Telanetix Q4 2007 Earnings Call Transcript

Mar.26.08 | About: Telanetix, Inc. (TNIX)

Telanetix, Inc. (TNXI) Q4 2007 Earnings Call March 25, 2008 4:30 PM ET

Executives

Kirsten Chapman – Lippert-Heilshorn & Associates

Thomas A. Szabo – Chairman of the Board & Chief Executive Officer

Richard M. Ono – Chief Financial Officer, Chief Operating Officer & Corporate Secretary

Analyst

Brian Swift – Security Research

Manuel Recarey – Kaufman Bros.

Scott [Burkbee] – Enable Capital Management, LLC

Chris Lahiti – LD Michael

Frank Christina – Michael Capital

Larry Rossum - Greenwich Investments

Robert Seidenschwarz - SG Long

Operator

Good day ladies and gentlemen and welcome to the fourth quarter and year end 2007 Telanetix, Inc. earnings conference call. My name is Ericka and I will be your coordinator for today. At this time all participants are in listen only mode. We will be facilitating a question and answer session towards the end of this conference. (Operator Instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for Kirsten Chapman. You may proceed ma’am.

Kirsten Chapman

I’d like to thank everyone again for joining us for today’s call. With us on the call today from management are Tom Szabo, Telanetix’s Chairman and CEO and Rick Ono, Telanetix’s COO. Before I turn the call over to management I will read a short Safe Harbor Statement. Current statements contained in this call are forward-looking statements within the meaning of applicable federal securities laws including without limitation anything relating or referring to future financial results and plans for future business developments and are thus perspectives. Forward-looking statements are inherently subject to risks and uncertainties some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include without limitation the risks and uncertainties set forth from time-to-time in reports filed by the company with the Securities & Exchange Commission. Although the company believes the expectations reflected in such forward-looking statements are reasonable it can give no assurance that such expectations will prove to have been correct. Consequently future events and actual results could differ materially from those set forth in and compensated by or underlying the forward-looking statements contained herein. The company undertakes no obligation to publically release statements made to reflect events or circumstances after March 25, 2008.

I would now like to turn the call over to Mr. Tom Szabo. Please go ahead sir.

Thomas A. Szabo

This is a very important call for us. This is the culmination of a lot of years of work of developing projects on the voice and video and data side and we had some very aggressive forecasts out for the fourth quarter. If you recall estimates were made to $7.1 million in revenue and 41% in gross profit and to achieve that that means that we had to not only manage our sales funnel and close opportunities and ship them and have customer acceptance but also rationalize costs and create efficiencies in the cost of goods sold to increase our gross profit percentage from the 23% in the third quarter and I’m very pleased to report that we’ve exceeded our expectations on both fronts. We’re reporting $7.4 million in revenue for the fourth quarter and 47.8% in gross profit percentage for the fourth quarter. That also brings our 07 year end because of the strong finish in the fourth quarter including the consolidation of the access line voice division [break in audio]

We’ve tried to create products that work in the fabric into the DNA of our customers. And what that means is that instead of just connecting two rooms by voice or by video or by data we’re trying to create platforms that allow our customers to apply their business and create and ROI inside of their business that’s attractive and valuable and effective immediately. To that end, we know that we’re competing effectively with some of our bigger rivals in all three of the voice, video and data spaces. Because of that we’ve taken steps to expand our distribution. We want to leverage our ability to win in that marketplace from the $7.4 million that we did in the fourth quarter into the first quarter and in to growth in 2008. To do that we’re focused on expanding our distribution. We want to get more people to see our product, to more effectively sell. A couple of things that we’ve done on that, we’ve been successful both in the US and abroad.

In the US market we expanded our video distribution into five new territories, D&J Technologies, Peter Schmitt Companies, OmniView, [inaudible] Marketing and New Wave Technologies. This gave us an increase in our sales channel into 27 new states and that means more people can see our video products, experience the telepresence, see the value and create their own ROI models. We are also expanding our demo sites throughout those regions in the first half of 2008. Late in the fourth quarter we also jumped into the European market. Many of our customers see a tremendous ROI in the usage of telepresence products when they travel over greater distances other than just within the United States. We had our first shot at some of these opportunities in the European community. We signed a new European distribution company called Imago and we just shipped the systems over there for them to build their demonstration facilities in two locations and we’ve also gotten some great press in that area.

Richard M. Ono

I’d also like to add that we started our marketing activities there and I’m pleased to announce that we’ve done several new articles in major trade publications in the UK and we’re starting to get some great analyst coverage from industry analysts out there and we’ll see their report coming out shortly.

Thomas A. Szabo

Now, not only are we expanding our footprint both in the US and Europe but we’re also expanding our marketing efforts into verticals. What we’ve found is that as we’re being ingrained into the fabric of companies we’re not just connecting two rooms. We actually connect platforms for people to do their work. Whether that’s automotive design, business meetings, CAD cam systems, entertainment, medical facilities, in fact in the period of the quarter we shipped nine systems to various medical facilities and each one of those has a different type of application. Because of our ambiguous data platform they’re able to plug through a regular IP connection heart monitoring equipment, radiology equipment, it’s used for training, for remote medical facilities. In light of this, of our success we’re perfecting an OEM relationship that will help us market directly into the medical vertical. Once we’ve identified the exact marketing schemes for selling into the medical vertical we’re going to expand that through to several others in the first half of 2008.

Also in that sort of vertical notion we’ve started to perfect models in the SMB space both for video and voice. We’ve enhanced our product in such a way that not only does it work from a features and benefit program but it also works on a financial model that allows our customers an easier way to buy our products [break in audio] that the major benefit that we’ve allowed is that our system is working on a standard XO Internet connection which unlike all of our competitors that require dedicated sole source network, our cost of ownership is significantly lower. In fact, those two four screen systems including the network operate for under $5,000 per month all costs included which gives the cost of ownership model a tremendous boost in our favor and lowers the cost of entry for the customer and increases the ROI.

Also into the SMB vertical we’ve introduced a new voice product called digital voice service. This is a state of the art phone system that operates up to eight phones. What we found early on is the ultra small SMB space which is five employees or less that 70% of the 6 million SMBs in the United States fall into that category and it was totally unserved in the video, voice and data provisioning. So, we introduced the digital phone service late in the fourth quarter. This is a phone system, as I said it goes up to eight phones, it eliminates all of the upfront equipment costs. The payments are included into the phone bill, it’s shipped directly to the customer, it’s plug and play. They install the system with a power cord into a wall outlet, they connect the wire into their broadband circuit and within minutes they have a full IP phone system that’s fully featured. We think that that is going to be a strong growth product for us.

As we go into the operations we’ve managed to create efficiencies in consolidating many cost centers. Primarily we’ve consolidated many of our operations in Seattle. Many of you will be happy to know that as our 10K and annual report come out at the end of the week you will see that we were able to bring in segment reporting which gives us two categories. It gives us video operations and it gives us voice and network operations. Much of that was done because we are now able to with a larger finance staff accommodate segment reporting. On the accounting side we’re transitioning all of our financial activity to a common platform. We’ve selected Great Plains software and with our three divisions integration which has been in New Jersey, video in San Diego and voice in Seattle, all three had separate platforms. So bringing those on to a common Great Plains platform gives us the ability to accommodate and transition into a single accounts receivable and a single accounts payable and finance group which we anticipate will be done before the first half of this year.

Sales and marketing continues to make progress to leverage the strengths of each of those divisions voice and video and both in the sales and marketing area and the customer support area. We endeavor to begin consolidation of our engineering group and we’ve begun the integration of all of the development team into a single organization. This will help us reduce costs, it will also accelerate the development of many of our unified communications platforms. We have some exciting marketing programs coming up in the first half of this year. For those of you that enjoy traveling to Las Vegas we’ll be at Infocom the first week of June. An exciting thing here is because of the way our technology has now been developed we’re going to have three locations at the show, one at the entrance, one at a booth on the floor and one at the suite away from the show and all three of those will be connected and live with our telepresence system.

So, we’re very excited about our prospects for 2008. The market for our products continues to show great promise even really in spite of the downturn of the general economy. Our products reduce operating costs for our customers. They reduce the phone bill, they reduce the travel expense. In fact, American Express just came out with a new business travel forecast that predicts the cost for travel in 2008 will rise 10% in airfare and 8% for hotels and at the same time IDC now estimates that the 250 telepresence end points that are currently installed will grow to 9,800 in 2011 and ibis World estimated now that the voice for IP telephony will grow to 3.2 billion in this year. So, in a way with this downturn we’re sort of counter cyclical.

Now that we have put in place all the programs and policies and efficiencies we’re preparing to provide guidance for 2008 that we anticipate will be released in April of this year. The full 10K which includes all of the products of the two private firm and the valuations and consolidation is scheduled to be released on time and it will have further details of our year end and our progress. So, at this point I’d like to open up for any questions and we can have sort of an open conversation about our year end.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Brian Swift from Security Research. You may proceed.

Brian Swift – Security Research

Can you give us a little idea about how your pipeline of business opportunities looks in transition from say the fourth quarter into the first quarter or whatever kind of historical flavor you can give us to kind of point us into what our expectations ought to be for the current quarter? I know you said you’re going to put out full year guidance out sometime next month but what can you tell us about the activity of your business by segment and where you are going in this quarter?

Thomas A. Szabo

Okay. Rick manages the funnel so I think he’s a lot closer to it so I’ll let Rick answer.

Richard M. Ono

Yeah. The funnel actually with all of the marketing activity that we’ve had all of the recognition that we’ve gotten for instance winning the Frost & Sullivan award and all the stuff we’ve got in our funnel had actually exploded over the last two quarters. We expect Q1 to exceed Q4. Things are looking very good for the next – in our funnel, like I said it’s the largest funnel that we’ve ever had and it seems to be growing almost daily.

Thomas A. Szabo

Typically, for this type of equipment Q1 is a downturn quarter across the industry. We will not see by our estimate a downturn at all in the first quarter.

Richard M. Ono

And we also expect the funnel as it stands today doesn’t really have anything representing our new efforts in Europe and some of the OEM opportunities that we’re pursuing. So, we’re pretty happy with the way things are looking right now.

Brian Swift – Security Research

Could you give us an idea – you mentioned on an example of a two four screen installation that was under $5,000 a month, can you give me what the OM costs are typically on the various things? In other words I think you have two screen, three screen, four screen type applications?

Richard M. Ono

Sure. We start with our executive system which has a list price of about $40,000. The example that Tom gave earlier was a customer that is leasing the system so their lease price per system and leasing of course is going to vary based on prevailing interest rates and so on but I believe that they’re leasing for approximately $1,300 thereabouts a month per system. The network connection that Tom references from kind of a state of the art, actually a run of the mill Internet provider called XO and they’re paying for 10 megabytes of bandwidth they’re paying about $1,000 a month. So that’s where that $5,000 number comes from thereabouts. For that particular customer they breakeven on one or two trips from coast-to-coast and then everything else on top of that is gravy.

Thomas A. Szabo

And we’re continuing to expand both in the direct sales meaning customers that buy the product outright. The range really is $35,000 up to about $80,000 depending on how it’s configured and how it’s installed. Networks are sometimes purchased through us and because we have an open network platform many of our customers can use the network they already have or can provision any range of networks from, as Rick said, standardized Internet connection all the way to specialized high end networks depending on their applications.

Operator

Your next question comes from the line of Manuel Recarey from Kaufman. You may proceed sir.

Manuel Recarey – Kaufman Bros.

Can you give any further explanation on revenue? I know in your 10K you’re going to break it out between voice and video, can you give us any color on it in the fourth quarter? And then can you also give a further explanation of what drove the increase in the gross margin in the quarter?

Thomas A. Szabo

Coming out in our forecast we’re using the fourth quarter numbers but I think the numbers that we have available at this moment are the yearend numbers which were $4.9 million in video and $7.1 million in voice and networks. When you see the K and we’ll have subsequent calls. What we’ve done is broken out the video number to be just the pure video box which is the server with our software loaded on it and the kit. And the other side of the segment is voice and network which is all of our voice products, along with all the network products including the networks that carry the video product when they’re installed. And that’s really a feature that we’ve developed which is the ability to use the same network in multiple ways, voice video and data.

The quite dramatic move in our gross profit from about 23% to nearly 48% comes from a couple of different things. First the most dramatic move came from the fact that we’re selling a lot more of the video telepresence products that have a higher gross margin contribution. The second is that we’ve been very conscious of our cost of goods sold and we’ve started to drive now some volume, we’ve been afforded some volume purchase benefits in terms of our purchasing ability and we’ve also worked on the engineering side to design away from some of the more expensive components replacing them with lesser costing hardware components or replacing them entirely with software. And third it’s efficiencies created by the consolidation of the two businesses. We have better purchasing power on many items now that we actually have a good run rate, now that we have some solid revenues going forward. We expect from now forward to be holding this gross profit margin level and in fact improving it throughout the year with the continuation of those three programs.

Operator

Your next question comes from the line of Scott [Burkbee] from Enable Capital. You may proceed, sir.

Scott [Burkbee] – Enable Capital Management, LLC

Couple questions, are you guys going to detail the first quarter revenue and first quarter gross profit margin guidance in the press release that you guys plan on releasing here in the near term?

Thomas A. Szabo

Yes, we do.

Scott [Burkbee] – Enable Capital Management, LLC

And then will you detail the full year revenue and gross margin guidance?

Thomas A. Szabo

Yes.

Scott [Burkbee] – Enable Capital Management, LLC

Kind of speaking broad terms, what do you think the gross profit margin can go to there in 2008?

Thomas A. Szabo

Well, I don’t know that we’ve put actually put a limit on it. I think the best way to characterize it is that we designed several programs to enhance our gross margin at the end of Q3, enacted them at the beginning of Q4 and they had a great effect. There’s a lot of variable costs in it. I can tell you that the way that we developed these programs gives us a good look at we know we can do which is this level and the effectiveness and the future of the program really depends on product mix, in some of our new product introductions we have further enhanced margins. So if we see greater traction in those products and our mix changes towards those then we’ll see again another jump in our gross margin. But I think you’ll see it drifting north of 50%.

Scott [Burkbee] – Enable Capital Management, LLC

Okay, do you think you could back to the 60 to 70% range that we saw last year? Is the recent acquisitions more dragging down that enterprise gross margin?

Thomas A. Szabo

I don’t think it’s actually dragging it down, but a good example of how we enhanced our margin is when we ship kits to one of our channel partners or integration partners where they buy all of the additional hardware components, the gross profit on those sales is significantly higher. When we blend in screens and commodity parts like that into our revenue number it pulls it down because the margins are sub-10%. So it’s really mix related but we do see it drifting higher throughout each quarter this year. Where that limit is we’re not sure yet, but I think we’ll have a better handle on it when we give out our guidance in April.

Scott [Burkbee] – Enable Capital Management, LLC

And then what was the loss in the fourth quarter? You guys have that number?

Thomas A. Szabo

We’ll have that wrapped up in the K. The entities had to go through an audit. Last year we bought two private companies so we had to go back and do audits of those and we also had to do valuations and so that’s all being wrapped up and we’ll have a handle on that as the K comes out in the next few days.

Operator

Your next question comes from the line of Chris [Lahiti] from [LD Michael]. You may proceed, sir.

[Chris Lahiti – LD Michael]

I just had a question in terms of the telepresence product. Is the pipeline now much, much stronger than it was given last year? Because it seems like as the cost of traveling and the cost of oil continues to rise that more and more companies would be ultimately interested in solutions that you guys have. My question is, in terms of business prospects, is it much better than it was year-over-year and are you guys seeing it firsthand?

Thomas A. Szabo

Oh, yeah. We have seen, and I tried to allude to that in sort of the body of the call, it’s almost counter-cyclical. As the economy started to turn and travel costs started to rise, our ability to reach out to customers and get better traction and more immediate attention particularly for our video products increased many fold and our backlog reflects that and where we really see it is in our sales funnel which has jumped, many, many, many fold in a very short period of a number of months.

Operator

Your next question comes from the line of Brian Swift from Security Research. You may proceed.

Brian Swift – Security Research

Actually you answered my question. I was looking for the Q4 numbers, but that’s why I couldn’t find them because you haven’t put them out yet.

Thomas A. Szabo

We put out the revenue and the gross profit.

Brian Swift – Security Research

I saw the revenue but I meant like the income statement and balance sheet.

Thomas A. Szabo

Yeah, we’re wrapping all that into the K.

Brian Swift – Security Research

And when will we see that?

Richard M. Ono

Our deadline is the end of March. It’ll be done this week.

Operator

Your next question comes from the line of Frank Christina from Michael Capital. You may proceed.

Frank Christina – Michael Capital

I was also wondering about the income statement. So we’ll see that with the K, but can you give us an idea how many telepresence systems you put in in the quarter or is that not a metric you give out?

Thomas A. Szabo

We haven’t been tracking that although we’ve had some discussion in distilling it down to units. Our first goal was to segregate all of the video products from all of the voice products. So this will be our first entrée into that and I know a lot of people wanted to see that. This will be our first effort to go into segment reporting. I suppose that in the future we could break that down further into number of customers and so forth. But at this time we’re segregating voice and network solutions and video solutions.

Frank Christina – Michael Capital

Can you give us a ball park as to how many – we know there’s 250 telepresence systems out there. Can you give us an idea of your estimated share?

Thomas A. Szabo

Of the 250 that are reported to be out there we’re in the mid-40’s.

Frank Christina – Michael Capital

And just historically how has the mix been in terms of buying versus leasing and where do you see that going?

Thomas A. Szabo

I think leasing has been about 20% of our business to date, but we really see it going more heavily towards that leasing model because we’re moving down from the enterprise boardroom application into the middle of the market and in the middle of the market you have a lot of customers that are 50 to 100 employees where this product now can create an ROI for them but they have to be able to buy it. There has to be programs that allow them in some reasonable way to enter and buy the product and that’s where the leasing program I think will really start to shine for us. And I think the example of the East Coast-West Coast firm with two telepresence installations at $5,000 I think that opens a market that just – it’s not even underserved it’s simply not served at all.

Frank Christina – Michael Capital

And that billing on that is that directly to you or through an integrator?

Thomas A. Szabo

Yeah, we have a financial partner and so we recognize revenue as a sale and the partner manages the lease with the client.

Frank Christina – Michael Capital

So it wouldn’t really make any difference on your quarter-by-quarter?

Thomas A. Szabo

No, it appears the same as a sale as we report.

Frank Christina – Michael Capital

And then last question, I’m just relatively new to the story, what does your sales force look like currently? How many direct sales reps do you have and how many [VAR]s are out there that are pushing the product? Where do you stand currently?

Richard M. Ono

For both products in total I believe we have in our New Jersey facility our sales force that supports the telepresence, we have six full time sales people there.

Thomas A. Szabo

Those six people manage 10 reps and integration firms across the United States that collectively have about 440 sales reps and then we just added the two European reps and we don’t have any direct people in Europe yet on the video side.

Richard M. Ono

And on the voice side, we have what, 20?

Thomas A. Szabo

We have approximately 20 people that are on the voice side and of course we’re starting to integrate those two teams and cross train and cross sell the product.

Operator

Your next question comes from the line of Larry Rossum from Greenwich Investments. You may proceed.

Larry Rossum - Greenwich Investments

Gentlemen, couple things here, cash on hand at the end of the year if you could and 40% of last year’s revenues came from video, do you have an idea if that will be up or the same for the quarter we’ve just about completed and do you have any ideas of when you may turn profitable?

Thomas A. Szabo

Our cash on hand at the end of the year was $3.8 million. We’ll put a lot more color onto it but certainly we intend to move into break even in profitability during the course of 2008 and in April when we come out with some of our guidance we’ll try and narrow that scope a little bit. Larry, what was your third question?

Larry Rossum - Greenwich Investments

Third question was video sales in the quarter we’ve basically completed now? And I’m just wondering if it will be a higher percentage than 40%? I’m talking about revenues now.

Thomas A. Szabo

I should clarify that year end number of 4.9 and 7.3 for the 12.2 total number because that doesn’t include a full year of voice. So the way that we’re going to report moving forward will have video in one bucket and voice and network in the other. I think the best way to view it is that video will be about a third of our business and voice and network will be about two-thirds of our business but understand that because of our ability to have ubiquitous networks the video runs off in time on the network that is in the voice number.

Larry Rossum - Greenwich Investments

So it’s hard to really know where things stand there?

Thomas A. Szabo

I think it’s very clear that the video number is the pure video number and it doesn’t have any other pieces associated with it. They are all video related products. The voice number is the voice number plus the network that manages the voice and some of the network that manages the video. It clearly isolates all of our video products.

Operator

Your next question comes from the line of Robert Seidenschwarz from SG Long. You may proceed.

Robert Seidenschwarz - SG Long

Couple of things, citing the Kaufman Report for 2008 and I understand you’ll be giving more guidance in April, but if I just refer to that report and looking at the body of information in evidence in terms of the progress that you’ve made and the inroads it seems like an understatement to say the share price doesn’t begin to reflect the progress and the future of this company and I think that’s probably stating the obvious here. In light of that what can be done and what are you doing to get the story out because I suspect that that’s still a big part of what needs to be done from a company standpoint to get more eyes on the product and this company so that shareholders can start to realize what should be reflective of eventually a much higher share price year. Give a little detail on that please, Tom.

Thomas A. Szabo

I agree and thank you for the tremendous compliment on our share price. I would hope that like any other company the true value is reflected in the price and I think that we made tremendous headway in developing programs and products that fill an area of the market that’s underserved by all of our competitors and our ability now to get that product in front of more people and to sell more aggressively will help us on the business side of the business. Now getting that out in front of people is a totally different business and we started at the beginning of the year with a road show. We visited 68 different institutions physically. We went and visited them, we showed them our offering, we showed them how we’re going to market and what our expectations are from our programs and I think frankly a lot of them stepped back and wanted to see what our results would be. And I hope that combining today’s results with future results and continued exposure to the financial community will give us more attention that we’re all trying to get.

Robert Seidenschwarz - SG Long

So you may not be able to say this, Tom, but I can. I think at this point people that are starting to pay attention or should be will come to realize that the stock is at a hell of a discount to future opportunities here and that if people have already taken positions and are higher priced and we should all be taking a real hard look at adding to this since I don’t see too many opportunities that come along in a business that has such minimal penetration but such incredible upside to it. So I’m just kind of excited to see where it goes from here and obviously risk is the game but I think you guys are in a great position and I just want to personally thank you for your continued hard work. I know you’re on the road constantly and I don’t sometimes think people appreciate how much has to be done on a day to day basis to create shareholder value so thank you very much.

Thomas A. Szabo

Thank you for those kind words and for the vote of confidence.

Operator

Your next question comes from the line of Scott Burkbee from Enable Capital. You may proceed.

Scott [Burkbee] – Enable Capital Management, LLC

Just one more quick question, are you guys going to be holding another conference call after you put out results so we can all get back on and talk about the results?

Thomas A. Szabo

Yes, we are and we’re going to do it in conjunction with the guidance for 2008.

Operator

Your next question comes from the line of Brian Swift from Security Research. You may proceed.

Brian Swift – Security Research

Just one more, I realize that the acquisition of those two private companies has put a strain on your financial reporting in terms of the time it is taking in terms of getting your end results out. What’s your target for getting the March results out? Is that going to be done in conjunction with this April guidance? Or, is the April guidance going to come and then we’ll have the March quarter?

Thomas A. Szabo

I think we’ll do the guidance and then the quarter. However, all of the really time consuming activities related to the year end and they were because of the acquisitions we made and going back and doing evaluations and audits of those private companies, doing valuations, having the valuations audited and so forth. Moving forward we don’t anticipate anywhere near the amount of effort by the company or by the audit firm to get our Qs out. So, I think we’ll be on a regular reporting schedule for the March quarter but we will separate that from the guidance.

Analyst

Typically the smaller companies get their reports out by the third week unless it’s a year end. The third week in April would that be typical or do you think you’re going to go longer than that?

Thomas A. Szabo

We have controls in place that allow us to produce numbers pretty quickly. As I spoke, we’re transitioning to a Great Plains platform that will help get our numbers our even more efficiently. It really comes down to our scheduling with the audit firm and they’re ability to take us in a particular week.

Analyst

So you can’t give us a target as to when we should expect March quarter?

Thomas A. Szabo

I can’t do it at this moment but I think if you wanted to give me a call tomorrow I could tell you when. I think we’ve had all hands on the year end.

Analyst

How far away do you think this April guidance will take place?

Thomas A. Szabo

We’re anticipating a couple of weeks.

Analyst

Okay. A couple of weeks from now?

Thomas A. Szabo

Yeah.

Operator

You have no further questions at this time. I would now like to turn the call over to Mr. Szabo for closing remarks.

Thomas A. Szabo

Thank you all for being on the call. It’s always exciting to see us put products out there, execute on our strategies and create actions and we’re very, very pleased with the fourth quarter results and for all of your support. We are very optimistic for our prospects throughout 2008. Thank you for all your continued support. If any of you have further question please feel free to call us, myself or Rick. We look forward to talking with you again in the very near future. Thank you.

Operator

Thank you for your participation in today’s conference. This concludes our presentation. You may now disconnect and have a wonderful day.

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