DSS Inc (DSS) 2010 Q1 法說會逐字稿

Greetings, and welcome to the Document Security Systems first quarter 2010 results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jody Janson, Director of Investor Relations for Document Security. Thank you, Mr. Janson, you may begin.

Thank you, Manny. Good afternoon, everyone. This is Jody Janson, Director of Investor Relations. I'd like to welcome you to the Document Security Systems conference call for the first quarter of 2010.

Joining us today from management are Chairman Robert Fagenson; Chief Executive Officer Patrick White; Chief Financial Officer Philip Jones; and Chief Operating Officer Bob Bzdick. . This conference call is also being webcast and will be archived in the Investor Relations section of our website at www.documentsecurity.com.

Before turning the call over to management, I would like to read the Safe Harbor statement. Document Security Systems has included in today's press release and conference forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including all statements considering future or expected events or results.

Please note that during the course of this call we will be making forward-looking statements regarding management's opinion and expectations about Document Security Systems' business, its markets and financial performance. These statements are subject to risks, assumptions, uncertainties and changes in circumstances.

Actual results may vary materially from those expressed or implied in such statements. For more detailed information about Document Security Systems' risk factors that may cause actual results to differ from expectations please see the Company's filings with the SEC including our Form 10-Q that was filed today, and our earnings release which will be posted on our website later today.

Part of the Company's presentation includes non-GAAP numbers that management considers to be useful such as adjusted EBITDA, which is earnings before interest, taxes, depreciation, and amortization, stock-based compensation and non-recurring items.

These non-GAAP measures should be considered as supplemental to its corresponding GAAP numbers. We encourage you to review the differences between these measures as described in today's press release. With that, I would like to turn the call over to Mr. Robert Fagenson, Chairman of Document Security Systems.

Thank you, Jody, and good afternoon, everyone. Thanks for joining us. I'll make a short opening presentation and then turn you over to management, Phil Jones, our CFO; Bob Bzdick, Chief Operating Officer; and Pat White, who will each discuss certain things with you. Then we'll have a short Q&A and then I'll sum up at the end.

A lot of what you have seen in our recently released results are a result of the economy. You know that we added Premier Packaging to our DSS family midway through February in this first quarter, and it certainly is a welcome addition to everything that we do. Bob Bzdick, who has joined us not only as running Premier Packaging, but also as our Chief Operating Officer of the entire Company, is a welcome addition to the team and adds the type of depth, experience, marketing and production knowledge that really helps round out our team.

The first quarter results are a little complex in that Premier only became a part of our Company in February 13th, so it's really only half of a half quarter. But Phil will go over that with you and Pat and Bob later in the presentation. The issue for us really that I want to discuss is that we've put the pieces in place.

We've continued to work on reducing expenses, and aggressively marketing the capabilities the combined Company has to offer. The total package now includes the ability not only to print something, but to turn it into packaging, and then to execute using some of our IP, the security features that not only had a value from a customer's perspective, but significantly add margin from the Company's perspective.

We are not sitting and resting on our laurels. Obviously, if other opportunities arose we'd certainly seek them aggressively. But now we really have no more excuses about not being able to penetrate the marketplace. We have the pieces in place to be able to offer our customers a virtually complete package of everything they could want in the printing packaging and product security realm.

So now for us the task is to execute. I hope that we have the opportunity to execute in an increasingly vibrant economy. The first quarter was anything but that, and particularly in bread and butter printing, it was more difficult than any of us had anticipated.

However, I believe the trends that we are seeing in the last month, last month and a half, are the positive ones we've been waiting for, and give us the sense, and Pat will discuss this more, as will Bob and Phil, that we have been on the right track, and that we've reached the point where we're finally going start seeing the type of successes in our quarterly reports and at the bottom line that we've been hoping for.

ADX is finally ready. Pat will tell you how we've completed that product after a long and arduous trek. And as I say, the trends are definitely positive. So I am going to leave it there and turn it over to Pat simply by saying the faith in our intellectual property, the value that our brand protection and our ability to offer customers the complete package has never been brighter than it is right now.

And I believe that the faith and the patience that we have all shown as shareholders in this process are about to be rewarded. I hope that the next time I'm with you we'll have the tangible results of another quarter that will show the trends that we're seeing now as we sit here mid-May, are lasting ones.

And I think I will let Phil now discuss with you the results in detail and then both Bob and Pat will take you through some of the operating highlights, and I'll be back at the end of the call for questions and to sum up. Pat? Or Phil? Over to you.

Thank you, Robert. This is Phil Jones, CFO of Document Security Systems. Today we announced our first quarter 2010 financial results, and we have provided detailed financial results in the press release that was posted on the financial news wires, and that is available on our website.

I would like to briefly discuss some of the highlights of our results, and if you have any questions, please ask those during the question-and-answer session portion of this call. As we highlighted on the press release, revenue increased 19% sequentially as compared to the fourth quarter of 2009, and was flat compared to the first quarter of 2009.

So 19% sequentially compared to the fourth quarter, flat compared to the first quarter. The revenue for our quarter includes $741,000 from our Premier Packaging, from its results from February 13 to March 31, so a six-week [stub] period. This packaging revenue unfortunately was offset by a slowdown in our commercial print business which was adversely affected by a lack of orders from one of our largest customers, commercial printing customers, which we believe will be coming to us later in the year.

Sequentially, we are very pleased to see the license revenue begin to trend upward although it is still lower than historical levels. Core operating expenses decreased 13% over the first quarter of 2009 while showing only a 3% increase sequentially over the fourth quarter 2009.

It grew only 3% despite the addition of Premier Packaging, a major operation. So once again we've been able to benefit from the cost cuts and the streamlining of costs that we've been able to produce with the grouping of our businesses and the overlapping of resources. Non-cash-based operating expenses increased 91% from the first quarter of 2009. The largest factor of this difference is the fact that stock-based compensation, which was actually a negative expense in the first quarter of 2009 was positive expense this quarter.

It was actually a $280,000 differential between those two periods. That has certainly affected our net income results for the quarter. Net loss for the quarter, first quarter of 20 10, was $0.07 per share, or $1.1 million. This is flat to both the first quarter of 2009 and the fourth quarter of 2009.

The decline reflects the decline in the commercial print sales offset by the cost savings and the other efficiencies we were able to generate in the business. Also, the first quarter typically is the quarter that has the largest professional fees, including accounting fees for our business. In addition to that, we incurred approximately $30,000 of professional fees associated with the acquisition of Premier Packaging.

In the past, these fees would have been netted against the various business combination allocations we would do, but going forward, according to the new GAAP rules, we expense those as incurred. So we did have some what I consider one-time expenses, or cyclical expenses in those first quarter numbers that did adversely affect our results.

Moving on to the balance sheet, our balance sheet continued to improve, and as of March 31, 20 10, reflects the positive benefits of our acquisition of Premier Packaging. Our Quick Ratio, which is basically cash and accounts receivable less accounts payable, improved by $785,000, or it actually improved by -- it actually improved by $816,000 to $785,000.

This is a significant improvement, and really reflects the fact that our acquisition of Premier was very favorable to our working capital position. In addition, with the acquisition of Premier we acquired $1.6 million of fixed assets and took on $1.5 million of bank debt on what we feel are very favorable terms. As of March 31 our total assets are now $11 million with shareholders equity of nearly $5 million.

So, once again with the Premier Packaging deal, we feel we were able to acquire a very strategic business on very favorable terms. I can certainly go through the financial results in more detail during the question-and-answer session, but now way like to turn it over to Pat.

We're going to turn it over to Bob Bzdick first.

Good afternoon. Glad to be with you and happy to be part of the DSS team. The first two months have been both hectic and informative.

During this period, I've visited each facility and spent considerable time with each Company's management teams. The emphasis during these visits was to communicate the mission of bringing DSS technologies to the marketplace. My brief experience has served to solidify my beliefs that the strategic decision made by DSS management to acquire organizations capable of bringing its technologies to the market rather than depend strictly on license partners is a sound tactic.

During the very short time we've been able to open doors previously impenetrable. Many packaging buyers have been tasked with researching and securing anti-counterfeiting and brand protection alternatives As these doors have been opening, we're finding that these buyers have been networking together. As a result, we're being directed to other interested parties and assisted in getting introductions to other motivated buyers.

With a coordinated effort, our technology implementation team, our security printing operation called DPI Secuprint, and Premier Packaging staff, we have designed and produced initial folding carton samples which incorporate several of our technologies. This has greatly enhanced our sales presentations. Without exception during these presentations, we're asked by the client if we're capable of production and to what degree we are integrated.

This further confirms the value of our direction. Each of the subsidiaries have experienced the effects of the slow economy. Previously these entities have had to slug it out without the benefit of the initial offerings that our technologies provide. That is why we're directing as many -- as much emphasis as possible to securing security-based printing, packaging, plastic cards.

Our recently announced win with a very well-known e-commerce company is evidence of the success of our coordinated sales efforts. Our card company, P3, is working on several large bid opportunities with channel partners. They're involved with several foreign national ID cards, and we're happy to report that just recently P3 is partnering with a smart card organization to create prototypes for the new U.S. Social Security card containing some of our technologies for upcoming presentations to be held in Washington, D.C.

As for DPI Secuprint, their commercial printing work dealt with two issues during the first quarter, one being the effects of a major client who froze its marketing budget due to pending merger. We do believe this client's work will reappear later in 2010. The other first quarter issue is the overall challenging economic environment we're experiencing here in western New York.

General commercial print has been hit hard due to the lack of growth in the geographic area. We do see signs of the commercial printing sales seem to have finally bottomed and its security print sales are ramping up, which is a positive as we move forward.

In conclusion, we continue to have a stream of new national sales leads, which we are aggressively pursuing, and we feel there will be additional wins in 2010 and beyond. With that, I would like to turn the call back over to Patrick White.

Thank you, Bob, and good afternoon, everyone. We continue to believe that 2010 should be an exciting and rewarding year for the Company. We also feel that our new combined business model of security printing, packaging, digital security and technology all under one roof is truly unique and separates us from the competition. Strategically, we feel the Company is now complete.

Never say never, but as of right now there are no further acquisitions on the horizon. The good news is that the full service concept has already proven to be a door opener and catalyst for bigger and better revenue generators as evidenced by the recent $600,000 to possibly over a $1 million dollar win we announced 11 days ago with a large well known e-commerce company.

We're also very happy to inform you that there is a pipeline of opportunities which are in various stages of development that are similar or in some cases larger than the recently announced sales order. We look forward to sharing with you new reportable revenue projects as they transpire.

In regards to our new AuthentiGuard DX software information security technology I am very pleased to inform you that we have successfully completed the MacIntosh operating system version to complement our original PC-only version. We feel this product is cutting edge and as far as we know no other company has been touting anything similar to it.

We are now following up on various leads for the product as well as a redeployment into a test site located in Los Angeles. Prior to joining DSS, Terry McFadden, our VP of Digital Solutions, who coordinated the product development, was employed with Motorola and Nortel. Terry is on the line and if you have any technical or industry questions for him in the question-and-answer section of the call he would more than happy to address them for you.

For newcomers, the AuthentiGuard DX product is an enterprise system that resides on a server platform. Our software is accessed by a user to secure alpha numeric information such as Social Security or credit card numbers. The user highlights the selected information contained in a Microsoft Word or Excel document, as an example, and then with the press of an icon the information is hidden utilizing our Prism technology.

At this point, the user can then e-mail, store or print the document in a fully protected fashion. The information cannot be read or copied by hackers or unauthorized viewers. Now our software also allows the user to read the protected contents with a digital viewing system on his computer screen which we created that is part of the DX technology solution.

It's very important to note that besides its current configuration, we feel this product could be developed to produce other significant incremental revenue. With the proper investment and time, the technology could be adopted so it can be utilized by smart phones including iPhone, BlackBerry, HP Palm, the Microsoft Win 7 for phones and Droid.

An example of a smart phone's use of the DX technology would be in the case of a user whose phone is lost or stolen. Is the user had our technology installed and applied, he or she could rest assured that the phone's contents of DX secured e-mails, personal information, documents, et cetera, is protected and hidden from the wrong eyes.

For now, our DX sales strategy begins with the successful completion of our initial California client, and then we will focus on an indirect sales model as we will seek out and work with specialized security channels that work vertical markets. As an example, GE Medical would be considered a specialized channel. We will also have some direct sales activity restricted to high-profile clients.

Some of the major companies, such as Boeing, are looking to go paperless, and this product is a perfect add-on solution for their security needs. Bottom line is that the product has potential from everything from a standalone enterprise system, to which it is now, to some day becoming an Apple derivative or cloud computing offering.

Our number one focus is to execute with the product's current configuration and complete the initial launch and sales initiatives. Another area I wanted to speak to concerns the status of our security printing such as secure paper and coupons.

As we started from ground zero in January 2009, we've began to meet with Fortune 500 end users for the first time as we offered our technologies to help them with their security print needs. In 2009, we had some success as we managed to acquire six major well-known consumer product companies as clients. These clients tepidly and sheepishly tested with us 12 different security print projects. That computes to approximately one job per month in 2009.

We are happy to report that since January 1, 2010 we are receiving orders at a rate of one per week. Since May 1, we have been receiving orders at a rate of one every other day. I want to make it clear that these statistics we just mentioned are a single snapshot in time. There are no long-term contracts, and they will continue to fluctuate. If they do hold or improve, then the trend is definitely our friend. We feel that this proves that the momentum for our security printing technologies is rising with new large well-known clients who are now choosing and using our technologies to protect more and more of their precious consumer products.

In the area of brand protection, in conjunction with our partner, the Long Island-based Ergonomics Group, we have recently had face-to-face discussions with several very large well-known companies in the technology sector. These meetings are very early stage as we discuss our combined offerings of brand and data protection solutions.

Some of these clients have their own brand protection solutions so part of our discussion centers around opportunities we can possibly partner with. The meetings have been encouraging and we're working on follow-up and next-up discussions. If anything transpires we'll certainly report to you immediately.

We would like to say that the Ergonomics Group is a tremendous addition to our partnership network and this remarkable company has been extremely successful and we sincerely appreciate the efforts on o ur behalf. In summation, as you have heard, our growth strategy has many different facets. We are a very small but complicated Company, and Robert Fagenson couldn't have said it any better.

We're all organized around a vision of security for a world that, from what we can tell, is getting more and more unsecure. Rest assured our main focus is on three things, sales, sales and more sales. In closing, I would like to that thank our partners, clients and employees for their continued support and commitment toward making our vision a reality as we focus our Company growth and prosperity through innovation and continued sales.

And now we are available to take your questions. Operator, could you please give the instructions for Q&A?

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. (Operator Instructions) One moment, please, while we poll for questions.

Our first question is from the line of Chris [Whitmore] with William Smith & Company. Please go ahead.

Good afternoon.

Hi, Chris.

Briefly, I was wondering we couldn't get an update as to the European patent litigation as well as maybe some of the next steps with Internet media services?

The European litigation situation is as follows. In the next -- beginning in June and July, there are two appeal cases that are going to occur. The European Central Bank has challenged our victory in Germany and in the Netherlands. They are appealing, I think in The Hague and in the Netherlands June 21, I think, is the date.

Then in the very first couple of weeks of July is the hearing in Germany. Now, if we are -- if we win those two appeals, which we feel we will, then it gives us a clean slate towards our infringement suit, which will be -- take place, I think it's January 21 in 2010, in the Netherlands.

2011.

2011, I'm sorry. So -- now, we also have a victory in Spain, but they have not appealed that decision as of yet. So we're going to be very busy in the courtroom in June and July. And Trebuchet will be representing our interests, along with their own since they're part owner of the patent with us and they will be handling the litigation. Did you want to mention about Internet media services?

Sure, hi, this is Phil. IMS filed their S-1 for the public registration of the shares as we have described. And they received their first set of comments from the SEC. So everything is moving along.

They are in the process of responding to those comments with an amended S-1. It's everybody's hope that those responses would result in getting to the next stage, which would be the SEC declaring that S-1 effective, then we, DSS, can move forward with our plans on the distribution to our shareholders. So it's certainly moving along, and we're getting to the next step.

It looks like the Premier Packaging sales were as strong if not stronger than anticipated. I was wondering if you would be able to say if what we're seeing is a good estimate or a good starting point for an estimate for a run rate?

This is Bob Bzdick. Premier Packaging did have a strong April, and I think it's pretty much representative of what we anticipate going forward. We tend to have some additional strength in the latter quarters of the year.

Okay. And I know you guys have only really been integrated since February 13th, I think you said. Is there -- are you initially or immediately seeing cross-selling opportunities with some of the anti-counterfeiting stuff, or is that a little bit farther in the future in terms of integrating those two lines?

Actually, the integration with DPI Secuprint is invaluable, in fact, required as it gets the packaging. I mentioned in my report there that we are asked just how integrated we are. They are concerned about how the security is infused into their artwork. There's concern about the printing of it, and obviously then the formation of the packaging.

To have the ability to do all three things is vital to our success. We are doing joint sales calls now, and overlapping customer lists to identify targets, as well as brainstorming potential clients from all of our sales people.

Okay. I guess lastly, is there any way to quantify what percent of orders are due to the large customer that has kind of been not as active in the printing business?

It was --

The decline in the first quarter from that customer was approximately $400,000.

Okay, and what -- okay, I guess I can back into it from there. All right, great. Thank you.

But the key there, Chris, is the customer didn't go elsewhere for that business. They're involved in some corporate transactions that just led them to stop it, and we have reason to believe that will resume after the end of the second quarter.

Okay, great. Thank you for that color. Thanks, guys.

Thank you.

Thank you.

Our next question is from the line of Sandy Wyman with Gilford Securities. Please go ahead.

Yes, good afternoon. I'm wondering if you could give us an update on a couple of the past announcements, such as Samsung, in particular, with a lot of ruffles and flourishes last fall, we talked about what that potential could be, and we haven't heard anything further.

Have you considered in the future, anyway with such kind of announcements or arrangements, if you will, some kind of a minimum requirement or upfront payments, or whatever, because it seems like they've got us tied up here, and yet don't seem to be producing. Then the second one is somewhat related to that, and I guess that would be RR Donnelley, what's going on there? Have you started to see any additional royalties and so forth from that perspective?

Why don't you start with the Samsung, then I'll get into RR Donnelley.

I think we would agree, Samsung, the process has become much more deliberate. When we first became associated with them, and when they approached us, they were moving very fast and very vigorously.

So we certainly are thrilled to have them working with us and developing different strategies and ideas for moving forward. The process has become a bit more deliberate, so as of this date we don't have any significant progress in that area, but they are certainly working with us, investigating our technologies, and we feel that we'll still be able to work with them going forward as a strong partner in what we're trying to do.

My personal thought on the Samsung thing is that we need to have them as a resource for some computer screen technology that we have been developing and have some interest from certain sectors of the economy. And we're certainly not a television manufacturer so it would behoove us to make sure that we have the powerhouse behind to us handle that type of opportunity.

They have made efforts, they've researched their federal government's needs, and they've had a show, a trade show for a lot of their own corporate divisions to view the technology. They've sent us pictures and photographs. But it's sort of like they're still feeling it out.

It's really not -- they're not taking the football and running down the field for a touchdown at this point. But it's a relationship that we have to maintain. I see as -- going forward, and regardless of what efforts they're putting into it, and it's just kind of --

What kind of exclusivity have you given them?

They have exclusivity in Korea, period.

Shouldn't you charge for that, or don't you have anyone else to pick up the ball in Korea?

We could strip it from them and -- because we have had inquiries from that country, but at this point, I don't think it would be in our best interests. I think we have to maintain -- I don't want to slap them and then say, I need you the next day.

Sandy, it's a good affiliation, and you're spot-on in asking if there was a possibility to get some upfront or minimum cash, but there wasn't. It was certainly something that we brought up. The problem is we don't have a developed market over there.

So I think their divisional execs who came over, brought the product home, got the technology up and running over there were very exuberant, believed that they would have a layup internally within Samsung. But despite the fact that Samsung is a huge and fast moving company, there is still an attitude of deliberation and reticence when something is this new and far afield from what they normally do.

And we certainly would have liked to have gotten some minimums or some upfront cash, but in a completely new territory and undeveloped market for us they're clearly the biggest in Korea, and it's a great positive affiliation. But I think we're going to have to let the year run through and see whether or not they can, in fact, deliver on any of the goods or make it non-exclusive and move on.

Okay, thanks.

Now, in regards to RR Donnelley, your second part of the question, as you know, they upgraded their license, early part of this year, to take on several new technologies. We had been working with a very, very large consumer products company in the food and beverage industry that was very interested ino ur technologies. We went to their corporate headquarters and had several meetings and dialogued for -- probably a six-week period of time, and at the end of the analysis the company's work was very voluminous, to say the least, with extremely tight deadlines.

And in looking at the total multimillion dollar project it was determined that our capacity was no way on earth able to be able to service their needs and requirements. So we fostered that relationship over to RR Donnelley, who has been doing some work with this particular client in the past, and educated RR Donnelley that they should be actively utilizing the technology to supply this client what it is looking for.

So they took the bull by the horns and we know that they are actively working with this client directly at this point, and I don't think they've delivered yet. I think timing was the second half of the year so we should see some of our royalties derived from this relationship that we helped foster for them.

It's too early to see the ramp, Sandy, and in a month from now we'll have a better feeling because we're in the middle of royalty period so we don't have have the reading on it yet.

Right. Do you have any idea of the potential magnitude?

I'd say on an initial basis, it could be a $0.5 million royalty order.

Okay. I mean, one-time or ongoing?

Well, given the nature of the company that Pat is talking about and the way they do things, I would expect this would be recurring. This is brand protection, and high-value printing, and that's the trend that we're seeing. It's astounding how many of our U.S.-based consumer products are being counterfeited all over the world.

Sandy, I mean, this thing is 48 different print projects. Some of the volumes are like 500 million pieces.

If we had been able to run our plant 48 hours a day, 365 days a week, we couldn't have come close to fulfilling it.

It had mailing -- it's just a monster.

But it's good to see the technologies being embraced that in type of approach, and hopefully this will come through, and we'll have a recurring revenue in a company that is a household name around the world. So let's hope that that's successful.

Okay, great. Thank you.

We have no further questions in queue at this time. I would like to turn the floor back over to management for any closing comments.

Gentlemen, do you have anything else? Otherwise I'm going to summarize.

Go right ahead, Robert.

Okay. Well, as you've heard, paper and plastic printing, packaging and brand protection, the ability to offer a full-service approach to our clients is the Company we've built. We're continuing to emphasize cost control. I know as you look at the figures for the first quarter it's very hard to tell whether or not we're doing better because a lot of things simply aren't that easy to see.

The $400,000 customer deferral of classic printing which, as I said, didn't go elsewhere, clearly exacerbated the negatives of the quarter, and as Bob had said, Premier's business historically has been back end loaded toward the second half of the year with its first quarter being the weakest. That also played played on this.

We can't forget the economy which in the fourth quarter of 2009 and the first quarter this year was first beginning to show signs that it was coming out of the doldrums. The expanded licensing with Donnelley, as Sandy's question just highlighted, we're mid-period so we're not yet seeing the trend because we haven't received the latest quarterly checks.

The Samsung and our relationships, obviously, while exciting, have yet to produce the revenues that we're expecting. But the potential is still there. The Fortune 500 companies that Pat talks about in terms of the expansion of our couponing and printing and not just the number of clients, but the frequency with which we're receiving orders are all the positive trends we're looking for.

P3's business in printing driver's licenses, DSS's couponing, Premier's new customer that was landed in the last few weeks, added together what we are seeing in terms of trends of organic growth at DPI and the joint bidding that's going on with Premier are really all the types of things that we've hoped we were going to see. I know it's very difficult in this Company to continue to ask people to be patient.

Once again, I feel like the waiter who keeps bringing everyone the menu, and eventually everyone says, no more menus, I want to eat. I promise you, as a significant shareholder, I'm as hungry as any of our shareholders in terms of seeing that come to fruition in terms of revenues and earnings.

When we started this process less than two years ago we had a money losing licensing Company, and we began with the initial strategic financial and operational phase of rebuilding this Company by putting additional building blocks in place. P3, DPI and Premier really now allow us to say that we have achieved the goals that we sought in terms of the financial and operational engineering of this Company into a completely new place.

The goals for the rest of this year, I will tell you personally, I would be extremely disappointed if we can't be at the $18 million to $20 million run rate in the third and fourth quarters and move to what my goal is to see the positive EBITDA. I think that from an economic point of view, personally, I believe we're in a slow but sustainable economic recovery.

And the Company is now properly positioned to capitalize on that, whereas before, as a licensee we were basically captive to what other people were doing. So a lot of progress has been made in positioning this Company really to ride the trend of an improving economy, and do better even if that takes a lot longer in terms of the general national and world economy. We're all low on patience.

The next eight months are certainly going to be the test period for both your board and your management, and I can only hope that as we increase our communications to you, hopefully on positive wins, which I feel will be coming with greater frequency, the motto for the rest of the year basically is no excuses. We've got the pieces in place.

We have an expanded and deeper management team. We're able to offer the customers what they want, and offer them a product that allows us to not only keep a greater percentage of each job in-house but also to increase the margins. And if I'm right, we'll all be able to see these in the ensuing quarters, both at the top line and the bottom line.

So unless anyone has anything else they would like to add, I would like to thank you all for staying with us, and hopefully we'll have more frequent and better news as time goes on. Gentlemen, anything else?

That's it.

All set.

Once again, thank you, all, and that will end our call, operator.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.