Robert Blum - Investor Relations, Managing Partner at Lytham Partners Mark Wong - President, Chief Executive Officer, Director, Principal Executive Officer Matthew Szot - Chief Financial Officer, Executive Vice President of Finance and Administration, Treasurer.

Sarkis Sherbetchyan - B. Riley FBR Gerry Sweeney - ROTH Ben Klieve - NOBLE Capital Markets.

Good afternoon everyone and welcome to the S&W Seed Company reports first quarter fiscal year 2018 financial results conference call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions].

Please also note that today's event is being recorded. At this time, I would like to turn the conference call over to Mr. Robert Blum with Lytham Partners. Sire, please go ahead, sir..

Thank you Jamie and thank you all for joining us today to discuss the financial results for S&W Seed Company for the first quarter of fiscal year 2018 ended September 30, 2017. With us on the call representing the company today are Mark Wong, President and Chief Executive Officer and Matthew Szot, Chief Financial Officer.

At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. Before we begin with prepared remarks, we submit for the record the following statement.

Statements made by the management team of S&W Seed Company during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended and such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually or projected.

Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements, including the risk that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company's 10-K for the fiscal year ended June 30, 2017 and other filings made by the company with the Securities and Exchange Commission.

With that said, let me turn the call over to Mark Wong, Chief Executive Officer for S&W Seed Company.

Mark?.

Thank you Robert and good afternoon to all of you on the call today. As I mentioned during my inaugural conference call eight weeks ago, I believe S&W remains one of the unique middle market agricultural companies in the world today. This is the reason I became CEO.

I believe we have a tremendous opportunity to leverage a very strong asset base to drive incremental value for each dollar of seed we sell by evolving our focus to include trait premiums of our existing crop portfolio as well as the creation of a more customer centric sales organization. This evolution will not occur overnight.

But at the end of the day, I am confident that it will enable us to significantly expand shareholder value.

Looking at the first quarter, we saw a continuation of the trend that highlighted fiscal 2017, improved gross profit margins as we reduced our production costs, offset by weakness in Saudi Arabia caused by the recent change in water regulations.

Overall, revenues were $10.7 million, compared to $12.3 million in the quarter a year ago, but importantly gross margins were 21.8%, compared to just 15.9% last year. The 590 basis point improvement in gross margins is especially significant given our product mix.

As we move toward the remainder of the year and product mix shifts to our higher margin varieties, we expect this to become an even more pronounced trend. I know Matt will talk more about this in his details shortly.

As I highlighted during our last conference call, I think there is a large opportunity for us to build an integrated seed biotech platform that can bring significant value to the marketplace.

There are certain classes of genes that we are evaluating with a high degree of interest, including digestibility, insect resistance, disease resistance and herbicide resistance. Trait development will be a key driver for S&W going forward in our alfalfa, sorghum and sunflower programs as well as future crops we may look to enter or acquire.

Along these lines, we made a significant announcement last month. Calyxt and S&W jointly announced that the first of its two alfalfa product candidates has been designated as a non-regulated article under "I am regulated" process by the Biotechnology Regulatory Services of the Animal and Plant Health Inspection Service (APHIS), an agency of the USDA.

The improved quality alfalfa product is the first ever alfalfa product to receive the non-regulated distinction from the USDA.

The collaboration between Calyxt and S&W Seed Company is focused on providing enhanced traits in alfalfa seed varieties that can drive improved productivity while decreasing input costs to meet the growing global demand for higher quality alfalfa products.

S&W is proud to be on the leading edge of new breeding technologies with this collaboration with Calyxt and we are excited to commercialize this leading edge technology with this being just the first in a pipeline of products for alfalfa seed marketed with Calyxt.

In addition to our work with Calyxt, we are making advancement in our technology trait development with genetics led by renowned biotech trait developer, David Stalker. We are working to develop novel alfalfa seed varieties containing select biotechnology traits.

As a number of unique technologies come off patent in the coming years, we are looking to leverage generic genetics knowledge of the patent landscape and scientific expertise to create varieties specific to S&W, utilizing current transgenic traits coupled with other trait technologies proprietary to generic genetics.

Currently, we are working with off-patent constructs of traits in preparation of transferring them to S&W. Based on this unique approach, we believe there is an opportunity to achieve non-regulated status on these products. This would be another significant development within our program.

Again, the unique goal is to develop traits that we can attain higher value per pound of seed sold and development and we have ongoing with Calyxt and generic genetics are the types of agreements that can help us get there. As some of you are aware, we have recently expanded our R&D facility in Nampa, Idaho.

The facility will primarily house development of our alfalfa and Stevia programs as well as parent seed increases for our sorghum and sunflower programs. On the Stevia front, we are confident in the progress being made in our R&D collaborations with a large unnamed consumer products company.

Our goal is to develop a mechanically harvestable Stevia plant for U.S. production with enhanced flavor profiles that would be specific to this customer. Our initial development agreement is scheduled to conclude with this customer in the coming months and we are currently in the process of creating an expanded three-year agreement with them.

As I mentioned during the last call, I believe Stevia is a growth opportunity for S&W. I will personally be overseeing commercialization initiatives and ensure that resources are allocated to drive the adoption and success of these products in the years to come. In our sorghum and sunflower programs, very good progress is also being made.

From an R&D standpoint, the sunflower nursery in Hungary has been harvested. The seed has been shipped to Chile for contra season activity. Excellent progress has been made in development of hybrid sunflowers for the large Russian, Ukrainian and Eastern EU markets. In Chile, seed is being produced for entry into the EU registration trails in 2018.

In Australia, the spring sorghum nursery has been planted with good emergence. Meanwhile, in the U.S., grain sorghum evaluation trials are nearing harvest. On the sorghum and sunflower production side, production of parent seed and hybrid forage sorghum was finalized in Northern Australia with excellent results.

150 metric tons of higher seed was produced for S&W in Australia markets and we recently appointed a production manager for S&W genetics hybrid and parent seed production in the Southern Hemisphere.

On the sales side and marketing front for sorghum and sunflower, in Australia the direct to market model has commenced with sales of SV Genetics hybrid sunflower for sorghum being made to dealers and distributors.

In South Africa, 140 metric tons of SV Genetics sorghum Sudan grass has been harvested and most of that has been sold to Libyan and Pakistani markets. And additional two sorghum hybrids have been like licensed to client in Argentina and parent seed is being shipped to Argentina, Ukrainian and South Africa for production by licensees.

While sorghum and sunflower are a small portion of our current revenue base, I believe the opportunity is there for this to be a significant moment in the years to come. While alfalfa markets in Saudi remain uncertain, we are seeing room for optimism in the U.S.

We recently signed an agreement with a large national seed company to private label certain of our non-GMO dormant germplasms that we acquired from the Pioneer DuPont acquisition. We are also working on additional regional seed companies that we would expand our footprint in the U.S. of this high-end line of seed varieties.

This ability to sell these dormant varieties which we acquired from Pioneer in addition to customers here in the U.S. has also been a key selling point of the acquisition and we are making good progress on that front. We are also in the final year of registration for certain dormant and semi-dormant varieties in Europe.

This process is taking quite some time. But we are finally in the final stages of getting two dormant varieties ready for sale in Europe in 2019 and three semi-dormant varieties in 2020. This progress is helping expand the channels for our alfalfa products to offset the weaknesses we see in Saudi.

Before I turn the discussion over to Matt for a review of the final results, let me recap our strategy going forward. First, our focus going forward will be to drive trait improvement within all of our current crops including alfalfa, sorghum and sunflower and Stevia.

This is where my background lies and where I believe additional value can be generated. Based on industry history, more value per pound of seed is generated from technology than from the seed itself. We can no longer ignore the technology side and I intend to build S&W into an integrated seed biotechnology platform in the coming years.

Second, we are developing strategies to become a more customer centric organization based in conjunction with our key distributors to highlight and communicate the attributes of our alfalfa, sorghum, sunflower and Stevia variety to our customers. Third, sorghum and sunflower become increasingly larger components of our business going forward.

We will look to establish market share through organic and possibly acquisition growth, while developing traits that will allow us to become significant players these crops going forward.

And lastly, I believe Stevia is a growth opportunity for S&W and I will be personally overseeing commercialization initiatives and ensure that resources are allocated to drive the adoption and success of this sector of our business in the years to come. With this said, let me turn over to Matt Szot for a review of the quarterly results.

Matt, please?.

rights offering during the week before the Christmas holiday. And as a reminder, this is a back stop up rights offering, which will generate $12.2 million in proceeds for us. Now from a banking perspective, as we discussed last quarter, we recently closed on a new two-year $35 million working capital facility with KeyBanc.

This new facility is providing us the working capital to support our increased production and we are also working on securing a 15-year term loan to refinance our promissory note due to Pioneer in December 2017.

From a balance sheet perspective, I think it's important to point out that we saw a significant increase in inventory and corresponding accounts payable since the end of June. The increase in inventory and grower payable is consistent with our expectations and reflects the timing of our recent North American harvest.

As in the past, inventory levels spike at the completion of our harvest period. To recap our guidance, based on information currently available to management, the company expects revenue for fiscal 2018 to be approximately $75 million to $80 million and adjusted EBITDA to range between $4 million and $5.5 million.

And for the second quarter, we expect revenue to be approximately $20 million. I know we went through a lot of data here. So if you have any questions please feel free to ask. Now I will turn the call back over to Mark..

Thank you Matt. I would just like to wrap up the call today and give you a view of what I think are the highlights of what S&W represents in this unique middle market agricultural industry. First, we are one of the largest alfalfa seed companies. We have nearly 20% share of the worldwide alfalfa seed market. We address global demand for animal proteins.

We have access to the leading products through our acquisition of Pioneer which also gives us distribution that we did not have before. We have multiple technology collaborations for the next generation of products. We are also expanding into other crops and technologies. We have a strong pipeline of new sorghum and sunflower products being rolled out.

We have patented Stevia varieties being commercialized. We have a strong base of industry leading germplasm in these crops. Proprietary varieties of alfalfa and these additional crops like sorghum, sunflower and Stevia. We have long breeding programs of up to 20 years to give us unique germplasm for each of these crops.

We have strong production and distribution base. We sell our products in more than 30 countries around the world. We have production areas in both the Northern and Southern hemispheres of the world and we are able to grow our sorghum and sunflower products in these areas to support our expansion. We are addressing also some really big markets.

I think we have said before, we believe the alfalfa market is about $400 million a year in sales. We think the sorghum market is almost equal to that at about $350 million in sales. Sunflower is about $1 billion. So it's about twice as big, more than twice as big as the alfalfa market.

And the Stevia market currently is about $565 million while the sweetener market is the in the billions of dollars. And so Stevia, as a product category, is helping to take some more of that large sweetener market. And lastly, I think we are a great value. We trade at a discount to industry evaluations.

Seed companies traditionally are valued at a multiple of revenue. Large transactions in the seed industry has been at increasing premium, as evidenced recently by Bayer's sale of its seed assets to BASF.

And we are currently trading just above a little bit above book value which, in my view, is a real opportunity for people to buy the company shares at a very reasonable price. And I personally have bought some shares recently in the company as has been announced.

In addition and lastly and maybe most importantly, I think we have a great team in place to execute on the initiatives that we have described in the last couple of calls. And ultimately, we will create value through these initiatives for you, our shareholders. We thank you for your continued support.

And we will now like to open up the call for your questions.

Operator?.

[Operator Instructions]. Our first question today comes from Sarkis Sherbetchyan from B. Riley FBR. Please go ahead with your question..

Hi. Good afternoon and thanks for taking my question here..

Hi Sarkis. Good to hear from you..

So in the press release. I see that you guys have outlined the fact that you want to become a more efficient and successful production platform, marketing and sales organization, right.

So just thinking about that statement and given the fact that you maintain your annual revenue guidance, how do we reconcile the existing operating expense base of this business compared to this revenue trajectory? In other words, are you potentially looking at some cost rationalization? And if not, what degree of confidence do you have that you are going to grow revenues materially higher from this trajectory?.

Yes. Sarkis, I think at this stage, we feel comfortable where our operating expense spend is. We are going to see a bit of, probably a $400,000 increase year-over-year in our research and development line item. But overall, we are most focused on growing revenues and expanding gross margins and we think our operating expenses.

Of course, we are always looking for ways to drive efficiencies there and reduce costs, but we don't see significant opportunities nor is that really in our plan over the next 12 months to be dramatically changing the operating expense line item..

Understood.

If we think about the maintenance of the annual guidance, can you just maybe remind us the confidence of at this stage in the year or the cycle?.

Well, certainly one of our largest course for revenue is in Q4. So we don't have complete order book to substantiate the full $75 million to $80 million.

But with that being said, based on our detailed rollup by our projections from our sales guys and communications from our customers, at this time, we believe $75 million to $80 million is a reasonable range of expectations for our revenue for this year.

We will also be driving, we will be driving, we expect to be driving gross margin improvements year-over-year and that should be translating into an EBITDA of around $4 million to $5.5 million. And if the Saudi market continues to soften, we will probably be in the lower part of that range.

And if the Saudi market remains stable or starts to improve, we will be at the high end of that range..

Got it. That's helpful. I appreciate the commentary around the progress in sorghum and sunflower, those programs you have.

Can you maybe outline what your near-term, mid-term and long-term revenue and gross margin targets are for those programs?.

Sarkis, this is Mark. Well, the development of new species like this starts off with a breeding program that can take up to eight years to generate its first varieties and that's why most seed companies enter new markets as we have done through an acquisition of a breeding program or an existing company.

I think in the last call we said that after that, it's a two or three year process to kind of ramp up breeder seed in the form of these are all hybrids in sorghum and sunflower that we are developing. We are not doing any OPs currently. So you have a three line system for hybrids, A, B lines and restores.

And so we are developing all those and increasing all those lines and then putting them in the field to produce the seed that we will sell to our farmer customers.

So we expect this year some number around $2 million, $2.5 million in sales and from my experience we can ramp that number up looking at historical growth rate for companies that do a good job in new crop like these, which I am sure we will do. But we still think we can hit sort of $30 million number in five years that we have mentioned before.

How we get the $30 million from $2 million, $2.5 million is going to be a little bumpy. It always is. But we think we have a good chance based on our germplasm and our distribution and production assets to still get that number within a five year period. Hope that answers your question..

That's helpful. One more and I will hop back in the queue. I know you have talked about creating a customer centric organization as a key piece of the go forward strategy working with key distributors, et cetera.

Can you maybe give us a flavor or sense of how those discussions are going at this stage and/or maybe some specific plans that you have been communicating with your customers?.

Sure. So we, like many the companies, have concentrated on the handoff, right. So the next company along the line that gets our product is usually a distributor of some kind or a dealer who then sells directly to a farmer or a dairy farmer or someone like that in the alfalfa business, which is obviously our concentration.

We are selling to dairy farmers around the world who then produce the alfalfa and either feed it to their cows or who are selling to beef producers in general who grow the alfalfa and feed to their cattle. But there is also a big alfalfa trading market.

So we sell to a lot of farmers who grow alfalfa hay and put that on the water to different countries and hay prices are pretty good right now and that's what's happening in that, we think, some of the Middle Eastern demand that we are not seeing, in Saudi as an example, is translating to improved shipments of alfalfa forage from both East Coast and West Coast markets to Saudi Arabia.

So we are trying to focus on, especially with these new traits that we are looking in evaluating and putting into our products. I will just give you an example, since you asked for one.

So what's really the benefit to the dairy farmer, right? So maybe the dairy farmers buying through a distributor something and that relationship is absolutely important to us and the distributor understands the technical aspect of our products and why they are superior to our competitors' products is important to us.

He then proves to dairy farmer that he gets more milk from our alfalfa. I mean that's bottom line there. And that's what I mean by a customer focused effort. We have got to work more with the final user, right. He is the one or she is the one that translates a bale of alfalfa or a bale of forage that is in a silage pit to milk.

And we have got to do more to understand what that metric looks like, how to both produce seed that gets the farmer more value but also to teach the farmer what kind of processes he needs or she needs to plant, harvest and then feed that alfalfa to his or her animals to get more value.

So it's both a process of putting more and better genetics in the plants and the seeds. But it's also a teaching process of making sure that our customers are informed how to use our seeds to get more value at the farm, at the animal level.

The dairy farmer wants to know, how does he get more milk? How does he get more milk for every pound of S&W alfalfa that be buys, that he then grows and translates into silage or hay and that then he feeds to his dairy cows or beef cows? That's what we are trying to develop, that whole chain of information and value for ourselves and for our customers.

They have got to know how to use our products. Hope that answers your question..

That's great. I will hop back in the queue. Thank you..

Our next question comes from Gerry Sweeney from ROTH. Please go ahead with your question..

Good afternoon, Mark and Matt..

Good afternoon..

Hi Gerry..

Mark, this is probably a little more for you. So in the prepared remarks, you went through a lot of different things, the Calyxt opportunity, the alfalfa traits, sorghum, sunflower. But obviously you have been in this business a long time.

As you are looking at a wide variety of opportunities in front of you, as you look out, this year is this year, but as you look out the next couple of years, what gets you most excited? What do you think maybe on like a risk base analysis, what has the biggest opportunity to hit the market and could be the most successful?.

Yes. I am going to talk about that in a little bit general terms, because if I name the exact traits, probably our competitors are listening to this call and that probably wouldn't be a good thing. But so bear with me please. But I will break it down to a couple of categories, right.

I think traits really break down into two main categories, traits that help the farmer in some way, right. They either reduce his cost or they improve his yield. But the bottom line for him is that he can make more money at the same original price of his commodity. But the other set of traits which are just as important are traits for the end consumer.

So if you had a more nutritious kind of milk with better makeup of protein and fats and vitamins and things like that, that would be something that would be valuable. So we are trying to look at both of those two categories, the customer sort of focus traits and the farmer sort of focus traits.

The customer traits, in the history of the industry, have been a bit harder to develop. But we think they are really important and we think that, from a public accepting standpoint, they are very, very important because the public has to see something in this technology development that really helps them, right. They have got to see a better product.

Yes, they care about the price of the products and they care if the farmer is making money in sort of a opaque sort of way. But they really like to see something that helps them and we are focused on those kind of opportunities as well as more traditional ones that either increase yield or reduce farmer cost.

So that would be my general answer to your question..

All right.

And then on the gross margin side, Matt, has this been the result of the optimization program growing S&W, the California seed in Australia that we have always talked about the last couple of years driving the margin?.

Well, I would say, in Q1, the margin improvement was more just pronounced by the fact that, which was primarily a non-dormant quarter for us, Gerry, the cost of that production, we did a better job of securing contract production at lower cost this year than our historical costs and doing that while maintaining a firm pricing was the main driver to margin improvement in Q1.

And as we look to Q2 and Q3, in particular, both of those quarters have higher concentration of sales of our dormant varieties are merely being sold to DuPont Pioneer. Those also carry higher margin profiles.

So as we look at our business in 2018 to 2017, we feel confident that we are going to be demonstrating margin improvement and more importantly, getting back to your original question about Australian varieties and being optimized, that's certainly part of our go forward margin expansion opportunity and I think that that's going to be a fundamental tool that we are going to use to continue to drive margins for the next three to five years..

Got it..

This year, we don't have as many Australian seeds to incorporate into that optimization program..

That's right. Because you were sold out at one point, if I remember correctly..

Well, the Australian harvest, the yields were really low back in May 2017..

Yes. Got it..

It's absolutely a part of our go forward strategy..

Okay. Got it. And then Saudi Arabia, obviously it's a headwind and there was talk before about some of that land moving to Sudan and other places that you eventually could make up some of that lost revenue.

Is that still the case? Are you pursuing that? Or you just going to maybe just take this as an opportunity to pivot more towards the trait work and move in at the contraction?.

Yes. A great question. So Saudi Arabia is a difficult market right now. That's pretty clear from all the press we are all reading about the political situations there too. So in line with our trying to get closer to our customers, we have had meetings in Saudi with some of the dairies.

And the dairies have gone through their strategies with us in the terms how much production and what kind of production are they going to try to keep in Saudi Arabia? Where are they going in terms of neighboring countries to plant some of the alfalfa that they can't grow in Saudi Arabia? Where are they going to buy land in other places all around the world from California to Argentina to wherever to grow alfalfa that they are then going to ship to their cows in Saudi? What kind of short-term philosophy are they trying to take towards importing forages in the forage market? And lastly, if push comes to shove, will they cut cow numbers and just import milk for the Saudi market, which has 35 million people and a certain amount of demand for liquid milk and milk products.

So we are trying to work through all of those options. See where we can help them. See where there is an opportunity for us as a seed company. But that goes back to Sarkis' question.

We are trying to really try to understand what the customer really wants and how we can help them get to a better solution than the solution that they may have before we showed up. So we are working on that pretty hard..

Got it. And then final question.

The term loan, I think Matt, you talked about with KeyBanc for the Pioneer note, that has not been finalized, correct?.

Yes. Gerry, to clarify, so our working capital facility is with KeyBanc. We are working with another ag lender on our 15 year term loan. And we are just in the process of finalizing our appraisals on that. And once the appraisals are done, we can finalize the exact loan amount and close. Looking to do that here in the next 30 days or ideally this month..

And this appraisal, is that the appraisals on the Pioneer assets that I know you are going to get --.

Well, yes. Sorry, to clarify, this term loan is going to be collateralized by the mill in California and the mill that we bought from Pioneer that's located in Idaho and our R&D facilities. It will be a mortgage-backed facility..

Okay..

And that's what the appraisals are for..

Got it. And you got those assets pretty cheap. It was a little bit before my time, but it sounds like there is an opportunity to sort of extract some value with this.

Is that a fair assumption?.

Can you repeat the question? I want to make I address it properly..

Yes. I think you got those assets pretty cheap. So there is an opportunity to take that loan out, borrow against it and puts you up in a little bit better situation, maybe bring out some of the asset value to investors is what I am really trying to get at, show them what the value is, yes..

Well, yes. We were very comparable with the valuation we paid and we acquired a tremendous set of assets and that's our job to leverage off of those assets as much as possible..

Okay. Got it. I appreciate it. Thanks..

[Operator Instructions]. Our next question comes from Ben Klieve from NOBLE Capital Markets. Please go ahead with your question..

All right. Thank you. A few questions for me here. One, curious about your take on GMO space after the Pioneer transaction.

Do you see more opportunity there? Or do you think the germplasm targets beyond the Pioneer transaction will largely be conventional?.

I am not sure we understood your question, Ben. I mean we think the assets that we acquired that are non-GMO are very important. I mean there is a majority of the sales in the deal. Obviously, we believe in traits. We said that about, I should at least 20 times in 30 different ways. So we think those are valuable assets.

We are still in the process of negotiating that deal. We have till the end of the year. As you can imagine, the other parties to the deal being Pioneer and Forage Genetics in some ways are allies and in other ways are competitors. So it's a three-way negotiation. So it's not an easy negotiating. I will just put it that way and no more about that..

Yes. I understood. Okay. Fair enough. And a couple of other questions here. One question relative to your customer centric approach, I know like you said that those kind of changes don't happen overnight.

But I am curious, when you look at the timeline here, do you see this more as a multi-quarter process or a multi-year process? And given that there is a distribution network in place, I would guess it would be the former.

But I am curious what your thoughts are there?.

Well, you know, it's like anything else in life. You start on a quarterly basis and you do it per year. So yes to your question, right. Good question. And that's how she works.

It depends on what markets, the dairy market are easier to show, I think are going to be easier to show value of alfalfa versus maybe the beef market which alfalfa is only one of many feeds. So I think it's a market-by-market analysis. And for sure, it's not easy. That's why everyone doesn't do it.

But I think it's important for us to understand the value of our products to our customers. I think that's the shorthand for what the question for our customer centric sort of approach. And we believe in that. It might be difficult to do, but we don't see how that can be wrong.

If we learn from our customers what they want to see in our seed in terms of traits, whether they be GM or non-GM or from breeding and we are out to make a better product for them so that hopefully there is added value that we can get a little higher price so that we can up our return for our shareholders..

Okay. Thank you. And then one last one for me here.

Mark, I know some of your initial comments talk about, but the investments that you need and the working capital and I guess besides seasonal build ups [indiscernible], are you happy with the current level of investment in working capital? Or do you think you are going to need to build this up a bit more here?.

I am happy with our level of working capital. I am happy with the commitments our shareholders have made to the rights offering and to the equity they put in the company.

I will give you the best thermometer, if you asked my wife, she would go, man for the last five months you have been a very, very happy guy sort of you know, just seemingly in a good mood all the time, you don't kick the dog anymore and man, what the hell happened with you, it must be your new job, that's the only thing that changed, boy, well, you should have taken that job a long time ago.

So you know, all I can say is yes, I think we are doing fine on the financial side. Our banks and our equity investors seem to have confidence in our team and we couldn't ask for more than that. So thanks for the question..

Well, I am glad that things are going well at work and the home now. I will jump back in queue, guys. Thank you..

You are welcome, Ben..

And ladies and gentlemen, at this time we have reached the end of the allotted time for today's question-and-answer session. I would like to turn the conference call back over to Mark Wong for any closing remarks..

Well, I would just like to thank everyone for participating in the call today and listening so intently to our explanation of the company's progress. We will have another call in mid February and we look forward to having the opportunity to communicate to all of you again. Thanks so very much..

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending. You may now disconnect your lines..