Greetings, and welcome to the Frequency Electronics Q2 Fiscal 2024 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. 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. Any statements made by the company during this conference call regarding the future constitute forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements inherently involve uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences are included in the company's press releases and are further detailed in the company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the company undertakes no obligation to update these statements to revisions or changes after the date of this conference call. It is now my pleasure to introduce your host, Thomas McClelland, President and Chief Executive Officer. Thank you, and good afternoon, everyone. From a financial point of view, as was the case last quarter, we have encouraging numbers to report, and I continue to be confident that we're on a sustainable path of growth and profitability. We have a lot of exciting new business and are confident in our ability to execute profitably going forward. As everyone should be aware, we publicly announced three relatively large contracts, one right after the other, during the month of November. These contracts were a long time in the making, and originally, we anticipated getting under contract much sooner. However, in the end, this occurred after the close of Q2. Because these contracts have been anticipated for some time, we've been able to prepare ahead of time and are thus in an excellent position to hit the ground running, so to speak. We have every reason to be confident in our ability to execute these programs successfully. In addition, we anticipate additional smaller contracts to be coming online over the next few weeks/months, and we will make public announcements as appropriate. All in all, we're experiencing significant growth and have good reason to believe that this trend will continue going forward. Let me briefly highlight the financial results before Steve fills you in on the details. Revenue, gross margin, and operating income are all up compared to Q2 of last fiscal year and holding steady compared to Q1 of this year. The backlog's holding steady at around $50 million at the end of Q2 and is anticipated to grow significantly based on the new orders that we got in November. So in summary, I believe our efforts have put us on a sustainable, positive trajectory of growth in our core business. The company remains committed to achieving sustained profitability and cash generation going forward. At this point, I'd like to turn things over to Steve Bernstein, our CFO, who will go through the numbers in a lot more detail. Thank you, Tom, and good afternoon. For the six months ended October 31st, 2023, consolidated revenue was $25.9 million, compared to $17.2 million for the same period of the prior fiscal year. The components of revenue are as follows: Revenue from commercial and U.S. government satellite programs was approximately $9.5 million, or 37%, compared to $7.8 million, or 46%, in the same period of the prior fiscal year. Revenues on satellite payload contracts are recognized primarily under the Percentage-of-Completion Method and are recorded only in the FEI New York segment. Revenues from non-space, U.S. Government, and DoD customers, which are recorded in both the FEI New York and FEI-Zyfer segments, were $15.8 million, compared to $8 million in the same period of the prior fiscal year, and accounted for approximately 58% of consolidated revenue, compared to 47% for the prior fiscal year. Other commercial industrial revenue was $1.4 million for the six months ending October 31st, 2023 and 2022. The significant increase in revenue for the period compared to the same period in the previous fiscal year was related to contract awards, resolution of technical problems from the previous fiscal year, and improvements made by management. For the six months ended October 31st, 2023, gross margin and gross margin rate increased as compared to the same period of fiscal year 2023. The gross margin dollar increased as a direct result of increase in revenue. The gross margin rate increased significantly due to the fact that many of the technical challenges faced in the prior fiscal year have been resolved, and as a result, the related programs are now moving forward and running more efficiently. Previous programs that sustained lower margins due to technical issues are near completion or have completed. For the six months ending October 31st, 2023 and 2022, SG&A expenses were approximately 19% and 23%, respectively, of consolidated revenue. The percentage of consolidated revenue decreased 5% due to an increase in sales for the six months ending October 31st, 2023, as compared to the six months ending October 31st, 2022. The increase in SG&A expense for the six months ending October 31st, 2023, as compared to the prior year period, was largely due to an increase in professional fees, payroll, and associated costs. R&D expense for the six months ending October 31st, 2023, decreased to $1.3 million from $1.7 million for the six months period ending October 31st, 2022, a decrease of $400,000, and were approximately 5% and 10%, respectively, of consolidated revenue. R&D decreased for the six months ending October 31st, 2023, was primarily due to a shift of employees between production and development, depending upon availability, scheduling, and necessity. The company plans to continue to invest in R&D in the future to keep its products at a state of the art. For the six months ending October 31st, 2023, the company recorded operating income of $3 million compared to an operating loss of $5.4 million in the prior year. Operating income increased due to the combination of increase in revenue, gross margin, and the effects of cost-cutting measures instituted by management that began in fiscal year 2023. Other income can be derived from reclaiming of metals, refunds, interest on deferred trust assets, or the sale of fixed assets, interest expenses related to deferred compensation payments made to retired employees. This yields pretax income of approximately $2.9 million, compared to a $5.4 million pretax loss for the prior fiscal year. For the six months ending October 31st, 2023, the company recorded a tax provision of $13,000 compared to $2,000 for the same period of the prior fiscal year. Consolidated net income for the six-month period ending October 31st, 2023, was $2.8 million, or $0.30 per share, compared to a $5.4 million loss, or $0.58 per share, in the previous fiscal year. Our fully funded backlog at the end of October 2023 was approximately $50 million, compared to $56 million for the previous fiscal year ending April 30th, 2023. The company's balance sheet continues to reflect a strong working capital position of approximately $25 million at October 31st, 2023, and a current ratio of approximately 2-to-1. Additionally, the company is debt-free. The company believes that its liquidity is adequate to meet its operating and investing needs for the next 12 months and the foreseeable future. I will turn the call back to Tom, and we look for your questions soon. Thanks, Steve. We'll now turn things over for any questions. Certainly. 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 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, please press star one on your phone at this time if you wish to ask a question, and please hold while we pull for questions. And the first question today is coming from Brett Reiss, from Janney. Brett, your line is live. Gentlemen, thanks for the opportunity to asking a question or two. Tom, the Starlink satellite program that SpaceX has, that, you know, so many of the militaries are using in the conflicts that are going on, is the satellite size of those satellites, you know, the size where, you know, you know, our atomic clocks and our frequency generators, you know, are these, you know, you know, potential sales opportunities? Well, I can tell you that Starlink, in particular, we none of our products are on the Starlink satellites at this point in time, nor do we have any anticipated presence on the Starlink satellites going forward. However, there are several other similar kind of satellite systems that are in various stages of development and launch, and we have been talking to several of these programs, and we do anticipate at some point in the future, that we will definitely be involved in these programs. So one of the important things, Starlink is very much a communication system. Where we think that we have a better opportunity is in similar systems that are developing a navigation segment on those systems. And there, the precision timing becomes much more important, and that provides a big opportunity for us. And this is a pretty big thing at this point in time. People are very concerned about the vulnerability of GPS and the ability to. So one thing is to actually take out the GPS satellites, the other is to jam the signals from those satellites or to spoof them. And it's much more difficult to jam the signals that come from low-Earth orbit satellites, because the signals are a much higher level. So, a lot of people, a lot of programs are looking at adding a navigation payload and capability to those systems. And, we have a big potential opportunity in those, and we're looking at those very, very carefully. These organizations that are looking to develop these similar systems, do you know who they are, and you already have your foot in the door, or is it, you know, someone that, you know, your sales people have to, you know, first, you know, get to know? No, we, we know who they are, and we do already have our foot in the door in a significant number of these. Great. I'm going to drop back in queue. Thanks again for another good quarter, and good holiday to you. Okay. Thank you, Brett. Thank you. Bye. Thank you. The next question is coming from [Chris Witowski]. Chris is a private investor. Chris, your line is live. Hello, congratulations on great results. Thank you. I want to ask first, did margins go down slightly sequentially? Because you discussed margin on six months basis, but on quarterly basis, it seems like sequentially, you had slightly larger revenues. Last quarter, you said, you know, barring one-time items, your operating income was a little bit over $1 million, and now it was a little bit under $1 million. Yeah. Yeah, yeah. You, that's certainly correct. But I think the point I would emphasize, we always anticipate that quarter to quarter, we're going to see some fluctuations in things. As we reported last quarter, there were some one-time events that had a positive impact on those numbers, and those one-time events aren't there this quarter. So I think strictly speaking, the margin went down a little bit, but I think realistically, I would characterize it as pretty much holding steady. Okay. And, generally speaking, does your business allow for, you know, leverage, kind of continuing raising margins as your revenues increase, or would that, would the government economies kind of like, look at that and take that into account when they price your contracts? Yeah, you know, we for our government customer, of course, they scrutinize things pretty carefully, and we're subject to audit of all our numbers on any programs that the ultimate customer is the government. But I think that we feel pretty strongly that our gross margin is going to continue an upward trend. Of course, that's not going to go on indefinitely, but we're targeting a gross margin of around 50%, and we think that we can get there within the next six months to a year. That is, that is great to hear. And, your backlogs were, you know, kind of a hair down sequentially again, but you still anticipate, to be clear, you still anticipate backlogs shooting up again as you win more deals. Is that correct? That's definitely correct. Same, I would characterize that the same way. It's true, literally speaking, the numbers have gone down a little bit over the last quarter, but they're really pretty much holding steady. And, given the new business that we booked in the month of November, and additionally, what we anticipate over the next couple of months, our backlog is definitely going to trend upwards because of that. Okay, that's good to hear. And, of the deals you announced, one of them wasn't a U.S. government customer. Is that still a military deal, or is that a civilian deal? I t's not a military deal. Let me put it that way. Do you expect you can enter the civilian markets in any way? I'm sorry, can you say that again? Do you expect to go into civilian markets significantly? Definitely. You know, of course in the satellite business, the U.S. government has historically been the biggest player. But you know, we've always been there. There's a lot of activity and more and more coming from other arenas. And the $9 million contract that we talked about in our November press release is an example of that, and we anticipate that there will be more of that going forward. Okay. That's it for me. Okay. Congratulations again. Okay. Thank you. Thank you. Thank you. The next question is coming from Tim Hasara from Sinnet Capital. Tim, your line is live. Yeah, thank you. Yeah, Tom, just, I just wonder, I just wanna confirm, you said 50% gross margins in the next six months to a year? Is that correct? Yes. Okay. That's our goal. I, right. I would assume that the three new contracts that you announced in November would be much higher gross margin than to help the mix there. Would that be correct? In general, that's correct, yes. With respect to those three contracts, I would assume that you'll book those as a percentage-of-completion through the term. I guess all three of them are approximately t wo years. Yeah, that one of them is actually closer to three years, but, and one of them is 18 months. But they will all be a percentage completion. With respect to the booking those on a quarterly basis, well, can you give us any kind of estimate or guidance? Will it be somewhat linear for the amount of the contract or more front-loaded, back-loaded, or any kind of color would help kind of model that? Yeah. I think, you know, it's pretty hard to model, but I would say that this, the best approximation would be a linear approximation. Probably a little bit more upfront, but approximately linear over the course of the program. Okay, great. I don't have any other questions. Thank you. Okay, thank you. Thank you. The next question is coming from [Frank Wyszynski], and Frank is a private investor. Frank, your line is live. Hi, and your backlog, given the new orders in November, your current backlog must be closing in on about $100 million. And in that light, your inventories, which are high, is a positive, I assume. I'm curious about the personnel, though. Do you have enough engineers, and do you have enough people to put out these contracts efficiently? Okay. So, a couple of things to highlight there. First of all, the current backlog is not at $100 million. You have to keep in mind that when we get under contract on these programs, we don't get authorized to spend the full amount of the contract. So, the backlog is going to go up, and it's going to go up significantly over the coming months, but it doesn't all happen at once. So, that's kind of an important thing to understand. I think that I'd like to address inventory a little bit. I think you're actually right on the money with that one. I think, you know, we've we're really coming out of the pandemic and this period where we all experienced supply chain problems. And as part of that, it was pretty important to inventory provided a good buffer to all of the supply chain kind of problems. And we're really kind of coming out of that, and we're at the point where we've we really want to be much more aggressive in keeping the inventory down and and approaching it and managing that inventory very carefully. But you're right, we do have a very significant inventory, and as we start these programs, especially where we're on really quite historically, quite tight schedules to deliver things, that's a that's a benefit. Now, your other part of the question, regarding engineers, I think, this, what I tried to point out in my opening statements is that, we've actually been working on these three programs for quite some time. And in fact, it's been fairly frustrating that we didn't get, turned on, get under contract on these jobs sooner than we did. But the benefit of that, the positive thing about that, is that we've really been preparing for these programs over the last, six-nine months. And, we have cautiously been, increasing our workforce and, hiring, engineers. So we're really in, I think, a very, very good position, in that regard, and, I'm very, very optimistic about our ability to, to, execute these, effectively, right from the start. Good. I'm a little curious, though, on the how you figure the backlog. You've got contract awards, say, the first one for $25 million. So you don't take all that $25 million, even though it has been awarded, you don't take it in the backlog? No, we only take fully funded backlog. So in that example, let's just say a $25 million contract, they give you $5 million upfront, and then they progressively fund it accordingly, we would only put $5 million in backlog. I understand, but, I mean, it's not like, the rest of that $25 million is contingent on anything other than you delivering the first $5 million, I suppose, right? It's not contingent on anything, but it's just funding, and we only report funded backlog. Right. And just to follow up on that, in that particular example, that's a $25 million program, which has that completion in 18 months. So I think, one of the important ways to look at that, is that, that backlog has to surface within the next 18 months. Yep. Obviously, most of it a lot sooner than that. Okay. So our initial turn on was just for $a few million, but that has to, in order for that customer to get that product, in 18 months, they're going to have to turn us on for a lot more money, relatively, quickly. Great, I understand. In that same vein, the atomic clock order, which I guess has a potential contract options of $70 million, depending upon the effectiveness of the navigation system performance on a demonstration satellite. When is that demonstration satellite going up? And when do you expect to receive confirmation that the product has been effective? I think that is currently scheduled for 2027. So we would anticipate that potentially even well before that, but certainly at that point in time, we would anticipate that we, you know, that would get determined. Let's just put it that way. Okay. You know, this is a new customer for us? Yeah. And I think one of the important things is for that customer to gain confidence in working with FEI. And so we're doing everything we can to you know position ourselves to you know so that those options get realized. Yes. It, it's funny, you don't expect any engineering difficulties like you've had in past programs on that, on this program, I hope? No, we, we do not. In fact, that, that's one of the things, this, this is, there, there's very little new development on this. It's basically, building, hardware. It's a, a production job, and, you know, it, there's, there's every reason to believe that, we should be very, very, successful on this one. Okay. One final one from me. You know, investors look at FEI pretty much as a satellite program company, but the Zyfer and the non-satellite business seems to be going quite well. Correct. Are there big orders associated with that business, or is it more continuing orders, or is it smaller orders? But the numbers are quite impressive, how that's going. Yeah. They actually have been very successful over the past couple of quarters in getting new work, completely new stuff. Of course, there are also continuing orders on their existing products. They went through a rough patch about a year ago. I remember. Things were moved around the country, but they've surprised us all, actually, in their ability to turn things around and things are really just looking really good at Zyfer at this point in time. And are the margins at Zyfer similar to the satellite, or is there any difference in the margin structure of those two operations? Yeah, I think they're, you know, the numbers aren't that different when you look at them, but I think the details of how you get there are definitely not quite the same. All right. Good. Well, thank you very much. Wish you best of luck in coming quarters. Thank you. Thank you. Thank you. The next question is coming from George Marema from Pareto Ventures. George, your line is live. Hi, thanks for taking my call. I had a question about your SG&A R&D expenses. If, as revenues increase, and if you get near your gross margin. Well, let me ask you a different way. If you get towards your gross margin goals, what would net margins approximately look like? Steve, I'll let you take that one. So SG&A on a dollar value number is going to run fairly consistent. I mean, again, if we, if we grow substantially, yes, there'll be some more costs in there, but percent-wise, as you see, it went down. Forgetting the percentage, the dollars, even as a formula of income is down. So we expect it to stay at that current level where it is now, unless things substantially grow. Okay. So you don't expect the net margins to expand, as a percentage of sales? Gross margin or SG&A? No, net margin. Net. Gross margin. Well, let's say your gross margin does hit 50%, what would you anticipate a net margin be? Operating margin. I would have to look at it, but it will go up, and again, I think, like I said, the actual cost structure will be relatively the same, all in all. The SG&A right now is about $2.5 a quarter. You don't expect that to increase too much? No, I do not. Okay. All right. A lso, after you've won a couple of these, these big jobs here recently, what does the opportunity outlook over the next, you know, couple of years look like? You know, the opportunity set? Pipeline, if you will. I think, yeah. I think the opportunities look really great. You know, you might imagine that we've been working on these three jobs for some time, and we finally got them, and that's it. But the reality is that we're just actually overwhelmed with opportunities at this point in time. Space is booming, and I don't see that turning around anytime soon. Okay. So a lot more. You mentioned you may have some small wins here in the coming weeks/month. Yeah. Do you, do you, are there any big ones in the pipeline, or they're all you won them all already? Well, no, there, there are definitely some other big things in the pipeline, but, you know, the, the big things don't happen overnight. T here's kind of a constant barrage of smaller things coming in. The big ones, you know, I think we look for some things to materialize in six-nine months, perhaps. Okay. And if I may ask one last one, since you were there, you know, you know, for many years there, I know you're new as a CEO, but you have some history with the company. Can you kind of maybe compare and contrast or describe maybe, you know, qualitatively, the difference between today and, say, back around 2018, there was a similar, I'd say, setup in terms of, you know, huge opportunities, a lot of wins, but it just didn't really materialize. What kind of happened then, and what's to prevent it from everything to kind of falling apart again now? Yeah. A very good question, and of course there are no guarantees in life. Of course We are doing some things differently. I think that if we look historically, we've had a lot of difficulty with what we refer to as NRE programs, Non-Recurring Engineering, or a lot of new development activity. Historically, when those turn into later on into production, we've been able to do those very profitably, but we have been challenged with the development. And I think one thing that I've made a real effort to do differently is we're bidding these things differently. I think, to some extent, you know, my experience here over many years, I have been involved in an awful lot of these development programs, and I know the pitfalls and the difficulties, and I think we are, we're pushing back really hard, and we're making sure that we bid these in a way that we feel confident that we can be profitable. And so, you know, I think, that's one of the elements. I think then the rest is just kind of the devil's in the details. I think if we look at the specific programs that have just come online in November, I think these have a smaller non-recurring engineering component to them. They're much more production, and those historically we have been very effective on, so we're, we're confident in that regard. And I think the rest of it is just I, I think one of the problems starting in 2018 is that you know the top management really didn't understand the programs very well. And so, so we, we really didn't we, we just kind of ended up behind the eight ball from the start in some cases. And I think I'm actively involved in these programs, and I'm committed to making sure that they execute effectively going forward. And I think so, so that's my take on things. It's a really good question, but, you know, we'll just have to see how things go going forward. I appreciate your candor. If I may slip in one real, one last quick one here. And I know you guys don't give guidance. Do you guys, as a company, have good visibility quarter to quarter on what revenues and costs look like, or you don't have much visibility? Oh, we have pretty good visibility. Have you conside red giving quarterly guidance a quarter ahead? Steve? As of now, we don't guide going forward. Maybe we will continue in the future, but not for now. Okay. Thank you for your time. Okay. Thank you. The next question is coming from Michael Eisner. Michael is a private investor. Michael, your line is live. Hi. How many employees do you have at this time? We have just about 200 employees, including all three sites at this point. That's full-time? Y es. You have some part-time also, right? We have some part-time. We work with some consultants, and we have some contracts with some outside engineering contractors. All right, so you hired more people. The three contracts, the first two, the technology is already proven on the first two? Yes. The $25 million and the $19 million. Yes. That's great. Now, can they, can these companies, whoever you're dealing with, can they give you more business on these two contracts? Oh, yes. All right. Yes. J ust the first part of, like, for example, the $25 million, that will be done in roughly two years or so. That could go for another $20 million, say? Well, I wanna make sure I don't mislead. It's in that particular case, it's not like there are contract options going forward, but that is a major satellite supplier, and we've had many, many contracts with that particular company over the years, and we will have many more going forward. In fact, we do currently have other contracts with that company, and I have every reason to believe that if we are successful on that particular program, that will lead to other satellite programs for us going forward. Well, it should work because you're using technology that worked before. Yep, absolutely. You know, one of the things we pointed out in the press release is that this is a $25 million program, but from beginning to end, this 18-month time period. And in a way, this is the ultimate customer is U.S. government. And this is sort of a test to see if we, and, of course, our customer, can deliver in this shortened period of time. Typically, a program like this would take roughly three years to do the same thing. We're trying to do it in half that time. And so we see this as a big challenge, but it's one that we are pretty confident that we can do. I think if we're successful, I think there's going to be a lot more business behind it. All right, well, that's good to hear. But at this point, these three contracts, I assume you already started working on them? That's correct. Yes. So the clock is already ticking because you didn't start just today or the day t he contract was awarded, it came in. Yeah. We are moving forward very aggressively on all of these. The $9.1 million, is that, is that new technology, or you had did that work before? No, that's not. That's not new technology for us. That's a space-based atomic frequency standard, but that is an existing FEI product that has already gone through qualification testing, and so forth, and so on. And, so, that is one that we really do not anticipate any major difficulties in the it's just straight manufacturing. All right. Who owns the technology for that, you or the customer? We own the technology. Is that on all three contracts? Y es. So they, once you make it for them, they can't take the work to someone else? No, no, definitely not. All right, so you get the R&D, which is key. And that one you mentioned, it could be $70 million over six years. Is that more because they don't want to give you the whole thing at once? They want- Well, so I have to be careful what I say because as part of this contract, there's a lot of specific information that we're not able to divulge. But this is a navigation satellite system. And so the idea is, the products that we're going to deliver on this contract are going to go on a demonstration satellite. And if that demonstration satellite is successful, then there's a very high probability that those options will be exercised. Now, the other thing to keep in mind, if you read about a lot of these satellite systems, there's all kind of, you know, independent of FEI's participation in these programs, there's a, you know, it's very expensive to launch a satellite system. There are all kind of considerations. And, so there are many things other than just the product that we deliver for the satellite that can cause problems for the ultimate success of that satellite system. Those things are completely out of our control. And, so there are a number of other reasons that our customer could decide down the road not to go forward with this system, things that have nothing to do with FEI. I think we have reasons which I can't go into, to believe that that is unlikely, but nonetheless, we have to recognize that those are possibilities. But I think, of course, the other side of it is that if we're not successful in delivering on time, or our products don't work the way we anticipated, then obviously our customer would have the opportunity to try to procure those products from somebody else. We think that's highly unlikely, and it's hard to imagine that that would be cost-effective for our customer. So setting aside the part of this that is completely out of our control, that the system doesn't go forward because of the financial things or other, other things that have nothing to do with our products, we set that aside and look at the part that we can control. I think we feel that we're in a really good position, and I think it is very likely that one way or another, those options will get exercised. Just for example, someone may make the part that attaches to your part, and if they can't make it, that would be an example of something could go wrong, hypothetically. Well, that's. Yeah, that's the kind of thing that could go wrong. You know, we've you know, I, I'm not going to speak specifically about this program, but we've seen where other space programs had you know, the whole program was put together, and the plans were to launch satellites in Russia. And then over the last couple of years, all of the things that have gone on in the geopolitical realm, Russian arrangements with the U.S. are suddenly not very good, and so those launch opportunities disappear. And so now the customer making that system is scrambling to find other kind of launch sources someplace else in the world. That delays programs, and then when things are delayed, you know, people are investing money, and it goes out in time, and things, things become a lot more challenging. So that's just by way of example of other things that can throw a monkey wrench into these kind of programs. So I probably shouldn't be sitting here being negative about this kind of thing, but I think those are the kind of things that I could imagine that would potentially be a problem. You know, if you pay attention to the commercial satellite programs that people talk about, somebody mentioned Starlink earlier, and there are many other of these systems, there's a good number of them that never really end up getting launched. No, yeah, that's always, that can always happen. But you're comfortable with these three contracts? Yes. The third, the third one, is that the three year one? That you said three years before. That's correct. Yes. Three year. All right, so all these contracts could go any, you could do more work on, but right now, you expect a couple of just smaller contracts over the next couple of months? That's correct. All right. And, I think SpaceX, I think, is launching about half the rockets at this point, right? I don't know the exact number, but they're pretty busy, yes. Yeah, it's not really your concern. You just make the product. And I think that's all I had to ask. It sounds like the backlog is going to grow, and your revenue went up this quarter, so that's always been it's been going up for, like, a year and a half. So good job there. And the backlog has been going up for a while. Thank you for your time. Okay, thanks. Thanks, bye. Thank you. The next question is coming from [Frank Gasker]. Frank is a private investor. Frank, your line is live. Yes, thanks for taking my call. Yeah, I'm going to see if you could say something about not the present technology, but future technology. In particular, several, if not quarters, years ago, there was mention of an atomic clock which could in fact be a game changer. I haven't heard much about that since. Could you elaborate on that in any way? Yeah. So, we are currently working on an advanced atomic clock. In fact, we're going to do a demonstration tomorrow for our government customer on that one. That's a Pulsed Optically Pumped Rubidium Standard. That technology, we anticipate, should make an order of magnitude improvement in the capability of these kind of clocks. Now, the demonstration that we're doing tomorrow actually is not for a space-based atomic clock; it's for terrestrial applications. But we do believe that this technology is definitely something that can work very effectively in a space environment also. So that's just one thing. I think that there are some other technologies in terms of even more advanced clocks that we are seeking funding rather than for us to develop those technologies on internal FEI money is probably not feasible, so we are seeking sources of external funding at this point in time. We'll see over the next year or two whether we can be successful at that. In addition, I think one of the things we think is very important, and we are pursuing with internal funding, is smaller, lower cost atomic clocks and also quartz-based clocks for space applications, but with an emphasis on very high performance. So, I know I've talked about this previously on these calls, but I think we feel strongly that the trick is to find the sweet spot for a lot of these satellite programs, the low Earth orbit satellite programs. And the sweet spot is finding the right compromise between low cost, small size, low power, low cost, and high performance. I think we've seen many of the satellites, and Starlink is actually an example, where the emphasis is on low cost, but the performance capabilities in terms of precision frequency, and time are very, very limited. O nce you add the navigation component to those satellites, much better performance starts to become necessary, and we think that's where we can make a big contribution, and we're working on that. Yes. Thank you. Thank you very much for getting, in detail that. I just have one more, short aspect of that. The test you said tomorrow, is that, in fact, then going to show a significant increase in the, clocks capability? Yes. Yes, it is. We believe that that technology is capable of even more. You know, we're going to, by one measure, demonstrate roughly an order of magnitude improvement over what we typically do with our current products, but we think that technology is capable of even another order of magnitude improvement if things are optimized appropriately. You have to keep in mind, on this particular development, you know, there's. It's not just do whatever you need to do to get the best performance possible. It's, you know, get the best performance possible, but you have to keep the power dissipation below a certain amount, the size below a certain amount, the weight below a certain amount, and, so forth and so on, has to work over a wide temperature range. And so, so that's where we end up, where we are. It's the performance that can be achieved given the constraints that we have to operate in. And, so, yeah, depending on the application, the particular application, this is one particular example, and we do see a very significant performance improvement, but, if we remove some of the constraints that we have on this particular application, we can do much better. Okay. Thank you very much for the responses and the improvement. Have a good day. Okay. Thank you. Thank you. The next question is coming from [Richard Johns], and Richard is a private investor. Richard, your line is live. Thank you. Tom, you were talking earlier about changes in your bidding processes. I wonder if you'd expand on that a little further. Would you characterize the contracts, the large and small contracts you're winning, as fixed price contracts? Most of the contracts we're bidding on are fixed price contracts. We do, from time to time, have cost plus contracts, but in general, it's fixed price contracts. I think, you know, in terms of expanding on things beyond that, let me just say, I think that. Yeah, I've been here for almost 40 years, so I do have a lot of experience on these programs, and I think that I have a pretty good sense of, you know, what we can achieve. And I think I have a pretty good understanding of our business and our customers and what the needs are, and so forth and so on. So I think, you know, part of the trick in this regard is, is knowing just how to go about things. And I think in some cases, you know, we're, if not sole source, we're virtually a sole source because nobody else can provide, nobody else has the technology or the demonstrated capability to deliver the product that's needed. And in those cases, you know, we shouldn't be giving anything away. And I think, we've been working very hard to toe that line. In other cases, you know, there's, we have to look at potential going forward, you know, that maybe there's a new development, and and it's something that we want to invest in, with the idea that we will there'll be a significant business going forward. And, you know, we can we wanna make sure we have the opportunity to participate in that. And, so I think the trick is having a good enough understanding of where things are. You know, on the other hand, to invest in a new program, where we end up taking on a lot of risk and there's not much potential, you know, it's a one-shot program or whatever, it doesn't really make sense to invest in that. And I can tell you, over the last year, I can think of specific cases where we lost the program, but we kind of did that knowingly. We know there was competition, and you know, there just wasn't much potential beyond the particular program, and we could have taken those we could have gotten those programs. We know what it would have taken, but we would've lost money, and it just doesn't make any sense to do that. So I don't know if that's a helpful answer. Yes, it is. Yeah. Yeah, that sounds as if you're going about the process in a very reasonable fashion. I have another question about your income taxes. They were tiny in the recent quarters as compared with the historic tax rate. Is that because of loss carryforwards, or? And when do you expect to get back to what I believe was more like a rate in the mid-twenties or around there? When do you think you'll go back to that kind of tax rate? It is because of NOLs. The tax we're paying now is mandatory state taxes and things of that nature. I can't predict exactly when the NOLs will run out, but I can tell you, as you see the performance in the last couple of years, we have a bunch of NOLs going forward that we will be using for a while. Okay. Okay. All right, that's it for me. Thanks very much for the good work you're doing. Okay, thanks. Thank you. We did have a question coming from Jeffrey Cohen from Mulholland Capital Management. Jeffrey, your line is live. Yeah, good afternoon. I appreciate all the color, as other callers have reflected. Just real quick, you talked about a target gross margin, about 50%. What sort of quarterly revenue run rate would that contemplate? Steve, do you want to? Well, we're not fully ready to guide how revenue will grow long term. We believe it'll grow. And from there, we'll see the efficiency we get from the growth and the margin. Yeah, no, I appreciate that, but I mean, if 50% gross margin is your target, you must have some sort of underlying assumption in terms of what sort of revenues you'd need to get there. So that's my question. Maybe you can range that. Well, I'll put things differently because I don't think it's that target is not really based on a particular revenue goal. I think that target is based, you know, it's really a question of how we're bidding new business. And that's the target for new business is a gross margin of 50%. I see. And, you know, I just talked about the particular contract that we lost, and that's because, you know, when we bid it at 50%, we didn't get it, and that made sense in that particular case. Now, there are going to be some cases where we're going to bid at a lower gross margin because there's good reason to do that. But in general, you know, we're really targeting 50%, and that's kind of a baseline approach to things. And it's really not, you know, it's. That is not based on the particular revenue assumptions. Okay, but just so I'm clear, you're not talking about your six- 12 month goal being you're necessarily getting 50% gross margin on your contracts. You're talking about being able to show that in a quarterly report, correct? I'm not quite sure I understand the distinction there. Well, I think there's a distinction between bidding a project at a 50% gross margin and actually bringing that down to your financial results. Okay. That's certainly true. So when you put out that target, you're talking about the latter, correct? Yes. Yeah. Okay. Can you quantify your bidding activity at all? You know, the amount of outstanding bids or the sales funnel, or in some way quantify that? I don't think I'm prepared to do that in a very meaningful fashion. Qualitatively, very qualitatively, I think the pipeline is pretty full at this point in time. We have a tremendous amount of bidding activity going on. But yeah, I'm not really in a position to put a total dollar amount on things at this time. Okay. And Steve, I was just curious, you said you have a lot of NOLs. Can you? What would they be on a cumulative basis, roughly? I don't have the exact number, but I'll say it's approximately $20 million, give or take. Okay. All right. That's all I had. Thanks so much. Okay. All right. Thank you. Thank you. That's all of the questions that we had. I would now like to hand the call back to Tom McClelland for his closing remarks. Okay, thank you. I think we've been on the call for quite a while at this point in time. I appreciate everybody's participation, and I'd like to wish everybody happy and healthy holidays, and that's it. Thank you very much. Thank you. This does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.