<SEC-DOCUMENT>0000814676-12-000024.txt : 20120815
<SEC-HEADER>0000814676-12-000024.hdr.sgml : 20120815
<ACCEPTANCE-DATETIME>20120815144255
ACCESSION NUMBER:		0000814676-12-000024
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20120630
ITEM INFORMATION:		Results of Operations and Financial Condition
FILED AS OF DATE:		20120815
DATE AS OF CHANGE:		20120815

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CPS TECHNOLOGIES CORP/DE/
		CENTRAL INDEX KEY:			0000814676
		STANDARD INDUSTRIAL CLASSIFICATION:	POTTERY & RELATED PRODUCTS [3260]
		IRS NUMBER:				042832509
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-16088
		FILM NUMBER:		121036742

	BUSINESS ADDRESS:	
		STREET 1:		111 SOUTH WORCESTER STREET
		CITY:			NORTON
		STATE:			MA
		ZIP:			02766
		BUSINESS PHONE:		508-222-0614

	MAIL ADDRESS:	
		STREET 1:		111 SOUTH WORCESTER STREET
		CITY:			NORTON
		STATE:			MA
		ZIP:			02766

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CERAMICS PROCESS SYSTEMS CORP/DE/
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>k8081312c.htm
<DESCRIPTION>TRANSCRIPT OF Q2, 2012 CONFERENCE CALL
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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549<BR>
</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>FORM 8-K<BR STYLE="mso-special-character: line-break">
<BR STYLE="mso-special-character: line-break">
</B></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">Current Report<BR>
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934<BR>
</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">Date of Report (Date of earliest event reported):
August 13, 2012</P>

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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>CPS TECHNOLOGIES
CORPORATION<BR>
</B></FONT>(Exact Name of Registrant as Specified in its Charter)</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Arial, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 34%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">Delaware</TD>
    <TD STYLE="width: 33%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">0-16088</TD>
    <TD STYLE="width: 33%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">04-2832409</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">(State or other jurisdiction of incorporation)</P>
        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Commission File Number)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(IRS Employer Identification No.)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">111 South Worcester Street, Norton, Massachusetts</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">02766</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Address of principal executive offices)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Zip Code)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Registrant&rsquo;s telephone number, including area code</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">508-222-0614</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="3" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="3" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="3" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Former name or former address, if changed since last report.)</TD></TR>
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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (<U>see</U> General Instruction
A.2. below):</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">[ ]&#9;Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">[ ]&#9;Soliciting material pursuant to Rule 14a-12 under the exchange
Act (17 CFR 240.14a-12)</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">[ ]&#9;Pre-commencement communications pursuant to rule 14d-2(b)
under the<BR>
Exchange Act (17CFR 240.14d-2(b))</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; border-bottom: Black 0.75pt solid">[ ]&#9;Pre-commencement communications
pursuant to Rule 13e-4( c)) under the<BR>
Exchange Act (17 CFR 240.13e-4( c)).</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">Item 2.02. Results of Operations and Financial Condition.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">The Company hosted a conference call on August 13, 2012 to review
the Second Quarter results for 2012 and to answer questions from investors. A transcript of this conference call is attached hereto
as Exhibit 99.1 and is incorporated herein by reference. The information furnished under Item 2.02, including the Exhibit attached
hereto, shall not be deemed &lsquo;filed&rsquo; for any purpose, including for purposes of Section 18 of the Securities and Exchange
Act of 1934 (the &ldquo;Exchange Act&rdquo;) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language
in such filing.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>SIGNATURE</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in">Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

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    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><B><U>CPS Technologies Corporation<BR>
</U></B>(Registrant)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 51%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">Date:&nbsp; August 15, 2012</TD>
    <TD STYLE="width: 49%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">/s/ Grant C. Bennett<BR> Grant C. Bennett<BR> President and Treasurer<BR> (Principal Executive Officer)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">EXHIBIT INDEX</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

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        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">EXHIBIT NUMBER</P>
        <P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P></TD>
    <TD STYLE="width: 80%; padding-right: 5.4pt; padding-left: 5.4pt">DESCRIPTION</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">99.1</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Transcript of conference call held August 13, 2012.</TD></TR>
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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>confcall2012q2.htm
<DESCRIPTION>EXHIBIT 99.1 TRANSCRIPT OF CONFERENCE CALL HELD ON AUGUST 13, 2012
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">Conference Call Participants</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">Nitsan Hargil - Torrey Hills Capital</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CPS TECHNOLOGIES CORP.</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Moderator:&#9;Ralph Norwood</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>August 13, 2012</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>5:00 p.m. ET</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/200% Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>Good afternoon, my name is (Crystal) and I will be your conference operator. I would like to welcome everyone to the CPS Technologies
Corporation Second Quarter conference call. The speakers today are Mr. Grant Bennett, President and Chief Executive Officer and
Mr. Ralph Norwood, Chief Financial Officer.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>All lines have been placed on mute to prevent any background noise. After the speakers&rsquo; remarks, there will be a question
and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone
keypad. If you would like to withdraw your question, press the pound key. Thank you.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Mr. Ralph Norwood, you may begin your conference.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Thank you,
(Crystal). Good afternoon everyone.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Before we begin the business portion of this call, I would like to point out to all of you that statements in this conference
call that are not strictly historical are forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995 and should be considered as subject to many uncertainties that exist in CPS&rsquo;s operations and environment.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>These uncertainties include economic conditions, market demands and competitive factors. Such factors could cause actual results
to differ materially from those many forward-looking statements.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Now, to the results of the second quarter: Our revenues for the quarter totaled $3.6 million, down 25 percent from the $4.8
million earned in the second quarter of 2011. This decline in demand occurred in all three of our main product families; AlSiC
components, hermetic packages and our contract with the Army Research Laboratory.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Our AlSiC component business consist of two primary product lines; base plates for motor controlled modules and lids and heat
spreaders for routers, switches and high performance micro processors. We believe the decline in demand for base plates for motor
controllers, used primary for trains, subway cars and wind turbines, is temporary and is primarily tied to the Euro crisis.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The decline in demand for lids and heat spreaders is primarily the result of inherent volatility in the market. Products lives
are much shorter than in the motor control market and several products have reached end- of- life over the last few quarters. Although
new design wins will, we believe, replace that revenue in the future, there will be continue to be quarter-to-quarter fluctuations
in demand relating to the timing of individual projects.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Shipments of our hermetic packages for the aerospace and defense industries have been lower in the past few quarters versus
the comparable period a year ago, although, recently we have seen an uptick in quoting opportunities. The significant drop off
in the contract for the U.S. Army reflects the combination reduced defense spending and the fact that our contract with ARL is
nearing its end.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Our gross margin dropped from 20 percent in the second quarter last year to 5 percent in the second of 2012, largely as result
of reduced revenues. In particular, this reflects the fact that our fixed manufacturing cost were spread over a sharp reduction
in revenues.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>In the quarter, margin was also adversely affected by $95,000 of obsolescence charges associated with slow moving products
and some work in process inventory.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Selling, general and administrative expenses were down 9 percent versus the second quarter last year. The suspension of our
401K match and lower sales commissions were the principal factors in this reduction. Interest expense was down due to net paybacks
of capital leases. And we also benefitted from a tax credit of approximately 43 percent of our pre-tax loss in the current quarter.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Turning now to the balance sheet---our day&rsquo;s sales outstanding, DSOs, declined from 63 days at March 31, 2012 to 44 days
at June 30, 2012, reflecting a mix of customer terms. Inventories were flat versus the end of the first quarter of 2012 at $ 3.4
million as we decided to ratchet back our production levels to avoid building inventories beyond current levels. You will also
notice that we have reclassified all of our deferred tax asset to non-current as we are not likely to benefit from these credits
within a year&rsquo;s time.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>On the liability side, we reduced our payables, which had grown over the past two quarters, to a more typical level. We spent
about $50,000 on capital expenditures in the quarter, well below the $200,000 of depreciation and amortization.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Finally, our cash balance decreased from about $ 600,000 at the end of March 2012 to approximately $ 300,000. Operating losses
which we incurred during the quarter, offset in part by a reduction in working capital and lower capital expenditures, were the
major reasons for the reduction in cash. Our current ratio at the end of the quarter was 3.4x, unchanged from year-end.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>At this point, I would like to turn the call over to Grant who will offer his comments on our results for the quarter and add
perspective for the coming quarters.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 0pt; text-indent: 0pt">Grant Bennett:&#9;Thank you,
Ralph. And thanks to each of you for joining us.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>In the first quarter conference call, we had about three months ago, I described that we were disappointed in our first quarter
results. We viewed the factors contributing to those disappointing results, principally the economic turmoil in Europe---which
incidentally more than 50 percent of our revenues come from Europe---but we viewed the factors contributing to those results as
temporary and we expected sales to accelerate in the second half of the year.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Let me update you on our current thinking. First, let me share a framework that is essential to understanding our business.
We&rsquo;re a custom component manufacturer. We make components that are integrated or designed into larger assemblies or pieces
of equipment which in turn are made by OEMs, primarily in the electronic and automotive areas. In the short term, demand for our
products and thus our sales revenue is completely a function of demand for the assemblies or the equipment made by our customers.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>At any point in time, current demand is the demand generated by the sales of our customer&rsquo;s assemblies or equipment.
When a customer definitively chooses one of our components for inclusion in their product, we refer to that event as a &ldquo;design
win&rdquo;. Depending on the application, the time from the design to the point when that specific component enters production
and starts to generate revenue can be as short as a few months to as long as three to four years.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>This could be frustratingly slow at the beginning but it&rsquo;s also generally rewarding long lived at the other end. In other
words, in most cases, once designed in, our products are generally used for the product lifetime of the customer&rsquo;s products.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>The key point I want to make really is that demand for existing products and the timing and the revenue that is derived from
new design wins are in fact quite independent of each other. And that&rsquo;s in our press release with a little bit of tongue-in-cheek
where I quoted Charles Dickens, &ldquo;The best of times, the worst of times&rdquo;. Let me return to our current environment.
We find ourselves in the environment today where demand for existing products is lower than we expected and lower than our customers
expected.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We receive rolling forecast from our major customers looking forward, in most cases, for a whole year. These are generally
updated either on a weekly basis or a monthly basis. Historically, actual demand has been plus or minus 10 percent of the forecast
given to us by our major customers.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>This year something very different has occurred: actual demand, and specifically in Europe, has been significantly lower than
customer provided forecast throughout the year. In some cases, actual demand is as much as 50 percent below the level of demand
forecast by our customers only three months earlier. This deviation between actual demand and our customers&rsquo; forecast of
demand says there is much greater uncertainty in Europe than our customers or we had previously assumed.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We have essentially come to a point where we can't place much credence on forecast given to us by our European customers. We
now believe, based on our own analysis, that current demand will remain low throughout this quarter. But we believe, based on the
details customer by customer, part by part analysis, that current demand for current products will start to tick upward in Q4.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We have, throughout most of this year, kept employment levels sufficient to meet the customer provided forecast. However, given
the deviation between the actual demand and the forecast demand, we determined earlier this month that we would change course and
we would match our employment to actual recently-realized-demand rather than customer provided forecast demand; but we would do
so in a manner that still allows us to meet increased demand quickly.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Accordingly, earlier this month, we reduced employment in manufacturing and we moved our manufacturing operations to four days
a week. This will allow us to meet increased demand quickly by returning to five days. We have also taken the difficult decision
earlier this month of reducing our fixed cost in overhead and SG&amp;A by reducing employment by approximately 15 percent in our
technical, engineering, supervisory and administrative staffs.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Let me move on to talk a little bit about design wins and then put these two elements together. We talked in our last conference
call about the four year contract we've entered into with Continental Automotive. And we indicated that these are actually design
wins that go back three or four years but are just now reaching fruition and going into manufacturing. Continental has given us
permission to identify them as our direct customer and to identify the automobiles that use the Continental assemblies which incorporate
our base plates.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>These autos to date are: the Audi A6 Hybrid, the Audi Q5 Hybrid, the smart electric car and two Renault hybrids. These automobiles
are just now being introduced for sale in Europe and are not yet available for sale in the U.S. The Audi Q5 will be available for
sale in the U.S. at the end of this month; Audi has not set date when the A6 will be available for sale in the U.S.; the Renault
hybrids will only be offered in Europe; Renault is not marketing in the U.S. as you're probably aware.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Although, the level of this new demand is of course subject and affected by the macro economic environment in Europe, it is
nonetheless new demand generated by a new design wins. And it of course stand to reason that the demand is higher if these automotives
actually becomes available for purchase than demand has been while the OEMs have been simply filling their production pipelines
and beginning production of the initial dealer floor samples.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>But I cite this simply as an example, an exciting but nonetheless somewhat typical example, of the timing and the nature of
design wins.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We also have achieved a very significant new design win for a high volume traction application. Traction is referring primary
again to trains and subway cars which is ramping to full production in Q4 of this year. I can also comment that we've achieve a
design win after several months of efforts for a part at Raytheon that, over time, could become one of our largest, single sources
of revenue.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Essentially &ndash; now let me put these two topics together as it relates to current demand and design wins. Essentially what
we've done in our recent actions is to match our cost structure to our assessment of continued weak demand for current product,
plus a reasonably conservative estimate of new demand from design wins toward the end of this year and going into 2013. This insures
our financial stability and insures that we can meet the demands on our cash. And that, I believe, puts us in a position where
the surprises will positive rather than negative as we go forward and demand increases.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Frankly, we began this year expecting, again based primarily on that forecast provided by customers for current products, sequential
growth versus 2011 and it&rsquo;s now very clear that that&rsquo;s not going to happen. The increasing and widening deviation between
what our customers forecast and what they're actually doing, again signals in our mind the higher level of uncertainty than we
expected. Nonetheless, we view this as a bump in the road and while deeper than expected, it&rsquo;s a bump that won't derail our
future going forward.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Just one or two sentences taking a slight longer term view---we remain very convinced that our fundamental strategy is appropriate
and that the future is bright. Among the reasons for this is the general view that hybrid and electric vehicles will continue to
increase their share of all vehicles sold and, given the fact that they're starting from a very small base, that represents meaningful
growth for us.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We believe that our agreement with Continental and the activities we have with the Continental outside of the agreement with
other first year suppliers in the U.S. and in Europe mean that we&rsquo;ll play a very important role in hybrid and electric vehicles
going forward.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We also believe that there will continue to be, at least over the next decade, significant growth in the traction market. China
had its fits and starts---they had a high speed rail over a year ago now that caused them to ask some questions. They're slowing
down some of their infrastructure spending but nonetheless the scale of the railway build out in China is very, very significant
and will continue to be so for many years. We are supplying the companies that are supplying the Chinese market and we, ourselves,
are also being qualified at more than one Chinese module manufacturer.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We are also very encouraged at the potential that we have for expansion of railroad business in Japan. I've commented before
that this has been a focus---penetrating the Japanese market for about two years now. And the Japanese has been exceedingly methodical
and thorough but we are at a position where design wins which we expect very, very shortly will generate what we believe will be
meaningful revenue in Japan next year.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>We continue to believe that growth opportunity exist in the use of AlSiC and hermetic packaging. And finally, the engineering
advances that we've made in armor and structural applications, which in spite of the slowdown in defense spending, lead to direct
customers; also, the Army Research Laboratory continues to give us very positive feedback. We believe that this product line continues
to have great potential.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>So that a brief overview, let me stop and welcome any questions.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>At this time I would like to remind everyone in order to ask a question, please press star one on your telephone keypad. We&rsquo;ll
pause for just a moment to compile the Q&amp;A roster. One moment for the first question.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>And you first question comes from the line of Nitsan Hargil with Torrey Hills Capital.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Nitsan Hargil. Good afternoon gentlemen.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Good afternoon.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Good afternoon.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Nitsan Hargil. I was wondering if you could give us a little bit more in-depth look if you will. You mentioned that there&rsquo;s
a very long lead time of three to four years between you know, starting the design up to design wins in many countries. As we look
forward as to what is going on in the pipeline, can you give us an idea of how optimistic you would be looking forward into the
longer term?</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Sure. We,
you know, the short answer is we&rsquo;re very optimistic. Now, those of us who had followed us for some time, perhaps recognize
that we are optimists but let me be a little more data driven. We make lids and heat spreaders and our customers include Xilinx,
LSI Logic, Hewlett Packard, IBM, Micro Electronics, Cisco, our Texas Instruments. The time between the design win and production
for those products tends to simply be two or three months.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>And we&rsquo;re delighted that in some cases, because these products are relatively simple in nature, even though everything
we do is to a customer&rsquo;s blueprint. Customer&rsquo;s frequently will tool up for a particular design or pay us to tool up
the design. And then they will themselves use that lid or heat spreader for more than one product.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>While at the other end, let me actually take up a point in the middle, if that&rsquo;s two or three months, the typical cycle
for a new automobile from the point when they're designing the drive train for &ndash; in a hybrid or electric car, it&rsquo;s
getting shorter of course. But it&rsquo;s still at least two years and usually three years between when those designs start to
get fixed and the product reaches production. Although, military related defense products are very small percent of our revenues,
less than 10 percent, nonetheless, the time between a design and volume production and for example a radar application really can
be four, five or even six years.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Well, fundamentally, what we have in any point in time is a portfolio of design wins. And so the lid business is churning a
little faster and we indicated that a couple of parts have reached end of life to be very specific. That had to do with the more
rapid or shorter product life cycle for some Cisco products than we or they had originally forecast. But, anyway, the long and
short of it is we have today what I think is an attractive portfolio of activities and design wins which should give us solid meaningful
growth as we go forward.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Another element here is aluminum silicon carbide which is the primary composite that we make is still a relatively new material.
And so we are finding, I haven't gone into these, but in addition to the identified markets where our materials has demonstrated
advantage and where the value proposition is still unambiguous like in the motor controller market, we've got a variety of other
applications where we&rsquo;re really introducing the material to the customer and we&rsquo;re excited about those. But anyway
that&rsquo;s the general answer.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Nitsan Hargil. Understood. Understood. A little &ndash; a little bit more information, obviously, you're producing the bases
of some of these cars; the smarts, the Renaults, the Audi. Can you give us an indication of the per unit average that we&rsquo;re
looking at you know, we&rsquo;re looking at selling $20 of aluminum per car or is it &ndash; or is it a hundred dollars per aluminum
per car? So we could somehow try to &hellip;</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Sure. Today,
it&rsquo;s between $50 and a $100 and it&rsquo;s pretty darn close to $75 on average.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Nitsan Hargil. Understood. Understood. And I&rsquo;ve been &ndash; I've been hearing lately about more and more cars becoming
&ndash; having more aluminum in them if you will but that is becoming the method of (inaudible) if you want to save on gas mileage
and so on. Is that the trend that is going that is going to affect you fairly directly or it is something more directly due to
these particular cars.</TD></TR></TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;It&rsquo;s
a trend that is positive for us. However, the weight, you know, we&rsquo;re talking about &ndash; we&rsquo;re talking about a single
component, an important component but single component in the car compared to, for example, the entire body. But it certainly works
in our favor.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>And a brief technical digression here: people use our material because of its expansion rate, the electronics that are put
on it is the car or train or wind turbine starts and stops or accelerate and decelerates the electronics on it are expanding and
contracting as the temperature changes. And our material matches the expansion and contraction rates of the electronics.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Well, there are other materials that also match the expansion rate and, in particular, there are two of them: copper tungsten
and copper molybdenum. And our material is significantly lower in cost than copper tungsten and copper molybdenum. That wasn&rsquo;t
always the case, in fact it wasn&rsquo;t even the case three years ago. But as our volume has increased and as the cost of copper
has increased, we are now lower cost than copper tungsten or copper moly and we&rsquo;re also only about one fifth of the weight.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>So we think that as customers are looking at&ndash; the customers are looking at the alternatives-- some may put a higher priority
on weight, some priority on cost but in either case, we believe that the AlSiC is a better material.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in"></TD><TD>Nitsan Hargil. Understood. Thank you so much gentlemen.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Thank you.</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>And there are no further questions at this time.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;We very
much appreciate you joining us on the middle of the summer. I hope the rest of the season for all of you and please feel free to
call Ralph or myself in the future if you do have follow on questions.</P>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Ralph Norwood:&#9;Thank you.</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 1.25in">Operator:</TD><TD>Thank you. And this does conclude today&rsquo;s conference call. You may now disconnect.</TD></TR></TABLE>

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<P STYLE="font: 12pt/18pt Times New Roman, Times, Serif; margin: 0 0 0 1.25in; text-indent: -1.25in">Grant Bennett:&#9;Thanks very
much.</P>

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