Executives: Gary Quinn - CEO Dan Murale - Interim CFO

Analysts: Allen Zwickler - First Manhattan

Operator: Good afternoon and thank you for joining us to discuss FalconStor Software Q3 2016 Earnings. Gary Quinn, FalconStor’s Chief Executive Officer; and Dan Murale, interim Chief Financial Officer, will discuss the Company’s results and activities, and will then open the call to your questions. The Company would like to advise all participants that today’s discussion may contain what some consider forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are discussed in FalconStor’s reports on Forms 10-K, 10-Q and other reports filed with the Securities and Exchange Commission, and in the Company’s press release issued today. During today’s call, there will be discussions that include non-GAAP results. A reconciliation of the non-GAAP results to GAAP has been posted on FalconStor’s Web site at www.falconstor.com, under the Investor Relations. After the close of business today, FalconStor released its Q3 2016 earnings. Copies of the earnings release and supplemental financial information are available on FalconStor’s Web site at www.falconstor.com. I am now pleased to turn the call over to Gary Quinn.

Gary Quinn: Thank you, operator, and good afternoon ladies and gentlemen. And welcome to the FalconStor Q3 2016 earnings call. Before we get to the numbers with Dan, I wanted to give you an update on our progress with FreeStor and the year ahead. I believe that we’re on the right path with our FreeStor product and the most recent release will now allow enterprises and services providers to leverage the cloud public, private or hybrid, as if it was their own infrastructure, on premise or their own environment. In addition much of the data that is currently moving into the cloud from enterprises is for archive, compliance and development test environment, which are usually temporary. Granted small business companies who are primarily windows are moving to either Azure or Amazon. Those are not FreeStor potential customers, but service providers who assist them in the move or provide a hosting environment as well as a public cloud destination are potential customers for FreeStor. In addition the FreeStor product is a block storage solution, which is used for the high performing data basis and applications which have high availability, zero downtime and low latency requirements that would not typically reside in a public cloud due to those requirements. The public cloud for those companies would utilize a FreeStor for backup copy or an offline copy which does not impact production for data mining as well as a temporary destination for virtual disaster recovery and other development test application requirements. Our recent road show with analysts, bloggers and journalist around the world was well received and indicated that we are the most complete solution for those enterprises looking to take advantage of the hybrid cloud and workload portability with introduction of our latest release. Now back to the marketplace climate and the opportunity for FreeStor, we believe as you can see from our press release and as Dan will review in a few minutes, that FreeStor is the right solution for large, mega-large enterprise customers, manage service providers who supporting small and medium enterprises as well as those who are supporting windows based SMBs. Finally, hardware manufacturers, who need enterprise class block storage services and have no ability to get their within their own organization are also excellent candidates for FreeStor as we are seeing from the new flash providers and the eventual entry of the component manufacturers to the market. But since FreeStor is 16-year-old company, who’s had a legacy install base of customers with legacy point solutions and some of those customers are not convertible to FreeStor due to their limited requirements or some who have already decided to move to the cloud and abandon their own management of their own management of their infrastructure. We find ourselves in some cased unable to the match to decline of our installed base at the expense of the growth of our free store product. If you look at what Dan is going to review in the press release information free store is the standalone company that is less than two years in the market place, is growing at quite an acceptable pace that would represent a completely different evaluation of this particular company. And I would like to now turn the call over to Dan for the official financial discussion. Dan.

Dan Murale: Thank you Gary. This slide is just a reminder of the Safe Harbor Statement. Good afternoon to everybody. Most of our discussion this afternoon will focus on non-GAAP financial measures and on the key business performance indicator for the quarter. The balance of our financial details can be found in our press release which was distributed earlier today and contains our year-over-year results and all the applicable disclosures in accordance for GAAP. During third quarter of 2016, our consolidated revenue totaled $7.3 million compared with $8.1 million in the previous quarter and 49.7 million in the third quarter of 2015. During the quarter, we had one customer which accounted for more than 10% of total revenue. HDS which was 11% of our total revenue. Booking for the current quarter totaled $5.5 million compared with $8.8 million in both the previous quarter and the prior year. Some of the more significant headwinds we continue to experience and expect to continue through at least the end of 2016 include challenges in obtaining new customers, decreased sales of our legacy products and the level of customer deal elongation and customer indecisiveness to purchase in a timely manner as a result of customers working through their organization purchasing strategies. We see this with many prospect transaction which are currently underway with customers evaluating their current environments determining the best destination for that work load public, private or hybrid cloud. Evaluating the market place for the appropriate technology and then finally making a purchase -- purchasing decision and then deploying. Our non-GAAP expenses which excludes restructuring charges, legal cost and share based compensation expense totaled $8.9 million compared with $10.5 million in the previous quarter and $11.8 million in the prior year. A 15% and 25% decrease respectively. We ended the quarter with 185 employees worldwide compared with 237 at the same period last year. We are pleased that we are able to decreased cost structure and anticipate there are non-GAAP expenses will continue to decrease in the fourth quarter of 2016 as we continuously look to optimize our cost structures and allocate resources in order to gain operational efficiencies. We anticipate ending the year with 168 employees worldwide. We believe by focusing on a few key geographies for new free store opportunities we can growth the business in a way that is efficient and overcomes the legacy reduction. One size does not fit all from a go to market perspectives. Our non-GAAP gross margins were 72% in both the current and previous quarters compared with 75% in the third quarter of 2015. Turning to our balance sheet, as of September 30, we had $6.1 million in cash, cash equivalent in marketable securities. Compared with $9.4 million as of June 30. Included in the current quarter cash burn of $3.3 million was $1.1 million of severance payments related to employees who were terminated during 2016 as part of our cost structure optimization initiatives. We have continued to make strategic investments back into the business in supportive our new product releases. Including free store analytics which was completed during the first half of 2106 and our latest enhancement related to free store which were released in October 2016. We believe our investments in engineering have enabled us to innovate faster than any period in time in FalconStore and that innovation is driving us to participate in more opportunities. Although those opportunities are taking some time to close. Gary will provide greater detail over the latest FreeStor enhancements later on in the presentation. However, we continually look to optimize our cost structures and allocate resources in order to gain operational efficiencies to match our projective run rate of billings -- our booking billings and total revenue to ensure we are adjusting our business plans and strategies and response to our anticipated sources and uses of cash as we move forward. Now I’d like to discuss our FreeStor performance. In looking back over the last 15 years, you can see that we are gaining significant traction with FreeStor and all our routes the market. When looking at this slide, you can see that our total FreeStor subscription based platform and FreeStor technology bookings value for the first nine months of 2016 have exceeded our total FreeStor bookings value for all of 2015. However, while we are pleased with the booking growth for FreeStor technology and subscription based platform, these bookings sales to make-up for the declines in our legacy product bookings. As mentioned on our last call, when looking at our three pronged approach to the marketplace. OEMs are cooling in terms of additional new partnerships. Although, our three China based partners have met or exceeded their annual commitments. The MSP marketplace we believe is our best opportunity for new growth expansion. But we’re also very pleased with our new enterprise customer acquisitions and now existing enterprise customer conversions beginning to take place. During the first 15 months of FreeStor, we have delivered the technology to 330 customers by the following routes to market. OEMs six customers, MSPs 18 customers, enterprise subscription 30 customers and enterprise perpetual 276 customers. This represents an increase of 92% in our FreeStor customer base since December of 2015. During the second and third quarters of ’15 we sold five FreeStor transactions, those respective customers have subsequently increased their capacity by total 44% in the last 12 months. Although a small sample size, we will continue to update you on the annual capacity growth rate for the FreeStor product. Looking at our bookings breakdown, you will notice that in the third quarter FreeStor and FreeStor technology combined for 34% of our total bookings and 38% for the nine months ended September 30, 2016. As we look at our year-to-date bookings result for 2016 and 2015, 2015 had minimal subscription based FreeStor bookings due to the timing of the release of FreeStor product in May 2015. However, we had a healthy adoption from our OEM partnership and a few existing customers who adapted the FreeStor technology platform under our traditional perpetual license models. Our year-to-date 2016 bookings reflect a better mix of overall FreeStor and FreeStor technology bookings versus existing customer renewals, expansions and traditional point solution bookings. As a result of the continued adoption and acceptance of the FreeStor platform since its release in 2015. However, this increase in the percentage of FreeStor and FreeStor technology bookings as compared to the prior year is not entirely a result of organic growth in our FreeStor platform bookings and is partly a result of declines in our legacy product bookings. Now, I’d like to turn the call back over to Gary, where he will provide even update on the SDS marketplace and some more color on the new enhancements to FreeStor.

Gary Quinn: Thank you, Dan. I’d like to review the current situation in the marketplace and how FreeStor is addressing the needs of enterprise customers and service providers in the industry. As you can see from this picture prior to the introduction of the Amazon cloud most enterprises had a single destination site A or possibly two destination site B that the use for backup copies, disaster recovery, offline data mining and for high availability stretch clustering and delivery of compliance archive and other service levels to the organization. They also in many cases paid for everything two times and then some organizations three times. This was not the best use of financial and human resources, but it appeared there was no other way until Amazon demonstrated and achieved a breakthrough in the use of sharing infrastructure that was commoditized. When FreeStor was announced 2015 it was primarily [technical difficulty] data services platform that was hardware agnostic commoditization that will allow for enterprises and service providers to migrate from site-to-site, disk-to-flash and once at the final destination deliver different service levels, zero downtime, minimal recovery time or a reduced footprint of the data with dedublication. In April of 2016, FreeStor introduced a real time analytics engine to help enterprises and service providers to view all the storage commoditization again, the same for capacity utilization and a portable interface that could be used for storage administrators as well as business end users in a self-service model. In October of 2016, we introduced the ability to execute FreeStor in a number of clouds due to our agnostic once again commoditization of those cloud infrastructures. We help customers used the cloud as if it was their own. There is no need to learn Amazon, Azure, [Indiscernible], OpenStack et cetera. In addition, we not only move to data, but we move the application, the database and the data. So workload portability is what enterprise customers are ultimately looking for. The ability to move VMware to the cloud, Microsoft type review [ph] to the cloud or move VMware to Hyper-V and vice versa is what customers are doing today, when they inventory their workloads and categorize them. Customers want the ability to move well known hypervisors to open source hypervisors like OpenStack and Zen, so they can eventually cloud hop. Since the data is the only component left, because the servers have been virtualized and the networks have been virtualized, FreeStor delivers the last requirement of date virtualization and ultimately workload portability, mobility. As you can see here an example of either an enterprise customer moving to a hosted private destination a service provider moving some of the customer workload to their destination and finally to the cloud, which is the appropriate destination for performance both technical and economic as well as to achieve certain levels of service. So the challenge of moving workload to the appropriate destination to maximize value and performance is what is delivered with FreeStor today. The updates to FreeStor in October, included a change in the licensing model to accommodate those customers looking to place copies of their data into the public cloud environments, which require them to pay a fee to that particular cloud provider. We extended FreeStor to run in the cloud destination of a customer or service provider’s choice and we also extended the FreeStor product use external industry standard security controls for authorization access and audit in a secure multitenant environment for management network and data isolation. We enhanced our analytics to not only report real time on the core physical and virtual storage resources, but also now at the edge where the applications in databases reside for better visibility into performance and service level achievements. We also added industry standard agent deployment capabilities with the use of the puppet configuration management software to be less intrusive and to support security requirements of our enterprise customers and service providers. This now allows for quality of service to be visualized and for troubleshooting from the physical or virtual storage resources to be accomplished easier and faster. Finally we are in a continuous improvement of our technology since we are an enterprise class provider which requires us to add more quality, more performance and more compatibility which allows our customers to growth with us with certainty. Finally, here is an example to visualize what we are talking about when using our FreeStor offering in a hybrid model. As you can see moving, workloads from your premise into the appropriate could destination and subsequently, here is the additional example to visualize what we are talking about when FreeStor permit to cloud hop from Amazon to Azure. Also in this example, in our pay one price, pay once licensing model, you would only pay for the capacity in Amazon or in the Azure cloud if the on premise instance is no longer available or exits. So once again FalconStor’s many well-known customers around the world using our technology to support their businesses. We realize that we need to continue to win new customers convert existing customers and development new roots to market like service providers. We are on a right path although sometimes it may not see in their way but we are moving ahead. So in conclusion. I would like to say thank you very much and operator if you can compile the Q&A roster?

Operator: [Operator Instructions]. And there are no questions at this time. And we do have a question from Allen Zwickler of First Manhattan.

Allen Zwickler: Just based on what we now know you've been talking about October is there any way that you can project the number of backlog or orders that you received for the no products?

Gary Quinn: So Alan how it's Gary Quinn. Nice to see you again or hear from you. So, actually the product we can available on October 17, there are some existing customers who are looking for the cloud capability that will participate in the beta program and approximately half a dozen of those customers already took the solution and moved it into production. So we have existing customers who are using the new version with the cloud connectors. We do not have a brand new customers since the release on October 17 till today for the FreeStor cloud version.

Allen Zwickler: And how does that translated into revenue to people that you were just referring to?

Gary Quinn: So anybody who is an existing free store customer in the subscription license or even our perpetual license which requires a true up on an annual basis. Those existing customers received the new version of the product and at their true up period, if there is additional capacity that has required to be licensed. They will pay us for that additional capacity, as well as their annual fee at that point in time.

Allen Zwickler: Okay. And what is the run rate safe for the service side of your business, the legacy products if you want to breakdown your revenues in the quarter? I just don’t have the press release always I was intend [ph] for whatever reasons. Could you just take that out?

Gary Quinn: I think Dan on the one slide that you show that 38% of our business came from -- in the quarter, came from FreeStor and the rest came from our existing customers or our [technical difficulty] customers correct.

Dan Murale: Yes. From a booking side, yes. Revenue --.

Allen Zwickler: And how is that looking, is that going to -- at that rate would you on a GAAP basis be able to breakeven. I mean, have you given lay-offs that you’ve just put in place. What do you think your burn rate is or cash burn rate is?

Gary Quinn: So we made a necessary adjustments in Q3, some of that will flow through into Q4 and our anticipation next year, we’ll give you an update, after our Q4 results we’ll have a final outlook for 2017. But I think I could extrapolate that our goal, obviously is to become cash flow positive and non-GAAP positive. Even though our numbers are quite low. But we’ve been adjusting as rapidly as possible to the declining legacy customer installed based, well FreeStor grows. And obviously many of you just like us are wanting to be cash flow positive and non-GAAP positive and move to top-line along the way. So that would be our anticipation, but I think I’d have to really wait like the final results of Q4 and then basically give you an update after I finish Q4 and tell you what we think we can do on the next call.

Allen Zwickler: Okay. Thank you.

Gary Quinn: Okay. Thank you, Allen.

Operator: [Operator Instructions]. And we will take a question from [indiscernible].

Unidentified Analyst: Doing fine. Just wanted to kind of get you to describe, what it’s like out there. I know you’ve been traveling with [indiscernible], a bunch of customers, and a bunch of potential customers. In this malaise that you’re seeing out there. How does the conversation go and does it end with the potential customer or customer?

Gary Quinn: So it’s a good question Bill [ph]. Because I think a lot of people who are looking at storage providers today, the advent of the cloud has caused significant disruption in the storage marketplace as you’ve seen. Whether that’s a hardware provider such as Dell and EMC, they got together, those things -- they were declining in their traditional storage basis, NetApp continues to see some challenges even with the acquisition of solid fire to fill out their flesh environment. I know, people look at people like Nimble and Pure and say, look they’re growing, they’re growing primarily in a share shift of physical storage from disk to flash. So some people who are on traditional HP EMC and others may be looking at Pure and Nimble for performance, as well as economic performance, because of better price points. But to get to the software side, for us, what’s happening, we talked -- Dan mentioned and I know in the past, we’ve talk about deal elongation. So a typical customer right now that is an enterprise customer that is looking to transform their infrastructure. And when we talk about infrastructure, we’re talking about physical storage, physical servers, the actual networks themselves and they’re looking to get more value out of that through virtualization. So whether it’s storage virtualization, network virtualization or sever virtualization. That’s ultimately what a cloud is and allows you to plug in any type of hardware and without any kind of proprietary requirements. Also inside of storage you have block storage, file storage or object storage. Everybody talks about object it’s the smallest footprint out there today, but it’s the most potential to grow. But that doesn’t mean that existing enterprises on block or file, are not looking to take advantage of commoditized environments or virtual environments or take advantage of the cloud. So what’s happening is people are inventorying their virtual machines, so to use VMware for the most logical virtual machine and that typically contains a database and applications and some associated storage whether block or file. And what’s happening is they’re determining whether that should remain in a new shared infrastructure that they would run on VMware or OpenStack in their own environment or if they move that to a hosted private environment because they believe some other provider can give them a better physical location as well as the assets and the environmental, et cetera. As opposed to owning their own building like we showed in a picture like a side A. So when the time they do the inventorying and decide what virtual machines are going to stay with them and which ones they’re going to put into cloud because they don’t have certain requirement like maybe it’s performance, maybe there is a lot of not just writing, but also reading typically from a cloud perspective reading data around the cloud cost more and it’s a pretty extensive inventory process and then the next thing is to move the virtual machine, the application database in the storage, the appropriate destination. And that’s where FreeStor gets the opportunity to come in, one of the used cases in the produce is migration and once you migrate that virtual machine to the appropriate destination with the data you then have the opportunity to determine the service level whether you need zero downtime, you want to modernize backup, which is traditionally snapshot backup with recovery. Maybe just want to backup and deduplicate for a smaller footprint and then the ability to apply a common set of data services that FreeStor gives you. Our FreeStor platform operates in the pubic cloud environment as if it’s your own. We are not asking the customer to talk to the Amazon gateway, the Azure gateway, the Alibaba gateway. They talk directly to the FreeStor platform and we basically virtualized that connection, so that customers don’t realize it’s in the public cloud or it’s in their own premises the same. The challenge with all of that and as the long explanation of what’s happening in most these enterprise customers is it exactly that it’s a lot of inventorying, it’s been assessing the technology that can do it. We’ve been in the number of those transactions, some of them we won, as Dan as mentioned, others are continuing on and it takes time. It’s a long project, there is usually multiple phases, they have to get the investments to make the changes and then actually begin the actual work. So I think you know a lot of people are looking at the public cloud as an opportunity, I think it is a huge opportunity for certain data types and certain service levels, but it’s not everything, there will always be some level of on-premise storage either in your own facility or in some type of hosted private facility and then leveraging the cloud for the cheapest infrastructure out there based upon the service levels you’re looking for. So that’s what’s taking I think a lot of the time and I think if you look at some of the reports that have come out from the [indiscernible] of the world and the IECs of the world. It’s probably not fun for investors, it’s certainly not fun for vendors who are trying to get more business or in that business and the deals not happening fast enough. But I find where we are in a situation -- we have not -- put it this way, a deal to another technology provider with FreeStor. We've had a no decision or we had a non -- because they just haven’t moved forward with the investment yet or the human capital or we've had a non-decision because we are a small company and some people have said well you might be a little bit risky. Does that answer your question?

Unidentified Analyst : It does, it does, and so as an example and in the real world like the financial industry would be perfect use case for FreeStor. Where they can off load a lot of the stuff that’s not that important and then again of course store it on site the stuff that is important. Is that kind of what you mean?

Gary Quinn: Yes so, in the case of block storage like we have built. Those are typically like if you're on a trading platform it's probably running on either a proprietary data base, an oracle data base, its high performing, zero down time. That environment typically would have a snapshot copy of that environment offline somewhere, it could be placed into the clouds so that maybe your marketing people or may be customer relationship people could mine that data without impacting that real time production block data base. So that's where it's a perfect utilization in the cloud and we can help customers do that and then they take advantage of that because they are not leaving it for a long time. They might just mine it for a week due to particular campaign, particular metric they’re looking for a customers to cross sell the service to. And the cloud is perfect for those types of people who are looking for a temporary destination with good economic value and some reasonable performance. So it doesn’t have to be high performances like a trading platform. So that's a good thing there. the other one is for compliance reasons also I am sure in your business you are on to some kind of regulatory requirements that say you got a keep copy of either customer information, account information, transaction information for some period of time. Why store that on-site on-premise where you can't buy physical infrastructure. Your company or most company's at the same cost or price point as an Amazons or Google or an Azure. So for the right reason that's what people are doing. They are trying to find the right service performance and economic value. And economic value doesn't always remain cheap, I mean there are financial institutions, one that we were just recently in, it was nothing about the cost. It was all about if this data base fails, we lose $10 million a day. So it was to basically tell us what it's going to take to get it done and we're not really concerned about the cost at all. In other cases, you are concerned about cost because you don’t want to pay the high price of branded storage from a branded manufactures. You’d rather just throw it in Amazon or Azure and mine it from there. So I do think that there is a lot opportunity here. It's just taking longer, I think as you can see, we are moving ahead with free store, we are growing that business. It's just that where our traditional legacy customers and legacy environments and many of them, -- and if you think about, we have something called virtual tape library, those customers are not really FreeStor customers so to speak. Alright, the tape is not really going away in a lot of areas, but we currently don’t have a tape substitute in free store today. But that's not a growing business. So either it’s declining or somebody's modernizing there traditional net back up or IBM, TSM backup solution to our VTL into a snapshot backup which FreeStor could provide, provided that we’re in front that customer ourselves and we're not relying upon our partner. Lot of time our partners who sold our VTL products, it was kind of a one trick pony and they’re not really into that -- I would say almost saying that not really into the pre-store platform, because maybe compete with them, because they’re typically a hardware vendor or just a little bit too much of complicated sale.

Unidentified Analyst : Got you. On next -- in respect to your new pricing model. How radical is that -- I just noticed after you announced your new pricing, your stock kind of got hammer. Is this a pretty radical event. What are your views on that?

Gary Quinn: I don’t think that my pricing model is same as the share price. I really can’t comment on the share price and market dynamics. So I mean, I’m sure all the folks that are on this call tonight will have all kinds of investment models and metrics that they look at FalconStor and consider what we’re worth at the end of the day. I really don’t think it had anything to do with our pay once pricing, and the reason why I also say that is that, when you look at block data, although the cloud is a destination for copies of block storage data, that’s probably not the first storage type, that’s moved into the cloud, it’s primarily files, which a lower performance, not something that FalconStor is doing. And the idea behind pay ones was, yes we do have a number of customers either that were new or existing that wanted that model, before we made it official and we did license it to them. So it won us the transaction and it is also something where, if you look at that picture I had passed, the one with the clouds in the [indiscernible] of showing workload moving around, that’s an example of a current prospect that we’re in and they’re saying, we would like to have a master storage repository that we pay for once and then we serve up storage to be appropriate destination, be at a cloud or customer premise. And in order to compete against the Amazon of the world or the Azures we got to keep our cost down as much as possible. So we’re looking to say in that case, those are multi-petabyte transactions, if I could win those and pay for the master instance only, it’s certainly worth something to me to win that customer and get them as a flagship or somebody I can reference and rally around. Down the road maybe, we would turn around and say we’ll charge you for all the capacity, but right now, we think it’s very innovative, it’s in the spirit of the cloud, which people want, very flexible low cost. I don’t think -- I really don’t -- to be quiet honest with you we put that out on I think October 4th and since that time the stock has significantly drop. If somebody is reading into the pay once model should drive my share price down. I think they should really understand that I don’t think I’m leaving something behind with the pay once model, because of the fact that most block will reside on-premise or a private hosted environment and all of that capacity will be paid to FalconStor are under the FalconStor licensing model. Okay.

Unidentified Analyst : Thank you for that answer. And do you still feel Q4 will be like Q2, as Q3 would like Q1?

Gary Quinn: Yes. I think you can see that Q1 and Q3 were very similar and Q2 was a little better than Q1 and Q3 and I think as usual at the end of the year, you always get customers looking to spent a little bit more because they haven’t spent enough throughout the year. So I do feel that that trend will continue and I think what we found looking back now over the last seven quarters going on eight, that will probably give you guys little more seasonality of our business versus everything, everything is not 25%, there is a little seasonality. Q1 and Q3 are very similar, Q2 and Q4 are progressively better.

Unidentified Analyst : Thank you very much my friend.

Gary Quinn: All right. Thank you, Bill. Have a good night.

Operator: [Operator Instructions] [Operator Instructions] And with no further questions, I’d like to close up the call. Thank you, Mr. Quinn.

Gary Quinn: All right, great. Thank you very much and thank you to everyone, who is on this call and has been very supportive of the company, certainly during my timeframe here I appreciate all of you, who have put a lot of faith in myself as well as, I’d like to welcome Dan, this is his first call and I think you did pretty good Dan. So thank you very much and I look forward to future calls with you. All I can say is that we continue to move ahead and innovate with FreeStor. We market our FreeStor message, we’re aggressively participating in this cloud phenomenon right now with FreeStor and we continue as Dan mentioned before to match our operational costs to our overall performance. And we do look forward to updating you again after Q4, which would be in the beginning of February. So for many of you this is coming up on yearend, I wish you a safe and happy holiday season and a fantastic New Year and look forward to 2017. Thank you, again and good night.

Operator: And ladies and gentlemen, this does conclude today’s conference. Thank you for your participation. You may now disconnect.