Q3 2024 SuperCom Ltd Earnings Call
Ladies and gentlemen, good morning, and welcome to Super Com's third quarter, 2024 financial results and corporate update conference call.
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Speaker Change: Joining me on Super comps leadership team is or the entrepreneur Trabelsi Super comps, President and Chief Executive Officer.
Speaker Change: I'd like to remind you that during this call Supercomm management may make forward looking statements, including statements that address <unk> expectations for the future performance or operational results.
Speaker Change: Forward looking statements involve risks uncertainties and other factors that may cause <unk> actual results to differ materially from those statements.
Speaker Change: For more information about these risks uncertainties and factors. Please refer to the risk factors described in Supercuts. Most recently filed periodic reports on form 20-F, and form 6K and Super comes press release that accompanies this call, particularly the cautionary statements in it.
Speaker Change: Today's conference call includes EBITDA, a non-GAAP financial measure that Supercomm believes can be useful in evaluating its performance.
Speaker Change: You should not consider this additional information in isolation or as a substitute for results prepared in advance with gap.
Speaker Change: A reconciliation of this non-GAAP financial measure to net loss of comparable GAAP financial measure. Please see the reconciliation table located on Super comps, earning press release that accompanies this call.
Speaker Change: Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well.
Speaker Change: The content of this call contains time sensitive information that is accurate only as of today November 14th 2024.
Speaker Change: Except as required by law Supercomm disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
Speaker Change: It is now my pleasure to turn the call over to Super Com's, President and CEO or Don Trabelsi.
Don Trabelsi: Thank you operator.
Don Trabelsi: Good morning, everyone. Thank you for joining us today.
Don Trabelsi: This morning issued a press release on financial results, the third quarter and nine months ended.
Don Trabelsi: 32020.
Don Trabelsi: The final copy in the Investor Relations section of our website at Www Dot.
Don Trabelsi: Dot com.
Today I'll start my comments, a brief update on our highlights strategy future results followed by a Q&A session.
Don Trabelsi: Third quarter was another quarter of significant achievements with supercomm showcasing the continued strength and resilience in our business.
Don Trabelsi: Our financial results for the third quarter and first nine months of potentially four reflect the successful execution of our strategic initiatives, which have been driving revenue growth and improving profitability.
Don Trabelsi: Free cash flow is good.
Don Trabelsi: To date revenue increased to 21 million.
Don Trabelsi: Brian.
Speaker Change: Gross profit surged by 35% to $10 $7 million gross profit margin improved dramatically from 51%.
Speaker Change: Eight 7% in the prior year period.
Speaker Change: Our free cash flows.
Speaker Change: <unk> is a positive $1 $2 million from a negative number is really last year.
Speaker Change: We are pleased with our results and look forward to the following quarters.
Speaker Change: I was particularly excited to solidify our leadership position with key contract with.
Including the prestigious National Israeli electronic monitoring projects.
Speaker Change: Also expanded into new regions, New York, West, Virginia, and Maryland, further strengthening our footprint in the U S market.
Speaker Change: This was not only reflect the exceptional value of our technology, but also help position us for sustained expansion in the years ahead.
Speaker Change: Our commitment to financial discipline.
Speaker Change: Operational efficiency.
Speaker Change: Innovation has translated tangible results and improvement in net income to $50 million, just nine months period compared to a net loss of $2 four eight.
Speaker Change: Sorry.
Speaker Change: Free cash flow generation of $1 90, this quarter cash balance six point.
Speaker Change: Underscore these tangible results along with the ability to support further potential growth opportunities.
Speaker Change: We're also particularly proud to have continued our successful integration.
Our position in multiple new markets.
Speaker Change: But there are different limits inhibition ability to meet the bulk of these are high.
Speaker Change: This along with other strategic initiatives that position us to overstate.
Speaker Change: Profitability expansion.
Speaker Change: So those.
Speaker Change: Our mission is revolutionize public safety sector worldwide, our proprietary electronic module technology.
Speaker Change: Intelligent electric.
Speaker Change: Let your services.
Speaker Change: Over 36 years of experience since our founding.
Speaker Change: He's been a trusted partner dozens of national governments worldwide, providing cutting edge electronic.
Digital security solutions, our strategic straightforward is powerful.
Speaker Change: And then with innovative technology.
Speaker Change: Proprietary electronic module knowledgeable just scored highly repetitive government tenders for various programs to construct GPS monitoring rehabilitation services domestic violence prevention and more. Moreover, we've recently brought in our portfolio as it puts out AI driven analytics, which are integration, it's our electronic module system.
Speaker Change: This addition.
Speaker Change: That is our ability to buy it.
Speaker Change: Insights to improve outcomes for our clients.
It also appears solution.
We have secured over 50, new multiyear government projects.
Speaker Change: We expand our global presence.
Speaker Change: Our strong growing reputation as a premier provider of electronic monitoring solutions and services it enhanced our market position with each new customer win.
Speaker Change: We deliver our services did you focus on Iot tracking business in developed market is where the opportunity is greatest they'll drive module market projected to reach $2 $8 billion by 2028, the U S and Europe constitute about 95%.
Speaker Change: That's helpful.
Speaker Change: We continue to amplify our optical leadership significant R&D investment.
Speaker Change: The launch of definitions.
Walt: Sure Walt.
Speaker Change: These offerings is already making headway in various markets because the U S.
Speaker Change: Sure.
Speaker Change: <unk> is a lifesaving domestic violence monitor solution provided protective measures families suffering from domestic wireless where stocks, thereby increasing their safety.
Speaker Change: We offer a unique lightly abrasive longer battery life.
Speaker Change: Solution architecture.
No other offer domestic violence protection and a unique way, which is spreading rapidly around the world.
With Huawei.
Speaker Change: Jim.
Speaker Change: Sure Juan.
Speaker Change: Is it all in once you get tracking ankle braces module solution integrated comprehensive monitoring capabilities into a single device.
Many of our products that offers top notch features basically at or above that.
Speaker Change: This shift in those metrics in this pilot has been key to our expansion in the U S which is on plan.
Our cloud based software for your security products.
Speaker Change: Particularly effective and module vendors and managing real time information is real time advantage is a game changer powering authorities actionable insight timely intervention to mitigate potential risks.
Speaker Change: These products have significantly expanded the company's addressable market, we've been very pleased with the reception.
Speaker Change: To help facilitate accelerated expansion of super comp as the U S market for the European countries, we fortified our operational infrastructure to support our growth and our revamped our sales strategy with proactive outreach to approach our sales team.
Speaker Change: Expertise has been instrumental in achieving new wins.
Speaker Change: Last month.
Speaker Change: We announced that together with our prime partner Electric Israel, we have been awarded a five year contract by the Israelis President servicing agent or Ips.
Speaker Change: Our pure security electronic monitoring.
Speaker Change: This nationwide program is expected to cover all electronic monitoring programs in the country with an estimated 1500 enrollees.
Speaker Change: Tennessee and potential for expansion.
Speaker Change: Supercomm will deploy cutting edge E M solutions JD com.
Speaker Change: Peer to peer.
Speaker Change: The five year contract, it's already in effect and then who's the option for up to four one year extension for a total of a nine year potential contractor.
Speaker Change: Just want through a highly competitive bid process.
Speaker Change: Several rounds of negotiation demonstration and system evaluations required to provide.
Speaker Change: We displaced an Israeli Congress public contracts for many years and this is one that's amplifies our commitment to excellence.
Speaker Change: Allergy leadership and strong partnerships, a comprehensive set of offering.
Speaker Change: Well it was multifaceted national projects such as this one.
Speaker Change: Our sets encompass all electronic monitoring programs in the country.
Speaker Change: They have a broad array of solutions one contract one provider. So we can support all the programs.
Speaker Change: Over the past months, we announced many new orders and new project wins in the U S and Europe. In recent years, you think almost continuously displaced incumbent vendors and achieving over 65% win rate in European competitive tenders.
Speaker Change: Looking to the EU market.
Speaker Change: She's the gunman secured several new national tracking programs cost you have over the past two years with bigger contracts at various stages of execution, notably the company's large scale domestic violence unattractive programs like the one launch in Romania.
Speaker Change: I'm sort of catalyze further uptake from existing European customers.
European countries adopt these technologies with a bit of a broader expansion of our solution on the continent.
And the European market, just kind of expanded its business in over 10 countries that suggest significant contracts, which are typically awarded to a competitor tender process is that.
Speaker Change: Any new project.
Speaker Change: Could you had received ongoing orders.
Speaker Change: Partners just about what was it always announce received orders valued at over $2 $9 million in European government.
Speaker Change: Totaling over <unk> 5 million new orders.
In the past period as described.
That's here.
Speaker Change: Nashville.
Speaker Change: New National program of the Finnish government lawyer domestic violence sponsors.
Speaker Change: The deployment of our <unk> securities consisting of purer Taxotere tracked here.
Speaker Change: Monitor demonstrate the versatility and effectiveness of our solutions underscores our leadership electronic module.
Our collaboration with them that is a prime example of our confidence.
Speaker Change: Supercuts and those experienced our services often choose what are their engagement with our diverse rent solution.
Speaker Change: With one program a contra expense in GBS or domestic violence alcohol monitoring and that gives us of course opportunities for growth and margin improvement with the same customer.
Notably at the end of 2022 the company one of the largest industry award of the year for National Tronic monitoring project in Romania valued at over $33 million, including up to 15000 monitored vendors simultaneously per month about six years. The project has been progressing really had demonstrated substantial further extending our engagement of the countries.
Speaker Change: Project.
Speaker Change: <unk> scaled projects reinforces the strength of our superior security suite.
Our position as a trusted partner.
Speaker Change: Immigrants worldwide.
Speaker Change: We will also launch it and that's fine.
Speaker Change: We just recently launched as well in the U S looking to the U S market.
Speaker Change: While the European market continues to grow its important to note that the U S market offers large opportunity.
Three to five times the size of the European market.
Speaker Change: Gotcha.
Speaker Change: The introduction of our pure one electronic monitoring product now available in the U S and expansion of our domestic violence driving solution. We believe super Com is well positioned to unlock substantial growth potential top off here.
Speaker Change: Sure.
Speaker Change: All those different already does this multiple U S States, where I believe focus on further expanding our U S wholesale subsidiary located.
Speaker Change: Located in California. After the expanded program, we didn't revert with existing customers and winning new programs with brand new customers.
Speaker Change: These procedures, the prioritizes pier, one expansion into new markets and geographies.
Speaker Change: Do you want a dirty seats high credit during this introduction of the various stages of USA, whereas it's that's been deployed and is actively utilized monitor firefighters wolber sensitivities from tier ones.
Speaker Change: And as promised in the market.
Speaker Change: Sure.
Speaker Change: It's been a long standing presence in California. The U S market remains largely untapped for us since we began investing in outbound sales effort 2022 for the U F secure with it.
Speaker Change: Cornea, Idaho, bulky and well maintain a few this quarter. If we just announced if you wanted to reiterate and the launch of the tier one and two.
'twenty three kubota top positive feedback from initial deployment positions us to accelerate our capture across the us unlocking significant growth opportunities.
Speaker Change: New sales team a new way.
Speaker Change: First after it's due to the company's U S. One of its best strategy in an order driven.
Speaker Change: Customers in multiple demos resulted in significant increase in the company's pipeline launching a pier one solution to the U S marketplace.
A milestone that expansion strategy since our last earnings call well, we've announced multiple new projects in North America to provide the solution.
Speaker Change: So <unk> here, new multiple new contracts with a sharp agencies across west Virginia. These contracts Leverages becomes integrated do you want <unk>.
Speaker Change: With both seller and Wi Fi communications annuity.
Speaker Change: These conscious started generating recurring revenue for this client are present.
Speaker Change: In the U S market.
Speaker Change: We've also secured new contracts with Baltimore based service provider in Maryland, and the <unk>.
Speaker Change: <unk>, which was launched in June 2024.
Speaker Change: As demand generate an annual recurring revenue or profit.
Speaker Change: $250000.
Speaker Change: And we secured our first contract in the County in New York State.
Speaker Change: When achieved their competitive selection process for those trends to become strategic expansion across new asset marks another milestone in our business.
Speaker Change: As I mentioned earlier.
Speaker Change: Tier one is the game changer of securing these contracts underscores our competitive edge and commitment to deliver innovative and superior technology solution.
Speaker Change: These contracts further reinforce our position as a market leader in various fields and we reviewed recently the indicators, we're growing affluent and expansion.
Speaker Change: That's really North America and worldwide.
Speaker Change: In conclusion.
Macroeconomic uncertainty is the ongoing global challenges, including those in Israel should become solutions or be increasing relevant and continue to see growth driven by high recidivism rates definitely the cost of incarceration and the surge in adoption.
Speaker Change: But as for what the Companys <unk> technology, because it did not.
Speaker Change: As I suggest these trends operator, that's away from institutions that fiber is prison overcrowding lowest.
For example monitoring confinement.
Speaker Change: Vendor at home or GPS talked about 10 to $35, a day, which is 90% less.
Speaker Change: Then the $140 did it also have a correction.
Speaker Change: Moreover, home confinement helps or distribute offensive.
Speaker Change: The effectiveness of the vendors improve their lives.
Speaker Change: As he mentioned in previous calls, but it is also opportunity to enter the U S growth.
Speaker Change: Strategic acquisition local electronic monitoring service providers with a stronger position concentrated customer base in the local markets. We constantly monitor the market potential acquisitions that could generate significant value at a good price and buy immediately expanding market presence the provider vertical integration synergies our acquisition of LCA 2016 was lack of this.
Speaker Change: Sure.
Speaker Change: The $3 million of greatest yeah, that's our position is that.
Speaker Change: Great strategic value to the company allowed us to win over $35 million of new projects.
Speaker Change: In California alone since acquisition.
Now I will turn briefly to the financials.
Speaker Change: During this quarter Q3 in the first nine months of 2024 in comparison to the same period of last year.
<unk> that are multiyear projects or not run a quarterly scale.
Speaker Change: Fluctuated affect annualized quarterly we'll start with a nine month performance.
Speaker Change: Which helps to drive some of these fluctuations.
Through the nine months revenue for the first nine months increased $21 $3 million up from $2 9 million same period last year gross profit surged, 35% $10 $7 million.
Speaker Change: Margin.
Speaker Change: 1% up from 37.
Speaker Change: Last year net income improved significantly to five 2 million compared to a net loss of $2 four 8 million in the previous in the prior year.
non-GAAP net income grew to $4 $8 million demonstrates the strength of our cooperation and EPS.
One six hours and non-GAAP EPS reached one difference mainly attributed to amortization of acquired assets.
What are the performance in Q3 revenue increased to $6 $900 million up from $6. Seven eight Q3 last year, driven by a new project wins and expansion contract gross profit. This quarter was $3 2 million plus a margin of 46% compared to $4 million and margin of 59%. This margin decrease was primarily due to project mix.
Speaker Change: EBITDA totaled $1 $1 billion.
Speaker Change: $2 5 million in Q3 of last year also mainly due to project mix.
Speaker Change: Positive free cash flow of $1 $2 million. This year further underscore the strong financial discipline.
Speaker Change: The negative free cash flows for the same period last year.
Speaker Change: Note. This is very interesting.
Speaker Change: Cash flow from operations in the first nine months of the year or positive.
Speaker Change: Big improvement from recent years, if we.
Speaker Change: Look at it keep track in 2021, we had negative $9 $7 million in operating cash flows in.
Speaker Change: In 2020 to be a negative $4 7 million in operating cash flows in the 'twenty to 'twenty three we had a negative $2 $4 million of operating cash flows and again for the first nine months of 2024.
Speaker Change: Positive.
Speaker Change: Operating cash flows.
Speaker Change: These are these are great results and a great trend I'd like to see in this.
Speaker Change: Supports.
Speaker Change: Our strategic plan and a testament to the success we are achieving.
Speaker Change: The quarters results highlight our ability to seize the high margin potential of our project portfolio through successful execution of progression of the different stages of these projects showcasing our focus on.
Speaker Change: Profitability.
Speaker Change: Typically initial project stages into higher expenses, while advanced stages of the higher gross margin cause fluctuations in our gross profit depending on project competition that deployment stages, we're running multiple projects in different stages throughout the world and that's why you can see the fluctuations in the quarter, depending how each one paul in that specific quarter.
Speaker Change: This pipeline matures, we expect an upward trend in gross margin based on the evolving project portfolio, what additional places images, we run existing projects on our existing infrastructure.
Speaker Change: Provision margin for each additional base it could be as high as 70%.
Speaker Change: Operating expenses in the quarter stayed in line with those first half of the year as we continue with our strategy and also interesting to note. We've made considerable strides in reducing our long term liabilities were up to $4 $5 million year over year, which includes exchanges with our creditors of debt to equity and negotiated premiums of up to 100% premium to market price.
Speaker Change: Our operating cash flows improved to $1 2 billion year over year, and our cash position grew to $6 2 million at the end of.
Speaker Change: Quarter.
Speaker Change: One of our highest reported cash position in recent years.
And we remain focused on reducing our cash need for external funding as we can.
Speaker Change: We need to win and execute projects. These improvements further strengthen our financial foundation to support our ongoing growth initiatives and strategic divestments and clothing.
Speaker Change: Thank our global team for the hard tireless work to achieve our company's record setting performance.
Speaker Change: We've developed the right technology and product.
Speaker Change: Criminal Justice system clients overcome challenges that make better use of the over $80 billion spent annually in the USA on operating rehabilitation centers.
These are selling in approximately 75% instead of the rates in the U S.
Speaker Change: I think you had room for improvement when in fact, the program technology adopters.
Speaker Change: We're excited about the growth we are experiencing at about the growing demand of our products. After several years through which we transition from our legacy business. The Iot tracking those banners business, we're happy to show the shift the nice growth in revenue and profit we believe that we're well positioned to continue expanding our.
Speaker Change: To capitalize on many opportunities before us these are being driven by multiple factors, including a strong presence reputation the U S and European market.
The counter cyclical nature of electronic monitoring industry, the growing public policy shifts and monitoring that of incarceration.
Speaker Change: The growing adoption of the method by alphabet just solutions, we anticipate continued expansion in the U S Europe and <unk>.
Speaker Change: Other regions, our commitment to preserving our technological advantage and a robust growth foundation remains steadfast.
In these areas.
Speaker Change: With that.
Speaker Change: I'll turn it over to operator to overcome.
Speaker Change: Open up for questions.
Speaker Change: Operator.
Ladies and gentlemen, if you wish to ask a question on today's call you will need to press Star then the number one on your telephone.
Speaker Change: If youre using a speakerphone please pick up your handset before entering your request and speaking on the call.
If your question has been answered and you wish to withdraw your request you may do so by pressing the pound key.
Speaker Change: One moment please for the first question.
Speaker Change: Thank you. Your first question is coming from Matthew <unk> from Maxim Group. Your line is live.
Speaker Change: Hey, Thanks for taking my questions.
And congrats on the strong.
Speaker Change: Strong year to date.
Speaker Change: Can you maybe start off by just touching on what the pipeline looks for looks like for Europe. In 2025 are there any large national projects that are up for bid or that youre pursuing now that you think could close in 2025 or what is your up look like as you look out over the next year.
Speaker Change: Okay.
Matthew: Thanks Matthew.
Matthew: Question are.
Matthew: As you May recall, we have.
Matthew: The market several years ago.
Small projects in Europe last year between the $200000 grew two larger ones.
Matthew: Like Denmark, and Sweden and $7 million.
Matthew: At $32 million.
Matthew: I'll Act as references.
Matthew: And track record that helps us.
Matthew: The peak on any <unk>.
Matthew: In ERP.
Matthew: States with the waiting for the ones to come out and then we compete and use our leverage.
Matthew: Leverage our strong win rate to help with this project.
Matthew: Europe, there's still many countries.
One rate one rated countries, there's still many countries out there that we havent yet to enter.
Matthew: And we are continuously monitoring and bidding and progressing and thinking about it.
Matthew: For various projects.
Matthew: Culture, almost every western European country has national projects.
Speaker Change: You haven't answered yet.
Speaker Change: In France, Germany and Norway.
Spain, and so there are certainly opportunities of various sizes and there are many that are out there that are bigger than Romania project.
Speaker Change: Europe, while being smaller than U S is still a great market for us a very good position to grow your position there and we continue to bid there while because while in parallel we entered the U S market.
Speaker Change: Got it thanks and.
Speaker Change: When you bid on new projects in Europe.
Speaker Change: And they usually displacing or to displace or replace legacy.
Speaker Change: You know kind of old henkel bracelets or what what's the are they looking for additional functionality generally in one go such as domestic violence.
Speaker Change: Staff or you know what.
Speaker Change: What are the new bid generally looking for.
The national programs, many times of compass, although although electronic monitoring programs like the housewares GPS monitoring domestic violence alcohol.
Speaker Change: So we did we also do in the monitor in the cell.
Speaker Change: Usually there is an incumbent.
Speaker Change: <unk> has been around for a long time and some countries like Romania, which is the first program Atlas.
Since they are related to the first.
Speaker Change: Almost every other one we're displacing an incumbent we then that income into 2004 years.
Speaker Change: We displaced the Israel that encompass for very long time as well, we displace them. So it does require capital and work on investment for countries to switch over to a new vendor usually they do that when they see a value proposition, which is significant to what they are experiencing today.
Speaker Change: I'll just have to marginally improve what they're what they have.
Big step improvements adapted now retraining, all their staff and change your systems and integrate it with the whole process, we're able to do that by firstly offering significant improvements to existing programs to have whether it's <unk> or GPS monitoring because our technology and architecture is completely different offers.
Speaker Change: Much much longer battery life and very other.
Speaker Change: Whole scale of all the capabilities and features that are important to them and we're able to offer branded solution that they haven't had before like domestic violence with our pure protect program.
Speaker Change: So it's a it's a mix.
Speaker Change: They get a better version of an existing program and the opportunity to go to do programs ended by the team, which is altogether, usually local partner, which provides them top notch support great execution effective timeline for the communication and all the things that they're looking to see from government contractor that we bring with over 36 years of experience as a government contractor.
Yes.
Speaker Change: Got it. Thank you and then last question for me and then I'll jump back in the queue.
Speaker Change: I guess.
Speaker Change: With respect to the U S market.
It seems like you're expanding your footprint into new states within the U S North America.
Speaker Change: What do you expect to do you need to add resources to that have hurt.
Speaker Change: To accelerate North America, or do you expect to add more.
Speaker Change: More boots on the ground to try to push that faster or just curious how you think about.
Speaker Change: Going after that bigger opportunity in the U S.
Speaker Change: Just to clarify the assets, we're putting more boots on the ground are.
Speaker Change: The elevated or if we're doing other strategic moves.
Yeah, Yeah exactly.
Okay.
Speaker Change: Good question, so it's a trade off.
Speaker Change: In the U S market themes as much faster than Europe, because those are counted for clients and resellers with ours.
Speaker Change: From agencies that have to go through an RFP process, because it's not on their own in a.
Speaker Change: <unk> 10 counties that are controlling and they are running all of those programs with Tommy villainous, which technology is their prerogative to do so so they get the final technology the company like ours at switch.
Speaker Change: It happens quickly.
Speaker Change: Within two months three months, sometimes you see that switching over or they can start small who will go over them onto everything at once so it gives them a lot of flexibility and it allows us to move faster that does require though.
Speaker Change: The other half more feet on the ground because.
Speaker Change: Market is fragmented and so I was just looking at it one national projects, you have dozens or even hundreds of projects spread across the U S.
Speaker Change: Different counties and surprise us.
Speaker Change: We have multiple projects with a lot of the sheriff.
Speaker Change: Program of operation will have early intervention or I'll call. It modest rate, it's very fragmented and requires a more relationships, but the resellers do accumulate aggregate. Some of these and work for the salaries, we have quicker expansion and we try as you can see we tried to keep an eye also on our cashiers and our.
Speaker Change: Stability are we.
Speaker Change: We were.
Speaker Change: Looking to.
Speaker Change: To grow faster.
Speaker Change: Could've raised a ton of it.
Speaker Change: Venture capital backed fund the company, we could have a raise more money and tried to put many many of you on the ground to expand faster and faster when they find out.
Speaker Change: Trying to maintain our profitability and trying to optimize our cash use which you may have heard on the script for.
Three years ago, where you had a negative nine points of $7 million in cash burn as you are cash flow positive.
Speaker Change: So far so we're trying to manage everything at the same time.
Speaker Change: We are cognizant of having salespeople, who put on the ground and we have seen great growth already even as we work very efficiently with our capital and try to optimize and utilize our salespeople and our sales.
Senses adopt.
Speaker Change: But ultimately as we can.
Great well I appreciate all the answers and I'll be back if there is no other questions in the queue. Thanks.
Okay.
Speaker Change: Thank you. Your next question is coming from Dan sheets. Your line is live.
Speaker Change: Okay.
Dan Sheets: Hi, or done first.
Speaker Change: First of all it sounds like another great quarter of execution, we really appreciate that.
Speaker Change: Or I guess, a couple of questions first one would be.
Speaker Change: Oh in the deck debt to equity conversion, how many new shares were issued and at what price.
Speaker Change: Don't have that.
Speaker Change: One conversions over the course of the year with several conversions.
Usually at a premium of up to 100%.
Speaker Change: That would be.
Speaker Change: Yeah as you saw in the numbers that helped to reduce our long term liabilities of four or $5 million.
Speaker Change: Benefits to shareholders of course, we're going to get forgiven.
Speaker Change: Together with that we reduce the debt.
Speaker Change: Are you seeing a significant premium to the stock price.
Speaker Change: So well how many I'm more concerned about this particular quarter, how many how many new shared square as part of that conversion were issued this quarter. This quarter love. It looked it was down this quarter zero in the in the third quarter.
Speaker Change: Okay, Great your core Msas.
Speaker Change: An update.
Speaker Change: Just give annual updates.
Speaker Change: Compared to the last year, you'll see the long term liabilities are reduced because the conversion is done.
Speaker Change: Previous quarters previous okay, small small amount.
Speaker Change: And just one conversion.
Multiple conversions with what's optimal.
Speaker Change: We tried to cheat.
Speaker Change: It's just okay.
Okay wonderful that's that's excellent to hear.
Speaker Change: How many can you give me a count of how many shares are outstanding.
Speaker Change: At the end of the third quarter.
Speaker Change: We did report.
Speaker Change: We did report we Havent semi annual report that we recently roughly $2 million outstanding shares.
Speaker Change: Okay, great to hear a little bit once you went out of their chairs.
Okay wonderful well I'm thrilled to hear that there wasn't any additional dilution that a long term shareholder and I believe in your of your product and your mission.
Speaker Change: But it's been a little disheartening to see the continue they'll continue dilutions over the last couple of years I Hope, that's that's behind US and just one final comment.
Speaker Change: The market will once you once that is common knowledge and it's out there your stock performance will change because right now that's what's been holding you back.
Speaker Change: And that's all I got to say I understand yes.
Speaker Change: Thank you for that answer, but one of them we have.
Speaker Change: We have been.
Speaker Change: Working to grow our infrastructure expand.
Speaker Change: Reducing our use of cash in overtime.
Speaker Change: The seven months of negative $9 7 million to negative $4 70 to $2 four now positive cash flows.
Don't control exactly the project stages, and how things roll out we hope to win more projects.
Speaker Change: We did use cash to support this growth, but we are trying to be cognizant of the conversion.
Speaker Change: So we've described that was done about a premium of up to 100%.
Speaker Change: Provided great value for shareholders or trying to be cognizant and delaying we extended the maturity of our debt.
Speaker Change: <unk> worked closely with our with various partners.
Speaker Change: To help goodbye.
Speaker Change: Terms that to be able to execute and grow.
Speaker Change: Implement our business plan, why while trying to optimize shareholder value.
Speaker Change: I appreciated your support over the years.
Speaker Change: Yeah.
Speaker Change: Thank you. Your next question is coming from Matthew Kalinka from Maxim Group. Your line is live.
Matthew Kalinka: Hey, Thanks, Thanks for taking on another couple of questions from me.
Can you expand a little bit more on the.
Matthew Kalinka: The deal you have now in Israel.
Matthew Kalinka: Particularly.
Matthew Kalinka: Maybe it's a little bit more about the structure is.
Matthew Kalinka: Is it more of a purchase or kind of a recurring structure and what are the opportunities for expanding that that project over time.
Matthew Kalinka: The question and.
Matthew Kalinka: Just make sure asset duration organize for you.
Speaker Change: Well sure.
Speaker Change: With a high level of the project was through Congress, there's an incumbent for many years in Israel.
Speaker Change: Partnership.
Speaker Change: I was holding the projects.
Speaker Change: And we came in with a partnership together with electronics.
Speaker Change: And one bit.
Speaker Change: The first the first period of five years for a one year extension of nine years, if we do well it could be extended for another nine years.
Speaker Change: As we've seen in many regions in the world.
Speaker Change: Initially it starts with how stress, which is our base and that is traditional program is expected to have a 15.
Speaker Change: Plunger vendors on a purchased Lee.
Model, if we see many filings with the U S market in some parts of Europe.
Speaker Change: There are other types of programs.
Speaker Change: As we discussed on the call are domestic violence and others that.
Speaker Change: We believe that Israelis.
Israeli prison.
Speaker Change: Ips.
Speaker Change: <unk>.
Speaker Change: They plan to use more of these programs to help with criminal Justice in Israel others.
Speaker Change: It's been a long path.
Speaker Change: Last year around domestic violence.
Speaker Change:
Speaker Change: Allows us complement the use of electronic monitoring for domestic violence and there's other things that are in process. This project gives us the right for all of the electronic monitoring projects in the country.
Speaker Change: Over these years, so as the government decides to deploy more projects, we will be the factor.
Speaker Change: We have experience I've noted.
Speaker Change: Many of these programs in many countries around the world.
Speaker Change: <unk> sizes included 50000 unit domestic projects, the remainder which is amazing.
Speaker Change: Sure.
Speaker Change: We've seen even in house arrest increases to the quantities every year and we expect those numbers to grow just for the additional program.
Speaker Change: But beyond initial programs growth.
We're expecting potential additional programs to be added onto that work to the projects, which could be very valuable.
Speaker Change: Got it and when you think about additional units on the house harassed or additional programs under that Tam win.
So if you add incremental units what does the margin look like.
Speaker Change: If you go beyond the 1500 I guess.
So like.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yeah, Yeah, Yeah, Yeah, yes, yes, yes.
Speaker Change: There's a lot of cost with a four.
Speaker Change: The new system that includes installation and hardware teaching support such as manual setting up software that includes development of a software application for specific programs what the customer wants we'll do that with every not every customer, but every large customer that happens in cases with our effort and that lowered our margins.
Speaker Change: Watch.
Speaker Change: As you noted.
Speaker Change: Every additional.
Speaker Change: A bridge that we put on is very high margins much higher than the original ones.
Speaker Change: Because you don't have to do any additional customization, whether you're doing 500 or 10000 units.
Speaker Change: When you say, you're going to add more units and the margin on each additional unit is very high sometimes 70% of the higher it depends on the specific pricing of the civic program. Sometimes you have one person in one maybe they won't listen to phone.
Is it almost $100 of racism.
Speaker Change: Each one is different call.
So their costs.
Speaker Change: The change, but they are much higher when you add additional additional units to each existing contract and whats nice about besides Israel, which is going to put more program since it would be interesting and good margins in the U S. Almost all of the programs run on the cloud and they run with the same language and out of the same.
Speaker Change: Infrastructure in the same protocol. So it's very nice that the market that it was already three to five times the size of Europe will utilize.
Speaker Change: The same systems, allowing us to reach higher margins versus in Europe, where origination had a lot of it was purchasing.
Speaker Change: All of our different languages different protocols different walls.
Speaker Change: And it maybe a little bit more complex than it from nation in Asia here in the U S. We're actually seeing more consolidation and more similarities between programs that's going to be a benefit so I'd start with is our future.
Got it. Thank you and then final question on that.
Speaker Change: I don't know if you can answer this but.
Speaker Change: Is there a number of track.
Speaker Change: Trac defenders you think.
Speaker Change: Israel deal can breach over you know the FERC initial five year period. So we started at 1500 and.
Speaker Change: So maybe that up and then like 3000 or you know impossible to answer that at this point.
Speaker Change: Uh huh.
Speaker Change: Charlie.
Speaker Change: Without the.
Speaker Change: The population is in Israel.
Speaker Change: As of end of 'twenty three it was close to $10 million in Romania, looking at 19 million population without getting into the specifics of our different laws the processes.
Speaker Change: Graham.
Speaker Change: You see that as Romania started with 15000.
Speaker Change: Theres still talking considering growing theres certainly room for much more than 1500 in Israel.
Speaker Change: There's a lot of potential to be done.
Speaker Change: The population of the country. It also depends on the processes and the governments propensity to quickly our experience in Israel.
But here is a lot of the a lot of this.
Speaker Change: Different programs in Israel, the government policies like technology that are comfortable with technology, we had a program in Israel for the Covid even tracking.
Speaker Change: And we have no.
Good aspirations to work closer together with them and it was electronics to deploy effective solutions in these numbers.
This has worked well they grow their numbers and it's the least projects really continue to continue to grow it as I see it working effectively and improving the numbers.
Yeah.
Speaker Change: Thanks, and sorry, one last follow up for the initial 1500.
Do they turn on you know as soon as you implemented or isn't there kind of a ramp up period to that initial number where you need to go in and swap.
Speaker Change: You know the old for the new or what what's the process towards you know go live in reaching that point.
Speaker Change: He already started with.
Speaker Change: The project deployment it takes time right now.
Speaker Change: Processes the definition of the planet.
Speaker Change: It should take a.
Speaker Change: Six months or so for the some of the initial deployment that's the beginning number.
Speaker Change: I expect it to be a little less than 1500, and then it could go.
Speaker Change: Maybe.
Speaker Change: Somewhere between 1000 to 1500 at the beginning and then it goes to just under quickly, but it does it does happen through swaps and Israel.
Speaker Change: Malo region easier than when you spent it across larger regions like California. So you have easier touch points and access to two of the.
So the vendors are able to do the swap from one vendor to another relatively quickly it couldn't be done in a months for example.
Speaker Change: That number again.
Speaker Change: First you have to set up infrastructure run the test train everyone doesn't already and that's what we're looking to do.
In the six months, while the program is running right now.
Speaker Change: So, it's the swatch and swap with a handover process, which we're very familiar with it is done.
Those are the volumes around the world successfully and of course, that's what gives our customers confidence when they choose in the first place. So we do not hear Israel, just a little closer to closer to some of.
Our staff, which will make it actually easier than normal.
Speaker Change: Great. Thanks, and then I mentioned are all we have a local partner Elektra.
Speaker Change: Which is a large corporation here in Israel, and they're spread out throughout the country and they're going to be doing in handling a lot of services in the swap rate and so forth.
Speaker Change: Uh huh.
Speaker Change: The interesting endeavor for anyone we feel confident because as well this process should be smooth.
Speaker Change: Like many others.
Speaker Change: Yes.
Speaker Change: Through our partnerships.
Speaker Change: Congrats sounds like a great win and thanks again.
Speaker Change: Thank you.
Speaker Change: Thank you at this time I'll pass the call back to <unk> for closing remarks.
Speaker Change: Okay.
Speaker Change: I want to thank you all for participating in today's call and for your interest in <unk>.
Speaker Change: Please contact us directly if you have any additional questions. We look forward to sharing our progress with you on our next conference call filings and press releases. Thank you and have a good day.