Acacia Research Corp (ACTG) 2014 Q1 法說會逐字稿

Good afternoon ladies and gentlemen, and welcome to the Acacia Research first-quarter earnings release conference call.

At this time, I would like to inform you that this conference is being recorded.

(Operator Instructions)

I will now turn the conference over to Mr. Matthew Vella.

Please go ahead, sir.

Thanks, Keith.

Thank you for being with us today.

Today's call may involve what the SEC considers to be forward-looking statements.

Please refer to our 8-K which was filed with the SEC today for our forward-looking statement disclaimer.

In today's call, the terms we, us, and our refer to Acacia Research Corporation and its wholly- and majority-owned operating subsidiaries.

All patent rights acquisitions, developments, licensing, and enforcement activities are conducted solely by certain of Acacia Research Corporation's wholly- and majority-owned operating subsidiaries.

With me today are Clayton Haynes, our Chief Financial Officer, and Ed Treska, our General Counsel.

Today, Clayton will start our call by taking you through the numbers for the past quarter.

Clayton?

Thank you, Matt.

As detailed in our earnings release today, on a consolidated basis revenues totaled $12.6 million as compared to $76.9 million in the comparable prior-year quarter, and were comprised primarily of 20 new licensing agreements executed in Q1 2014, as compared to 29 new licensing agreements executed in the comparable prior-year quarter.

As discussed on previous conference calls, license fee revenues continue to be uneven from period to period.

For the first quarter of 2014, we reported a GAAP net loss of $24.4 million, or $0.51 per share versus GAAP net income of $5.1 million, or $0.10 per share for the comparable prior-year quarter.

The first quarter 2014 non-GAAP net loss, excluding the impact of non-cash charges totaling $19.2 million was $5.2 million, or $0.11 per share, as compared to $22.7 million of non-GAAP net income, or $0.46 per share for the comparable prior-year quarter.

Please refer to our disclosures regarding the presentation of non-GAAP financial measures in today's earnings release and 8-K filed with the SEC.

Inventor royalties and contingent legal fees expense decreased relatively consistent with the decrease in revenues quarter to quarter.

Average margins were 80% for Q1 2014 as compared to 56% of the comparable prior year quarter.

Litigation and licensing expenses were relatively flat quarter to quarter, with a slight net decrease in litigation costs incurred in the first quarter of 2014.

MG&A expenses, including non-cash stock compensation charges, decreased $2.2 million, or 16% due primarily to a decrease in non-cash stock compensation charges, variable performance-based compensation expenses, and other corporate, general, and administrative costs in Q1 2014.

We ended Q1 2014 with $229 million of cash and investments, as compared to $256.7 million as of December 31 2013.

We made investments in three additional patent portfolios in the first quarter of 2014, incurring $15.8 million in upfront advances and other costs, $15.3 million of which were accrued as of March 31, 2014 and scheduled for payment in Q2 2014.

Q1 2014 quarterly cash dividends paid to shareholders totaled $6.3 million.

Looking forward, for FY14 and we continue to expect fixed MG&A, excluding non-cash stock compensation charges, to be in the range of $27 million to $28 million and we expect patent-related litigation and licensing expenses to be in the range of $35 million to $36 million.

Excluding additional 2014 patent portfolio acquisitions or accelerations, scheduled FY14 patent amortization expense is expected to be approximately $49 million.

For additional details regarding the summary information provided in our prepared remarks today, please refer to today's earnings press release and 8-K filed with the SEC.

Thank you all for joining us today.

Matt, back to you.

Thanks, Clayton.

Acacia's mission statement remains the same.

We empower patent owners and reward invention by providing a path to patent monetization for the people and companies who have contributed valuable patented inventions to an industry, but who need a professional, experienced, and independent third-party licensing partner to get rewarded for those inventions.

We call these people, our customers, the patent-disenfranchised.

In so doing, Acacia's placing itself at the forefront of an emergent secondary market in patent assets.

Just as Acacia's mission statement remains the same, the operational framework management has put in place to achieve that mission, which we described to you in recent earnings calls, also remains the same.

Moreover, our perspective about the future of our Company remains the same.

Specifically, our future trial date calendar and revenue pipeline have never been more robust.

Our pipeline of new marquee portfolios remains strong, and our commitment to increasing the transparency of our operations remains in place.

In 2013 we learned two pivotal lessons that we believe will make Acacia a stronger and more consistently profitable Company moving forwards.

First, Acacia has strategically chosen to become a Company that serves a small number of customers, each having higher quality portfolios.

In examining our past successes, we found that the vast majority of our growth and profit stems from high-quality, high-revenue potential patent portfolios, marquee portfolios.

Second, Acacia has evolved into a Company that will be more patient about getting the right prices for licenses under its own, under its customers' patent portfolios, even if it means enduring a temporary revenue trough to get those right prices.

Now, looking strictly at the numbers Clayton just shared with you, and thus strictly at the agreements which fell into this past first quarter, the Company's revenue trough continued through this past first quarter.

However, we still believe the poor revenue and loss numbers members of the past few quarters, this revenue trough, one, belies the underlying strength of our Company, and two, is only temporary.

In the examination of our business I referenced in previous earnings calls, we learned that the vast majority of our revenues and profits stem from our marquee portfolios, and this finding has driven our focus in dealing in marquees.

With our organization, as a result now focused on such marquee portfolios, our intake of them has accelerated.

While we only had 1 such portfolio in the beginning of 2012, we now have 10, and we expect to have 12 to 15 by the end of this year.

And this is one reason we are confident the revenue trough is only temporary.

Another reason for our confidence stems from the litigation and patent office records pertaining to our major portfolios.

We think that a close examination of those records shows that, one, virtually all of our major patents have remained intact, or in some cases even the been strengthened.

Two, we have a retooled organization, honed to bring in and execute against marquee portfolios at an unprecedented rate.

And, as a result, we have more valuable, major portfolios than we have ever had before.

And three, our future trial date calendar and revenue pipeline has never been more robust.

Nor have we had greater confidence in our ability to continue strengthening that calendar and pipeline.

And turning once again to these trial dates, though not perfect predictors of revenue, they are historically correlated to revenue events.

In all of 2013, for example, we only had three such trial dates, all falling in the first quarter of that year.

And, in line with that correlation, we saw strong revenue that quarter and poorer revenue in the following quarters of 2013 when we had no such trial dates.

Looking forwards, for the rest of 2014 we have roughly seven scheduled trial dates.

And better still, for the first half of 2015 there are over 20 scheduled additional trial dates, most of which relate to marquee portfolios.

While it was the paucity of marquee portfolios and trial dates that put us in this revenue trough, it is the strength in portfolio depth and the subsequent trial dates that we believe will pull us out of the trough.

We continue to sense the connection between these upcoming trial dates and the altered cadence and tenor of our negotiations with prospective licensees.

Turning to our portfolio intake, since our last earnings call we have entered into an additional partnership agreement for a marquee portfolio and also strengthened one of our existing marquee portfolios by deepening our relationship with one of our customers, Nokia Siemens Networks.

Specifically, we invested a total of $15.75 million for rights in the following three patent portfolios.

One, Nokia Siemens Networks.

We gained rights in more of their standard essential patents covering 3G and 4G mobile handsets and network infrastructure, including patents covering signaling, power control, and carrier aggregation.

Two, a portfolio, whose identity must remain confidential for a few more weeks, that comprises patents covering application processor and video decoder memory architectures as used in mobile devices, such as smartphones and tablets.

And three, a Fraunhofer Institute portfolio comprising patents covering ceramic materials used to manufacture orthopedic artificial joint implants such as artificial hips, knees, and in the near future, shoulders.

As previously stated, our pipeline for new marquee portfolios is robust, thanks in part to the changes we made to strengthen portfolio intake.

We expect a solid and consistent intake of new, high quality portfolios to diminish the likelihood and severity of future revenue troughs.

As has become our habit in the past few earnings calls, I will briefly touch upon the government and its activities relating to patent reform.

Our view regarding patent reform remains unchanged from a quarter ago.

As mentioned before, Acacia is generally supportive of the draft Bill that we understand might pass into law, the one that is sponsored by Congressman Goodlatte and that has passed through the House.

While the Senate version of the same Bill has been delayed, we believe this version might turn out to be less onerous with regard to fee shifting, that is loser pays, which incidentally is the issue that reportedly been holding up the Bill in the Senate.

With that said, whether or not loser pays passes, that will not change our stance on the Bill.

And turning to patent reform generally, its net affect has been, and continues to be, to make patent licensing more complex and needful of experienced guidance and resources.

The increased complexity and expense makes it even harder for the patent disenfranchised to monetized their own patterns, which means our present and future customers need us, our expertise, our experience, our risk reduction models, and our financing more than ever.

Turning back to our future revenue prospects, as you have very recently seen, happily the cadence and quality of our licensing deals has been gradually increasing.

With this increase, we remain committed to giving you more information to be able to better track our licensing progress in the coming quarters.

Our licensing opportunity page already provides a lot of this information by cataloging our large number of portfolios, the formidable array of high-quality patents, the high covered unit counts, the billions of dollars of exposed revenue, the extensive geographies the patents cover, and increasing number of upcoming trial dates driving negotiation deadlines, as well, of course, as the high-quality patent portfolios themselves.

The Bonutti orthopedic portfolio, the Boston Scientific stent graft and vena cava filter portfolio, the Rambus backlighting portfolio, the Breed automotive portfolio, the Adaptec's 4G and 4G-plus portfolio, the silicon image interconnect portfolio, the Nokia Siemens 2G, 3G, and 4G portfolio, which I have mentioned has recently been bolstered, thanks to our deepening relationship with Nokia Siemens, the PalmPilot software portfolio we are working on for Access Company, the VoiceAge portfolio that we recently filed suit on and that we just licensed to Samsung earlier this week, and soon, in at least another marquee portfolio that we have brought in, for which we will provide details on our opportunities page later this quarter.

In addition to this information, going forwards as we get more data points and higher confident in our pricing, we will also begin to share some of the pricing information with you, where possible.

As pricing around an individual portfolio starts to stabilize, that is as we keep getting paid the right price on an individual portfolio, for certain types of patents we will put up forward-looking pricing information in the form of licensing rate tables.

The rollout of those tables will commence before our next earnings call.

In conclusion, thinking of our upcoming trial dates and the marquee patents that will go to trial on those dates, the continuing high quality of our patent intake and our increased focus on such high-quality intake, the increased need of our customers, the patent-disenfranchised, for the services we provide, thanks in part to patent reform, and the quality and technical skill of our professional staff, Acacia has never been better positioned for high-caliber long-term performance.

We are now determined for Acacia to take advantage of its superior positioning to become strongly and sustainably profitable.

So, while our revenues and the number of portfolios we acquired declined over the last year, if one considers our present portfolios, our upcoming trial dates, and the portfolios we believe we can soon to bring into Acacia, I am truly more optimistic about Acacia's future than I have ever been.

I look forward to reporting our progress to you next quarter.

Thank you very much.

Now with that, we will turn to questions from various folks listening in on this call.

Thank you, sir.

The question-and-answer session will begin.

(Operator Instructions)

Mark Argento, Lake Street Capital Markets.

Hi, guys.

Good afternoon.

Matt, you had touched on some of your trial activity.

Could you just review that again in terms of when you expect the activity levels over the next few quarters, and then in aggregate over the next couple of years?

And then my second question would be Samsung.

You had mentioned that you licensed the VoiceAge portfolio to Samsung.

Maybe talk about, know historically you guys have had more of a comprehensive licensing agreement with them, maybe how that relationship has changed a little bit, seeing now that it looks like you're licensing specific portfolios to them?

Sure.

On the trial activities, and just to give you a more general overview, focusing just on marquees, because if I extend the scope of my response, we might be here a while.

We certainly have the smart phone trials against Huawei NVD coming up in June in the Eastern District of Texas.

We also have some German litigation that is reaching a decision of first instance shortly.

We have Adaptec's litigation occurring in Japan that's set to go to trial in the May and June timeframe.

We have a, I'll call it Boston Scientific trial, that's set to go against Gore in Germany, again a trial of first instance in August.

And then if we switch to 2015 we have a large number of lawsuits going to trial in California and Texas relating to Adaptec's.

We have a Benutti trial going forward in Florida.

We have the Rambus backlighting portfolio going to trial in Texas against a number of companies.

And we also have the Bree automotive portfolio going to trial.

All this in the first six months.

That's where the numbers we gave you in the earnings call come from.

Beyond 2015, again we could really keep going, but I'll just stop my remarks at that point.

We're obviously getting trial dates on a continuing basis.

Beyond the first half of 2015, excuse me.

Turning to the VoiceAge question, I'll call it, with respect to Samsung: It's interesting, the relationship, if you want to call it that, it's there and it's going to take on different outcomes as the portfolio mix changes, as the patience of, perhaps, our Company changes, and also it's going to be a function of a bunch of industry trends in the marketplace.

So with Samsung, suffice it to say if you look at the amount of litigation going on, if you look at the history between the two companies, there's still a dialogue occurring.

The dialogue is going to get tense at times.

At other times we're going to resolve and get to agreements.

The dialogue is, by no stretch, stable, but that makes things very interesting on the upside and the downside potentially.

And if I go into any further detail I am probably going to be getting into a bunch of confidential information.

Great, that's helpful.

Last question.

In terms of the amount of capital you deployed, it looks like you deployed $15 million in the quarter, and you talked about taking your marquee portfolios from roughly 10 right now to, I think you said, closer to maybe 14 or 15 by year end.

Do you see deploying $5 million to $10 million per marquee portfolio, more of in the hybrid type of deal?

Maybe your thoughts around capital deployment and how much capital you guys are willing to put out for some of these better portfolios, now that that seems to be a really key focus for the Company?

It depends on the portfolio.

I can certainly speak to what's been going on in the past few quarters.

We have been primarily focused on hybrid agreements in the kind of price range you've been discussing, but it's a function of what's before us and the pricing on what's before us.

Great.

Thank you.

Brian Prohm, Cowen and Company.

Good afternoon, Matt, Clayton.

How are you doing, guys?

So my first question, Matt, is on the overall market environment for technology licensing.

We've seen a fair number of high profile events, deals, since the beginning of the year from Google, from Samsung, Nokia, some others, $100 million patent sale from Unwired Planet.

Do you think these deals are -- do you characterize these as more of a one-time cluster in the mobile and wireless space, or is this maybe evidence that the market overall is starting to thaw, given your comments around what ultimately is going to come out of the Senate reform legislation?

And if so, does that sort of herald that deal momentum is going to pick up across multiple sectors?

It's hard for us to prognosticate and opine over what is going on in the industry as a whole.

All I can tell you is what is going on with our Company, and with our Company we're very happy with the increased cadence around our negotiating, our license negotiations.

We're very happy with the fact that that cadence is relating to marquee portfolios.

And maybe those observations are linked into what's going on with all the other folks, maybe we're an outlier, I'm not sure.

I can just speak for ourselves, and again, we're happy with what we're seeing in the licensing front.

Yes, I ask because if I look at that 20 agreements in all of calendar 1Q, but then I look at the last five weeks and there's 20 agreements in the last five weeks.

It feels like there's a change in the trajectory or the momentum on deals from the Company.

The numbers speak for themselves, right, and the distribution over time speaks for itself.

And again, as we've been saying, we're getting closer to trial dates, and there is a historical correlation to revenue events and trial dates.

We certainly expect to continue playing out, we expect that to continue playing out in part based on the observations we're making of the licensing environment as we're participating in it.

Great.

A quick follow-up question on the Bonutti deal in 1Q.

Was that the 39% revenue deal that's in the K?

I'm not sure we can answer that question with that level of specificity.

Fair enough, all right.

Let me ask this question, then.

So through the first two weeks of April, there are three Benutti and one Adaptecs, what you call marquee portfolios.

Those deals are announced, but if I look and try to track them back to a Markman and then a trial date, it looks like these are deals that are getting done maybe a year ahead of a trial date?

Is that correct?

Yes.

I think what's happening, though remember we've called these agreements that are detached from trial dates, I've called them transients at time, right?

They're things where they might emerge and they might not emerge.

And we think we've been really close to entering into these so-called transients, even as we've been in what we're calling the revenue trough of the past few quarters.

Once in a while, transients will occur.

Now, the interesting thing is that, I strongly encourage you guys to do the kind of thing you are during, which is look at the trial dates, look at the Markman dates, look at the wording on the press releases carefully, right, and I suspect you'll be able to piece together a bit of the story of what's going on.

But to answer your question generally, yes, there are transient deals, they're still possible, we never said they were impossible, and we still expect those to happen every so often.

Would you characterize this as incremental to the top tier or marquee portfolio revenues events that you referenced in your prepared remarks?

Or are they tied together somewhat?

What do you mean by that?

I mean, in the case of, I guess if it's a Benutti, if it's a Adaptecs, if it's a top two portfolio and if it's transient deal then it's settled, then it is no longer one of the potential major revenue catalytic events that are likely to settle, historically, based on proximate to trial date.

I just want to make sure that I'm not counting apples and oranges when there are only apples.

Again, I'm not entirely sure I'm understanding the question, but maybe to review my answer I'll give you another shot at the question.

I apologize for not getting it, but we -- transient agreements are always being negotiated.

Sometimes they come in, sometimes they don't, and the backstop's always been agreements that lead up to trials.

That's fine.

I think there -- I'm --

When we do a transient, by the way, then yes, obviously that's a potential trial revenue event that's been perhaps addressed, depending on what's inside the transit agreement, if that's what you're asking.

Tim Quillin, Stephens Incorporated.

Hello, good afternoon.

Thank you for taking my question.

First, I hopped on a little bit late and I was wondering, Clayton, would you be able to repeat your financial guidance on the four, I think the four areas you typically give us?

Sure.

Sure, Tim.

It's relatively consistent with the guidance at the end of 2013.

But with respect to MG&A, we are expecting that to be in the range of $27 million to $28 million excluding non-cash stock compensation, as usual.

Yes.

We expect patent-related litigation and licensing expenses to be in the range of $35 million to $36 million, and patent amortization to be roughly $49 million excluding, of course, additional acquisitions and any accelerations throughout the rest of the year.

And stock comp I think at the beginning of the year, you had said $18 million.

Is that still accurate?

Yes, it is.

Okay.

And then in terms of the licensing deals in the quarter, so there were two licensing agreements or revenue agreements around marquee, what we would probably consider marquee patent portfolios, Adaptec's and Benutti.

There was only one 10% customer, so only one deal over $1 million or so.

And maybe the way to ask is maybe the different flavors of agreements that you might be getting around marquee patent portfolios.

I know all licensees are not created equal, and maybe especially with Benutti maybe the patents you're licensing aren't necessarily all created equal.

But maybe if you can talk about the differences in agreements you might sign around those marquees?

Tim, this is Clayton.

Before Matt jumps into that answer, just to clarify, as far as Q1 2014, one licensee individually accounted for 39% of the revenues recognized.

You had mentioned a 10%, but it's not [sure].

Greater than 10%.

Yes.

So there's only one greater than 10%, yes.

So, thanks for the clarification.

Yes, Tim, it's not.

So that's a good question.

It's interesting, There's a few variables that you can imagine get changed from deal to deal.

One is the subject matter, right?

So on Benutti, for example, there are a number of patents covering full knees, a number patents covering half knees, a number of patents covering suture anchors, other technologies actually.

There's about four or five in there.

And what you want to look at is which technologies have been announced, which lawsuits have been withdrawn, which patents have been pulled back, what the businesses looks like to sort through that information, right?

The other thing is timing, right?

We've done deals historically where you have blends of licenses and covenants, you have blend in terms of the timing of each, right?

You typically have covenants, which are personal to a company.

Covenants not to sue, I should say.

You have licenses, which tend to carry with the patents, right?

There's a number of reasons why companies would want to get into those.

You've got some variability in terms of geographical scope, right?

So there's number of variables that we've historically done and that we expect to keep doing going forwards, in answer to your question.

Yes, and just more specifically around the Bonutti portfolio, are the suture anchors considered to be a less marquee portion of the portfolio?

No not at all, but different companies have different sales volumes on suture anchors, right.

Right, right.

That's where you might get some variability.

Yes.

No, that's fair.

And then on VoiceAge portfolio, typically when I talk about Samsung, I said that even a very small royalty rate across a couple hundred unit volume is a big number, or a potentially big number, but is there any way without talking about specifics you can help us think about how you might size up that patent portfolio?

Or how a licensee, and maybe not Samsung, but maybe a licensee might look at that and how that would fit in to the stack on a cellular handset?

It depends on the technology, right?

Samsung does sell a lot of phones, and it does sell a lot of phones in a lot of geographies.

So generally speaking, your estimate that any time you talk about Samsung and smartphones you're going to be looking at large-ish numbers, that's right.

But obviously, not all technologies are deployed evenly, right?

So that can be one variability.

And again there's other variables that can come in along the lines of what I mentioned before.

But generally speaking Samsung sells a lot of phones, and that's an undeniable fact.

What can we read into the fact that they licensed ahead of the suit filings?

What did they see in that portfolio?

What do they like enough to get ahead of the litigation?

I can't speak for Samsung.

There's confidentially obligations.

There are a number of reasons I would not do that.

I can speak for ourselves, though, and maybe our reasoning applies to Samsung.

In other words, they've adopted it, maybe they haven't, I'm not sure.

We think the VoiceAge portfolio is very important with respect to high def voice.

And we like the geographic scope of the patent coverage, we like the quality of the claims, and we're very excited about partnering with the University of Sherbrooke people that control that portfolio going forward as high def voice continues to become increasingly popular in smartphones throughout North America, Europe, and Asia.

Great.

Okay, and then in terms of the patent portfolio intake, you had mentioned, I think it was something like $16 million, $15.75 million in outlays on three new partnerships, and I think the CapEx in the quarter was only about $1 million.

So does that mean that most of the capital outlay that you discussed are on a patent portfolio that's, I guess, the one that you alluded to that you're sourcing this quarter?

No, Tim.

This is Clayton.

We invested the $15.7 million in the quarter, but just based upon the timing of when those deals were done.

$15.3 million is accrued as of March 31, 2014 and those are scheduled to be paid in Q2 2014.

So it's just a timing issue as it relates to when the cash actually -- payments were made.

Okay.

Okay, and then Matt, I guess you can't -- can you tell us which of the three you consider one of the marquee patent portfolios?

I think you made some mysterious comments about that, but is there anything else you can tell us about that?

No.

Look, I can't tell you anything for now.

Over time you will get to know, and we've been pretty good about telling folks.

But for now I certainly can't get into that.

The other thing is that from Nokia Siemens, we're not really counting that as a new marquee.

I mean I guess we could, but we are really think of it as a deepening commitment, a deepening relationships with Nokia Siemens.

Those are patents that read on the same products as the ones we've already identified as requiring a license under the first batch of Nokia Siemens patents, and so other than that one clarification, which is somewhat subjective, I guess, that's all I can tell you for now, Tim.

Okay, and then I'll just take one last attempt to try and figure out how big this agreement with Samsung is.

It maybe set expectations, right, or help us set expectations, right?

Is it something that we consider -- should consider as a game-changing revenue contributor, or a nice sizable agreement that will be helpful in 2Q?

Thanks.

The real answer is, you have to wait and see until we release our Q2 numbers.

I've spoken about the VoiceAge portfolio, I've spoken about Samsung phones, and really it would be improper for me to go beyond that.

Okay.

That's fair, thank you.

Thanks.

Brett Reece, Janney, Montgomery, Scott.

Good afternoon, gentlemen.

The 7 trial dates for 2014 and 20 for 2015 that you alluded to in your prefatory comments, that seems lower than the numbers I either remember you saying in prior calls or something I've seen the website, or am I wrong, that's been what's it's been?

The 2015 count is actually up, I mean technically.

In my mind it's a little up.

The 2014 count is a little down, but that's what happens when you do license deals, right?

Certain deals that might going to trial get settled, and all of them are marquees.

Okay, because I kind of remembered like a number 10.

So from 10 down to 7 is because of the settlement prior to a trial date?

Yes, things get resolved.

And I think we were more like in the 8 to 10 range before, by the way.

And a lot of it is you are sort of trying to divine how these things are going to be turning out.

So we use words like roughly and we give you ranges.

Okay.

But on 2014 the natural progression of matters is going to mean that that count will come down, right?

And for 2015, the count's been stable.

If anything, it's probably inched up.

They're scheduled dates, right, they can always change.

But so far the 2015 counts remain stable and it might have inched up.

Okay.

Other than settlement, once something is put down for a trial calendar date, is there anything that can derail that?

Yes.

Of course try not to let things derail.

Most courts, in fact pretty much all courts, they really try to run tight ships, and they try and make sure their trial dates go off on time.

But just speaking from personal experience, and I don't mean to say this is typical, just again because of a random collection of things can happen.

I've been involved in matters in federal court where all of a sudden a very high profile case that the federal courts need to hear suddenly might need to be scheduled, that can happen.

You can have defendants or plaintiffs discovering certain things in manners that they could not have predicted that the interest of justice might require an extension.

You can have judges suddenly wanting to retire.

There's a number of things that can happen.

Now, they typically don't, but they can happen.

And so that's my best answer at this point.

Okay.

No, I appreciate that.

All right.

Thanks for taking the questions.

You're very welcome.

And ladies and gentlemen, this concludes the question-and-answer session.

I will now turn the call back to Mr. Vella.

Well again, thanks for your participation on the call.

Thanks for your interest in the Company.

And to our shareholders, thanks for your continuing patience and belief with us.

We do look forward to our next earnings call.

Thanks very much.

Ladies and gentlemen, if you wish to access the replay for this call you may do so by dialing (888)203-1112 or (719)457-0820 with the confirmation code of 217-3616.

This concludes our conference for today.

Thank you for participating.

Have a nice day.

All parties may now disconnect.