Question-and-Answer Session
Operator
(Operator instructions) Your first question is from the line of Jim Ricchiuti with Needham & Company.
Jim Ricchiuti – Needham & Company
Hi, good afternoon.
Steve Abramson
Hi, Jim.
Sid Rosenblatt
Hi, Jim.
Jim Ricchiuti – Needham & Company
The question first on the operating expenses. Sid, maybe this one’s for you. Are you breaking out patent cost now from R&D, is that where it had been?
Sid Rosenblatt
That is correct. It had been included in our R&D expenses and we decided this year to break it out separate.
Jim Ricchiuti – Needham & Company
Okay. Has it been roughly at these – the $700,000 level or does it tend to vary quarter to quarter?
Sid Rosenblatt
It has actually been close to that for the past four to six quarters. It has been, for the past couple of years, somewhere around $3 million on an annual basis.
Jim Ricchiuti – Needham & Company
Okay, that’s helpful. I have a question about the royalty reports that are generated. And the question is – I’m just wondering when you get a report from Samsung, how much information is there? Is it broken out by product line, is it broken out by geographic region?
Sid Rosenblatt
These reports we get are confidential, but our royalties essentially are based upon direct gross revenues that – of the AMOLED or the OLED products that they sell, but anything in the report is really confidential, but our license fees are based upon gross revenues.
Jim Ricchiuti – Needham & Company
Okay. But it is possible for you – what I’m getting at, I’m just wondering if it’s possible for you to get some better sense as to how some of the products are selling based on now what we know where they are going in certain – for instance, the phone is now available here in the US.
Sid Rosenblatt
We – if we had the – a couple of things. Anything that we get from them through these reports will be confidential. Display Search and some of the other folks actually get more information and publish that information about the specific products and press releases.
So, that is the place that we actually look to get some corroboration of the information that we get, but they get more information because I think they speak more to the marketing folks and stuff like that and get information about the specific products. To be honest, we are a technology provider and a material provider and looked at as a vendor.
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