Yuval Viner - CEO Eyal Cohen - CFO.

Mitch Fitter - Aegies.

Ladies and gentlemen, thank you for standing by. Welcome to the BOS Second Quarter 2014 Results Conference Call. All participants are at present in listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session.

(Operator Instructions) As a reminder this conference call is being recorded and will be available on the BOS website as of tomorrow. I would like to remind everyone that this conference call may contain projections or other forward-looking statements regarding future events or future performance of the Company.

These statements are only predictions and may change as time passes. BOS does not assume any obligation to update that information.

Actual events or results may differ materially from those projected, including as a result of changing industry and market trends, reduced demand for our products, the timely development of our new products and their adoption by the market, increased competition in the industry and price reductions, as well as due to risks identified in the documents filed by the Company with the SEC.

I would now like to hand over the call to Mr. Yuval Viner, CEO of the Company. Yuval, please go ahead..

Thank you to all our listeners. Second quarter results reflect growth in revenue, improvement in gross profit margin, and reduction in financial expenses as compared to the second quarter of last year. However, our operational expense increased as compared to the comparable quarter last year. Increase was attributed mainly to two reasons.

First, the devaluation of the U.S. dollar against the Israeli Sheqel in the recent year. And second, hiring new employees to the technology department of the RFID and mobile divisions. This investment in the technology department will enable us to expand our product offering and implement cutting edge technology at our customers’ sites.

During the second quarter, we already saw the initial fruits of our investment in the technology department reflected in increase in deferred revenue attributed to project and process. Now, I would like to turn over the call to our CFO, Mr. Eyal Cohen..

Thank you, Yuval. Second quarter results reflected a continuing improvement in BOS’ financial position. In the recent 12 months, we generated $1.3 million EBITDA, a non-GAAP profit of $750,000, and GAAP profit of $200,000. Our loans continued to decrease, and we’re at $6.4 million in June 2014, down from $7.4 million in December 2013.

Going forward, we expect our loans to further decrease. The devaluation of the U.S. dollar against the NIS in the recent year had negatively impacted our profit. We are therefore encouraged by the recent strengthening of the U.S. dollar against the Israeli Sheqel. You are invited to see our updated presentation on our Web site.

This completes the financial review, thank you..

Thank you, sir. (Operator Instructions) The first question is from Mitch Fitter of Aegis, please go ahead..

Hi guys, congratulations on a strong quarter. I have a couple of questions.

Unfortunately, the price of the stock has not reflected some of the good things that you guys have been doing, do you have any plans on going at on road shows and maybe telling your story a little bit to some other institutional players?.

As a matter of fact, at this time what we’re doing is on one side to work hard on the business structure and make a stable company for few quarters, and I think that we achieve a part of that and we are working on that one.

I think that when we will go to a road show, we need enough background of history of success, and not quarter-by-quarter just making a long story that the investor will see how we handled these quarters and the last year..

If you don’t mind me asking, I think I’ve one or two more questions.

You have a finance deal set up where you -- have you drawn down on that financed deal where they issue shares, I am not exactly sure how the deal is structured, but you might know what I’m talking about?.

Actually, in the recent -- since last year, since June last year, we’ve raised about $1 million, only $1 million from this instrument. This instrument called [indiscernible], and yes, we’ve raised equity of $1 million which helped us to reduce our test, our [currency] (ph) support, our working capital needs..

I think the share count hasn’t changed much.

The outstanding shares are still about the same?.

Actually, there is presentation on our Web site which include information on the outright shares, and it’s about 1,450,000..

Okay. Last question is you’ve done some hires, some technical people.

Have you done anything to beef up the management team at all bringing some people who have experience running publically-traded companies, people who have experience in mergers and acquisitions, stuff like that? People who have experience in enhancing shareholder value, because obviously you guys have not done a very good job in that area.

Let’s not just say that’s not going to happen.

You’re not on your way to doing it, but hit a 52-week low in the stock, and I am not sure if that really -- do you feel like that will flex the progress that you’ve made, just the price of stock, do you feel like the price of the stock reflects the progress that you’ve made in the Company? That’s my question..

This is Eyal. I understand the question.

We have very longer experience in the merger and acquisition, and it’s very easy to do so, but we believe that first we have to reduce significantly the debt of the Company, because with $6.5 million loan, bank loan, or a year before with $7.4 million loan, it’s too risky to go to acquisition, but we have on our plan that during the year ’15, we will reach to a level of the loan that will give us comfort to grow to the next step -- to grow the Company, and one of the major act that we’ll do is to grow the Company through acquisition, but again it will be according to our risk policy.

As you can see, we are doing things step by step very carefully. We are not running too fast. We don’t want to risk our company..

Have you [broadened] the senior management to help you, guide you in planning on further growth or are you still staying with the same group of people that have….

Actually the….

Same management team?.

Yes, actually we are the same management team, we are the same Board members, and all the Board members, they are people with a lot of experience in mergers and acquisitions.

And actually, we are the company that [indiscernible] in all these aspects of merger and acquisition and more than this, in the recent years, we hired one of the senior and professional person in the Israeli market that advised us how to grow the business. .

And as far as organic growth in the company, are you satisfied with the -- it seems like you’re going to have about $28 million in sales this year, somewhere in that neighborhood, are you satisfied with the organic growth of the company?.

I think that when we are looking on the results of this Q and from the beginning of the year, we are on the track that we designed at the end of last year. There are times that I am telling my people that it’s not enough, but I think that through our plans, it’s working nice.

We are trying all the time to do and get more of the target that we have achieved ourselves, but we are satisfied. We will be more satisfied next year and after that, but we build the wall right now..

So, it seems like you are building the foundation for a long-term growth..

Absolutely. We are here for long run. .

Okay. And you are building a foundation for a long-term shareholder appreciation, that’s your number one goal, is to reward the shareholders..

Of course. I think that we have two [hats] that needed to be described during our day-to-day business. One is the business itself, and second one because we are public company, we care about the investors.

And I think that the investor looking ahead on the last three years, there is progress on the rank three years and we are on the track for the coming years..

So unfortunately your -- I don’t know if you could say your stock price has reflected it or hasn’t reflected it, but it’s you are trading at one point some millions, you have a $5 million market cap or something along those lines. Obviously you have some debt, you also have some assets.

So you’ve got to -- as long as you guys understand that your main job is to enhance shareholder value, then I think you will get there if you stay focused on that, that’s one thing. So again good quarter, I am a big supporter of the stock, I am disappointed with the price of the stock. I’d like to see some more.

I would like to see a public relation firm separate from the CFO, if that’s possible, and we’re going to feel a long haul but we would like to see some incremental progress, and unfortunately over the last year or so, we haven’t seen the stock price reflect any improvement in the price of the company.

So, I will look forward to speaking to you again next quarter. And again, congratulations on bringing down the debt and keeping things building, and I will -- hopefully there will be more of questions, so I will go back into the queue. Thank you for your time..

(Operator Instructions). There are no more questions at this time. Before I ask Mr. Viner to go ahead with his closing statement. I would like to remind participants that a replay of this call will be available on the Company’s Web site, www.boscorporate.com by tomorrow. Mr.

Viner, would you like to make your concluding statement?.

Yes, thank you. We are continuing our day-to-day role and business streamline our operation and expand our solution offering. We’re confident that we will meet our challenges. Thank you all for participating in today’s call..

Thank you. This concludes BOS’ second quarter 2014 results conference call. Thank you for your participation. You may go ahead and disconnect..