Matthew Selinger – IR Ordan Trabelsi – President, North America Simona Green – CFO Arie Trabelsi – President and CEO.

Josh Nicolaus [ph] – B. Riley & Co Brian Abrams – Lazarus Investment Partners Robert Schnell – Dougherty & Co.

Ladies and gentlemen, thank you for standing by. Welcome to the SuperCom’s Third Quarter 2014 Results Conference Call. All participants are present in listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. As a reminder this conference is being recorded.

I would now like to hand the call over to Matthew Selinger of SuperCom. Mr.

Selinger, would you like to begin?.

Good morning everyone. Thank you very much for joining us today for SuperCom’s third quarter 2014 results call. Joining us on the call are Arie Trabelsi, President and Chief Executive Officer; Simona Green, Chief Financial Officer; and Ordan Trabelsi, President of SuperCom North America.

Our press release detailing the quarterly results crossed the wire at approximately 8:00 AM this morning, and is available on the company’s website at www.supercom.com. Following comments by the management, we will open up the floor for questions.

In addition, we encourage you to visit the company’s website for further information regarding solutions, services and products. Before we start, I’d like to point out that this conference call may contain certain projections or other forward-looking statements regarding future events or future performance of the company.

These statements are only predictions and SuperCom cannot guarantee that they will in fact occur. SuperCom 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 market trends, reduced demand and the competitive nature of the security systems industry, or due to risks identified in the documents filed by the company with the Securities and Exchange Commission.

In addition, following the company’s disclosure of certain non-GAAP financial metrics in today’s earnings release, these non-GAAP financial metrics will be discussed during this call. Such non-GAAP metrics are used by management to make strategic decisions, forecast future results and evaluate the company’s current performance.

Management believes that the presentation of these non-GAAP figures help investors understanding and assess the company’s ongoing core operations and prospects for the future. Unless otherwise stated, it should be assumed that the financials discussed in this conference call will be on a non-GAAP basis.

A full reconciliation of non-GAAP to GAAP financial metrics is included in today’s earnings release. So at this time, I would like to turn the call to Mr. Trabelsi. Ordan, the floor is yours..

Thank you, Matt. Good morning everyone. I’d like to welcome you to our third quarter call. First, I’d like to thank the shareholders who have supported us over the years.

We are honored and supported by continuing to execute on our business plan to provide EID scalable platforms and M2M innovations and solutions with our suite and product and technologies. I’d like to begin with some high level preview on the quarter.

Then I’ll give the floor to Simona Green, our CFO, who will highlight financial results for the quarter. When she is finished, I’ll make some closing – Arie will make some closing remarks, and open the floor for questions. To begin, let me discuss what we are seeing in the industry.

According to NFC [ph] national EID global revenue is estimated over $12 billion annually. Our addressable markets, developing countries and international tenders between $10 million and $200 million is estimated at over $1.5 billion in size. Our segment in the market is seen consistent and very rapid.

Our customers have expanded technology infrastructure and increasing security needs. Once we gain our confidence, we are able to offer more products and solutions.

This allows us comfortable expansion into adjacent markets, such as the markets where border control e-Gate systems, which alone is projected to continue growing at a rate of 20% per year to over $750 million by 2018.

We have already been experiencing this forecasted growth, and in conjunction with our recent contract wins, we are seeing an increase in RFPs in our market segment. Our base process has also become more efficient.

While once we were able to send out only one proposal every one to two months, we can send up to three proposals for a month, a significant increase in our bidding capacity. As we implement more successful projects around the world, we’re getting better proposals from the field, which helps us track more appropriate proposals.

Lastly, SuperCom’s reputation for ex-Americas reaching neighboring countries, enhancing the level of comfort and desire for new customers to start working with us. If you not guarantee a higher rate of contract wins, we are approaching the challenge systematically and increasing the likelihood of winning new business over time.

On August 4, we announced a new $22 million contract, which is included in the $57 million in contracts we have won so far this year.

We secured the contract factored in our historical precedence which both at our sale processes and becoming more effective and competitive declining following the consolidation of OTI SmartID division, previously, our major competitor.

The contract includes four modules; Biometric e-Visa, Biometric e-Gate for Border Control, a Biometric e-Passport system and Biometric Resident Identification System. This type of multiple module government contract is where EID platform offers an advantage, as we deploy multiple modules with one single platform, the manual platform.

We previously mentioned that the majority of our revenue from implementing this contract will be recognized in the nine months following our announcement. We serve different governments in various parts of the world, with very different cultures and business practices, and each contract is relatively unique.

However, let me remind you how typical contract is structured. As I mentioned in the past, we measure a contract for stated value, which we then increment over steady period booking the contract value as revenue. After the implementation is completed, we typically receive between 20% to 30% of the contract value as recurrent revenue annually.

This is additional to the initial stated amount. We currently receive such recurrent revenue from contracts previously implemented by both SuperCom and SmartID, as reflected in our Q1 and Q2 revenues. As we continue to win more new government customers, our base of recurring revenue will grow, and with it, our margins.

In the EID division, we plan to grow organically by adding new EID government customers and by offering more services to each of these existing customers, which is much more simple once you get your foot in the door with the first system deployment.

We also have planned growth in our other two divisions, the M2M IOT division, and the new mobile financial services division. The M2M and IOT, internet of things markets are emerging very quickly globally.

According to Gartner, initial projections are applicable growth market for the public safety sector alone is expected to exceed $6 billion by 2018, while the general IOT market is set – is expected to reach $300 billion in size by 2020.

SuperCom has invested many years of R&D development for proprietary active RFID technology for the machine to machine or M2M space, but technology and both unique mix of capabilities including extended battery life and long range.

We’ve been selling these components based on the technological products alone for over seven years to customers around the world. In the past year, we have shifted our business model to a solution offering rather than a simple component.

This leverages our brand and decades of experience in providing full turnkey IT solutions and allows us to generate much higher margins and recurrent revenues. A component now can also seamlessly communicate with smartphone so that it easily makes other devices smarter.

And together with the inherent technological advantages, we plan to disrupt a few chosen verticals. In electronic monitoring through public safety segment, we began to offer our inherent PureSecurity Electronic Monitoring Suite to customers in the U.S.

market in August 2014, and we launched the suite in Europe, South America and Africa in September 2014. We have been participating in our international formal competitors [ph]. Earlier this year, we were approached by some of our customers in emerging countries to offer a payment capability for un-banked customers or consumers.

Research indicates that 2.5 billion people globally are un-banked, but over 1 billion of those people have access to mobile phone. In response, we presented our m-Pay, Mobile Money and Mobile Payment Suite at one of the largest payment conferences in the USA, the Money20/20 Show in Las Vegas today through November 6.

In parallel, we’re also presenting the product in Paris at the Cartes Secure Connexions 2014 Conference starting tomorrow until November 6 as well. Our PureMoney platform provides a wide range of mobile money and banking applications and services using a hybrid of component and services that enables secure mobile transactions.

The PureMoney platform offers payment capabilities for those without bank account and appeals to our existing client base of governments, because for the first time, they will be able to provide mobile money solutions without partnering with the mobile network operator and dealing with expensive terms and fragmented market share.

Our PureMoney solution works on virtually any phone, which is a very critical capability in Africa and South America. However, mobile payments still face significant challenges in developing countries as well. For example, mobile payments for Apple iPhone users are only possible using the newest model iPhone 6 with Apple Pay.

Hence, our newest platform SuperCom’s SuperPOS, a mobile point-of-sale, which allows users simply any mobile phones to make mobile payments like turning any iOS or Android-based tablet or smartphone into robust secure mobile payment POS.

SuperPOS supports a number of secure ways to payments with the NFC, BLE, Ultra-Sonic, and HCE and utilizes biometric authentication features. And very importantly, no additional hardware is required, unlike with other currently available systems.

This works together with SuperPay, a secure mobile payment hybrid suite that allows mobile users to securely make mobile payments using virtually any phone and saves money, a built-in mobile automated security threat scanner providing secure usability over uncontrolled network channels by identifying and neutralizing threats and suspicious activities.

The mobile money market is still in its infancy. Projections show that by 2017, $700 billion in mobile transactions will be executed by 450 million users, representing an average annual growth of about 35%.

SafeMoney solutions surmount some of the biggest challenges in this space and leverage its [indiscernible] for deployment, we believe that our mobile ID and mobile money technologies created on the back of our many years of experience in this segment, should help us to gain a significant market share by 2015.

For SuperCom, our early penetration in capturing even a small portion of this fast growing market, not only represents a huge and long-term growth opportunity, but also greatly exemplifies how we’re using technology innovations to provide a nice value to our rapidly growing customer base.

We are most likely to seek the partner with banks, governments and merchants and charge life insurance fees as well as per transaction fee. Not only are we executing on our business plan, but we are also making strides to assemble a corporate team that will propel SuperCom to the next level.

We have been adding to our sales force with focusing on systematically improving our processes. Operationally, we remain vigilantly focused on efficiencies, which has been part of our DNA since the beginning. And doing so, we’re able to utilize revenue growth to increase our margins, and at the same time invest more in R&D.

On the M&A side, we look for businesses or assets that can significantly increase the revenue base, while leveraging the existing lean cost structure. The December 2013 SmartID acquisition clearly demonstrates this strategy. Keep in mind that any acquisition we pursue must be accretive.

Now I’ll turn the call to Simona Green, our CFO, for an overview of the third quarter financial results.

Simona?.

Thank you, Ordan. I will now walk you through our financial results for the third quarter of 2014 compared year-over-year with the third quarter of 2013. Thereafter, we will be happy to take your questions.

Revenues for the third quarter of 2014 was $9.1 million, way ahead of the $2 million reported in the third quarter of 2013, and an increase from the $7.1 million in the second quarter of 2014.

I will be presenting the rest of the financial results on a non-GAAP basis, which excludes the non-cash income tax benefit we had in 2013, as well as amortization of software and IP and customer contracts to intangible assets, which were created as a result of the acquisition of the SmartID division in December 2013.

For a full reconciliation from GAAP to non-GAAP numbers, you can refer to the press release we issued this morning. Our gross margin in the third quarter of 2014 was 76%, below 82% in the third quarter of last year and in line with the 76% margin in the second quarter of 2014.

Please bear in mind, that the shift in gross margins relating to the proportion of revenue, it is recurring and the portion which is derived from new contracts. The recurring element tends to be at a very high gross margin, while new contracts and the initial installations tend to be lower gross margins.

Normally, our expectation would be for gross margin to trend throughout the 75% level. Operating income in the third quarter of 2014 was $4.1 million or 45% of revenues, compared to $0.5 million or 25% last year and an increase from $2.6 million in the second quarter of 2014. Net income was $4.1 million compared to $0.4 million last year.

Earnings per share were $0.30 versus $0.05 last year and $0.19 in the second quarter of 2014. EBITDA for the quarter was $4.2 million compared to $0.5 million last year, and $2.6 million in the second quarter of 2014. On the balance sheet side, by the end of the third quarter we had increased our cash and cash equivalents by over $3 million.

Trade receivables continued to remain at high level by the end of the quarter, reflecting the significant revenue increase during this quarter. We increased our working capital to $14.2 million at the end of September versus $3.9 million at the end of 2013.

Shareholders’ equity increased to $29.1 million at the end of the third quarter as from $19.4 million at the end of 2013. With that, I conclude the financial summary. And now I will hand it over to Arie. Arie? And open it for questions. Yes..

Operator, can we open up for questions please?.

Yes, thank you. Ladies and gentlemen, at this time, we would do question-and-answer session. (Operator Instructions) Please stand by while we poll for your questions. The first question from Josh Nicolaus [ph] with B. Riley. Please go ahead..

Yes, looking at the August 4 announcement for the $22 million contract, over the nine months that the revenues are going to be recognized.

Is that pretty level, or are you anticipating that the revenue recognition might be kind of lumpy?.

The revenue recognition for new deployments. Typically growth over the first nine months quarter-after-quarter is the beginning, recognition is a bit slower and then it ramps up towards closer to the end of the nine months. So it’s a natural process as we deploy our system..

Okay. And real quick, it looks like R&D and the sales and marketing expense have been bouncing around a bit. I was a bit surprised that sales and marketing would be down considering the new contract announcement. I would figure that you might have to pay that out.

Could you give me a little bit of color on the R&D in sales and marketing expenses a little bit?.

Our sales and marketing expenses are usually put at the same frame. The only thing that is declined between one quarter to another are sales and marketing expenses related to contract. This quarter we don’t have any promoters’ expenses or any other outside of spending the sales and marketing expenses unusual.

Regarding the sales and R&D expenses, were recognized one-off our capitalized R&D expense with [indiscernible] products during this quarter..

Okay. Thank you..

You’re welcome..

The next question is from Brian Abrams of Lazarus. Please go ahead..

Congratulations on another great quarter guys. I want to ask you a couple of questions. First one about the new mobile payment products. You suggested in your opening remarks there might be some synergies with the EID and government business.

I’m wondering if you could elaborate on that a little bit, and also if you could speak to the revenue potential for these products in the next one to three years?.

Thanks Brian. So the whole notion of the – we deploy in two different developments here, the mobile money and mobile payments.

Mobile money is the notion more for development countries where you can transfer payments between people and give a bank account through a mobile phone to the un-banked which the present population are more prevalent in developing countries.

The synergy here is that the governments which we are already serving needs the correct payments for their passports or ID cards, their taxes or bills from their citizens around the country, and they don’t have an proper way to do that.

In places where the citizens are spread up around and there is no proper banking infrastructure, they have trouble doing so. And with the current technologies out there, they weren’t able to find a solution which had appropriate pricing and it could be ubiquitous and [indiscernible] on their citizens.

So our mobile money platform, which runs on any mobile phones we operate in regions of the world helps them solve that request. Your second question was the amount of revenues. We’re currently planning on deploying the mobile money through our current customers and government customers, and through that extending into regions around the world.

The market is very big in size right now. We don’t yet know how much of the market you’ll be able to take a grasp of, but even a small portion of this will be significantly larger than our current revenue base as we’re talking about very high growth and large tenant markets in development countries around the world.

And the notion of mobile payments, again in the U.S. also, there is a lot of problems with paying with your phone.

You cannot pay with your iPhone 4 or your iPhone 5, some of them don’t have NFC capabilities to make the mobile payments, and over there it’s a very large market as well and then you’re trying to reach them too, we have a specific technology which allows any phone to make payments and it helps also to capture a nice market share there..

That’s great. And I guess that leads to my next question which is, you’ve spoken previous quarters about targeting about $100 million of revenue in the next few years.

I’m wondering, A, if you still see fees to reach that goal, and B, what do you think the product mix might be at that point between the EID government business and somebody in your products on RFID or M2M or m-Pay side of things?.

First of all, today, a quarter after we talked last time, we feel more confident that we’ve reached this point and even higher numbers, what we see in the increasing demand through our product and through our solution that probably would be willing larger content and to be significant shorter term that [indiscernible].

So we do believe that everything we said in our last quarter, we should continue to be reaching these goals even earlier. Now about the mix between revenue. The revenue between the EID, M2M and payment, we do believe that in three years, our revenues from the M2M is going to be over 50% of our total revenue.

And from the – although the EID is going very faster than the M2M market, is much going fast. So to answer your question, yes, we are very confident reaching this point..

Great. Thanks guys. Congratulations again..

Thank you..

(Operator Instructions) Please stand by while we poll for more questions. The next question [indiscernible] Capital. Please go ahead..

Hi, thank you for taking my question. My first question is, can you clarify for us the product that you plan to market in the U.S. Does that include the PureSecurity solution and also the mobile payment solution? Thank you..

Sure. So regarding PureSecurity solution, we are launching the product which is a house arrest or GPS tracking products for offenders. The current technology and common technology is one piece GPS that you put on someone’s leg to finalize that unit has GPS, GPRS and everything at one place.

The battery runs out up to two days leaving the offender to actually connect to the leg, so the wall which is not unsafe but also likely to be forgotten. Our solution has a battery life of between three to five years on someone’s leg and inherently communicate with the mobile phone to add more capabilities and advantages.

Regarding the mobile payment products, we have a whole suite. We have the SuperPOS, which is a mobile point-of-sale, which is like any merchant in the U.S. or any person for example getting to U.S. [indiscernible] any sort, he makes their phone or the tablet into a mobile point-of-sale with just software, no additional hardware needed.

And we have software for the mobile phone, for any type of phone which allows you to make those payments. So you can have an old feature phone from Nokia or you could have an iPhone4 or you can have the new Android, regardless of the phone type, you can still come and do your payments as bringing their phones close to the mobile point-of-sale..

Okay. So I mean regarding the reason you said the Apple payment was rejected by several major retailers in the U.S. because they have prior contract obligations to implement another different, although may not be as convenient as Apple payment different system.

So do you see that as kind of an obstacle to you for marketing your mobile payment technology in the U.S.?.

Well, it certainly is an obstacle, but we do not see as a major one, because our platform does not require any additional hardware or any additional systems.

You can put additional software under current point-of-sale system and allow all these new billions of phones around the world who currently cannot do mobile payment can now do mobile payment at your merchant location..

Okay. Should we expect....

Sorry, what was that?.

Go ahead, sorry. Go ahead..

I’m sorry, over time the phenomena would also be much better for merchants as they are essentially taking some fighters out of the chain, but that’s more confusion, I’m sorry, continue please..

Shall we expect some revenue from either the PureSecurity solution and also the mobile payment solution in the U.S.

in 2015?.

Yes. We have already contracts with both of them for the PureMoney. Those were the contracts that we’re implementing there through different contracts in emerging countries. And for PureSecurity we have contract as well. So we should see substantial revenue in the year 2015 for both product lines which you just mentioned now..

Okay. And my second question regarding the financials.

Can you give us some kind of guideline as to how much you are going to spend on R&D, and also selling and marketing expenses going forward?.

Okay. In general, R&D is – we are going to keep it in the range of 5% to 7% in the quarter, and we believe it’s going to be certain amount of investments because we do believe that our revenue is growing. The second is about sales and marketing.

Our sales and marketing is mainly our fixed sales and marketing group around the world which we are increasing. And also in order to capture more and more sales [indiscernible] our promotion or I think our sales representative around the world. So we believe that we continue to be in revenues that you see this quarter..

Okay.

Could you tell us the current share count? The number of shares outstanding?.

I think it’s close to 13.7 million shares..

Okay, got it. Thank you..

That’s this quarter..

Okay, thank you..

The next question [indiscernible] of Ross Capital Partners. Please go ahead..

Hi, good morning. Just a couple – most of my questions I think have been answered, but maybe some clarification here on the mobile money payment products. They’re going to contribute in 2015, but is there first half or second half.

And then can just describe the margin structure for those products? And then finally, are EID products a prerequisites or any other payment products going forward? Thanks..

I’ll answer the first and then actual clarification on the second question. We should already start seeing in the first half of 2015 some revenues, the general structure from payments are either from point-of-sale, where they pay the fee for the software and from transaction fees.

So it is essentially people using their SuperPay on their mobile phone, then you don’t have to go through a credit card. So some of the transaction fees are going to be going to us. Those are the two main modules or the main business models for that.

What was the second question?.

A few million dollars of revenue from the mobile payment..

The second part was maybe just around the margin structure, sort of the revenue stream. Is there a level that you can disclose for us from that perspective, and then, are the EID products prerequisite at all anywhere for the payment products like....

The gross margin for the PureMoney, it’s is going to depend on the structure we build out positively on the [indiscernible] bank. Another, that we do believe that it is going to be above the 80%..

And in terms of the – do you guys need prerequisites? I am not sure if I understand it. It doesn’t have to have – it doesn’t have to be….

Yes, you have to have them or it depends you have them and not have them..

No, well, if we have an EID relationship with that government, then it just helps us employ for the payment solution side of that, but irregardless we can go to a new government also then only the mobile payments and mobile money solutions..

Just understand, in general where we are [indiscernible] PureMoney solution to some new government contract.

One, the citizen will use our PureMoney solution to pay government and there will be a requirement for our SuperPOS from other group that will – probably would like to take advantage of this type later and this would increase our revenue also from the private and commercial market..

All right, great. Thanks a lot..

Thank you..

The next question is from Robert Schnell, Dougherty. Please go ahead..

Hello, nice quarter..

Thank you..

From a receivables and cash standpoint, both moved up in the quarter. I’m just wondering what your thoughts are about those numbers moving into Q4. Do you expect to generate decent cash again, and will you revenue will bounce start not flattened out here. And then I’d also like to know what different status of your NOL is? Thanks..

Okay, first of all our cash flow is positively and going – right now I think in the first month – end of the quarter we receive additional almost $6 million in cash, and we have had to fixed number in the next 60 days, but as you see, our revenue is growing and our field is growing but from cash flow point of view, we part of deploying significant operation.

We have very good cash flow and we continue and believe that it’s going to be growing in a very fast rate..

Can you update us on what was your net operating loss carry forward is do you have in this company?.

Right now, our NOL in – so we have NOLs both in Israel and in the U.S., and right now we are reevaluating our NOL to be actually will pick up end of 2015 of tax assets or using the tax asset..

Could you guys know what that number is or was the last time you went through the review?.

I think it was….

That’s around $8 million to $10 million [ph] for NOL still here, that we’re still analyzing and we’ll be analyzing by the end of the year..

Okay, could you repeat that number, I’m sorry I missed it..

Additional $15 million..

Okay. Thank you..

Thank you..

Thank you..

There are no further questions at this time. Before I ask Mr. Trabelsi to go ahead with his concluding statement, I would like to remind participants that a replay of this call will be available on three hours on SuperCom’s website www.supercom.com. Mr.

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

Thank you. On behalf of the management of SuperCom, I would like thank you all for joining us today. I look forward to next speaking with you when we discuss our fourth quarter and full-year results in about two months from today. Have a good day..

Thank you. This concludes the SuperCom Limited third quarter 2014 results conference call. Thank you for your participation. You may go ahead and disconnect..