Drilling Tools International Corporation

Good afternoon and welcome to Peraza Link's fourth quarter 2024 conference call. At this time, all participants are in a listen-only mode. If anyone needs assistance at any time during the conference call, please press the star key followed by the zero on your touchtone phone. As a reminder, this conference call is being recorded today, Wednesday, March 19th, 2025. I would now like to turn the call over to your host for today's conference call, Mr. Jim Sullivan. Please go ahead.

Good afternoon, and thank you for joining today's conference call to discuss Parasso's fourth quarter and full year 2024 financial results. I'm Jim Sullivan, CFO of Parasso, and joining me today is Ron Glibury, our CEO. Today, after the market closed, we issued a press release on related Form 8K, which was filed with the SEC. The press release and Form 8K are available on Parasso's website at www.parassoinc.com under the Investor Relations section. There is also a slide presentation that we will be using in conjunction with today's call that may be accessed through the webcast link on the investor relations website. As a reminder, comments made during today's conference call may include forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. Ferrazzo advises caution and reliance on forward-looking statements. These statements include, without limitation, any projections of revenue, margins, expenses, non-GAAP gross margin, non-GAAP gross profit, non-GAAP operating expenses, adjusted EBITDA, non-GAAP net loss, cash flows, or other financial items, including anticipated cost savings. Also, any statements concerning the expected development, performance, and market share or competitive performance of our products or technologies. All forward-looking statements are based on information available to Thrasso on the date hereof. These statements involve known and unknown risks, uncertainties, and other factors that may cause Parasso's actual results to differ materially from those implied by the forward-looking statements, including unexpected changes in the company's business. More detailed information about these risk factors and additional risk factors are set forth in Parasso's public filings with the SEC. Parasso expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in terms of GAAP and non-GAAP. With respect to remarks on today's call involving non-GAAP numbers, unless otherwise indicated, referenced amounts exclude stock-based compensation expense, amortization of reported intangible assets, severance costs, and the change in fair value of warrant liabilities. These non-GAAP financial measures, definitions, and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related Form 8K, which provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available on the Investor Relations page of our website. Now I would like to turn the call over to Ron. Ron?

Thank you, Jim. Good afternoon, and welcome to everyone on the phone and webcast. We appreciate you taking the time and joining us on today's conference call. We closed out 2024 with continued progress across several of our key business initiatives. Fourth quarter revenue was within our expected range and represented 100% growth year-over-year as we continued to execute on end-of-life shipments of our memory IC products. Favorable product mix continued to expand gross margins, and we also realized further benefits from our previous cost reduction actions and ongoing efforts to drive higher operational efficiencies. In fact, fourth quarter operating expenses decreased 20% year over year, even with revenue doubling from fourth quarter of 2023. Taken together, we delivered significant improvement in our overall operating performance for the quarter and the full year. More importantly, we recently began seeing renewed and growing momentum of our MMWave technology, including increasing production orders from our lead customers. Turning to slide four, I want to provide a brief status update on the end of life of our memory IC products. During the fourth quarter, we completed $3.4 million in shipments against remaining backlog, bringing total memory IC product shipments for the full year 2024 to approximately $12.9 million. As previously outlined and anticipated, these end-of-life orders have been significant contributors to our financial performance over the last several quarters, as we work past the inventory correction impacting several of our fixed wireless access customers. At year end, our remaining backlog of memory IC purchase orders was approximately $2.3 million. We will complete shipments in fulfillment of these final orders during March. Flipping to slide five, we have worked aggressively over the past year to establish a growing and more diversified customer base for our MMOA-based solutions. In addition to broadening our existing penetration of the fixed wireless access market in North America, we've also focused considerable efforts towards expanding market reach across numerous new geographies and end-market applications. On the left portion of the slide is a year-over-year comparison of our new business funnel and engagement pipeline as of November, which clearly demonstrates our progress in terms of both sourcing and advancing an increasing number of product engagements. Taking the number of new funnel opportunities at the top and adding the four progressive stages of active engagement, including from formal evaluation to advanced design and engineering and prototypes, our pipeline approaching this year-end comprised over 100 total engagements. Although the size and market potential of each engagement is unique, this still represents more than 20% increase in the number of identified commercial opportunities over the prior year. Also keep in mind that these pipeline measures do not include prior program engagements that have converted to customer production. In fact, today Peraza's MMWave solutions are enabled at least 60 different commercial products that are now in production across 11 different customers. Pictured on the right side of the slide are a series of these customer end products that are currently in production and incorporate our industry-leading MMWave technology. Turning to slide six, I want to briefly highlight the most recent and projected ongoing momentum that is underway across the broader fixed wireless access market. As the demand for high-speed internet connectivity continues to grow, especially in underserved areas, fixed wireless access is increasingly becoming the go-to alternative over legacy wireline and cable internet. With the advancements and improved reliability of 5G technology, Fixed wireless access can now offer comparable performance to traditional fiber, yet also have the advantage of being significantly cheaper to deploy. This slide highlights several excerpts from a recently published report by Ericsson, which validates and further emphasizes these current market dynamics. First, not only is the total number of FWA connections globally projected to increase dramatically over the next five years to 280 million connections, But 5G fixed wireless access is forecast to represent the lion's share of the market by 2028. Equally notable is the graph on the bottom left, which clearly shows that North American fixed wireless access has already become the majority of all broadband net ads. And since 2021, the three largest carriers in the U.S. have collectively added an estimated 10.4 million FWA connections. The one key takeaway here is the current market momentum and 5G PIX wireless access is poised to capture a significant and growing share of the market over the next five years. Next, on slide seven, I want to provide an update on the current market dynamics that we are seeing, as well as speak to a few notable recent business highlights. For those of you that have been following Perazzo, we have been candid about the extended inventory correction impacting our PIX wireless access customers. Today, I'm pleased to report that we're seeing indications that the tide may finally be turning back in our favor, most notably in the form of renewed customer demand and purchase orders in support of the existing FWA deployments. Although a large portion of this positive shift can be attributed to market cycles, I would be hesitant not to mention that Perazzo now also has the broadest portfolio of MMOA solutions in the company's history. Looking back, we introduced our new FWA solution designed for dense urban network environments around this time last year, which was likely near the peak of the broader market inventory correction. Today, however, we are seeing our unique Dune MMOA platform for dense urban applications gaining meaningful traction with both existing and new prospective customers. As a reminder, our Dune platform was specifically designed to overcome the challenges associated with delivering reliable, and high-speed connectivity in densely populated areas, such as urban neighborhoods. As a fully integrated hardware and software solution, incorporating Peraza's prospective series of MMOA modules, the platform offers low-cost deployment, low power, long range, and point-to-multipoint capabilities. These distinct benefits are equally important to wireless internet service providers, or WISPs, whether they are deploying a fixed wireless access network in Los Angeles, rural North America, or densely populated urban centers in South Africa. In addition to the growing traction of our DUNE platform, we are seeing a renewed demand for our other M&A solutions. Most notable, earlier this week, we announced receipt of a $3.6 million purchase order from a longtime strategic customer and leading provider of networking systems used for fixed wireless access. This new and significant purchase order, which we expect to fulfill during calendar 2025, serves as further validation of Peraza's MMWave technology while also signifying the improving dynamics and expanding momentum across the broader FWA market. Consistent with these observations, our MMWave solutions are currently being utilized in ongoing proof of context by numerous WISPs targeting future FWA compliance across diverse geographies. Turning to slide eight, it has become almost impossible to have a conversation about delivering high-speed internet in North America without talking about BEAT. As a brief recap for those who might be less familiar with BEAT, BEAT is a U.S. government program that was initially established with the goal of improving access to high-speed Internet by providing grants of up to $42 billion to fund new infrastructure and consumer adoption initiatives. Although technically funded by the U.S. Department of Commerce, the National Telecommunications and Information Administration, or NTIA, is responsible for management and oversight of the program. As discussed on our previous conference call late last year, the latest emerging development was that the NTIA had formally updated its guidance to make high-speed Internet using unlicensed spectrum fixed wireless access, including the MMOA bands, eligible for program funding, keeping in mind that the NTIA's original guidance strongly favored broadband Internet access via fiber-based deployments, So, at that time, we view this as an indirect win and potentially expanded opportunity for alternative technologies such as MMWave and, in turn, Perazo. As we have seen following the newly elected administration in the U.S., government policy has and continues to change and evolve rapidly. However, despite certain elements of ongoing uncertainty related to how the BE program will be handled, the most recent indications appear to be an incremental positive for fixed wireless access and, in turn, MMWave solutions. More specifically, the newly nominated leader of the NTIA, Ariel Roth, has publicly conveyed support for technology-neutral BID funding. Additionally, Howard Lutnick, the newly confirmed Chief of Commerce Department, was recently quoted as saying, The department is revamping the BID program to take a tech-neutral approach that is rigorously driven by outcomes, so states can provide Internet access for lower costs. Acknowledging that the future direction and resulting impacts of B programs still remain to be seen, we continue to believe that a decisive technology-neutral approach that also emphasizes low-cost deployments could contribute to meaningful expansion and acceleration of use of the MMWave spectrum and customer adoption of Peraza's MMWave solutions. Turning to slide 9. I wanted to shift to the other exciting and rapidly expanding opportunity for our MMOA technology, which is tactical defense and military applications. As a result of the proliferation of new technologies on the modern battlefield, including smart weapons, advanced drones, and other forms of digital surveillance, there's an obvious need for secure communications. However, perhaps less obvious is the simple awareness of a signal that could allow for an enemy to triangulate precise locations from which signals are being sent or received. Increased recognition of this major vulnerability has led to growing demand for tactical communication platforms that are both highly secure but also very difficult to detect. Not only is mmWave bandwidth more inherently stealthy than other frequently used spectrum for communications, but we have now demonstrated through an extensive series of customer-led trial and evaluations that Peraza's 60 GHz mmWave technology is fully capable of meeting the unique demands of mission-critical comms and defense applications. As further recent evidence, during the fourth quarter, one of our lead military defense customers upsized a previously secured initial production order for our prospective module products. We expect to commence initial cements and recognize revenue associated with these orders towards the middle of the year. Keeping in mind that it was less than a year and a half ago when we secured our first commercial engagement for our military defense application, we are pleased with the pace of our progress and initial success in the market. Today, we now have additional active engagements underway on tactical communication applications with other prospective customers. Moving to slide 10, prior to 2024, we viewed tactical communications as a potential adjunct but mostly niche application for MMOA technology. However, our early success demonstrated over the past year on our initial customer engagement has since opened the door to what we believe is a significant and complementary market opportunity for Perazzo. I wanted to share this slide as a high-level overview of what we now view to be full potential breadth and scope for MMOA applications across this market vertical. For additional context, the customer and production orders that I spoke about on a previous slide are primarily targeted at enhancing situational awareness and communications for deployed soldiers engaged in combat operations. However, this represents only a single application and use case. As outlined on the slide, there are numerous other mission-critical applications spanning both military infrastructure and transportation-related communications that can benefit from high bandwidth, low latency, and directional beamforming capabilities of Peraza's MMWave technology. Needless to say, we are excited about several of these future incremental market opportunities and their potential to contribute towards increased diversification of our customer base and market applications. In conclusion, we are pleased with our continued growth and encouraged by the growing momentum for our MMWave technology. With the renewed demand and increasing purchase orders from our fixed wireless access customers, we anticipate significant growth of our MMWave revenue throughout 2025, driven by increasing order backlog and ramping customer production. Most notably, we currently expect MMWave revenue for the first quarter of 2025 to exceed comparable revenue for the full year of 2024. With that, I'll turn the call back to Jim to review the financials as well as provide our revenue outlook for the first quarter of 2025.

Thank you, Ron. Turning now to the results for the fourth quarter and full year of 2024. Total net revenue for the fourth quarter was $3.7 million, compared with $3.8 million for the prior quarter and $1.8 million for the fourth quarter of 2023. Full year 2024 total net revenue was $14.6 million, compared with $13.7 million for the prior year. Product revenue from the sale of our memory integrated circuits and millimeter wave products in the fourth quarter with $3.7 million compared with $3.8 million in the prior quarter and $1.5 million in the fourth quarter of 2023. For the full year of 2024, product revenue was $14.2 million compared with $12.9 million in the prior year. The increases in product revenues for the fourth quarter and full year of 2024 compared with the comparable periods of 2023 were attributable to increased shipments of our memory IC products to fulfill and the life orders. Royalty and other revenue for the full year 2024 was $0.3 million compared with $0.9 million in 2023. The decreases in royalty and other revenues were primarily the result of reduction in memory royalties attributable to the foundries and the life of the process, combined with a decrease in non-recurring engineering services related to our millimeter wave technology. GAAP gross margin increased to 56.3% in the fourth quarter from 47% in the prior quarter and negative 147.3% in the year-ago quarter. For the full year of 2024, GAAP gross margin was 51.7% compared with 13.6% in the prior year. On a non-GAAP basis, gross margin for the fourth quarter was 71.6% compared with 61.7% in the prior quarter and compared with negative 116.6% in the fourth quarter of 2023. For the full year 2024, non-GAAP gross margin was 67.2%, compared with 28% for the prior year. The increases in both GAAP and non-GAAP gross margin for the fourth quarter and full year 2024 were primarily attributable to increased sales of our memory IC products and a reduction in inventory write-downs, as the fourth quarter of 2023 included write-downs of $3.2 million. Gap operating expenses for the fourth quarter of 2024 were $3.7 million, compared with $4.5 million in the prior quarter and $5.5 million in the fourth quarter of 2023. For the full year of 2024, gap operating expenses were $20 million, compared with $22.5 million for the prior year. Non-gap operating expenses, which exclude stock-based compensation and amortization of intangible assets, were $3.2 million in the fourth quarter compared with $3.3 million in the prior quarter and $4 million in the fourth quarter of 2023. Non-GAAP operating expenses for the full year of 2024 were $14.9 million, compared with $16.4 million for the prior year. The sequential and year-over-year decrease in operating expenses on a GAAP and non-GAAP basis was primarily attributable to a combination of previously implemented cost reductions and the company's ongoing cost containment initiatives. Gap net loss for the fourth quarter of 2024 was $1.6 million or loss of 37 cents per share compared with a net loss of $2.7 million or loss of 98 cents per share in the prior quarter and compared with a net loss of $8.9 million or $12.48 per share in the same quarter a year ago. For the full year of 2024, gap net loss was $10.7 million or loss of $3.57 per share compared compared with a net loss of $16.8 million or $26 per share for full year 2023. On a non-GAAP basis, which excludes amortization of acquired intangibles, stock-based compensation, and severance costs, net loss for the fourth quarter of 2024 was $0.5 million or a loss of 13 cents per share. This compared with a non-GAAP net loss of $0.9 million or a loss of 34 cents per share in the prior quarter, and a net loss of $6.1 million, or a loss per share of $8.52 per share in the same quarter a year ago. Full year 2024 non-GAAP net loss was $5.1 million, or a loss of $1.71 per share, compared with a net loss of $12.2 million, or $18.90 per share for full year 2023. The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non-GAAP EPS for the fourth quarter of 2024 was approximately 4.3 million shares. Adjusted EBITDA, which we define as GAAP net income or losses reported, excluding stock-based compensation, amortization of acquired intangibles, severance costs, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes, was negative $0.4 million in the fourth quarter of 2024, compared with negative $0.8 million in the prior quarter and negative $5.9 million in the fourth quarter of 2023. For the full year of 2024, adjusted EBITDA was negative $4.5 million compared with negative $11.2 million for the prior year. As of December 31st, 2024, the company had $3.3 million of cash and cash equivalents compared with $1.3 million at the end of the third quarter. The sequential increase primarily reflected the aggregate gross proceeds to the company from financing activities of approximately $2.8 million, including approximately $2.6 million of proceeds from the exercise of Series B warrants during the fourth quarter and $0.2 million of sales under our ATM program. Excluding the proceeds from financing activities, operating cash burn was approximately $0.8 million for the fourth quarter of 2024 and compared with $0.7 million for the prior quarter. Now, turning to our outlook. As Ron previously highlighted in his remarks, we continue to have a diverse pipeline of customer engagements to utilize Parasote's millimeter wave solutions for targeted market applications across both fixed wireless access and tactical military communications. Based on a combination of new production orders for our millimeter wave IT products, as well as contribution from shipments against the final backlog orders for our end-of-life memory IC products, we anticipate total revenue to increase year-over-year in the first quarter. More specifically, the company expects total net revenue for the first quarter of 2025 to be in the range of $3.6 million to $4 million. This concludes our prepared remarks, and we thank you for your time this afternoon. Operator, please commence the Q&A session.

At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment. Our first question comes from David Williams with Benchmark. Please proceed.

Hey, good afternoon, gentlemen. Thanks for taking the question, and congrats on the progress here all around the performance and the new orders there.

Thanks, David. Thank you. Thanks, Dave.

Yeah, you know, I've got a couple of questions here, but I think one of the first ones for me is really on the order that you received this quarter, $3.6 million, and you talked about that being fulfilled through 2025. Is there a way we should think about that? Is it fairly linear throughout the year, or do you have any indication on whether that's a 2Q or 3Q? Just kind of how do you think that revenue player is in this year?

It's reasonably linear with really... a little weighted to the second half only because of our ability to ship it. Does that make sense? The customer wants a linear, and we're trying to make it as linear as possible. But, yeah, it's going to be a little back. But I'm not talking September, October. I'm talking July, August in terms of when I say second half. So, yeah, that's how I would look at it.

Okay, great. And then just kind of as you start to get through this inventory issue and you've got this new PO coming in, how do you think that your other customers are trending and looking at your inventory, it's a pretty good position relative. I guess you seem fairly optimistic just about those orders, but are there other things in the pipeline that you would expect to see this year in terms of orders that should come in?

Oh, definitely, yeah. I mean, you know, we had a couple of years ago, David, you know, Just to recap, we had a couple of primary issues, and one was, you know, the inventory situation. The other was really concentration of customers. We had two, you know, basically two customers, I would say, two years ago. We've put a lot of effort into actually increasing our customer base. So, you know, we've probably got, I don't know, we'll call it five times the customers now that we're leveraging over, which makes them much less, depending on any particular customer. So I think the two things are coming into play, which we're optimistic about 2025, which is A, the inventory crisis seems to be, well, we know it is over, certainly based on this order. And two, we've got a much more diverse customer base. Not to mention the fact, by the way, as we move into the military, we're going to be shipping our first volume of military components in Q2. So Obviously, that kind of fits into the overall expansion of our customer base, but that's more of an application expansion as well. So I think all of those factors are helping us out this year.

Fantastic. And then maybe on the comms military side, you listed quite a few applications there. So I guess I'm curious, are you seeing development or seeing engagement on each of those applications, or are those just areas that you think you could potentially benefit from or applications you can work in?

Yeah, that's a good question. I mean, I would say broadly that was all of the potential applications. Probably we're focused on maybe a third of those today materially in terms of just literally working with customers on some of those. And I think we've said in the past, for example, the first application we actually have revenue from is this concept of just – Very simple, you know, kind of bone to Humvee, you know, tactical link, right, if you will. Tactical but secure link. So very, very simple. But, you know, undetectable by the enemy, which is obviously the key here. We've got some, you know, we're doing some experiments with some of our customers on drone. applications, for example. So that's one of the one of the applications decided now on the drone. In the case of the drones, for example, we can transmit high speed video. You can imagine a drone flying over a battlefield and the video gets in high resolution gets transmitted back to a receiver and not again not detectable by the enemy. Those are some of the obvious applications. We're actually doing some applications that are actually, you know, confidential, classified. I can't share today. So pretty fascinating stuff that the military is using our technology for. So hopefully at a later date I can share those. So there's even some that we're doing that are not on that list that we showed in our slide presentations.

And then maybe just one more on the product side there. Just kind of thinking about the AI trends and this intelligent edge and the real move to push AI to the edge, how do you think you could benefit from that? It seems like there's a lot of areas that need to have connectivity that necessarily can't have fiber ran to it today. Are you seeing people start to talk about that or seeing applications develop kind of around that for maybe more smart cities type applications, but really for AI at the edge?

We're seeing that specifically is in an enterprise environment. So for example, you know, really with people's, you know, kind of laptop, let's say an AI enabled laptop. So in that case, they need to get data on and off their network very quickly. As you know, our chips can do this at several gigabits per second. So really today we're seeing literally pending applications for AI support. And so as we all know, one of the main issues for AI is actually the data rates. And so because of our large data rates in an office environment, in an enterprise environment, you know, we help solve that problem. So I would say our first instantiation of that concept is in an enterprise environment.

Great. Thanks so much for the time. I'll jump back into you. Thank you.

My pleasure, David.

Once again, if you have a question or a comment, please indicate so by pressing star 1 on your touchtone phone. The next question comes from Kevin Liu with K-Liu and Company. Please proceed.

Hi. Good afternoon, guys, and let me add my congratulations on the results and outlook here.

Thanks, Kevin. Good to talk to you.

First question I had here was just, you know, it looks like your millimeter wave sales start to ramp again here in the first quarter, but with some of the large orders on FWA and then also the upsized military order, any indication you can give us in terms of how materially that starts to scale kind of in Q2 and beyond, or any sort of indication where you think, you know, what sort of run rate you can reach for millimeter wave later in the year?

I'll defer to Jim on that one. He's closer to the numbers, but Jim, you want to tackle that?

Sure. You know, um, yeah, obviously we're pleased to, you know, basically with the first, you know, the guidance for the first quarter, you can, you can, and Ron's comment, you can obviously tell where we're going to do as much and more in the first quarter as we did all of last year. You know, we've been trying to keep the message that we'd like to keep kind of revenue kind of flat as we make this transition, you know, recognizing that, you know, the first quarter, We expect to, I think we've got one shipment that may have even gone in the last day or so, complete the memory shipments and move on from there that we're trying to keep revenues kind of flat year over year. There is some lumpiness from quarter to quarter. And as Ron mentioned with the new large order, which will ship between Q2 and Q4 this year, you know, more back end loaded to the second half of the year. You know, we're in the process now of, you know, using inventory we have on hand and then, you know, placing new orders. So we expect, you know, a good, you know, a good increase year over year.

Yeah, no, certainly if you guys are able to hold that new flat, given the runoff of the memory business, that would be pretty impressive for millimeter wave. And, Jim, while I have you on the line, maybe if you could talk about where you expect gross margin to normalize once the sales are all millimeter wave and you no longer have that benefit from memory.

Yeah. Obviously, the memory, and particularly the last couple of quarters, had popped pretty high in the high 60s, low 70s as we cleared out the last of the shipments. You know, the challenge had been, you know, over the last few quarters in millimeter wave with the stops and starts and the lower revenue levels kind of getting to a steady production state. You know, we're looking, you know, we're not, you know, we don't achieve the margins we have on the memory. You know, we've always had our corporate target as a 50% gross margin. It's going to take us some time to get there. You know, we'd like to see the margins, you know, initially kind of in the, you know, 40% range. One of the things with the new order, there are some moving pieces there as to which specific devices the customer will take. And one of the aspects is we have a fair amount of inventory. As you may recall, we recorded a large inventory write-down in the fourth quarter of calendar 2023. You know, recognizing a write down is not the same as scrapping the inventory. So we have a fair amount of inventory. And we'll see some benefit to the margins here over the next couple of quarters as we, you know, to the extent we are able to ship written down inventory. But, you know, as we kind of get the production flow going and can get now to a steady state. And actually, I can just tell you yesterday, you know, our COO and I were signing purchase orders yesterday. to get production for these, you know, for this new customer order that Ron talked about, um, as well as, uh, other expected orders, you know, I think we'll see that, you know, that margin improvement, you know, in the second half of the year. So hopefully I, hopefully I answered your question. There is just some moving pieces right now, um, on this, on this order, as Ron said on timing. And, and again, there is some, um, question as to which devices, um, will end up shipping.

Got it. No, that's helpful. And then maybe going back to Ron, just on the military side of things, you know, you guys got your first meaningful customer in a production, you know, I would say fairly quickly. With the ones you have in the pipeline today, do you expect that some of those could convert to production, you know, by the end of this year, or are these more so kind of 2026 events?

I classify them more as 2026. Generally, the military does move a bit slow, but obviously for us, it's a long-term investment. So we were thrilled with this first engagement. It's a very, very pressing application. Needs to get to market as soon as possible. It's going to save people's lives. So we need to move very quickly. And so that's been a real winner for us. Very out of the norm, I think, generally for military applications. I would say generally the rest of the opportunities are kind of in the traditional time scale, if you will. But we should start to see the revenue early 26, but luckily for this first application, it moved very, very quickly, less than a year.

Yeah, understood. And if I could sneak just one more in on B, you had the highlight of the number of applications coming in. in March of 2025. Are you expecting Bede to start to contribute more so this year, or is that also more of a 26th event?

You know, as Jim said, this is a bit of a moving target. Right now, I would say the appetite in Washington to move Bede is very aggressive. So we probably should have spent more time talking about that. So certainly, We're thrilled with this initiative to move towards tech neutral. Obviously, it's very biased towards fiber. Now those days are over. I think the new administration is saying, no, we just want everybody to get high-speed broadband. We don't care how they get it, right? Whatever is the best way to provide that. But part of this now, and if you kind of do a little bit of research, what you'll find is that the administration is also trying to accelerate beads. So we're hoping that, you know, we start to see the effect of that this year, of course, right? We're obviously almost thinking some of these orders are related to that a little bit. That's pure conjecture, frankly, but we're really hoping that BEAT starts to show those effects this year based on, I think, the administration's desire to get, you know, get high-speed Internet out to the masses. You know, everybody in America has high-speed Internet, so that's what we're really counting on ASAP.

All right, great. Thank you so much for taking the questions.

My pleasure, Kevin.

This concludes today's conference, and you may disconnect your lines at this time.

Thank you, everyone.

Thank you for your participation.