Legend Power Systems Inc

XTSX:LPS

Earnings Call Transcript 2024-Q1

[Operator]

So, good morning, everybody, and thank you for attending. My name is Mike COC, and I'd like to welcome everybody to the Legend Power Systems Q1 2024 Financial Results Call. [Operator instructions].I will now turn it over to Randy to begin the conference.

[Randall Buchamer, executive]

Welcome to Legend Power Systems fiscal 2024 Q1 Investor Call. I am Randall Buchamer, the CEO. I'm pleased to have you join us on the call today, and we're going to discuss our corporate progress and financial results for the first quarter of fiscal 2024, which for the 3 months that ended December 31,2023.As you can see on the screen, we've got a fairly lengthy forward-looking statement. But I would like to just note that the statements on this call may be forward-looking in nature. These include statements involving known and unknown risks.Uncertainties and limit factors that could cause actual results to differ from those expressed or implied in our forward-looking statements. And for more information about our forward-looking statements and risk factors, please see our year-end management discussion and analysis, which was filed on SEDAR yesterday under our company profile at sedar +.ca.And in Jan and today, we're obviously going to provide an update on the quarter, but we're going to talk a little bit about what's happening in the organization in different areas. Each of the individuals that are speaking today, we'll give you a little more detail give a bit more of an overview.We'll talk a little bit about our financial results. Paul will talk about the operations and sales update from Mike, and then we will allow as usual a Q&A time. So, that we have Florence Tan, who is our CFO. We have Paul Moffat who's our COO; and Mike Cioce is our VP, Sales and Marketing. And as I mentioned, Florence will give the financial highlights and overview of Q1. Paul has been working on spearheading and focusing on our contribution of cash, speeding up cash flow, reducing operating costs, reducing coffee goods, growing margins and really doing some great work on improving supply chain and production capabilities.Mike will highlight pipeline and positive sales progress. He'll highlight about the U.S. GSA Green proving ground program partnership and the significant progress we've made at the Department of Citywide Administrative Services, also referred to as DCAS.And again, as I mentioned last quarter, we were pleased with the progress at those major accounts, and we believe both the GSA and DCAs, will be company makers for the company.And I want to refer to some shareholder feedback I've had over the last while. And basically, the topics come up are sales and cash. And I'd like to try to briefly point out some issues those. To start with, the leadership team as a group, we're very disappointed with the time it's taken to get to Mosco sales results. We completely accept that we have not delivered on the sales and understand the frustration and disappointment with the sales team to date.Sales targets happen than that, but it doesn't mean that there aren't many positive things to be proud about at Legend Power. We do believe that there are lots of good things that will continue to add value from a company point of view and shareholder value, and we're all excited as a team.We have very strong visibility on numerous large deals, the larger deals that involve dozens of systems, coordination of installation pricing and timing, multiple layers of decision-makers and the process of order procedures have been extensive.The deals are there. Our timing on the completion of the deals has been off, but we will press release order achievement on a timely basis as we can. And Mike will give a little more color on those sales.On the cash side, we've taken steps to decrease the time to collect our receivables, focus on shipping our 12 system backlog and collecting about $1.1 million net cash contribution. Without any sales deposits, we are well cast well into the summer, by securing just $2 million in deposits, again, just $2 million in deposits, we are cash into calendar 2025.With forecasted sales of deposits, we've become self-funding. There is no planned diluted financing being considered. And then the team is very positive on our outlook and many team members have stepped up and agreed to take a 20% to 30% salary reduction to show commitment to shareholders and that they believe in legend and want to help conserve our cash. Other changes combined provide about $150,000 in cash reduction over the next quarter or so, and our quarterly cash requirements have been aggressively reduced to about $1 million without impairing our ability to deliver on plan.We've been in contact with numerous financial institutions that are in discussions to finance sales deals we have and/or finance customers SmartGATE purchases. We have not had our sales objectives, but we have made some outstanding progress in numerous areas, which the team will speak about today.I'd like to highlight a few things that sometimes we don't talk about enough. Over the last few years, we've invested $5 million in Gen3 solution, another $5 million building on our U.S. sales operation and creating awareness and support to the active power management market, which we own without an equal.At $70 million that's invested in fully paid for without any debt, and we're now beginning to see strong payback in our investments, which will show up in the results going forward. The $10 million in product and marketing investments will drive returns for Legend for many years. And Q1 results do not reflect the positive work that's been happening at Legend. All significant progress has been made reducing backlog, revenue recognized was minimal despite nearly 12 systems ready to be shipped or installed. And these systems will be revenue recognized in the next quarter or 2.And we continue to receive outstanding customer feedback regarding the excellent performance of Gen 3, large follow-on orders are in progress. And we have the stability on pipeline conversion to very large sales.We're forecasting continued customer upfront deposits with orders that will help cash flow. Combining the deposits with conversion of prepaid inventory and to deliver systems, we expect continued cash growth.So, all this progress isn't reflected in the last financial statements, we believe we have imminent order flow, while carefully containing our costs and growing cash as we manage through the next couple of quarters.Expected cash deposits and inventory conversions will firm up the balance sheet. And we really have passed the critical stage of having approved our solutions work. We have successfully completed technology evaluation in numerous markets.And we're focused on helping partners and prospects to develop a large multiyear, multimillion-dollar deployment plans. Our order visibility is clearer and stronger than it has ever been. Florence, if you could, take next and provide the highlights for the quarter on the financial side, please.

[Florence Tan, executive]

Thank you, Randy. During this quarter, revenue recognized was $1,548 compared to $403,000 in Q1 of fiscal '23. Note that the company can only recognize revenue as per our disclosed accounting policies that while the amount recognized this quarter is lower than usual, does not mean that there has not been significant progress and strides within our sales cycle that both Mike and Paul will discuss in further detail later.Deferred revenue as at December 31, 2023, was $246,000 compared to 0 in Q1 of fiscal '23. So, our backlog is progressing, and we will see the transition of these revenue recognition as the orders are fulfilled over the next few quarters.The company ended the quarter with $1.4 million in cash, no debt and $2.8 million of working capital. With this working capital, we continue to proactively focus on the items critical to attaining our growth projections, and we will continue to manage our capital resources as we always have to support our sales growth plans and deliver for our shareholders.I'll now pass it to Paul, our COO, to provide some operational highlights.

[Paul Moffat, executive]

Thank you, Florence, and hello to everyone on the call. As Randy mentioned, our primary focus is cash flow and continuous improvement across all functions of the operation.As I reported last time, we've been able to achieve and maintain a 30% reduction in our operational expenses down to less than $350,000 per month. And in addition to the cost-cutting measures that Mike has mentioned, we've achieved another $150,000 over every 3-month period.So, very pleased with that. With the sales opportunities that Mike is working on, we will see several million dollars of deposits throughout the fiscal year and with the completely paid investment of Gen3 development and inventory on hand, I have complete runway to produce and build the backlog of 12 units and achieve a net cash of $1.1 million over the next 4 to 6 months.That's an investment that is behind us, and that's an investment that has allowed me to convert material product into cash and realize the cash into the business in the short term.Regarding our key initiatives. We've made a lot of progress on accelerating our insights and Power impact report delivery process. And the point there is to increase our win rates, increase our time to win and again, increase our time to cash. So, I'm very pleased with the progress on that initiative.We have developed new service offerings to monetize and freight fee structures, to monetize our installation expertise and installation oversight. We are looking at soon kicking off development of larger capacity Gen3 systems like the 4,000 AMP in order to support Mike's sales opportunities that are about to turn.And with our new strategic planning process, something that we've been working on through the sales operations workflow process and a willing forecast with finance, we've improved our responsiveness dramatically in our collaboration amongst the teams for both short- and long-term objectives.And this is allowing us to make quick and solid decisions, course corrections as need be on a regular basis. In addition to our top initiatives, we've achieved greater than 10% cost of goods sold on our product, and that continues. We've seen reduction in many materials, including our primarily in transformers.And since my last report to you, we've also achieved a 30% reduction in transformer lead time, and we are qualifying additional and secondary sites for transformers and for critical parts.So, we're very well rounded on the production supply chain and continuous improvement in cash initiatives. I'm very excited, I'm very comfortable. I'm looking forward to what's coming ahead, and I believe we're extremely well positioned.So, with that, thank you, and, Mike, I'll pass it over to you.

[Mike Cioce, executive]

Thanks, Paul. I appreciate that. And I want to take a moment to express my sincere appreciation for everyone's ongoing support in patients.Undoubtedly, we are experiencing delays with our deals and please rest assured that we share in your frustration. Yet we do remain optimistic and positive outcomes. As pioneers in our emerging market, each step forward presents unique challenges.However, I want to emphasize that despite these obstacles, we are resolute in our optimism for the future and the positive developments we're seeing. Despite some challenges, we are currently experiencing significant momentum in our sales efforts.Our previous investments that Randy and Paul mentioned are bearing troupe and it's been exemplified by the recent events with the City of New York. For example, with this one RFP, there are 8 contractors bid in all of our SmartGATES in their proposals.Again, any winning bid must include an active power management system. And this is a trend that we continue to see over the coming years. This will be repeated hundreds of times over the coming years.Similarly, with our progress with the U.S. government general services administration that's very promising. We have the imminent shipping of our first systems in the finalization of the site selection for our second system. And with all of this activity, we've identified additional near-term opportunities on the horizon.So, as a result, our pipeline remains very strong in the private sector. We're actively engaged in negotiations with major commercial real estate firms in the multifamily and commercial office space, while these deals are indeed taking longer than expected, they are sold very much a lot. For a number of our larger deals, we're also working on cash flow positive OpEx purchasing programs rather than significant CapEx purchases. These options use the market itself as collateral in eliminating the need to attach other assets in our prospects and customers' portfolios. In addition, we continue to see our partnerships with the ESCO yielding opportunities with large-scale projects in the pipeline. So, while our business is multifaceted, our value proposition of energy savings, cost savings, revenue enhancements, higher tenant satisfaction, all wrapped in better ESG performance, utilities incentives, lower taxes, better interest rates allowed for increased expansion for our customers, increased building values. These are all paving the way to an addressable market measured in tens of billions of dollars, if not hundreds of billions of dollars.So, while our business name exhibit variability, we are still steadily progressing towards significant results. Please also keep in mind that 3 years ago, we set a record for the largest deal in the company history.We then beat that number 2 years ago. We then beat that number again last year, and we expect to beat that number again this year. And this trend will continue into the future. It's important to recognize that the customer journey is multifaceted, starting from being unaware to skeptical to eventually recognizing the need for our solutions.Our sales and marketing efforts are strategically crafted to expedite this journey and leverage the experience of previous customers to showcase the benefits of our offering. We're pleased to report that we are seeing success in this aspect. Currently, we have more than a dozen systems sold, as everyone's mentioned, that we're awaiting delivery, installation, revenue recognition and, most importantly, cash in the door. These are all results of the investments that have been made to date.And as we continue to deploy these systems, success simply begets success, installing more systems and accumulating more proof points will serve to replace skepticism with confidence in our prospects and ultimately accelerate our deals.So, customers increasingly recognize the value proposition of our solution beyond near energy savings and maintenance savings, positioning SmartGATE as a key component in our customers' low-carbon journeys.So, in conclusion, while we challenge and have mutual frustrations will persist in the short term, I'm unwaveringly positive and committed to winning the deals as quick as we can with our dedicated team, exceptional product and previous investments and your continued support, I'm confident in the bright future of Legend Power Systems.Once again, thank you for your continued support and patience. Randy?

[Randall Buchamer, executive]

Thanks, Mike. Thank you, Florence. Thank you, Paul, for your updates. We continue to earn the respect of our target markets every day and our ecosystems and make them comfortable with Legend Power as an innovative company in Oracle.We continue to build our brand by working with the key ecosystem partners to ensure that we have their support and they're aware of Legend Power and all that we bring. Dilation Power leadership team is very positive about Legend's future.We believe that we're right in the custom some very big things, and we are each very committed to making Legend a leading active power management company for many years to come. We would be pleased at this time to take any questions that you may have.

[Operator]

Randy, on the Q&A tab on the bottom of the screen, you'll start to see the questions are coming in.

[Randall Buchamer, executive]

Yes. We haven't seen it yet.

[Operator]

So, I'll go ahead and expose some of the first questions. One was that we mentioned that we expect $2 million in deposits pertaining to orders by the summer. Is this related to government or commercial contracts?

[Randall Buchamer, executive]

In order of the questions, I think the first question asked is really just about the stock pricing and give us some juice to believe.Hopefully, we've done that today. I would suggest if you take the last quarter, it's not indicative of what you're going to see. You will see positive results. You'll see the rev rec grow, you'll see the bookings grow. I don't know what else to add to that except that what we've talked about with Mike's update, Paul's update about the cost reduction, the commitment of the team to take reduced salaries, we believe.And I think it's one of the best things you can do when you look at the company is, do the leadership team. I think invest in duty cadre. We've got a great product that's paid for and we've invested, as we said, into the sales growth, I think the time has come. So, I think there's lots of reasons to be very excited about where we're going.

[Mike Cioce, executive]

Randall, if I can add on to that. Again, I think one of the parts of the question was specific to the GSA and DCAS opportunities? And with DCAS, the screenshot that we pulled up was directly from one of the RFPs that they recently issued.And, when we look at the planning that we've done with them, there are hundreds of those that are expected. So, we're starting to see those in the world. We're starting to see a lot of activity from the contractors that work with Citi to get pricing to include in a world of space, and again, it's very encouraging when you open up your e-mails in the morning and you start to see solicitations from people that need to buy SmartGATES in order to win business for the city of New York.So, again, that's something that we're seeing and we're going to continue to see. And as far as the GSA, we do have to recognize that we are still dealing with a government entity, and there is some slowness in the responsiveness. We stand ready to ship the systems as soon as they're ready to receive them.The good news is that, the rigor that they're putting that they're putting in right now is building a framework for the future. So, while the first one is taking a little bit longer, the second one is going to take less time. The third one is going to take less time.And then we're going to get to the point where all of these are going to start flowing in at a very high pace. So, we are seeing some tremendous movement on both of those major, major company making sales that have already been closed.

[Operator]

And just to continue on that, my next question. [Indiscernible] Can you give some flavor to that, please?

[Mike Cioce, executive]

Yes, absolutely. So, with the U.S. government work, the way they operate is a little bit different than our traditional corporate markets.So, they do go through a design element and building out the installation proposals that then they are sent out for their approved companies to respond to, to install. So, we know that we've been actively working with them on building out the documentation, and we expect those RFPs to be going out shortly and then installation to be awarded with for the installation for the first system.And again, the thing that's very exciting is that we're 95%, 98% on the site selection for the second site. And what's great about that is that the month's worth of development of documentation for the first site will be replicable for the second set. So, we will start to see an acceleration in the milestones there.

[Randall Buchamer, executive]

The question about $2 million in deposits and the question is, is it related to government or commercial contracts?In this case, it's commercial contracts, although we do have a business that will be going through third-party organizations, and we expect to get deposits with those third-party organizations on an ongoing basis.Another question is, appreciating there are likely multiple reasons why orders are taking forever. Forever is forever, so taking longer. What is the main reason is it solvable?There is no main reason. I think if you take the main theme is that, we are creating a new market. We are introducing a new technology, a new thought process and earning the right to that has taken time, but that is moving along nicely.I would say that on the government side, it's process, it's procedures. We are doing a deal with one government agency that will only allow certain installers to be on their site because there are security risks can have to go through the approval process prior, things like that, that we didn't expect or didn't know.So, I think if I can change the question slightly, are there things out there that are slowing things down that we show stoppers that we can't solve or are totally unexpected and put the company at risk?Absolutely not. They're part of what you see when you see adoption of a new technology. And we've seen companies go through that, Tesla, et cetera. It's just the way things go and you introduce a new way of doing things, there's doubt and you have to accept the doubt and earn way.

[Mike Cioce, executive]

Actually, can I add on to that as well. Again, when you look at the Legend of all, how we would go to market is a customer would buy a system. And that sales process would take a year, 1.5 years, and then we would, in turn, install that, and they would measure the results for another 1.5 years, 2 years.So, in the last time, we're 3.5 years in before we look at getting order #2 for system #2 with them. And we got feedback from our customers that, that doesn't work for them. They're looking at their portfolio and they need large-scale solutions that they can deploy.So, there's more complexity with that. With virtually every deal that we have in the pipeline right now, we're looking at multiple buildings, multiple systems. We have deals right now where we're looking at 30, 40 systems at one time.And those are taking a bit more time just because of the complexity of looking at 30,40,45 systems for a given customer. There's complexity in that. And that's one of the things that does add time. But keep in mind, from a shareholder perspective, what that means is, millions of dollars of sales years and years faster than the old way.So, while it is taking longer than expected, it's dramatically less time than the path given the old way.

[Randall Buchamer, executive]

Thanks, Mike. Next question is, Paul mentioned 12 systems that were built over the next 4 to 6 months. But Randy said, there are 12 systems built and ready to ship and install.So, that's 24 systems that we expected to continue to purchase sales over the next 6 months. And sorry for the confusion there. There's 12 systems currently being built and/or sitting on the dock to be shipped.They're in different stages, but they're all committed units that are sold that are being shipped to a customer who are being built for a customer. And those are over the next 3 to 4 months. That's not all the total systems we expect over the 6 months. Also, Paul, do you want to add some color on that?

[Paul Moffat, executive]

Yes. Thank you, Randy. Yes, as you say, it's really a hybrid. We have shipped 2 of those already. The GSA system is sitting on the dock, waiting for GSA to call it in.We have 3 to 4 systems already in assembly and test. The remainder have yet to be started. And we shipped one about every 2 weeks. So that makes up the approximately 4 to 6 month turnaround time for the remainder of the units. And at that point, they are invoiced or the payment terms on the contract.

[Randall Buchamer, executive]

Yes. And that's just the assembly production process. As far as the next 6 months, we expect dozens of systems. So, if we've had any confusion on that, hopefully, that clarifies. Next question is, government started notoriously slow. Why is it taking so long in the commercial sector?My view, and Mike, you can add on to this is that, again, when we were previously selling Gen 1 and 2, one system at a time, you'll be ceiling basically with one decision maker, one location, a more simplistic process, especially with the schools in Ontario, things like that.What we're looking at now is deals that are dozens at a time and working since 2018 with DCAS as an example, to earn the right that there is a real market for this product and that they actually need it.But when you go through the process, whether it's government or commercial and you get beyond one site or 1 or 2 systems, it does involve multiple decision-makers. It involves a lot more nuance with executives.It becomes more strategic. The financial aspect become out of 1 or 2 persons sign-off and becomes more of a corporate expenditure that needs a higher level of due diligence, et cetera. Those things take a lot longer.But as Mike said, once you get those relationships built, it does take test time, and we're finding that with repeat orders. Mike?

[Mike Cioce, executive]

You're spot on, Randy. And again, just the complexity of of the corporate environment and the demands of some of these buildings are more intense.In addition to the fact that when we're looking at a multifaceted value proposition, there are questions that our customers get on, how guaranteeable the savings are going to be. So, because we're more than energy savings, there are some additional work that our customers need to do to really understand that.And when we look at that, most of the people that are in the operations space look at our solution and they know that will bring benefits, they know that, for example, we're working with lighting manufacturers.They know when they have a large lighting project. If they have good power, their 3-year failure rates could be low single digits. Conversely, when they have bad power, their 3-year failure rates could be north of 30%, sorry, when we're looking at north of 20%.So, when we're looking at trying to monetize those dollars for each customer individually for each individual building, there's complexity in that. And that complexity takes a bit of work to work through that. So, we're actively working doing that for each customer to make sure that we get them over the finish line as quick as we can.

[Randall Buchamer, executive]

Next question is about the current cost structure, approximately how many systems could we build an installed perforates came through?And I'll turn it to Paull in one moment. I just want to make a comment that what Paul has been doing is building processes, procedures and documentation for growth. So, even though the numbers have not been there, everything he's been doing has been to scale the business and grow it.So, ultimately, the goal is looking at outsourcing in different ways to add significant capabilities to the organization. But in the interim, we will add additional labor as required. Space-wise, is something that we are talking about managing. But we don't have any concerns with the capability to develop systems on a timely basis for customer requests.And the last point I'd make is, our customers also don't order a crop and a Friday and expected Monday, Tuesday, the following week. It normally can be 3 to 6 months by planning a shutdown, getting installation teams to come in and quote on installations, preparing electrical rooms.There's a lot of work done beyond just the physical plant, but our capability on an ongoing basis and even if we are into hundreds of units a month, which hopefully we do get to, that never was planned to be part of Legend itself, and we would use strategic partnerships and outsourcing to, one, be the most effective on a timely basis, but also to be the most cost effective. Paul, anything you want to add?

[Paul Moffat, executive]

Yes. Thanks, Randy. Yes, I have to everything you've said. I mean, basically, it's a two-pronged approach. We're looking at all the opportunities we have for assembly and test cycle time and capacity within the current building, looking at utilizing constraining equipment like the test apparatus on a second shift.And in parallel, as Randy has mentioned, speaking with a variety of outsourcing partners and contract manufacturers around North America to prepare for their help in building a product and increasing capacity.

[Randall Buchamer, executive]

And if you want to take the next question, Mike, on the TAM slide, please?

[Mike Cioce, executive]

Yes, absolutely. And again, please keep in mind that our sales pipeline those are not our forecast numbers. So, when we look at the sales pipeline, we take the same approach that any business does, where you look at it from early-stage activities to advancing through the pipeline to actually closing deals, and that's what those 3 segments represent.So, on the TAM for the customers that we are in active outreach with and dialogue with, that's the top of that funnel. Then moving through to actually talking to them about moving forward with SmartGATE insights, power impact assessments. That's the mid-part of the funnel.And then, as we get to the point where we've done that and we're presenting actual SmartGATE proposals to them, that's the lower-portion of the funnel. That's what actually leads to verbal commitments, bookings and ultimately revrec. So, those are the 3 stages of the pipeline, and I hope that helps get a better understanding on that slide.

[Randall Buchamer, executive]

And could you take the progress on the government programs beyond shipping 2 systems this year?

[Mike Cioce, executive]

Yes, absolutely. When for example, with the second location is in a major federal development area where they have in excess of 30 buildings in the same area. And what was interesting is as we start engaging with the local people about doing a system in a building, we get a lot of, hey, what about us? Can we get some love with that?And that's what's driving that. And again, when they hear of the capabilities, when they hear the results that we're getting, the light bulbs start going off. Well, we need to hear, we need to hear, we need here.So, there's tremendous opportunity there. And what's also encouraging is that because of the work that Mark Peterson and Karen and Brian Hashimoto, have done working with GSA team, they're very comfortable with Legend Power.So, they've given us every indication to believe that we can be processing orders before we get fully through the GPG program. So, very positive results there. Hopefully, that answers the question.

[Randall Buchamer, executive]

Another question is, will there be insider buying to support the stock in the last financing, there was 50,000 to 100,000 participation by individuals, insiders in the company that help finance the company over the next while. There's been exercising of options at a far higher than market to finance the company.So, the question is, will it be insider bid, there continues to be?That has not been any lack of commitment financially, except by Pataky insiders towards leadership team, et cetera, and also many people in the company that may not have the ability to buy a lot of stocks, et cetera, we believe. The other part of that question I would ask is, people step up, commit to a role? They're here for multiple years and then they support and take a reduction in salary to support cash?I think that's pretty committed.Next one is, do clients accept the value proposition of Gen3? Or is this a challenge of convincing them to sign these orders. Mike?

[Mike Cioce, executive]

Yes, they were 100% see the value proposition of Gen3, where the dialogue focus is in on is are we reducing 30% of their maintenance repairs cost, so we're reducing 60% of the maintenance repair costs.Those are the dialogues that we're having right now. And again, we're working with them diligently to come up with what's the number that everyone in their organizations can feel comfortable with. But there's little doubt on the value proposition, the functionality and the results. It's just a matter of what number do you apply to those results.

[Randall Buchamer, executive]

A couple of other questions from someone who has chosen to be in anonymous attendee today. They're basically short questions, et cetera. So, I'm not going to go through those. I think if you can't put your name to a question, you don't deserve an answer, number one. But if you'd like to follow me in any of those questions that you believe are humorous. Please call me directly, be happy to talk about those.The last one is a question with the experience you've accumulated so far with Gen3, when do you expect you'll be able to start getting guidance on urticales?I would say at this point, it's would be inappropriate for us to even consider doing guidance. I think we need to get through the next while. We need to get us a render order flow, we can be predictable.Yes, what we had is really 2 sides of advice. One is come out and you've got to tell people when deals are coming. And then if we miss a date or we're not accurate when we think it's going to close, we shouldn't have told people to us closer.So, you can't make everyone happy, and we can't try to do that. What we can try to do is be as best as we can. So, I think some weeks before some of the press releases, et cetera but as soon as we have predictability and the Board decides as a team, it's the appropriate thing to do, which to provide guidance, and we will look at that. But it's a little early obviously right now. Any other questions?

[Mike Cioce, executive]

Randy, someone has raised their hand. If you have a question, please, we don't have the ability to turn on individual microphones. So if you do have a question please put it into the question and answer button and the tool bar below the speakers.

[Randall Buchamer, executive]

The other question is, guidance has been to 50% conversion of power impacted parts of SmartGATE, how many are past the 12-month period. Mike?

[Mike Cioce, executive]

That's a difficult question from the standpoint of when did the 12 months start. And I think that when we went through our last presentation, we talked about some of the challenges in that, that the collection of data, it's more than just the data from the insights meters.We also have to get maintenance and repair data. We have to energy data. We have to also go through and process that data, present that those findings and answer the questions that we have on that.So, when we look at when does that 12-month clock start is one of the more difficult challenges one of the most more difficult aspects of that question. When we look at it from the standpoint of fully answering their questions, there have been a few that have gone bin 12 months.But again, right now, what we're focused on is compressing the amount of time it takes us to conduct these power impact assessments, from 4 to 6 months and trying to get that down to a few weeks. And then answering those questions as fully as possible so that we can then start at that 12-month clock as early as possible.

[Randall Buchamer, executive]

I think that's the last questions I see on the screen here, Mike. Can there be any one else who wants to ask a question, let's do last round. Thank you for those questions. Just to summarize, as we said, we've got a committed and dedicated team that's willing to do the things that are necessary to make the company successful. We've got an outstanding active power management platform with significant investment that's paid for.And this team is prepared to address the challenges we face every day and have faced for many years. We've always done what's necessary to keep the dream a live. We're focused on achieving the sales objectives.We're closely managing cash. We're reducing our operating costs. We're securing sales deposits, and we're all willing to put our own funds in Lowe's salary to reduce the costs. No one looks more forward than this team and our other team members of Legend to realizing significant sales progress and returns on the $10 million we have in product and market development with Gen3 and enhancing our U.S. sales abilities.We're excited about where we're going. We believe we have a significant opportunity in front of us to be a leading organization, known for being the best product and solution and active power management marketplace.Thank you for your time today, your support and everyone, have a great legendary day.