AxoGen Inc (AXGN) 2011 Q3 法說會逐字稿

Good day, and welcome to the AxoGen third quarter 2011 conference call. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to your host, Mr. Rich Cockrell. Please go ahead, sir.

Good afternoon, and thank you for joining us today for the AxoGen third quarter and nine-month 2011 financial results call. On the call today are Karen Zaderej, AxoGen's Chief Executive Officer; and Greg Freitag, Chief Financial Officer. During the course of this call, Management will make projections and other forward-looking statements regarding future events and the Company's future performance. These forward-looking statements reflect AxoGen's current perspective on existing trends and information can be identified by such words as expect, plan, will, may, anticipate, believe, should, intend and other words of similar meaning.

Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties including those noted in our filings with the SEC on Forms 10-K, 10-Q and 8-K. Actual results may differ materially from those projected in these forward-looking statements. For the benefit of those who may be listening to the replay, this call was held and recorded on November 10 at approximately 3.00 PM Eastern Time. Since then, we may have made announcements related to the topics discussed. Please refer to the Company's most recent press release and current filings with the SEC. AxoGen declines any attempts or obligations to update these forward-looking statements.

With that, I'd like to turn the call over to Karen.

Thank you, Rich, and good afternoon, everyone. And welcome to the AxoGen inaugural earnings conference call. To get things started, I'll be covering highlights of the third quarter and discussing the strategic direction of the Company, after which Greg Freitag will review the financial details for the third quarter and the nine months of the year.

Let me start by saying I'm very pleased with our performance during the period. We delivered a solid quarter, generating revenues of $1.1 million, which is a 43% increase over the third quarter of last year. And our revenue for the nine months of 2011 was $3.5 million, which is a 59% increase over 2011, and more importantly, already exceeds the total revenue -- excuse me, a 59% increase over 2010, and more importantly, already exceeds that total revenue.

I'm proud to say we've achieved these good results under less than optimal business conditions. We also successfully closed a strategic merger with LecTec which has strongly positioned and capitalized the Company for our continued growth. Our merger with LecTec was necessary for the continued expansion of our business. Through this merger, we have the ability to commercialize our regenerative medicine portfolio for peripheral nerve repair, penetrate new and existing markets and access the capital markets for any potential additional financing requirements.

Our ability to execute well on all these goals will be contingent on the diligence with which we grow our sales and marketing capabilities so that we can appropriately educate the marketplace about the benefits of our products. Therefore, broadening of our US sales coverage through our direct representatives and our independent distributors will be a core access to our strategic initiatives over the next several quarters.

At AxoGen we're dedicated to providing surgeons improved options for peripheral nerve repair. Our commitment on building solid data to educate and support both surgeons and their patients in their decisions of peripheral nerve injury treatment options will be a key determinant in their selection of our product as a solution to their needs.

We consider clinical research a privilege and we're extremely proud of the recent updates regarding the RANGER study, which at this point is the largest multi-center clinical study conducted to date in the peripheral nerve gap reconstruction. Dr. Darrell Brooks of the Buncke Clinic in San Francisco presented the study's results at the recent American Society for Surgery of the Hand meeting in Las Vegas. This study demonstrates the Avance Nerve Graft as a safe method for reconstructive nerve discontinuity with an 87.3% of injuries achieving meaningful recovery in a wide range of nerve types and injuries, and including both military and civilian trauma.

And while educating surgeons is important to the success of our products, we also believe it's equally important to educate the patient. About a week ago, we launched an educational website called aboutnerve.com for patients who are seeking additional information to provide a factual data source on both peripheral nerves and the treatment options. We look forward to expanding this platform to provide much needed information to patients.

The healthcare market remains a space in which practitioners continue to demand safer, cost effective solutions that enhance the patient quality of life, and our product portfolio of peripheral nerve treatment options is the ideal solution for this evolving value-based healthcare landscape. We will continue to educate the marketplace about the attributes of our technology.

I'll now turn the call over to Greg who will be reviewing our financial results.

Thanks, Karen. I want to remind all our listeners to refer to the 10-Q that will be filed late in the day on Monday. We also put out the press release last night but the full presentation of the financial statements will be in that 10-Q with a full set of footnotes.

One of the things leading in that has, I know, been a struggle for some of our investors and including the way that it's been picked up on some of the sites that provide our information, is the complexity of how our data is presented and, at times, wondering what does that data look like between AxoGen Inc., formerly LecTec, and AxoGen Corporation, the operating Company. For accounting purposes, AxoGen Corporation, the Florida Company, operating Company, was identified as the inquiring entity and AxoGen Inc., again, formerly LecTec, as the acquired entity.

Accordingly, the condensed consolidated financial statements and related footnote disclosures presented for the period prior to the merger are those of AxoGen Corporation. So as you look at the P&L, the P&L is for AxoGen Corporation and is not incorporating in the operational results of AxoGen Inc./LecTec. On the other hand, for the balance sheet as of September 30, that does look at the combined entities, which is why what is important is that as of September 30 we have a very clean balance sheet. We have common stock options and a warrant.

Before that, and what people will see in the comparison, is a very long list of preferred stocks and all sorts of charges against preferred stock. That is all gone as of September 30 end of the day and that is why the balance sheet reflects the combined entities. So, again, important to the P&L is that that is an AxoGen operating P&L that can be compared to going forward.

For the third quarter 2011, we reported a 43% increase in revenues to $1.1 million, as Karen had stated earlier. And, again, more importantly, for the nine months, $3.5 million, up 59% from the previous quarter. The improvement of revenues was primarily driven by increased penetration into target accounts as a result of our strategic sales and marketing initiatives. We anticipate continued growth in revenues as we broaden our sales focus and expand our marketing efforts.

For the period, we reported a net loss of $3.1 million, or $2.60 per diluted share, which compares to a net loss of $0.9 million, or $1.05 per diluted share, during the same period in 2010. The reported loss for this period, however, included approximately $643,000 of merger-related expenses, and $828,000 associated with a one-time inventory write-off. Excluding those items, the net loss for the period was $1.6 million, or $1.49 per common share, compared to a net loss of $1.1 million, or $1.05 per common share, reported during the third quarter.

One of the things that we wanted to point out, though, with regard to the earnings per share number is that the earnings per share number, again, based on the purchase accounting statement I made earlier is based on outstanding AxoGen Corporation shares during the period and not based on the shares as of September 30. In the footnotes to the financials that will be included in the 10-Q on Monday there's a footnote dealing with the pro formas. In those pro formas, the net revenue and loss numbers are given but also, more importantly, the diluted share numbers are based on the current number of shares outstanding pursuant to how that's calculated for GAAP.

So pro forma for the merger with LecTec, which takes into account the events of September 30, 2011, subsequent to the Company's merger our net loss was $3 million, or $0.28 per diluted share, compared to a net loss of $1.6 million, or $0.15 per diluted share, reported during the same period in 2010. And then, obviously, those were inclusive of the inventory expenses and the merger expenses stated before. Those loss per share numbers are the numbers that will have comparative meaning as we move forward.

Gross profit for the third quarter was $10,436 but that included the $823,000 one-time charge we had taken against our inventory. A change in our product mix, combined with costs associated with the resumption of manufacturing of Avance Nerve Graft in January, also impacted gross profit. Excluding the inventory charge, gross profit increased 29% to approximately $838,000 for the period, and also increased 45% to $2.4 million for the nine-month period. With regard to the non-recurring and one-time charges taken during the quarter, we felt it necessary to take these charges during the period. And as a result, our results in subsequent quarters will be a clear and clean representation of our operating performance.

Salaries, general and administrative expenses increased to $2 million during the third quarter of 2011 compared to $1.1 million reported last year, and includes, again, $643,000 of merger-related expenses. If you exclude those costs, salaries, G&A, for the period was $1.4 million. The higher expenses reflect our strategic and continuing broadening of our sales and marketing effort. Our balance sheet is strong, cash at the end of the period was $10.5 million, and total long-term debt outstanding at the end of the period was $4.8 million.

Karen, I'll turn it back over to you.

Thank you, Greg.

Our goal is to focus on revenue growth for the business. We continue to grow our revenue and in order to achieve this we will continue to invest in our sales and marketing program. Ultimately, costs will be contained in step with our growth. Although there were merger-related activities that really convoluted our third quarter results and softened our sequential revenue performance, having this all behind us will allow us to refocus now on growing this business. At this time, we'll now open up the call for questions.

Thank you, ma'am.

(Operator Instructions)

Our first question comes from [Ron King], which is a private investor. Please proceed, sir.

Karen, I wanted to clarify -- how many full-time salespeople you had on board, end of third quarter, September 30th of this last quarter?

In terms of full-time salespeople, I will point out some of our salespeople are very new at the end of that time period; but at the end of the quarter we were at 10.

Suppose you break that down as full-time productive salespeople making money for the Company, and those salespeople still in training, ramping up their marketing forte?

At the end of May, we had three associates when we signed the merger agreement. All of the people that we've added since then are still in the ramp-up phase.

Okay.

(Operator Instructions)

We do have a question from Mr. Wayne King with Twin Oaks Realty.

Yes, this is addressed to Greg.

Having been a LecTec holder for many years, I was under the impression that there was a pent-up demand for AxoGen stock in the Florida area for a number of reasons, I guess. And over the last weeks I have not seen any big demand for the stock. I've not seen people going in to buy. I'm especially curious if our former LecTec people, including you, have got into the market at this time, buying our stock. Seems to be no buying pressure at all. So I'm just curious about that.

I'll respond in a few ways. I don't mean to start by answering the question by countering something that you said. There has been, as of late, a little bit more buying in the stock as we've gone, we've seen that grow a little bit; but certainly not even close to where we need it to be. I only say that from the standpoint that we have had a little bit more liquidity as of late. Secondly, as to specifically down in the Florida area and the question of pent-up demand for the stock -- to be perfectly honest, we have not had any time to get down and to cultivate some of those areas down in Florida.

I do know that there has been some buying that has come out of Florida. There has been a number of questions, and this goes back to the entire OTCBB situation, of getting people to recognize that they can go in and they can purchase the stock. So we are working to cultivate -- but I do know that there has been some buying out of Florida. More importantly, though, the question that comes up all of the time is the capability of -- and this comes to some of the situation in Florida being employees and people around the Company.

We continue to be in a blackout period for purposes of buying, and one of the things that Karen did a very good job of, is warning everybody to the effect of doing anything that would affect the merger or inappropriateness with the stock. With the quarter being filed on Monday, our hope is that we are up to where we need to be with all information, and that is going to also allow for people who otherwise have not been in the markets to be able to enter the markets.

Are you planning on doing -- again, maybe it's too soon -- but are you doing any marketing, have marketing strategy? What I'm hearing is I don't -- you haven't started that marketing strategy. Am I correct?

So I'm going to say something and then Karen also. So, in fact, we have, and it is a three-pronged approach. The first was to get through the merger and to do that in a way that stabilized both organizations. The second is why we're an OTCBB and have the liquidity we do. We need to cultivate the retail investor market.

In that regard, again, I will say that we have not had the opportunity to do as much of that as I would have liked. However, we have done presentations directly related at retail customers, and we continue to find ways to do that, and it is absolutely on our plan. The third prong is for what I will put into the institutional markets, to the analysts, to the institutional investors, which is what ultimately brings the liquidity. That is a function of us getting down the road some to get interest in our stock, to continue to feed information to those parties. We quite frankly, I will say, are ahead of plan on those introductions.

It has been very interesting that from -- what I will call, again, the institutional side of investment bankers, analysts, institutional investors -- the story seems to hold together quite nicely, and we are able to tell the story and people wish to listen. So we definitely have a plan in place. Also this call is part of that plan, and we appreciate everybody on the call, as we're working our way through, putting these things together to get that IR function out there also.

Karen?

I was just going to add -- you can actually see some of the marketing things that we're starting to do. We added the investor page on the AxoGen website, so at axogeninc.com; and on that page it will talk about investor conferences where we're presenting the information, trying to move to that third realm that Greg mentioned. We were at the Healthios Conference and now next week we'll be presenting at the Lazard Capital Healthcare Conference in New York City. We haven't put some of the retail investment work on there. Not really conferences as much as they are meetings, but certainly for you to track and see some of the things we're doing on the institutional side, you'll be able to see it on that website.

And I think the overall summary of that is, it is key to our focus, and at the end of the day we can operationally do all we can do; but if you don't have liquidity for a market as owners of a Company, that doesn't do you much good. So it is top on our priority list and we do have plans and we are working forward for that.

Okay, thank you.

We will go next to [Kipling Becker] who is a private investor. Please go ahead, sir.

Yes, good conference call.

Could you tell us a little bit about the inventory write-down, and maybe give us some insight as to whether this will be an ongoing issue, or whether it's a one-time event?

Yes, thank you for the question.

It is what we see -- certainly in this magnitude -- a one-time event. It goes back -- if you look at our history, in 2009 we had a distribution agreement with a large multinational distributor, Stryker Orthopaedics, and they had minimum purchases in that agreement that we started to manufacture. We ultimately decided to terminate that agreement, but we still had inventory in the queue and, frankly, as part of the settlement, got back inventory from them as well.

And as Greg mentioned, we restarted manufacturing recently, but we actually shut down manufacturing and used this inventory as our inventory through some of the difficult time we had through 2010. The inventory that we have has a good shelf life. We have a three-year shelf life on the product. So it's not a shelf life issue. It really was a match of what we are expecting to sell versus what was built for the Stryker distribution relationship.

We're now much more aligned and efficient in our manufacturing in terms of making what we sell instead of having this sort of chunk of inventory that we were working towards and selling off.

A quick follow-up to that -- what we looked at as we looked into third quarter, and as we look out to the future; and a fairly recent hire and our head of manufacturing, who had started at the beginning of the year being able to put the efficiencies in place for manufacturing. A lot of things had come together to where, in third quarter as we moved into fourth and forward quarters, that we basically get everything lined up, because now we have clear line of sight to our manufacturer processes, to our sales alignment, to our product alignment.

Good. Can I ask you a follow-up question on sales and marketing? Could you tell us a little bit about your rollout strategy, your sales and marketing rollout strategy?

Sure.

Our strategy's really built on several key tenets. The first, really, is having a solid foundation of that data about the product. So, again, I'll go back to the information about the RANGER study, which I think is really a landmark study in the area of peripheral nerve repair. So, of course, continuing to communicate that, I think, will be key to the surgeon population in making them aware of the solid information about the performance of the product.

The second is creating a professional education environment so that surgeons learn about this, and one of the best ways to do that is through peer communications. And so we're working with many of the leading institutions on now getting that data communicated in their educational forums -- and they have continuing educational forums in certainly all academic facilities and in many hospitals across the United States. And then, lastly, is really the execution plan in terms of getting good sales coverage to get the product into the hands of surgeons, and making sure that they're aware of it, get it into their hands, have them trial it; and certainly get their own good results with the product. And so we're really focused on those three things as the primary effort that we're putting forth over the next 12 months.

On the sales side, you heard that we've expanded the sales force. Along with that comes an extensive amount of training that we're doing to get the sales representatives educated so that they provide a very professional consultative approach in the way that they work with the clinicians. And so there is a learning curve that we go through. We estimate that learning curve is six months. So we're in the midst of that, and will be throughout the next year as we add capacity.

Now with three to 10 sales reps, you're going to have a hard time covering the whole country, so can you elaborate a little bit about your rollout strategy and how many sales reps you anticipate having a year from now?

I will go back. The question before was how many direct reps do we have. But we also have an independent network of distributors that provide support and sales for our product as well. What we will see at the end of next year will be that we'll have greater than 25 sales representatives that are direct reps, and probably that amount or more of independent representatives. So we'll have in excess of 50 sales teams out there covering territories, and that should get us at least the primary target, hospitals, well covered. There are still secondary hospitals that we could continue to expand to get increased coverage after that.

Okay. Thank you very much.

We will go next to Sanford Brink with Nike Storage. Your line is now open.

I want to compliment you both for your achievements to date, all the hard work that you've done to get us to where we are right now, and I want to thank you from all the shareholders.

And then if you can comment a little bit about the military activity, if you can at this point, and what you expect for the near future there?

Thank you. That's a great question, and gives me a chance to brag a little bit about some of the things that we've done historically.

While military in and of itself is nowhere near the majority of our sales, I think it is a segment of the population that shows the extreme range of injuries in peripheral nerves. And so we have been active at a number of the key military hospitals that are treating the wounded warriors coming from Iraq and Afghanistan today; and in that have what we think are some very good success stories in providing good functional recovery for these wounded warriors, and in some cases preventing amputations of limbs, which is certainly a substantial impact in terms of quality of life.

Towards that end, we have been shipping on a regular basis to Bagram Air Force base, certainly one of the places where there's been a lot of active treatment going on. We continue to ship into Bethesda Naval and Brooke Army. There's a number of different purchasing types of arrangements you can have with the military. We have been granted a BPA for some of those critical hospitals; and essentially a BPA is a way that they can purchase volumes of material up to a certain limit, and it opens up the purchasing lines, making it a little easier for them to purchase.

We look to continue to expand that with some focus in the military area. And to the extent that the military will allow, I will be happy if we can tell some of those stories in a broader way. Certainly takes the military and the patient's approval; but we have just some really great outcomes that I think would be impactful to the population as a whole.

The one addition that I'll put into it, as we look to this fourth quarter and we talk about how everything has been somewhat of a crescendo as we take this Company and have a focus going forward -- the contract that Karen mentioned is something that came in late part of third quarter, and it's the first contract that the Company has had with the military. Now that's only for a small number of hospitals, but to date that military buying has been a credit card-related situation as compared to a buying group. As we move forward these are the type of things that we'll do, is to get stabilized contractual relationships that's should help to make it easier for purchasing. So that's another example of the military, where we hope that over the next year here, we'll be able to put more contracts in place to make that sales process easier.

Well, again, thanks for all your hard work and I compliment you on your success.

Thank you.

Thank you.

We will go next to Felix Frayman with Springboard Capital.

Thank you very much for a very insightful conference.

I have a question regarding comparing Q1, Q2, and Q3 revenues. Would you care to comment on the comparison of sequential revenue growth?

Well, I'll start and then turn it over to Karen. So what we obviously had, there was growth Q1 to Q2; Q3 was a little lower than Q2. And, quite frankly, none of us were happy about the fact that Q3 was not another quarter, although our expectations were not that it was going to grow all that much from second quarter. That is something that we are dealing with, and it really was a focus, bandwidth issue in third quarter.

And I'll have Karen speak a little bit more to that also.

Yes, I think Greg said it is that we expect to see continued growth as we continue to expand and broaden our marketing and sales efforts. But in third quarter, I think we got into the mix of a lot of merger-related activities that were, frankly, time-consuming and distracting. And so, not for the good, and throughout that managed to continue at least holding our own; but did not get the kind of growth that I would expect to continue to see. And I do think we've got that corrected. Certainly, have the merger past us so we're not distracted in that.

We also now have this foundation of having hired some of these additional reps, and really geared up some of our sales and marketing implementation efforts so that in and of itself also not a distraction. We have the infrastructure in place now to expand the sales team with a good robust sales training program, and can now just execute on that.

The other thing I would say to that -- and as I am now CFO of AxoGen, Inc., but I still feel a little bit of a foot in each boat -- one of the reasons why from a LecTec perspective we saw great future capabilities in action was the management team; and what third quarter showed to me is just how important Karen, John Engels, some of the other management team are to this beginning sales force and this beginning marketing program, to have them be able to have their clear focus on it. I saw that distraction, and now I see what has started now that we've cleaned the plate and gotten into this quarter; and it really is a world of difference. We need that team fully focused on what we're doing, and that's what we're able to do as we clear third quarter moving forward.

Thank you very much.

We do have a follow-up question from Mr. Ron King who is a private investor. Please go ahead, sir.

My question's been answered, thank you.

We will go next to [Bill Bessinetti] who is a private investor as well.

Good call, Karen and Greg.

I got a question for you. You identified at the shareholder meeting, I believe, a top 50 accounts that you were targeting. And can you at all comment at what percentage do you feel that the current revenues represent those top 50? And hopefully, at the end of 2012, what percentage you hope to achieve as related to revenue?

Bill, we don't divide up as to what those are, because what's really important is from a standpoint no single customer represents a large part of our revenue, which is a good dispersion. But at the end of the day, those top 50 accounts are going to represent less as a percentage of the overall sales as we continue to expand beyond that. Now, to be quite frank, what we think is probably going to happen is, we continue to see growth in those top 50 accounts because the marketing plan is focused on where we have made strides, and we have surgeons, we have certainly not impacted every single surgeon within a group or within an account.

So as we roll out the sales force, we are focusing them on expanding into those accounts, get as many physicians in there, and then start looking beyond that. So if we were to eye that up and the plan is working, we will be expanding that in the shorter term but in the longer term as we bring on more salespeople and expand with our independent reps and the support of that, it will start spreading out beyond those 50.

Karen, was that --?

I think -- while I don't have a percentage I could tell you off the top of my head, it actually will get, as Greg said, smaller; because that's the point of expanding the sales team. Now what we've done is, we took those 50 accounts to use them as learning metrics for us, to say, what does adoption and growth look like? And so, while I think we still have -- I know we still have room to continue to penetrate those top 50, we use that to model out what we expect new accounts to now grow at. And so that was really the importance when I was at the shareholders meeting and thinking about those 50.

Now we won't lose sight of them, but the lion's share of the business won't continue to be only 50 accounts. We're going to continue to take what we learn in those 50 and run it out to several hundred.

And a follow-up question to you, Greg, regarding, as you said, that you have a practice group that might specialize in peripheral nerve surgery and you have one of the surgeons within the group using it, but not the rest. Can you continue to comment on that, of those top 50, overall percentage of current users as far as within those groups? Of those top 50 groups of hand surgeons that have a group of 10 or five or whatever, what percentage have adopted our methods?

Actually I'm going to let the more professional person answer that, Bill.

Oh, it's Karen.

I would say, very honestly, if you look at the total market, we're less than 1% penetrated into the market. We're at a very small penetration. And even in those accounts that we focused on over the last year and a half, we can really grow essentially in three ways. So in every one of those accounts, we have a surgeon who is at some stage of adopting the product in their practice. But we have the option of increasing that penetration and their usage.

The next area that we can grow in is cross-selling, because they typically will start with maybe one of the three products, but we have three products that provide solutions. So our sales representative is to be, again, that consultative sales process to understand what are the needs of that surgeon and suggest additional options that they may utilize. And then, of course, the third is to increase to the additional partners within the practice. And the number of hand and plastic reconstructive surgeons in an account will, of course, vary because there's many sizes of accounts, but typically we would see it as somewhere between three and seven partners in that practice. And I still see room in all of the top 50 accounts for us to continue to expand.

So we have room to grow even in those but we've got good sales in those model accounts that we've used, and so our assumptions are let's take what we've done so far and replicate it in more places. That doesn't mean we walk away from where we've been; we have opportunities to continue to take more.

The other part of that, that comes from that ends up being -- with the product that we have, being that we have the only product and there's no competition, why is it that all of a sudden tomorrow the entire medical community does not take this on? And so this goes a little bit to our overall sales ramp, and the importance of our data and why we always talk about the data. Right now with the base we're working on and the expansion of sales, we are working on putting more salespeople out to sell product. But that is still salespeople working hard to sell product, because from an adoption standpoint, healthcare is slow in adopting.

You have legal issues with regard to adopting, and you keep chipping away at that until, as one of our shareholders has put it, you're not leaning into the wind, but the wind shifts behind you. We're trying to position everything for the time when the wind starts shifting behind us; and part of that is all of the work that you'll continue to see with regards to the RANGER data and other data and information that we put out to the physicians that make it easier for them to change and to start purchasing product.

Great.

And just one further question. At the end of 2012, is there going to -- can you comment on the mix of the sales regarding Avance and AxoGuard and the third product as far as percentage of sales? Is it going to change from what it is now, or can you comment on what percentage of sales you expect those categories to be?

I don't think we can comment at this point as to what we think the percentage mix will be. I do think that we will continue to see all three products as important in our portfolio. We'll continue to see growth in all of them.

And part of that is that, right now off of the base, quite frankly, fluctuates and it's a little bit of a function of still being off of the base that we are of sales. I, my own self, I found it to be very interesting because the AxoGuard product sometimes seemed to be in the shadow of the Avance product because the Avance without the competition, as we've talked about before. But, in fact, it is very interesting the amount of market acceptance that the AxoGuard sees also. So I've been very pleasantly surprised and changed my own mindset that it's not a stepchild of anything. It is very good products in the product mix, and I think that we see that reflecting month-to-month of not really knowing what that mix is -- which, I think it's good news, quite frankly.

No more further questions.

(Operator Instructions)

It appears there are no further questions at this time. I would like to turn the conference back over to your presenters for additional or closing remarks.

I just want to thank everybody for joining us in this third quarter earnings call and we look forward to speaking with you all again after the end of the year. Thank you.

For my own self, and Karen, we are very approachable in this Company. We know we have a small base of shareholders. We want to get the information out and respond. We're trying to do what we can. We appreciate everybody's comments and input as we move forward together and try to make the Company successful. Thank you.

And that does conclude today's conference. Ladies and gentlemen, thank you for your participation.