Q3 2023 Safeguard Scientifics Inc Earnings Call
[music].
Speaker 1: Greetings and welcome to the Safeguard Scientific's 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 concert is being recorded. It is now my pleasure to introduce your host, Matt Barnett, General Counsel. Please proceed.
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 call is being recorded it is now my pleasure to introduce your host Matt Barnett General Counsel. Please proceed sir.
Good afternoon, and thank you for joining us for this presentation safeguard scientifics third quarter 2023 finance cost going.
Speaker 2: Good afternoon, and thank you for joining us for this presentation, Safe Care Scientific's third quarter 2023 financial assault.
Speaker 2: Join me on today's call webcast. Eric Salzman, SAFE-RCH Chief Executive Officer, and Mark Harndon, SAFE-RCH Chief Financial Officer.
Joining me on todays call are Patrick Austin.
Sure Mark.
Our Chief Financial Officer.
Speaker 2: Following our prepared remarks, we'll open up the call to your questions. As always, this presentation includes forward-looking statements.
Oh, My God prepared remarks.
All your questions as always this presentation contains forward looking statements.
Speaker 2: Reliance on forward-looking statements involve certain risks and uncertainties, including but not limited to the uncertainty of the outcomes of corporate strategic transactions, if any, uncertainty of our efforts to exceed 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 as amended, and relist our shares of common stock from trading on that. The uncertainty of the future performance...
Reliance on forward looking statements call certain risks and uncertainties.
My name's, Phil uncertainties outcomes.
Concerning our efforts to execute on and implement our common stock.
Alright, very sharp on the soft goods to charities and you talk to that.
34.
And the last of our shares of common stock.
Thanks, Jeremy.
And for our company.
Speaker 2: our ability to make good decisions about the monetization of our companies, the ongoing support of our companies, our inability to literally control our companies, fluctuations in the market prices of any of our companies that are publicly traded, any effect of regulatory and economic conditions generally, and other uncertainties described in our filings with the SEC.
The only thing good decisions about the monetization.
Got it all in support of our company and I'm, the only jewelry and car companies.
So today for companies that are publicly traded and the effect of regulatory and economic conditions generally and other uncertainties.
Yes, you see many of these factors are beyond our ability to predict or control as a result of these other factors past financial performance cannot be relied on as an indication of future performance.
Speaker 2: Many of these factors are beyond our ability to predict or control. As a result of these other factors, the past financial performance should not be relied on as indication of future performance.
Speaker 2: During the course of today's call, work such as expect, anticipate, believe, and attend will be in our discussion of goals or events in the future. Management can provide any assurance that future results will be as described in our for-looking statements. We encourage you to read SAFE CARES filings with the SEC including our Form 10Q, which describes in detail the risks and uncertainties associated with managing our business. The company does not assume any obligation to update any for-looking statements made today. With that, I would now like to introduce Eric.
In the course of today's call.
We anticipate they'll be abandoned.
I'll begin our discussion of goals prevent future management kind of provide any assurance that ensures all I'll be asked this path before like I stated.
Encourage you to read safeguards filings with the SEC Form 10-Q.
In detail the risks and uncertainties associated pad.
Okay. Thanks, Scott.
Okay.
These forward looking statements made today.
I'd now like to introduce Derek.
Speaker 3: Thanks Matt. Thanks for joining us this afternoon for our Q3 2023 earnings call.
Thanks, Matt Thanks for joining us this afternoon for our Q3 2023 earnings call.
Speaker 3: Today we will walk you through the rationale and key elements of our go dark transaction.
Today, we will walk you through rationale and key elements of our go dark transaction.
Speaker 3: our thought around a potential two for 2023 dividend.
Our thoughts around a potential Q4, 2023 dividend.
Speaker 3: 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.
A brief update on our remaining portfolio of 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.
Speaker 3: 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.
We filed our definitive proxy this afternoon, which detail the various elements of our plan to delist from NASDAQ and become a non reporting companies.
Speaker 3: 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.
As explained in the proxy we concluded that the costs of being public.
Come too burdensome and the benefits are very limited in light of our strategy to monetize our remaining ownership interest in return maximum value to our shareholders.
Speaker 3: 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 15th.
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 15th.
Speaker 3: The intention of the stock splits is to reduce the number of shareholders of record to fewer than 300.
The intention of the stock split is to reduce the number of shareholders of record.
Fewer than 300.
Once we have fewer than 300 shareholders of record safeguard is no longer required to get recording company for SEC purposes, meaning we will not have to file 10, Ks and 10, Qs, thereby reducing our expenses significantly.
Speaker 3: 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 10-K 's and 10-Q 's, 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.
Speaker 3: The stock splits will create a relatively small number of fractional shares, which we intend to cash out at $1.65 per share.
Speaker 3: details of how we arrived at this number is described in the project.
Details on how we arrived at this number is described.
In the proxy.
Based on our current estimates we expect the total cost of cashing out Boston with shares to be approximately $10000.
Speaker 3: Based on our current estimates, 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 cost to operate the business. We expect the transition safeguards general and administrative functions to an external service provider to be selected by the board.
Speaker 3: 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 company.
Speaker 3: We expect the transition safeguards general administrative functions to an external service provider to be selected by the board.
Speaker 3: Our remaining officers and employees, the four of us, are expected to provide transition services to safeguard on an as-needed basis.
Our remaining officers and employees. The four of US are expected to provide transition services to safeguard on an as needed basis.
Speaker 3: Board has narrowed the search process for an external service provider to three, and we expect to have this in place by January 1, 2024.
The board has narrowed the search process for an external service provider to three and we expect to have this in place by January one 2024.
Speaker 3: Taken together, we believe these deaths will substantially reduce the operating cost, the manage and monetize the remaining companies in the portfolio.
Taken together, we believe these steps will substantially reduce the operating cost to manage and monetize the remaining companies in the portfolio.
Speaker 3: has disclosed in the proxy, we anticipate annual cost savings of approximately $1.5 million in cash and a reduction.
As disclosed in the proxy, we anticipate annual cost savings of approximately $1 $5 million in cash and a reduction.
Speaker 3: based compensation of approximately 1.2 million.
Based 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.
Speaker 3: 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 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 supports safeguards operations and our portfolio companies.
Speaker 3: We refer to this extra cash as excess cash. And it is defined as cash on hand, less than estimated amounts required to be retained to pay the cost of the transaction, to port save for our job operations in the portfolio companies, as well as cover liabilities and contingents.
Well its covered liabilities in contingencies.
Speaker 3: Such a board approval, we intend to pay out this excess cash as it cash-driven and late December after the shareholder rose.
Subject to board approval, we intend to pay out this excess cash cash dividend in late December after the shareholder vote.
Speaker 3: We would not be list from now as back until after the December 15 shareholder meeting and assuming we move forward with the GoDARC transaction, any trading in our common stock after delisting will only occur in privately negotiated sale.
We would not be list from NASDAQ until after this after the December 15th 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.
Speaker 3: We will be exploring whether safeguard shares can trade on one of the OTC markets, but there can be no assurances of that.
We will be exploring whether safeguard shares can trade on one of the OTC markets, but there can be no assurances of that.
Speaker 3: We are required to file a 2023-10K, which will be our last SCCC file.
We are required to file a 2023 10-K, which will be our last FCC pilot.
Speaker 3: Post-defiling of the 10K, we expect the size of the board to drop from the full current score members to two, with these two coming from our existing board.
Post the filing of the 10-K, we expect the size of the board dropped from the current four members too.
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.
Speaker 3: 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 Sherville.
Speaker 3: 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 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 and $45 million.
Speaker 3: We estimate exit proceeds from our remaining positions at between $25 and $45 million.
Speaker 3: The monetization process is expected to take two years, but could be longer.
The monetization process is expected to take two years, but could be longer.
Speaker 3: We are working with the Board to finalize all operational elements required to consummate this transaction.
We are working with the board to finalize all operational elements required to consummate this transaction.
Now, let me turn to the portfolio.
Speaker 3: As we disclose 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 company.
As we disclosed 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.
Speaker 3: Consistent with what we said last quarter, the bucket one companies are prognosed, Mikud Meck??, Neutlu Libert Teraz, Hanay Un personas, he has been??
Consistent with what we said last quarter the bucket one companies, our prognosis equilibrium clutch and moxie.
Speaker 3: We have also added info by Onyx to bucket one as it recently completed a recap and capital race.
We have also added info bionics in bucket one as it recently completed a recap and capital raise.
Speaker 3: 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 race, and if this were to happen, we would expect that it would move to bucket one. This is what happened within Probiotics.
You recall from last quarters call, we mentioned that one of our companies when it was in the midst of a potential recap capital raise and if this were to happen. We would expect that it would move to bucket. One this is what happened within probiotic.
We continue to have a board seat the prognosis equilibrium moxie and clutch and are actively engaged with management and calling bachelors to drive value creation and exits.
Speaker 3: We continue to have board seats at Prognos and Equilibrium, Moxie and Clutch, and are actively engaged with management and co-investors to drive value creation and exit.
Speaker 3: Post-retapped and given our reduced ownership interest, we have retained an observancy at Infobile.
Post reach out and giving given our reduced ownership interest we have retained an observer seat add info biotech.
Speaker 3: Let me provide some further clarifications on the 25 to 45 million future exit.
Let me provide some further clarification on the 25 to 45 million in future exit proceeds.
Speaker 3: First, the 25 to 45 million are estimated future exit values and are not discounted.
First the $25 million to $45 million, our estimated future exit values and are not discounted.
Speaker 3: Second, the inclusion of Infobionic in bucket 1 does not have any impact on this range, nor does it represent the difference between the low and the high.
Second the inclusion of info bionic in bucket, one does not have any impact on this range nor does it represent the difference between the low and the high.
Speaker 3: And thirdly, the 25 to 45 million is expected to be generated exclusively from bucket 1.
And thirdly, the 25 to 45 million is expected to be generated exclusively from bucket one companies.
Speaker 3: All other remaining physicians are bucket two and we expect de minimis proceeds from them.
All other remaining positions or bucket two and we expect the minutes is 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.
Speaker 3: 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.
Speaker 3: The Safe Guard, one of our bucket one companies recently hired an investment banker and expects to launch a process in January 2024.
For safeguard one of our bucket one companies recently hired an investment banker and expects to launch a process in January 2024.
Speaker 3: There are no immediate plans for the other four companies. So we continue to work closely to position them for exits or recaps that could generate proceeds to safeguard as expeditiously as possible.
There are no immediate plans for the other four companies who continue to work closely to position them for exits of recaps that could generate proceeds to safeguard as expeditiously as possible.
Speaker 3: 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 transaction.
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 transactions.
Speaker 3: Regarding Q3 performance, our companies have experienced varied results. For example, meeting or exceeding revenue plans like coming in underbookings, meeting or exceeding EBITDA plans.
Regarding to the Q3 performance our companies have experienced varied results for example meeting or exceeding revenue plans, but I mean under bookings meeting or exceeding EBITDA plans.
Speaker 3: but missing revenues and for three of the five company's, Q4 represents an important quarter due to the business's season L.
But missing revenues and for three of the five companies Q4 represents an important quarter due to the businesses seasonality.
The Q3 performance was taken into account when determining the $25 million to $45 million of exit values.
Speaker 3: The Q3 performance was taken into account when determining the $25 to $45 million of exit buys.
Speaker 3: At this time, I'll hand the call over to our CFO , Mark Herndon.
At this time I'll hand, the call over to our CFO Mark Herndon.
Thanks, Eric.
Speaker 4: TIFA reported net income for the quarter ended September 30th, 2023 of .9 million or six cents per share as compared to a net loss for the comparable 2022 third quarter of 3.2 million or 19 cents per share.
Reported net income for the quarter ended September 32023 of <unk> 9 million or six cents per share as compared to a net loss for the comparable 2022 court third quarter of $3 2 million or <unk> 19 per share.
Speaker 4: The year-to-date period ended September 30, 2023 with 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.
Year to date period ended September 30th 2023, with a net loss of $5 4 million or 33 cents per share as compared to $9 4 million or 57 cents 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.
Speaker 4: We ended the quarter with $15.7 million of cash, cash equivalents and restricted cash, and we continue to have no debt obligations.
Speaker 4: 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%.
Our general and administrative expenses were $1 3 million for the third quarter of 2023 versus $1 4 million for 2022, a decrease of three 5%.
Speaker 4: Similarly, our general administrative expenses were $3.7 million for both the year-to-date periods, a decrease of 1.5%.
Our general administrative similarly, our general and administrative expenses were $3 7 million for both the year to date period, a decrease of one 5%.
Speaker 4: Corporate expenses for the quarter, which represent general and administrative expenses excluding stock-based compensation, severance expenses, and non-repairing 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...
Corporate expenses for the quarter, which represent general and administrative expenses, excluding stock based compensation and severance expenses and nonrecurring and other items for.
For <unk> 9 million and <unk> 8 million and around a basis for each of the third quarters of 2023 and 'twenty two.
The year over year increase was nine 8%.
Speaker 4: 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 3.2% decrease.
Corporate expenses for the nine months ended September 32043 were $2 4 million as compared to $2 5 million comparable to 2022 period, that's three 2% decrease.
Speaker 4: The increase during the quarter was due primarily to legal and other professional fees.
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 cases has generally stabilized at this approximate value before we implement any cost structure changes. However, this quarter's additional expenses have pushed us, especially our annual estimate of corporate costs back up to our original range.
Speaker 4: 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 rate.
Speaker 4: 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.
With respect to our ownership interests, we have an aggregate carrying value at September 30th.
$14 $8 million as compared to $15 4 million at December 31, 2022.
There were no deployments this quarter.
Speaker 4: However, there was an increase at Infobionic resulting from their recapitalization transaction, which allowed Infobionic to raise cash and convert certain liabilities.
However, there was an increase it if somebody O&M, resulting from their recapitalization transaction, which allowed if a bionic to raise cash and convert certain liabilities.
Speaker 4: Since we did not participate in the transaction, our ownership level dropped to approximately 5%.
Because we did not participate in a transaction our ownership levels drop to approximately 5%.
Speaker 4: This transaction also resulted in recording a $1.7 million non-cash observable price change gain that is recorded in other income.
This transaction also resulted in recording a $1 $7 million noncash observable price change gain is recorded in other income.
This quarters activity also included the application of the equity method accounting at our other remaining interest.
Speaker 4: This quarter's activity also included the application of the equity method accounting at our other remaining interest. 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 other.
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.
Speaker 4: Our results under the equity method for the three months ended September 30th, 2023 resulted in a $.4 million of equity income as compared to a $1 million equity loss for the comparable period of 2022.
Our results under the equity method for the three months ended September 32023, resulting in a <unk>.
$4 million of equity income as compared to a $1 million million equity loss for the comparable period of 2022.
Speaker 4: This change is predominantly the result of several companies reaching zero care and value during late 2022 or 23. At that point, we generally cease recording loss system as in.
This change is predominantly the result of several companies, reaching zero carrying value during late 2022 or 23 at that point, we generally seek recording losses for those entities.
Speaker 4: 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 reflect the second quarter of 2023.
I'd also like to remind everyone that we report our share of the losses from the equity method companies on a one quarter lag. So this quarter's share of losses reflect the second quarter of 2023.
Excuse me.
Speaker 4: Also with respect to our ownership interest, this quarter's third party debt for the remaining six companies with approximately $88 million versus 135 million last quarter. This decrease is due primarily to the recapitalization transaction at InfoBio.
Also with respect to our arrest of interest this quarter as third party debt for the remaining six companies was approximately $88 million versus $135 million last quarter.
This decrease was due primarily.
Primarily to the recapitalization transaction that info biotic.
Speaker 4: cash at the same group of six companies is down to approximately $41 million.
Cash at this same group of six companies it was down to approximately $41 million.
Speaker 4: In terms of revenue performance, we reported a 10.3% increase at this group of six companies for the trailing 12-month period in the June 30, 2023, due to the 1.4-meg. This increase was most favorably impacted by clutch, which was largely offset by decreases at price.
In terms of revenue performance, we reported that pinpoint 3% increase in this group of six company for the trailing 12 month period ended June 32023, due to the one quarter lag.
<unk> was favorably impacted by clutch, which was largely offset by decreases at progress.
Speaker 4: 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 that share count to increase as we continue to settle director fees using shares.
Also we noted in our filing that our share count as of today. Its filing date was approximately $16 6 million shares.
Going forward, we expect that that share count to increase as we continue to settle director fees using shares.
Speaker 4: 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 to 16.8 million shares by the time we file the final 10K referred to earlier.
And exact number will depend on the share price windows shares are issued early next year, but we are estimating that the share count will grow to approximately $16 seven to $16 8 million shares by the time, we file the final 10-K, we referred to earlier.
Speaker 4: Finally, I'd like to reiterate some points made by Eric and answer questions that we've already received from shareholders who have had questions about the preliminary proxy that's now definitive that was filed earlier today.
And finally I'd like to reiterate some points made by Eric and answer questions that we've already received from shareholders, who I've had questions about the preliminary proxy. That's now definitively that was filed earlier today.
Speaker 4: about how this will impact them and address the mechanics of what will happen to their share.
And about how this will impact them and address the mechanics of what will happen to their shares.
Speaker 4: The proposed stocks blitz will not have an impact on any shareholder who shares equal to or above the stocks blitz.
The preferred stock splits but.
We'll not have an impact on any shareholder who shares equal to or above the stock split number.
Speaker 4: 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 split.
For example, if the final ratio is based on the highest amount of the proposed range 100 shares.
Any shareholders holding 100 shares or more will not be as impacted by less share splits.
Speaker 4: shareholders who are less than that amount would be cashed out if they hold their shares directly as a registered share.
Shareholders, who were less than that amount would be cashed out if they hold their shares directly as a registered shareholder.
Speaker 4: Well the other end, shareholders who hold less than that amount in street name may or may not be cast.
On the other hand shareholders, who hold less than that amount in street name may or may not be cashed out.
Speaker 4: Street names here, owners should contact their bank or broker for more information.
Street named shareholders should contact their bank or brokerage for more information.
Speaker 4: 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.
We also encourage shareholders to review the Q&A portion of the proxy, which provides further details and examples of the impact and you should expect as a result of the proposed stock split.
Speaker 4: As we addressed in the proxy document, the cash requirements expected to repurchase these fractional shares that may result from these stocks blitz was estimated to be only about $10,000. As a result, most shareholders will not experience any significant impact of the splits 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 distribution.
As we addressed in that proxy document the cash requirements expected to repurchase these fractional shares.
That may result from this.
Stock splits was estimated to be only about $10000. As a result, most shareholders would not experience any significant impact of the splits 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.
Speaker 4: Now we will turn to the Q&A segment of the call so operator that
Now, we will turn to the Q&A segment of the call. So operator I'd ask it.
Speaker 4: And I do see that we've had a couple that have come in on the web, too, and we will address those in a moment as well. I'll let you give those instructions first.
And I do see that we've had a couple that have come in on the web to address those Ah Ah moment as well.
I'll, let you give those instructions first.
Speaker 1: Thank you. We will now conduct a question and a 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 a question queue. You may press star two if you would like to remove your question from the queue. For participants using Speak Requitment, it may be necessary to pick up your handset before pressing the star keys. Once again, that star one to ask a question. One moment.
We will now conduct a question answer session.
I'd like to ask a question. Please press star one on your telephone keypad.
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 stock east once again, that's star one to ask a question.
One moment, while we poll for our first question.
Speaker 4: Yeah, and well, she's, um, came letting questions there. Why don't we, uh, address the couple that we know already? So the first question was just, we're just, we're just, we're, we anticipate this to be the last or in child before the plan be listening. Uh, and I would say, uh, yes, uh, we continue to, we will make ourselves available as, as necessary for questions and comments. We, we try to be on regular basis.
Yeah, well she's accumulating questions there Eric why don't we address the couple that we know already so the first question was legit.
Logistically.
We anticipate this to be the last earnings call before the plan B lifting.
I'd say that yes, we continue to we will make ourselves available as necessary for questions or comments that we've tried to be a regular basis.
Speaker 4: So this is the last plan conference call before then. I think we've talked about it timing, that the special meeting would occur in the middle of December and it'd be lifting if that ends up being the case as a result of the votes would be shortly thereafter. You want to add anything to that?
But because the last planned conference call before that.
I think we've.
We've talked about the timing.
The special meeting would occur in the middle of December and then B. The a delisting if that ends up being the case as a result of the votes will be shortly.
Shortly thereafter.
Yes.
You would add it or Matt do you want to add anything to that.
I think that's right Mark.
Okay.
[noise].
Yeah.
Speaker 3: We can go to the second question, which was related to, you previously mentioned considering you're in dividend, being roughly half of the...
Okay. We can go to the second question, which was related to.
You previously previously mentioned considering the year end dividend.
Being roughly half of the year end cash balance.
Speaker 3: So just to address how we're thinking about sizing the given end and coming up with what we determine is this excess cash.
So just to address to address how we're thinking about sizing the dividend in coming up with what we determined is this excess cash.
Speaker 3: So the board will estimate the year end and make the decision. Basically we'll take our September 30th cash, less what we'll spend in net outflows this quarter.
So the the board will estimate the year end to make a decision basically will take our September 30th cash less what we'll spend net outflows this quarter.
Speaker 3: From that we would deduct the stock split and transaction costs of a million to which is on page
From that we would deduct a stock split and transaction costs of 1 million to which is on page 10 of the proxy.
Speaker 3: From the remaining number, we would set aside estimated costs to operate as a non-reporting company.
From the remaining number we would set aside the estimated cost to operate as a non reporting company.
Speaker 3: cost of support to portfolio, cover liabilities, contingencies, and an ultimate wind down. We indicated that you're roughly...
Cost to support the portfolio cover liabilities contingencies in your ultimate wind down.
We indicated that's roughly a two year process could.
Speaker 3: could be longer, and the net of this number would represent the excess cash that the board would consider returning as a dividend.
Could be longer and the net of this number would represent the excess cash that the board would consider returning as a dividend.
Speaker 3: Last quarter, that was our preliminary estimate, what we said, and we're currently half of year in cash, or up to half of year in cash. And we're currently working with the board to arrive at the number that balances returning as much cash as possible.
Last quarter that was our preliminary estimate of what we said and we're currently half of yearend cash or up to half of the year end cash and 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 of operations at risk. So we're doing that.
Speaker 3: without putting the remaining portfolio 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 a husband who keep excess cash and necessarily, but on the other hand, we want to make sure that they're sufficient to cover both the significantly reduced costs of operating as well as any other contingencies. Thank you.
<unk> 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 a husband, who keep excess cash unnecessarily, but on the other hand, we want to make sure that there are sufficient to cover both the the significantly reduced cost of operating as well as any other contingent.
Yes.
Yeah Eric.
Speaker 4: I'm going to skip to the next question. I'll let you handle the first half of it, but there's a couple of 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.
I'm going to skip to what.
The next question I'll, let you handle the first half of it but I think there's a couple of questions in here.
Let's talk about I'll call. It the mechanics of how things will operate in.
In 2024, and so let me broadly cover those for a minute.
Speaker 4: The company, if they could, we will continue to have board seats on our remaining portfolio companies, right? But where we have them now. So that nothing changes there. The, what is being worked out right now is exactly who would sit as our representative on those boards, right? And that could be the external service provider. It could be someone else. But we're working through that.
Yeah.
The company and thank God, we will continue to have borne seats.
On our remaining portfolio companies right, but where are we where we have them now so that nothing changes there.
The what what is being worked out right now is exactly who.
Who would fit as a representative on those on that.
Sports right.
That could be the external service provider it could be.
Someone else.
But we're working through that now.
Speaker 5: And I will say the...
And I will say the.
Speaker 4: In terms of what 1 of the 1 of the aspects related to this is just cost. I mean, obviously, as we've talked about 1 of the reasons for this transaction is to reduce costs.
In terms of well what does it what are the aspects related to that is just cost I mean, obviously as we've talked about you know one of the reasons for this transaction is to reduce costs.
Speaker 4: So, you know, while we haven't put out a formal number for 2024, you know, we've talked about reducing the cost by, it was a number of cash, but by $1.5 million, right? So if you compare that to your 3.2-ish, where we're at this year, you know, then that's going to be in that ballpark, would be an early estimate of expenses for 2024.
So.
Well, we haven't put out a formal number for 2024.
We've talked about reducing the costs by.
The number of cash them by one and a half million dollars right. So if you compare that to your.
The 3.2 ish, where we're at this year you know then that's going to be in that ballpark would be.
Early estimates of our expenses for 2020 for that that said, there's a variety of things that are that remain to be in play.
Speaker 4: That said, there's a variety of things that remain to be in play, including
Including.
Speaker 4: 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 there will be substantially less.
That a service provider.
Multiple firms have been considered and we're in discussions with them that we.
Have not settled on a affirm or therefore, a firm price here. So there is a number of estimates involved with it.
Turning to figure out how exactly how much that costs will be in 2024, but we expect it will be substantially less.
Speaker 5: when we don't have the full time management team here working with the company.
And we don't have the full time management team here working with the company.
Okay.
Uh huh.
Speaker 3: Yeah, sure. I'll make one more just comments on the cost. So, so obviously there are a number of benefits that's forcing the general administrative activities to a service provider, one of which is, as time passes in the needs of the portfolio where the company go down, then there's an ability to scale down the costs of an external service provider in a way that is
The address.
Yeah, Yeah sure I'll make one more just comment on the cost. So obviously there are a number of benefits.
We're seeing the general administrative administrative activities to a service provider one of which is <unk>.
As time passes and the needs of the portfolio, where the company would go down then there's an ability to scale down.
The cost of an external service provider in a way that is.
Speaker 3: frankly almost impossible, we're very difficult in our current form.
Frankly, almost impossible, where very difficult in our current form.
So that's just so when you think about the go forward cost. It's the savings that kind of Mark indicated and we indicated in the proxy, but if you look beyond that I think would be reasonable to expect that the annual operating cost 12 months out 18 months out et cetera should.
Speaker 3: So that's just, so when you think about the go-forward cost, it's the savings that kind of mark indicated and we indicate in the proxy, but if you look beyond that, it would be reasonable to expect that the annual operating cost.
Speaker 3: 12 months, 18 months out, et cetera, should...
Speaker 3: should come down as there are fewer portfolio companies and fewer activities.
Sure It should come down as there are fewer portfolio companies and fewer activities.
Speaker 3: 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.
The one another question we have is on the remaining bucket one portfolio companies are there any of 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.
Third has not been in the sale process and at least the past 12 plus months.
Speaker 3: third has not been in the sale process in at least the past 12 plus months and and the other two have.
And.
And the other two half.
So that's the answers that.
Question.
Board seats, we talked about.
Speaker 3: Can you provide any additional color in the portfolio companies, perhaps the companies most promising for exit?
Can you provide any additional color on our portfolio companies, perhaps the company's most promising for exit values.
You know what I would say is we wish we had.
Speaker 3: You know what I would say is we indicated it was on last quarter we talked about.
We indicated.
I think it was on last quarter, we talked about.
Speaker 3: The definition of what we're using for a bucket one company is well capitalized, executing on a business plan while navigating kind of the risks and opportunity, and it does not have an excessive debt level.
The definition of what we're using for our 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.
Speaker 3: which has impacted negatively a couple of other companies as you know.
Which is.
Impacted negatively a couple of other other companies issue now.
Speaker 3: So I wouldn't call one out over the other. I think 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 two years.
So I wouldn't call one out over the other I think there where were.
Optimistic and constructive on all of those companies and we'll be working closely with them to maximize the exits over the next.
Two years.
Okay.
Speaker 5: So, I want to be a positive for a second, then operator, have any questions come up in that queue?
Pause there for a second and then operate or have any questions come up in the queue.
Speaker 1: Yes, so you have a question from John Powerwood Redwood Fund, please proceed.
Yes, I mean I have a question from John power with Redwood Fund. Please proceed.
Speaker 3: Thank you, operator. Appreciate your time, gentlemen. And my question was regarding the excess cash, which you covered a couple minutes ago in your comment. So, no questions at this time. Thank you.
Thank you operator I appreciate your time, gentlemen, and Mike My question was regarding your excess cash would you covered a couple of months ago in your comments show.
No questions at this time thank you.
Okay.
Thank you.
Okay.
Speaker 1: Once again, ladies and gentlemen, to ask a question, that's star 1 on your telephone keypad at this time.
Once again, ladies and gentlemen to ask a question Thats Star one on your telephone keypad at this time.
Speaker 3: We have a question on the web that is, can you go into more detail after the 25 million dollar lower bound of proceeds? Is the 25 million dollar split fairly equally between the five?
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 it $25 million split fairly equally between the five companies.
Speaker 3: So, just comes a bit on the methodology of how we came up with that number.
I'll just comment a bit on the methodology of how we came up with that number.
Speaker 3: So basically, we took the low-end revenue estimates, right? So projected revenues for each of those five companies between now and in 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.
So basically we took the low end revenue estimates right. So projected revenues for each of those five companies between now and then exited the low end of that we applied.
Kind of low end revenue multiples low, meaning if you look at the market the public markets or cross cycle.
Speaker 3: And then we that would get your your enterprise values to track out your net debt and you would run that Remaining value through the waterfall each company has its own
And then we that would get you to your enterprise value subtract out your net debt and you would run that remaining value through the waterfall. Each company has its own course.
Speaker 3: the third stack and auction pool, et cetera, to come up with Faithguard's proceeds.
Preferred stock and option pool et cetera to come up with safeguards proceeds.
Speaker 3: that would be the future value of safeguards proceeds, which is 25 million at the lower bound.
That would be the future value of safeguards proceeds, which is the 25 million at the lower bound.
Speaker 3: And then, so that's how we came up with it. It's not equally weighted among the five because of...
And then Hum.
So that's how we came up with it it's not equally weighted.
The size.
Does have.
Speaker 3: The way that the cap structures work in different companies and the preferred payouts, facts work, it wouldn't be equal. The revenues are unequal. All the bulls are not dramatically different on the low end across the companies, but revenues would differ and the cap staff would differ. So you wouldn't get the same resulting value for shape.
Different way on the cap structures work in different companies and the preferred payouts facts work it wouldn't be it wouldn't be equal the revenues arent equal multiples are not dramatically different on the low end across the company, but revenues would differ and top staff would differ so you wouldn't get the same resulting value for safeguard.
Yeah.
Speaker 5: Another question is how much I'm sorry. I was going to, yeah, I mean, I mean, there's a couple questions in here that asking about specific debt values and revenue values for different cuts of the portfolio. And, you know, I'm trying to avoid giving you a specific number on the fly to be accurate, but obviously,
Another question is how much I'm, sorry, Mark I was going to add there's a couple of questions in here that asking about specific that values and in revenue values for different cuts of the portfolio.
I'm trying to avoid giving you a specific number on the fly to because that wouldn't be accurate but.
Obviously, they're there 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 of the.
Speaker 4: There does remain to the depth on the portfolio at our five is substantially less.
Speaker 5: then the number that we quoted for the six companies because that other one is just a high-depth entropy. But...
That other one is that's just a high debt entity, but.
Speaker 5: and 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.
And it was not intending to provide that data.
This moment, we can look into.
Putting that out there at a later time perhaps.
Speaker 3: I mean, I'd add to it just unless if you look at, 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. so
Well I mean, I would add to it just lastly, if you look at if you look at the bucket one companies and you adjust it for the cash from the info bionic.
Transaction that we mentioned earlier.
There is slightly more cash than debt I guess, if you just summed it up.
Speaker 3: which which as Mark said it's significantly delivered compared to
Which which as Mark said, it's significantly de levered compared to.
Speaker 3: let's call it, in prior quarters. Some of that delevering happened because of a recapitalization by info bionic.
Let's call. It you know in prior quarters, some of that de levering happened because of a recapitalization and painful bionic.
Speaker 3: where there was a recast or recast of some debt equity. But if you kind of zoom out overall, the bucket one company.
Where where there was a recap or a recast of some debt to equity.
But if you kind of zoom out overall the bucket one companies today have more cash than debt.
Speaker 3: today have more cash than debt lightly.
Slightly.
Speaker 3: Another question, the two companies that have not been out in the sale process, is one of them the one that just hired a banker? Yes.
Another question Alright.
The two companies that have not been out in the sale process is one of them. The one that just hired a banker.
Yes.
Speaker 3: Our share per repurchases possible still considering no portfolio companies are under M&A discussions until 2024. Mark, do you want to talk a bit about how we thought about it?
Oh, our 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 it.
Speaker 3: Sherry purchases versus Gividend and as well as the goal are met to get to the fewer than 300 shareholders. So we would be non-reporting.
Share repurchases versus dividend and as well as the.
They'll go or Matt to get to the fewer than 300 shareholders. So we would be non reporting.
Speaker 5: Yeah, and 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 about material nonpublic information. And that's something we would address that sort of at the time that we were trying to make a decision about whether to do a repurchase or not.
Yeah, there's and there's a variety of things.
Embedded in that question right I mean, there's the concept of.
And I think the question I was getting at is it.
It's the traditional I'll call it a window open under.
Yeah.
About material nonpublic information so.
And that's something.
We would address that sort of at the time.
They were trying to make a decision about whether to do a repurchase or not.
The.
I'm, sorry lost my place here.
What we thought about it in terms of repurchases is just.
Speaker 5: What we had thought about in terms of repurchases is just 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 also experienced the
Is it to do a large repurchase like we did last time requires.
Generally more cash than we have available at this time.
And.
We also experienced the.
Speaker 4: at the market purchases where 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 of considerations in and.
The at the market purchases were.
They had a limited impact because you are just accumulating shares at a slow pace because of the.
Low volume of the traded stock so part of part of the value part of our evaluation is simply taking those couple of considerations in and.
Speaker 4: I forgot that the most competing way to get cash and value back to shareholders was to pay I did it into all the shareholders.
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.
Speaker 4: And that's the path and the direction that we've been talking about to here for a couple quarters.
And that's.
The path and the direction that we've been talking about for here for a couple of quarters.
Speaker 3: We have another question on, you said revenue multiple at the low end, we're about the same, about what revenue multiple ranges are using for the low end proceeds across the five companies. I would say that it's the low single digit revenue multiples.
We have another question on you said revenue multiple at the low end or about the same about what revenue multiple ranges are you using for the low end proceeds across the five companies.
I would say that it's low single digit revenue multiples.
Yeah.
Speaker 4: So we're reading this in real time as a concern. Yeah, very similar to the web. So that's where we're. It's another, the next question. I'll just, I'll let Eric think for a second. The next question is about, again, the dividend amount and I understand how people are easier 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 there will be, it will be ultimately a matter of judgment. And so really if the discussion??. Yeah, very similar to that. Community. Yeah, send that. 43
Yes, so we're reading this in real time, yes, yes, sorry.
So that's why we're it's another the next question.
I'll, let Eric Thank for a second the next question is about.
Again, the dividend amount and I understand how people are.
Eager to think about exactly how much that value will be and what we're trying to be careful because we obviously the board has to make a judgment decision there and there will be a it will be ultimately a matter of judgment.
Yeah.
The factors that we are thinking about yes are continuing to hold enough funds to operate that.
Speaker 4: 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.
More limited scale operations of the company.
For a period of time to get them to completion.
Speaker 5: as well as holding back an amount for 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 companies.
As well as holding back an amount for any kind of.
[noise] tendency that we can think of that would exist, including potentially funding the company. Although we don't expect any funding of companies.
Yeah.
Speaker 5: 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 going to 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.
We've also talked about you know I know the metric has been put out there about 50.
50% of a year end cash after a couple of adjustments, but we still don't know exactly how much cash we're going to have at the end of the year right. When we don't think it'll be substantially different than where we're at but we don't know.
So.
Yeah.
Speaker 4: Those are the parameters that I would provide to you without actually telling you a number or a value of what a dividend could be. We're discussing a range of options with the board on that.
These are the parameters that I would provide to you without actually telling you a number or a value of what the.
A dividend could be worth.
We're discussing a range of all of our 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 and the reserving cash or let's call. It a hold back cash.
Speaker 3: Yeah, I'm not just adding a couple of comments to it. So firstly, one of the design parameters in the reserving the cache, or let's call it the hold back cache.
Speaker 3: is that it needs to be sufficient to cover the operations portfolio one down.
Is that it needs to be sufficient to cover the operations portfolio wind down.
Speaker 3: 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'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.
Regardless of when the next exit curse, so we're not coming up with the cash number that assumes Oh in June of next year X million is going to come in to help cover. It. So we want to we're coming up with a quantum of cash that will cover the complete operation support.
Wind down contingencies et cetera, So that's how we're thinking about it from that standpoint, one of the.
Speaker 4: one of these questions that can be part of that question and maybe I read it a little A little closer now that...
Sounds like that's kind of part of that question and maybe I'm reading a little closer now that.
Speaker 4: Should they be assuming that distributions in the future are rather monetization in the future would flow?
Should they be assuming the distributions in the future.
Or I'd, rather monetization in the future would flow.
For the most part down to distributions.
Speaker 4: And the math that we just outlined would say yes. But it's always it's hard when you're looking at the future, 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 if it's designed perfectly, then it should be in that ballpark.
And the math that we just outlined would say, yes, but there's.
It's always it's hard when you're when you're are looking at that in the future. You know some other contingency may arise at the board at that time, we need to consider so I don't want to pin them in on that but yeah. It's designed perfectly then it.
It should be in that ballpark.
That is the goal.
As Mark said.
Speaker 3: Another question, I think we're up to question number 12. Can you speak a bit about the confidence level of the two year monetization time frame given there?
The question I think we're up to a question on the 12th can you speak a bit about the confidence level of the two year monetization timeframe given that right now.
Speaker 3: For bucket one company you don't have a real timeline.
Four bucket one company you don't have a real.
Timeline.
Speaker 3: 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.
There was another question that related to that around front end weighted versus backend weighted proceeds based on our internal you know based on our estimates.
Speaker 3: I think given the fact that we have one company going to market, we have no companies in the market now of our bucket, bucket one companies to five, and we have one going to market January . And if you look over,
I think given the fact that we have one company go into market with no companies in the market now with our buckets bucket one companies to five and we have one going to market in January.
And if you even if you look out over.
Call It a.
Yeah, 27, 28 months period by the time you start 24 month period. Gen. One I think you would just assume that those exits would be would be occurring at least in the second half of that period more than the first half where we're sitting today now.
Speaker 3: 27, 28 month period by the time you start 24 month period, GN1, I think he would just assume that those exits would be occurring at least in the second half of that period, more than the first half where we're sitting today. Now,
Speaker 3: 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
Things do change.
Indicated we have been having some conversations with some secondary buyers around seeing if there's a bid for any of our positions you've also been working with them.
Speaker 3: one of our companies around potential recapitalization, the proceeds of which could be used to.
One of our companies around potential recapitalization, the proceeds of which could be used to should take us out. So we're working them.
Speaker 3: We're working all possible angles to monitor the investments but from a
All possible angles to monetize the investments but from a.
Speaker 3: hiring a banker and going out, I would say it would be the second part of the coming 24.
Hiring a banker and going out I would say it would be the second part of the coming 24 months.
Speaker 4: And while Eric's looking at another question there, I have one of the...
And while they are looking at another question there is one of the.
Speaker 5: The next question, we've had another question coming about revenue rates, about which companies are growing the fastest, and I'll add more to what we've said earlier. Similar to what we've seen last quarter, or the last few quarters, Moxie and Nekolibrium, as well as Clutch, all three of them on a trailing 12 month basis have experienced growth and tightening. Good growth.
The next question. We have had another question come in about revenue rates about which companies are growing the fastest and I'll add.
More to what we said earlier.
Similar to what we've seen last quarter.
The last few quarters, our moxie and equilibrium as well, it's all three of them.
Trailing 12 month basis have experienced growth.
Hmm.
Titan.
Good growth.
Speaker 4: But that period ended June 30th. And then I think I would refer to Eric Thomas, very results since then some of the September numbers are still shaken out.
But that that in that period ended June 30, and then I think I would refer to Eric's comments, we've had sort of varied results. Since then some of the September numbers are still it's kind of a chicken.
Shaken out we had.
But each of those three have had over.
Over 20% growth.
Yeah.
Speaker 3: Question 14, given we're not from shareholders and these portfolio companies, can we drive monetization timelines? That has been a, an Instagram question, it's one that we've been working with 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...
Question, 14, given where Nox 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 you want to.
Speaker 3: be in the investment, right? So other co-investors are similarly, these are, you know.
B any investment right. So other co investors are similarly easier you know.
Speaker 3: the whole periods have been long, relatively long. So there's alignment to exit. The decision to exit is really less of a, our people, or the management and the stakeholders.
They hold periods have been long smell it should be long so there's alignment to exit the.
Decision to exit is really less of a.
Or people or the management and the stakeholders.
Speaker 3: Well, line to exit, it's really more of the opportunity.
Online to exit it's really more of the opportunity.
Speaker 3: Sustainability, valuation, and 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 because there's a line.
Scalability valuation.
Just the company is the company, putting up the types of metrics needed to attract buyers and are in a reasonable way. So that's it's less of the issue about how to drive monetization timelines because there's alignment.
Speaker 5: Yeah, and you have another question come in about the range of proceeds, particularly the low end of the proceeds with respect to info bionic moving into bucket 1. So, and I'll.
Yep.
We have another question come in about the range of proteins, particularly at the low end of the proceeds with respect to antibiotic moving into bucket one.
So and I'll tell you I mean, we made that the full range estimate last quarter right when when things were in.
Speaker 4: 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. We're in a bottoms-up analysis. And as you might expect, you know, there's not a perfect level of precision on any of these, and things vary, you know, within the portfolio, even from, you know, the estimates.
<unk> flux with the one company.
And we updated it again this quarter with a bottoms up analysis and as you might expect there's not a perfect level of precision on any of these things vary.
Within the portfolio even for the estimates.
Speaker 4: And we just we still have come up with the same range. It just has not you know moving in for bionic in there Yes, you know, I would say they give you more confidence Went into the range, but it's not something in another self that's gonna move you from you know move the range significantly or move within the range
We just we still have come up with the same range I just have not moving into a bionic in there yes.
I would say they give you more confidence and it went into the range, but it's not something in and of itself is going to move you from me.
Moved our range significantly or move within the range significantly.
Speaker 6: Yeah, and I'll add to that. Yeah. Yeah. And I'll add to that.
Yes, and I'll add to that yeah, yeah, and I'll add to that.
Hum.
Speaker 3: When we did this analysis last quarter, we had some probability weighting of the infobionic achieving a recap and a set of outcomes. So it wasn't necessarily in that zero last quarter and a big number this quarter. There was a number that reflected the probability of the recap getting done. The second thing I would say is with a 5% ownership stake, which is what we have.
Last one when we did this analysis last quarter.
We had some probability waiting for meaningful bionic, achieving a recap and instead of outcomes. So it wasn't necessarily in a zero last quarter.
You know a big number this quarter. There wasn't there was there was a number that reflected their probability of the recap getting done and the second thing I would say as you know with a 5% ownership stake.
Which is what we what we have.
Speaker 3: It moves the needle, given where our 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, larger ones.
It doesn't it moves the needle given where our stock prices and what we're trying to do but it doesn't swing as much as some of the other companies, where we have larger larger ownership stakes.
Yeah.
Speaker 4: That would pause there for a second operator. Were there any other questions on the online?
I will pause here for a second operator are there any other.
Questions on the line.
Speaker 1: We have a question from Sherry Rubenstein, a private investor. Please proceed.
We have a question from Sherry Rubenstein, a private investor. Please proceed.
Oh, Hello am I on.
Speaker 7: Yes, you are. 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. What does that mean exactly?
Yeah sure Hi, how are you hi, I'm really new to this I don't quite understand I only have 83 shares so I'll be cashed out what does that mean exactly.
Speaker 4: 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.
If you ended up being cashed out then you would your brokerage account would simply receive a check cash.
<unk> outlined in the proxy is $1 65 per share.
Speaker 7: 65 per share. Well, because right now it's only $8.98.
165 per share well because right now it's only.
898 cents.
Speaker 4: Correct. Yes, the cash out price is at a premium to today's trade.
Correct, yes, it they'd be cash out price is at a premium to today's trading price.
Speaker 7: So my best to wait then until you catch me out or
So my best to wait then until you catch me out or.
Well I need to avoid giving individual okay. I guess, that's my advice.
Speaker 7: Well, I need to avoid giving individual investment advice. So I should have to ask my broker that. So right now, if I sold it, I would be getting $0.98 if I wait. When are you cashing out?
You'd have to buy my broker that so right now if I saw that I would be getting 98 cents if I wait when it's when you're cashing out.
Well if this transaction is approved by shareholders, we would expect it to occur.
Speaker 4: Well, if this transaction has approved bus shareholders, we would expect it to occur around December 15th. December 6th.
Around December 15th December 15th, Okay, So, possibly that I could get $1.65 a share if I just wait until then.
Speaker 7: So possibly then I could get a dollar 65 a share if I just wait until then.
Speaker 4: Is that correct? That is correct. That is correct. OK. And they receive the check because it's a brokerage. I have E-Trade. Is that the way it works? Or should I call them? Yes. That would all be handled through your brokerage account.
Is that correct that is correct that is correct, okay and they received a check because its a brokerage I E trade is that the way. It works. So should I call then, yes that would that would all be handled through your brokerage account.
Oh, Okay, alright, and I will give him a call and thank you for all the information.
Speaker 7: Okay. All right, then I will give them a call. Thank you for all the information. It's confusing to me. All right. Yep, I understand.
Using to me [laughter].
Yeah I understand.
Okay.
Speaker 1: There are no audio questions left. In queue, I would turn it back to management for closing comments.
There are no audio questions left in queue I will turn it back to management for closing comments.
Speaker 3: Yeah, we have one more question number 18. At what point would you expect to have clarity on whether State Card 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. Yeah.
Yeah, we have one more.
Question number 18 at what point would you expect to have clarity on whether safeguard will continue to trade OTC or not so as we said where 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 to make that work.
So we will do everything we can.
Speaker 3: to see if we can get market makers, to see if it can trade on one of the OTC levels. There's no assurance that it will. Obviously, keep in mind that if we're a non-reporting company, so we're not defiling the equivalent of 10Ks or 10Qs, then it's gonna trade differently than a proper NASDAQ listed company with Ks and Qs, although our current recent trading has...
Let's see if we can get market makers to see if it if it can trade on one of the OTC levels. There's no assurance that it will obviously keep in mind that if we're a non reporting company. So it will not be filing the equivalent of 10-Ks or 10-Qs then.
It's going to take.
Trade differently then.
A proper NASDAQ listed company with occasion choose although our current recent trading.
<unk> 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 having done subject of things that we're working on.
Speaker 3: or episodic, if you will. So we'll do everything we can to try to achieve that.
Speaker 3: We can commit to trying, we can't commit to having it done, subject to things that we're working on.
Yeah.
Okay and it looks like that was the last.
Question.
Speaker 3: So just to wrap up, I want to thank you for joining us in our call today. Please contact us if you have any questions. Will we answer the questions directly? We'll put you in touch with computer chair, whoever else to try to help you understand the transaction and interrupt any questions or concerns you have. Thanks a lot, have a good evening.
So just to wrap up I want to thank you for joining us on our call today. Please contact us if you have any questions. We'll we'll either answered some questions directly we will put you in touch with our computer chair 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.
Speaker 1: 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.
Thank you. This does concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Yeah.