ParkerVision 2009 Q4 and Year End Conference Call

March 15, 2010

Ron Stabiner

Cindy Poelhman

Jeff Parker

Bob (Robert) Cohen with Western International

Jim Whitten (with Laidlaw)

Phil Anderson with Pinnacle Fund

Don Steincamp with CFC

 

Operator:  Good day everyone, and welcome to the ParkerVision fourth quarter and year end 2009 conference call. Today's conference is being recorded. As it is time for opening remarks and introductions, I'd like to turn the conference over to Ron Stabiner with the Wall Street Group.

Ron Stabiner:  Thank you, operator. Good afternoon and thank you for joining us.

Before we get started, I would like to remind listeners that this conference call will contain forward‑looking statements which involve known and unknown risks and uncertainties about our business, the economy, and other factors that may cause actual results to differ materially from the expected achievements and anticipated results.

Included in these factors is the ability to maintain technological advances in the marketplace, the ability to increase manufacturing capacity to meet demand, achieving timely market introduction and acceptance of product, maintaining our patent production and the availability of capital, among others.

Given these uncertainties and other factors for our business, listeners are cautioned not to place undue reliance on any forward‑looking statement contained within this conference call. Additional materials concerning these and other factors can be found in our filings with the Securities and Exchange Commission.

On today's call, we will hear first from Cindy Poehlman, Chief Financial Officer of ParkerVision, to be followed by Jeff Parker, Chief Executive Officer, who will provide an update on the business of the company. With that, I will now turn this call over to Cindy Poehlman. Please go ahead, Cindy.

Cindy Poehlman:  Thank you, Ron. And thank you for those of you going up today for our fourth quarter 2009 and yearend conference call. We reported today a $4.9 million or 0.13 cent per share net loss from the fourth quarter of 2009. This compares to a $5.7 million or 0.22 cent per share net loss for the same period in 2008.

For fiscal year 2009, we reported a net loss of $21.5 million or 0.65 cents per share, compared to $23.1 million or 0.88 cents per share for 2008. We did recognize $64,000 of Engineering Services revenue in the fourth quarter of 2009. This represented services provided to ITT Corporation under a US Military contract.

The contract, as we announced in October, is for purposes of funding the completion of a highly integrated transceiver radio demonstration platform incorporating our D2P Technology.

This platform will be used to demonstrate to ITT's customers the figures of merit and communications improvement enabled by D2P. The total funding to ParkerVision under this program was approximately $130,000, roughly half of which was recognized in the fourth quarter of 2009, with the other half expected to be recognized in the first quarter of 2010. The results of the demonstrations to ITT's customer could result in an additional government funding initiatives for future product development.

Our operating expense decreased approximately $860,000 or 15% in the fourth quarter of 2009, when compared to the same period in 2008. We saw a similar decrease in operating expenses from the third to the fourth quarter of 2009. On a full‑year basis, our operating expenses for 2009 were approximately $1.5 million or 7% lower than in 2008. These decreases are, in part, a result of cost‑cutting measures across the organization.

The most significant reductions in operating costs were a result of a decrease in the use of outside design resources which supplement our own internal engineering team. In many cases, those reductions are the result of the completion of specific programs. In other cases, the reductions are from the deferral of certain projects.

As Jeff will discuss in more detail in just a moment, we are focusing our short‑term resources on only those tasks which lead to near‑term revenue generation and growth.

We ended the year with approximately $13.5 million in cash. We used roughly $14.8 million in cash for operations in 2009, and invested another $800,000 in our patent portfolio for the year.

We are comfortable that our working capital is sufficient to support our operating costs for 2010. We continue to control our cash usage, and we look forward to reducing our quarterly burn rate even further as we generate revenue from commercial operations.

As you know, we successfully completed two stock offerings in 2009, one in March for net proceeds of approximately $9.7 million, and more recently in November with net proceeds of $14.6 million.

As we head into 2010, our focus is on near‑term revenue generation from commercial products, while at the same time maintaining tight control on our operating costs. We view 2010 as being a transformational year for ParkerVision, and we're excited about both our near and longer‑term opportunities.

And with that, I will now turn things over to our CEO, Jeff Parker, for a general business update.

Jeff Parker:  Well, good afternoon and thank you for joining us in our fourth quarter year end conference call. These are busy times at ParkerVision.

As we're progressing toward our first launch of D2P enabled mobile handsets and other devices, we're excited with our progress on that front, and as Cindy said, we're looking forward to a transformational year for the company.

In our last update, we indicated that the next steps with our base‑band chipset partner were to support them in putting D2P into volume production in parallel with supporting them in the solicitation of orders for D2P enabled solutions for their customers, who are both mobile device OEMs and ODMs.

Those next steps are exactly where our focus has been over the latter portion of 2009, and into the first quarter of this year.

We have been working closely with our base‑band partner as they showcase the ParkerVision solution to their customers, with a goal of securing orders for the ParkerVision RF to replace traditional RF in handset models which incorporate our partner's chipsets and that are currently in high‑volume production.

The sales efforts by our base‑band chipset partner have now moved to the highest level, namely the CEO of their organization. Recently their CEO and I have been actively participating in joint, face‑to‑face customer meetings. Based on these recent discussions, I'm excited, and I believe that we have found the first customer for our offering.

While details are still being worked out, we hope to be able to bring you additional information in terms of timing and volume to ParkerVision in the coming months.

We will be extremely excited to announce that we have our first launch customer solidified, and firmly believe that it will be opening the door to additional design wins for this particular offering, throughout our base‑band partner's customer base as well, and opening the door for new customers for both our companies.

We also have been working with our base‑band partner on setting up volume manufacturing for the production of the D2P RF Solution. We agree that it is in both our companies' best interest that the ramp of the D2P product occurs as smoothly and predictably as possible.

And so at the beginning of this year, we started to explore teaming with a third party who has the expertise and facilities to handle the final volume production tests and inventory of the D2P product, to join us as a RF manufacturing partner.

As you know, we already have been working with LG Innotek on developing a hedge RF module. And while our focus with LG Innotek longer term continues to be on a hedge product, we've been exploring with LG the possibility of leveraging their manufacturing customer support expertise sooner rather than later.

With this type of cooperative relationship, we believe that we can expand the market for our base‑band partners 3G offering as well.

While this is still a work in progress, and thus I'm not at liberty to go into great detail at this time, what I can tell you is that we're contemplating a business model that would bring increased revenue to not only ParkerVision, but to LGI and our base‑band partner also.

Our exploration of this business model has included joint discussions between the three parties and in some cases face‑to‑face visits with potential customers. LGI brings an excellence in manufacturing and packaging to the mix, and they already support component production in sales to many tier‑one companies.

The involvement of a manufacturing partner would mean a business model along the lines of what we've anticipated with LGI, in our selling the silicon of known good dies, which would generate higher revenue for ParkerVision then would a royalty-only model.

The concept of ParkerVision supplying D2P semiconductor solutions through a manufacturing partnership is agreeable to our base‑band partner as well, thus paving the way for us to put more of our near-term focus on our base‑band customers 3G applications, since this provides a more desirable financial business model to this segment of our business.

Our partners recognize that even the small size of our team and our limited financial resources, if we all currently focused our efforts on this existing product application ‑ that is the application of our base‑band partner for 3G handsets and other 3G products ‑ that we can greatly increase all our chances for launching a near‑term, successful product and revenue ramp with D2P.

So to this end, we focus the vast majority of our resources and activity on our 3G products, and we've slowed our hedge development activities to enhance our chances for a successful 3G product launch as quickly as possible.

We are quite confident that this will ensure our revenue ramp for 2010 and into next year moves smoothly and as quickly as possible and that this is synergistic to our later paving the way for our introduction for our hedge module, with the greatest chance for a trouble‑free launch as well.

So now I'd like to spend a minute discussing what we believe the potential is for our current focus. If you look at the overall market potential for our initial 3G application in the next two or three years, it is a market that is forecasted at 200 to 220 million handsets shipped per year, starting this year of 2010.

Based on the conversations that we've had with our base‑band partner as well as the industry forecasted growth, we believe that the potential for ParkerVision D2P chips in this market segment over this time frame, will grow to 40‑45 million chips annually.

This is based on the market share of our base‑band partner, the growth that they are experiencing, and the percentage of the market that both they and we believe can incorporate D2P.

This is an excellent starting point for us, and we believe it is very important that we have as near flawless execution of this initiative as possible. And so let me speak for a minute on the reasons why, and the benefits that can be derived from exceptional execution.

Firstly, this opportunity is tangible. What I mean by that is that we have an enthusiastic base‑band partner, and our chips have been designed to interface with their baseband. They have important relationships selling their products to three of the top five tier‑one handset OEMs, as well as other important tier‑two OEMs and several large ODMs as well.

The potential that I speak of isn't some hypothetical market share that we think can be attained based on general market statistics. Rather, it's based on ParkerVision attaining a share of market of our partner's volume, based on their own belief from what they've seen in the actual marketplace and the benefits that our technology grants the 3G handsets.

Secondly, proper execution of this opportunity not only credentials our technology as a viable handset product, but enables us to build relationships with important handset OEMs and ODMs.

In a recent conversation we were in with a top executive at an important handset OEM, they not only acknowledged the importance of achieving longer battery life for their own 3G handsets, but also wanted to know when we will have products that support multi‑mode applications as well as products for the coming 4G standard.

So a success with our base‑band partner on this first market segment, will automatically provide the visibility and generate demand for the other applications that we aspire to deliver.

Lastly, we are on the path of securing an excellent handset launch partner, and they're success in the D2P launch in volume product, will result in our being known as a valuable and trusted partner by others as well.

Our base‑band partner has been willing to invest time and resources with us to help evolve our technology from the demo platform we started with a couple of years ago, to an application specific product that has now been proven in actual handsets to provide the battery life and other benefits that we've been discussing since we started developing D2P.

As we've continued to meet our commitments to them as an RF development partner, they've now taken the step to introduce our offering to some of their most important customers. A step which is a show of great confidence in our relationship, when one considers the importance of being known as a reliable and trusted supplier in this space, and how challenging it is to accomplish and maintain that stature.

A successful launch with our valued base‑band partner and a volume handset OEM will set the stage for achieving a transformational year for ParkerVision, a year where we begin our revenue ramp to become not just an RF technology innovator, but a valued commercial chipset partner as well. A year where we build relationships with handset OEMs as a viable supplier of advanced RF solutions.

Starting with the 3G focus and then expanding to multi‑mode solutions and other advanced mobile phone standards as well, I look forward to bringing you news in the coming months of the consumation of our first design mode. And I also look forward to seeing many of you at the Roth conference over the next couple of days.

And so, operator, now I'd like to open this call up for questions, please.

Operator:  Thank you. Today's question and answer session will be conducted electronically. If you'd like to ask a question, please do so by pressing the star key followed by the digit one on your touch‑tone telephone. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Once again, please press star, one on your touch‑tone telephone to signal for a question. And we'll pause for a moment to allow everyone the opportunity to signal. And we'll go first with Bob Cohen with Western International.

[14:26]

Bob Cohen:  Hi, Jeff.

Jeff Parker:  Hi, Bob.

Bob Cohen:  Hi, I've got a question. Can you first tell me when you get your first successful design win, where will you go from there? Can you give us the steps?

Jeff:  Sure. Once the first design win has been secured, it will define a number of activities that we'll need to do to support the customer for incorporation of the D2P chips into their handsets.

And the execution of that I think is very important, because execution on our first customer, in my opinion, is going to make it much easier for us to secure additional customers thereafter.

Designing new, advanced RF into handsets is viewed by many as a tricky business. So, when we show and prove that we can execute on that, and that it has the support of our base‑band partner, it has the support of our manufacturing partner, and that it goes smoothly, and that the ramp is predictable, and that it brings all of the benefits that we know what we can bring to these handsets when they incorporate D2P into their handsets, that this will really open up a lot of opportunities, I think, for the company to follow on with additional design wins from additional customers.

So, I think the successful execution of this first one will really open up the door for a nice growth for ParkerVision.

Bob Cohen:  OK, another question is with whoever your manufacturing partner is, are you envisioning that ParkerVision is going to be the one spending the money on the manufacturing? - actually manufacturing the phones, which would be a lot of money for ParkerVision to put out, or do you envision... OK, can you tell us how your manufacturing would be set up, what your vision is?

Jeff:  Sure. Sure, good question.

Now, the reason we're seeking a manufacturing partner is we envision a manufacturing partner as being somebody who already has facilities that are set up to take the silicon, which is what we are intending to sell, and that we sell the known, good dyes to the the manufacturing partner, they then incorporate those into a packaged, finished, tested components. So, they would be responsible for that. They would then be responsible also, for inventory and management of that, customer support in terms of many of the design‑in criteria, although we'll certainly support them as well. When I say support in design‑in criteria, I'm talking about design into handsets.

And then ultimately, also we would expect the manufacturing partner to have their own sales organization, which can not only support sales that both we and our base‑band partner can secure, but also additional sales that they themselves are able to go out and secure from their own customer relationships.

So, no, we see a manufacturing partner as a very important way for ParkerVision to leverage what we do best, which is the innovation of silicon and the delivery of that silicon to someone who can then take it to the final manufacturing and support steps.

Bob Cohen:  OK.

Jeff:  That's what we see, and I'm confident we'll find a good manufacturing partner.

Bob Cohen:  I just have one last quick question. On your last conference call, you had talked about your partner did a test. And the test went better than expected, and you actually got 60% more talk time.

Can you explain to me, if that is the case, and I think you've also stated that your chip costs no more than what's out there today, where is the negative? Where would somebody not want to use this?

Jeff:  Well, that's a good question. I think the natural resistance to any new technology ‑ not just ours ‑ but I will say especially in the RF world, because RF is still considered a specialty in small form factors such as handsets, is still considered a tricky business in the sense that the components themselves can be easily tested, but once you put them all together in a handset, and you have to deal with the form factor and the available voltages and all the little nuances that a handset imposes on the design process, the RF portion of a phone still is one of the most problematic and challenging areas for the handset engineering staff to deal with.

So there's just a natural hesitancy on RF in general, and then when you bring in a new, advanced RF, which is what we have, you add that as another level of concern and skepticism. So, I think in our situation, look at we're not a known party, not a known player in the space in the handset area.

People have heard of us, they've heard we're developing. They look at us perhaps as an innovator, but they haven't seen that we're a reliable supplier that has delivered in volume and that has supported the needs of all the things that you have to do to get into a successful handset launch. And so there's a natural skepticism around that.

Now our mission is to prove that we are a reliable supplier, that we do support the needs, and that we do know how to work with all of the parties involved to get a handset with D2P launched, and we're overcoming those hurdles now. We've just stepped down the path one step at a time. That's what I mentioned in the update, I think it's very important that the execution is very, very good, because it will open up the door, after we've knocked all of those other barriers down, for more parties to say, "Yes, I definitely to want to put this into my handset, because you're correct." When you can bring this kind of battery life extension to a 3G handset, that's very attractive, as long as you can prove that you can do that without the shortcomings of preventing someone from getting their handsets launched.

Bob Cohen:  See, and then I'm going to picture this. I knew the last one was my last one. Are you guys, are your partners that you're talking to, are you working on a gray market phone, or can you explain that? And thank you again for your time.

Jeff:  OK, Bob. Sure, thanks for the questions. The path we're on right now is to secure a handset OEM that has a known brand, that is shipping in volume, is well respected in the marketplace, and it sells through the normal channels that handset carriers purchase. And that's what I refer to when I say I think we're on the track to getting our first design in.

Can we take the next question?

Operator:  And we'll go next to Jim Whitten.

[21:14]

Jim Whitten:  Hi, Jeff.

Jeff:  Hi, Jim.

Jim:  Things are starting to look up, I hope.

Jeff:  It's been a lot of work, but we're seeing the fruit of the labors starting to blossom.

Jim:  Well, before I ask a couple of questions, I want to ask you a general question since I've been in here since probably day one.

After all of the money that's been made, been spent, and all the years that we've been investing in this technology, is it living up to your expectations and in any way is it exceeding your expectations, just to begin with?

Jeff:  The technology is definitely living up to my expectations. It has taken more time than I had hoped, it costs more money to develop than I had hoped, not an unusual result in the development of new technology and the RF space itself is a very challenging space to innovate in to start with.

But what's very encouraging and exciting to me, is when we developed those sample handsets last fall and delivered them, the actual end situation results, actually somewhat exceeded our expectations.

I was hoping that we would see about a 50% increase in talk time over the area that a typical user would operate the handset in, and we actually got up to about 60%.

So often times in the component world, especially the RF component world, the devices do a certain performance figure of merit on the bench, but when you get them into the actual form factor where you have to deal with other realities in a handset, they can give up a lot of their benefits. And what we found here is that, no, we were able to translate the theory to the device, to the handset, and everything stood up exactly as we had hoped, and a little bit better.

I give big accolades to the engineering staff who led the charge through that process, because it takes a lot of good attention to detail to be able to do that and to be able to achieve that level of benefit in a challenging area like a handset.

So, no I'm very pleased with the way the technology has played out after this time frame has taken to develop and the investment it's taken, because we're in an important space, and I think that as we start proving - as I mentioned to the earlier questioner ‑ as we start proving ourselves in a handset space, and people become more and more comfortable incorporating this in their handsets, I think the benefits are very much going to be in demand, and would give us a great growth opportunity.

Jim:  Second question is to go back to your presentation; did you say that the people you are dealing with are expecting to do 220 million shipments a year, or the whole industry?

Jeff:  No, what I said is the space for the 3G handsets that we're working with, the overall shipments per year, are in around the 200 million a year, growing over the next few years to about 220 million or so. And that based on our partner's market share, based on the growth that we see in the market, based on the attractiveness of our technology and what we believe it will bring to the enthusiasm of people who want to incorporate it, that we think maybe a 20% or a little better than that market share of that total market is where we think we can capture over a period of a couple, three years.

Jim:  Now, would this be like 20%? We'll say 40 million this year, 80 million the next, 120, or it would be 40, 40, 40?

Jeff:  Yeah. No, what I'm referring to was we think the total potential per year is into that 40 plus million range. It will take time, of course, to ramp up to that. You've got to get the production ramped up, you've got to get the customer base to incorporate it, et cetera.

But that's the target that I see, or the goal that I think ParkerVision should set, and that I think is a realistic goal to achieve if we execute properly and we do all the things I described in the call earlier in terms of helping people design it in, and make it as trouble free as possible, and enjoy all of the benefits of the technology.

Jim:  Now, is there any kind of a snowball effect as you start getting up to these levels? Does it start putting pressure on other parties to adapt to the technology if you've got a superior technology on the present state of affairs?

Jeff:  Like any competitive offering, I hope that as we prove that we are a viable and reliable supplier, not just an innovator, that other parties who may be a bit hesitant to move forward with us will look again, and will consider us to be a good partner as well, and will want to incorporate this into other standards, other markets, other types of devices.

The wireless space in the cell phone world has a lot of different areas for growth.

There's no question in my mind that a successful launch on this particular application will create demand for the whole technology from other people today who maybe aren't looking at us as a good supplier or partner. I think there's no question that will occur.

Jim:  So, your business universe in your mind, you hope to be much more than 40 million a year?

Jeff:  Oh, absolutely.

Jim:  OK.

Jeff:  I mean, yeah. The cell phone market this year is going to be ‑ I don't have the numbers in front of me ‑ but it's greater than a billion and maybe less than 1.5 billion, somewhere in that range. So, certainly there's a lot of growth potential beyond this first application.

Jim:  My last question and then I'll sign off, is the other day you made an announcement about a new patent filing. Could you just briefly discuss that?

Jeff:  Sure. We see about anywhere from two, three, or maybe four sometimes, patents a quarter issue. This particular patent, if it's the one I think you're referring to, it was our latest patent. It deals with one of the benefits of our D2P technology, and the D2P technology categorically would be considered a non‑linear switching type amplifier technology.

One of the challenges with those architectures is that like all transmitted signals, both linear and non‑linear, they create a signal that you want to send ‑ a carrier signal ‑ and then there's unwanted signals that are called harmonics that are created.

One of the challenges with switching architecture in general, is that you end up with a lot more harmonic energy created than you'd like. It can take away from both your efficiency and it can take away from a well‑behaved transmitter and make it difficult, if not impossible, to use in something like a handset.

This particular patent ‑ again, if it's the one I think you're referring to, describes how the D2P technology is able to keep those harmonics low or lower than a traditional linear transmitter and its power amplifier would. That enhances our efficiency, and it also allows you to get all of the efficiency benefits of the switching architecture, as well as keep the design in from those unwanted harmonics low, making it practical to put into something like a handset.

I think we ended up now with something over 90 patents issued and I believe that's just North America, or the U.S., and I think we have another 50 or 60 foreign, and I lose track of how many we have pending, but I think it's somewhere around 80 or 90.

So, yeah that's a nice patent, but candidly, all of the patents that are issued on our technology are important to us. But, that's the subject of effort, if it's the one I'm thinking of.

Jim:  Well, good luck.

Jeff:  Thank you, Jim.

Operator:  And we will go next to Phil Anderson with Pinnacle Fund.

[29:24]

Phil Anderson:  Hi, Jeff, how are you?

Jeff:  Hi Phil, good afternoon.

Phil:  You have been ‑‑ you have updated on regarding the selling effort and selling in conjunction with the CEO of our partner, what can you tell us about what remains between where we are today and where we want to be before there is a contract signing?

What else has to be ‑‑ what has to be negotiated, maybe more bluntly, what other proof does a potential buyer of our product need before they say, ah this is great, good value proposition, let's begin to buy it?

Jeff:  OK. That's a good question. There is no other proof that I am aware of. You know I think the steps are the normal steps that one would need to go through in designing any component into a handset.

It's working with the handset company, working with the component provider which in our case as I mentioned we are hoping to have a manufacturing partner who will actually deliver the final product, getting all the parties to work together, including the baseband provider and making sure that the design or whatever model or models of handsets that the first customer decides to incorporates this into, that they don't see any reason why this isn't is a smooth process, that there is a clear path to getting it designed in, getting it designed in a timeframe that everybody is happy with and having a good launch. So those are the steps we are going through now. And while I'm very comfortable that the parties we are working with are going to help us walk through the appropriate steps to get to the successful conclusion, I think we still have another couple of months or so to get everything lined up and wrapped up.

But from what I have seen, I have seen a lot of enthusiasm, a lot of acceptance, a lot of acceptance of the benefits being what people find important for the next generation of things that they want to launch. And so this is finally coming to I think a very nice next step for the company, which is what we have always been driving toward which is a commercial launch. But those are the steps that I see happening now. It is kind of the detailed pulling in together of the specific model or models and then consummating it around that and launching.

Phil:  What would you say given how intimately you are involved in this and all the meetings you have had and so on, what is your confidence level today that this is all going to come to fruition with a contract and a design win and an order, I think you mentioned a couple of months, which is a guesstimate, but what is your confidence level that this is going to come to fruition in the relatively near term?

Jeff:  My confidence level, Phil, is very high because I think the parties who are investing their time in this have a lot of other things that are on their plate. They are already doing a lot of other business activities, and I don't believe they'd be investing this kind of time and effort in something that they didn't believe would come to a successful conclusion, because they have a lot of other things they could be doing with their time that would come to successful conclusion.

So I believe the fact that they are beginning to share some of their important time and actually introduce this product to important customers is a very good sign that they themselves are also confident that we are going to consummate a first design in, and as I mentioned earlier I think good execution on that will lead to additional ones beyond.

But I believe it's the investment of their time and energies and efforts that gives me the high level of confidence because I don't think they would do that just as an exercise. I think they are doing it to generate commercial business for themselves and frankly to help us launch as well.

I mean I am very appreciative of the time that's gone in and the enthusiasm and the confidence in our organization and our ability to support their efforts. You know it takes a lot to build customer relationships in this space. You want to make sure that those continue to be maintained in good stead and you certainly don't want to jeopardize those.

So the fact that people are willing to take some of their relationships and open the door to include us, I think is a very important step and is very encouraging for me.

And I can only tell you that we're going to do 110% to make sure that anything, that they get us designed into, flows smoothly and is successful, and makes all parties involved very, very successful, and profitable, from the relationship.

Phil:  Jeff, when you are out helping, co‑selling if you will, with the CEO of the chipset company, can you give us a sense as to how many, what level, were you in the room with? Are you at the C level at the cellular OEMs? How many companies did you visit on your road show as I'll call it?

Did these people have sample phones? Had the discussion moved beyond the technical diligence that the customer would have, to really just figuring out where the product would fit into their own road map of the products they plan to roll out over the couple of years.

Jeff:  Well, I don't want to go into specific details of how many companies they've shown this to, and exactly who, etc. I don't think that's appropriate. But I can tell you that the conversations are at senior executive levels. They're at levels of decision‑makers within these companies.

These companies are relying upon the representation of our customer and ourselves that what we say we can do, we can. I think those sample phones helped certainly provide the confidence level to our baseband partner, and as well their customers, that we can deliver a known, good result that is important to them.

And we're in the process, now, of sorting through which type model, or models, would be the appropriate ones to launch with. And I think once you get down to those types of conversations, you're in the last kind of phases of sorting through what the launch is going to look like.

Phil:  It certainly sounds like you are at the final stages. And is the customer, the cellular OEM, who, it's that company itself, is now deciding which model, or models, they want to have our stuff in?

Jeff:  It's an active dialog between our baseband partner and their customers. Let's just say it that way.

Phil:  OK. And, in terms of capacity, and the ability for manufacturing capacity to be there to handle the ramp, whatever the ramp turns out to be. Are you satisfied that the capacity is there to handle the ramp that you all have envisioned jointly?

Jeff:  I am, although that's not a trivial part of the puzzle, as well. Once you get down to the final stages of actually launching, and production of course, you've got to hope that the capacity at the semiconductor manufacturing is there.

Right now, I would say that the semiconductor world is favorable for what we're doing. But the caveat is that industry goes through cycles and it goes through cycles where supply is tight and where supply is aplenty. Right now, the supply for the particular materials we use is fine. And then you, of course, have got the constraint of the manufacturing of our manufacturing partner.

But we'll work through all those issues. Those are high class issues to have to deal with. And I don't believe we'll have any more constraints or challenges on that front than anybody else that produces semiconductor‑based components has. Again, it's a lot of attention to detail. It's good planning. It's good execution. This is one of the reasons we seek a manufacturing partner is we don't want to reinvent that process. There are people out there who have great expertise in that area. And we want to leverage that.

And we believe there's a good amount of beneficial, good money to be made in doing that with us. We think that's an attractive next step. Stay tuned for more. I'll look forward to bringing more details when I can share them with you.

Phil:  OK, I just have one more question, if you don't mind. The companies in our supply chain, of which we are in effect the beginning of the supply chain and the end would be when a phone is delivered into retail or is delivered to the cellular OEM, the company which you believe would become our actual first customer, has that cellular OEM worked with any of the participants in our supply chain in the past? Which, I suppose, if they worked them before, that may give them confidence that they would be there again, to handle the kind of volumes which are anticipated in the ramp.

Jeff:  Well, let me answer your question this way. The manufacturing partner that we hope will come on board, currently handles many tier-one and many tier-two, both handset OEMs and ODMs clients. So whether they have, or they haven't, actually worked with whoever the handset OEM is that actually launches our first product with our technology inside, what we're encouraged by is the manufacturing partner would have a good reputation for delivering, supporting, inventorying.

All the things that a handset company is going to look toward being taken care of in a professional and has a history, a legacy, of being able to support that, I believe we'll get a manufacturing partner like that. And that their reliability and their reputation will definitely help us launch a reliable handset launch with D2P inside.

That's one of several reasons why we seek a good manufacturing partner. And I believe we'll get a very good partner for this product.

Phil:  OK, well, it all sounds terrific, Jeff. It sounds like you're right at the finish line, ready to cross over, and finally get the gold here. So thanks very much for the hard work.

Jeff:  Well, thank you for staying in there and supporting us for all these years. It's greatly appreciated. Any other questions?

Moderator:  Yes, once again, if you do wish to ask a question, please press *1 on your touch tone telephone. We'll go next to Don Steincamp with CFC.

[39:57]

Don Steincamp:  Yes, thank you very much for the information so far. I wonder if there is any other firm, similar to Parker, that is approaching your ultimate customer with a long‑life similar chip?

Jeff:  Thanks for your question. There's nothing that I've encountered in the field. Nothing that I've had brought to my attention by anybody that we're speaking with. Doesn't mean I know everything going on, certainly, in the marketplace, but, certainly, nothing that I am aware of.

Don:  OK. And a last question is ‑ I could look this up myself I guess, but ‑ I wonder if your short interest has gone up or gone down in the last couple of months?

Jeff:  You know, to the best of my knowledge, and I haven't looked at it real recent, but, to the best of my knowledge, it has remained largely unchanged.

Don:  Up?

Jeff:  I think it has remained largely unchanged.

Don:  OK, OK.

Jeff:  To the best of my knowledge, yeah.

Don:  Thank you.

Jeff:  Thank you. Any other questions?

Moderator:  Once again, that is star, one to signal, star, one.

Jeff:  Well, folks. Anything else there?

Moderator:  And that does conclude today's question and answer session.

Jeff:  OK, well, I know I'll be seeing some of you, maybe many of you, at the ROTH Conference over the next couple of days. I look forward to that. And I look forward to sharing with you guys whatever I can on our progress, and spending some time, and seeing some of you in person.

Transcription by CastingWords