Robert Curda: That’s absolutely correct.
Michael Melby: And I think I missed it. I think the Mariner contract starts in fiscal Q1 of next year. How long does it run for?
Robert Curda: It’s a one-year contract.
Michael Melby: And that’s for the $20 million, and that includes the options you suggest in the press release, too.
Rick Wheeler: Yes. The $20 million includes the options that they have of extending that contract and even purchasing the equipment.
Michael Melby: And I guess the options if those are included since one year in total as well.
Rick Wheeler: I’m not sure I understand what you’re saying.
Michael Melby: Should we think about the $20 million being over one year? Or is it over more than one year?
Robert Curda: The $20 million is over the minimum rental period of one year, yes.
Michael Melby: And in terms of CapEx or your investment in rental equipment, it’s gone up and I was wondering what we should expect in Q4 for the full fiscal year now?
Rick Wheeler: Well, I mean, certainly, the Mariner is going to probably fall into next fiscal year.
Robert Curda: No. Part of our increase this year is related to components we had purchased in expectation there could be a Mariner contract. Now that we’ve signed that contract, we know we’re going to be assembling those components. We’re actually assembling them now into units, and they will ultimately be part of our rental fleet. So that — we kind of preemptively included some of that in turn where we spent in cash so far into the rental fleet this quarter, we’ll do some more next quarter and ended in the first quarter of next fiscal year.
Michael Melby: Yes. I might have mentioned in the guidance, but I think before you’ve guided towards how much you plan to spend on CapEx in the fiscal year and then in rental equipment. Do you have an update there for investors?
Robert Curda: No, I don’t have an update right now, sorry.
Rick Wheeler: I think it’s in line with what was already mentioned though, so really, no major changes in that regard.
Robert Curda : Yes.
Michael Melby: That’s it from me. Thank you.
Rick Wheeler: Alright. Thanks, Mike.
Operator: Thank you. We’ll take our next question from Scott Bundy with Moors & Cabot.
Scott Bundy: Good morning, guys. A couple of quick questions. Rick, the AVS product that was introduced or released, is that a pilot program? Or are we actually making sales?
Rick Wheeler: Well, these pilot programs are sales, but they’re not large quantities as it were. So I have to say it’s a sale. And it’s a new product that extends the markets they can serve.
Scott Bundy: You answered the question. I’m confused in your press release with the statement, the increase in the revenue is attributable in part to a recent decision to increase manufacturing capacity to meet demand for the water meter cable business. Will we constrain — can you elaborate what going on there?
Rick Wheeler: No, we definitely were constrained. Our backlog was continuing to grow. And that was affecting our lead times, making it harder for us to serve the needs of our customers, which were growing in terms of quantities in the orders. So we definitely enhanced our manufacturing capabilities there, adding new equipment, so that we could increase that capacity. And there’s likely going to be more that we do in that regard even so.
Scott Bundy: And lastly, Robert, roughly speaking, where are the loss carryforwards of the company?
Robert Curda: They’re significant. We’ve got many years of loss carryforwards that we have accrued, but they’re fully reserved on the balance sheet, and we won’t reverse those reserves or valuation allowances until we string many, many months of income together, and it starts to see that those losses starts are valuable to us.
Scott Bundy: But in your 10-K in the past, that number has exceeded $100 million, correct?
Robert Curda: Yes, I believe it has.
