--------------------------------------------------------------------------------

Ralph Garcea, Cantor Fitzgerald - Analyst [8]

 

--------------------------------------------------------------------------------

Ralph Garcea, Cantor Fitzgerald - Analyst [10]

--------------------------------------------------------------------------------

No problem. Okay. A couple of questions or multiple questions. On the studio deals, do they already cover your distribution or do you have to renegotiate again once you set that up from a European expansion?

--------------------------------------------------------------------------------

Nicholas Routhier, Sensio Technologies Inc. - President, CEO [11]

--------------------------------------------------------------------------------

It wouldn't be as much fun if we didn't have to renegotiate, wouldn't it? Yes, there is no provision for Europe. However, once again, you know, we've been talking about Europe and Latin America for the last year, so you can appreciate that we have been having these discussions with the studios for a while now. At the point that we are right now, we feel like we have the right level of comfort on all sides to be able to say that we can -- we will soon be able to move ahead in that direction. So yes, there will be renegotiations. There will be new contracts, new agreements, but we are not starting from scratch.

--------------------------------------------------------------------------------

Ralph Garcea, Cantor Fitzgerald - Analyst [12]

--------------------------------------------------------------------------------

Okay. And then I commend you again on your cost cutting. You kept R&D flat over the three years while you cut the other variable expenses. You're down at a nice level now. As you go to Europe, do you go from a CAD2.5 million OpEx level to CAD3 million, let's say, once it's fully rolled out in a year or two? What sort of OpEx level do you need to get to to really deliver on Europe? We are trying to gauge what the expense increase would be over the next two years.

--------------------------------------------------------------------------------

Nicholas Routhier, Sensio Technologies Inc. - President, CEO [13]

--------------------------------------------------------------------------------

It's a very good question, actually. There will be some development costs for the platform for the CMS to put it in Europe and make sure that we have redundancy in servers in Europe so we make sure we don't have any buffering issues. We will not be streaming straight from the US to Europe for sure. So there will be some investments there. But the good news is it's a very, very scalable architecture. So we don't need -- the application was developed internationally, so we don't need to scale that up. We don't need to scale up the CMS. It's another CMS, but it's still the same infrastructure it's running on. So we expect costs to pretty much remain -- there's going to be a slight increase, but it's not going to be anywhere near a doubling or 1.5X. It's going to be a slight increase in operational costs.

--------------------------------------------------------------------------------