Large Contract Expectations
Q: Are you expecting large contracts soon? Orders were low.
A: Yes, we anticipate significant new business in the current quarter and going forward, replenishing our backlog despite government unpredictability in starting contracts. "

Funding of New Programs
Q: Can you elaborate on funding for newer programs?
A: For proliferated satellite systems, we have significant government funding. The government is funding multiple companies to explore novel approaches, which involves some risk for us as we invest upfront without guarantees our customers will proceed to later phases. We are not funding additional R&D but account for the risk of programs not continuing. "

Capacity for Growth
Q: Do you have capacity to grow into large addressable markets?
A: From a plant and equipment standpoint, we have plenty of capacity and room to expand. The bigger challenge is ensuring we have enough people to get work done without overstaffing. Financially, we're in a good position to support growth. "

R&D Expense Increase
Q: R&D expenses rose $1 million year-over-year; is this ongoing?
A: You shouldn't extrapolate that increase into the future. This quarter was higher due to unique circumstances, but we don't anticipate significant increases in overall R&D expenditures going forward. "

Gross Margin Outlook
Q: Gross margins were high; will they increase further?
A: We don't expect gross margins to increase significantly. Our strategy is to maintain high margins on our core Heritage business, but it's unrealistic to expect high margins on all newer programs. "

R&D Rate for Fiscal Year
Q: Will R&D be closer to 5% of sales for the year?
A: Those exact numbers may not be precise, but that's the general trend. "

Unfunded Backlog
Q: Can you provide your unfunded backlog?
A: We don't publish that number. While it's significantly larger than the $70 million funded backlog, we don't feel it's valuable to provide. "

Non-Satellite Business Outlook
Q: Is non-satellite business decline causing higher gross margins?
A: No, don't read too much into those fluctuations. We anticipate the Zyfer (non-satellite) segment will increase. The changes reflect the general lumpiness of our business. "

Quantum Sensor Development
Q: Can you discuss the quantum sensor area?
A: Currently, we do not have products shipping, but our goal is to develop products like magnetometers for applications such as alternative navigation when GPS is unavailable. We're working with national labs and seeking external funding, with some success. "

Funding of Announced Contracts
Q: Will the three contracts announced last November be funded soon?
A: Yes, absolutely correct. We're actively working on those programs, which have different durations. A significant amount is already funded. "

Tax Rate Expectation
Q: What tax rate are you expecting for fiscal '25?
A: We expect a very low tax rate due to net operating losses, though California's different rules mean some income isn't covered. Overall, it will be a low single-digit percentage. "

Details on Upcoming Projects
Q: Can you share details on projects you hope to win soon?
A: We anticipate several significant satellite programs and some non-satellite programs but prefer not to get too specific until we're under contract. "

Proliferated Satellites and LEOs
Q: Are the proliferated satellite contracts in LEO?
A: Many are Low Earth Orbit satellites, but not exclusively. The trend is toward smaller satellites, larger quantities, and shorter lifetimes across all orbits. "

SG&A Expenses Increase
Q: SG&A expenses rose $500k; is this steady state?
A: It's steady state. Expenses went up 3% to 5% over last year but will remain constant and not continually grow. "

Clarification on Annual Report Figure
Q: What did you mean by "new business, $70 million" in the annual report?
A: I don't have it in front of me; please call me tomorrow, and I can explain. "

MEMS Technology Usage
Q: Are you working on MEMS technology instead of crystal oscillation?
A: We are not internally developing MEMS technology but utilize it in some products. MEMS resonators don't perform as well as quartz in high-performing applications, our specialty, but are good in high vibration environments. "

Involvement in DARPA Projects
Q: Are you involved in DARPA's chip-scale atomic clock work?
A: Currently, we are not directly involved in any chip-scale activities at DARPA. We have been in the past, 5 to 10 years ago, but not currently. "

Gross Margin Adjustment Clarification
Q: Why didn't you mention last year's 8% gross margin adjustment?
A: Those were one-off issues from Q3 and Q4, not relevant at this point. "

CEO's Board Membership
Q: Why isn't the CEO on the Board of Directors?
A: I haven't been invited to the Board at this point in time.

Annual Meeting Date
Q: Have you set a date for the annual meeting?
A: Yes, it's scheduled for October 8. "