Greetings, and welcome to the Safeguard Scientifics' third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt Barnard, General Counsel. Please proceed, sir.
Good afternoon, and thank you for joining us for this presentation of Safeguard Scientifics' third quarter 2023 financial results. Joining me on today's call and webcast are Eric Salzman, Safeguard's Chief Executive Officer, and Mark Herndon, Safeguard's Chief Financial Officer. Following our prepared remarks, we will open up the call to your questions. As always, today's presentation includes forward-looking statements. Reliance on forward-looking statements involves certain risks and uncertainties, including, but not limited to, the uncertainty of the outcomes of corporate strategic transactions, if any, the uncertainty of our efforts to execute on and implement reverse and forward splits of our common stock so that we can cease the registration of our common stock under the Securities Exchange Act of 1934 and delist our shares of common stock from trading on Nasdaq.
The uncertainty of the future performance of our companies, our ability to make good decisions about the monetization of our companies, the ongoing support of our companies, our inability to leverage control our companies, fluctuations in the market prices of any of our companies that are publicly traded, and the effect of regulatory and economic conditions generally, and other uncertainties described in our filings with the SEC. Many of these factors are beyond our ability to predict or control. As a result of these and other factors, past financial performance should not be relied on as an indication of future performance. During the course of today's call, words such as expect, anticipate, believe, and intend will be used in our discussion of goals or events in the future. Management can't provide any assurance that future results will be as described in our forward-looking statements.
We encourage you to read Safeguard's filings with the SEC, within our Form 10-Q, which describe in detail the risks and uncertainties associated with managing our business. The company does not assume any obligation to update any forward-looking statements made today. With that, I would now like to introduce Eric.
Thanks, Matt. Thanks for joining us this afternoon for our Q3 2023 earnings call. Today, we will walk you through the rationale and key elements of our go-dark transaction, our thought process around a potential Q4 2023 dividend, a brief update on our remaining portfolio companies, and then Mark will run through the financials, and we'll open up the call to questions. I will start with our go-dark transaction. We filed our definitive proxy this afternoon, which details the various elements of our plan to delist from Nasdaq and become a non-reporting company. As explained in the proxy, we've concluded that the costs of being public have become too burdensome and the benefits very limited in light of our strategy to monetize our remaining ownership interests and return maximum value to our shareholders.
The process to become a non-reporting company requires a shareholder vote to approve a series of stock splits, and we set the shareholder meeting date for December fifteenth. The intention of the stock splits is to reduce the number of shareholders of record to fewer than 300. Once we have fewer than 300 shareholders of record, Safeguard is no longer required to be a reporting company for SEC purposes, meaning we will not have to file 8-Ks and 10-Q, thereby reducing our expenses significantly. The stock splits will create a relatively small number of fractional shares, which we intend to cash out at $1.65 per share. Details of how we arrived at this number is in the proxy. Based on our current estimate, we expect the total cost of cashing out these fractional shares to be approximately $10,000.
As part of our plan to delist from Nasdaq and become a non-reporting company, we also intend to make changes to our management structure to further reduce the costs to operate the business. We expect to transition Safeguard's general and administrative functions to an external service provider to be selected by the board. Our remaining officers and employees, the four of us, are expected to provide transition services to Safeguard on an as-needed basis. The board has narrowed the search process for an external service provider to three, and we expect to have this in place by January 1st, 2024. Taken together, we believe these steps will substantially reduce the operating costs to manage the remaining companies in the portfolio.
As disclosed in the proxy, we anticipate annual cost savings of approximately $1.5 million in cash and a reduction in place compensation of approximately $1.2 million. Reducing our expected operating costs frees up more of our balance sheet cash to return to shareholders via a dividend, subject to board approval. We refer to this extra cash as excess cash, and it is defined as cash on hand, less the estimated amounts required to be retained to pay the cost of the transaction, support Safeguard's operations in the portfolio companies, as well as cover liabilities and contingencies. Subject to board approval, we intend to pay out this excess cash as a cash dividend in late December, after the shareholder vote.
We would not delist from Nasdaq until after the December fifteenth shareholder meeting, and assuming we move forward with the go dark transaction, any trading in our common stock after delisting will only occur in privately negotiated sales. We will be exploring whether Safeguard shares can trade on one of the OTC Markets, but there can be no assurances of that. We are required to file a 2023 10-K, which will be our last SEC filing. Post the filing of the 10-K, we expect the size of the board to drop from the full current four members to two, with these two coming from our existing board. From an information perspective, while we are not required to do so, we currently intend to provide quarterly business updates and expect to provide an annual audit to shareholders.
Any future distributions after the potential dividend will be dependent on actual cash exits, any changes to the estimates of the cost to operate through a liquidation, as well as any other contingencies. We estimate exit proceeds from our remaining positions at between $25 million and $45 million. The monetization process is expected to take two years, but could be longer. We are working with the board to finalize all operational elements required to consummate this transaction. Now let me turn to the portfolio. As we disclosed last quarter, we expect nearly all of the exit proceeds from the remaining portfolio to come from those companies that we categorize as Bucket one companies. Consistent with what we said last quarter, the Bucket one companies are Prognos, meQuilibrium, Clutch, and Moxe. We have also added InfoBionic to Bucket one, as it recently completed a recap and capital raise.
As you recall from last quarter's call, we mentioned that one of our companies, when it was in the midst of a potential recap and capital raise, and if this were to happen, we would expect that it would move to Bucket one. This is what happened with InfoBionic. We continue to have board seats at Prognos, Equilibrium, Moxe, and Clutch, and are actively engaged with management and co-investors to drive value creation and exit. Post recap and given our reduced ownership interest, we have retained an observer seat at InfoBionic. Let me provide some further clarifications on the $25 million-$45 million in future exit proceeds. First, the $25 million-$45 million are estimated future exit values and are not discounted.
Second, the inclusion of InfoBionic in Bucket one does not have any impact on this range, nor does it represent the difference between the low and the high. And thirdly, the $25 million-$45 million is expected to be generated exclusively from Bucket one companies. All other remaining positions are Bucket two, and we expect de minimis proceeds from them. On the M&A front, while the market has improved somewhat compared to earlier this year, it continues to be challenging for venture-stage companies. For Safeguard, one of our Bucket one companies recently hired an investment banker and expects to launch a process in January 2024. There are no immediate plans for the other four companies, but we continue to work closely to position them for exits or recaps that could generate proceeds to Safeguard as expeditiously as possible.
We also have had discussions with a couple of secondary buyers for one or more of our positions, but these discussions have not resulted in any transacting. Regarding Q3, Q3 performance, our companies have experienced varied results. For example, meeting or exceeding revenue plans, but coming in under bookings, meeting or exceeding EBITDA plans, but missing revenues. And for three of the five comp, companies, Q4 represents an important quarter due to the business's seasonality. The Q3 performance was taken into account when determining the $25 million-$45 million of exit values. At this time, I'll hand the call over to our CFO, Mark Herndon.
Thanks, Eric. Safeguard reported net income for the quarter ending September 30th, 2023, of $0.9 million, or $0.06 per share, as compared to a net loss for the comparable 2022 third quarter of $3.2 million, or $0.19 per share. The year-to-date period ended September 30th, 2023, was a net loss of $5.4 million, or $0.33 per share, as compared to $9.4 million, or $0.57 per share for 2022. We ended the quarter with $15.7 million of cash, cash equivalents, and restricted cash, and we continue to have no debt obligations.
Our general and administrative expenses were $1.3 million for the third quarter of 2023 versus $1.4 million for 2022, a decrease of 3.5%. Similarly, our general administrative expenses were $3.7 million for both the year-to-date period, a decrease of 1.5%. Corporate expenses for the quarter, which represent general and administrative expenses excluding stock-based compensation, severance expenses, and non-recurring and other items, were $0.9 million and $0.8 million on a rounded basis for each of the third quarters of 2023 and 2022. The year-over-year increase was 9.8%. The corporate expenses for the nine months ended September 30th, 2023, were $2.4 million, as compared to $2.5 million for the comparable 2022 period.
That's a 3.2% decrease. The increase during the quarter was due primarily to legal and other professional fees. We continue to expect the level of the quarterly level of corporate expenses has generally stabilized at this approximate value before we implement any cost structure changes. However, this quarter's additional expenses have pushed our annual estimate of corporate costs back up to our original range... With respect to our ownership interests, we have an aggregate carrying value at September 30th of $14.8 million, as compared to $15.4 million at December 31st, 2022. There were no deployments this quarter. However, there was an increase at InfoBionic resulting from their recapitalization transaction, which allowed InfoBionic to raise cash and convert certain liabilities. Since we did not participate in the transaction, our ownership level dropped to approximately 5%.
This transaction also resulted in recording a $1.7 million non-cash observable price change gain that is recorded in other income. This quarter's activity also included the application of the equity method accounting at our other remaining interests. However, the impact was less than prior periods due to several entities' carrying value being previously reduced to zero and year-to-date lower operating losses at the others. Our results under the equity method for the three months ended September 30th, 2023, resulted in a $0.4 million of equity income, as compared to a $1 million equity loss for the comparable period of 2022. This change is predominantly the result of several companies reaching zero carrying value during late 2022 or 2023. At that point, we generally cease recording losses from those entities.
I'd also like to remind everyone that we report our share of the losses in the equity method companies on a one-quarter lag. So this quarter's share of losses reflects the second quarter of 2023. Excuse me. Also with respect to our ownership interest, this quarter's third-party debt for the remaining six companies was approximately $88 million versus $135 million last quarter. This decrease is due primarily to the recapitalization transaction at InfoBionic. Cash at the same group of six companies is down to approximately $41 million. In terms of revenue performance, we reported a 10.3% increase in this group of six companies for the trailing twelve-month period ending June 30th, 2023, but due to the one quarter lag.
This increase was most favorably impacted by Clutch, which was largely offset by decreases at Progress. Also, we noted in our filing that our share count as of today, the filing date, was approximately $16.6 million shares. Looking forward, we expect that share count to increase as we continue to settle director fees using shares. An exact number will depend on the share price, when those shares are issued early next year, but we are estimating that the share count will grow to approximately $16.7 million-$16.8 million shares by the time we file, the final 10-K we referred to earlier.
Finally, I'd like to reiterate some points made by Eric and answer questions already received from shareholders who have had questions about the preliminary proxy, that definitive that was filed earlier today, and about how this will impact them and address the mechanics of what will happen to their shares. The proposed stock splits will not have an impact on any shareholder whose shares equal to or above the stock split number. So for example, if the final ratio is based on the highest amount of the proposed range, 100 shares, any shareholder holding 100 shares or more will not be impacted by the share splits. Shareholders who own less than that amount would be cashed out if they hold their shares directly as a registered shareholder.
On the other hand, shareholders who hold less than that amount in street name may or may not be cashed out. street name shareholders should contact their bank or brokerage for more information. We also encourage shareholders to review the Q&A portion of the proxy, which provides further details and examples of the impact you should expect as a result of the proposed stock splits. As we addressed in the proxy document, cash requirements expected to repurchase these fractional shares that may result from this, these stock splits, was estimated to be only about $10,000. As a result, most shareholders will not experience any significant impact of the split and should continue to be able to hold their shares in their brokerage account as we continue to wait for portfolio exits to fund future distributions.
Now we will turn to the Q&A segment of the call. Operator, I'd ask you to... I do see that we've had a couple that have come in on the web, too. We'll address those in a moment as well. I'll let you give those instructions first.
Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Once again, that's star one to ask a question. One moment while we pull for our first question.
Yeah, and while she's accumulating questions there, Eric, why don't we address the couple that we know already? So the first question was logistically, do we anticipate this to be the last earnings call before the planned delisting? And I would say that, yes, we continue to. We will make ourselves available as necessary for questions and comments, as we try to do on a regular basis. So this is the last planned conference call before then. I think we've talked about a timing that the special meeting would occur in the middle of December, and then the delisting, if that ends up being the case as a result of the votes, would be shortly thereafter.
Matt, do you want to add anything to that?
I think that's right, Mark.
Okay. Um- We can go to the second question, which was related to we previously mentioned considering a year-end dividend being roughly half of the year-end cash balance. So just to address how we're thinking about sizing the dividend and coming up with what we determine is this excess cash. So the board will estimate the year-end and make the decision. Basically, we'll take our September thirtieth cash, less what we'll spend the net outflows this quarter. From that, we would deduct the stock split and transaction costs of $1.2 million, which is on page 10 of the proxy. From the remaining number, we would set aside the estimated cost to operate as a non-reporting company, cost to support the portfolio, cover liabilities, contingencies, and an ultimate wind down.
We indicated that's roughly a two-year process, could be longer, and the net of this number would represent the excess cash that the board would consider returning as a dividend. Last quarter, that was our preliminary estimate, what we said, and we're currently half of year-end cash or up to half of year-end cash. We're currently working with the board to arrive at the number that balances returning as much cash as possible, without putting the remaining portfolio or operations at risk. So we're doing that analysis now, and we continue to be working with the board. But the goal is to find that balance where we're returning as much cash as possible.
We do not want to husband or keep excess cash unnecessarily, but on the other hand, we wanna make sure that there's sufficient to cover both the significantly reduced cost of operating as well as any other contingencies.
Yeah, and Eric, I'm gonna skip to what, the next question. I'll let you handle the first half of it, but there's a couple questions in here that would talk about, I'll call it, the mechanics of how things will operate, in 2024. And so let me broadly cover those for a minute. You know, the company, Safeguard, we will continue to have board seats, on our remaining portfolio companies, right? The where we have them now. So that nothing changes there. What is being worked out right now is exactly, who would fit as our representative, on those boards, right? And we're-- That could be the external service provider, it could be, you know, someone else. But we're working through that, now.
And I will say the, in terms of... Well, one of the, one of the aspects about related to this is just cost. I mean, obviously, as we've talked about, you know, one of the reasons for this transaction is to reduce costs. So you know, when we're while we haven't put out a formal number for 2024, you know, we, we've talked about reducing the cost by, what was the number? Half by, by $1.5 million, right? And so if you compare that to your , the $3.2-ish, where we're at this year, you know, then that's, that's gonna be in that ballpark, would be an early estimate of expenses for 2024.
That said, there's a variety of things that remain to be in play, including that a service provider, while multiple firms have been considered and we're in discussions with them, we have not settled on a firm or therefore a firm price there. So there is a number of estimates involved with continuing to figure out how exactly how much the cost will be in 2024, but we expect that it will be substantially less when we don't have the full-time management team here working with the company. Eric, do you wanna address the first half of that question?
Yeah. You know, I'll just-
Yep.
Yeah, sure. I'll make one more just comment on the cost. So obviously there are a number of benefits to outsourcing the general administrative activities to a service provider. One of which is, as time passes and the needs of the portfolio or the company go down, then there's an ability to scale down the costs of an external service provider in a way that is frankly almost impossible or very difficult in our current... So when you think about the go-forward costs, it's the savings that kind of Mark indicated, and we indicated in the proxy. But if you look beyond that, it would be reasonable to expect that the annual operating costs, 12 months out, 18 months out, et cetera, should come down as there are fewer portfolio companies and fewer activities.
Another question we have is: On the remaining Bucket One portfolio companies, are there any that have not been out in market for a sale process? So we have five of our Bucket One companies, two have not been in a sale process ever since my involvement. The third has not been in the sale process in at least the past 12+ months, and the other two have. So that answers that question. Board seats we talked about.
Can you provide any additional color on the portfolio companies, perhaps the companies most promising for exit values? You know, what I would say is, as we indicated, I think it was on last quarter, we talked about t he definition of what we're using for a bucket one company is well capitalized, executing on its business plan while navigating kind of the risks and opportunities, and it does not have an excessive debt level, which has, you know, impacted negatively a couple of other companies, as you know. So I wouldn't call one out over the other. I think, we're, we're optimistic and constructive on all of those companies, and we'll be working closely with them to maximize the exits over the next, you know, two years.
Okay. Why don't we pause there for a second, and then, Operator, have any questions come up in that queue?
Yes, I have a question from John Power with Redwood Fund. Please proceed.
Thank you, operator. Appreciate your time, gentlemen. And my question was regarding the excess cash, which you covered a couple of minutes ago in your comments, so no questions. Thank you.
Okay. Thank you.
Once again, ladies and gentlemen, to ask a question, that's star one on your telephone keypad at this time.
We have a question on the web that is: Can you go into more detail as to the $25 million lower bound of proceeds? Is the $25 million split fairly equally between the five companies? So I'll just comment a bit on the methodology of how we came up with that number. So basically, we took the low-end revenue estimates, right? So projected revenues for each of those five companies between now and an exit. The low end of that, we applied kind of low-end revenue multiples. Low meaning if you look at the market, either public markets or cross cycle, and then that would get you your enterprise value, subtract out your net debt, and you would run that remaining value through the waterfall.
Each company has its own preferred stack and option pool, et cetera, to come up with Safeguard's proceeds. That would be the future value of Safeguard's proceeds, which is the $25 million at the lower bound. So that's how we came up with it. It's not equally weighted among the 5 because of the different way that the cap structures work in different companies and the preferred payout stack work. It wouldn't be equal. The revenues aren't equal. Multiples are not dramatically different on the low end across the companies, but revenues would differ and the cap stack would differ, so you wouldn't get the same resulting value. Another question is how much-
Um, yeah.
I'm sorry, Mark, go ahead.
I was gonna add. Yeah, let me add. There's a couple questions in here that asking about specific debt values and revenue values for different cuts of the portfolio. You know, trying to avoid giving you a specific number on the fly that wouldn't be accurate. But, obviously, it does remain to be debt on the portfolio at our five is substantially less than the number that we quoted for the six companies because that other one is just a high debt entity. And I was not intending to provide that data at this moment. We can look into, you know, putting that out there at a later time, perhaps.
Well, I mean, I'd add to it just-
Unless you-
If you look at, yeah, if you look at the bucket one companies and you adjust it for the cash from the InfoBionic transaction that we mentioned earlier, there is slightly more cash than debt, just if you just summed it up, which, as Mark said-
Yeah
It's significantly delevered compared to, let's call it, you know, in prior quarters. Some of that delevering happened because of a capitalization in, by InfoBionic, where there was a recap or recast of some debt to equity. But if you kind of zoom out overall, the bucket one companies today have more cash than debt, slightly. Another question. All right. The two companies that have not been out in the sale process, is one of them, the one that just hired a banker? Yes. Are share repurchases possible still, considering no portfolio companies are under M&A, M&A discussions until 2024?
Mark, do you want to talk a bit about how we thought about share repurchases versus dividend, and as well as the goal or Matt to get to fewer than 300 shareholders, so we would be non-profit?
Yeah. There's a variety of things embedded in that question, right? I mean, there's the concept of... And I think what the questioner is getting at is the traditional, I'll call it, window open under you know about material, non-public information. So, and that's something, yeah, we would address that sort of at the time that we're trying to make a decision about whether to do a repurchase or not. The... Sorry, I lost my place here. What we had thought about in terms of repurchases is just is it-- to do a large repurchase like we did last time requires you know generally more cash than we have available at this time. And we've also experienced the...
At-the-market purchases were that had a limited impact because we were just accumulating shares at a slow pace because of the low volume of the traded stock. So part of our evaluation is simply, you know, taking those couple considerations in and trying to figure out the most expedient way to get cash and value back to shareholders was to pay a dividend to all the shareholders. So and that's, you know, the path and the direction that we've been talking about here for a couple quarters.
We have another question on, you said revenue multiple at the low end were about the same. About what revenue multiple ranges are you using for the low-end proceeds across the five companies? We say that it's low single digit revenue multiples.
And, yeah, what else?
We're reading this in real time as it comes-
Yeah, sorry.
on the web, so that's why we're
The next question, I'll just let Eric think for a second about, again, the dividend amount, and I understand how people are eager to think about exactly how much that value will be, and we're trying to be careful because obviously, the board has to make a judgment decision there, and it will be ultimately a matter of judgment.
You know, the factors that we are thinking about, yes, are continuing to hold enough funds to operate the more limited scale operations of the company for a period of time to get them to completion, as well as holding back an amount for, you know, any kind of contingency that we could think of that would exist, including potentially funding the company, although we don't expect any funding of them. You know, we've also talked about, you know, I know the metric has been put out there about 50% of year-end cash after a couple adjustments, but, you know, we still don't know exactly how much cash we're gonna have at the end of the year, right? We don't think it'll be substantially different than where we're at, but, you know, we don't know.
So, you know, those are the parameters that I would sort of provide to you without actually telling you a number or a value of what a dividend could be. But we're discussing a range of options with the board on that front.
Yeah, and I'll just add a couple of comments to it. So firstly, one of the design parameters in the reserving the cash, or let's call it the holdback cash, is that it needs to be sufficient to cover the operations portfolio wind down, regardless of when the next exit occurs. So we're not coming up with a cash number that assumes, oh, in June of next year, X million is gonna come in to help cover it. So we wanna—we're coming up with a quantum of cash that will cover a complete operation support wind down contingencies, et cetera. So that's how we're thinking about it from that standpoint. One of the questions that we-
In that context, that kind of part of that question, and maybe as I read it a little closer now, that assuming the distributions in the future are become, or, or rather, monetization in the future would flow, for the most part, down to distribution. You know, the math that we just outlined would say yes, you know, but there's it's always it's hard when you're looking at the future, you know, some other contingency may arise that the board at that time would need to consider. So I don't want to pin them in on that, but, you know, if it's designed perfectly, then it should be in that ballpark.
That is the goal. Get another question. I think we're on question number 12: Can you speak a bit about the confidence level of the two-year monetization time frame, given there are now four Bucket one companies who don't have a real timeline? There was another question that related to that around front-end weighted versus back-end weighted proceeds based on our internal, you know, based on our estimates. I think given the fact that we have one company going to market, we have no companies in the market now of our Bucket one companies to five, and we have one going to market in January.
And if you, if you look over a, call it a, you know, 27-28-month period, by the time you start a 24-month period in January 1, I think you would just assume that those exits would be occurring in the second half of that period, more than the first half, where we're sitting today. Now, things do change. As I indicated, we have been having some conversations with some secondary buyers around seeing if there's a bid for any of our positions. We've also been working with, you know, one of our companies on potential recapitalization, the proceeds of which could be used to take us out.
So we're working from all possible, angles to monetize the investments, but from a hiring a banker and going out, I would say it would be the second part of the upcoming 24 months.
While Eric's looking at another question there, one of the next questions, we've had another question come in about revenue rates, about which companies are growing the fastest. And I'll add, you know, more to what we said earlier. Similar to what we've seen last quarter, or the last few quarters, Moxe and meQuilibrium, as well as Clutch, you know, all three of them on a trailing 12-month basis have experienced, you know, growth, and tight, you know, good, good growth. But that period ended June 30th, and then I think I would refer to, you know, Eric's comments. We've had, you know, sort of varied results since then. Some of the September numbers are still kind of shaken out. We had.
But each of those three have had over 20% growth.
Question 14: Given we're not control shareholders in any of these portfolio companies, can we drive monetization timelines? That has been a great question. It's one that we've been working with for the last three years. And what I can say is that in each of our companies, we have very good alignment in terms of among ourselves and management and the other investors in terms of how long we wanna be in the investment, right? So our co-investors are similarly. These are, you know, the hold periods have been long, relatively long, so there's alignment to exit. The decision to exit is really less of a: are people or the management and the stakeholders well aligned to exit?
It's really more of the opportunity, availability, valuation, and is the company, is the company putting up the types of metrics needed to attract buyers in a reasonable way. So that's less of an issue about how to drive monetization timelines, 'cause there's alignment.
Yeah, and, Eric, while you're talking, we had another question come in about the range of proceeds, particularly the low end of the proceeds with respect to InfoBionic moving into bucket one. So, and I will tell you, I mean, look, we made that the full range estimate last quarter, right? When things were, you know, in flux with the one company. And we've updated it again this quarter from a bottoms-up analysis, and as you might expect, you know, there's not a perfect level on any of these, and the things vary, you know, within the portfolio, even from the estimates. And we just, we still have come up with the same range. It just has not...
You know, moving InfoBionic in there, yes, you know, I would say may give you, you know, more confidence at one end of the range, but it's not something in and of itself that's gonna move you from, you know, move the range significantly or move within the range significantly.
Yeah, and I'll add to that. You know, when we did this analysis last quarter, we had some probability weighting of InfoBionic achieving a recap and a set of outcomes. So it wasn't necessarily in at 0 last quarter and, you know, a big number this quarter. There was, you know, a number that reflected the probability of the recap getting done. And the second thing I would say is, you know, with a 5% ownership stake, which is what we have, you know, it doesn't, it moves the needle given where our stock price is and what we're trying to do, but it doesn't swing as much as some of the other companies where we have larger ownership stakes.
I will pause there for a second. Operator, were there any other questions on the line?
We have a question from Sherry Rubenstein, a private investor. Please proceed.
Oh, hello, am I on?
Yes, you are. Hi, how are you?
Oh, hi. I'm really new to this. I don't quite understand. I only have 83 shares, so I'll be cashed out.
Okay.
What does that mean exactly?
If you end up being cashed out, then you would, your brokerage account would simply receive a check, cash, and the price outlined in the proxy is $1.65 per share.
$1.65 per share.
Yeah.
Well, 'cause right now it's only $0.98.
Correct. Yes. The cash out price is at a premium to today's traded price.
So, am I best to wait then until you cash me out, or?
Well, I need to avoid giving individual-
Oh, okay. I just-
-investment advice.
I should have to ask my broker that.
But-
So right now, if I sold it, I would be getting $0.98. If I wait, when, when are you cashing out?
Well, if this transaction is approved by shareholders, we would expect it to occur on, you know, around December 15th.
December 15th. Okay. So possibly then I could get $1.65 a share if I just wait until then. Is that correct?
That is correct. That is correct.
Okay. They receive the check, 'cause it's a brokerage. I have E*TRADE. Is that the way it works, or should I call them?
Yes, that would, that would all be handled through your, your brokerage account.
Oh, okay. All right, then I will give them a call.
Okay.
Thank you for all the information. It's confusing to me. I'm sorry.
You're welcome. Yep, I understand.
There are no audio questions left in queue. I will turn it back to management for closing comments.
Yeah, we have one more question number 18: At what point would you expect to have clarity on whether this stock will continue to trade OTC or not? So as we said, we're starting to work with OTC. Depending on, there are different levels within OTC, you need a market maker and so forth. So we have every incentive to try to make that happen or make that work. So we'll do everything we can to see if we can get market makers, to see if it can trade on OTC levels. There's no assurance that it will.
Obviously, keep in mind that if we're a non-reporting company, so we will not be filing the equivalent of 10-Ks or 10-Qs, then it's gonna trade differently than a proper Nasdaq-listed company with Ks and Qs, although our current recent trade has been quite limited or episodic, if you will. So we'll do everything we can to try to achieve that. At this point, we can't... We can commit to trying, we can't commit to having it done, subject to things that we're working on. Okay, it looks like that was the last question. So, just to wrap up, I wanna thank you for joining us on our call today. Please contact us if you have any questions.
We'll, we'll either answer the questions directly, we'll put you in touch with Computershare or whoever else to try to help you understand the transaction and, and address any, any questions or concerns you have. Thanks a lot. Have a good evening.
Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.