Rob Fink - Hayden IR Arie Trabelsi - President and CEO Simona Green - CFO Ordan Trabelsi - President Americas.

Josh Elving - Feltl and Company Josh Nichols - B. Riley Rob Stone - Cowen & Company Brian Abrams - Lazarus Marcel Herbst - Herbst Capital Management Scott Billeadeau - Walrus Partners John Roginski - Diversified Financial Group Chuck Lipson - CSL Associates.

Good day and welcome to the SuperCom Second Quarter Earnings Conference Call. Today’s call is being recorded. At this time, I’d like to turn the conference over to Rob Fink of Hayden IR. Please go ahead sir..

Good morning everyone. Thank you for joining us today and for joining SuperCom for the second quarter 2015 results conference call. Joining us on the call today are Arie Trabelsi, President and Chief Executive Officer; Simona Green, Chief Financial Officer; and Ordan Trabelsi, President of Americas.

A press release detailing the second quarter results crossed the wire at approximately 09:00 AM this morning and is available now online. Following comments by management, we will open the floor for questions. In addition, we encourage you to visit the company’s Web site for further information regarding our solutions, services and products.

Before we start today, 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 system 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 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 press release. At this time, I would now like to turn the call over to Ordan Trabelsi. Ordan, the call is yours..

Thank you, Rob. Good morning everyone and welcome to SuperCom’s second quarter 2015 earnings conference call. I will begin my prepared remarks with a high level overview of the quarter and then I’ll turn the call over to Simona Green our CFO who will review the financial results for the quarter ended June 30, 2015.

Following Simona’s review, Arie will provide a closing statement and open the floor for questions.

During the second quarter, we executed on a number of strategic and operational initiatives to advance our growth strategy with more than $7 million in new contract wins are in existing e-ID customers, our recent M2M win for offender monitoring with a new European government and approximately $27 million in net proceeds from successful public offering.

We are making progress to strengthen our business. We generated recurring revenues from existing customer as planned. However, a small delivery delay in late June pushed into the $2 million of high margin recurring type revenues that we expected to recognize during the second quarter into Q3.

We completed the stages to recognize these revenues in the first week of July shortly after the end of the second quarter. I will now recognize these high margin revenues in the third quarter which should balance our gross margin profile for the full year.

While this delay impacted our Q2 financial results, we don’t believe it will have an impact on our full year financials.

In addition, we continue to advance our long-term growth strategy and make significant progress to strengthen and expand our e-ID and M2M businesses while further developing our secure mobile payment offering which we believe could be a meaningful revenue contributor in the future.

On the e-ID side of our business, during the second quarter, we recognized revenues from deployment, generated recurring revenues from existing customers and were awarded more than $7 million in follow-on orders from governments that are currently using our systems.

The deployment of new systems for the two large customers we announced in 2014 are progressing and we remain on track with our implementation plan. As a reminder, typically more than 50% of revenues from a new contractor recognized in the first nine months of the implantation phase following the announcement of the new contract.

That over the course for the next 9 to 15 months will recognize the vast majority of the contracts out. After the implementation is completed and our customer actually begins delivering ID credentials to their citizens, we typically start to receive recurring revenues from that contract that includes software licensing, maintenance and consumables.

Typically, we will generate between 20% to 30% on average of the initial deployment contract value as recurring revenues every year. This is of course in addition to the initial stated amount which is recognized during the implementation phase.

I’d also like to point out that gross margin of our recurrent business that has already reached the study state, tends to be significantly higher than those during the implementation phase which are between 50% and 70% in implementation.

As we continue to win more new government customers, our base of recurring revenue will grow and with it so will our gross margins. In the e-ID division, as we discussed on previous calls, we plan to grow organically by adding new e-ID government customers and by offering more services to each of these existing customers.

The beauty of our platform is that it is modular and highly scalable. So for our customers, it’s very easy and cost effective to add an additional module or programs in existing deployment platform with conservative [ph] additional revenues centered for the clients and increase their ROI.

We continue to be encouraged by the number, quality, stage and size of the e-ID opportunities we have in our pipeline. We have a growing number of open proposals in various stages around the globe. And we continue to believe that we are well-positioned to win additional new deployment contracts this year.

More specifically, the number of advanced stage tenders in our pipeline continues to increase and we are in negotiations with several potential customers for contracts where we have been selected as the bidder of choice. Some of these potential contracts are significantly larger than what we’ve seen in the past and require more working capital.

And while we are confident our core capabilities, value proposition and track records position us well to win more new business, we appreciate the increasing importance of servicing our financial position as we negotiate and compete on larger government contracts.

As a result, we closed on a public offering in June that raised approximately $70 million in net proceeds. The strength of our balance sheet provides access to additional working capital and we believe bolsters our ability to capitalize on new opportunities with new potential customers.

A stronger balance sheet also gives us greater flexibility strategically as we move forward and provides us optionality to augment our growth in a number of ways including strategic acquisitions. Winning new government contracts around the globe and organically growing our business remains our top priority.

However we have and will look for all avenues to maximize shareholder value going forward. During the second quarter, we also secured a highly strategic M2M win in the electronic monitoring of offender space with the new European government to deploy the solution to effectively track and monitor hundreds of enrollees for a new probation program.

This new contract was awarded following a highly competitive RFP process against some of the largest solution providers in the industry.

This five-year contract not only provides a new revenue stream with guaranteed minimum a significant opportunity to expand the program over time with this customer, strategically it also provides us with a new referenceable customer that we believe we can leverage exceptionally well to win additional new business around the world.

Our M2M pipeline also continues to advance. Currently we are in discussions with several potential customers in the U.S., Latin America, Europe and Asia with issue of tenders and we have actively progressed in the public safety segment.

These tenders range in size from annual recurring revenues of hundreds of thousands of dollars to tens of millions of dollars. Given our progress and communication with government customers, we are expected to secure additional new contract wins this year.

And as was the case of the win we announced in July, these new contracts will allow us to bid much more effectively and rapidly revenues in upcoming years. Turning to mobile payment. SuperCom is in discussions with some partners and organizations around the world to provide M2M turnkey solutions to various financial ecosystems.

The market reaction for our solution is very encouraging as we’ve been incorporating some of the products and current ongoing contracts implementations.

In summary, while the delay of nearly $2 million of revenues which I referenced earlier, impacted our quarterly results, we are very pleased with the progress we are making in each of our core divisions and remain vigilantly focused on operational efficiencies.

In addition, we believe the implementation of the two larger frontend contracts we won in 2014 will be completed at some point in 2016 in majority and convert generating high margin software license, maintenance and consumable revenues which will bolster our recurring revenues in 2016 and provide the foundation for continued year-on-year growth.

New e-ID or M2M deployment wins of any size will only further accelerate our growth trajectory and increase our earnings power. With that, I would like to now turn the call to Simona Green, our CFO, for an overview of the first quarter.

Simona?.

Thank you, Ordan. I will now walk you through our financial results for the quarter ended June 30, 2015. Revenues for the second quarter of 2015 were $7.7 million compared to $7 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 benefits and other non-related expenses such as depreciation and amortization and stock-based compensation expenses.

For a full reconciliation consolidation from GAAP to non-GAAP numbers, you can refer to the press release we issued this morning. Our gross margin in the second quarter of 2015 was 66%, a decrease from the 78% in the second quarter of last year.

Please bear in mind that the shift in gross margin related mainly to the proportion of revenue which is recurring and the portion which is deriving from the deployment of new contracts. The recurring element tends to be at a very high gross margin while new contracts and initial installations tend to be lower gross margin.

On a normalized basis as we continue to grow, we expect our gross margin to trend around the 70% mark. Operating income in the second quarter of 2015 was $2.3 million or approximately 30% of revenues from post operating income of $2.7 million last year.

Net income was $2.2 million for the second quarter 2015 compared to $2.7 million in the second quarter of last year. Earnings per share were $0.16 in the second quarter of 2015 down from $0.20 in the second quarter of 2014.

EBITDA for the second quarter of 2015 was $2.4 million, a decrease compared to EBITDA of $2.7 million in the second quarter of last year. Shifting to the year-to-date results, revenue increased 24% in the second half of 2015 to $15.4 million compared to $12.4 million in the first six months of 2014.

Operating income in the first half of 2015 was $5.4 million or 35% of revenues from post operating income of $4.4 million last year. Net income of $5.3 million for the first half of 2015 compared to $4.4 million in the first six months of last year.

Earnings per share were $0.38 in the first half of 2015 a decrease of 15% compared to same period last year. EBITDA for the first half of 2015 was $5.5 million, an improvement compared to EBITDA of $4.5 million in the first six months of 2014.

Turning to the balance sheet, at the end of the second quarter, we had $32 million in our cash and cash equivalents, an increase [ph] of $27 million from the beginning of the year. During the quarter we completed the capital raising in the amount of approximately $27 million.

As a result we significantly increased our working capital to over $48 million at the end of June 2015 compared to $10 million at the end of the second quarter of 2014 and $16 million at the end of 2014. Shareholders’ equity increased to $60 million at the end of this quarter up from $25 million at the end of the first quarter of 2015.

With that I conclude the financial summary. And now I will hand it over to Arie. Arie please..

Thank you Simona. Before we open the call for questions I would like to review our outlook. As a reminder, our quarterly results are highly dependent on the relative amount of contracts related to larger formal contracts and completion revenue recognition which can lead to quarterly lumpiness that we experienced during the second quarter.

On an annual base however and as a result of growing too much recurring revenue from existing customers, our business is surely predictable and as a result we believe we’re unable to effectively forecast annual guidance.

As a result of successful completion of a follow-on offering we completed in late June, we’ve increased our estimate for total number of fully diluted shares to be used to calculate non-GAAP EPS.

As a result, I believe we will meet the guidance previously issued adjusted to the increased new share count as a result of the successful public offering we completed in June. And as Ordan indicated earlier on the call, we are excited and are highly optimistic about SuperCom future and our growing size and opportunities.

And now I would like to open the call for questions.

Operator?.

[Operator Instructions] We will go to our first question from Josh Elving with Feltl and Company..

Coming into I guess exiting 2014 with 60 million in new contract wins, the company seems really optimistic about its opportunities to win new business in 2015. I guess, my expectation is that we would see some things earlier in the year and it’s not been a year since you’ve had any material announcements.

Has anything changed in the process, anything that would have caused delays, and has anything fallen out of your pipeline?.

For some part of the question, you fell out of the line. I believe you asked if this year something changed when you compare them out of the wins to 2014..

Well, just the process, has anything changed with how long it takes the contract process?.

Okay, great. So our processes we believe only improved in terms of amount of [indiscernible] we’ve been able to add with our enhanced team over time to be more effective in how we bid on things and how we gather the intelligence necessary for bidding on proposals.

What has changed strategically which might have a small impact on longer time schedules is the size of the tenders. We are increasingly looking at larger and larger tenders and they sometimes do take a bit longer to turn into a final contract, especially from when you get actual win.

But generally speaking in this business, sometimes you have periods of time we have a lot of wins that are close together and other times a bit more spread out. But on a statistical trend when we look at, we are only increasing our capability to win more of these projects.

And we expect that when you average it over time, you will see much larger contract wins and revenues associated with them in upcoming, near future..

Has anything fallen out of your pipeline?.

Things always do fall out of the pipeline and other things come to replace them. I would say that the opportunities we have been mostly excited about have stayed in and we still feel good about them..

Okay.

And then could you review some of your prepared remarks about some of the e-ID awards that you are working on that you -- I believe that you hope to potentially win by year-end; can you clarify that; is that what I heard?.

In general, we cannot get into detail because it is sensitive information both from competitive reason and other. But in general, I would say the size of contracts we are dealing are much larger than the size we announced in the past but we cannot provide more color on that..

There are some projects that we’ve already been awarded and they give us more confident than others but there is still a process between award’s actual signing and starting of the contract which can take a variable amount of time..

And I am sorry.

Arie, did you say five contracts that you are working on?.

No, I didn’t say a number..

Okay..

I didn’t provide any numbers but I think more important thing is the number of proposals and tenders that we are dealing with and their size. And I think we should be very comfortable with the increasing number of proposals, both in the e-ID and the M2M.

And we feel stronger today especially after offering that we are able to compete on very large tenders and the part requires much stronger balance sheet and accessible to cash. So we feel today much stronger both to compete on this kind of deal and increasing the ability of winning them..

Okay.

And just so I’m clear, you said that you are -- you have been awarded projects in the e-ID space that you are working on contracts that are larger than the contracts given out in the past?.

We have been selected for projects. We didn’t necessarily say what size compared to what size, but we have been selected. On the previous call we talked about that a bit more in detail..

We’ll go next to Josh Nichols with B. Riley..

Yes. I know you’ve talked a lot about the pipeline, how company is optimistic and I can see here in the press release, you’ve dramatically broadened the new business pipeline.

If you give any specifics about how fast that’s increasing, any activity, dollar value, anything of that nature?.

Could you repeat the beginning of the question, we couldn’t hear what…?.

Yes. So it says here that you’ve dramatically broadened the new business pipeline during the quarter.

Any details you could give as far as dollar value per bid that you guys are doing, frequency, number of bids, just any specifics?.

I would say I was just getting out of open bids meeting an hour to two hours ago and commenting [ph] how many tenders are out there both in the e-ID and the M2M, and the important thing to say that most of them are larger sized, they are $20 million, $25 million contracts that we announced last year, smaller than the size of some of those tenders we are dealing with.

Some of them are in volume for much more and many years they are reaching a point that we were dealing with in the past [indiscernible].

So in size, the numbers are much higher and we believe that we have the capability both from finance point of view, balance sheet and experience to compete with the larger organizations in this market and there are about four to five there. So, we do -- we’re optimistic both in the M2M and e-ID on winning some of those tenders..

And in terms of the number for example that we can’t share, there has recently been very large project. And I think already four or five different local partners and companies around the world have reached out to us to participate with them on this.

And this is the project of a size that in the past almost nobody would reach out, especially not four or five players. So we are getting much more exposure to many more projects and we are getting much better partnerships that come along with intelligence and understanding, allows us to bid much more effectively and to bid on more same..

Okay.

And then I want to say I guess it could be pretty lumpy in the short-term?.

Yes..

Given how lumpy it is on the short-term, it takes a while to figure out percentage of completion contract method, what your revenue or earnings are going to be for a particular quarter.

How are you able to have a lot of -- a high degree of confidence reaffirming this year’s guidance because we’re already in September?.

Okay. And I think I said during the discussion earlier, in general quarterly is -- it can be a [indiscernible] quarter. But if you look at the overall annual, I think we have a much better knowledge. When you look at the contracts and you look at recurring revenue, something like shift on a quarter-to-quarter from how it torch out on the annual basis.

So, I don’t think that there is a change in our ability to predict on annual basis..

And also this is a completely a reason but when you look at the way the quarter is split up in our business that doesn’t really comply with any timelines or obligation to our customers. If you look at our annual basis, that does actually have more meaning and more implications to the operations..

I think there is one more thing that’s important that you do not really see in the numbers is the amount of investment and development within the company, both in new division and in new market which really increased and building our capability and product line solution in vertical markets and in an area that a year ago we did not have this capability.

And I think this amount of development is not being reflected in our financial statement but it dramatically increased our IP and our solution line or line of product and solution. And we believe that all-in-all, there is lot of them and the investment will be reflected in the years to come..

Last question for me, I mean I know the share rate is [indiscernible].

Could you give any amount of cash that company has on its balance sheet, could you give some details on what you plan on capital?.

Okay. I think that in the past when we had the offering, we had the attraction there of use of proceeds and I think it’s important just maybe I will repeat.

The important thing was that we felt that once we are dealing and proposing a very large contract, our customers are looking for a company which is stable enough, has the access to cash to be able to deal with a contract that some time is $100 million or $200 million contract.

So we felt that to be able to be in a position to compete with larger organizations, we should fill our balance sheet and I think that a successful offering will drive to this position.

But I would like to mention that the board especially in these days is evaluating a number of searches to enhance the shareholder value and has been supportive of corporate buyback. We will update our investors soon and announce to buy back a press release disclosure if a definite plan for program has been finalized..

And that’s of course based on the movement of the stock which I did notice lower than offering was significantly..

We will go next to Rob Stone with Cowen & Company..

I was wondering if you maybe could provide a little more color on the M2M electronic monitoring opportunities.

In particular what do you see more opportunities in the United States versus Europe and what in particular about your offering do you think give to the best competitive positioning?.

So first, I’ll talk about our product offering differentiation and then we will get into opportunities out there. So, the incumbent technology today mostly is a one piece GPS for instance which has a battery life of maybe up to two days max and you connect your leg to the wall to recharge the battery.

Our solution is substantially different in architecture and by design; the battery can last up to several years and communicate continuously within mobile phone or within the house unit.

This allows the whole world the capabilities and new product offering that we are able to use on the same infrastructure and that we have been able to excite many government customers, both new to electronic monitoring offenders and ones who are veteran to the industry, understand the processes with this new technology.

And what we are doing with recently is explaining and showing just the full technological advantages of our system. So far we’ve had good feedback along the way.

This win that we had recently in Europe from a new customer which has never done an electronic monitoring of offender program, this win over other players who are very experienced in the industry, that was a significant and substantial breakthrough for us.

And quickly off that many other countries around the world which have dealt with us in various capacities have invited us to see our capabilities in electronic monitoring space. And this has been being into many opportunities around the world..

I think it’s important to mention, as you probably know the electronic monitoring programs are widely -- been denied [ph] for many years and the whole market -- most of the countries in the last few years have been adapting similar program. We started in Europe and so into Eastern Europe, Asia, South America and Asia.

And we see today amazing number of tenders and program being adapted by countries. So, right now our group of people working on product are very, very busy. And our presale activity is very higher in this area. And we believe that from a competition point of view, we believe that our complete solution is among the best in the market.

And I think that governments are the ones recognize it. And we have excellent feedback from large organization or government that work with product from our competitor and are not happy with. So we believe it’s great opportunity and we do believe that some of these tenders will be secured by us even this year.

So we are very optimistic there because as the number of competitor here, we believe only three or four of them and we believe we have superior technology. And from our competitive point of view, we’re able to secure those contracts.

Now important thing to say that the overall market is expected to be $12 billion the next year around the world and very hard to try to secure part of this year..

I think you mentioned in your prepared remarks that you are looking at some U.S. opportunities, might just see some wins in the U.S.

this year as well?.

We’re looking at U.S. opportunities as well. The only element in the U.S. is that the formal tenders, the bigger tenders in the U.S. require a term level of references and experience in the U.S. which we are overcoming by starting smaller counties and smaller pilots and other regions around the world that limitation [indiscernible].

So we’re able to do both in parallel, but in the U.S. it will probably start off a bit slower than some of the other areas..

I had a couple of questions related to the Q2 results; one, you mentioned the influence on gross margins is a split between deployment and recurring revenue.

Can you say roughly what that was as a percent of revenues deployment versus recurrence?.

I’d say in general we don’t have ex U.S. number, but I would say you that it’s between to 60%, 70% on contract and the remaining at current revenue..

And finally, a question related to the operating expense run rate. So your total OpEx was essentially flat year-over-year and that was lower than we have been modeling. Of course we were expecting more revenue as well.

How should we think about the run rate of expenses in the second half?.

I think we should probably break up the three items..

I think there are….

You are asking why the operating expenses are increased; is this question?.

The total operating expenses were below what we were expecting, of course revenue was as well and I am just wondering whether you’re expecting the level of operating expenses to be similar in the second half or do you see it rising sort where the -- and I know the expenses have moved around from quarter-to-quarter as well, but just -- how you’re thinking about the operating expenses in the second half will be helpful? Thanks..

We do not see any increase in our operating expenses. As you see, this time we had a onetime stock base, but in general we do not see any increase in relative to expenses. The only item that may increase which is related to expense is marketing which is a component of commission to our first [ph] people.

So as long as increase, you will see increase in closer market and component. But the other two components are going to remain at the same level..

And G&A is around 500,000 for this quarter, higher than what it typically would be. There is element that is there..

We’ll go next to Brian Abrams with Lazarus..

I think the -- I want to go back to the pipeline a little bit. I think the market is clearly getting a little bit impatient waiting for another big e-ID contract to materialize. But you mentioned in your prepared remarks that you’ve been selected as a bidder of choice in a couple of instances.

And I am wondering if you can help us better understand what it means to be selected as the bidder of choice and how you just come back to a final contract and when they could actually be announced?.

I think that in general it’s a very sensitive issue to discuss especially and -- but I would say that in general, when there is a process, is it tender or some other network going to select few companies to shortlist and later on it may go into discussion with one of them into more detail.

And as I say on this kind of discussion, a contract may be same or if there is a budget issue with -- it maybe go in a different track. But it’s not always outcome of the tender, there are some cases that we are dealing on the contract that are not free of tender that came to us to a different opportunity..

Then it’s when being selected to actually signing the contract, there is -- if it’s RFP process or several stages and otherwise if you’re sole sourcing it, there’s still the negotiation on the contract which has those elements of requirements you want the government to do around legislation or around other sort of obligation.

And the more conservative you want to be as a company, the longer it takes and you can close things faster and you can close the things slower. But that’s less of issue of your ability to win projects, it’s more of how conservative you are and how you wish to act going forward in the operation.

Having additional cash on your balance sheet and stronger working capital puts you in a much stronger position, when you’re negotiating the terms, you’re getting much more confident to your customers, you will be able to overcome the element of working cash fluctuations for example if they tend to arise..

So, I’m understanding that basically you’re just being fairly conservative about when you would announce any contracts even if you feel like you’ve made a lot of progress in certain instances, is that right?.

Yes. Our general methodology is to announce the contracts once they’re signed or another -- very high confidence makes us believe that the projects will start.

Even though there’s several [indiscernible] for that, we actually win or selected, we take a conservative approach and only announce once s we’re at the “final stage” and actually starting a deployment..

And a little while ago, I think Arie, you mentioned the possibility of a buyback program and I think you mentioned that on a previous quarterly call as well. Can you give us any sense of your thinking as far as the timing of that? Obviously the share price seems to be quite low compared to the pipeline.

Any sense that this might be a buyback program you initiate this quarter or before yearend or otherwise?.

I think I mentioned today that the board is evaluating to follow to a buyback program up to 1 million shares. We just can say that the board will decide and probably will announce in the next day or two about this kind of trend what it is the board approval recommendation..

Last question, as far as some of the longer term goals, you’ve mentioned in the past, you put out some multiyear revenue goals. Do you feel like those goals are still intact; do you still feel confident about the longer term objectives..

Yes, I feel comfortable with our earlier projection this year for the five years’ plan and in some cases I think we feel that we achieve it even faster than we expected..

And we’ll go next to Marcel Herbst with Herbst Capital Management..

On the fourth quarter call, you mentioned that you were close to a very big e-ID contract which you originally expected to close in November-December of 2014.

Is this still in the pipeline and in general do you have an update on that for us?.

I do not recall exactly if we discussed specific year [ph] but as we’ve done [indiscernible] that we are in the process of various deals, some deals got delayed due to bigger competition and competition that approached customer and has been changed some of the returns; in some cases there is some geopolitical reasons that the customer has a delay to launch the cover on; in some cases just because the processes take much longer because it’s a large program, it requires more detail because of the contract details and the way it’s being financed.

But I don’t recall specific contract that we were showing..

You mentioned this was a contract that was supposed to be coming in this, you thought it was coming in but it would close in the next 90 days that was said on the call but -- so that was some good detail on why some of the delays are happening.

In general, do you see longer decision times also due to the strong dollar and perhaps low oil prices?.

There are some countries that we are working there or in the process with the government that’s been affected by the oil prices which led to some delay in -- we believe delay in signing contracts or even taking schedules out.

But there are [indiscernible] such other things, it’s affecting us right now are more affected in specific countries from the oil price and ability of those countries to budget large contracts as we generally have on e-ID, but in those cases, we always have some programs of those government to finance some of the program to support them in a process and going through until they get stabled with their budget..

And let me just add on to that. Those geopolitical influences cannot impact on new tenders and acquiring new business. And when you’re talking about a customer, it’s been a customer of ours and our system is already deployed there.

We really see any disruption to that, not just over the past period of time, but if you look at SuperCom over the past many years, through different fluctuations including the financial market collapses, the company was able to stay at a similar level of revenues, recurring revenues from specific customers because the system that we’re providing such a low level and key operational aspect to the government operation to providing government credentials and reading them, once you have deployed a system, you see a very steady stream which is quite resilient to market fluctuations and geopolitical aspects for existing customers and our stability with them but in terms of new customers and new tenders there can be some influences in timing and so on..

And switching topics here, you mentioned previously that you expect significant revenues in 2016 from the M-Pay product line but obviously we haven’t seen any announcements of important contracts yet.

Are you close to the finishing line on some meaningful contract wins or what gives you the confidence to ramp up and pay revenues this year?.

2015 you said or ‘16?.

Well, fiscal ‘16, yes..

‘16? In general, we will not provide any guidance for ‘16 for revenue this year, just for answer there were not specific numbers but our -- the mobile payments division and offerings were developed just part of a request of our customers, in Africa revenue in mobile payments.

We have two deployments, large ones that we are currently taking into account our mobile payment solutions and they’re integrated into the solution to offer references to new customers.

We’re progressing well with partnerships and other customers in different ecosystems around the world, but it’s hard for us to assess the amount of revenues that will be generated by them even though, what you think that some of these customers and contracts are closed.

The format of the revenue streams in these type of projects is a bit different from what we’ve in the e-ID and M2M divisions. And after we start deploying the standalone payment solution, we’ll be able to give better and more specific numbers around that but it is more of a 2016 type factor..

We’ll go next to Scott Billeadeau with Walrus Partners..

Maybe as you look at your pipeline and what’s going on, can you talk about your market share, what competitors are doing? I would assume competitors have probably signed at least one contract in the last year, just trying to figure out what -- where do you think you’re in share and who are you competing with on contract?.

At the time of the EID space, there is different competitors in different sections of the world, probably somewhere between 10 to 20 different players depending on what you’re looking, some of them are very large and some of them are very small and nimble and each have their advantages and capabilities.

Of course the ones that are larger generally those are winning more projects, kind of multi-billion dollar companies such as Gemalto or Morpho and the ones that are smaller are sometimes winning more and sometimes winning less. But if you’re asking what projects they won, each have their regions that they focus on for that matter..

I think it’s important just to try to describe where we see ourselves if you compare ourselves to our competitor in different region.

And I think it’s important that if in the past we were competing on a very small contract in every country around the world and in many cases again some small competitor groups there today as we look at much contract and relatively we see more and more four key players competing against us which are Gemalto, Morpho, Oberthur, [GNB] and I think that additional players that may come on a regional basis but those are the four competitors that we see almost on every tender they are trying competing there.

We believe that we have our own advantages against them and we believe that we will see it in the future once those contracts or those tenders will be completed..

And we have each and every one of them on different tenders around the world. And the four we continue to see defend [ph] in future just..

I think that if you look at the overall market of e-ID which translates about $16 billion or $18 billion a year, it’s clearly that in our number right now we are at the beginning of acquiring a larger market share.

And we believe the best way to increase market share is to beat on the large contract which are as in many cases over $100 million deal which would bring us to a faster market share to meet. And we do believe we have the capability to build that and capability of winning that. And that’s what we are doing in the last few months.

We [indiscernible] and we are proposing our solution in every tender that is out there..

Is there anything in the competitive -- is there any piece or module that you don’t have that you need or finding a partner for that, maybe just kind of assessing you as you go up on these bigger contracts and talk into -- anything, any holds in the product line?.

Our approach to the business is different than some of the other players. While some of the larger players will try to be completely firstly integrated and will have all different components, many times they won’t have the components in their best in kind or best in breed.

We have -- SuperCom has some components but we are much more flexible on our solution. And we look at ourselves as a company that can offer integration with the best in kind components around the world.

And we from the track record, we deploy things successfully in China and Hong Kong, UK, Ethiopia, Tanzania, Zanzibar, to Ecuador and Panama, you can see that regardless of where you look in the world complete different business environment, culture environment and technological environment, we are able to integrate with the local players and manufacturers the biometric providers, the security providers and wherever is necessary to integrate complete solution which actual entails the best in breed component based on the specific requirements of RFPs that are put out.

So that is the big advantage to us and allows us to offer, finely tuned customized solution to customers. We don’t find that we are missing the specific capability because we have a system that allows integrating almost any capability. And we have done this successfully in the past..

And of course we are seeing that when you provide an M2M solution to a customer especially in the e-ID market, we have that knowledge and ability to put together any configuration and solution to customers that benefit, there is no case that tender is out there and we are unable to fulfill the solution to that.

We’ve got more changes, we have the whole company enhanced but in some cases that we need one -- we don’t have enough partners or suppliers are very happy to provide us with this kind of optimistic product which is more commodity product that you -- we don’t feel that we need to acquire or we don’t have any difficulty [ph] we have to develop.

I don’t think we recall any case that we didn’t provide a proposal because we didn’t have all the capability there. I could just mention that right now there are several, more than five large tenders in South America and some tenders in Asia and Europe.

So, the number of tenders we are seeing at the same time is very high mainly because -- mainly in the passport area because most of the countries -- mode into the e-passport due to regulation that [indiscernible] and other are regulating there, so we believe there would be a lot of opportunity in this kind of arena..

And we will go next to John Roginski with Diversified Financial Group..

Hi guys and Happy New Year to you..

Thank you..

Just wanted to chime in; a lot of the questions that I had, have been addressed. But one of the things I’ve been just curious about was I know you have different deals at different stages and some of them have been selected obviously at this point.

But what is the most common way that a competitor will try to interfere with the situation that you’ve been chosen?.

In general, the most common way that competitors do is the -- for instance for that they will put an appeal and a process which makes the process longer.

We are still in the process with some contracts but we believe that at the end of the government will complete the process and it may cause a delay of few months few months or even longer but at the end of the day the government will award the contract to the original selected company.

It is the governments just do not like to change and replace selected bidders just because somebody put an appeal there. So I believe that in general, it’s more delay than a cancellation or change of selected bidder..

I am curious about the visibility that you have for your closings and some announcements in 2015. It’s deemed in the press release that you’re pretty confident that we’ll see something by the end of the year.

I am curious also that the target earnings for 2015 that -- would that include any potential new business that you see with the high visibility of closure or is that strictly on business that you have already?.

First of all, the confidence which is reflected in our press release about securing more contract is just based on we have right now in hand in different stages on different tenders, both in e-ID and M2M.

So, we just look at this and we believe [indiscernible] rather issuing of the goal on the target, I would say that some of the revenue recurring, some of them are from new contracts, but most of them are recurring contracts that we have in hand.

For example, we have a contract that is over $15 million as we already selected as the bidder of choice and we had a major progress. We’re preparing it for delivery and it just got delayed because of some [indiscernible] in the country itself.

We believe that at the end of the day the country needs this solution and because we are being selected, they will sign a contract and we are able to deliver it. So we have these kinds of deals. And we have some other call it revenue that keep coming on the regular basis from our existing customers.

And we don’t see any reason that we’ll have any discomfort in this country..

And we have deployments from 2014 that are expected at churn level to be recognized in ‘15 which we’ve given in our guidance. It is important to note that the large projects, the very large ones we’re talking about are not included and will be above what we gave as original guidance when we built it out..

That would be adjusted for the dilution, correct?.

Correct..

Yes..

How would 2016 look if there were hypothetically no new contracts?.

It’s an excellent question, but I think that at this stage I think [indiscernible] experience. First of all we do not believe that we not win any contract, this is one that we must say. And second I think we will feel more comfortable talking about 2016 in November when we put provide guidance on contracts.

I don’t see any reason based on visibility we have in the pipeline to worry about it..

That’s good to hear. One last thing, you mentioned potentially buying back some share which I certainly wouldn’t blame you at this point, the market seems to be quite impatient looking for these contracts.

My only concern with that maybe taking away from the recent capital raise for the balance sheet to go after some of these larger deals, do you see a conflict of interest there at all?.

In general you’re right, but we have -- the one goal is to enhance shareholder value. It’s just something that is DNA [ph] of the companies and especially in our case.

And the other case, we always evaluate the amount of cash we have on hand, the amount of cash we believe we’ll save from this contract and then we make a decision if we do a buyback and at prices.

And I think that our conversation for 1 million share buyback, it doesn’t [indiscernible] is close right now, we’re taking after an in-depth analysis of our cash flow, cash on hand and the cash need for all contract we are dealing with..

The capital allocation is fair and when we look at purchases any other avenue of return on investment and depending on where the stock is and what we do each dollar we have on hand, we’ll take that into account.

But remember that we’re generating in the business more cash over time, so to not to buy all the shares at one point, but we have an ability to be flexible based on the need for cash for operational aspects and for other.

The demand actually move [indiscernible] the performance of the share I think that really we care about share that the board and the management look forward to enhanced shareholder value and there is a lot of that we are doing because we believe from operation point of view and making our business [indiscernible].

So, I think the other way of supporting shareholder value is in this kind especially when we believe that we’re in excellent position..

I certainly see the value here given what you’ve mentioned that you are capable of doing over the next few years and even by the end of the year.

If you had to encapsulate, what gives you the most confidence of meeting your year-end and perhaps your longer term goals, what would you say is giving you the most confidence; is it your competitive edge; is it your bidding abilities, what?.

I would say that first of all, it is the people we have in the company. I think we have an excellent team, almost in every division we have and so we are able to put together development of IT which [ph] we require, transition of time and high quality. I think we have excellent team for putting together.

We bid at the right knowledge proposal to our customers that provide them with the best solution in specific field.

And I think that the most important thing that is a fast growing demand to our solution, almost in every area we are dealing with both in the e-ID, electronic monitoring, secured payment and the size where all of them there is a huge growing demand together with our capability to address almost every need there and the quality of our people, actually very significant ability to secure more and more contracts and performance and outcome the way this company has done in the last years, we’re always successful with too many contracts.

And our customers are almost happy with the solution or the system we provide for many years..

I would say you guys -- you are saying all the right things. I am looking forward to seeing some press release in hopefully the near future to illustrate some of what you are saying coming to fruition. And with that, I wish you the very best and again Happy New Year to you..

And we have time for one last question. We will go to Chuck Lipson with CSL Associates. .

I guess that a lot of us are having shuffled with, having listen to all the call is the confidence in all these proposals that you’ve made, nine months ago we would have heard on a conference call that the pipeline is very robust and we have great confidence that we are going to secure many of these contracts.

Well now nine months just past and we haven’t seen any of these come to fruition.

So, has something changed in that pipeline that we have -- could you give us some indication that you have greater confidence that these proposals will indeed come to fruition? Just how that you feel more confident that yes a contract will happen shortly versus the nine months that it has?.

First of all I think one explanation for that is that we mentioned I think on previous call that we raise [indiscernible] that from this point we announced contracts, we are not announcing contract of $4 million, $3 million, $5 million, we decided to announce only when they are $7 million [ph] and above; only if it fits, we announce it.

So there are contracts we are dealing in the company which just we’ve not announced it. We now are only talking about large contracts.

I think we have to talk about this and describe as I said earlier that we have been selected in some cases there, we are negotiating, there it takes longer for various reasons, some of them are for some other reasons that competitors are trying to put obstacles. But at the end of the day there is no change in our position in this specific program.

And we believe that at the end of the day and we are not talking about the day-to-day but shortly we will be signing large contract and we will announce it.

But again the reason that you don’t see a lot of the small announcements that we are not announcing less than $7 million [ph] contract and we have most of contracts in our hand and we should [ph] have $7 million, [ ph] we are in different stages and we are optimistic securing some of them..

And I have a little thing to add on to that. We’ve expectedly gone I believe to bigger, more profitable, more valuable contracts and we’ve actually been able to win an RFP against much larger players.

We could stay strategically on the smaller ones and win them more simply and have less appeal and less compression, but we chose to on our strategy based on the capabilities of the team here at SuperCom to continue to progress towards the larger ones. With this team, we are successful in doing so.

Just signing a contract and announcing is not as important to us, it is to actually to make sure we have the right infrastructure in place to avoid the risk that can be inherent to some of these projects.

So while we are negotiating dealing with the customers, we want to make sure that all the different elements are there in an appropriate way to allow small companies such as ourselves to grow rapidly and enormously and in very short period of time and do that in a secure way. It takes a little bit of time. It takes a little bit of capital.

And that’s why we raised it. But we do have all the right signals from the market to give us high confidence that we are in the right way. And that could be even the small things as many other players coming to us and large tenders are out and asking for us to partner with them.

So some of the players that are in the market they see our success in the tenders and our capabilities are growing.

And soon when we are at the stage, we will announce properly to the market and you know that with our conservative approach we have taken all the rights steps to ensure that our announcement actually comes into highly predictable future generation of revenues and profitability at a high margin..

I think that it’s important to mention that the way we have done, the long way we have done during the last few years by enhancing and building our product line, has increased our ability of winning contracts where we compete against some of our competitor, they do not the complete line of solution that we have whether it’s estimating [ph] secure payment capability, or cyber capability on our system is something that most of our competitors do not have.

And in many cases we see that with the revenues and with advantages when we arrive to the final stage, most of the governments around the world are looking at these areas which I mentioned to be critical will provide any sigma any ID contract, they won’t be still confident to those in or integrated [indiscernible].

The confidence as I mentioned earlier comes from our position and capability to growing market and the tenders that are already there in different stages..

I think the market having seen you receive several large contracts last year got really confident that this year will just be a continuation especially when the capital raise came at a very opportune time which leads into my next question.

Has anything changed with that capital raise? Obviously you own the large part of the company and would do things at an opportune time for shareholders but when that raise was made, I think investors thought that something was about to happen and yet three months later.

So has anything changed than that score?.

I don’t think we do things on opportunity basis. We are looking at things carefully before we do any move especially going to an offering. I don’t think this company has any reason to go offer better than its performance except as we mentioned we did believe that the offering is differential to some of the activity we have mentioned.

There was no reason to be skeptical [ph] because the company is profitable and we have cash on our own.

Now the reason as I mentioned earlier I think goes there and this of course that we thought need to do specifically because of some tenders or negotiations that we need to show a stronger balance sheet and a larger access to cash in order to convince those governments to provide with a contract.

And I think we see that already in the feedback of the market to our position from balance sheet point of view. So yes, there is a major change there and we are being perceived a much stronger company enabled to form larger contract for many years and we see it of course we are receiving in different tenders..

Well, I think when we talk shareholder value the thing that would count the most now is some contract announcements as far as shareholders are concerned. So, I wish you well on that and Happy New Year..

Thank you and Happy New Year..

And that does conclude today’s conference call. We appreciate your participation..

Thank you..