Have you forgotten the ongoing fees for those put on notice/in discussion?

Neither we nor TPL are required to contribute more than $2,000,000 in any fiscal year. Distributable cash and allocation of profits and losses will be allocated to the members in the priority defined in the LLC Agreement. Phoenix Digital has committed to pay a quarterly amount ranging between $500,000 and $1,000,000 (based upon a percentage of the working capital fund balance of Phoenix Digital) for supporting efforts to secure licensing agreements by the other member on behalf of Phoenix Digital. During the three months ended August 31, 2007 and 2006, Phoenix Digital paid $873,731 and $968,000, respectively, to TPL pursuant to this commitment.

We are accounting for our investment in Phoenix Digital under the equity method of accounting, and accordingly have recorded our share of Phoenix Digital’s net loss of $1,200,542 during the three months ended August 31, 2007 as a decrease in our investment and our share of Phoenix Digital’s net income of $12,070,198 during the three months ended August 31, 2006 as an increase in our investment. Cash distributions of $11,578,672 received from Phoenix Digital during the three months ended August 31, 2006 have been recorded as a reduction in our investment. No distributions were received during the three months ended August 31, 2007. Our investment in Phoenix Digital is $1,683,427 at August 31, 2007 and has been recorded as “Investment in Affiliated Company”. We have recorded our share of Phoenix Digital’s net loss as “Equity in Loss of Affiliated Company” in the accompanying consolidated statements of operations for the three months ended August 31, 2007. We have recorded our share of Phoenix Digital’s net income as “Equity in Earnings of Affiliated Company” in the accompanying consolidated statements of operations for the three months ended August 31, 2006. At August 31, 2007 we have recorded $396,098 as A/R from affiliated company for reimbursement due to us of legal fees and related costs for the patent litigation (see Note 7).

During the three months ended August 31, 2007 and 2006, Phoenix Digital entered into licensing agreements with third parties, pursuant to which it received aggregate proceeds of $1,500,000 and $25,749,000, respectively. During September 2007, Phoenix Digital entered into licensing agreements pursuant to which it received aggregate proceeds of $1,433,000.

Be well