Fuel Tech, Inc.

Greetings and welcome to the FuelTech Incorporated Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Devin Sullivan, Managing Director of the Equity Group. Please proceed.

Thank you, LaTanya. Good morning, everyone, and thank you for joining us today for FuelTech's 2024 Second Quarter Financial Results Conference Call. Yesterday, after the close, we issued a press release, a copy of which is available at the company's website, www.ftek.com. Our speakers for today will be Sarah Loney, Chairman and President and Chief Financial Officer, and Ellen Albrecht, the company's Chief Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors. Before turning things over to Vince, I'd like to remind everyone that matters discussed on this call, except for historical information, are forward look statements as defined in Section 21 of the Securities Act of 1934 as amended, which are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995 and reflect expectations regarding future growth, results of operations, cash flows, performance, and business prospects and opportunities as well as assumptions made by and information currently available to our company's management. FuelTech has tried to identify forward-looking statements by using words such as anticipate, believe, plan, expect, estimate, intend, will, and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to FuelTech and are subject to various risks, uncertainties, and other factors, including but not limited to those discussed in the company's annual report on Form 10-K in item 1A under the caption of risk factors and subsequent filings under the Securities Act of 1934 as amended, which could cause FuelTech's actual growth, results of operations, financial condition, cash flows, performance, business prospects, and opportunities to differ materially from those expressed in or implied by these statements. FuelTech undertakes no obligation to update such factors or to publicly announce the results of any forward-looking statements reflect future events developments or change circumstances or for any other reason investors are cautioned that forward-looking statements involve risks and uncertainties including those details in the company's filings with the sec with that said i'd now like to turn the call over to vince arnoni vince please go ahead thank you devin good morning and i'd like to thank everyone for joining us on the call today as expected

Our performance in the second quarter was much improved over Q1 of this year. Following a slow start to the year, our APC and Fuel Chem business segments each exhibited double-digit revenue growth and gross margin expansion during the second quarter. We remain very encouraged by the progress toward commercialization made with our Dissolved Gas Infusion, or DGI, business initiative, and we ended the quarter in a strong financial position. with cash, cash equivalents, and investments of over $30 million and no debt. Additionally, we were pleased to report the incremental $5 million in new APC contract bookings yesterday, which provides us with an effective backlog of just under $10 million as of this date. Now, let's discuss our results for the second quarter in more detail, starting with FuelChem. Our performance this quarter was highlighted by a 52% increase in revenue as compared to the same quarter of the prior year. After a slower than expected first quarter, this performance puts us at the same level as the prior year on a year-to-date basis. This result was driven by several positive factors. First, we had two customers that had largely been dormant over the past two years return to service to address higher regional power demand in a cost-efficient and dependable manner. Second, as discussed on our last call, we realized a modest contribution from a recently initiated demonstration in the western U.S. of our chemical technologies program at a new coal-fired unit. These demonstration-related revenues will be more pronounced in the current third quarter. If this becomes a commercial account, It is expected to generate annualized revenue of approximately $1.5 to $2 million per year at historic fuel chem gross margins. In addition to this domestic opportunity, we are in discussions with one additional coal-fired power generation facility, also in the western U.S., regarding a demonstration later in the year or early in Q1 of 2025. We are also pursuing an opportunity to address the concerns of a biomass-fired boiler operator and this could also materialize into an additional demonstration as we move into next year. With respect to international fuel chem opportunities, we remain in discussions with our partner in Mexico to expand the provision of our chemical technology in that country. Following the election of President Claudia Sheinbaum, who takes office on October 1st, we are still waiting to gain additional clarity on the likelihood of this opportunity. We would expect her to act favorably toward implementation of environmental policy, given her background as an energy engineer and her long-term advocacy on matters of energy efficiency, sustainability, and the environment. With the combination of customers returning to service from scheduled and unplanned outages, the increase in power demand and associated unit dispatch that historically comes during the summer months and the incremental impact of known demonstration revenue. We expect fuel chem revenue to improve significantly in the second half of the year versus the first half of the year, and we expect a year-on-year revenue improvement for the third quarter. Domestic and international opportunities that we are currently pursuing could provide additional upside. Turning to our APC segment. The 15% growth compared to last year's second quarter reflected the timing of successful project execution. As I mentioned previously, we were pleased to announce $5 million in new contract awards yesterday, and based on ongoing discussions with our potential customer base, we expect to close additional new APC orders during the second half of this year. In 2023 and 2024 thus far, We've benefited from the continued adoption of our Ultra, SCR, SNCR, FTC, and ESP emissions control solutions at natural gas and coal-fired units in the U.S., Europe, South Africa, and the Pacific Rim. I expect this to continue throughout the second half of 2024 and into 2025. Independent of the potential impact of regulatory drivers, we are well positioned to take advantage of current industrial market trends, which include plant capacity expansion across several industries, the incentivized use of small turbines to replace traditional less clean power generation, the development of the biocarbon industry, the continued emphasis on decarbonization on a global basis, and the focus on using our ultra systems as the safe source of ammonia for SCRs at hospitals and universities across the U.S. Now on the regulatory front. On June 27th, the Supreme Court granted states and industry applicants request to stay the good neighbor rule while the case proceeds in the D.C. Circuit Court. As we had discussed on previous calls, the rule required 23 states to reduce emissions of nitrogen oxides from power plants and certain industrial facilities to limit their impact on downwind states. This decision temporarily halts the implementation of the rule pending the disposition of the applicant's petitions for review in the U.S. Court of Appeals for the D.C. Circuit. We will be definitely closely monitoring the status of this case to better understand the impact and timing of the final decision making. In addition to the Good Neighbor Rule, we are also watching the progress of EPA's rule for large municipal waste combustor units, which is independent of the Good Neighbor Rule. This rule reduces the nitrogen oxide emissions requirements for large MWC units. FuelTech has had a long history of assisting this industry in meeting its compliance requirements, and we have had discussions with customers in this segment to support their compliance planning. The MWC rule was proposed in February of this year. and is currently being finalized by EPA after the public comment period. The final rule is expected in November, with compliance deadlines expected sometime in the next three years. Lastly, in April of this year, the EPA issued a new stringent greenhouse gas emission standard that required 90% reductions from most new gas-fired plants and existing coal units by 2032. This same proposed rule includes tightening the mercury and air toxic standards by 2028, wastewater discharge limits for coal-fired power plants by 2029, and ash handling and disposal from coal-fired power plants over the next several years. This combined rule comes at a time where there are projections of potential shortfalls in power generation over the next five to seven years in certain geographic regions due to data center power demands and increases in computing power resulting from the adoption of artificial intelligence, and we are in the process of evaluating the potential impact across our technologies in the power generation market. As previously mentioned, opportunities related to these regulatory requirements would be incremental to our current expectations. Now, shifting to our DGI technology. Ongoing business development initiatives continue to gain momentum. We expect to commence the demonstration late in the third quarter or early in the fourth at a fish hatchery site in the western U.S. to highlight the capabilities of DGI for this aquaculture application. Should this demonstration prove successful, we would expect that DGI would be integrated into this customer's greenfield project specifications for a large facility that is expected to be completed by late in 2025. We are also progressing in discussions with one of the largest food processors in this country to utilize DGI to provide dissolved oxygen for the wastewater treatment facility at a food processing plant that they own and operate. The timing of this demonstration is currently unknown, but is likely to occur towards the end of the year. There are multiple other end markets of interest that we are pursuing for DGI, including pulp and paper, food and beverage, petrochemical, and horticulture, and we look forward to addressing these markets prospectively as we continue to advance towards commercialization. On the marketing front, we continue to increase our efforts to communicate the benefits of DGI to targeted end markets and customers, and we will be attending the WESTEC Conference, also known as Water Environment Federation's Technical Exhibition and Conference in New Orleans in October of this year. Based on our effective APC backlog, the business development activities we are pursuing across business segments, and our previously noted expectations for fuel chem. We continue to expect that total revenues for 2024 will exceed the total revenues recognized in 2023 of $27.1 million, and we will provide further guidance as we move throughout 2024. This base case outlet excludes any material contributions from DGI as we are still in the midst of commercialization. In closing, I want to express my thanks to the FuelTech team for their contributions to our business. We are encouraged by the contract landscape for APC, by the resilience and potential growth of our FuelChem segment, and the opportunities we are pursuing at DGI. I thank our shareholders for their continuing support and reiterate to you our focus on delivering long-term shareholder value. Now I'd like to turn the call over to Ellen.

Thank you, Vince, and good morning, everyone. For the quarter, consolidated revenues rose 29% to $7 million from $5.5 million in last year's second quarter, reflecting double-digit growth in both the APC and FuelCom segments from the prior year period. APC segment revenue increased to $3.9 million from $3.4 million in last year's second quarter, primarily related to progress made on project execution. Fuelchem segment revenue increased to $3.1 million from $2 million in the second quarter of 2023 due to the combination of factors that Vince described earlier. Consolidated gross margin for the second quarter was 42% of revenues, up from 37% in last year's second quarter. This increase reflected an increase in both APC and Fuelchem gross margins. APC segment gross margin increased to 39% of segment revenues from 31% in the prior year period due to favorable product and project mix. Fuelchem segment gross margin increased to 46% from 45% during the prior year period, primarily due to the increase in segment revenue. Fuelchem's second quarter gross margin also improved from gross margin of 43% in the first quarter of 2024 validating our expectations that fuel-cum-segment gross margin will return to historic levels in the second half of the year. Consolidated APC segment backlog on June 30, 2024, was $4.3 million, down from a backlog of $7.5 million at December 31, 2023. Backlog at June 30th included $1.8 million of domestically delivered project backlog and $2.5 million of foreign delivered project backlog, compared to $2.6 million of domestic delivered project backlog and $4.9 million of foreign delivered project backlog as of December 31st. We expect that $4.3 million of the current consolidated backlog will be recognized in the next 12 months. As Vince noted, backlog at June 30th did not include the $5 million of new project awards announced yesterday. SG&A expenses increased to $3.3 million from $2.9 million in last year's second quarter, reflecting higher employee-related expenditures. Despite the year-over-year increase, SG&A as a percentage of revenue decreased to 46% from 53% in last year's second quarter, primarily driven by the increase in total revenue and our commitment to maintaining cost-efficient operations. For 2024, we expect SG&A expenses to range between $13 and $13.5 million. Research and development expenses for the second quarter were essentially flat at just over $400,000. primarily reflecting our ongoing investment in the development of new technologies to expand our product offerings in the water and wastewater treatment market, and more specifically, our DGI systems. Our operating loss narrowed to $715,000 from an operating loss of $1.3 million in last year's second quarter, reflecting the increases in revenue and gross profit in both business segments. We continue to take advantage of the favorable interest rate environment, and as of June 30th, have invested the majority of our $30.4 million in cash and held to maturity debt securities and money market funds. This generated $334,000 of interest income in the second quarter, compared to $307,000 in the prior year period. Assuming no significant changes in the interest rate environment, we expect to generate interest income in excess of $1.2 million in 2024. Our net loss for the quarter narrowed to $421,000 or one cent per share compared to a net loss of $1 million or three cents per share in the same period one year ago. Adjusted EBITDA loss was $529,000 compared to an adjusted EBITDA loss of $1.2 million in the same period last year. Lastly, moving to the balance sheet, our financial condition remains strong. As of June 30th, we had cash and cash equivalents of $10.4 million and short and long-term investments totaling $20 million. Working capital was $25.8 million, or $0.85 per share. Stockholders' equity was $43.6 million, or $1.43 per share, and the company continues to have no outstanding debt. We remain confident in our ability to maintain a strong financial position and fund our growth initiatives. I will now turn the call back over to Vince.

Thank you, Ellen. Operator, let's please go ahead and open the line for questions.

Thank you. We will now conduct 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 a question queue. You may press star two if you would 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. Once again, that's star one at this time. One moment while we pose for our first question. The first question comes from Amit Dayal with HC Wainwright. Please proceed.

Thank you. Good morning, everyone. Good morning, Amit. Congrats on the bounce back in the second quarter. You know, just focusing on sort of the DGI side of things, Looks like business development efforts are progressing well. What are you seeing currently for how big some of these contracts could be for you? If you could share any range for how large these opportunities potentially could be, it would be very helpful. Thank you.

Yeah, thanks, Amit. I mean, we've discussed this a little bit previously, I think. When we talk about revenue range for DGI systems, it will depend on the size of the application that we're looking to serve. I mentioned that we're looking at a couple of demonstrations right now. One is for a large food processing plant, and their wastewater treatment plant is sizable. The system that we would provide to a site like this could be between a half a million and a million dollars, just as a range for application. As we're looking at an aquaculture site, it'll depend on the size of the aquaculture site, but I would expect perhaps something a little smaller than that revenue range. So it will definitely get down to the size of the application for which we're looking to provide the dissolved oxygen. But the system range could be anywhere from as low as $200,000 to $300,000 to in excess of $1 million. Understood. Thank you for that.

And with the work you've done so far on this segment, gross margin trends will align with sort of current levels for the legacy business for DGI?

Yeah, we're going to be targeting 35% plus gross margins for DGI, just as a general statement. But as technically we're not commercial yet, it's a little premature. But at a minimum, we're going to be targeting 35% gross margin levels or better.

Okay, thank you.

You're welcome.

FuelChem, you know, seems to be doing, you know, much better, especially going into 2025. Are you taking market share from sort of other players or are these just previous customers who you already had a relationship with who, you know, in tournament are now sort of re-engaging you?

Yeah, no, technically speaking, Amit, there really isn't competition for what we do with our FuelChem technology. So what's happening at this point in time is we are finding that there are, again, some pockets of opportunity where there are units in certain geographies that are being tasked to dispatch at higher load levels. They're burning some fuels that are difficult to burn, but it's very advantageous for them to try to keep themselves up and available to run, particularly during the peak dispatch times of year, that being summer and winter time. So it's these couple of facilities that are giving us the opportunities for additional business at this point in time. One we're up and running on now, the demonstration is going well. The additional one where we're targeting and looking at a startup as we move towards the end of this year or early next year, but those two accounts are indeed brand new customers for us.

Okay, understood. And you highlighted that, you know, if you close on this account in Western U.S., you could, you know, generate, like, record-level margins. Like, what would those margin levels be for the fuel cam business?

I did not say record. I think the word I used was returning to historic levels, returning to our historical levels, if you will. So not record levels, but through the first half of the year, our fuel cam gross margin on a year-to-date basis increased. is a little bit lower than our norm. It's in the 44% to 45% range. But the additional volumes that we're going to see in the second half of the year, our overall year-to-date numbers as we proceed throughout the year should increase more towards our historical average of that 48% to 49% level, 50% level some years. So we will see some margin improvement as we move throughout the remainder of the year.

Thank you for clarifying that. I appreciate it.

No problem.

Yeah, that's all I have, Vince. We'll take more of the questions offline. Thank you. Thanks, Amit.

The next question comes from William Brimmer with Vanquish Capital Markets. Please proceed.

Good morning, Vince. Hey, Bill. How are you? I'm doing well. Thank you. I appreciate the update on the future political compliance rules. That's very helpful, especially there's a few of them out there. The question I have, and I'm going back almost six years, was released by you guys September 10th of 2018, in which it was a very sizable release, totaling $15.8 million, if you recall. But more importantly in this release, this was the second contract that you received in the data center power market going back six years. It was at its infancy, and we all know that the data center power market has been an enormous play. My question to you is, is that we supplied the selective catalytic reduction and the urea reagent technologies to these data centers. Why haven't we received the bulk load if we were so early on this end market? Where has been the future follow-up orders and, you know, As I voiced in the past, we haven't had a book to burn over 1.5 in some time. Now, today's announcement of $5 million is commendable. It's not earth-shattering, but it's commendable. It's a step in the right direction. But we were so early on this end market, and yet there hasn't been any follow-through whatsoever.

Understood. Obviously, I know the order that you're making reference to. It was actually – It was two separate contract awards, but in total it was for 20 units of STR in support of gas turbines that were backup power for a data center. And yes, that was in the 2018-2019 timeframe. Now, interesting because we actually did think that we would see more opportunity from the data center market over this past handful of years. But what we found out is A couple of things. A primary point is the requirement for the use of post-combustion control. In other words, our systems for reducing nitrogen oxide emissions is very specific to each application because the requirement for that emissions reduction depends on how many hours that these units are going to be permitted to run on an annual basis. And if the permits that are obtained don't require these units to run over that requirement level, if you will, then they don't require the pollution control systems on those units. So we've been watching this very, very closely. Believe me, there's no one that's more disappointed that we haven't seen more revenue from this marketplace than us because it's something that we definitely had some high hopes for. But as we've come to find out that The data centers that are being permitted, they're not requiring the pollution control requirements because of how they've written those permits for those applications. So we're still in contact with the gas turbine providers that we worked with previously and other ones as well. So we are watching this market space. And if it happens to turn our way again, we'll be there ready to interact and engage. But unfortunately, there hasn't been a further expansion of the requirement for the pollution control technologies on these applications. And a long answer, but that's the best knowledge that we have today.

No, I appreciate the articulation of that. I truly do in the education. Second question, our equity actually traded down to 91 cents this week, far below our cash per share. Basically, the market's telling us that they don't value our products, our management, et cetera, if we're trading below cash per share. We need to turn this around. I've articulated in the past that we need a complete change in our sales cycle or additional sales personnel. Have any of these changes been implemented since the last call?

No changes in sales cycle, Bill, nor in sales team as we sit here today. Our sales cycles are challenging cycles, and they always have been. Sometimes our sales cycle for our air pollution control business is five to seven years long from when we first have an inquiry and provide a budgeted bid. So it's something that we watch all the time. So what's interesting to note is, as part of the contract orders today, the great majority of that contract value is international in nature. So that's a cause, a little bit of a nuance and a little bit of surprise, particularly with the contract values that we're talking about. But what we're looking to continue to do is not just focus domestically, but look to find partners that are doing business all over the world that can utilize our technology and some of the expertise that we've developed over the past four decades. We follow our sales cycles very closely. One thing I will share with you is that we have never seen, call it longer periods of time to come to contract than we have over this past two to three, four years post COVID. I don't know if it's the way businesses interact with each other. I don't know if it's how budgets are being set and managed or just uncertainty in the timing of when projects are pushed forward. But that has been a recent trend that we've specifically noticed with our business over this past, again, two to three year time frame. Just coming to contract closure is taking longer than we thought. Some of the orders that we announced today I mean, we've been trying to get the contracts finalized for the past two, three, four months, although we had final agreement two, three, four months ago. But just working through final terms and conditions, exceptions, payment terms, all your usual legal language is part of a contract. It just takes longer to get those things done. So just general trends, but on an overall basis, I am pleased with where we stand today relative to our APC contract outlook. I am expecting to see some material awards between now and the end of the year, or even as we move into the first month of next year. You may have noted in our contract award press release today that one of those contracts came with an option for additional units, and that option expires in January of 2025. If the customer exercises that option, it's a significant incremental contract award for us. So I'm pleased with what we just announced yesterday, long overdue. I'll definitely agree with that, but I do see good activity coming our way in this next six to 12 months.

I appreciate that. I truly do. I hope that you and the Bailey's aren't content. Okay. And I, for one, I have more shares than yourself and Mr. Cummings combined. Okay. And so I am not happy with the performance. being a exceptionally long-term shareholder that saw the value, the trends, et cetera, I just don't see the implementation on your end. You guys have to kick it up a notch. You really do. Thank you for your time, Vince.

Thanks, Bill. Appreciate the comments. And believe me, we are not complacent in any way or form.

The next question comes from Mark Silk with Silk Investment. Please proceed.

Hey, Vince. How are you doing?

Hi, Mark. How are you?

Doing okay. The first thing you discussed, the fuel chem, that $1.52 million, the way you phrase it, does that sound like that could be recurring or it's just a one-off?

If the customer fully goes commercial post-demonstration, it will be annualized revenue. It is recurring revenue.

That's encouraging. Yes. Sticking with that area, let me see. What are the reasons of the return of the dormant customers, and how did that come about? Did they reach out to you, or was it an internal sales strategy?

Actually, in this case, they reached back out to us. In one of the cases, our equipment was already on the site for this particular customer application, and they – Because of regional power demand, they've been tasked to run these units, and they obviously have found it profitable to run these units. But when they run, because of the coal they're utilizing, they need to run our program. And so, again, the levels that they're taking our chemical, we haven't seen from this customer in probably three years or thereabouts. So that was a nice surprise. The other one is outside of the U.S., a customer down in – call it the island area. They burn oil, and this customer was actually looking to convert units to a different fuel source and use that different fuel source for power generation. Those conversions did not happen. They came to us and said, we need to start back up and we need equipment for an additional unit as well. Can you help us? And of course we did. So that was a nice surprise return as well. And believe me, it was a good fortune to have these two customers return back to us here in 2024. Very pleased with that.

So kind of get to this point. So it How do you leverage the first example you gave is they realize they need your product and they've used it in the past. How do you leverage that to, again, you're the only player in town, and is there internal strategies as far as how to kind of leverage that testimonial, let's say, because you could capture lightning in a bottle?

Agreed, and we've tried to leverage, call it the benefits of the technology model year in, year out, over this past year specifically, we do large advertising and email campaigns specifically targeted to coal-fired units that are operational today to see if we can provide them with benefit. But our program benefits are, they're really specific to the end user and what their needs and requirements are. They have to be burning a fuel that is causing them some difficulty. they have to be dispatched at higher loads because if they're only running at 25% or 50% of their base load level, in all likelihood, they're not going to have slagging and following issues on the inside of their boiler. So it's very specific criteria that these end users need to have for them to see benefit of our program. And our program, it's not inexpensive. So for them to calculate a A return on investment, it ends up being more of a specific case that provides success to them. And, yes, we are out there in the marketplace reaching out to anyone and everyone that we can to see if we can find additional opportunity for this particular application.

Okay. And then the last question on FuelChem before I move on is you've got two new customers. So how did that come about?

Well, one new customer, that's the one that we're demonstrating right now. This new customer actually has, call it, some common relationships, if you will, from other plants where we've done business before. And so they end up coming to us because of their familiarity with what we've done on other units.

You mentioned invested new technologies on your press release. Is that DGI or are there other parts of the business?

That's DGI specifically.

Okay. So one thing that got overlooked, and maybe it's not a big issue because it didn't even come up in a conference call, but when you talked about your $5.5 million backlog, this is the first time I heard you discuss a renewable energy market. So can you expand on the possibilities and where you guys can find business opportunities? Sure.

Yeah, so the renewable reference was in our contract press release. And so one of the orders that we were able to bring in-house was it's an application where ammonia is being fracked, and it's being broken down into hydrogen and its other components. And whenever ammonia is broken down like that, it creates an emissions flow, if you will. And we're providing technology to address the emissions from that ammonia fracking process. And it's actually at two locations in Europe whereby we're providing our equipment. So it's a nice adder for us to say that we're associated with a renewable energy application. It is fact. And hopefully we'll find more applications like this prospectively. The ultimate end customer that we're dealing with is looking to build facilities like this in multiple locations around the world. If we do well with our execution on our contract with them, hopefully we'll be well aligned for additional business with them in the future.

Great, because that is a nice buzzword. And then maybe to piggyback on the last caller, so, you know, you talk about It seems like there's so many opportunities there. Obviously, the Supreme Court hasn't done you any favors, but maybe things can change. And I'm not going to rely on the kindness of people's hearts that their neighbors, they don't care if their neighbors get lung cancer or whatever. So there's no doubt you're undervalued, especially you've done a good job maintaining your cash balance and this stuff. So I do appreciate a healthy balance sheet. But now that you're hovering at the $1 range and, you know, I don't know if I don't know if anyone would be short this stock, but if people could try to manipulate this below a dollar to try to get you delisted, I think now's the time to talk about a very small, just to announce a share buyback. Let's just use a million dollars or a million and a half dollars. A million and a half dollars can basically retire 5% of your shares outstanding. So when things turn around, there's going to be less opportunity. The supply and demand is going to be in these long-term shareholders' favors. But you can have orders below the market that if something happens where the market tanks like it did this week and it got to $0.91, you might have been there at $0.92, $0.93, $0.85, $0.95, whatever. I think strategically, using a small portion of your cash, and that's the important part. I'm not telling you to do a $5 million buyback. And I haven't even proposed this before, but I think now's the time. Maybe it makes sense to announce... a small buyback, just so you can retire shares at a ridiculously cheap price, and then as the business gears up, then it was a great investment as well.

Understood, Mark. I appreciate the commentary. As I mentioned previously, we do discuss at board level the best utilization of our cash, and we've discussed buyback scenarios on a recurring basis. It's something that we will indeed discuss again. I can't make any specific comments about whether or not it's something we'll move forward and do at this point in time. I will tell you that obviously we watch the dollar threshold very, very closely. We take it very seriously. And if indeed we needed to take action to secure a dollar share price, we will do it and we'll find the best way to do it.

Yeah, you know, like I said, it would be using a lot of the money And as Warren Buffett said, you're not out there in the market buying the stock on the way up. You're just there saying, I'm going to retire stock at a ridiculous level because as you give out options, it's going to be a plus plus. So, yeah, hopefully they look at this more seriously than they have in the past. And again, the dollar number I don't think would impact the balance sheet that negatively because I'm not looking for a $5 or $10 million buyback. I'm trying to be realistic here. Okay?

Will do, Mark. Appreciate the commentary.

Good luck going forward, my friend.

Thank you.

Thank you. At this time, I would like to turn the call back over to Mr. Visit on Noni for closing comments.

Thank you, Operator. I would like to thank everyone for taking the time to join us on the call today. We are continually looking to find ways to increase our shareholder value, and we look forward to discussing further our results as we move throughout the year. I wish everybody a good day, and we'll talk again soon. Thank you.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.