Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Jack Frasier – Seamark Capital.
Jack Frasier – Seamark Capital
I’m wondering Jim if you could share with us just a little more insight as to the kind of discussions going on with potential customers? Are there other customers you might potentially be talking to at this point? And, if so, how would their queuing if you will in line for resources work out with your now existing partner/customer?
Then just lastly, I’m just wondering if we could possibly have an update on the likely financial impact if you look out to the first half of next year from these relationships?
Jim B. Terry
Yes, we continue to talk to other customers. The reality is given our size it is very difficult to address multiple opportunities at the same time. We certainly can on the business development side but in terms of engineering and resources required to review potential projects or certainly to work on anything specific like a new bit size, we’re pretty much all consumed with what we’ve engaged to do with our new customer.
So, in short, we continue to have those conversations so we can kind of force rank the opportunities for the future but we have made a commitment to this customer and it is a fully funded commitment so that is where all of our resources are going. In terms of financing, we’re doing what we can to reduce our burn rate. Most of the burn in the last half had to do with the acquisition of components and spare parts on long lead items for our current single system.
That’s largely gone away so the bulk of our future near term cash requirements are going to go in to funding the development, the design of the new drill bit as well as manufacturing it. The funding we received from the customer, will compensate us for the work that’s being done on that project and I’m not at liberty to disclose a lot of details aside to say that some of the funding is at risk predicated at the outcome of the trials but in relative terms to previous opportunities, it’s significantly less a portion of the total project.
In other words, most of the money is guaranteed and is provided in progress payments for making milestones.
Jack Frasier – Seamark Capital
One follow up if I may, as we think of the revenues that are associated with this lead customer at this point, should we be thinking of those revenues as actually being profitable in nature or is it too early to tell that yet?
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