SuperCom Ltd. Price & Performance (SPCB)

You should not consider this additional information in isolation or as a substitute for results prepared in advance with GAAP. A reconciliation of this non GAAP financial measure to net loss a comparable GAAP financial measure, please see the reconciliation table located on Supercom's earnings press release that accompanies this call. Reconciliations for other non GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time sensitive information that is accurate only as of today, November 14, 2024. Except as required by law, SuperCom disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. [indiscernible] It is now my pleasure to turn the call over to Supercom's President and CEO, Ordon Trebelsey. Thank you, operator. Good morning, everyone. Thank you for joining us today.

Earlier this morning, we issued a press release of financial results the Q3 9 months ended December 30, 2024. You can find a copy in the Investor Relations section of our website at www.super Today, I'll start my comments with a brief update on our recent business highlights strategy and future results followed by a Q and A session. 3rd quarter was another quarter of significant achievements for SuperCom. Showcasing the continued strength and resilience in our business. Our financial results for the Q3 and 1st 9 months of 2024 reflect a successful execution of our strategic initiatives. Which have been driving revenue growth, improving profitability and enhancing cash flows. Year to date, revenue increased to 21 $300,000 Gross profit surged by 35 percent to $10,700,000 and our gross profit margin improved dramatically to 50.1 percent from 30.7% in the prior year period. Additionally, our free cash flows increased to positive $1,200,000 from a negative number in Q3 of last year. We are pleased with our results and look forward to the following quarters. This quarter was particularly exciting to be to exemplified our leadership position with key contracts with including the prestigious National Israeli Electronics Monitoring project. We also expanded into new regions including New York, Virginia and Maryland further strengthening our footprint in the U. S. Market.

These wins not only reflect the exceptional value of our technology, but also help position us for sustained expansion in the years ahead. Commitment to financial discipline operational efficiencies and technology innovation has translated into tangible results. An improvement in net income of $2,520,000 for the 9 months period. Compared to a net loss of $2,480,000 in the prior year period. Free cash flow generation of $1,200,000 this quarter and a cash balance of $6,230,000 at the end of the quarter. Under support these tangible results along with their ability to support further potential growth opportunities. We are also particularly proud to have continued our successful integration and PureOne solution into multiple new markets in the industry. Besides our continued commitment to innovation and our ability to meet the evolving needs of our clients, This along with other strategic initiatives has positioned us to deliver sustained For those new to Supercom, our mission is revolutionized public safety sector worldwide. [indiscernible] our data intelligence and suite of complementary services With over 36 years of experience since our founding in 1988, we've been a trusted partner to dozens of national governments providing cutting edge and digital security solutions are strategic, straightforward yet powerful [indiscernible] Our proprietary electronic monitoring technology, which has scores highly independent government tenors for various programs such as CounterRESS GPS monitoring visualization services, domestic violence prevention and more.

Moreover, we have recently brought in our portfolios to include Dant's AI driven analytics, which are integration into our electronic monitoring system. This addition enhances our ability to provide predictive insights and improve outcomes for our clients. We developed superior solutions since 2018 we've secured over 50 new multi year government projects leading to solutions. We expand our global presence and our strong growing reputation as a premium provider of electronic monitor solutions services enhanced our market position with each new customer win. And we deliver our connected services, digit focus on IoT tracking business in developed markets [indiscernible] The electronic monitoring market projected to reach $2,300,000,000 by 2028 the U. S. And Europe constitute about 95%. We continue to amplify our Knob our [indiscernible] These offerings are already making headway in various markets, including the U. S. And our pivotal and SuperCom expansion. PURE PROTECT is a life saving domestic violence monitoring solution providing preventive measures to families suffering from domestic violence or stalking thereby increasing their safety. We offer a unique, lightly abrasive, long term battery life and solution architecture like no other to offer domestic violence protection in a unique way, which is spreading rapidly around the world.

With more wins in different regions. Tier 1 is an all in one GPS tracking angle bracelet monitor solution integrating comprehensive monitor capabilities into a single device. Like many of our products, it offers top notch features placing it above the competitive competition in most measure. And this product is a key for our expansion in the U. S. Which is on its way. Our cloud based software pure security product line has been particularly affected in monitoring offenders and managing real time information This real time advantage is a game changer. Empowering authorities with actionable insights to timely intervention to mitigate potential risk and enhance public safety. These products are significantly expanded in the company's adjusted market. We've been very pleased with the reception and traction and expect them to help facilitate accelerated expansion of Supercom into the U. S. Market and further European countries. We've fortified operational infrastructure to support our growth have revamped our sales strategy with proactive outreach approach. Our sales team with deep industry expertise been instrumental in achieving new wins and driving growth. Last month, We announced that together with our prime partner in Israel, we have been awarded a 5 year contract by the Israeli Prison Service State Agency or IPS to deploy our pure security electronic monitor suite. [indiscernible] nationwide program is expected to cover all electronic monitoring offender programs in the country.

With an estimated 1500 enrollees simultaneously and potential for expansion. Supercom will deploy its cutting edge EM solution including SuperCom, PURE TAG and PURE Beacon. The 5 year contract is already in effect and includes the option for up to 4 1 year extension. For a total of a 9 year potential contract term. Project is won through a highly competitive bid process, including several rounds of negotiations demonstrations and system evaluations required and supervised by the ITS.

Displaced the New Zealand incumbent out of public contracts for many years. This one exemplifies our commitment to excellence technology leadership and strong partnerships. Our comprehensive set of offerings position us well to a multifaceted national project such as this one that are set to encompass all electronic monitoring programs within the country. They have a broad array of solutions and with one contract, one provider ourselves, we can support all the programs. Over the past month, we announced many new orders and new projects wins in the U. S. And Europe. In recent years, Supercomputing continues to displace incumbent vendors achieving over 65% win rate. In European competitive tenders. Looking to the EU market, [indiscernible] national tracking programs across Europe over the past few years.

With bids and contracts at various stages of execution. Notably, the company's large scales of method pilots defender tracking programs. Like the one launched in Romania have the potential to catalyze further uptake from existing [indiscernible] customers.

As more European countries adopt these technologies to anticipate a broader expansion of our solution in the continent, In the European markets, SuperCom expanded its business into over 10 countries that secure significant is simply awarded through a competitor tender process. Besides winning new projects, we continue to execute and receive ongoing orders from our existing partners battered over $2,900,000 from European customs totaling over 13,500,000 new orders in the past period as described. That's here. We secured national [indiscernible] [indiscernible] The deployment of our Proof Security Suite consisting of PureProtect PureTrack, PureTag and PureMonitor demonstrates the versatility and effectiveness of our solutions and underscores our leadership in electronic monitoring. Our collaboration with Finland is a prime example of the confidence that clients have in Supercom and those experienced our services often choose broader engagement with our diverse array of solutions.

That means they start with 1 program like HouseRev, they expand to GPS, domestic violence or 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 won the largest industry award of the year for National Electronic Monitoring Projects in Romania valued at over $33,000,000 including up to 15,000 monitored offenders simultaneously per month for up to 6 years. [indiscernible] further extending our engagement in the country's National EM project. The large scale projects reinforce the strength of our secure security suite, cement our position as a trusted partner. For government worldwide. We've also launched our domestic biopsies on the European region and have recently launched them well in the U. S. Now look into the U. S. Market. While the European market continues to grow, it's important to note that the U. S. Market offers [indiscernible] Being approximately 3 to 5 times the size of the European market to oil [indiscernible] With the introduction of our PURE 1 electronic monitor product. Now available in the U. S. And the expansion of our domestic violence tracker solution, we believe Supercom is well positioned to unlock substantial growth potential in this untapped market. Although Supracom already does this in multiple U. S. States, we are actively focused on further expanding our presence in the U. S. Our wholly owned subsidiary, LTA, located in California is rapidly expanding the size of several existing programs. [indiscernible] with existing customers and winning new programs with brand new customers.

The company's decision to prioritize Tier 1's expansion into new markets and geographies. The Pier 1 has already received high praise during its introduction to various regions in the USA, whereas it's successfully deployed and is actively utilized to monitor live offenders.

Moreover, sales activities for Q1 [indiscernible] outside Europe and Western Europe. Despite our longstanding presence in parts of California the U. S. Market remains largely untapped for us. Since we began investing in outbound sales efforts in 2022 for the U. S. With secure wins in California, Idaho, Texas, Kentucky, and Wyoming, to name a few this quarter, we just announced a few more, which will reiterate And the launch of Pure1 in 2020 3 Google with top positive feedback from initial deployment positions us to accelerate market capture across the U. S. Unlocking significant growth opportunities. Our SUGGEST new sales team and new wins have been the first effort of SKU's company's U. S. Market expansion strategy and have already driven creativity with existing customers and multiple new demos resulting in significant increase in the company's pipeline. Launching our PUREONE solution in the U. S. Market is a significant milestone in our expansion strategy. Since our last earnings call alone, we've announced multiple new projects in North America to provide a solution. [indiscernible] new multiple new contracts with the sheriff agencies across West Virginia. [indiscernible] Suite with both cellular and Wi Fi communications, Odie. [indiscernible] footprint in the U. S. Market.

All secured new contracts with leading Baltimore based service provider in Maryland. And the contract which was launched in June 2024. Smed generates an annual recurring revenue of approximately $250,000 And we secured first new contract in a county in New York State. This one achieved through a competitive selection process further strengthens SuperCom strategic expansion across the U. S. As a milestone. In our business plan. As I mentioned earlier, as you said, 51, [indiscernible] and commitment to deliver innovative and superior technology [indiscernible] Restructuring these contracts further reinforce our position as a market leader in various fields and we review these recent wins as indicators for growing insulin and expansion potentially in North America at the worldwide In conclusion, despite macroeconomic uncertainties and ongoing global challenges, including those in Israel, Supercom solutions are being increasingly relevant. We continue to see growth driven by escalating cost of incarceration and the surge in adoption of victim protection solutions worldwide. The company's pure security technology is designed to address these trends to offer an effective way for institutions to enforce home finance [indiscernible] For example, monitoring confinement vendor at home, or GPS costs about $10 to $35 a day.

Is 90% less [indiscernible] Moreover, home confinement helps reduce repeat offenses [indiscernible] As we mentioned in previous calls, we believe there's also an opportunity to advance the U. S. Growth through strategic acquisition local electronic monitoring service providers with a strong reputation in customer base in the local market. Constantly monitor the market. Potential acquisitions that could generate significant value at a good price. By immediately expanding market presence and providing vertical integration synergies. Our acquisition of LTA in 2016, which is the last of this sort, $3,000,000 is a great example. The platform position has been Great strategic value to the company allowed us to win over $35,000,000 in new projects to win in California alone since the acquisition. I'll now turn briefly to the financials During this quarter of Q3 and the 1st 9 months of 2024, in comparison to the same period of last year. Note that our multiyear products are not run on a quarterly scale not fluctuate in the facts and analyzed quarterly. We'll start with the 9 month performance. Which helps to drive some of these fluctuations. The 3 months. So for 9 months, revenue for the 1st 9 months increased to $21,300,000 up $20,900,000 in the same period last year.

Gross profit surged 35 percent to $10,700,000 and improved gross margin [indiscernible] up from 37.7% last year. Net income improved significantly to $2,520,000 compared to a net loss of 2.48 $1,000,000 in the previous year. Non GAAP net income grew to $4,880,000 demonstrating [indiscernible] reached $1.6 and non GAAP EPS reached $3.1 The difference between the attributed amortization [indiscernible] Quarterly performance in Q3, revenue increased to $6,910,000 up from $6,780,000 in Q3 of last year, driven by new product wins and expansions of [indiscernible] Gross profit this quarter was 3,200,000 dollars affecting a margin of 46%. Compared to $4,000,000 and margin of 59% in Q3. This margin decrease was primarily due to project mix and timing EBITDA of total $1,100,000 compared to 2,500,000 in the Q3 of last year, also mainly due to our project mix and timing. Positive free cash flow of $1,200,000 in Q3 of this year further underscored a strong financial discipline. [indiscernible] negative free cash flows for the same period last year.

Note, this is very interesting. The cash flow from operations in the 1st 9 months of the year were positive This is a big improvement from recent years. Look at it and keep track, in 2021, we had negative $9,700,000 in operating cash flows. In 2022, we had negative $4,700,000 in operating cash flows and in 2023, we had negative $2,400,000 in operating And again, for the 1st 9 months of 2024, we have [indiscernible] operating cash flows. These are great results and a great trend that we'd like to see and this supports our strategic plan and a testament to success we are achieving in it.

The quarter results highlight our ability to seize the high margin potential of a project portfolio through [indiscernible] Execution and progress in different stages of these projects, showcasing Our focus on sustained growth Typically, initial project stages incur higher expenses, while advanced stages yield higher gross margins. Causing fluctuations in our gross profit depending on project composition and deployment stages. We are running multiple projects at different stages [indiscernible] that's how you can see these fluctuations in the quarter. Depending how each one falls in that specific quarter. As the project pipeline matures, we expect an upward trend in gross margin based on the evolving project portfolio. I'll just point additional braces and lesions where we run existing projects on our existing infrastructure the contribution margin for each additional rate can be as high as 70% or more. Operating expenses in the quarter stayed in line with those first half of the year as we continue with our strategic strategy.

And also interested to know we made considerable strides in reducing our long term liabilities for our $4,500,000 year on year includes exchanges with our creditors of debt to equity negotiated premiums of up to 100% premium to market price Our operating cash flows improved to 1,200,000 dollars year over year and our cash position grew to 6,200,000 dollars at the end of the quarter. This marks our highest reported cash position in recent years and we remain focused on reducing our cash needs for external funding as we continue to execute projects.

These improvements further strengthen our financial foundation. To support our ongoing growth initiatives and strategic investments.

In closing, [indiscernible] for the hard and tireless work to achieve our company's record setting performance.

We have developed the right technology and product to help criminal justice system clients overcome challenges and make better use of the over $80,000,000,000 spent annually in the USA. On operating rehabilitation centers The research showing that approximately 75% of the disability rate in the U. S. There's significant room for improvement [indiscernible] We're excited about the growth we are experiencing. And about the growing demand of our product. After several years through which we transitioned from our legacy business to the IoT Tracking Zone Spanners business, we're happy to show a shift in nice growth in revenue from profit. Believe that we're well positioned to continue to expand this business by capitalizing on many opportunities for us. These are being driven by multiple factors, including our John presence reputation in the U. S. And European markets, the countercyclical nature of electronic monitoring industry the growing public policy shift to monitoring the incarceration and the growing adoption of domestic bio prevention solutions. Anticipate continued expansion in the U. S. And Europe central other regions. Our commitment to conserving our technological advantage and our robust growth throughout foundation remains With that, I'll turn the call over to operator to open Thank you.

Your first question is coming from Matthew Galinko from Maxim Group. Your line is live.

Hey, thanks for taking my questions. And congrats on the strong year to date. Can you maybe start off by just touching on what the pipeline looks for it looks like for Europe in 2025? Are there any large national projects that are up for bid or that you're pursuing now other you think could close in 2025 or what does your outlook like you look out over the next year?

Thanks, Matthew. Good question. Our you may recall, we entered the market several years ago, we had to start with small projects in Europe, like last year and between the end are 100,000 hours. We grew to larger ones. [indiscernible] [indiscernible] And track record that helps us basically beat on any RFP at this stage. So basically waiting for the ones to come out and then we compete and use our leverage our strong win rate to help win this project. In Europe, there's so many countries, even though we had an uptick in win rate and we won many countries, there's so many countries that we haven't yet to enter. And we are continuously monitoring and bidding and progressing and being evaluated for various projects.

Across Europe. Almost every Western European country has national [indiscernible] Like England, 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 projects. While being slower than U. S, it's still a great market for us. We have very good position position there. And we continue to bid there. [indiscernible] because while in parallel we answer the U. S. Market, Got it. Thanks. And when you've been on [indiscernible] projects in Europe Is it usually displacing or to displace or replace legacy kind of old ankle bracelets or what what's the are they looking for additional functionality generally in one go such as domestic violence [indiscernible] what are the new bids generally looking for?

The national programs many times encompass [indiscernible] GPS monitoring, domestic violence, alcohol, Sweden, we also do inmate monitoring in the prison itself. Usually, there is an incumbent because those chronic monitors, they're for a long time. In some countries like Romania, which is the first program, they didn't have those chunk monitors. Subsequently in Croatia, we did the first. But almost every other one we're displacing an incumbent. We didn't add an incumbent for 24 years. We displaced that. In Israel, we had an incumbent for a very long time as well. We displaced that So it does require capital and work investment for our country 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. So we don't just have to marginally improve what they're what they have, but it's giving a big step of improvement because they have to now retrain all their and change your systems and integrate and look at the whole process. We're able to do that by firstly offering significant improvements to existing programs they have, whether it's house arrest or GPS monitoring, [indiscernible] [indiscernible] much, much longer battery life than very other whole scale of other capabilities and features that are important to them.

And we're able to offer brand new solutions that they haven't had before like domestic violence with our PureProtect program.

So it's a mix. They get a better version of their existing programs, and the opportunity to go to new programs and they find a team which is all together usually with local partner, which provides them top notch support, great execution effective timelines, good 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.

Got it.

Thank you. And then last question for me and then I'll jump back in the queue. I guess with respect to the U. S. Market, seems like you're expanding your footprint into new new states within the U. S. And North America.

What do you expect to do you need to add resources to that effort to accelerate North America? Or do you expect to add like more boots on the ground to try to push that faster or just curious how you think about going after that bigger opportunity in the U. S?

And just to clarify, you asked me for putting more and more boots on the ground? To accelerate it or if we're doing others?

Yes, exactly.

Okay, good. Good question. So it's a trade off with sales. In the U. S. Market things we faster than Europe because you look at accounting sometimes in resellers. Recellers not government agencies have to go through an RFP process and decide on their own, Reseller can have 10 counties that they're controlling and they are running all those chronic monitoring programs for those counties. If they want to switch technology, it is their [indiscernible] And it happens quickly. So within 2 months, 3 months, as I you see the switching over, they could start small, move over, they don't feel everything at once. Give them a lot of flexibility and it allows us to do faster. That does require though [indiscernible] more feet on the ground because market's fragmented instead of just looking at one national project, you have dozens and even hundreds of projects spread across the U. S. Throughout different counties. It's a nice, the same county will have multiple projects because they'll have the sheriff program, lab probation, they'll have early intervention courts, alcohol monitoring, It's very fragmented requires more relationships. But the resellers do aggregate some of these and work resellers we have quicker expansion.

And we try as you can see, we try to keep an eye also on our cash use and profitability. We [indiscernible] to grow faster. We could raise that to where venture capital backed fund company We could have raised more money and tried to put many, many few on the ground. It's faster and faster. We had a same time though trying to maintain our profitability trying to optimize our cash use, which you may have heard on the script from 3 years ago where you had a negative 9 point $7,000,000 in cash burn this year, cash flow positive. So far. So we're trying to manage everything at the same time. We are cognizant of how many salespeople we put on the ground. And we have seen great growth already even as we work very efficiently with our capital and try to optimize utilize our salespeople and our sales expenses adoptively as we can.

Great. Well, appreciate all the answers and I'll be back if there's no other questions in the queue. Thanks.

Your next question is coming from Dan Schatz Your line is live.

Hi, Ordon. First of all, sounds like another great quarter of execution. We really appreciate that. I have a I guess a couple of questions. First one would be, in the deck debt to equity conversion, how many new shares were issued and at what price?

Exact one conversion. So over the course of the year, we've done several conversions. And usually at a premium sometimes up to 100%. And that would be As you saw in the numbers, that helped to reduce our long term liability by $4,500,000 We think it's a benefit to shareholders, of course, because we're going to forgive together with that.

We reduce the debt while using a significant premium to stock price So, well, how many I'm more concerned about this particular quarter. How many new shares were part of that conversion were issued? This quarter. This quarter, nothing. Nothing was done this quarter. 0 in the Q3. [indiscernible] It's just an update, just give annual updates and compared to the last year. You see the long term liabilities have reduced because of the conversions done to previous quarters, previously small Small amount, not just one conversion. Small little conversions with optimal terms we try to achieve. With our this is just Okay, wonderful. That's excellent to hear. How many can you give me an account of how many shares are outstanding at the end of the third quarter.

We did report We did report we had a semiannual report that we previously, but roughly 2,000,000 outstanding shares. Okay, great. A little bit more than you went out there and shared some Okay. Wonderful. Well, I'm thrilled to hear that there wasn't any additional dilution been a long term shareholder. And I believe in your your product and your mission. [indiscernible] it's been a little disheartening to see the continue the continual dilutions over the last couple of years. I hope that's behind us. And just one final comment the market will once you once that is common knowledge and is out there, your stock performance will change. Because right now that's what's been holding you back. And that's all I got to say.

I understand. Yes. Yes. I understand. Thank you for that, Angela. I want to know that we have we have been working to grow our infrastructure, expand and even reducing our use of cash and over time as I said, we want some negative 9,700,000 dollars to negative $4,700,000 to $2,400,000 now positive for cash flows. We don't control exactly the project stages and how things roll out. Have to win more projects. Sometimes we need to use cash to support this growth, but we are trying to be cognizant. That's why these conversions that we described as a debt was done at a premium of 100%. That provided great value to shareholders. We're trying to be cognizant and [indiscernible] extended and pushing maturity of our debt and we've worked closely with our various partners and creditors and parties to help get to better terms. And to be able to execute and grow and implement our business plan while trying to optimize shareholder value. And I appreciate your support to come over the years. [indiscernible] Thank you.

Your next question is coming from Matthew Galinko from Maxim Group. Your line is live.

Hey, thanks for taking another couple of questions from me. [indiscernible] expand a little bit more on the the deal you have now in Israel particularly maybe a little bit more about the structure. Is it [indiscernible] kind of a recurring structure? And what are the opportunities for expanding that that project over time?

Good question. And just make sure I have some of this information organized for you. So we'll start with the high level. The project was through an incumbent. There's incumbent for many years in Israel. [indiscernible] that was holding the project And we came in with a different partnership, us together with Elektra. And we won bid The first period 5 years. There's 4 1 year extensions. That's 9 years. If we do well, that could be extended for another 9 years, as we see in many regions in the world. Initially, it starts with HouseREST, which is RF based and that is the initial program as it's to have 15 100 offenders and it's not a purchase, delete model. That we see many times in the U. S. Market and some parts of Europe.

There are other types of programs that as we discussed on the call like domestic climates and others that believe that it's really Israeli prison IPS they're called They plan to use more of these programs to help with criminal justice in Israel. There's been a law passed last year around domestic violence. Which is the usual [indiscernible] complements the use of electronic monitoring for domestic violence and there's all the things that are in process. This project gives us the right for all the electronic monitoring projects in the country over these years. So as the the government decides to more projects, we will be the vendor deploying that. And we have experienced, as noted, in many of these programs in many countries around the world, of various sizes, including the 15,000 unit domestic projects in Romania, which is mainly domestic [indiscernible] We've seen even in house arrest increases the quantities every year. And we expect those numbers to grow, but just for the program, but beyond additional program, which grows we're expecting potential additional programs to be added on to the projects, which should be very valuable.

Got it. And as we think about additional units on the house arrest or additional programs under that, that when So if add incremental units what does the margin look like if you go beyond 1500 I guess?

Yes. Yes, yes, yes. So there's a lot of cost with deploying a new system. That includes installations and hardware, teaching, and setting up support, such as setting up manuals and setting up software that includes development of the software and adaptations specific programs that the customer wants.

We do that with every not every customer, but every large customer that specifications. We have to put our effort in that and that lowers our margins. But every additional brace that we put on has very high margins. Much higher than the original ones.

Because you don't have to do any additional customization. Whether you're doing 1500 or 10,000 units, it's mainly to say that you can add more units and the margin on each additional unit is very high, sometimes 70% or higher. Depends on the specific pricing of the specific program. [indiscernible] Sometimes you don't have a phone at all, you just have braces, you have the analog unit, but each one has different call different cellular calls and margins could change, but they are much higher when you add additional units to each existing contract.

And what's nice about besides Israel, which is going to put more programs and it's going to be interesting, good margins. In the U. S, almost all programs run on the cloud and they run the same language and are the same infrastructure and the same protocols it's very nice that the market there, which is already 3 times or 5 times the size of Europe will utilize The same systems allowing us to reach higher margins versus in Europe, where each nation had a lot of it was purchasing, and automat different languages, different protocols, different laws. And it made it a little more complex there from nation to nation. Here in the U. S, we're actually seeing more consolidation and more similarities between programs and that's going to be a benefit for us going looking forward in the future.

Got it. And then final question on that. I don't know if you can answer this, but is there a number of track defenders you think the Israel deal can reach over the first initial 5 year period. So we started 1500 and maybe that ends at like 3,000 or is it impossible to answer that at this point? [indiscernible] Well, I stay without telling you. So the population in Israel as of end of 'twenty three was close to 10,000,000 [indiscernible] Without getting into the specifics, of different laws and processes, different programs you can see that if Romania started at 15,000, and they're still talking to them growing. There's certainly room for much more than 1500 in Israel. There's a lot of potential to be done. It's not just the population of the country. It also depends on the processes and the government's propensity to move quickly. Our experience in Israel our headquarters are here is a lot of the a lot of different programs in Israel and the government [indiscernible] like technology, they're comfortable with technology. We had a program in Israel for the COVID even tracking And we have aspirations to work closely together with them and with Elektra.

To deploy effective solutions. And as these numbers as the solutions work well, they grow the numbers. And it's a lease project, so they continue to grow it. As they see it working effectively and improving the numbers.

Thanks. And sorry, one last follow-up. For the initial 1500, they turn on as soon as you're implemented? Or is there kind of a ramp up period to that initial number where you need to go in and swap the old for the new? Or what's the process towards go live and reaching that point?

We already started with the project deployment. It takes time right now. Processes, the definition, the planning And it should take 6 months or so for the some of the initial deployment steps. The beginning number is expected to be little less than 1500. And then it can grow. Maybe somewhere between 1,000 to 1500 at the beginning and then it grows 1500 quickly. But it does happen through swaps. And Israel is a smaller region, easier than when you expand to the cross. Larger regions like California.

So you have an easier touch points and access to to to the offenders, you're able to do the swap from one vendor to another relatively quickly. It can be done in a month for example, that kind of that number. But first you have to set up the infrastructure, run the test, train everyone, get everyone ready and that's looking to do. In the 6 months while the program is running right now with different lenders. So it's a swap, a swap with a handover process, which we're very familiar with and we've done. Dozen of the times around the world successfully And of course, that's what gives our customers confidence when they choose us in the 1st place.

So we're doing that here in Israel. Just a little closer to some of our our staff as we make it actually easier. Than normal.

Great. Thanks again. And I mentioned our We have a local partner Elektra which is a large corporation here in Israel.

And they're spread out throughout the country. And they're going to be doing and handling a lot of services and swapping and so forth. And it's going to allow us to interesting endeavor for anyone. We feel confident as well that this process should be smooth like many others that we've brought up to in the past. Through our partnerships.

Congrats. Sounds like a great win and thanks again.

Thank you.

Thank you. At this time, we'll pass the call back to Ordon for closing remarks.

And I want to thank you all for participating in today's call. And if you're interested in Supercom. Please contact us directly if you have any additional questions look forward to sharing our progress with you on our next conference call, filings and press releases. Thank you and have a good day.