Focus Enhancements Inc. Q4 2005 Earnings Conference Call Transcript (FCSE)

Focus Enhancements Inc. (FCSE)
Q4 2005 Earnings Conference Call
March 9th 2006, 4:30 PM.

Executives:

David Barnard, Lippert/Heilshorn & Associates, IR contact, FOCUS Enhancements
Brett Moyer, Chief Executive Officer, President
Gary Williams, Chief Financial Officer

Analysts:

Daniel Amir, WR Hambrecht
Edward Ching, Rodman & Renshaw
Doug Ledewitz, Pronto

Presentation

Operator

Welcome to the FOCUS Enhancements Fourth Quarter 2005 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, March 9, 2006.

I would now like to turn the conference over to David Barnard of Lippert, Heilshorn & Associates. Please go ahead, sir.

David Barnard, Lippert/Heilshorn & Associates, IR, FOCUS Enhancements

Thank you. Good afternoon and welcome to the FOCUS Enhancements Fourth Quarter and Full-Year 2005 Conference Call. We are pleased you're joining us today. And with us from management are Brett Moyer, Chief Executive Officer; Gary Williams, Chief Financial Officer; and Tom Hamilton, General Manager of the Semiconductor Group. If you need a copy of the press release, please visit our website at 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, and includes statements regarding management's expectations of funding requirements in 2006, demand for FOCUS Enhancements' products, which impacts revenue, gross margin percentage and cash from operations, management's plans to complete it's Ultra Wideband semiconductor chip designs, move UWB technology to silicon, and the performance of its UWB technology in silicon.

Because of 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 includes the risk factors specified in the Company's Form 10-K/A for the year ended December 31, 2004; Form 10-Q for the period ended September 30, 2005; as well as other filings with the SEC. These statements are based on information as of March 9, 2006, and the Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

And with that, I'd like to turn the call over to Brett. Brett?

Brett Moyer, Chief Executive Officer, President

Thank you, David. Thanks everyone for participating today. I will first provide you with a brief review of the year, then Gary will review the financial results after which I will elaborate on our products, outlook and strategy. Revenue for the year grew 23% over 2004, and included revenue growth in each quarter when compared to the previous year. Both the Semiconductor and the Systems Businesses demonstrated significant growth for the Company.

Our Semiconductor business grew 38% over last year's fourth quarter, primarily due to production ramps of Internet Protocol TV, known as IPTV set-top boxes and portable media players, which we anticipate continuing through 2006. Portable media players, known as PMPs, represent the largest potential revenue of growth opportunity to our Semiconductor Business this year. I will discuss expectations for this division in more detail later in the call.

Most significantly, we expect to tape out the digital chip in our TALARIA Ultra Wideband technology chip-set this week. This is the second chip in the chip-set and taping out this chip builds on other recent milestones as we move closer to UWB commercialization. In addition, the $10 million funding we announced on January 30th, which Gary will discuss in more detail later, is anticipated to bring us through the completion of our UWB development effort.

The Systems Business revenue grew 15% compared to last year's fourth quarter. As I've indicated throughout the year, the FireStore suite has become our strongest product line with digital signage and asset management projected to increase their growth in 2006. Although timing issues with one of our major customers impacted sales of our new HD FireStore product during the fourth quarter, shipments have begun this quarter. We expect growth on the Systems side to continue to be driven by sales of FireStore to all leading camera manufacturers and digital signage to the financial community.

With that, I will now turn the call over to Gary Williams, our CFO, for more on the financial reviews and details. Gary?

Gary Williams, Chief Financial Officer

Thank you, Brett. Revenue for the fourth quarter was $6.1 million, up 19% compared to the $5.1 million for the fourth quarter of 2004. During the fourth quarter of 2005, the Systems Business contributed 82% of revenue and the Semiconductor Business contributed 18%. Gross profit, as a percent of sales for the fourth quarter of 2005 was 39% compared to 24% in the fourth quarter of 2004. Operating expenses during the fourth quarter of 2005 totaled $5.5 million compared to $5.7 million in the fourth quarter a year ago. Our net loss for the fourth quarter was $3.3 million or $0.05 per share versus a net loss of $4.3 million or $0.08 per share in the same quarter of 2004. The net loss came in lower than expected as certain Semiconductor expenses related to our UWB development moved from the fourth quarter of 2005 into the first half of 2006.

For the year 2005, revenue was $24.6 million, up 23% compared to $20 million reported for the same period of 2004. Net loss for the year 2005 was $15.4 million or $0.25 per share versus a net loss of $11 million or $0.22 per share in 2004.

Accounts receivable at December 31, 2005, was $3.2 million compared to $3.5 million at September 30, 2005. DSOs were at 47 days at December 31, 2005 compared to 46 days at September 30, 2005. We expect DSOs to run in the mid to high 40s for the first quarter of 2006. Inventories at December 31, 2005, were $3.7 million or flat when compared to September 30th. We expect inventories to decrease slightly in the first quarter of 2006. Sales order backlog at December 31, 2005 was approximately $900,000 or consistent with September 30th.

In November, we closed the financing under which we raised gross proceeds of $3.3 million through the private placement of our common stock. Under the agreement, we issued 5 million shares of common stock and 1.8 million warrants. We ended the quarter with cash and cash equivalents of $637,000. As of December 31, 2005, we had borrowings of $3 million under our $4 million account receivable baseline of credit. At December 31, 2005, total shares of common stock outstanding were approximately 68 million.

As Brett mentioned a moment ago, on January 30th we raised $10 million in funding through the sale of senior secured convertible notes to private investors. These notes carry a 10% interest rate per year, and through June 30, 2007, such interest is payable in kind. These notes have a maturity date of January 1, 2011, and are convertible into FOCUS Enhancements' common stock at a price of $1 per share. This funding is currently expected to be sufficient to complete our UWB development and fund general operating requirements in 2006.

I will now turn the call back over to Brett. Brett?

Brett Moyer, Chief Executive Officer, President

Thank you, Gary. I will now review our business by product group. Semiconductor Business revenue grew 38% compared to the same quarter last year and 17% sequentially. Driving this growth in part, is our success in the expanding markets for video convergence products. The IPTV set-top box market finally started to gain credibility as the infrastructure necessary to deliver viable media content continues to improve. Some industry projections show this market growing from 1.7 million units in 2004 to 16.9 million units in 2009. Technology and operating system advances geared to the delivery of entertainment quality media over the internet are making computer TV a vital function.

The variety of solutions being generated by designers trying to hit the hot spot and get to market early, make the use of a discrete video conversion processors attractive, and FOCUS Enhancements makes the best quality processors on the market. We have been working with reference designers in cultivating this market for several years and are confident that our video convergence processors provide what developers want and fit very well in a convergence market. Our chips are already included in IPTV set-top boxes for manufacturers such as Hyundai Digital, Tatung and Biostar. And we are even more excited about the prospects for continued revenue growth in the category, as a result of existing reference designs with Intel and new reference designs with Applied Micro Devices, AMD.

PMPs have created a wave of activity in the TV out market since most leading MP3 players now have huge disc drives suitable for video storage. The video iPod being one popular example. AMD and Freescale are popular platforms to provide the horsepower for competing PMP products and FOCUS chips have been integrated into reference designs for both of these to provide the TV out functionality that seems to be a user must-have feature. We believe this product area is destined for growth over the next one to three years.

As digital media is being transported through an ever-increasing number of devices, demand for semiconductor convergence chips is appearing in virtually every part of the electronic sector, including end-product for set-top boxes, portable media players, automotive and mobile entertainment, medical imaging, hand-held GPS systems, cellphones and among other products. This industry dynamic had created a huge miscellaneous category of designers who know they have to deliver media to low-cost displays such as TVs, and need this discrete functionality, as there is no all-in-one solution for these diverse and emerging markets. The miscellaneous category makes up more than 60% of the activity we see in the market for convergence.

Lastly, we believe trends in design wins and production starts bode well for revenue from convergence chips in 2006. Total design starts increased 60% to 129 in 2005 from 81 in 2004. Several of our video convergence processors appeared multiple set-top boxes and media players that were displayed in 12 manufacturer’s booths at the International Consumer Electronic Show in Las Vegas in January. For our convergence chips, in the fourth quarter we gained 15 design wins, up from 12 in the fourth quarter 2004. All in all, this quarter we had 37 design starts, 15 design wins, 10 designs went into production, bringing the full year 2005 totals to a record 129 to starts, 45 design wins and 39 production starts, which compares to 81 starts, 44 wins and 27 production starts in 2004.

Summarizing recent UWB developments, as I remarked at the beginning of our call, the tape-out of our second chip, which is digital is expected to occur this week. This will mark another major milestone in our development effort and bring us significantly closer to filling a necessary components in our validation systems, which are expected to be available for shipment in the second quarter. We continue to believe our validation systems will outperform anything currently on the market or being demonstrated. We featured our TALARIA UWB technology in the WiMedia TechZone at CES, consumer reaction was positive as CES was a turning point for UWB. People began to view UWB as more than just a concept and as a viable product with numerous applications.

Now on the Systems Business. Fourth quarter revenue in the Systems Business grew 15% over the fourth quarter of 2004 and 28% over the full-year 2004. We expect the growth rates to continue in 2006 as a result of FireStore sales to the high definition camcorder market and cross-selling of the FireStore customers to digital asset management and digital signage. In fact, last week the home page and product pages of our website were redesigned to help execute this mission. Emerging multi-year industry trends to high definition video format, and a need for greater storage capacity are driving increased demand for our Systems products. Professional and consumer videographers are tackling capture and post production activities in HD and FOCUS's solution promises a huge productivity gain in the capture process, archiving and storage, and a distribution of content.

Highlighting and previewing specific developments in our FireStore line: In December, we announced our FireStore FS-4 HD direct-to-edit disk recorders were included in the Best of 2005 cover story in EventDV magazine. This was the third award for FireStore in 2005. The other two were Editor’s Choice and Reader’s Choice. Prior to the National Association of Broadcasters tradeshow in April 2006, we expect to expand our FireStore line by shipping more HD models: the HD100 to JVC, and the FS-100 to Panasonic.

The digital asset management product line, which previously was primarily sold in Europe, has begun ramping in the U.S. in the first quarter. Managing the video media capture from the camcorders is a logical requirements of a FireStore customer. We expect worldwide sales to start this year with significant growth in 2007.

Digital signage also continues to produce strong results. We are now seeing orders for both the larger projects that have started shipping this quarter, and the broader customer base of museums, universities, corporations and government municipalities. Both digital asset management and digital signage are expected to grow in the 40% plus range this year versus last year.

Now on to guidance. For the first quarter, revenue is expected to be approximately $6.7 million. We are targeting gross margins as a percent of revenue in the high 30% range for the first quarter 2006, and at approximately 40% of revenue for the full-year 2006. We expect a loss per share of $0.06 to $0.07 in the first quarter 2006. Included in our outlook is an expected $350,000 in non-cash stock-based compensation expense associated with our implementation of FAS 123. Our loss per share forecast for the first quarter of 2006 excludes any potential non-cash charges associated with our convertible debt financing completed in January 2006.

For the full-year 2006, we expect revenue of approximately $32 million, representing growth of over 30% compared to 2005. We expect to incur a $1.4 million of non-cash stock-based compensation associated with FAS 123 in 2006.

We anticipate continued sequential revenue growth in the Semiconductor Business for the fourth quarter of 2005 to the first quarter of 2006, and we expect it to grow 75% to 80% this year compared to 2005. As a result, we expect Semiconductor Business revenue contribution to grow to 20% of total revenue versus 14% in 2005 with the Systems Business revenue contributing -- contribution at 80% in 2006 versus 86% in 2005. With the expenses related to taping out our digital UWB chip from FAS 123, operating expenses are expected to increase approximately $1.3 million sequentially in the first quarter.

In summary, we expect our Semiconductor group to reap the benefits in both IPTV and PMPs. By focusing our marketing efforts in those areas, we are poised to see the benefits of the increased adoption of our technology in 2006. With the tape-out of our digital chip expected later this week, our UWB development effort continues to progress towards commercialization, and we believe we have the financing in place to take us there.

The Systems Business continues to be defined by the success of our FireStore line and is poised to benefit from growing HD markets. I will now open the floor for questions. Operator?

Questions & Answers

Operator

Operator Instructions Our first question comes from Daniel Amir with WR Hambrecht.

Q - Daniel Amir

Thanks a lot. Good afternoon. A couple of questions here. First on the OpEx as we look at '06, what type of level should we be looking at?

A - Brett Moyer

Yes, just to take you back, Daniel, I think we guided that OpEx would drop pretty significantly sometime starting in the middle of Q2 previously. But with a shift of the UWB chip moving from Q4 into Q1 and that approximately two to three months slide in terms of expenses, the sequential bump up in Q1 I will see a plus, that's a good representation for the first three quarters a year. Then we'll see the drop in Q4.

Q - Daniel Amir

So, Q1 to Q3 is the same level of OpEx?

A - Brett Moyer

Approximately yeah.

Q - Daniel Amir

Which is about a $1 million increase over the Q4?

A - Brett Moyer

Well, of cash increase. We said a 1.3 million in total.

Q - Daniel Amir

1.3 million in total. Okay.

A - Brett Moyer

You got 350 of FAS 123, right?

Q - Daniel Amir

Right. Okay. Now, if I look at the UWB, when should we start to see some revenues hit the topline? Is it Q3? Is it Q4? Is it anything meaningful or should we just looked into '07 on this?

A - Brett Moyer

I mean, there will be some evaluation, revenue it will start coming to the topline in June, which I wouldn't describe as a meaningful in terms of our models and overall revenue. We expect to get design starts in the second half of the year, which means probably will get production orders late in the year and we'll be shipping early next year. In terms of meaningful quantities, it's always going to be small opportunities that will come earlier, but in terms of meaningful revenue, it's probably Q1 '07.

Q - Daniel Amir

Okay, so if I look at the semi conductor business, you highlighted the number of segments that are driving your business, I guess, in '06. Can you kind of break it down which segments are more important to you and what portion of revenue do you think there will be as part of your semi group?

A - Brett Moyer

Oh, within the semi revenue?

Q - Daniel Amir

Yeah.

A - Brett Moyer

I mean, that's going pretty detailed, but we generally don't break down. Basically the guidance we gave you we said semi is going to go from the $3 million range to approximately $6 million. And it's the IPTV and there's a lot of designs, the primary ones as we mentioned were the PMPs and the IPTVs. But those other designs of automotive entertainment, GPS systems, those are all contributing to the revenue growth. And it is a large miscellaneous category.

Q - Daniel Amir

Okay. Now, can you a bit highlight what's going on in the FireStore kind of I guess one of your customers you said, pushed out a bit, what's going on there and what momentum are you seeing in the FireStore orders right now?

A - Brett Moyer

Yeah. Well, in terms of historically speaking, in Q4, we and one of our two primary high-def customers agreed to make some modifications to improve the performance between the camera and their version of the FireStore. And we were not able to synchronize the two units in time, we being them and us jointly. So that has started shipping in February slightly with heavy shipments starting this month as we ramp production. The other high-def one will start shipping in April. And from a demand perspective, Q4 was probably slightly softer than what we would have liked to see. But Q1 and Q2 now all four camera manufacturers are shipping and producing in quantity high-def camcorders. Q1 and Q2 now look very strong for the FireStore line again.

Q - Daniel Amir

So, do you expect it to increase linearity as the year progresses?

A - Brett Moyer

Yes. So certainly we're going to take a good-size jump in Q2 as we bring on the second version of the high-def one for Panasonic. That appears to be a very successful product. We have a tremendous amount of activity. And Q2 and Q3 are typically are stronger quarters in that industry. So, from a guidance perspective, Q2 goes up, Q3 goes up and Q4 is probably flat or even.

Q - Daniel Amir

Okay. Thanks a lot.

A - Brett Moyer

You're welcome. Thanks, Daniel.

Operator

Our next question comes from Ed Ching with Rodman & Renshaw.

Q - Edward Ching

Hey, guys.

A - Brett Moyer

Hey, Ed.

Q - Edward Ching

Brett, could you give us more color on the portable media players’ space there, I mean how is that growing for you as a percentage of revenue? And this whole buzz on the Origami, Microsoft Origami does that potentially lead to any new leads for you going forward there out there, out in Asia or do you think North America will be a better place for that?

A - Brett Moyer

You know what? Let me just tie back to the guidance. So the semiconductor revenue we're not breaking down into smaller segments so it is the PMPs and IPTV set-top boxes, which are driving a good chunk of that revenue growth from 3 million to 6 million approximately. But there are quite a few other designs in the miscellaneous base that are doing it as I mentioned earlier. I think I'd like to just have Tom cover the whole PMP market for you, because it is pretty interesting and we think it's a good run for us over the next few years.

A - Thomas Hamilton

Yeah. The PMP market for us is, we're addressing via partnerships as Brett mentioned in the formal remarks, we're in AMD and Freescale's reference design for PMPs. And we have, we've already gotten revenue from that in Q4 of last year and Q1 this year. And we see things going forward, we see this picking up. So we're in PMPs from Toshiba with their gigabyte product, we are in PMPs from Digital Cube and some other Korean manufacturers going forward. What these products are primarily is entertainment products and need to differentiate a little from the Origami product, which is really a small tablet PC. And if you look at Microsoft went public on it today, and first products are being shown at CeBIT right now. And those are -- that product is really a tablet PC downsized running tablet PC OS. It's also expensive. The first one, Samsung product is $1,190, where the PMP market is really in the $200 to $500 range in terms of, in entertainment device. We're, as we've mentioned, we're in a number of products, number of design wins, some of them public, some of them not. And that market seems to be taking off. If you look at what's going on with things like Vongo, which is capable of downloading movies and transferring them to PMPs and there are, as well as your PC, you look, of course, at the iTune site and what they can do. But this whole area is beginning to explode. Vongo --

Q - Edward Ching

Tom, could you tell us which PMPs manufacturers you're actually doing business with?

A - Thomas Hamilton

I can tell you the ones that are public and announced right now. There's two that are public and announced. And those are Toshiba with gigabyte product, which was featured in CES keynote by Microsoft for media players and media accessories, when they announced Vongo that was also a way of getting movies on to that. And the other one that is public and announced in shipping is Digital Cube in Korea.

Q - Edward Ching

How many more, could you tell us how many more that you have? I don't need to know the names, but how many more manufacturers do you actually do business with, number-wise?

A - Thomas Hamilton

Right now, we're in another couple design wins in that space.

Q - Edward Ching

Okay. And my other question is, on the, I guess the switchover from analog to digital among the professional broadcasters, is that speeding up or is that sort of still staying at the same clip that you guys see? Or there any other catalysts do you think that will go on, that could speed up the process?

A - Brett Moyer

Are you talking from the TV head-end stations?

Q - Edward Ching

Yeah, exactly.

A - Brett Moyer

In our space?

Q - Edward Ching

Yeah.

A - Brett Moyer

In our space on the camera side at the prosumer and news gathering area. The HDV and in Panasonic's HD version, that's full steam ahead as of really the very end of last year, late in December.

Q - Edward Ching

Okay, right.

A - Brett Moyer

So that's why when we look at FireStore going into Q1 and Q2, they're going to be much stronger than Q4 and Q1 last year.

Q - Edward Ching

So it's all from basically that coming too ahead?

A - Brett Moyer

Yeah. I mean, now Panasonic wasn't shipping last year. Their cameras let alone our product, JVC was still catching up on their camcorders. Canon didn't get their shipping in the US until I believe late, late September which means probably not really quantity until early December, right. Sony was the only one that was really shipping in HDV or in HD camcorder. In terms of the broadcasters, I mean we see more requests coming for HD products in our digital signage place, we see more requests coming for HD file formats supporting our ProxSys line. So I believe that is continuing on. I don't think it's changing the rate that we seen in ’05 or ’04. There is still quite a bit of catalysts involved in terms of convergence.

Q - Edward Ching

Right. Okay. And you guys think you'll still have the same, a bigger presence in NAB this year or about the same as last year?

A - Brett Moyer

We're going to have significantly bigger.

Q - Edward Ching

Okay, great.

A - Brett Moyer

Our space and at our partners' space.

Q - Edward Ching

Great. Thanks guys.

A - Brett Moyer

Thanks.

Operator

Next question comes from Doug Ledewitz (phonetic) with Pronto (phonetic).

Q - Doug Ledewitz

I have several questions for you guys. Of the FireStore products that are announced, how many aren't shipping yet? You mentioned Panasonic.

A - Brett Moyer

Well, the HD100 for JVC and the FS-100 for Panasonic did not ship in Q4. The HD100 just started shipping at the end of February. And will ship in quantities this month. The FS-100 for Panasonic will start shipping in April.

Q - Doug Ledewitz

Okay. But the focus versions are shipping, the HD ones, in quantity?

A - Brett Moyer

Yeah. FS-4 HD and FS-4 Pro HD are both and have been shipped and since I want to say September of last year.

Q - Doug Ledewitz

Okay. Back to UWB, rather. What was the reason for the tape-out delay? Can you talk a little about that?

A - Brett Moyer

Well, I mean, there was no, it's a very complicated chip. There was no significant brow sweating reasons, there was just a series of small things that had to be tightened up and cleaned up in terms of timing change and stuff like that, it's all pretty common, that’s a bit longer with cadence been what either cadence or our estimates were.

Q - Doug Ledewitz

Okay. Regarding the evaluation kit, can you comment on how many orders you have and what the price is of those?

A - Brett Moyer

Well, yeah, let me just say we, mentioned when we first announced the evaluation kits back in October, I think we booked five immediately. That has increased modestly, but with the tape-out of the digital chip and our ability to anticipate shipping in the next 10 to 12 weeks eval kits, that sales process will now get started in earnest. The price will range – list price is approximately 20,000 but depending what you're ordering and who you are and how serious we think you are, the price can vary.

Q - Doug Ledewitz

Okay.

A - Brett Moyer

So as I mentioned earlier, Doug, to Daniel's question, we will see revenue but it's not something that's material in terms of modeling. It will be some in Q2, some in Q3, some in Q4, and if you look at Freescale, I believe they shipped a million dollars worth of eval kits in that, they have been shipping eval kits for – Tom can correct me, but I would say probably six quarters, give or take.

Q - Doug Ledewitz

All right. Is that something typically a manufacturer would order, what, one, two, just a few of them?

A - Brett Moyer

No. It depends on how big they are, Doug, right? I mean Sony could have them in many locations around the world. You could have multiple in one site depending on the number of projects.

A - Thomas Hamilton

We basically anticipate that every group that will be designing using the product will order an eval kit.

Q - Doug Ledewitz

Okay.

A - Thomas Hamilton

Because it's also useful for validation and development.

Q - Doug Ledewitz

What, what do you see as the best opportunity in the next 12 months for any multimillion semi chip order? Would it be set-top boxes, cellphones, portable media players?

A - Thomas Hamilton

In the large volume as we've mentioned and what we tried to guide you to, the opportunities that we really see growing in the area of set-top boxes and specifically, portable media players. We see those as being of good growth opportunity.

Q - Doug Ledewitz

All right. Are there Brett, any worries about delisting of the stock?

A - Brett Moyer

No, actually. You know, we do get notified, Gary can go through it. Why don't you go through this, Gary? I can't remember the dates.

A - Gary Williams

Sure Doug, you probably know we have until May 22nd. But what we would expect, based on correspondence with NASDAQ, is if we meet the initial listing requirements of NASDAQ, excluding the $1 minimum bid, we would be granted an additional six months window in which to comply with the $1 minimum bid which we are now deficient with. And given our business plan and anticipated growth, we think we can take care of it in that window.

A - Brett Moyer

So, I mean to follow on, Doug, not to say that's what we think the stock will do. We do know that since we’ve registered the private placement that was 5 million shares that we did back in October of last year or November, there's been consistent selling of those shares in the market to move them out of the financiers’ funds. There's still some of that left but not a whole lot.

Q - Doug Ledewitz

Okay. The only other question, I noticed some options were exercised recently.

A - Brett Moyer

Yep.

Q - Doug Ledewitz

Are any of those shares, has anyone registered to sell any of those, including yourself?

A - Brett Moyer

No. I mean, they're saleable, right?

Q - Doug Ledewitz

Right.

A - Brett Moyer

Both mine, Tom's and director Bill Coldrick have exercised the right to buy them and we've held them.

Q - Doug Ledewitz

Okay. That's all for now. Thanks.

Operator

Operator Instructions There are no further questions at this time. Please proceed with your presentation or any closing remarks.

David Barnard, Lippert/Heilshorn & Associates, IR, FOCUS Enhancements

Thank you for joining us today. In summary with the completion of 10 million financing, tape-out of our digital chip this week, and continued revenue growth in conversions chip and digital media products, we are well positioned for a very exciting year. We look forward to speaking with you again soon. Thanks.

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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