance and interest from the marketplace that large. And so when there is so much activity in this phase and we are on the forefront of it, it really gives us a nice platform to communicate in both of those environments. And I would expect this to be very active as that goes forward.

Chris Lewis - ROTH Capital

Okay. And then shifting over to the new order side of the business with the increasing focus on driving that utilization that you have talked about, how does that impact new orders going forward and how should we think about 2014 new orders versus 2013?

Seph Jensen

Yes. It’s a good question. Maybe I will use this opportunity to add a little bit of clarity on one of the breakdowns that Elias said when we were talking about 2014 revenue. And it’s a question we have gotten before. So when you look at the 70% and 30% split that Elias spoke to on how we are going to compensate and how 70% is coming from existing customers and 30% from new. That really is talking about our incremental growth. And so to put it into context, if you look at where we finished it at basically $14.5 million and we have done some analysis if that business the amount of customers and their utilization rate that we have finished 2013 with simply annualized and stayed consistent for 2014 we would expect approximately $20 million of revenue. And if you look at the bottom end of our guidance at $30 million and simply use that because its round numbers, it’s easy to look at, you can see that’s about $10 million of incremental revenue. So to put it easy for you, $7 million of that according to the 70% we expect to come from increased utilization at our current customers and $3 million revenue coming from new customers. So, certainly we have an eye on bringing in new customers and certainly we expect to generate $3 million of revenue from that side of our business, but it gives you a relative focus for our efforts and clearly 70% of our efforts are going to be against getting our current base utilizing more and integrating the TearLab test more consistently.

Chris Lewis - ROTH Capital

Okay, great. And then on the G&A line specifically it looks like it was up quite a bit sequentially, can you walk through the reason for that increase and then going forward is this just a normalized level that we should expect for G&A?

Elias Vamvakas

Bill, do you want to take that?

Bill Dumencu

Certainly. One of the main reasons of the G&A did increase in the quarter was because of non-cash option expenses that were booked in the quarter that had a large impact as well. So going forward I think that our G&A will be more in line with the Q3 numbers with a slight increase of course for the underlying building up the resources to support the rest of the sales team and marketing team.

Chris Lewis - ROTH Capital

Okay, great. If I could sneak one more in, maybe just provide an update on the competitive landscape out there, what you are seeing in terms of test being approved CLIA waiver is being approved for other diagnostic tests that you might expect increased competition with going forward? Thanks a lot.

Bill Dumencu

Thanks Chris, I will take that and I will also answer the other questions where we are at it. So we have not seen anything different in the landscape than we have discussed. We have seen in InflammaDry RPS has passed that CLIA waive, which as we talked many times we don’t see competitors in terms of what we are doing, but frankly we see it complimentary with what we are doing. So we are happy that we got their approval. Now, there is few people out there trying to convince doctors that using lab test is of significant value in the practice. We haven’t seen anything new. We have not seen anything in development or going through the FDA or anything out from that area.

Chris Lewis - ROTH Capital

Great.

Bill Dumencu

Let me answer your previous question and I am sorry we did say that we were going to put this number in our – on a regular basis and we should have included it. So, the number of accounts – so we have 238 accounts that purchase their device, we have 746 accounts that have got a used contract and we have a 144 masters account.

Chris Lewis - ROTH Capital

Okay, thanks a lot.

Bill Dumencu

Thank you.

Operator

(Operator Instructions) And our next question comes from Ben Haynor of Feltl and Company. Please go ahead.

Ben Haynor - Feltl and Company

Good afternoon gentlemen.

Elias Vamvakas

Hey, Ben.

Ben Haynor - Feltl and Company

Just any commentary that you can ride on how Q1 is tracking now that we are midway through March here in terms of system orders, should we expect something maybe similar to Q4 or Q1 last year from this time around?

Elias Vamvakas

So I think probably – I think we probably be looking at something similar to Q4 overall. I can tell you that the first quarter for us has been a quarter, where we are rolling everything else. So, I would not expect any of the programs and plans that we have in place to impact the business. We rolled out our compensation plan about three weeks ago. We had our sales meeting in January. So everything that we have discussed and everything that we have put in place is just undergoing as we speak. So, I wouldn’t really see anything different than something in Q1, but as we said I think it would be the trend of what we are talking about taking place as the business develops and push here in the back half of the year.

Ben Haynor - Feltl and Company

Okay, that’s helpful. And then in veterinary earlier this year, you mentioned that the next test on the TearLab platform that would launch would be a panel, could you comment at all on what might be on that panel or maybe what disease state it might be focused on?

Elias Vamvakas

Yes, I don’t know that I said that it was a panel that sounds more something like Ben would say. What I did say is that we are working on IgE, which is a – obviously a test for more intense like….

Unidentified Company Representative

Allergy.

Elias Vamvakas

Allergy. Thank you, Ben. So a test for allergy and we have talked about the fact that we would want both Osmolarity and allergy on that, so that would make it a panel. We are looking at all the different options. Ben, without disclosing too much if you want to add a comment here?

Unidentified Company Representative

Well, what we are trying to do is develop a platform that’s valuable in similar diagnostics to what we put on it. We do a lot of analysis on different markets and there is a variety of (indiscernible), that are existing. Certainly, somebody mentioned earlier clearly that (indiscernible) came out that’s something that’s interesting. I don’t know that we would put out something like that necessarily, but that’s certainly in the Tear zone. There is a bunch of markers like glycated albumin for diabetic retinopathy has been published about. There is markers detailing glaucoma and all kinds of different things, there is glucose in the Tear zone. There is all kinds of different things that you can measure. We will be doing a lot of analysis on what the right market is and how much money we think it will take to develop versus how much money we could get on the product launch. And I think those are the things that will drive the next product. Right now, they only wanted to share is IgE and Osmolarity chip that we are looking at in the near term and then everything else that we are looking at. I don’t think that we have formal decision on yet, but we are certainly looking at variety – although that we can’t tell you about (indiscernible). So, needless to say, a panel isn’t going to be 20 or 30 markers. At most if we ever did will be two proteins in Osmolarity if I could see going forward as a rationale multiplexing for such technology that we have right now.

Ben Haynor - Feltl and Company

That’s very helpful. And then two last quick ones, where are you on manufacturing, what type of production levels are you running at monthly these days? And then on the implementation specialist side, are you at a level that you are comfortable with, do you still need to add there or any commentary that you could provide there would be helpful?

Elias Vamvakas

Seph, you want to talk about implementation specialist, I know you have been doing so much work in the area over the last couple of months with the team?

Seph Jensen

Yes, I can say as recently as today and really going forward, I think what I am prepared to say is we are looking deeply into that. I think one of the important things that we realize as we look at both types of sales reps if you look at territory managers and implementation specialists is that at the end of the day, they are both accountable to the same thing. We have so much in our customers that are in the masters account with many, many devices in those accounts, but it really takes both of them as a team to drive utilization and to make sure that account is up and running. So, I don’t think it’s as clear cut as saying the territory managers are out getting new business only and the (indiscernible) are only working to drive utilization. I think that it’s really a team approach to make sure that our number one objective this year, which is increasing utilization is a shared accountability by both. And as the months go by we’ll be in a better position to tell you really how we look at that mix and the number that we have and what we think we need going forward. What I can tell you is when we built the guidance, we built that off of our current structure and so our current structure is what we believe we need to deliver the 2014 guidance.

Ben Haynor - Feltl and Company

Okay great. And then on the manufacturing side?

Elias Vamvakas

So, on the manufacturing side, we are still – we now have two manufacturers on the device side and together we are in the 400 a month range – 400 months to 500 months range as we speak with regards to the card side I think you will see a bunch of work being done in that area. We are working very closely with our partner in Australia. We are talking about putting up a different manufacturing plant. We are talking about moving some of that over into the U.S. as well. And we feel very comfortable with the numbers of projections and if you look at the manufacturing from a card perspective.

Ben Haynor - Feltl and Company

Excellent. Thank you very much guys. I will hop back in the queue.

Elias Vamvakas

Thank you.

Operator

(Operator Instructions) And I see no further questions at this time.

Elias Vamvakas

Thank you. Thanks very much. Thank you all for joining us on the call. And we look forward to talking to you again soon.

Operator

Ladies and gentlemen, this does conclude today’s conference. Thank you for your attendance. You may now disconnect. Everyone have a great day.

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