Greetings and welcome to the Document Security Systems' First Quarter 2012 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Patrick White, CEO of DSS. Thank you, you may begin.

Thank you and good afternoon. Welcome to the conference call and webcast. I am joined here today with our Chairman of the Board, Mr. Robert Fagenson; our Chief Financial Officer, Mr. Phil Jones and for questions and answers, we have our Chief Operating Officer, Bob Bzdick; Mike Roy, President of the DSS Digital Division and a member of our Board of Directors, Mr. John Cronin. During the call today, we will review and discuss our first quarter 2012 financial results, talk about significant business developments and market conditions as well as provide an update of our strategy and operations. This webcast will be archived in the Investor Relations section of our website. Please note that during the course of the call, we will be making certain forward-looking statements including those regarding revenue recognition matters, results of operations, investments, initiatives and growth strategies. These statements are subject to many assumptions, risks, uncertainties and changes in circumstances. Any assumptions we offer about future performance represent a single point in time estimate. Actual results may vary materially from those expressed or implied by such statements. We expressly disclaim any obligation to revise or update any assumptions, projections or other forward-looking statements to reflect the events or circumstances that may arise after the date of this conference call. For more information about risk factors that may cause actual results to differ from expectations, please see the company's filings with the SEC including our latest Form 10-Q. Our Chief Financial Officer, Phil Jones will now begin by reviewing our financial results. I will then discuss our outlook and execution strategy. Phil?

Thank you, Pat. Today, we announced our first quarter 2012 financial results and filed our Form 10-Q with the SEC which includes the detailed financial results that I will summarize. I encourage all interested investors to read the 10-Q for a full understanding of our financial results and position as of March 31, 2012. First and foremost, we are very pleased to announce first quarter revenues of $3.8 million, a 43% increase over the first quarter of 2011. This is our strongest first quarter in our history. Our entire team was focused on getting 2012 off to a strong start and I believe that we have accomplished that goal. Driving the revenue growth was our packaging division, which had a 102% increase in sales during the quarter driven by demand from its 2 largest customers. In addition, digital sales increased 70%, primarily due to the acquisition that we made in the second quarter of 2011 of ExtraDev, our cloud computing group. Just as exciting as the revenue growth for the quarter was the gross profit performance. Gross profit for our first quarter was $1.3 million, a 34% increase over Q1. Of specific note, gross profits from our printing increased 77% as we saw the benefits of our efforts during 2011 to streamline cost and to focus on our higher margin security printing opportunities. Our total operating expenses increased 24% driven by significant increase in research and development costs, along with the increased costs associated with the company's digital group which we acquired in May of last year. Specifically, Sales, General and Administrative compensation costs increased 40% due to the increase in our employee base from our ExtraDev acquisition. Professional fees, which are typically high during the first quarter as we incur the bulk of our annual audit and SEC fees of approximately $125,000. Professional fees decreased 7% during the 2012 quarter due to a reduction in consulting fees. Sales and marketing cost decreased 34% from the first quarter of last year as we had completed many of our sales and marketing initiatives we targeted in 2011, such as work on our sales collateral, website and trade show materials. Those efforts are largely winding down and I believe that we saw the benefits of those efforts through the revenue growth we experienced this quarter. Most importantly, as we had indicated in our 2011 full year earnings call we had in March, we made the strategic decision to ratchet up our focus on intellectual property portfolio, especially in targeting digital applications of our security technologies. To this end, we significantly increased our R&D efforts this quarter, which increased a 190% from the first quarter of 2011. As Pat will discuss, we are very excited about the initial results of these efforts despite the short term impact on our financial performance. Also during the quarter, we incurred a one time other expense item of approximately $221,000 due to the acceleration of a note discount expense which was the result of a conversion of one of our note into equity during the first quarter of 2012. In addition, the variance in other income expense was impacted by a non-recurring income item that we had experienced in the first quarter of 2011 which was the result of a change in the fair value of a derivative liability. As a result, there was a $659,000 negative variance in our net other income/expense between the 2 quarters. This variance was the driver in the increase in net loss for the quarter. Net loss for Q1 of 2012 was $1.1 million, compared to $0.4 million in Q1 2011. Adjusted EBITDA, which is earnings before interest, taxes, depreciation amortization, stock based compensation and other non-recurring items, for Q1 was a loss of $479,000 as compared to EBITDA loss of $423,000 in the first quarter of 2011. First of all, these adjusted EBITDA losses are typically highest in the first quarter for the reason I have mentioned earlier, due to the high cost of our SEC related filing fees, most notably our annual audit fees, which are approximately $125,000. Other than that, the major driver of our adjusted EBITDA loss variance this quarter was the significant increase in the R&D spend of approximately $100,000 we did during the quarter. I remind everyone that adjusted EBITDA is a non-GAAP measure of performance and I encourage everyone to refer to the table we included in our earnings release for a reconciliation of our GAAP net loss to the adjusted EBITDA loss I just referred to. So, to summarize, our first quarter of 2012 was a very strong quarter on 2 very important measurements, revenue growth and gross profit growth. Our increase in gross profit allowed us to absorb the significant increase in R&D cost that were made during the quarter. Once again, we feel that the focus on R&D are important investments in the future of DSS. Once again, the highlights, our net loss was unfavorably impacted by the high degree of professional fees caused by year end reporting requirements that we incur in the first quarter each year, along with the impact of 2 large non-recurring other income expense items. The $221,000 charge this quarter, the amortization of note discount expense and $361,000 one-time gain that we incurred in last year's quarter for a change in the fair value of derivative liabilities. Quickly moving to the balance sheet. Our balance sheet, as of March 31, 2012 reflected the improvement in our financial condition as a result of a $2.7 million net [indiscernible] we closed in the first quarter along with the conversion of approximately $575,000 of long term debt made during the quarter as well. I am available to answer any detail questions on the financials. So with that, I will turn the call over to Pat.

Thank you, Phil. There were several noteworthy events in the first quarter. One of the most impactful of all events was the strategic decision to develop our intellectual property portfolio as it pertains to digital applications such as secure cloud computing, mobile communications, information security and secured data storage. This extensive undertaking was commenced after consultation with the ipCapital Group who advised DSS to take this initiative due to the potential revenue opportunities associated with these types of applications and DSS intellectual property value add to the digital world. This strategy commenced during the first quarter when DSS contracted with ipCapital to help us develop and focus our new intellectual property development as well as market the technology to large integrators. In response to continued requests from shareholders and the investment community, we asked John Cronin and his ipCapital Group, as part of their consulting agreement with DSS, to produce an early state evaluation of our technologies that DSS could share with the public as they apply to commercial uses that could become revenue drivers for DSS in the future. The ipCapital Group recently completed and prepared a market assessment based on DSS' intellectual property holdings. Earlier today, we issued a press release disclosing that ipCapital assess the monetization potential of our intellectual property at $245 million. According to ipCapital, the $245 million estimate represents the present value of potential future licensing revenue across key markets over the next 10 years, assuming a conservative market penetration forecast, industry average royalty rates applied to the top line market revenue and availability of financial investor required to drive DSS' continued technology and IP development and licensing efforts. It's also important to know that ipCapital also states that this monetization assessment is just one of 6 potential value drivers for DSS' intellectual property. For instance, this assessment does not include any litigation wins of the technology such as our lawsuit with Coupons.com. I am happy to report that to date DSS has approximately 130 technology concepts and ideas involving new and off shoot technologies, many of which may ultimately result in new patent applications. This will be a significant part of our business going forward as we attempt to position DSS at the forefront of security printing and move our technologies to cloud computing data security applications. ipCapital and DSS are both actively marketing these new technology -- digital applications to large integrators. Phil mentioned in the financial results and of course I am very pleased to report the 43% increase in our revenue of the first quarter and that is, as Phil said, the largest first quarter sales in DSS history. It also represents the third consecutive quarter year-over-year of sales increases. The other thing that Phil mentioned was that our gross profit also increased 34%, which is another positive jump in the right direction. These results are a strong indicator that DSS is beginning to ramp up as we have always felt would happen once we put all the pieces of our business model into gear. I can tell you one thing that meeting end-users face-to-face and helping them with their growing counterfeiting and product diversion issues, and boy, they are growing, is the key to successful growth for DSS. As Phil indicated, the major part of the increase stem from our DSS Packaging group. Now, they had some very busy clients and one of them, which we mentioned earlier in the quarter, was for an iPhone accessory that's being sold here in the States as well as in Europe. Although this is more of a second quarter event, I am happy to report that DSS' plastic group announced a win with a large consumer products company for an RFID people tracking software hardware project. The technology helps the client track people throughout a particular facility as well as gathers intelligence in the form of reports indicating various metrics they will use for people flow tracking and marketing research as well as security. It's important to note that this initial project with this one particular client has potential for another 48 potential installations that this client possesses. We are in talks about expanding it into those 48 installations after the first one. I am happy to report that our DSS Printing group has landed some new clients for security printing. Our printing group has received purchase orders from ConAgra, Hershey's and Kraft Food recently. Our DSS Digital group spent the quarter working closely with ipCapital group in the technology development process that we have been discussing. In addition, they completed the internet delivery of our variable secured document technology and they have been building necessary business infrastructure with the hiring of a new VP of sales and marketing who was currently addressing several international opportunities in Central America, the Philippines and the Middle East as well as supporting ipCapital's marketing and sales initiatives to the integrators. As Phil discussed, our bottom line was hit by a non-recurring charge of $221,000 for a debt conversion to equity charge as well as added expenses mainly from our strategic IP development program. This added expense shouldn't be a surprise since we have been seeing it all along that we are making a financial commitment to position and develop DSS' intellectual property around the cloud computing security solutions. World's largest tradeshow for printing technology was recently held in Düsseldorf, Germany. DSS attended this show as a guest of Eastman Kodak. Kodak displayed samples of DSS technologies in their very large tradeshow booth. From what I hear, Kodak made some significant sales of equipment and technology and it was a great opportunity for DSS to meet and train Kodak's international sales personnel in our technologies. As we have discussed previously, Kodak has been a very big supporter of DSS and the relationship only grew stronger by our attendance at the event. DSS benefits tremendously by utilizing Kodak's international sales personnel. With this mini sales army working on DSS' behalf, we now have feet in the street in many parts of the globe which we never had before. We anticipate some potential revenue opportunities in far away places because of this Kodak relationship. In summation, our business model is beginning to show positive results, as we discussed, the revenue jumped and the gross profit increased. In addition, our strategic plan of adding value to DSS by creating an intellectual property portfolio, it has broad applications in today's digital world is taking hold. It's happening. We also have added important brand onus through our stable clients seeking DSS' help with their growing counterfeiting problems and we have ipCapital working with DSS to introduce our technologies to much larger market segments and very well known integrators. All this hopefully has helped [ph] us growing, evolving and thriving DSS for 2012 and beyond. Thank you, and that concludes my comments. John or Robert, would you like to chime in with some closing comments of your own?

John, you want to bring people up to date?

Yes. Sure, I just have a couple of closing comments. Normally, when we do evaluation of a company, in terms of the value of the intellectual property, we recognize the 6 major ways that you can add up in a calculator the value of the company in terms of its intellectual property. The first is, how well the intellectual property supports the products in the market to give you the competitive advantage for the higher margins. Based upon today's products and services that DSS sells, that's an easy calculation but definitely [ph] the value is not there because of the size of the business right now, probably capitalizing the future, the intellectual property would provide higher margins and the ability to sell more. So we did not analyze that part of the value. The second way is to actually take a look at the litigation aspects of the intellectual property. I can't comment on the size but I think everyone on the call is probably aware of Coupons.com and its trade secret litigation [indiscernible] and I think previously in other report the numbers have been sized for that. [indiscernible] but certainly in the hatter [ph]. Third way is to gain transactional leverage. That is, because you have the IP, you can leverage it in doing deals and transactions. In this way, we are starting to add many large integrators that are looking at DSS as a partner and it is absolutely proof positive that the intellectual property, that's the reason why they are talking to DSS, not only we do have good technology but to practically [ph] have our good intellectual property has really started to open up doors. In one large integrator, for instance, last week, they said that they would only work with us because we had good intellectual property. So in that third way of a transactional leverage the whole value of the IP would be shown by the deals that we cut. For us, the fourth way is, when you look at intellectual property is to look at how well you can license it. Here we actually did do a sizing of the licensing market potential and the $245 million that we gave was based upon the 4 different markets over 10 years, the market of cloud security services, secured email, cloud storage and secure printing. Even at the growth rates of those taking an estimate of only 1% market share of that licensing and using a royalty rate pretty known in the industry we are able to accomplish sizing of a significant number in licensing. So we believe as we actively grow the portfolio in the direction of cloud computing to some of these niche [ph] areas even at a 1% licensing market penetration we have $245 million. The other 2, which I won't go into detail about, in terms of adding value to the company, in terms of intellectual property of the other 2. The fifth is brand and that is what we are finding in many companies that are public especially, that the fact that you have good intellectual property has investors recognizing that there is really accretive value in the intellectual property and therefore have a higher propensity to see the brand of the company being inventive and also being a good buy. This leads to the last part, which is shareholder value. Ultimately the value of the intellectual property adds up to those 5 to overall shareholder value, like 4 or 5 levers on a machine some of that you pull fast and some that you pull slow, some have larger returns, some have less. It's part of intellectual property, hopefully, the shareholder value is seen to be high because of the growing portfolio. As mentioned and I'll close, there are 130 ideas in just the first 3 or 4 months working with my staff and DSS, shows that the company is certainly incredibly innovative and with profit conversion of these ideas into intellectual properties and its patents, we gain an asset that lasts for 20 years and basically it is something that we can leverage for a long time. So I will close with the comment that I am very bullish on DSS' current portfolio, current litigation and also future development in the case of the drive of the company.

Thanks, John, it's Robert. It's a quarter of contrast. Clearly revenues grew substantially as did gross profit but the bottom line still doesn't look so good. So as substantial shareholders when they scratch our heads but at the end of the day, the trends that we have been trying to create in terms of large, credible Fortune 100[ph] client affiliation, demands driven by the customers are happening in increasing numbers and moving needle in the right direction. The fact is, as we announced last quarter, we made a conscious decision to invest in unlocking the hidden value in our intellectual property and as John Cronin and his group has the type of evaluation metrics that you are beginning to see and hence moving us closer to the true monetization potential of what we all, I believe, always felt was there so that we have watched the gracefully slow pace in terms of our ability to unlock it. This is our strategic move to unlock that at a greater rate so we will see it during our natural lifetime and it is a decision that the board management made that I feel certainly after the last quarter is showing a positive result so we're moving in the right direction. So I will stop there and turn it over to questions and answers and then we will wrap up at the end. Lewis, would you like to open for questions?

[Operator Instructions] Our first question comes from the line of Ben Benson, [ph] a private investor.

You guys mentioned that you did a $221,000 conversion. Can you elaborate a little on that?

Yes. Actually it wasn't a $221,000 conversion. It was a $575,000 conversion of which there was a equity based fair value measurement of $221,000 which is called a beneficial conversion feature element that typically gets amortized over the life of the convertible note but when the note is converted, any unamortized expense is written off and it's a one-time hit. So, hopefully that explains it.

It probably sounds more confusing than it does explanatory.

100% correct.

But as actually when you issue a convertible note like that, there is a value ascribed to that conversion privilege and you come up with a monetary number that says that note has with it the liability of the company that paid back but the investor has, what we call it, derived benefit by having the ability to convert when they want and normally you can take that monetary number. There is a formula that you arrive at by using and you can amortize that over the life of the note but if the investor makes a choice to convert prematurely, then you have to take the hit on that entire implied value all at once and that's what happened. The investor had a $575,000 convertible note and chose to convert it to stock and when they did that it triggered an acceleration of the need to take that hit on our balance sheet -- on our statement, really.

So what price was the conversion?

Joe, what was the price for those shares we converted?

$3.30

Guess that makes sense why your stock took a hit then at that point.

Well, only if someone sold them.

And I guess, this is a question to Robert. I been conference calls quarter-after-quarter for over 4 years and we are always hoping that going in the right direction, when do you think we are actually going to get there?

Well, it's a tough question to answer and I have tried before. Unfortunately I have been wrong before and I take no pride in having been wrong but after many years of being an investor in this company, and 4 of being in the chairman seat, I can only say that the metrics that we are looking at most closely are the quality of our customers, the size of the orders and then moving in the right direction. When we are able to take the cost that we are incurring by making strategic moves like buying in ExtraDev to be able to get the technical knowledge that they can offer in terms of building our products, it doesn't flow through immediately to the bottom line. When we get back the investment we are making and soliciting these larger clients and doing all the work necessary work to be able to service them and get those orders, when we are able to realize the value of the work that John Cronin is doing by actually landing the first real big wholesale commercial opportunity to license. When we start gleaning the benefits of the expanded licensing agreement that we have with an R. R. Donnelly, for arguments sake, and there a lot -- variety of other commercial possibilities with very large companies that fit into that mold, then we are going to turn. If this is going to be next month, or next quarter, I can't tell you but I can tell you that in our opinion, it is continuing to move closer and I just don't want to get in trouble by making predictions and being wrong but at the point that which we don't believe that anymore we will see me beating an exit which I haven't done. I am all in. I haven't sold the share or stock for my entire tenure and there certainly have been opportunities where we have seen our stock move up in volumes but I am in because I think we are doing the right thing and I think we have finally gotten out from the malaise of having to spend a lot of money on lawsuits, having to spend a lot of money on cleaning up older mistakes, the bad partners and I think we are starting to see the benefits and when they flow through the bottom line, then you will be happy and I will be happy, but I am not going to stand here and tell you I know when. Only that I think we are getting closer.

Our next question comes from the line of David Wolfson with Wm Smith.

John, thanks for being on the call and giving us some color on the valuation process. My first question, I was just curious where did you really see the strength in this patent portfolio in terms of the various segments? Was it mostly from the digital space? Or was it a mixture of packaging, printing, plastics? And then a follow-up to that would be, given your assessment of the different segments, how have you, as a company, adjusted your strategy internally to capitalize on these opportunities?

I could speak to the first one and the second, I can speak to but maybe have Patrick ride on top of the handle [ph] just to make sure I do it correctly. The basic patents that when I read them initially, myself which I do all the time when I'm doing diligence, I came to recognize that there were fundamental methods that could be used to print voids or dots on a paper or on an image such that you might not be able to see them but the reader could see them. So that when you print these dots in such a pattern at such a frequency and such an angle across the page, the copier when copying will see it and then produce an image that says this is an illegal copy. So as an engineer of science, which I am, I have been fascinated that that was possible and then recognizing the reason that was possible was to take advantage of the way the copiers work and I thought that was just clever. But then it dawned to me when I was reading the patent that it didn't mention to what business base it applied to. It was a basic fundamental technology that would allow you to do this. It was going to be used not only printing, it could be used in any kind of imaging, it could be used on LCD screens, smartphones. So I immediately thought, this is fundamental technology that could be applied to this whole world we are in. So I said, "my goodness, I really like this". So then I tried to explain to the team maybe the area of cloud computing is an important area because in cloud computing the big problem is security. If you look up cloud computing in Wikipedia, it says, "if you see a picture of what the cloud is and printing is not part of the cloud", but it is. So people have forgot that printing and copying is part of the cloud today. You can't print something without it going out of your laptop out to the internet and being printed back down into your machine. So I immediately thought that this basic fundamental technology could be applied but then we spent some time with the DSS technologist and some simple brainstorming sessions we were able to apply all sorts of new ideas to this fundamental basic technology. For instance, if you decided that you wanted to print on a print job and decided some regions of the paper should be some level of security, you could do that and the copiers would see it. It [indiscernible] the charge for that security. All the fundamental algorithms that they have which are in software is a trade secret. This is another level of protection for DSS, not just the patent, it's a trade secret which means you cannot get to the algorithms. A cloud allows us to store those algorithms in the cloud so that no printer or no copy will actually have those algorithms inside of it, so that you can't reverse engineer the trade secret. So once again, I said, "Wow, this has even more layers than intellectual property protection". So the answer to the question is, fundamentally, it's a fundamental technology that found that now we can apply to these other areas where I saw the future and that's where the product direction is that we are trying to orchestrate myself as a board member is to start doing deals. Their companies are applying this technology to images, to security for documents and its copies and printed in the cloud. So the integrators that we are talking to, I was on the phone today for 45 minutes with a major integrator talking about how we can apply this to the cloud and they immediately see it and by the way, I talked to 3 major integrators and they were surprised to recognize that this fundamental technology could actually be applied to this area of cloud computing and private cloud computing and security. So, as an ex-IBMer myself, I was surprised that these large integrators were surprised, meaning it wasn't on their radar screen, it wasn't in Google, Wikipedia. That's opportunity. Now, we are not going to get there after anybody. We are leading it. So I will turn it back to Patrick.

Yes, in answer to your part 2 of the question, as you can see we are working pretty damn close with ipCapital on discussing the opportunities with the integrators and we are talking with some of the biggest names out there. Some of these integrators are copier manufacturers, who make printing devices, some are actual building huge secure cloud computing systems and the one area that they lack in is data security, information security. People have to trust the cloud in order to put their vital records in it, to put their tax feature and information, to put their social security card information in it. They need to know that nobody is going to see that information except themselves or whoever they want to see it. That's where DSS is filling a big huge void. So that's a huge market potential for our technologies in that space. When you apply it to e-mails, cell phones, which get user authentications, there's just tremendous amounts of applications and to market all of this, we are working with our cloud computing group that we acquired last year, headed by Mike Roy. He's working on several projects, where he is driving reports in secured documents over the internet to clients in faraway places. As I said, he's got some clients he is talking to in the Middle East, Philippines and Central America. They are pretty important type stuff, one is in a licensing mode. So there's very good things going on and it's just endless what the type of stuff we can get into at this point.

Okay, great. Thanks very much. That sounds exciting. It's my only follow up question would be, do you guys have any goals in terms of timing for this technology to hit?

The best way to answer it is as quickly as possible. I mean, we have multiple fronts as we speak right now, some are near-term, some are medium-term and some are lengthy. I mean, I really can't pin it down anymore. There isn't like a specific date and time I can tell you but we do have to deal with the other side of the equation, which is the client, but it's been introduced and a lot of legwork has been done in the past year. So now things are servicing to decision making.

And Patrick, if I may, in recent calls with integrators it's clear that the DSS technology is really in a software realm, and is really easily implementable versus waiting for a hardware schedule of some new device. So we've learned from all the integrators that it's really, so we don't have to wait for their hardware schedule, right? We don't have to wait for their next box to come out to put our stuff in it, because that stuff can actually be ported into devices of today. So the neat thing is the technology is not going to be gated by a customer's hardware schedule. It's only going to be gated, we believe by their appetite for the opportunity, which we're trying to manage through leveraging -- licensing on the technology. That was a really new thing to find out because if know about the integrators, the more you realize it, our goal is to solve their problems. That's our goal.

Okay, great. Thank you. My other question is just regarding your current cash position. This may be a question for Phil, but just at what levels are you comfortable in terms of cash? How long do you think this cash position is sustainable for?

I'd say, we're very, very comfortable with our cash position. And, given all the near term opportunities we see on the pipeline, we feel this will last us in the foreseeable future.

Our next question comes from the line of Kenneth Crumble, [ph] a private investor.

Just like to know, when do you see the run on our shares to make some profit on our shares via shareholders?

When do you? Could you explain yourself a little bit more on that?

Well, the shares. The shareholder themselves on the valuation of the company here. You gave a valuation here out about the company.

Well, we think that the company is under valued, particularly in regards to some of the analyses we received from ipCapital. Hopefully the markets will catch-up to this valuation and they can use what we have been able to receive from ipCapital as a tool to value DSS and make a catch-up, get the markets to catch-up to us.

No, but something goes here because it goes up and down, like everyday. It starts to move a little bit then it drops. That's what it keeps doing.

The problem you see is that there is no way to track the performance of the company as it relates to the stock price at this point. It's really based on peoples' feeling of what might be. When we can bring in some of the large commercial applications to start showing the revenue stream and the earning stream, then the volatility of the stock that's based on speculation of what it might be worth, what it might not be worth will be tempered by some actual cash flow and earnings and that's what the market is waiting to see. That's what we are waiting to see.

Why don't you publicize yourself? You can [ph] be a little more on TV, CNN. Talk about it, maybe more people would buy into the stock.

The problem is all that does is hype short-term volatility. At this point, if we were a 3 year old company, that's one thing. They haven't been in the market so long they just go down hunting [indiscernible] but people want to see now is result and that's where we are focusing on. We are driving the revenues. We did very well with this. We did very well with driving the gross profit. Now we have to right size the expenses to meet that so that we are able to bring it to the bottom line. Every dollar of revenue you drive, delivers your margin, 20%, 30%, 40%. Every dollar expense you save is a dollar that goes to the bottom line. So at the end of the day, we are trying to balance the 2 and we've stopped the hemorrhaging at large part at the printing companies. So at least now, the efforts that we do now are earning up positively instead of getting sucked out of the company by the problems we had over at commercial printing. So we are with you philosophically but at the end of the day, spending more money on advertising when we don't have the bottom line to sustain it, we found it's a very, very short term solution. I hope you can understand that we have led through it as we all are now but we are committed to pushing in that direction. Lewis, anyone else?

Our next question comes the line of Brian Maron, [ph] a private investor.

I would like to direct this question to John Cronin, if I may. John, can you clarify one item? How many patents do we currently have and how many patents do you see as being pending?

John, are you there?

I am sorry, I was on mute here. On the applications side, the pending side is a matter of, whether or not we have filed the applications or not? Were you actually asking have we filed more applications or are you talking about the 120 ideas?

Well, how many current patents are we able to derive revenue from at the moment? I guess, is where to begin.

Yes.

I think we are using the whole portfolio to put in our paychecks [ph] to leverage. So it's not any one particular patent. We have 6 issued patents, 6 pending patents, 2 provisional applications in the core with 5 provisional applications in the digital and cloud security and in the combination, we have 128 new ideas pending that we could convert over and I would bet you that's a nice supply of a lot of patents. We could easily have 23 more patents with the supply. So basically 6 issued patents, 6 pending U.S. patents, some provisional applications and then 5 other provisional applications at digital and cloud and over 128 ideas that we have identified that could be converted over to patents. Does that help?

Yes. John, if all these became a reality, can you possibly speculate what the valuation might be?

Yes, I just gave the front end that on the licensing side, over a 10 year period using very conservative numbers that would be at $245 million. Leveraging it in other areas is very different. So leveraging it for competitive advantage, it means you have to have the products, you have to leverage the products to higher margins. There is a value there. [indiscernible] aspect of value is leveraging these patents in the integrators level and I believe that's a big part of the value here. That is because we are pitching DSS to these large integrators and talking about the fact that we are developing an ownership position in cloud computing for printing. I think that's going to help us win over many of these large integrators. I have had 3 separate conversations with 3 large integrators over the last 2 weeks and the intellectual property comes up by them not by us and I am happy to report to them that we have a good position and a big deeper position. So their third place of value is going to be, we close an integrator deal, for instance, and whatever that number is going to be for, either product or services, a big part of the value of that is going to be because we have this intellectual property growing. That's the third security of the intellectual property. The next one is litigation that I mentioned. We already are in litigation with Coupons.com but the [indiscernible] litigation, that's a fairly large number as Patrick has reported before. So that's the fourth area of value. So at least these 4 areas are kind of a calculator, you can calculate the value but for pure play licensing of this portfolio over a 10 year period is $245 million assuming 1% market penetration of the licensing. Fairly conservative.

There are no further questions at this time. I would like to now hand it over to Mr. Fagenson for closing comments.

Any of the members of the management team have anything they'd like to add at this moment. If not, then I would like to thank our investors for their patience. I would like to thank you for your loyalty. I hope that you see as we do that we are in fact moving in the right direction in terms of building revenues and building the type of customer base that we think is going to bring us to profitability. So as much as it is very difficult to wait as long as it has been, we are still convinced that making the investment in the IP and making the investment in our growth and research and development was the right one and we hope that during the course of the balance of 2012, that we will all be able to see it in terms of actual growth in all the metrics that we would like to see. So I thank you all and I hope that we will continue to have more growth and better news as the quarters go on. Thank you all, good evening.

Thank you.

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