Nanalysis Scientific Corp
XTSX:NSCI
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Nanalysis Scientific Corp
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Good afternoon. My name is Pam and I will be your conference operator today. At this time, I would like to welcome everyone to the Nanalysis' First Quarter 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]
Thank you. I would now like to turn the conference over to Mr. Matthew Selinger, Investor Relations. Please go ahead.
Thank you, operator and welcome everyone to Nanalysis Scientifics' first quarter year 2022 conference call.
Before we begin, I would like to remind everyone that remarks and responses to your questions today will contain forward-looking statements that are based on the current expectations of management. These assumptions involve inherent risks and uncertainties that could cause actual results to differ materially from our responses. Certain material factors and assumptions were considered and applied in making of the forward-looking statements. These risk factors are included in our filings, the year ended December 31st, 2021.
Forward-looking statements on this call may include, but are not limited to statements and comments with respect to, future growth of the company’s business, the ability to graduate to a senior exchange, the company’s acquisition strategy, the ability to develop future products, and the possible associated results.
The company’s actual performance and financial results in the future could differ materially from any estimates or projections of future performance implied by the forward-looking statements.
The forward-looking statements made on this call speak only as of today and Nanalysis Scientific assumes no obligation to update any such forward-looking information as a result of new information, future events, or otherwise, except as expressly required by applicable law. For additional information, I do encourage everyone to review our public filings and press releases, which are posted on the SEDAR filing system www.sedar.com.
So, on the call with me today, are Nanalysis Founder and CEO, Mr. Sean Krakiwsky; and Nanalysis CFO, Mr. Luke Caplette.
So, with that, I would like to turn the call over to the Nanalysis' CFO, Mr. Luke Caplette. Luke go ahead.
Thank you, Matthew. I'm happy to report for the three months ended March 31st, 2022, the company reported consolidated revenues of $5.6 million, an increased to $2.3 million or 69% from the comparative period in 2021. The increase in Q1 can be attributed to the shipment of more units of the 100MHz coupled with revenue from our most recent acquisition, K'(Prime) Technologies.
Gross profit for the three months ended March 31st, 2022 was $3.3 million, a margin of 60% as compared to gross profit of $2.1 million and a margin of 64% for the three months ended March 31st, 2021.
As discussed on previous calls, we anticipate a bit of margin erosion due to the inflationary pressures on our cost inputs. We continue to evaluate pricing, however, due to a large backlog of sales, the opportunity to increase prices has been temporarily stifled. The company's net loss for the three months ended was $1.5 million as compared to the three-month loss March 31st, 2021 of $0.5 million.
The increased loss was due to higher costs, specifically sales and marketing expenses, increased G&A expenses, and increased research and development expenses, both from an Nanalysis segment and from the new acquisition. In addition to this, there were business acquisition costs from the two transactions completed in the quarter, increased depreciation and amortization expense, increased finance expense, partially offset by no RS2D earnout in the quarter and increase revenues.
Significant transactions for the quarter included the acquisition of K'(Prime) Technologies, a North American sales and service company with particular focus on scientific instrumentation for pharma, food, chemical, and oil and gas customers, as well as imaging systems for security applications.
We also completed the acquisition of Quad Systems. Nanalysis provided Quad with a CHF1 million loan, which is convertible into shares of the capital of Quad. Nanalysis described for 260,000 Quad shares for cash consideration of CHF6.5 million. Until July 1st, 2021, Nanalysis has an option to acquire 100% of the issued and outstanding shares of Quad System at a preset valuation formula in combination of cash and majority of Nanalysis shares.
The company has assessed the IFRS 10 and has determined that based on the criteria outlined in the standard, management concluded that due to the option to purchase the remaining shares of Quad, the company has the power to govern the financial and operating policies of Quad, as such the acquisition was accounted for as a business combination.
During the quarter, the company also closed an upside public offering and non-brokered private placement for gross proceeds of $15.2 million. In addition to this, the company also received an interest-free repayable funding commitment of roughly $5 million to expand manufacturing operations from the Canadian government.
We're pleased to announce that as of March 31st, 2022, the company had cash on hand of $19.2 million, an undrawn credit facility of $6.1 million, and working cap of $18.5 million, as well as the under on government contribution funding of $5 million. We have a strong financial foundation for the future.
So with that, I'd like to now turn the call over to our founder and CEO, Sean Krakiwsky. Sean?
Thank you very much Luke. I'd like to start the call by addressing the most recent announcement we made last week regarding the $100 million and $60 million service and maintenance contract with the Canadian Air Transportation Security Authority or CATSA.
This contract was won by the company's wholly-owned subsidiary K'(Prime) Technologies, but was really a team effort across the Board. For those of you who follow us closely, this contract was perhaps not a surprise as we have alluded to the bidding and pursuit of such service-related contracts.
But a lot of the initial feedback I've received is more surprised of the sheer size and scope of this engagement and how we were able to land it. So, congratulations to our K'(Prime) and Nanalysis teams in that regard.
We were able to pursue and win this business for a few reasons, the first is K'(Prime)'s is experience and track record and servicing these types of -- pieces of equipment at airports and other security environments such as prisons and detention centers.
Secondly, the equipment manufacturers such as Lidos [ph] also gave recommendations and their references due to their prior work with K'(Prime). And lastly, it was a combination of Nanalysis that gave both balance sheet and operational strength to fulfill this engagement. The scope of the contract is to provide regular service and maintenance security screening equipment at Canada's 81 airports.
As we mentioned at the press release, the contract is for six years, which includes a gradual phase-in period of approximately one year, which we will strive to complete in six to nine months, and then start billing the customer the maximum amount.
It is common for these types of contracts to be renewed for an additional five years, making it a potentially an 11-year recurring revenue opportunity with inflation-based contractual price increases. The effective date of the executed contract is May 25th, 2022 and it expires on May 31st, 2028.
What does this contract meet for Nanalysis? I've often spoken about our macro vision as to miniaturize and democratize magnetic resonance for healthcare as well as industrial applications and to one day disrupt the MRI space for human medical imaging and make it work the way it should work as part of next-generation personalized prevention-centric healthcare system.
I said specifically on the last call that our strategy to achieve this vision, in addition to the product innovation required, is to position our company as a full-blown operating entity, with a bit of heft to it and an ability to bid on very large contracts without being told things like you have a great technology, but you're not big enough and we don't see you as a reliable supplier by industry and government customers alike.
And that we have an aggressive growth plan to build a vertically integrated global scientific instrumentation company that has an extended family of products and operations that constitute not only world-class manufacturing, but also channel management [ph] direct sales and service in every major market in the world. This contract is us executing on that plan.
Once up and fully running, we can leverage our boots on the ground into sales opportunities as well in this channel. This business will open sales channels for Nanalysis for proprietary products going forward and we expect to do more of these deals in the future.
We do believe that airports, border crossings, prisons, and other security markets are expected to be an important growth drivers for Nanalysis over the next five years and beyond.
Because of this contract and the growth that the company has and will continue to experience, you're going to see us move away from talking about specific unit orders and backlogs of particular models of products and start talking about the company in terms of business segments, such as service, benchtop NMR, high field NMR, and so on. Down the road, you'll also see us highlight more details in our acumen medical imaging and MRI initiatives.
So, that being said, our core business which is our flagship 60MHz and 100MHz NMR instruments is going very strong and I'm confident that that the strength of this business will continue.
Quad Systems, whom we now have a 43% stake in, continues on the path to roll out their new high field NMR product offering. This product line targets higher end segments of the NMR market including analysis of proteins and human blood and urine. The price range for their full products is between $500,000 and $2 million, as compared to the price range of benchtop NMR products, which is roughly $50,000 to $150,000. Their product can also be sold at separate modules, which is what we're focusing on now until the full system is ready.
There are also many cross-selling opportunities with Quad Systems and vertical markets such as the big pharma, food, energy, advanced materials, security, and universities and government labs. There's tremendous synergies also in terms of manufacturing and other aspects of running our business. We expect the full Quad System to be available this year and we'll continue to keep shareholders updated on this progress.
So, in closing, I would like to reiterate our high level objectives as a company, which we're executing on to build a fully vertically integrated global scientific instrumentation company, serving customers in the security, pharma, biotech, food, energy, advanced materials, petrochemical, healthcare, and education with imaging and detection products and service.
The company will continue to expand our direct sales, service, and channel management capabilities worldwide and will also strengthen technology partnerships as well as develop important supply chain, risk mitigating, and technology differentiating capabilities as the geopolitical landscape evolves, ensuring the ability to continue to drive growth and create shareholder value.
Incidentally, we will also be presenting at some upcoming investor conferences, including the LD Micro Conference in California in June, which is an in-person physical conference and the OTCQX Best 50 Virtual Conference in the middle of next month.
Lastly, we have launched an updated Investor Relations portion of our website and I encourage you to visit.
So, in closing, as good of a year as 2021 was previously for Nanalysis, I believe that 2022 will be even better, consistent with our stated objectives and that momentum will continue for many years to come.
I apologize to investors on this call, I'm just recovering from COVID and my throat is scratchy, as you can tell, but I'm feeling pretty good and should be recovered very soon.
So, thank you very much. And operator, I would now like to open up the call for questions. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]
Your first question comes from Stefan Quenneville with Echelon Capital. Please go ahead.
Hi guys and thanks for taking my question and congrats on the quarter and particularly, congrats on the CATSA contract. I do follow you closely and I must say I was a bit surprised by the size and scope of the deal. So, quite a coup for you guys.
But I want to sort of start with a couple of some wonky modeling questions. I -- you mentioned in your remarks that you're not going to be talking about system sales and, and backlog and all that and then I'm going to go ahead and assume that for competitive reasons.
Can you characterize what's going on with your backlog for us in more general terms? Like the backlog growing over the previous quarter and from ability to produce the 100MHz machines given the productions that was -- you've had earlier -- I guess, previous quarters, what's going on in terms of those elements of the business?
Thanks Stefan. This is Sean, CEO. I appreciate the question. Yes, you're totally right, we -- as a public company, we have a lot of transparency. Our number one competitor, for example, is not a public company. So, their financials and their MD&As are all over the internet. So, we'd like to be a little bit more strategic in that regard.
With -- about your specific question, the way I would characterize the benchtop NMR backlog and sales pipeline is that it's strong and strengthening. It is true that we haven't been shipping out as many 100MHz units as we would like, right, and -- but things are I'm very positive in that regard, I do believe that things are going to be more optimal and sort of mid-year.
Maybe just to give investors a glimpse into what exactly is happening behind the scenes in that regard, I like to describe it as a sort of crucible-like environment right now where we have about 40 people on the manufacturing side and the R&D side that are trying to get us to where we want to be on the manufacturing of these units, that entails of continued design for cost reduction and increase manufacturability. And so lots of real intense activity in that regard, all positive.
But yes, I mean, I think, again, we don't want to continue to talk about these numbers going forward, but we understand that, that it has been an important item and we're going to sort of wean people off of some of these sort of free items, so that we can focus in on the forest. But in Q1, we shipped out 10 100MHz units, so similar rate as previous quarters, a little bit behind in terms of our objectives of trying to get more out per quarter, but again, a lot of really great activity, intense activity going on in that regard right now.
Okay, great. So, -- and thanks for the added color and going forward, you're not going to provide it, so fair enough. So, what you also said in the preamble and it's actually the way I look at the business too is the different buckets that are segments of businesses that we've had to have. So, in terms of this quarter, there was some interesting dynamics, your benchtop NMR, which is the first -- and key bucket for us at this point, grew very nicely during the quarter.
RS2D, which, right now, we'll call the component business was down year-over-year and of course, K'(Prime), you acquired it and subsequently thanks -- [indiscernible] contract, can you give some color around what's going on in those segments and kind of produce what happened in the quarter, give us a little more color on the benchtop business? And what's going on with RS2D, which was down?
For sure. Maybe I'll jump in first here, and then I'll kind of pass the RS2D card over to you if that works. So, yes, as you kind of saw, Stefan, so we're up about 87% on the Nanalysis piece. You saw K'(Prime) coming about $1.6 million, we were actually a little disappointed on that. We were trying to get the deal closed as fast as possible and we kind of left a bit of revenue in those 10 days within January. So, came in a little shorter than we wanted, which was disappointing.
On the RS2D front, I'll that kind of Sean talked to the piece of business, but I will highlight the way the accounting is working right now, obviously, we're consolidating Quad and RS2D is doing quite a bit of OEM work for Quad. And so any selling intercompany-wise is now going to actually be eliminated while we recognize the Quad revenue, and so it's -- you're going to see RS2D, kind of, trickled off a bit, but then you going to see Quad come online, kind of, over the coming quarters here. And Sean will pass it to you now.
Yes, I don't have much to add at that, excellent characterization. So, yes, the console revenue that if we hadn't done the Quad acquisition, there would be some more RS2D console revenue booked. But as Luke said, because it's an intercompany now, it's not bookable. And then I see it as sort of a phase shift going on and that that revenue is going to come out the other side with Quad, but it's going to take a little bit of time. And so we weren't exactly sure about how the accounting treatment would be for Quad Systems.
Let's say if we go back a month or a couple of months, but since that time, Luke and our auditors and our audit committee have gotten clarity on that. So, it's a relatively new development. It doesn't change any of what -- as an engineer, what I would call the real revenue, but it does change the accounting treatment of the revenue and you'll see that work itself out over the next few months.
No, got it. So, yes, as you continue now on your previously biggest customer for RS2D, yes, the revenue is going to show up in the final sale of systems, not the components? Got it.
Exactly.
Yes, my last sort of wonky question and then I have one more big picture question then I'll leave outside -- jump [ph] off of the call. In terms of K'(Prime), are there any earnouts on the K'(Prime) deal beyond what you put in the value the pay for K'(Prime) because I -- obviously that will -- I assumed that will hit them and now it's given the -- is there any sort of contingent payments that might be tied to the deal?
Yes, so there's two, obviously. So, if you look at our acquisition note, which I'm sure you're kind of alluding to, you can see our contingent consideration we have of $1.5 million with respect to earnouts and there's two separate earnouts on that, there's a maximum of a $1 million earnout and I'll call it just on normal book of business for K'(Prime) to achieve some revenue targets. So, it'll be $0.5 million a year if they hit those targets. And then there's another secondary component tied to a percentage of revenue for the next two years based on a key contract that we just won, you could probably put those pieces together.
Got it. Okay. So, yes, that makes sense. I just wanted to make sure we understood that. And then finally, just big picture, this CATSA contract is a bit of a game-changer for you guys, you're going to sound like once you get an implemented, you're going to have nice, stable recession-resistant cash flows coming to the company once you're operating that contract. What does it mean to your ability to maybe accelerate R&D and other initiatives within the company, particularly on the medical side? And then I'll leave it there.
Actually, Stefan, I didn't hear you clearly on that. I heard about 90% of what you said, but I think I missed a couple of key words.
Sure, sorry. I was saying once the contract is implemented, you're going to have a nice steady source of recurrent recession-resistant cash flow from that contract. What does that do strategically to allow you to accelerate other initiatives, particularly on the medical side, but what does it do to the company knowing that you have this contract in your back pocket?
For sure. So, I mean, free cash flow is very nice. I mean, it's really the ends of every business, right and how you get there isn't as important as actually getting there. So, -- and we're going to do more of these deals, right? So, this isn't -- in that regard, it's not the end, it's the beginning. So, really excited about that cash flow. And yes, we're definitely -- for the next five years, we're definitely in reinvest in our business mode for sure. And we will use not only positive EBITDA, but positive bottom-lines that this contract is going to help us achieve to find our grand vision, which is to one day disrupt the MRI space, get more aggressive in the human medical imaging side.
So, I just think, in addition to the cash that it provides us, I think, the heft that it gives us with some of the corporate objectives we have going in the future. Right now, the equity markets seem a little bit strange, but hopefully, those will resolve themselves and the incredible value we've created in our company is going to be manifest in our stock price in the next couple of years, because we do want to resume acquisitions, particularly in the MRI space. We're not going to do it in 2022, but we would like to do it -- we would like to resume those activities in 2023. And having a stronger pubco currency will allow us to be more aggressive in that regard.
Okay, great. That's all for me. Thanks, guys.
Thanks Stefan.
Your next question comes from Yue Ma with Research Capital. Please go ahead.
Hey, good afternoon, Sean and Luke.
Hey Toby.
Yes, wish you a speedy recovery.
Thank you.
So, yes, the Q1 numbers look pretty healthy. Thanks for taking my questions. I just have a couple. First I was wondering if you could provide any color on the airport contract in terms of the gross margin, any impact on SG&A, any initial investment, et cetera? Any color will be--
I don't mind providing a little bit of color there. So, we're not actually going to talk about the gross margins associated with that contract until we get better visibility on it. Luke and I have been really focused in on accurately describing gross margins for proprietary products.
So, a service business is a little bit of a different animal with regards to gross margins per se. But we are comfortable talking about EBITDA margins that that we're going to strive to hit for the CATSA service contract and similar service contract. So, we think a reasonable objective for EBITDA margins is 20% once the project is up and running, so that's what we're shooting for.
And then with regards to some sort of -- you sort of asked how we're going to cash flow it and we estimate it's going to be a little bit over a $1 million, maybe $1.5 million to get it to cash flow positive. We do have different levers we can pull there though in terms of gradually implementing it and then starting to build a customer for just the coverage we've established.
And so we do have some levers in terms of how it affects our cash flow. But yes, maybe $1.5 million to get it to cash flow positive. And like I've said before, we're going to strive to do that in six to nine months, even though contractually, the phase-in period covers a full year. Luke, do you have anything to add to that?
Yes, I'll just -- I'll let you know Toby too and investors, you will see on future iterations of our financial statements, we will start splitting out that service revenue. So, we're not going to lump it all in as one and kind of leave everyone in the dark on. Okay, what's your margin on your product lines that you're doing? What's your margin on your service lines? So, we will make sure we differentiate between those two for everyone in the future.
Okay, yes, thank you. That's very helpful. Just one last question in terms of the Quad System transaction, I was wondering if you could comment on how likely management would exercise the option to borrow the remaining--?
Yes, so it's our full intention to exercise that option. So, we -- and we've been fully transparent with everybody at Quad including the shareholders that we wouldn't have done that deal without that option. So, we're not -- as our Chairman likes to say, we're not we're not a DC and so it is our full intention to acquire 100% of Quad Systems. And -- so yes -- so we have until July 2023 to exercise that option, according to our current contracts, but it's our intention to pull the trigger on that well before that time.
Okay. Appreciate that. Just a quick follow-up, I'm not sure if you discussed this before, but why is that Quad System deal structure there as a two-step transaction rather than just a great acquisition?
That was a negotiation is what it amounted to. In any negotiation, there's a bit of an expectations gap between the buyer and the seller and doing it in two steps, including having a preset price formula for what the step -- second step is, that was the way we were able to bridge the expectations gap and get a deal done.
And so yes, it was a negotiation. I mean, if you read between the lines -- if you read between the lines there, you'll -- the sellers weren't willing to sell 100% of their shares at the price that we were willing to pay for it. And so they were willing to sell part of it, give up de facto control and give at least for 18 months during the option period. And then what we wanted reciprocally was okay, we're given -- we're willing to give you a little bit of a lift, but not too much of one and we want to predefine and we want to add our option.
Okay, got it. Thanks for the color. I will stop here. Thank you.
My pleasure. Thanks Toby. Appreciate it.
Your next question comes from Brandon Austin with [indiscernible]. Please go ahead.
Hi guys, how's it going?
Hey, Brandon.
Great. Brandon, how about you?
Good. Good. So, yes, congratulations on that contract out of the gate. Just wanted to circle back some of the things you were saying earlier. So, from a reporting standpoint, you guys, right now you have Nanalysis, you have our RS2D, and then you have K'(Prime). So, is RS2D going to be combined with Quad Systems like when you guys report it segmented going forward, is that my understanding?
I couldn't -- right, go ahead Sean.
No, go ahead Luke. Go ahead.
Okay, I was going to say I can't give you a definitive right now. It could make sense to roll those two together. But at this point, yes, I'm not completely certain on exactly how we're going to monitor those segments and report those at this point.
Okay, and then Nanalysis one, yes.
So, I was just going to say Brandon, so the way -- like if I was an outside investor, the way I would look at RS2D is part of their business as NMR-related. So, you can think of that part of the business as sort of being combined with Quad, if you will, but part of their business is MRI-related for medical imaging. And so that part we'll talk about separately.
There is revenue on that MRI side today, but it's not a huge growth part of our business right now, but we will talk about it separately. So, the way I would look at RS2D is part of it is high field [ph] NMR and then part of it is MRI.
Okay. And then Nanalysis line, that's just the 100MHz and 60Mhz, that's mainly the benchtop products?
Yes, you're right. Like sort of by default, when we think of Nanalysis proper, we think of the benchtop NMR company.
Okay. And just -- I know, you guys don't want to get into detail by units, those are units, but how the how's the 60MHz coming because -- I mean, you guys always -- I guess I always get excited about the 100MHz, but you guys talk a lot about the 60MHz being a good sort of growth engine, because not everyone needs 100MHz, but how are sales there, you guys only sort of commented on the 100MHz?
Yes, they are good, very good. And I'll give you more. So, it's -- what's -- what I really liked about that product is almost zero R&D dollars are going into that right now. And so if we ran that business on its own, it would be a cash cow. And so we're trying to get the 100MHz into that same realm. It's not there yet, but I'm confident it will be.
But also, the future of the 60MHz is bright, because that's the product that's going to make its way into manufacturing facilities and be used for process control. And other applications as well, where performance is important, but higher volumes and price are important too. So, by no means is the 60MHz sort of an obsolete product, that we're just sort of phasing out. No, it's in fact the opposite for the future of the benchtop NMR group.
Okay. And just--
And for those of you -- sorry, doing math on the call, because I think Sean said we shipped 10, so I'm sure a lot of people come back into the 60MHz, but we were just shy of delivering three times the number of 60MHz units in Q1 2022 compared to Q1 2021. So, strong demand, strong shipments there.
And just aren't on the accounting for Quad, so you guys are going to consolidate them into your statements and then there'll be a minority interest in earnings and stuff like that. But the extent you're consolidating the balance sheet as well, when you say of cash of CAD19 million, how much of that is Quad's and how much of that's yours?
It'll be about CAD8 million of Quad on there in Canadian dollars sitting in their account right now.
Okay, So, CAD8 million of the CAD19 million is Quad's and CAD11 million is yours?
Correct.
So, that's not proportional then, that's an absolute number?
That's an absolute number, yes. And then just your MCI kind of pulls it out at the bottom, but that is a full consolidated number, 100% correct.
Okay. All right. That's good. Okay, so that's a decent amount of cash. And can you maybe talk a little more elaborate on your ability to sell benchtop? Like, is there any sort of ability to go beyond that, that that government contract in terms of can you sell products that would be additive or how do you guys drug discovery at the airports? Or how do you guys look at that?
Yes, that's exactly the way we look at it is the ability to do things like illicit drug detection. There's also opportunities with the OEM side, so companies like Raytheon, for example, to one day have devices that detect explosives better. And so yes, the objective is over the next couple of years to open that up as a channel and sell proprietary magnetic resonance products into that security market, not just airports, but detention centers like prisons, and border crossings.
Okay, all right. Thanks a lot, guys.
My pleasure. Thanks very much, Brandon. Appreciate your time.
Thanks Brandon.
[Operator Instructions]
Your next question comes from Lindsay Leeds. Private Investor. Please go ahead.
Hi, and congratulations on a strong Q1. I wanted to ask about the rollout of the Canadian airport security project, will you be needing to ramp up an employee count or hire contractors, what does that look like?
Yes, thanks very much, Lindsay. It's a gradual hiring of employees and we already have employees in about seven airports in Canada right now. So, we're not going from a dead start. We've been working with that equipment for years and working with CATSA for years. But there is going to be increases in headcount. It'll be managed by the Managing Director of our Security business, which is the founder of K'(Prime). So, it's not going to be too intertwined with the other parts of Nanalysis' business, although there is going to be some, I guess, operational synergies that are going to be exploited. But yes, it will be a material addition to the number of people we have as teammates in our company.
In addition to that, the incumbent vendor, of course, is -- no longer has that contract. And so basically, we'll be cherry picking those people who are already working in the same venues as our employees in several of those airports. So, there'll be that dimension of it to where the good employees of the incumbent vendor basically just move over to our business as well.
Okay, well, thank you. I think I want to just get a clarification on what I thought I heard earlier. And that is that you guys can proceed to try to service all these airports as fast as you're able to, there's not a -- you can do 20 this quarter, 40 this quarter type limitation, it's based on your ability to perform the contract.
That's correct. And I want to say that we work very closely with CATSA. So, everything that gets done is done on a -- sort of a mutually agreeable basis. Obviously, this is a pretty important service we're providing that includes the public, so nothing gets done in sort of a rash or, or sort of unilateral way. It's always in a bilateral way and both parties -- and then the third-party, which is the incumbent vendor, wants this to happen as fast as possible and that's why we've stated it's our objective to do it in six or nine months.
Great, thank you so much. That's all I have.
A pleasure. Thanks Lindsay.
There are no further questions at this time. Please proceed.
Okay. Well, on behalf of Matthew and Luke, I would like to thank everybody for spending the time to listen to our Q1 2022 call and I look forward to further discussions with all of you in the future. Thank you very much.
Ladies and gentlemen, this concludes your conference call for today and we thank you for participating and ask that you please disconnect your lines. Have a great day.