text:
|Publication number
|Publication type
|Publication date
|Sep 30, 1975
|Filing date
|Aug 19, 1974
|Priority date
|Aug 19, 1974
|Publication number
|John Franklin Heagy
|Original Assignee
|Rca Corp
|Export Citation
|BiBTeX, EndNote, RefMan
|Patent Citations (4), Referenced by (5), Classifications (27)
|External Links: USPTO, USPTO Assignment, Espacenet
United States Patent Heagy 1 Sept. 30, 1975 [54] PRODUCTION OF LEAD MONOXIDE 3,372,056 3/1968 De Haan et a1 1 17/200 COATED VIDICON TARGET 3,444,412 5/1969 De Haan et a1 117/200 X [75] Inventor: John Franklin Heagy, Leola, Pa. Primary Ozaki [73] Assignee; RCA Corporation, New York, N Y, AIIOIHQ), Agent, or Firm-G. H. Bruestle; R. J. Boivin [22] Filed: Aug. 19, 1974 ABSTRACT [21] Appl. No.: 498,772 A layer of substantially uniform lead monoxide is vapor deposited on a supported signal electrode of a 52 us. 01. 148/15; 148/174; 427/86; vidieen target The lead monoxide layer is formed on 357/31; 313/65 the signal electrode as a substantially homogeneous 511 1m. 61. 11011, 7/54 Compensated intrinsic, or H yp electrically eeridue- [58] Field of Search. 148/15, 175, 174; tive material An eleetrieel Potential is pp to the 1 [7/200 106 A supported layer of lead monoxide to affect an electrical discharge through a continually renewed atmo- 5 References Ci sphere consisting essentially of one of the inert gases, UNITED STATES PATENTS or nitrogen, whereby ion bombardment of the layer is accomplished. 3.289.024 11/1966 De Haan et a1 357/10 X 3,307,983 3/1967 De Haan et a1 1 17/200 X 17 Claims, 2 Drawing Figures 02" PIRANI GAUGE T0 VACUUM PUMP US. Patent Sept. 30,1975 3,909,308
PRODUCTION OF LEAD MONOXIDE COATED VIDICON TARGET BACKGROUND OF THE INVENTION The invention relates generally to methods of forming photoconductive layers of lead monoxide (PbO) and, more particularly, to such layers which display photoconductive properties particularly suited for use as photoconductive targets in image pick-up tubes such as vidicons. In general, photoconductive layers of this type include regions of different conductivity type material lying one behind the other in the direction of thickness of the layer. A p-n barrier or junction is thereby formed at the boundary region between the two adjacent zones of different conductivity.
Certain prior art techniques are known for the manufacture of photoconductive PbO layers. These include, for example the techniques described in the following U.S. Patents issued to E. F. DeHaan et al:
3,289,024 issued on Nov. 29, 1966,
3,307,983 issued on Mar. 7, 1967,
3,372,056 issued on Mar. 5, 1968, and
3,444,412 issued on May 13, 1969.
In the manufacture of devices which incorporate such photosensitive PbO layers, certain deficiencies in the prior art processing methods have resulted in inconsistent and particularly poor yield of devices having desired characteristics.
One desirable characteristic for photoconductive targets used in vidicons is a relative insensitivity of its photosensitive layer to changes in the magnitude of a reverse bias voltage connected across that layer. Devices having an excessive photosensitivity to such voltage changes when light within the blue region of the light spectrum is focused upon that layer may be said to display blue slump. Generally, photosensitive devices which display, in operation, a blue-slump characteristic, soon thereafter display, by continued operation, other still more serious defects which make them unuseable. Thus, the degree of blue slump displayed by such photosensitive devices is used as a leading indi cation of device failure. It has been found that prior art techniques, for manufacturing PbO layers of the type described, result in a high percentage of defective devices displaying such a blue slump characteristic.
Yet another deficiency of the prior art techniques, described in the above references, is that these techniques involve costly, complicated, and extremely sensitive steps for the manufacture of such photoconductive layers.
A simplified and less costly method is desired for manufacturing devices having photoconductive PbO layers, with significantly improved yield of devices whose photosensitivity is relatively insensitive to variations in reverse bias voltage.
SUMMARY OF THE INVENTION A photosensitive layer is formed from a supported layer of substantially homogeneous compensated intrinsic or n type electrical conductivity lead monoxide material. An electrical potential is applied to the layer of lead monoxide material to effect an electrical discharge through an atmosphere containing a gas chemically inert with that layer at a pressure of from about 4 X to about 6 X 10' torr whereby ion bombardment of the layer is accomplished.
BRIEF DESCRIPTION OF THE DRAWINGS FIG. 1 is a partial crosssectional view of a target for a vidicon camera tube made in accordance with the invention.
FIG. 2 is a cross-sectional view of one embodiment of an apparatus for practicing the method herein disclosed.
DESCRIPTION OF THE PREFERRED EMBODIMENT Referring to FIG. 1, the preferred embodiment of a lead-monoxide (PbO) target 10 for a vidicon camera tube is shown. Such targets, and their operation, are well known in the art of camera pick-up tubes generally, and include: a faceplate 12, of an evacuated glass envelope; a conductive coating 14, such as tin oxide on a major surface of faceplate 12; and a thin layer of lead monoxide on a major surface of coating 14 not in contact with faceplate 12. Generally the lead monoxide layer in such devices comprises two regions 16 and 18 of PhD of differing electrical conductivity. In manufacture, a layer of compensated intrinsic, or of n type conductivity, PbO material is first deposited upon the tin oxide coating 14. Thereafter, the region 18 of substantially P type conductivity PbO material is formed into the PbO layer substantially continuous with a remaining portion (region 16) of the original layer of substantially compensated intrinsic or n type conductivity PbO material.
In the manufacture of lead oxide vidicons, the first and second regions 16 and 18 of PbO material must be uniformly and carefully formed on a layer of tin oxide 14 which is ordinarily predeposited on the faceplate 12 of a tubular envelope. The degree to which vidicon targets 10 display desired characteristics, is largely a function of the processing methods employed in forming the regions 16 and 18 of PbO, and of the later sealing assembly of the envelope containing the target formed thereby with other necessary components of the vidicon. An improved method of assembling, sealing, and evacuating envelopes incorporating a target such as 10 depicted in FIG. 1 is fully described, for example in US. Pat. No. 3,536,462 issued to A. D. Eyster et al. on Oct. 27, 1970.
In FIG. 2 there is shown a processing apparatus 20, with a glass envelope workpiece 22 mounted thereon, that may be used in practicing the herein disclosed method of forming lead monoxide regions 16 and 18 as part of the target 10 (FIG. 1).
The Apparatus A portion of the apparatus 20 that serves an evacuating and evaporation function comprises a table 30 supporting a tubular metallic manifold 32 having an upper end adapted to support a lower end of a tubular glass Y envelope workpiece 22 as shown in FIG. 2. A lower end 34 of the manifold 32 is connected to a vacuum pump, not shown. The upper end of the workpiece 22 is closed by the glass faceplate 12 having on its inner surface an electrically conducting coating 14 made of tin oxide, for example, and which serves as a signal electrode for the completely assembled vidicon. The coating 14 is connected along its circular periphery to an annular aluminum sealing ring 36 which is hermetically sealed between the faceplate 12 and workpiece 22. The ring 36 includes a lip which engages the external periphery of workpiece 22 to provide a means of heat conduction as hereinafter described, and a means of electrical connection to the coating 14. Upon the conducting coating 14, regions 16, and 18 of photoconductive material comprising lead monoxide must be formed.
The upper end of manifold 32 is hermetically brazed or welded to a glass mounting base 38, and clamping member 40, which in turn is secured or anchored to the table 30. The base 38 supports a cylindrical glass pedestal 42 extending upward into workpiece 22. The upper end of the pedestal 42 is secured to a glass mounting base 44. The glass mounting bases 38 and 44 each include a plurality of axial passages (not shown) or apertures through their thickness by which there is provided relatively free axial passage of gas and/or vapor within the cylindrical interior of the tubular envelope workpiece 22 between the manifold 32 end of the workpiece 22 and the upper faceplate 12 end of workpiece 22.
The base 44 includes an annular lip region along its periphery upon which a glass cylindrical shield 46 may be engagingly mounted and retained by gravity in a substantially vertical position approximately in concentric telescopic relation to the sidewall inner cylindrical surface of the tubular envelope workpiece 22. The glass shield 46 extends vertically within the workpiece 22 and is' spaced therefrom to form an intermediate cylindrically shaped gap or passage for providing an additional passageway through which gases and/or vapors may freely pass from the region of the faceplate 12 to that of the interior of manifold 32.
A cylindrical glass evaporation chimney 48 is mounted entirely within the interior of cylindrical shield 46 in concentric telescopic relation therewith by means of a plurality of glass spoke-like radial extensions 50. The chimney 48 includes upper and lower end openings which terminate within the cylindrical interior of the larger and longer cylindrical shield 46. The upper end opening of chimney 48 includes a glass cover member 52 which includes a magnetic material embedded within its volume. The cover 52 provides a magnetically removable shutter as hereinafter described.
' A platinum bullet-shaped crucible 53 is mounted within the cylindrical interior of the chimney 48 for retaining and evaporating a measured quantity of PhD material disposed within a cavity 54 centrally located therein. An apertured lid 56 is provided to cover the crucible cavity 54. Removal of the lid 56 provides access to cavity 54 whereby a measured amount of PbO material may be introduced within cavity 54. The crucible 53 is fixably mounted within the interior of chimney 48 by means of a pair of supported wires 58,60 of dissimilar metal compositions which extend upward through the bases 38 and 44 and which extend through the manifold 32 external to apparatus 20. The wires 58,60 may comprise, for example, material compositions of platinum and platinum-rhodium alloy, respectively, whereby a thermocoupleis provided by which trolled, as hereinafter disclosed. Tubulations 64, 66, 68 additionally extend through the base 38 and terminate within the interior of workpiece 22 closely proximate to the gas passages through base 44. Tubulation 64 is externally connected by a T tubulation arrangement to a source of either oxygen or gas X". Tubulation 66 is externally connected to a source of water vapor. The rate of admission of gas or water vapor within the interior of workpiece 22 by tubulations 64, and 66 is accurately controlled by adjustable dosing valves 72 and 73, and 74, respectively. Tubulation 68 is externally connected to a Pirani gauge for measuring the internal gas or water vapor pressure within the interior workpiece 22.
The distance S? of the apertured lid 56 of crucible 53 from the inner surface of the faceplate 12 is adjusted to be 40 mm. A2 mm. when the workpiece 22 is vertically mounted to engage the upper annular end of manifold 32. The workpiece 22, once so positioned may be hermetically sealed to apparatus 20 by means of O ring 76 comprised of, for example, a silicon rubber material which may be compressed to hermetically seal the matingannular end surfaces of the manifold 32 with that of workpiece 22 by means of a threaded collar 78 which mechanically engages mating threads in the clamping member 40. Sealing compression of the O ring, and release of the workpiece 22 from the apparatus 20, may be easily accomplished by, respectively, screwing or unscrewing the threaded collar 78 within the clamping member 40.
During processing the faceplate 12 is maintained at a constant temperature by means of a removable temperature controlled heating block 80 comprising, for example, a copper block including an annular disc shaped receiving cavity 82 so dimensioned as to receivingly engage the external major surface of faceplate l2 and the aluminum lip 36 which is electrically connected to the conductive coating 14 or signal electrode. A thermocouple 84 is embedded within the block 80 to control the temperature thereof with an accuracy approximately 1C. of the controlled temperature by means of external control apparatus (not shown). A removable silicon grease 86, or other suitable heat conducting media, is provided within receiving cavity 82 between the block 80 and faceplate 12 to provide increased heat conduction therebetween. During processing the crucible 53 is heated by RF induction by means of the removable coil 88 which may be positioned telescopically about the periphery of workpiece 22 at the axial location of the crucible 53.
The Method Preliminary to forming PbO regions 16 and 18 on the interior surface of faceplate 12 the apparatus 20 is cleaned of all residual impurities which might later contaminate these layers. Cleaning may be, for example,
accomplished by providing an auxillary cover bulb or envelope, in lieu of the envelope 22 on the apparatus 20. The cover bulb may be sealed to the base 38, in the same manner as previously described for envelope workpiece 22, to include telescopically within its interior all the internal components of apparatus 20 which are ordinarily included within the workpiece 22. Once the cover bulb has beenhermetically sealed about the base 38, the bulb may be evacuated by vacuum pump(s) interconnected to the manifold 34. Dosing valves -74 are all maintained in an off position thereby preventing the entry of gases or vapor into the cover bulb. Once the cover bulb has been evacuated, the interior components of apparatus 20 may be cleaned, by a high temperature bake out, comprising for example, maintaining the internal components of apparatus 20 within the cover bulb, at a temperature of 450C. for a period of 30 minutes. Crucible 53 may also be simultaneously heated by means of coil 88 to remove by evaporation all residual PbO material which remains from a prior use of the apparatus 20.
If the prior cleaning operation is utilized, the cover bulb is thereafter removed by unscrewing the collar 78, and coaxially lifting the cover bulb from the internal components of apparatus 20. The glass shield 46 and chimney 48 are also removed to provide access to the crucible 53. The apertured lid 56 is then removed to provide access to the cavity 54 of crucible 53. A suitable charge of substantially pure PbO material is carefully placed within the cavity 53. The volume of PbO material introduced into cavity 54 must relate closely to the cross-sectional area and thickness of the PbO layer which is later to be formed on the coating 14 of workpiece 22. The apertured lid 56 is then placed across the crucible cavity as shown in FIG. 1.
The chimney assembly which comprises glass shield 46, chimney 48, and cover member 52, is thereafter positioned coaxially about the crucible 53 within the annular receiving lip along the periphery of mounting base 44. The workpiece 22, which comprises a vidicon envelope including faceplate 12, and a predeposited conductive coating 14 thereon, is thereafter coaxially positioned about the chimney in engagement with the upper annular mating surface of the manifold 32. The workpiece is then hermetically sealed to the apparatus 20 by screwing the collar 78 as previously described. Once sealed, the workpiece 22 is evacuated by one or more vacuum pumps interconnecting with the orifice of the lower end 34 of manifold 32, to a vacuum level approximately torr. An oven is thereafter placed about the workpiece 22 and the internal components of apparatus 20, and the assembly heated to approximately 450C. for a period of 60 minutes, for example, to bake out any remaining contaminents within the interior of the workpiece 22.
The previously described steps are intended to be illustrative of the cleaning and charging operation by which the workpiece 22 and the internal components of apparatus may be prepared for the critical steps of evaporating and forming the PbO layer and are not otherwise intended to be critical or limiting.
A PbO layer may now be formed on the coating 14 of the workpiece 22 by means of the following described steps which are accomplished during a dynamic state of atmospheric flushing of the interior of workpiece 22. The flushing is performed by introducing a series of gases and/or water vapor within the workpiece 22 by means of tubulations 64-68, as hereinafter described, while simultaneously evacuating the workpiece with an operative vacuum pump connected to manifold 34. A high rate of flushing or continuous renewal of the atmosphere of the interior workpiece 22 has been found desirable and may, for example, be accomplished by means of a vacuum pump system capable of pumping approximately 100 liters per see. from the manifold 32 having an orifice about 27 mm. in diameter. The hereinafter described admission rates of gases and/or vapors from tubulations 64-68 are specitied with regard to such an evacuation rate. While the rates herein disclosed are preferable, it is understood that the evacuation rate, and the admission rates of gases and/or water vapor may be suitably adjusted by persons skilled in the art to provide necessary convection and renewal of the atmosphere proximate to the surface region upon which PbO deposition is to occur as herein described.
After the interior of the workpiece 22 has been cleaned as above described, the internal components of apparatus 20 and workpiece 22 are cooled; the RF heater coil 88 is coaxially mounted in horizontal alignment about the crucible 53 external to the workpiece 22; and the block heater is placed on the faceplate 12 of workpiece 22 which has been precoated with a silicone grease, or other suitable conductive media, to suitably internestle in engagement within the receiving cavity 82.
During the formation of the PhD layer, the temperature of the block heater 80, and of the thermally connected faceplate 12 must be accurately maintained at a temperature of between C. and C. i 1C. The temperature of the faceplate 12 is critical, as it has been discovered that a necessary red hexagonal crystalline state for the PbO layers 16 and 18 may only be accomplished while maintaining the faceplate 12 within that temperature range. Moreover, PbO crystalline size is also largely controlled by means of the temperature of faceplate 12.
The temperature of the faceplate 12 is uniformly established within the above defined temperature range by means of external heating and control apparatus (not shown) interconnected to thermocouple 84 within the block heater 80. Once the desired faceplate temperature has been achieved, the dosing valve 72 is opened to admit oxygen to the workpiece 22 interior at a dynamic flushing rate at which there is achieved a substantially constant measurement on the Pirani gauge, interconnected to tubulation 68, of approxi mately 4 X 10 torr of pressure. A period of time approximating seconds is thereafter required to establish a stable flushing rate of the interior workpiece 22. The dosing valve 74 is then opened to also admit water vapor'to the workpiece 22 interior at a dynamic flushing rate atwhich there is achieved a substantially constant measurement of pressure on the Pirani gauge of approximately 1.4 X 10' torr. It is preferable that the ratio of admission rates of the water vapor and oxygen be about lO to 4 as herein described. A period of time approximating 120 seconds is again required to establish a stable flushing rate of the interior of workpiece 22.
Once a stable flushing rate of the admitted oxygen and water vapor into the interior of workpiece 22 is established, the RF heating coil 88 is connected to a suitable source of RF energy by which controlled heating of crucible 53 is accomplished.
At this point in the processing, the crucible 53 is heated in timed sequence in accordance with the following preferable time-temperature cycles with accuracy of il0C., as measured by the thermocouple consisting of wires 58 and 60, and externally associated equipment: (1) 660C. for a period of 1 minute; (2) 740C. for a period of 1 minute; (3) 820C. for a period of 1 minute; (4) 870C. for a period of 1 minute; and lastly, (5) 950C.l000C. for a period of l to 1% minutes. Inasmuch as the PbO material within crucible 53 only begins to sublimate or vaporize at temperatures exceeding 880C, occuring in step steps l (4) provide a series of additional baking or cleaning steps. The vaporization of the charge of PbO within cavity 54 initially is unstable for the period of 60-90 seconds during the period of step (5).
Once a stable rate of evaporation is achieved from apertured lid 56 of crucible 53, the cover member 52 is removed by external magnet means. The cover member acts as a magnetically controlled shutter across the upper opening of the chimney 48. Evaporation of the PbO charge within crucible 53 is thereby begun from the chimney 48 and is continued until the temperature of the crucible increases rapidly thereby indicating a substantial depletion of the PbO charge.
During the previously described heat evaporation step, subsequent to step (5) and the removal of cover member 52, oxygen and water vapor flushing of the workpiece 22 interior is maintained while simultaneously providing, as previously described, a substantially uniform faceplate temperature of between 100C. and 110C. 1 1C. In this manner, it has been found that a relatively homogeneous layer of PbO may be formed on the coating 14 comprising the signal electrode of the workpiece 22, and that a controlled thickness thereof may be obtained by carefully adjusting the charge of PbO previously inserted within the crucible 53. For example, it has been found that the previously described process may be utilized to form a substantially uniform and homogeneous 20 micron thickness of PbO on the coating 14 corresponding to the combined thickness of regions 16 and 18 wherein the faceplate 12 and its signal electrode 14 define a diameter of about 27 mm. The requisite charge of PbO to form such a PbO layer on a coating 14, may comprise, for example, a cylindrically shaped charge of PbO powder defining a diameter of 6.5 mm. and a thickness of 9 Once the temperature of the crucible 53, as externally monitored by means comprising wires 58 and 60, begins rising at a rapid rate (i.e., for a given approximately constant RF energy source connected to the coil 88) the RF energy source connected to coil 88 is turned off; the heater block 80 is removed from the faceplate 12; the oxygen dosing valve 72 and the water vapor dosing valve 74 are turned off; and the dosing valve 73 is turned on to admit gas X within the interior of workpiece 22. The gas X may comprise any of the inert gases selected from Group VIII A of the Periodic Table of the Elements, or nitrogen.
Dosing valve 73 is adjusted to admit gas X to the interior of workpiece 22 at a rate at which there is achieved a substantially constant pressure measurement on the Pirani gauge, interconnected to tubulation 68, of between about 4 X torr to about 6 X l0- tori; however, preferably about 4 X 10 torr. Once a stable flushing rate for gas X has been achieved within the interior of workpiece 22 a source of electrical glow discharge with direct current potential is interconnected to the coating 14 and to the crucible 53 by means of an electrical connection to ring 36 and wires 58 or 60, respectively. The potential so applied preferably is approximately 900-1000 volts, however, differ ing potentials may be provided to advantage by persons skilled in the art. The connection of such glow discharge potential, of either positive or negative polarity, to either the signal electrode (comprising coating 14),
or the crucible 53 produces a glow discharge ion current between the signal electrode and the crucible 53. The signal electrode current of approximately microamperes, for example, has been found to be associated with the appropriate application of (positive or negative) direct current potential as herein described, ofabout'1 ,000 volts in which the target 10 includes a diameter of about 27 mm. The glow discharge is preferably continued for a period of '60 seconds. However, other time periods of from l-5 minutes may be utilized to advantage. The potential applied to the signal electrode and the crucible 53 is disconnected at the termi nation of a suitable glow discharge time period.
The glow discharge operation above described, completes the process by which regions 16, 18 are formed within the layer of PbO deposited on coating 14, as previously described. It is believed that the glow discharge operation herein described provides for the formation of a region by ionic bombardment, which effectively comprises a p type electrically conductivity material within a homogeneous layer of otherwise compensated intrinsic or n type electrical conductivity. It is apparent, therefore, that the process herein described may be broadly utilized in forming photoconductive lead monoxide layers of differing conductivity types, and is not restricted solely to vidicon targets. Photodiodes may, for example, be manufactured by methods similar to that herein described. 0
Unlike prior art methods, I have found that the formation of the layer 18 may be accomplished by glow discharge within an atmosphere of gas X consisting of a nitrogen gas or an inert gas selected from Group VIII A of the Period Table of the Elements. Prior art methods have emphasized the necessity of providing a glow discharge operation within an oxygen atmosphere to form by ionic bombardment a region of p type conductivity analogeous to the layer 18.
Unlike one theory relating to glow discharge in oxygen in which the reaction of the oxygen ions with the substantially homogeneous PbO layer is believed necessary, it is believed that the critical function of the glow discharge, herein described, is the modification of the physical structure of the PbO material by the ionic bombardment of the glow discharge process itself without the necessity of including a gas atmosphere to react chemically with that material.
I have discovered that a glow discharge operation for the formation of region 18 within an atmosphere which is chemically non-reactive or inert with the substantially homogeneous PbO layer previously formed is particularly advantageous. For example, if the atmosphere (i.e., gas X) comprises a nitrogen gas having a dew point of approximately 3 5C., a photoconductive layer of PbO may be formed for incorporation in vidicon targets or other photosensitive devices which is particularly responsive to the blue and green portion of the visible light spectrum. Also, I have discovered, that a significant unexplained reduction of defective tubes may be achieved as compared with otherwise identical processes utilizing oxygen as the glow discharge atmospherev Targets and devices so manufactured do not appear to be as susceptable to the blue slump deficiency previously described. A significant reduction in the scrap of defective manufactured product has been achieved by this novel approach to manufacture of such photosensitive lead monoxide layers. Moreover,
the process appears to offer utility as a means of modifying spectral response of the manufactured product.
Inert gases such as argon, helium, etc., may be utilized to advantage for the glow discharge atmosphere. Targets have, for example, been successfully manufactured in which the glow discharge atmosphere has consisted of argon. Similar characteristics were displayed by the resultant targets as were displayed by those in which the glow discharge was accomplished in nitrogen.
Once the target has been formed on the faceplate 12 of workpiece 22, the dosing valve 73 is closed and the vacuum system attached to manifold 34 is shut off after gas X has been evacuated from the interior of workpiece 22 to a pressure level of about 10" torr. A buffer gas of nitrogen is thereafter admitted to the interior of workpiece 22 by means of dosing valve 70, until atmospheric pressure is achieved within the interior of workpiece 22. If the gas X and the buffer gas both comprise nitrogen, the buffer gas may be immediately introduced into manifold 32 without waiting for the evacuation of the interior of workpiece 22 as previously described, thereby simplifying the manufac ture of such photoconductive layers. Once atmospheric pressure is achieved by the introduction of the nitrogen buffer gas within the interior of workpiece 22, collar 78 is unscrewed, and the workpiece 22 is removed and transferred, for completion of a vidicon target assembly, to an evacuation sealing apparatus such as described in the previously referred to Patent issued to A. D. Eyster. The assembly of the workpiece 22 as part of an operative vidicon is there described and its disclosure in that regard, is herein incorporated by reference.
What I claim is:
l. A method of manufacturing a photosensitive device comprising the step of ionically bombarding a supported layer of lead monoxide, within an atmosphere containing at least one gas chemically inert with lead monoxide at a pressure of from about 4 X 10 to about 6 X 10 torr, by applying an electrical potential to said layer to effect electrical discharge through said atmosphere.
2. A method for manufacturing a photosensitive device in accordance with claim 1, wherein said atmosphere consists essentially of a gas selected from the group consisting of nitrogen and the inert gases.
3. A method for manufacturing a photosensitive device in accordance with claim 2, wherein said electrical discharge is for a period of time of about 1-5 minutes.
4. A method for manufacturing a photosensitive device in accordance with claim 3, wherein said supported layer comprises, prior to such electrical discharge, a substantially homogeneous layer of lead monoxide of one type of electrical conductivity.
5. A method for manufacturing a photosensitive device in accordance with claim 4, wherein said atmosphere is maintained in a dynamic state of flow and renewal by an apparatus and process in which continual flushing of said atmosphere abutting said layer is accomplished.
6. A method for manufacturing a photosensitive device in accordance with claim 5, wherein said gas comprises nitrogen having a dew point of about -35C.
7. A method for manufacturing a photosensitive device in accordance with claim 6, wherein said atmosphere is maintained at a pressure of about 4 X 10' torr.
8. A method for manufacturing a photosensitive device in accordance with claim 1, wherein said lead monoxide layer is vapor deposited.
9. A method for manufacturing a photosensitive device in accordance with claim 8, wherein said vapor deposition of said lead monoxide layer is accomplished in an atmosphere of water vapor and oxygen, prior to said electrical discharge; wherein the atmosphere abutting said layer being vapor deposited is maintained in a dynamic state of flow and renewal by an apparatus and process by which continual flushing of that atmosphere is achieved during the period of time of said vapor deposition, whereby the pressure of said atmosphere is substantially maintained at about 1.4 X 10' torr.
10. A method for manufacturing a photosensitive device in accordance with claim 9, wherein said water vapor and oxygen comprising said atmosphere are in the ratio of about 10 to 4, respectively.
1 l. A method for manufacturing a photosensitive device in accordance with claim 10, wherein said ratio is substantially fixed.
12. A method for manufacturing a photosensitive device in accordance with claim 11, wherein said applied potential to said supported layer is from about 900 to about 1,000 volts.
13. A method for manufacturing a photosensitive device comprising the steps of:
a. vapor depositing a substantially uniform and homogeneous layer of lead monoxide upon a supporting member; then,
b. ionically bombarding said layer by applying to said layer of lead monoxide an electrical potential to effect an electrical discharge through a continuously renewed atmosphere consisting essentially of a gas selected from the group consisting of nitrogen and the inert gases, and at a pressure of from about 4 X 10 torr to about 6 X 10? torr.
14. A method for manufacturing a photosensitive device in accordance with claim 13, wherein said electrical discharge is for a period of time of about 1 to 5 minutes.
15. A method for manufacturing a photosensitive device in accordance with claim 14, wherein said vapor depositing is accomplished in a continuously renewed atmosphere consisting essentially of water vapor and oxygen in the ratio of about 10 to 4, respectively, at a pressure substantially maintained at about 1.4 X 10 torr.
16. A method for manufacturing a photosensitive device in accordance with claim 15, wherein said electrical potential applied to said layer is from about 900 to about 1,000 volts.
17. A method for manufacturing a photosensitive device in accordance with claim 16, wherein a surface of said supporting member upon which said vapor depositing of lead monoxide is accomplished is maintained during said vapor depositing at a temperature of between about to C.
UNITED STATES PATENT OFFICE CERTIFICATE OF CORRECTION PATENT NO. 3 ,909,308 Q DATED September 30 1975 INVENTOWS) John Franklin Heagy It is certified that error appears in the above-identified patent and that said Letters Patent are hereby corrected as shown below:
Column 7, line 56: "tori" should be --torr-.
Column 9, line 15: "10 should be --10" o y Signcd and Scaled this eighth Day of junezm O Arrest:
RUTH C. MASON C. MARSHALL DANN Arresting Officw Commissioner oj'Palems and Trademarks
|Cited Patent
|Filing date
|Publication date
|Mar 10, 1964
|Nov 29, 1966
|Philips Corp
|Photo-sensitive device including layers of different conductivity types
|Mar 10, 1964
|Mar 7, 1967
|Philips Corp
|Method of manufacturing a photosensitive device
|Mar 10, 1964
|Mar 5, 1968
|Philips Corp
|Method of manufacturing a photoresponsive device comprising a photoresponsive pbo layer
|Oct 18, 1967
|May 13, 1969
|Edward Fokko De Haan
|Photo-responsive device having photo-sensitive pbo layer with portions of different conductivity types
|Citing Patent
|Filing date
|Publication date
|Jul 1, 1975
|Oct 26, 1976
|Nippon Electric Company, Ltd.
|Semiconductor camera-tube target
|Mar 28, 1977
|Apr 25, 1978
|Agency Of Industrial Science & Technology
|Selective doping crystal growth method
|Aug 17, 1977
|Feb 20, 1979
|Siemens Aktiengesellschaft
|Method of producing a monocrystalline layer on a substrate
|Jan 20, 2010
|Jul 17, 2012
|Hoerbiger Automatisierungstechnik Holding Gmbh
|Piezoelectric valve
|Jan 20, 2010
|May 13, 2010
|Hoerbiger Automatisierungstechnik Holding Gmbh
|Piezoelectric valve
|U.S. Classification
|International Classification
|Cooperative Classification
|European Classification


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TASER International, Inc. (NASDAQ:TASR)
Q4 2010 Earnings Call
February 23, 2011 10:00 AM ET
Rick Smith – CEO and Co-Founder
Dan Behrendt – CFO
Eric Wold – Merriman Curhan Ford & Co
Greg McKinley – Dougherty and Company
Good day ladies and gentlemen and welcome to the Fourth Quarter 2010 TASER International Incorporated Earnings Conference Call. My name is Regina and I will be your operator today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) Today's conference is being recorded for replay purposes.
I would now like to turn the conference over to our host for today's event, Mr. Rick Smith, Chief Executive Officer. You may proceed sir.
Rick Smith
Thank you. And thanks everybody for joining us this morning. As is the norm, I will turn over to our CFO Dan Behrendt to first read the Safe Harbor statement, and then we'll get started.
Dan Behrendt
Thanks Rick. Certain statements contained in this presentation may be deemed to be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. TASER International intends that such forward-looking statements be subject to the Safe Harbor created thereby.
Such forward-looking statements relate to expected revenue and earnings growth; estimations regarding the size of our target markets; successful penetration of law enforcement market; expansion of product sales to the private security, military and consumer self-defense markets; growth expectations for new and existing accounts; expansions of production capabilities; new product introductions; product safety and our business model. We caution these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements herein.
Such factors include, but are not limited to market acceptance of our products; establishment and expansion of our direct and indirect distribution channels; attracting and retaining the endorsements of key opinion leaders in law enforcement community; the level of product technology and price competition for our products; the degree and rate of growth of our markets in which we compete and accompanying demand for our products; potential delays international and domestic orders; implementation risks of manufacturing automation; risks associated with rapid technological change; execution and implementation risks of new technology; new product introduction risks; ramping manufacturing production to meet demand; litigation resulting from alleged product-related injuries and deaths; media publicity concerning product uses and allegations of injure and deaths; and the negative impact this could have on sales; product quality risks; potential fluctuations in quarterly operating results; competition; negative reports concerning TASER device uses; financial and budgetary constraints of prospects and customers; dependent on sole and limited source of suppliers; fluctuations in component pricing; risk of government investigation regulations; TASER product tests and reports; dependence upon key employees, employee retention risks and other factors detailed in the company's filings with the Securities and Exchange Commission.
With that, I'll turn it back over to Rick Smith.
Rick Smith
Thanks Dan. Okay, again thanks for joining us to everybody to look back at 2010, but more importantly looking forward in 2011. As is no secret, 2010 was a challenging year in general and particularly for our customers in municipal law enforcement. Going back to 2009, the stimulus program was in full swing in '09 and we had a record year that year. What it became clear in 2010 that the stimulus spend was not going to continue, really what happened was some necessary restructuring in the cost structure of many governments and particularly municipal agencies that was forestalled from '09, there were prop up operations with stimulus spending, 2010 was the year to that the music stopped and everybody had to find its share.
Then we did a particularly tough year to be selling capital equipment into frankly paramilitary agencies that have a very tight bond of brotherhood in one of the agencies looking going through staffing cuts, they will go to extra lengths to try to preserve the jobs of their men and women at arms. And in those environments trying to sell new equipment and new capabilities is exceedingly difficult. And frankly we don't dispute to be priorities of our customers were very close with that community.
I would say that 2011 is a bright new day in our opinion. Our distribution network is giving its very positive signs. Our discussions of law enforcements, it seems that many agencies have been through the restructuring or at least they are in the midst of it now. And by the midpoint of the year, we believe that we're seeing a fundamental shift where agencies will be coming out of this staff cutting mode. And as they do, they will be facing up to equipment shortfall, shortage in cartridges, outdated equipment that constitutes for life, there will be pent-up demand. And we believe that as we come up to the backend of this, our customers as well knowing how painful it is to go through staffing cuts, are going to be more likely to focus on investing in efficiency systems, improving the efficiency in our workforce rather than just staffing right back up immediately.
And our core systems both TASER devices and the new AXON and EVIDENCE.COM makes dramatic improvements in agency performance on a cost savings and return on investment basis. So we believe that positions us very well for the coming market conditions. In 2010, some specific highlights. One thing to point out, at the end of the year we saw our first major order for the TASER X3 for over a 1,000 units by the Arizona State Department of – I'm sorry the Arizona Highway Patrol, Department of Public Safety.
Again we saw they finally were able to free up some budget dollars to make investment in upgrading their equipment. And over the course of the year, we actually were able to just start begin to drive some upgrades, the trend that we believe we'll be able to continue and will be a major strategic focus in 2011. We also saw the launch of EVIDENCE.COM and AXON after a multiyear investment cycle. Not only in the U.S., but also in New Zealand that adopted our TASER CAMs and EVIDENCE.COM on a nationwide basis.
I'll talk more when we come back after the break, looking 2010 to talk more about our status in program forward with those exciting products. The Texas Department of Public Safety went full deployment after a multiyear sales engagement and test and evaluation program, with around 2,700 X26s, one of our larger packs, one of our larger deployment this year.
We also successfully defended our intellectual property with a patent infringement case that we took all the way through, well it actually didn't quite go to trial we want on pre-motion or pretrial motions, some re-judgment in infringements against Stinger Systems, a company that was violating several of our patent. That company was effectively dissolved in the Florida State equivalency of bankruptcy's proceedings. We believe that is very strong message that TASER will defend our intellectual property. Its core to our business, its core to our mission and we believe we have the capabilities to do so very effectively.
Finally we did – we took some important measures to streamline our cost structure in 2010. Again it was a bit of a tough year. At the top line we saw 16% decline in revenue, but due to some of the rigorous steps that we took in streamlining our processes and our expense structure, by the end of the year we were able to end in the fourth quarter a breakeven on a GAAP basis on obviously significant lower sales than the year before. But perhaps more importantly we were able to generate almost $300 million in cash from operations.
We believe that has positioned us as we move into 2011, and as we obviously work on bringing the top line back to and above historical levels that the business is really positioned to be able to leverage increases in sales to consistent cash earnings and hopefully we'll see that leverage generate throughout a GAAP basis as well. So before I move into talking about 2011, I'm going to hand over to our CFO Dan Behrendt to give a little more detail about 2010.
Dan Behrendt
Okay, thanks Rick. So I'll start with the results for the fourth quarter. Revenues as Rick said for the fourth quarter were $22.9 million. This is down approximately $8.2 million from the prior year adjusted revenues, which were impacted by of the $3.5 million deferral related to the X26 training program that we started with the introduction of the X3 Electronic Control Device. The decrease in sales versus the prior year quarter was primarily driven by clear individually significant orders especially to our international customers, and the way it's been getting the AXON [ph] in the market as well as the reduction in stimulus funding for law enforcement equipment that we saw in 2010 versus the prior year 2009, where we saw a much higher stimulus funding for our products.
Total year sales for 2010 were $86.9 million. This represents a 16% reduction from 2009. The gross margins for the fourth quarter were $11.8 million, or 51.7% of sales are down 7.2% as a percentage of sales. This was really one of the bigger impacts and drivers for that reduction is the fact that we're now including $1.1 million of software-as-a-service datacenter costs and software maintenance costs into the cost of goods sold line. This presents about 4.8% of sales. So that's a big part of that reduction, because we're now including those costs up in the cost of goods sold.
The remaining 2.5% decline is really driven mostly by decreased leverage on our fixed manufacturing overhead costs, with a lower sales level this year. We are seeing improvements in our direct manufacturing costs specifically in labor. The automation is really starting to have a positive impact on our margins and seeing the efficiencies related to some of the greenbelt projects we've started during 2010.
Moving onto SG&A expenses. SG&A expenses for the quarter were $9.3 million. This is down a $0.5 million from the $9.8 million in the prior year. SG&A as a percentage of sales were about 40.8% of sales compared to 31.5% of sales in the prior year. Again it's all driven by leverage because we are seeing reduction in the net SG&A cost due to some of the cost restructurings we've taken during the year. Most of that reductions from the prior year is driven by lower salaries, benefits, and stock compensation.
The growth research and development expenses for fourth quarter were $2.5 million. This is actually down $3.1 million compared to 2009, decrease is driven by the fact that EVIDENCE.COM datacenter costs were now up and cost of goods sold at $1.1 million but also just structural changes were reduce the overall spend in research and development as some of the projects that we started previously are through most of the development and we're seeing a reduction in expenses.
We'll continue to focus on our cost controls to making sure that expenses are managed as we gear towards returning to both near-term and long-term benefit for the company and getting leverage out of the fixed costs of the company. With the – on a cash basis, with the wrap up of our software development team in California and the resulting increase in 123R stock compensation and also the depreciation costs by the higher capital expenditures over the past couple of years especially the automation equipment put in place, we believe it makes sense to look at operating income on both a GAAP basis as well as traditional on a cash adjusted basis.
The non-cash P&L expenses have grown at point where it makes sense to break them out. So on a GAAP basis, we actually had a pre-tax loss of $31,000 and a net of tax loss of a $197,000 or $0.00 loss per share both basic and dilutes, but on a cash basis, we did see income for the quarter of $2.9 million. For the full-year, we saw revenues of $86.7 million which is down $17 million from the prior year. Again we talked about the impacts of the economic downturn on municipal spending the reductions in stimulus funding. All those things had a similar impact on the total year-over-year sales.
Gross margins for the year were $45.4 million or 52.2% of sales. Again the impact of the EVIDENCE.COM datacenter costs are impacting gross margins by $3.2 million for the year or 3.6% of sales. We're also seeing lower leverage on the fixed costs, but again as we for – successful [ph] in growing the top line we'll see that leverage return to the indirect manufacturing costs, improve gross margins. SG&A expenses of $39.1 million have decreased $4.4 million. Again attributed to the cost control measures we undertook during the year, we saw reductions in payroll costs versus the prior year of $1.2 million, reduced consulting costs by a $1 million, reduced professional fees by roughly $850,000, and travel is down $350,000.
So we're seeing dramatic impact to those cost restructuring. So we've taken during the year and we're seeing that by up over than SG&A line and R&D. Our growth R&D expenses for the year were $12.7 million. That's down $9.7 million on a gross basis versus the prior year, driven by a $5 million reduction in indirect supply, tooling and scrap charges. Again those we had much higher expenses in those areas last year due to the product development costs for AXON and the X3. We saw a $2.3 million reduction in salaries and benefits following the headcount reductions and a $1.2 million reduction in consulting expenses as volume development effort of EVIDENCE.COM and scale down.
The growth $0.20 [ph] in 2009, R&D expenses are offset by $1.3 million and $2.3 million respectively at capitalized salaries and consulting fees for the development of EVIDENCE.COM. 2010 adjusted operating income of $5.8 million is the result of adding back the 123R charges and the depreciation amortization charges of $11 million. This compares to $8.5 million in the adjusted operating income for the prior year. We had a GAAP operating loss for the year of $5.1 million compared to $79,000 in 2009, and the net loss for the year is $4.4 million or $0.07 on both the basic and diluted basis.
Moving onto the balance sheet. We just finished the quarter as Rick mentioned with $42.7 million of cash and investments. We actually had about $2.5 million increase in cash in the fourth quarter, mostly driven by the cash earnings. Overall our cash is down $2.8 million from the prior year, but considering the sales levels for the year and the investments we've made in the business, I think that's a good result for the year. Accounts receivable of $13.5 million, its down $1.8 million from the prior year. Again mostly due to the timing collections and lower quarterly sales in the fourth quarter of 2010 versus the prior year.
Inventory finished the year at $17.8 million. This is up $2.7 million from the prior year. Again that's really driven by the inventories for the AXON and also video devices is the biggest driver there. Prepaid and other assets of $2.9 million are up $1.3 million, mostly driven by income tax receivables and other long-term assets. The investment in property and equipment of $35.9 million is down $2.8 million. This is really driven by the fact that we're – we've got $7 million of depreciation expenses now. We've offset that with some new investments $1.9 million for production equipment in computer equipment for this year and another $2.2 million of capitalized EVIDENCE.COM (inaudible) development costs.
And then we finished the year with total assets of $136.1 million. On the liability side of the balance sheet, accounts payable of $4.6 million is down $1.8 million from the prior year, really driven by the timing of differences in AP check runs as well as we had year-end 2009, we had the final payments for automated cartridge lines still obtainable at year-end, those were paid in the first quarter of 2010. Accrued liability is just $3.8 million, decrease to $0.5 million due to decreased used tax, decreased bonuses due to lower sales and then decreased legal accruals. The total deferred revenue is $7.7 million is up slightly $67,000 from 2009 related to the training credits and the extended warranty sales.
Total liabilities is $18.6 million and finished the quarter with and the year with $117.6 million of stockholders equity. Again we've got no long-term debt. We continue to have liquidity to fund the R&D and operations as we move into 2011 here. On the cash flow, the company did have cash from operations for the year of $784,000 compared to $10.1 million to the prior year. The per year cash from operations is driven by number of factors including the cash operating income of $5.8 million. We did have another offset by $1.8 million – actually to the $1.8 million is receivables, $2.1 million of non-cash charges for inventory and warranty reserves. And those were offset by a $4 million increased inventory, a $1.7 million increase to prepaid other assets and a reduction of AP at $3.3 million.
Again a significant cash generated from operations. The prior year was driven by the cash earnings of $8.5 million and various changes to the operating assets and liabilities with the most significant being the increase in inventory to prior year of $2.4 million. Net cash used by investing activities in 2010 was $4.5 million compared to $11.7 million in the prior year. Again the decrease is driven by the decline in production in computer equipment purchase this year versus last year. Again last year we saw the purchase of the automation equipment as well as a significant amount of capitalized cost relating to EVIDENCE.COM development.
We did finished the year with $42.7 million of cash. And we're confident that our strong liquidity will improvise for the means to manage the business. During this challenging times, we're also obviously focused on growing our business throughout 2011. Well so now I'll go run through the sales statistics as well as before I turn it back over to Rick Smith. The X26 units for the fourth quarter were 10,222. We sold 3,792 M26 units. We sold 1,106 X3 units. We sold 3,909 C2 units. 1,535 TASER CAMs, and our cartridge sales for the fourth quarter were 319,459.
And with that I'll turn it back to Rick Smith, our CEO.
Rick Smith
Thanks Dan. All right, I'm going to talk about 2011 now. In particular, I want to focus on the company's top priorities. So we're going to talk about five key priorities for 2011. Our first priority is efficiency and profitability in the business. So I mentioned before the break including timely [ph] efforts that we've taken to streamline our cost structure in a declining revenue environment this past year. It was generate $3 million in cash in our sales in last quarter. We believe that's a trend that we can continue well into 2011 from a cash generation standpoint.
We are coming off a large investment cycle, you'll recall in late '07 and in to '08, we talked about the opportunity we saw with the emergence of video having a data storage and management challenges that video present to professional agencies like law enforcement. We see that as an important opportunity, an important trend and we decided to fundamentally invest the profit of the business over the few years into building a software-as-a-service and hardware capability that would enable us and position us to where the market was going. We're skating to where we see the puck [ph] few years ahead.
In intervening years, we did have a global financial crisis, but as I think I mentioned before, we believe that we've taken the right steps to position ourselves very well as we come out of this cycle both in the investment standpoint of TASER and from the global economic cycle perspective. And I'm also pretty proud that if you look at, we've been fundamentally able to do this or fund this new business opportunity out of cash from operations and maintain a small balance sheet with fundamentally no debt, as well as starting to return now to a cash generation type mode.
Another thing I think you'll see is in our product development capabilities have really matured. If you look at the frankly massive increase in R&D spending that occurred from '06, '07, '08, and '09. I think that much capability made to investment cycle like a learning opportunity through organization as well. And frankly you don't hit the ball right on a 100% of your investments, but what you do is you learn important organizational capabilities, and now we're able to take the advantage of that and streamline it to where I believe what you'll see in 2011 and beyond is comparable or even greater levels of product innovations at significantly reduced spend levels.
So I've got some investors are asking me about with some concern about the sequential decline in overall R&D spend. And my answer to that is we're not cutting back on the pace or capability that – capabilities you were developing for our customers which is really able to mature and streamline those operations as an organization. So it's that we're getting a lot more (inaudible), I think we'll see significant dividends from that in the future. We've also spent significant efforts on formalizing our voice of the customer integration. Last year we held our first formal innovation summit where we brought together engineers, who brought our company, our sales force and various representatives of our customer base to better understand our customers need, and it turned it to be a highly engaging event, very instructive for our engineers to become much more tightly integrated with our customers.
We coupled that with a number of quantitative tools that we're using to gain widespread quantitative data about customer technology use, the challenges they are facing and their foremost pressing need. So between a variety of qualitative and quantitative tools, we believe that we're really generating a product innovation and deployment machine here at TASER which is tightly coupled with the needs of our customers and we're getting better and better at it and that bodes well in my opinion into the future.
We're also focused on finding new sources of revenue while we're streamlining our past. One example there is the Wildlife TASER that we announced this quarter. We've surely seen some humorous input on the Wildlife TASER, one of my favorite shows over at the Colbert Report did a fantastically funny segment on the Wildlife TASER. But that itself is really no joke. We were able to develop new Wildlife TASER for probably less than $20,000 in total. It was some far more changes and some testing required, not a huge lift but, it was something that many of our customers were asking for in the law enforcement across North America and really around the world, how – in many cases animal control segments that have to deal with wild animals in some cases. Particularly in areas in Alaska, there are towns where a significant safety issue is bears that come into the town for feeding purposes.
And those wildlife specialists are charged with trying to find ways to keep the bears out of populated areas. And they destroy a lot of animals every year. And frankly people get killed and injured as well. And it's been related to back to us that the Wildlife TASER technology we've developed is uniquely capable not only incapacitating a wild animal so it could be tranquilized and moved, but perhaps more importantly and more practically animals that had been hit with the Wildlife TASER, there is an important physiological effect where those animals do not return to the scene where the TASER was used. And that is the fundamental goal of these wildlife control specialists is to keep large predators out of human populated areas.
Is it a huge market? No, but we've had significant interest from around the world from African countries where they have some very large animals that represent certain challenges in dealing with (inaudible) population of those animal. It fits our distribution channels into these government agencies. And it's a nice opportunity that with a relatively small spend, we believe the ROI will be very healthy on that project. And I've been frankly quite surprised with the level of real interest that has gained in wildlife control markets.
We're focused on careful market testing and growth. At this point, the Protector product that we invested in last year. We introduced that at CES. We are showing it now and what I've characterize it is at test market mode. We have tremendous publicity and interest on that product. At this point we are looking very carefully at our go-to-market strategy. We are not going to make heavy investments to try to build a consumer distribution channel, as you all know that can be very expensive proposition, but we're focused on tweaking features and interacting with customers and we're not going to invest heavily so we have a proven model.
And at this point the distraction management market is one of significant importance at the highest levels of government, but it is a fairly immature market from the perspective of there is not a significant revenue base out in that marketplace on a competitive basis for our products yet. So we're going to take that carefully and manage it in line with the rigorous principles of making sure that we are focused on profitability and innovate and operational excellence this year.
Our second primary focus is the AXON and EVIDENCE.COM sales ramp. Now AXON, one of our accomplishments in 2010 is that that product is now commercially available. We have a number of test agencies that began in late '09. Some agencies that purchased in early 2010. Earnest sales efforts really began in the third quarter. We are finding that the sales cycle is longer than we had initially anticipated. It is more complex solution sale than our typical hardware sale, and there is some maturation that's occurring in our sales processes and pipeline management. Over the last year we've put it in a much more rigorous sales management tools.
We are – at this point we're finding some of the features in partnership with our customers. This is a fairly complex end-to-end system. And frankly at this point one of the biggest issues we're working through are ergonomic issues. And we have several new mounting systems coming online this quarter. When you're asking somebody to wear something on their head, comfort becomes a very primary concern. And we continually iterating and what we're finding is the more options we have available every individual is different, some people want to wear it on hat mounts, some will wear it on a headband, some will wear it on glasses, some will want to wear it mounted on a collar or somewhere else in the upper torso, but we're iterating through those.
The important point is that the value proposition we've put forth is very well received. And we're seeing near universal acceptance that these types of systems are coming. It is rare, in fact I cannot recall a customer that we've met with that is disputed that this is the future. They all recognize that video systems are coming, but they believe they will be standard issue equipment for every officer at some point in the future, obviously there are some different viewpoints as to how long that process will take, but we're seeing consistent confirmation that we are on the right path and we're on a growth phase.
Let me give you one sample quote from one of our customers. And this will give you an idea of why I am so enthusiastic about the AXON and EVIDENCE.COM business segment.
Quote, we have been using AXON system for several months now and are extremely pleased with it. First of all, it bolsters our case preparation with strong audio and visual evidence. It will lower cost by reducing court time. Records and evidence staff time, IT staff time and city and county attorney prep time. It has also reduced the number of false allegations against our officers. When complaints are initiated, we invite the complainants to come in and view the AXON video with us. So far no one has taken us up on that invitation, plus after discussing with our current policy and procedures concerning internal investigations, our city attorney told us that if video captures the event that the video can stand as the formal investigation. Under those circumstances it avoids the entire need for a statement of allegation, girdy [ph], officer witness interviews, etcetera. We've been able to do that twice already. One was an excessive use of force compliant. The other was an improper staff in search of a vehicle. Both times the videos clearly showed the officers did everything right. The AXON has been a great tool for us and by the way TASER has been a tremendous business partner to work with, end quote.
We've also this past year had the opportunity to build not only our internal staff, our network of advisors, we all saw Hadi Partovi joined our Board as our newest Board member. Hadi Partovi was the founder of internet, I'm sorry he is the founder of Tellme Networks that was purchased by Microsoft a few years ago for little under $800 million. He was also a founder together with his brother of internet LinkExchange in the mid-1990s, also very successful venture. And he is one of the earliest advisers to Facebook and he is very well connected throughout the tech community, his last venture iLike was purchased my MySpace few years ago. We also have established advisory relationships with a number of other folks in the software-as-a-service space.
And we're getting very positive feedback from those advisors that there is some patience required when selling a software-as-a-service business. And particularly one that couples with a hardware solution, that the sales cycle tends to be long, quite a few things tend to have a hockey stick like adoption curve once you breakthrough a certain level of performance. And again based on the feedback we're getting about the capability, we still have work to do in terms of we're finding the exact features down but our core value propositions are very well received and the core infrastructure is stable enterprise rate platform that is positioned for growth.
So at the end of the day this has been a not an insubstantial investment both in terms of time and focus of personnel and financial resources, however it clearly has the potential to be comparable to our frankly significantly larger than our core business. So we continue to believe that in the time when the market are that we believe this will have been as we look back on it in a few years, an excellent opportunity for the business to have moved into that leverages our core business relationships and law enforcement, our core training capabilities, our hardware innovation and our now software development capabilities we've built in the last few years. So AXON and EVIDENCE.COM lot of promising things happening there.
Our third area of focus in the international space. International orders again were over I believe 20% of revenue in 2010. We've recently announced a number of additional orders in the international space. We continue to see a very robust pipeline with a significant opportunities ahead of us in 2011. Our fourth area of focus is really developing a world class people advancement system, our human capital systems had become much more rigorous in the past year. Everybody who went through TASER's interview in recruiting process a few years ago found it was fairly informal. It has become very rigorous in fact again Hadi Partovi one of our advisors has been recently charged with helping Facebook to establish their Washington State presence and audience [ph] one of his real areas of expertise is in human capital systems and frankly Facebook and Google are considered best in class. And probably before actually just in the last few months one of our latest recruits a Stanford Mechanical Engineering who'd gone through recruiting at Google, when we did the interviews, we didn't post our interview process really get back to us said, he found the TASER interview and selection process, everybody rigorous as Google. Something that we take tremendous pride in hearing that back.
So we're recruiting throughout the organization, particularly the engineering and through entry point levels in the company planting the seeds for the trees that will grow into really up to this company have the right systems and people to grow over the long-term as well as we've been spending a lot of time in the last six months on our internal review feedback and people development processes, because obviously the people of any business are the core. And so we're really putting the right systems in place to grow and develop our people and to continue to recruit best in class.
So again those are things that we could believe will lead to long-term leverage in the business as we continue to improve the rigor of our execution. And finally, the fifth major focus for this year is driving an upgrade cycle in our core ECD business. We saw – we ended the year with the order from the Arizona State Patrol upgrading from their 26s to X3s. Last year we did announce the end of life of the M26 in North America. We did see that that was did help many agencies to upgrade their systems to the X26s. We do have a significant portion of our installed base with weapons that were bought in 2003, 2004, 2005. They are recognizing that those devices are now over five years old and what they now usually use is nobody is hearing a cell phone they had five years ago, electronics do have finite lives. And we're very much focused on working with our customer base to bring them the right solutions and opportunities to upgrade that hardware. And we believe that has the opportunity to be significant in 2011 and beyond.
So at a very high level, our focus is on returning to profitability in 2011 by finding new sources of revenue, both irretrievably like the Wildlife TASER, with relatively low level of investment, repurposing some of our technology to adjacent market, finding relatively low less way to create value that take advantage of our distribution channel in our existing markets. And doing this in a rigorous way that's very much focused on efficient execution with good cost controls so that we can grow the top line and get the leverage in at the bottom line that we believe we'll make this a very exciting business on a financial basis the same way that is exciting I think today on a promising innovation basis for the product that are coming out of our pipeline.
And with that we'll take a few moments to take some questions. And then we'll send everybody on their day.
Question-and-Answer Session
(Operator Instructions) Gentlemen your first question today comes from the line of Eric Wold with Merriman Capital.
Eric Wold – Merriman Curhan Ford & Co
Hi good morning.
Rick Smith
Good morning.
Eric Wold – Merriman Curhan Ford & Co
Good morning. So question on the kind of the replacement cycle that were kind of waiting for and to get a start again kind of in the second half as year when budgets open up. Do you think you would need to do anything kind of discounting or kind of trade-in promotions to get that going or you're hearing with regard from agencies on that, and then would that be advantageous to keep those used devices off the street kind of get them in your hands and eliminate that the issue?
Dan Behrendt
Yes. Eric, this is Dan Behrendt. That's a good question, I think what we saw in 2010 is that we did have to give in some cases some small trade-in credits, I think it's probably more of an emotional issue to give the customers some value for a product that its fielded. And would that that significant I think it just helped us sort of drive things forward. I think we're seeing more and more customers just acknowledge the fact that these products are at the end of their useful lives. And I think the fact that we've got a product that's got such a high ROI for our customers I think helps, because in cases like in Houston, where the chief went to city council, they used the fact that this is a product that had a higher ROI as a part of the justification to start upgrading their products over the next couple of years.
So I think, we feel very good about that process as we go forward and the potential in that affords the business.
Rick Smith
Yes, this is Rick. Let me comment on that as well, I think your point about having some trade-in credits to get some of the older devices out of circulation. There is merit to that as well. But in terms of the driving factor, we believe the bigger factor in 2011 will simply be frankly the fact that the bogyman of pending staff cuts is getting behind many of our agency customers on a time basis, which allows them to then start to focus more on okay, we've been through the adjustments now, what do we need to do though, a lot of the capital equipment is just really in need of upgrade including their TASER devices.
So that's sort of the key and then we have pulse [ph] different types of trade-in programs overtime and that will likely remain part of our strategy to help to drive that process.
Eric Wold – Merriman Curhan Ford & Co
A follow-up on that, are you likely to see the X26 users that are looking are kind of getting towards end of life on their device, you've stick with the X26 and kind of replace that or are you getting feedback so they actually are considering a greater percentage moving up to the X3?
Rick Smith
We're seeing both. And we're focused on from a pipeline perspective making sure that we've got a suite of product with compelling in terms of upgrades. Obviously we'd like to bring our customers up to greater capabilities rather than simply replacing what they've (inaudible) wears out, and just get them to useful lines [ph] with the same platforms. But we're seeing interest in both spaces.
Eric Wold – Merriman Curhan Ford & Co
Okay, and then lastly looking at the international markets, not looking for comments on specific countries or agencies, but maybe give a sense of where you are now versus maybe a year ago in terms of various trails going on with some of these countries that maybe close to a decision. What is the outlook look now versus maybe how closer lot of these places.
Dan Behrendt
Yes, this is Dan Behrendt. I think the really the focus has been really in making sure that pipelines is robust as possible. So we're – a year ago we were talking internal, externally about maybe just a few opportunities, I think that number has certainly increased over the year, and really focusing on leveraging our distribution network and making sure that we've got a lot more things in the pipeline at any given time. And I do feel that from a pipeline perspective the pipeline is certainly both the number of opportunities and the relative size is certainly better versus the prior year.
Rick Smith
I would say as well we made some investments over the past few years in putting some sales offices abroad. We have been experimenting with trying different types of approaches in different countries. One example was actually putting a full time trainer into a country in order to help bolster the success rate of their deployment of product and the end-user experience. We've put more of a sales oriented employee into another market. We've used consultants in various markets in contrast to the typical rule of giving exclusive distributors to being more sort of governmentally aid on [ph] type resources as opposed to sort of product resellers.
And I think part of reason we're seeing a more robust pipeline. We do tend to see the international markets have a multiyear development cycle. So from the time you make those investments, until you start to see the return is we would just say they are probably 24 months or so and.
Dan Behrendt
Yes, certainly 18 to 24 months which is part of why we want to have that big pipeline.
Rick Smith
So we're feeling pretty good about the international opportunity in 2011.
Eric Wold – Merriman Curhan Ford & Co
Perfect. And then final question, if I look at the breakdown you gave Dan in terms of the units of each – various products in kind of you used kind of recent ASPs but I'm still getting short on the $22.9 million putting to that. Was there any large other revenue in the quarter or how large was the revenue from the other recent products like your XREP and the Shockwave etcetera?
Dan Behrendt
Yes, I think probably the bulk of the difference Eric, is going to be driven by like extended warranties, training, things like that. That's actually got informal the fairly material part of the business. So there is in any given quarter there is $1.5 million to $2 million worth of warranty in training, and out of warranty replacement sales in any given quarter.
Eric Wold – Merriman Curhan Ford & Co
Perfect. Thank you, guys.
Dan Behrendt
Rick Smith
Thank you.
Your next question comes from the line of Greg McKinley with Dougherty and Company.
Greg McKinley – Dougherty and Company
Thank you. Can you give us a little more sense around what you anticipate the run rate to be in a couple of your operating expense lines, I know we did see a big reduction in R&D for the full-year but it bumped up sequentially, despite I guess a reclassification of certain of those EVIDENCE.COM expenses from R&D to cost of sales. So I am wondering if you could talk a little bit about what caused the increase there despite that re-class and what we should expect going forward? And then maybe also if you could just provide similar color on general and administrative expenses? And then finally on your gross margin rate, again I thought perhaps with that re-class, the margin rate may have been a little lower sequentially, but it was up sequentially. Any observations you can share on that?
Dan Behrendt
Sure. So good question, this is Dan Behrendt. So on the R&D side, the probably the biggest difference from Q3 to Q4 is we had more of the software kind of rework type expenses get re-classed to up in to cost of sales and Q3 versus Q4 majority of our software development efforts were really sort of new features in traditional development. So that amount of the re-class of the cost of goods sold was significantly lower. On a total spend base, it's just really kind of pocket shift between R&D and gross margin. The expenses that we saw for Q4 – that's it's going to be around that range as we go into 2011 probably certainly actually little bit higher but on a run rate basis, it's not going to be dramatically different than that.
As far as SG&A, it's kind of same thing obviously there is fluctuations in SG&A quarter-to-quarter depending on activities, trade shows. Second quarter we all did see higher SG&A because the cost related to training a (inaudible) and doing a shareholders meeting and stuff. But overall, we're really focused on keeping the cost down in 2011 to make sure we're getting leverage back to the model. On the gross margin side, I think leverage – we're going to continue to work to get more efficient on the operation side of business. We've done a lot of quality training and greenbelt trainings. We've got a number of those projects we think will bear fruits in 2011. But there is still – especially with the automation equipments some of the other investments, there is fair amount of fixed costs. So really the leverage is going to be a big driver to the reference margins as well as we go into the current year.
So we do feel that we're really well positioned, I think that if we get start getting some traction and start seeing some sales increases, I think we're well positioned for profitable growth there.
Greg McKinley – Dougherty and Company
Thank you.
Dan Behrendt
Rick Smith
Great. Go ahead.
No, I was just going to turn the call over to you. Go ahead.
Rick Smith
Okay. All right, well again we'd like to thank everybody for spending your time with us this morning. Have a fantastic day. We'll be back to talk to you in, I believe April, and hear us to a fantastic 2011. So thank you very much and have a great day.
Ladies and gentlemen, thank you so much for your participation in today's teleconference. This concludes the presentation and you may now disconnect. Have a wonderful day.
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