Acacia Research Corp (ACTG) 2015 Q3 法說會逐字稿

Good afternoon and welcome, ladies and gentlemen, to the Acacia Research third quarter earnings release conference call. At this time I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode.

At the request of the company, we will open the conference up for question and answers after the preparation. I will now turn the conference over to Mr. Matthew Vella. Please go ahead, sir.

Thank you for being with us. 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 the forward-looking statements 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, development, 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 David Rossman our Executive Vice-President of Licensing. Clayton will start our call by taking you through the numbers for this past quarter. Clayton?

Thank you, Matt and thank you to those joining us for today's earnings conference call.

As detailed in the earnings release today, third quarter 2015 revenues totaled $13 million compared to $37.2 million in the comparable prior year quarter. Third quarter of 2015 revenues were comprised primarily of eight new license agreements executed in the quarter as compared to 20 new license agreements executed in the comparable prior year quarter.

In the third quarter of 2015 three licensees individually accounted for 54%, 15% and 13% of revenues recognized as compared to three licensees individually accounting for 43%, 30% and 12% of revenues recognized during the third quarter of 2014. As we have discussed on previous conference calls license fee revenues continue to be uneven from period to period.

For the third quarter of 2015, we reported a GAAP net loss of $27.3 million or $0.55 per share versus a GAAP net loss of $12.4 million or $0.26 per share for the comparable prior year quarter. On a non-GAAP basis we reported a net loss of $11.5 million or $0.23 per share as compared to non-GAAP net income of $5.1 million or $0.10 per share for the comparable prior year quarter.

Please refer to our disclosures regarding the presentation of non-GAAP financial measures and other notes in today's earnings release and 8-K filed with the SEC. On a combined basis, inventor royalties and contingent legal fees expensed decreased to 83% primarily due to the 65% decrease in related revenues quarter to quarter and a higher percentage of revenues generated during the third quarter of 2015 having no inventor royalty obligations compared to the revenues generated during the third quarter of 2014.

As a result, average margins for the third quarter of 2015 were 84% as compared to 67% in the comparable prior year quarter. Litigation and licensing expenses increased 8% quarter to quarter reflecting a slight increase in costs in connection with preparations for upcoming patent portfolio trials. These expenses will continue to fluctuate period to period based on future activity levels in those periods.

Total MG&A decreased 19% quarter to quarter due primarily to a reduction in non-cash stock of stock compensation and ongoing personnel costs resulting from our headcount reduction activities in 2015. The decrease also reflects a decrease in variable performance-based compensation costs and corporate, general and administrative costs. These decreases were partially offset by an increase in nonrecurring employee severance costs incurred with the reduction in headcount.

Third quarter 2015, other operating expenses included expense accruals for court-ordered attorney fees related to a matter initiated in 2010 and settlement and contingency accruals for other legal matters totaling $3.5 million. We ended Q3, 2015 with $168.5 million of cash and investments verses $193 million as of December 31, 2014.

Q3 2015 patent investment related up front advances and scheduled milestone payments totaled $837,000 as compared to $2.4 million in the comparable prior year quarter. Cash outflows for Q3, 2015 also reflect quarterly cash dividends paid to shareholders totaling $6.3 million.

Looking forward, as we reported on our Q2 2015 earnings call, and consistent with our continued focus on reducing our general and administrative costs on a year-to-date basis, we have reduced the headcount from 57 full-time employees at the beginning of the year to 45 full-time employees as of today. An approximate 21% reduction which results in annual savings of approximately $6.2 million on a GAAP basis and $3.2 million on a non-GAAP basis. As a result we expect our 2015 fixed MG&A expense, excluding non-cash stock compensation and variable performance based compensation, to be in the range of $24 million to $25 million including the impact of 2015 severance-related charges.

Based on our cost structure reduction activities to date 2016's fixed MG&A expenses, excluding non-cash stock compensation in variable performance based compensation would be in the range of $21 million to $22 million. Based on current outstanding grants of restricted stock we expect scheduled non-cash stock compensation charges for fiscal 2015 to be approximately $11.1 million.

For fiscal 2015 we expect patent related litigation and licensing expenses to be in the range of $36 million to $37 million depending on net patent portfolio litigation, international enforcement and strategic patent prosecution activities occurring in Q4, 2015. Excluding any additional 2015, patent portfolio investments scheduled fiscal year 2015 patent amortization expense is expected to be approximately $52.7 million.

Thank you again for joining us today. I will now turn the call back over to Matthew Vella.

Thanks, Clayton. As you can imagine, the team at Acacia is very disappointed with our financial performance in the third quarter. It was a quarter where legal developments on one hand strengthened several of our most important portfolios but on the other hand postpone the expected revenue drivers for the quarter, resulting in the poor numbers Clayton just set out. As a result we believe revenues not generated on the portfolios this past quarter were not lost but simply pushed into subsequent quarters.

Specifically our first Adaptix base station trials, originally scheduled to commence in June and rescheduled to start in late August and November were each postponed again by roughly one quarter. This is because a few days prior to the August trial our team unearthed significant documentation we believe strongly enhance our legal position. The Court accepted the documentation as evidence but also allowed the defense time to review it, which postponed our base station trials by roughly one quarter.

We now expect our Adaptix bay station case against Alcatel-Lucent to start in early to mid December and our Adaptix base station case against Erickson to start in February. All in all these developments when coupled with several new Adaptix patent allowances, markman wins and summary judgment motion wins have strengthened our confidence that the Adaptix portfolio will earn significant revenues.

Turning to VoiceAge. This past quarter our VoiceAge patents were tested on two more occasions in Europe. Once again, LG in Munich and, once again, HTC in Dusseldorf. Based on the state of opinion of the court, on both occasions, we won on all counts, including infringement, validity and competition law issues. Bringing our overall record in this portfolio to four wins and no loss.

While the German court is indicating it has decided in our favor, however, it will take several months to issue its formal opinion. We expect the formal opinion for the HTC matter on November 27, 2015 and for the LG matter on February 3, 2016. We are confident the German court will issue injunctions shortly after those times.

Additionally, VoiceAge's case against Voda Phone will go to trial in Dusseldorf in January of 2016. We believe all of the upcoming events should position us well to execute a new wave of revenue generating VoiceAge patent licenses in the near future. Again, third quarter developments created paradoxical outcomes.

On one hand our marquee portfolios were strengthened through markman, inter parties review and new patent issuance wins and now have even greater future value. But on the other hand we experienced a delay in collecting on that value. That said, we had opportunities in the third quarter to close license deals across our deep bench of strong patent involves which extends well beyond Adaptix and VoiceAge.

We declined many of those deals, however, because the pricing was below our thresholds. While this contributed to our poor third quarter I am confident our prices discipline will ultimately yield greater rewards for all of Acacia's stakeholders in the form of increased revenue and more marquee portfolios. So, in most respects, Acacia remains firmly planted where it was 90 days ago on our prior call.

Acacia is wholly committed to more consistent, long-term profitability. We are happy with our progress on right-sizing the company and rationalizing the Company's cost structure. We are utilizing our industry-leading balance sheet judiciously. And we remain firmly committed to the dividend as our preferred path to return of shareholder capital.

And though we are very disappointed in our inability to reasonably generate a very significant stream of revenue, despite our solid execution on the legal front, importantly we think it is unlikely that there will be still more postponements of the VoiceAge and Adaptix revenue drivers. As a result, we remain confident in our strategy and operating focus and continue to expect revenue to ramp in the fourth quarter and in early 2016.

You can see a newly updated and chronological listing of Acacia's upcoming trial calendar under the portfolio tab on our website.

Turning to patent uptake, consistent with Acacia's strategic shift towards a smaller number of higher valued marquee portfolios, our portfolio intake pipeline remains filled with deep and promising patents in the technology, automotive and energy verticals as inventors and companies seek out the best partner to navigate the increasingly complex patent licensing environment.

Our marquee portfolio count now stands at 13 and we continue to target 15 to 17 marquee portfolios by year end. And just as our perspective on the company remains unchanged, with respect to revenue prospects and new portfolio opportunities, it remains unchanged with respect to all other aspects of our business including the diminished capacity of our peers and diminished probability of further patent reforms that would impact our business.

All in all, not withstanding the poor financial quarter we just experienced we think we are in basically the same promising position we were in three months ago but with stronger legal cases for many of our key portfolios. Accordingly, we are really looking forward to executing our business plan over the next three months and looking forward to sharing our progress with you on our next earnings call.

And with that I will open up the call for questions.

Thank you, sir. (Operator Instructions). We will take our first question from Craig Hoagland with Anderson Hoagland and Company.

Yes, Matt, could you say a little bit more about the headcount reduction and what that says about the mix of portfolios or portfolios that might not have panned out?

The headcount reduction, I think, probably the one thing it does say is that in certain sectors, like med tech, the intake has ceased (inaudible). I don't think it says anything about what we have pulled in. And I think that is probably the only correlation you can make between headcount reductions on one hand and portfolio fails on the other, again it's more of the intake than the actual portfolios that we have in house. I think the headcount reduction also reflects the fact that the business is transitioning, right for the last couple of years from one where we have thought lots of lawsuits on lots of portfolios of varying values to one where we are focusing on marquees, a smaller number of marquees and so that, obviously, should lead to reduced head count.

And that's still trailed in to 2015?

Yes.

We'll take our next question from Mark Argento with Lake Street Markets.

Good afternoon, guys.

Hi, Mark.

Just a quick question on the legal fees. I saw that you guys, looks like you took a reserve. Can you talk about the reserve for legal fees in regards to, I'm assuming it is the case in which you were or the judge decided to award the defendant some legal fees? Just walk through that and what do you see going forward in terms of that being a risk to the business model.

I think the accruals, well, let me answer (inaudible) question because I think you've pinged us on two issues that are separate. The accrual, and Clayton, correct me if I'm wrong, that largely relates to a latter we have with a law firm, it's a fee dispute with a law firm. That has nothing to do with sanctions awards. On the sanctions awards front we don't anticipate a lot more of those. If you actually look historically at our lawsuit record, we filed over a thousand suits and I think we have only been sanctioned on three or four occasions.

You know, we generated over $1.2 billion of licensing revenue almost all of it from lawsuits or at least a lot of it and, again, I don't think we paid more than 0.2% of that. You know, and when you are in that many legal disputes you're going to have some of these things cropping up once in awhile, that's how I would characterize it and, actually, now that I recall there was, part of the accruals you are referring to, Mark, a chunk had to do with a fee dispute with a firm. About $700,000 of that had to do with a fee dispute. So I was wrong on that count.

That is helpful. And then just turning to the, just the total number of license transactions, I think you guys had did eight new agreements or eight new licensing agreements in the quarter which is down and I, you know, granted the total number of license deals isn't as important as the actual size per license but just like the breadth of transactions are just down.

Is that by design or is that somewhat by the environment we're in or driven by your shift of more focussing on these more marquee portfolios versus a broader kind of swath historically?

Well if you're talking about comparing this quarter to, in terms of the number of transactions, the number of transactions we had three years ago is because the strategy changed, right. We are (inaudible) a marquee strategy and a small number of deals and bigger dollars and you can see the trend play itself out.

You have to compare the number of deals we had this quarter to the number of deals we had last quarter or the previous quarter with in, let's say, the last two years, I think that's more of an abreaction. You know, we were negotiating a similar number of transactions as we normally negotiate.

A, well, in fact, that the dollars we were negotiating were in some sense comparable, if not higher, to what we are normally negotiating. Just that the gap in the bid and the ask didn't quite close and the number came out the way it did.

But again I wouldn't read anything into the number of transactions as being indicative of a trend if you're comparing it to the other quarters this year and I certainly wouldn't read anything into the revenue as being indicative of a trend. I see that as more of an aberration, again, that had to do with the GAAPs between the bid and the ask not closing the way we thought they would.

All right. And then last maybe a question for Clayton. In your guidance for the $21 million to $22 million in MG&A for 2016, what do you think about that level is that consistent on a run rate basis where you guys are right now in Q4 in terms of total, kind of, overhead costs? Or does that contemplate additional reductions in terms of the fixed expenses of business?

Sure, that, that contemplates the current run rate as of right now. Of course, those savings in Q3 were offset by some nonrecurring severance-related payments but that $21 million to $22 million is the current run rate currently.

All right. Then last question for Matt. Maybe you can talk a little bit about the environment. Obviously it has been bad for quite awhile. Are you seeing any, are you seeing a light at the end of the tunnel there at all?

I know legislation seems to have kind of come and gone or the threat of legislation. Seems like the law makers have basically effected change without having to put actual laws on the books. What are you seeing out there though, in terms of the environment? Maybe you could give us a little bit of your perspective, that would be helpful.

It hasn't changed. If you go back to my responses for the last couple of years it really hasn't changed and let me restate my views on the environment, as you call it, and then I'll come back into how I would position my views given the numbers we just put up for the quarter. I think the environment is tougher if you have a case that's closer to fringes, you know, where the valuation is lower or you're taking more risk on various positions. And so I think that we are running the business we used to run four or five years ago, three years ago, absolutely would have impacted it.

But we predicted this impact and we shifted out of the business, in my opinion in the nick of time. So I don't think of that's what's going on. What is going on, to be candid, is, you know, it's a new regime. It's been the most complete overhaul of the US patent law that happened in our lifetime, right. And so it's not so much that the regime is something we had anticipated, it just takes time to understand how it is going to work with respect to the details.

So things like predicting trial dates, yes, it becomes a little bit trickier because you're seeing fact patterns that no one's seen before and I can get into the examples, but perhaps this is not the about time and place for this call. So, you know, overall, I don't think it is really impacted us in a way that we haven't been able to model and that is a why we made the shift to the marquee strategy. In terms of what happened this past quarter I wouldn't read any of that into the environment.

The reality is we're in a marquee strategy, there is going to be a smaller number of deals driving revenue and if there is a miscalculation on the timing of when the deals close you get a quarter like the one we just had, right but at the same time I don't think we lost value. I don't think the revenue is indicative of the company being weaker.

As I said in my prepared remarks, we think it's stronger and we think that revenues that we could've collected this past quarter that we didn't collect will be collected. And we think much of those will be collected in the next few quarters.

My last, last question in terms of the intake it looks like you are looking to bring in another two to four portfolios, you know, the environment out there I guess it's a buyer's market, for lack of a better word. Do you anticipate having to lay capital out for IP or can you really kind of lean on that partnership model?

There'll be many, most where you won't have to deploy that much capital. There might be one or two where you might, it depends on the circumstance. I don't want to preclude that but, by and large, I think we'll be able to do quite well you know and deploy and get a good return on any capital we do deploy, let's put the that way.

Great. Thanks, guys.

We'll go next to Mike Latimore with Northland Capital Markets.

Hi, guys. This is Jim Fitzgerald sitting in for Mike Latimore.

Hey, Jim.

So were the medical device patents the biggest revenue contributors in the quarter?

I'm not sure we can, I mean, well, all we can do is tell you what is in our public filings, right, so we can tell you by size what the top three are. I will say I think if you look at it, the marquees that we closed this quarter, I think many of them were medical I will say that.

Okay. And do you see further material opportunity in the medical device space over, say, the next few quarters?

On intake, as I have mentioned, we have, I mean, we'll still look at stuff but we've cut back our resources at looking at that space because we think that those patents are actually pricing quite well and there is not, there is less need for our service in that space. In terms of the portfolios we do have in house we do see some future opportunities, yes.

Okay. And we just talked a little bit about the patent environment in the US. It seems, in Europe, the environment is a little bit more favorable. Would you say you guys are considering or are increasing your focus on European litigation over US venue?

We have increased our focus and we will keep increasing our focus but really it is a matter of finding the right patent for the right venue. I don't want to give people the impression the US is an awful place to litigate because, it is a harder place to litigate than it was three, four years ago, especially if you have lower quality patents but, again, much of the frustration, I think, people are sensing is new rules that have to be burnt in properly.

I think there is, in some cases, an anti-patent holder bias but I think the American system, you know, will re-balance. I think we are see some hints of re-balancing for example in our own IPR outcomes and so, overall, the way we see it is not so much Europe good, US bad, there is different patents, you have different characteristics, we pick the right venue for them.

Perhaps in the past, you know five, six years, we didn't look at Europe enough and we are starting to and, again, for the right patents it is a good place to look, just as America is for other types of patents.

Sure, okay. And then you just mentioned IPRs. Have you had any notable wins or losses in that space?

We basically had some jointer request denied. We won some IPRs on the Adaptix suit. I don't know if they happened, the wins themselves happened this quarter or the past quarter but I know we won some in the past let's call it four or five months.

By and large, if I look back and I just get a general notion of what's been happening with our IPRs, my sense is we've been winning the significant ones and lost one or two here or there but the ones we really needed to win we have won. And I'll give, as an example, one of our main patents in the NSN portfolio, I know we won one or two IPRs there and we've certainly one or two IPRs, I believe, on the Adaptix matter as well as an example.

Okay. Great. Thanks, guys.

We will take our next question from Darrin Peller with Barclays.

Hi. Thanks for taking my question. This is James [Berkley] for Darrin.

Hi, James.

How are you guys doing?

Okay.

Just a couple of quick questions for you. Just wanted to get a better understanding, I know on the last call you mentioned that you expected revenue to ramp, obviously, in 3Q, 4Q and into 2016 from the $40 million level you saw in 2Q. I know there is timing issues here so going forward just assuming things are on track as you expect, would expect like 4Q to ramp relative to 2Q or is that now relative to 3Q. Just trying to get any color I can.

No, no. It's relative to 2Q.

Okay. So we can, if everything goes as planned you would expect to see above that $40 million.

(Inaudible). Yes, we're We are not advertising a ramp off of 13. That is clearly not the intent.

Off of 3Q you mean?

(Multiple speakers)Yes. Exactly, yes.

Okay, great. That is really helpful. And then, are you able to give any further just additional color how much you would expect it to ramp and how we should think about 2016 at all and how sustainable the revenue is going forward and, similar to that, why the revenue, like what caused the major dropoff, what kind of fell off this quarter?

You know, I have given some information in the past on what our objectives are and I said we want to get back to our peak, the 200 to 250 level, right, and then go by it and that still holds. There are some timing issues, as you say. And, I think, did you ask me, you wanted me to talk about the timing issues? I know, I sense there were two questions in there. Was it just that one question or did you ask a second one as well?

The timing issues if you could. A little more detail on what led to the sequential drop off here and then just how to think about revenues sequentially going forward in 4Q and beyond.

Well, again, it really was probably a confluence of factors for this particular quarter but I'll point to some public things you guys can see to give you some hint. I can't, obviously, betray confidences that we're having in terms of negotiations.

On the Adaptix trial, right, you know, ten days before that trial was supposed to start documents were unearthed that really helped our case and we tried to get those documents into the case and have the trial start on time. But the judge probably did the right thing there and said well, if you are going to put new documents in that substantially strengthen your case you should at least give the other side a chance to react to the documents and examine them and that's what's been happening.

So he pushed that off a couple of months. So that's one where we had a choice, it is not like the delay was forced on us. We could either do what we thought was the right thing, identify the documents and give the other side a chance to react, right, which the judge, I think, wisely did or we can go in and we thought we had a strong case and fight the case with slightly lower probabilities of winning.

We took the choice of security over a rush to a trial, especially given it was only a delay of a quarter. Sometimes it's a matter of, you know, you have a marquee that's been doing quite well, people see the writing on the wall in terms of what's going to happen if they don't take a license and there's just a gap between the bid and the ask and your enforcement moment, right, is still two or three months away and people just want to push and push and push.

And what we are seeing is when the amounts get bigger delaying, even a couple of months, three months, becomes worth their while which is something we didn't necessarily see when we were closing $4 million or $5 million deals exclusively. And sometimes you have transactions and you're negotiating them and they are looking quite good and issues completely out of left field, that neither side could have anticipated, come along and side swipe you. And that happens in a while and when that happens then, especially when it happens late in a quarter, it kind of throws your planning into a bit of chaos and so what you have to do is, at that point, take a breath and say okay, we are not going to give away the future because of one quarter.

We are going to do the right thing, wrap up for the quarter, take some heat for the numbers we are going to put up but at the same time take the heat knowing that fundamentally the valuation of the company hasn't changed. In fact, in our case we think, because of the wins we've been having it actually increased, and move forward.

So it is fair to say, just basically to sum up, the summation of the documents, obviously, that led to a delay but at the same time you should probably come out better than you otherwise would have from a revenue standpoint longer term. Is that fair?

Yes. In know, without a doubt it delayed us and without a doubt our case is stronger.

Okay. Do you think that will impact what you are able to get, though, out of those cases by submitting documents?

If the case is stronger, right, you get more typically, right?

Okay.

So I mean that is the usual correlation.

All right. Perfect. Yes, I just wanted to make that clear.

No worries, yes.

And then just the last question. I know you talked about, in the past, that you guys are more focus on the dividend in terms of returning value to shareholders and what not. But at what point would you perhaps revisit that and consider a buyback, if at all?

You know, look, we are always looking at the stock price performance and we are always looking at stepping in and declaring, you know, an authorization for a buyback, which, again, given how closely the members of the board communicate would be something we could do almost instantaneously.

We've expressed our preference for returning capital via dividends and to date we have returned over $100 million, I think, if you count the buybacks and the dividends, right?

But rest assured we will be continuously monitoring, especially given how close a lot of trials that we think we are well positioned in how closely they are following up right as of right now. And we will be monitoring it.

Great. So is it fair to say that if things kind of go as planned from a timing perspective and you guys run into a good amount of cash here that you might be a lot more likely, perhaps, to put that to use in terms of a buy back if you feel the stock is undervalued?

There's that possibility and there's also possibility of a special dividend. There is a number of things that happen and so that is why, again, what we are focused on is bringing the cash in, we think we are well positioned to do that and really looking forward to doing so in the next few months.

Okay. Great. Thanks a lot. Appreciate it.

Thank you.

Next to Tom Ringe with Duane Morris.

Yes, thanks for taking my question. In the last call there was mention made of a remedies hearing I think it was scheduled for September 22 in Germany on the VoiceAge portfolio and I will think David Rossman may have mentioned it. So I was curious to know now whether that hearing went off as scheduled and if there's any report you can give us about how that worked out?

Yes. David Rossman here. We did have the hearing on September 22 in Mannheim and, in a nutshell, we won on all accounts. So to summarize the VoiceAge portfolio, we had a hearing in Mannheim and November 22 and a hearing in Munich in August in two separate cases.

In sort of an ironic twist here we won across the board in both of those hearings and, in other words, we won on the validity, we won on infringement but most importantly we won on the cartel issues, which were the new rules established by the European court of justice on how competition law works with respect to standard or central patents.

And interestingly when you win across the board it provides a situation that doesn't necessarily lend itself for easy and quick settlement and I think its caused, in this case, the defendants to sort of move back and take stock on how to resolve those cases in light of the fact that the judge, the judges in all of those cases gave them very little to count on.

So in sum, we continue to win on the VoiceAge portfolio. We've had four cases in Germany now. We've won on all four of those. And we have upcoming decisions in the fourth quarter and early in the first quarter next year where the cases will be finalized.

Okay. So those are the cases that Matt was referring to earlier when the decisions aren't out yet and once they are out you anticipate injunctions, maybe, included and that obviously forces the defendant's hand. That's what Matt was referring to earlier. I misunderstood that if that is the case, okay.

Yes, that's correct and the Courts in Munich in August and Mannheim in September, in two separate cases. The Courts both declared that we had basically won on all of the issues and they will issue their written decisions in just a couple of months.

And we expect, we're very confident that based on the court's stated position in those cases that injunctions will issue. But, more importantly we think that they provide significant drivers to settlement and as someone asked earlier, has your case been strengthened or weakened or it is a mixed bag. In this case the cases were strengthened across the board on all fronts.

Okay. Thanks. And just one other question. I saw that the Bard settlement was announced October 2, 2015. Can you tell us whether that was as Q3 or Q4 event? It wasn't clear as I read the business wide release.

It was a Q3 event and it related, you know, if you look at the complaint, that was a case that primarily related to filters, to vena cava filters.

Okay. Okay. Alright. Thanks. That is all I have. I appreciate it. And, oh, just one comment. I appreciate the management's refusal to bend on your pricing when the quarters come up. I really think that's admirable and shareholders friendly behavior. Thank you.

Thanks.

We'll go next to Brett Reiss with Janney Montgomery Scott.

Good afternoon, gentlemen.

Hi.

I'm looking at trading in Acacia in after hours, you know, it is down sharply. Can we hope or expect that upper management and board members will be buying stock in the near future?

Again, the response I'm giving you on our intentions, I think, reflects the response I gave on the buyback, right, we are monitoring it and we are going to act accordingly.

Forgive me, you know, I understand the buyback and there's a weighing between keeping abundant cash in the corporate coffers so you don't appear to be in a weak negotiating position I understand that. But you said that value creation is still there and it's just been deferred. You know, you would give shareholders a lot of hope and comfort if we could see somebody in upper management reach into their pockets and buy some stock if it gets down to a crazy level which is where it looks like it's gonna open tomorrow. And that has nothing to do with your buyback.

Again, we'll see what happens to the stock price tomorrow and we'll react accordingly.

Okay. Fair enough.

This will conclude the question and answer session. I will now turn the call back to Mr. Vella.

Thanks very much. We will talk again in three months and again thanks for your patience. We are very frustrated by the delays that were caused by legal developments but at the same time we're heartened by the strengthening of those portfolios that came about with those same developments. So we will do it again next quarter. Thank you.

Ladies and gentlemen, this concludes our conference for today. Thank you all for participating and have a nice day. All parties may now disconnect.