Bill Tempany - Chief Executive Officer Nola Heale - Chief Financial Officer Matt Bradley - President Dave Perez - VP, Sales & Marketing

Fadi Benjamin - Pope & Company Mike Niehuser - Scarsdale Equity Marc Berger - MKB Associates Walter Winnitzki - Buckley Capital Partners

Thank you for standing by. This is the chorus call conference operator. Welcome to the FLYHT Aerospace Solutions' Second Quarter 2015 Earnings Conference Call. As a remainder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]. Due to the volume of questions expected on today's call, we ask that you please limit your questions to three to allow others to ask. If there are any outstanding questions at the end of the call, the company will be happy to take them over e-mail at investors@flyht.com. [Operator Instructions]. At this time, I'd like to turn the conference over to Bill Tempany, CEO of FLYHT. Please go ahead Mr. Tempany.

Thank you very much. I like to thank everybody for joining the conference call today and we are pleased to have a team to present today that I think will talk about some of the advances the company has made over the quarter, and the year, and how excited we are about the rest of the year. I have been out on the road talking to investors about the raise that we announced in July. There were a bunch of questions came in over the e-mail about the raise. One specifically as we mentioned that was acquisition-related expenditures. We've been working hard with other companies in the industry both in the Iridium arena as well as other aviation software type companies to look at ways to expand the breadth of our offering, the size of our company, and the opportunities we have with major airlines and we continue to do that. We have nothing to announce as far as potential acquisitions at this point. But it does cost money and take time to investigate these opportunities and there are some out there, the current market conditions, and our share price certainly don't lend themselves at this point to be moving forward with those things. But I do believe it's a temporary situation with the market turmoil with summer and with people not understanding where we are as a business and the things that we have accomplished. Some of the things you are going to hear later on in the call today are the efforts and time that people have put into major opportunities, the strengthening of the sales force that we've done, and the things that we believe are going to drive superior results in Q3 and Q4 of this year. The airline industry is extremely healthy right now. One of the side benefits of the low cost of oil, which in Calgary you sure need to hunt to find benefits, but the benefit to the airline is that one of their major operating cost is about 60% or in some cases even 40% of what it was a year-and-a-half ago. So there is money available to make decisions and do things. And the tragedies that happened in the last 12 to 18 months have the attention of the senior executives in airlines that they should be doing things differently than they are doing. And the industry groups that we have been participating in are recommending solutions that AFIRS is already capable of delivering. So with that I'm not pleased with the results from the second quarter and from the look of the stock price today, others feel the same way. I think that Q2 for us is always a bit of a struggle, it was this quarter as well but we made a lot of progress. And I'm going to turn it over to Nola to talk about those things. Nola?

Thank you, Bill. The second quarter of 2015 continued FLYHT’s trend to improve on the performance of previous years and the team has been working really hard on our 2015 FLYTH plan. 2015 second quarter, not unlike prior years, as Bill mentioned, proved to be a slower quarter on revenue, but activity by and within the company was high. Revenue of just less than $1.6 million was 6% ahead of the comparable quarter in 2014, the loss from operating activities that's $1.6 million is 4% smaller than the second quarter of 2014, if one considers that $1.95 million provision was added back in 2014, and the loss before that abnormal item would have been $1.7 million. And similarly, the net loss is a small improvement on the second quarter of 2014. The revenue split by major component was similar in this quarter to the second quarter of 2014, and also to the first quarter of 2015, with the obvious exception of that one large initial license fee order that was included in the first quarter 2015 results. Further license fees were included in our second quarter but certainly not of the magnitude we saw in the first quarter. Revenue recognized on the AFIRS unit installations was again slower in Q2 than in Q1 as customers performed fewer installations and we did see the same trend in 2014. The UpTime usage charges formed 51% of our revenue in the quarter even on the year usage is averaging 44% which is a little low because of the distortion of those large first quarter license fees. Overall expense levels this quarter were very similar to the second quarter of 2014, although you do see that they are a little higher than Q1, and this is because in the second quarter expenses are always expected to be higher in that the share-based remuneration is included in the second quarter each year. We're also seeing some increase in labor and cost as we work on our 2015 plans; Matt and Dave will speak to these actions which you will recall were increasing the sales force and focus on our major markets, solidify contracts and relationships in China, respond to OEM request, continued participation in industry groups, and developing expanded applications. So of course of necessity you see costs on all of these items before the revenue will flow. In terms of statistics, investors will note that we are no longer reporting aircraft numbers. We did receive quite a few questions on the number of aircrafts that we are installed on now. The aircraft number is no longer meaningful because of the mix of our sales. We have our own aircraft installed with AFIRS, we have Dragons on aircraft, and we even had AFIRS on aircraft through our successful relationship with L-3 and SNC, who have both taken additional units in this quarter, but our revenues may not directly relate to the timing of those units being actually installed on aircrafts. So just take the number of aircrafts are installed on it is actually misleading at this point. In the working capital balances you will recall in Q1 our trade receivables were very high. They have decreased in this quarter as we said they would as the collections came indeed on time and the balance of our working capital balances have seen only minor changes. The current liabilities have grown because that debenture that matures in June 2016 has been reclassified to current liabilities. So it's not a normal current liability but it is due within the years so we have reclassified it. With that, I'd actually like to hand the line over to Matt, who will update you on some of the questions and the activities that company has been busy with.

Thanks, Nola. First thing I want to do is talk about the activities related to our 2015 plan, our five objectives that we have. And first is to increase sales and focus on major markets and to capture a major carrier. Lot of the questions that came in were about sales and specifically about this objective. And then second, I'm going to let Dave Perez, who joined us six weeks ago, talk about his activities and his experience related to what the sales team is doing both with the individuals that he has working directly for him as well as Ascend Aero that we announced in the last quarter. Of note, even though there is a ramp up time for sales force there are a couple of activities that in results that we are having just in the six weeks that Dave has been with us, we have formal responses to two request for proposals from large Tier-1 international airlines something that FLYHT has never been involved in before. We were down selected by one for the final round of decisions that will be made in the third quarter. The second result from the sales activity is that we won a contract that we will be announcing in the next two weeks. We've just been advised last evening that we won the contract. Too early to provide a press release that will come out in the next two weeks to provide AFIRS as a flight data monitoring and health monitoring service for a medium sized fleet operator. With that, prior to going on to the other objectives, well we are here discussing sales, I will pass it over to Dave Perez, who is in Chicago, who can talk about his experience over the six weeks and what activities are taking place in the sales side. Dave?

Thanks, Matt. Since I joined the company, one of the first courses of business that I took on was to really try to evaluate where FLYHT was from a sales force perspective and from an overall marketing perspective. And from that we kind of created three focus areas that we're moving forward with. The first area of focus is really the overall sales process, focusing on the sales message, ensuring that we have the right marketing material, ensuring that the sales people are selling the solution in a standard way globally across all markets, also to fine-tune what is the market segment that is best suited for this type of solution, and then how do we ensure that the message is getting properly conveyed to that market segment. And then lastly in that sales process area is really fine-tuning the ensuring that the commercial, the commercials are properly set, pricing contracts are properly set for that overall sales process. The second area of focus that we've been putting together is really what I'm calling is focus on the sweet spot. We have a very good client base today. And if you look at that client base today, there are certain characteristics about that client base that we can learn from, a lot of them are non 8 cord users, a lot of them have the flight tracking, they need the flight tracking capabilities. So they need a certain characteristics that we've been able to identify and now what we're doing is taking a look at other airlines in that market segment that meet that characteristics so that we can repeat the same type of messaging to those airlines, and again since maybe it's kind of our sweet spot, it's something that we can do very quickly, something that we're already being successful, and as Matt mentioned, with the one airline that we got exciting announcements of course in the last 24 hours, so really focusing more on that sweet spot. And then lastly it's the major logo, it's really one of our focus areas. And as Matt mentioned, we had two RFPs that we've been working on, one we gotten selected down to the next round, hope to hear some positive news on that coming up soon. But there is other ones out there. There is other major airlines that have a need for this type of solution. And we're still working on getting that marketing message out there, becoming more of a household name and by attending more conferences as Nola had mentioned in her brief. So really start trying to grow the business from that. Overall when you look at those three focus areas, what we really continue to do is just to look at our sales team, look for areas to strengthen that sales team. I will be bringing on some additional sales folks to help strengthen some of those areas and then continue to leverage Ascend. Ascend has in fact I'm meeting with them this week here in Chicago to help our sales activities grow, they're very eager, they're excited about working with FLYHT, and I think that will have some very good results within the third and fourth quarter. That's it from me now. Back over to you.

Thanks, Dave. Just the second 2015 objective was to setup a China repair depot. We're set to go live in the fourth quarter with that repair depot. The significance of the repair depot is for the larger carriers in China, one of the contract deliverables that they insist on is having a repair depot. So it's very critical to us having success with the larger carriers in China to have this setup. So we're pleased to be able to go live in the fourth quarter. Currently where we are, we're setting up the test setups, so there is test equipment that has to go into China and be setup, we're completing the assembly of those test setups. Our quality assurance has been working together both in China and in Canada and as refined some of the processes for repair. Those are being completed this month and training will begin in the third quarter. So we are on track to have the China repair depot setup which bodes well for our China contracts. The next objective was to respond to OEMs, on alerting and streaming, and the next after that is tied into industry group participation on the subject of alerting and streaming. A caveat to a lot of what I will say today is that we are under NDAs with all of our prospects, clients, and partners. So I'm very limited to what I can say about the progress of those relationships. But I will talk about where the regulations are with alerting and streaming and we will put this on our website as well so that people can refer to it. The highlights are as follows: In January 22, the NTSB published a letter to the FAA requesting that the FAA implement available means for enhanced data recovery, including triggered streaming using a tamper proof system. FLYHT was explicitly cited in that letter. We understand that the FAA and the NTSB have established working groups for a coordinated response and that triggered streaming is still at the center of that discussion. On April 16, the U.S. Government Accountability Office, the GAO, they sent a report to the U.S. Congress to provide background relating to avoiding the loss of aircraft. It wasn't intended to make specific recommendations. FLYHT, however, was explicitly cited in the report as having an available triggered position and data transmission solution. We will put the link to that report on our site, it reads very well, and we are pleased to have FLYHT called out in both those reports. April 29 to May 1, FLYHT was invited to present at the ICAO normal tracking initiative communications and systems provider workshop. We were there. The purpose of that workshop was to confirm that commercially available solutions are ready to go prior issuing a basically a state letter mandating implementation. The conclusions of the meeting were favorable on that regard and the state letter was issued. On May 15, ICAO issued a concept of operations, and in February at a state letter on May 15 outlining the proposed rule making that it envisage for locating down aircraft and recovering data. And just a refresher for the folks on the call that concept of operation includes aircraft tracking, normal tracking of 15 minutes, abnormal of every minute, autonomist distress tracking, and data recovery, automatic learning and triggering, position data every 20 seconds, and the possibility for manual activation, and it needs to be isolated from aircraft systems. And the fourth was automated deployable FDRs and come off the aircraft when the aircraft structure crashes, it must be able to float and it also contains an ELT, an emergency locator transmitter, so investigators can find it. Now of importance to everyone on the call is that AFIRS and FLYHTStream currently meets all those proposed requirements, expect the deployable recorder aspect, and the trigger data transmission is allowed as an alternate means of compliance for that capability. So there is nothing that FLYHT Solution is missing when it comes to meeting this solution. So we're right where we need to be, we're being mentioned in the industry document as having the capability that's a good place to be. With regards to Tier-1s on altering and streaming and other partnerships; now FLYHT was extremely busy this quarter. We received audits from two Tier-1 aviation companies that have done supplier audits of FLYHT that have been quite extensive, required a great deal of preparation, and took up a significant amount of time for the onsite audits. What they did was they came in and analyzed our engineering capacity, our internal processes, our software traceability, our software methodologies, our project management, our metrics, our ERP systems, and our QA systems. These audits will perform downside over a couple of days and as I said, these are routine audits that are done when the Tier-1s want to consider using FLYHT as a supplier. So the good news from those audits is that FLYHT received extremely favorable reports on those audits. No small feet when you consider the size of the company. Often times it's easy to shortcut on the development of software and hardware. FLYHT shows very impressively on all levels of its -- on all of its development QA, its project management, and its ERP systems, which just bodes well for us for future contracts. There was an objective to develop mobility solutions and I want to give an update on that. We started to develop mobility solutions and scoped out the requirements and rather than develop it on speculation, we took those with the assistance of the sales team to our prospects. And what we heard from our prospects was, it's nice to have functionality, they would like us to concentrate on some other areas in the areas of health monitoring that could bear more fruit for them. And so we took that information and we have removed mobility solutions from one of our objectives for 2015 and are concentrating on the areas that our customers have told us that they need. And I think that's a very positive process for the company to be customer focused and prospect focused and we are pleased to be able to address that and discontinue that objective and start working on once that are going to be more sales. With that, I thought I will jump right into prior to handing over to Bill some questions that were provided to us. I will just read straight from a list here. The first question, regarding the involvement of L-3, Sierra Nevada Corporation, Barry Eccleston, John Belcher, Mark Rosenker, Sandero [ph], and Dave Perez, could you speak to how the sales approach of FLYHT may have changed and what it was two years ago and if you are able to credit individuals please do? I want to make a comment that all our board members have been extremely proactive in assisting us over the last eight years at FLYHT and we appreciate all their contributions. Our board members are very instrumental in bringing us leads into our first objective which is our major markets and to focus on a major carrier. And I can tell you without pointing a specific individuals we are getting leads is pursuing with his team on a regular basis with the major carriers. I'm not going to mention names. We are under NDAs with all of them. But there is significant activity that has increased in the last six months especially with some of the new board members and the -- some of the board members that have been around for quite some time have continued to provide us with strong support and leads. Not just with the carriers but also with some of the Tier-1 companies where they feel that there might be strong partnerships. And hence those strong partnerships lead to the audits and I've addressed that. Can you give the main reasons for any reluctance to buy the FLYHT is experiencing when speaking with potential clients? Possibly the biggest push back that we're getting in the market is the lack of solid direction around altering and streaming. There is a reluctance to purchase technologies in an environment where the mandate is a recommendation. It's not a mandate. It's a recommendation. It's not a mandate. And so there is a fair amount of pasturing to make sure that there isn't a mistake in terms of the equipage. That's the biggest push back that we are getting from potential clients. I think I will -- the next two questions were roughly addressed by Nola, did L-3 take any units of Q2? Yes, they did. Did SNC take any units in Q2? Yes, they did. We are not giving numbers. Is the ARJ21 OEM business back on the table? I assume this question comes from in terms of being back on the table it was never was off the table. We had a strong relationship with AVIC and COMAC and the challenge with ARJ21 is regardless of what you might read on some of the billboards and some of the rumor networks, straight from COMAC and AVIC, they are not ready to deliver that aircraft. And there have been no deliver, commercial deliveries of the ARJ21. The program is in a bit of trouble. And we are still have a great relationship with AVIC and COMAC, and when they start shipping, we will be on those aircraft. Next question was I seem to recall and mention that Air Canada had a couple of AFIRS units that they were exploring as anything come off that? Yes, it has. I can't address it. Has there been any progress with the Dragon? There has been progress with the Dragon. We have shipped Dragon units, the Dragon is a great tool for operators that are on a lightweight portable solution and they need it immediately for tracking and for voice usage. SNCs agreement with FLYHT did not cover the Dragon but since the crash in Indonesia they have approached us and asked to be able to resell the Dragon, we have given them permission to be able to do that. And they think it's a great tool for the helicopter market. So there is good progress with the Dragon especially with SNC right now. There was a question about China and with the press release that we put out in November 6, 2013, with SKYBLUE announcing that it had received commitments from seven airlines, they have been working to install the AFIRS solution over the next three years committed to 218 units. Those 218 units will be delivered and installed in China within the next few quarters. We've actually signed more than seven airlines in China; again, I'm not mentioning names and we revised our relationship with and expanded our relationship with SKYBLUE. If you remember on the first quarter, we said that China was our highest priority and we are putting more boots on the ground. We're doing that and we have a relationship with SKYBLUE that allows us to go directly where it to the airline rather than go through SKYBLUE, where it's more Expedia to do so. We closed three airlines directly since developing that new process within the last two months. Has FLYHT made an agreement with anyone in China regarding in country service? Yes we have. We have signed a service agreement and are providing full service, full flight services to an airline in China. Those are the questions that we got by e-mail. With that I will pass it back over to Bill, and we can open it up for questions from the field.

Hey thanks very much, Matt. Operator I don't know if you want gave instructions on how to ask questions and then I can take questions from audience please.

Sure. Not a problem. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from Fadi Benjamin of Pope & Company. Please go ahead.

Thank you for taking my questions. If we can start with the voice and data services, the numbers are flat for the previous four quarters, if you go all the way to the second quarter and the third quarter of 2014 and then there was a drop of 11% sequentially in the second quarter. Could you provide some color on that? I do realize in your MD&A you mentioned something regarding a service interruption that started from mid 2014 to mid 2015.

Fadi, I think that drop was we suspended a customer in the Middle East for non-payment, so the revenues dropped for that. They has since made reparation, they are making their payments and they have been turned back on in the third quarter, so that will come back. There is also more activations happened and Q3 is trending well ahead of Q2 because of the restoration of the service to them and one another customer that hasn't paid that has now paid.

Great. With regards to David Perez and the sales effort obviously congratulations on expanding your sales team and taking these initiatives. If this question can go to David, if there is something that he can shed some light on with regards, what would he do differently now he has been in the seat for more than six weeks than what has been done in the past with regards to sales?

Well I like the way you phrased that more than six weeks like it's a maternity, Dave I'll let you answer that.

No problem, no problem. So I think prior to my arriving the -- I can’t speak specifically on what was the structure of the sales team prior to my arrival. I believe that there was some good groundwork laid out prior to me getting here. I think where I guess I’m more focused on now is the best way to move forward and when I look at the sales team, I think we have some very good people in place, we've been able to bring on additional resource recently of course we can't announce them yet but we will be within the next few weeks, and we’re going to continue to I think what I’m doing differently now is fine-tuning the sales process in such a way that will allow us to more effectively attract airlines to us as well as be able to properly position our products at the client side. So, it's really more taking what they had been previously, fine-tuning it, understanding the product in a better way so that we can position that product to solve the clients business problems. So the box does so much more than just the flight tracking, I know that’s still what we like to focus on but it does so much more and I think it’s been able to broaden that portfolio and really upsell our ability to expand the portfolio into the client that I’m really going to start focusing on more.

I agree with you on the capability of the AFIRS Solution absolutely and I'm glad to hear your thought on that. And on the same dovetailing on that with regard to the OEM relationships and the audit that was done on the company for supplier relationships, could you provide some color with regards to that relationship, is it in a sense an audit was being done by an airline or more of an OEM or an aviation and aerospace company that’s looking to incorporate the AFIRS solution?

I can address that. It was done by -- both audits were done by Tier-1 aviation aerospace companies, Fadi.

And Fadi just so you know, this is standard practice where they come in and do an audit of your quality procedures, your documentation, your people processes before they will allow you to sell to them and we have -- we went through this in the past with Bombardier. We told you guys that Bombardier will do factory installs of our equipment now because they got through that audit very successfully. There are other organizations doing that work right now and we can't talk about them because we're under NDA.

Understood. So, if I can just ask one more thing with regards to the health monitoring, you're offloading the mobility solution focus and on-loading the health monitoring. Am I to assume by the health monitoring here we're talking about [accidences] [ph] engine health monitoring and the like.

Yes. So Fadi we have been down that path and we have been - that’s been our focus for the last eight years and we're not changing that. The question is whether or not we give those health metrics in a mobility platform and what we heard back was don't spend your time making it mobile for us as they way we operate, we're quite happy to have those web accessible on our desktops we don’t need them on our Smartphones and so the only and that -- and hence from my perspective stand down that development effort immediately and continue to focus on the sweet spot which is health monitoring.

Sounds fantastic. Thank you. Sorry go ahead.

Well, that's good. Next question please?

The next question is from Mike Niehuser of Scarsdale Equity. Please go ahead.

Hi, just a follow-up on the previous call and I apologize if I step over the earlier questions you answered. But when you go back to these reports you mentioned these two reports that they may mentioned FLYHT, did they mentioned other types of service products or producers or was FLYHT unique in those reports?

FLYHT's unique in having the ability to do current triggered streaming and alerting. The reports cover all of the aspects of the recommendation of the -- put out by the NTSB and ICAO. So where FLYHT gets mentioned as really the sole commercial provider of this technology is in our product, our FLYHTStream product, which is alerting and streaming.

There's no other commercial products or companies in those reports.

Okay. And with regard to follow-up on the comment about David Perez, I was wondering if this medium sized airline that's to be announced in the next couple of weeks or hopefully a positive outcome to the major airlines that you referred to, if David has something to do that and I get the feeling that David has had very important in terms of brining the sales team and concentrating and focusing rather than what is really a long sales cycle to get to that point with those two airlines, is that right?

Well, Dave would probably be shy to talk about what he's bringing to the business but I'll address that for him.

Thank you.

Dave was instrumental in closing that business for two reasons, one is bandwidth. He's here; he's full-time on it whereas we're spread pretty thinly before. The other is, is that he brings an acumen and a focus to presenting the deal in a fashion that encourages closing quite frankly. So we picked the right guy and it’s showing.

Well, I sensed that in his presentation how complete it was and to combine the comments or questions that I’ve had so far if you look at the combination of the focus of the sales team, the reports that came out, and possible successful sales here in the near-term you mentioned that there's these mandates or recommendations are more like guidelines but my vision of the industry is that in a regulated space is that once somebody breaks through and provide something that becomes the standard it’s very easy for bureaucracies and politicians to require everybody to step up to that level of standard because it's just simply available and it's just a cost that need to be incurred or passed on to clients. And I would suggest this the much awaited hockey stick that every company dreams for but are you seeing these -- are those material things that could come together to cause positive outcome for your company in the next year or two years?

The slowdown that we had over the last 18 months was because these regulations or mandates or recommendations were being developed by the industry. The fact that our products already met all of those is kind of a pick in the product split. We should do it -- the changes that we're seeing and the reason we believe the hockey stick is still there is because of our health monitoring and our tools to interface with the aircraft data systems that are unique in how we do and what we do with the information. So those mandates are certainly giving the airlines a reason to look at their systems in what they're doing and I believe our solution which provides much more than the mandate is being favorably considered because it offers much more than a mandate.

And a question about China. Can you share with what percentage of business is outside of North America or if you can I guess some idea of what China is or what it's going to be because I'm concerned about with what's the talk that's gone on with growth in China whether that is going to have an impact on your business or whether you're immune because some of these tragedies that have occurred have affected Chinese nationals more than people here in North America at least by perception? So I'm looking for comments on China business future.

I think China business is strong and will continue to be strong. I think the turmoil in the stock market over there affected very small percentage of people in China. The growth in aviation continues to be very large, it's probably not the largest in the world anymore, Indonesia and Malaysia have taken over the highest percentage growth in the airline or aircraft purchase area. But China has a growing middle class that wants to get to see relatives and go from A to B kind of the WestJet model where there's going to be more and more aircraft flying to more and more places so people can visit relatives and I'm very bullish on where we are with China. Matt has had a program in place to reinforce our sales force over there and make sure that we stay in the number one -- we are the number one provider of Iridium Satcom in China. We will continue to be the number one provider of Iridium Satcom in China and as they work through this regulation and get things done we still believe that things are going to come out of the China market. That’s why we're investing in it.

[Operator Instructions]. The next is from Marc Berger of MKB Associates. Please go ahead.

Could you give us a little bit more insight with the new sales team that you said that came in? How long is it going to take to get them up and running and will they have an effect may be as early third or fourth quarter this year? And also what's their target market?

Marc, I can address that. The sales team is fully up and running right now. Teams in Chicago with them as we mentioned this week to discuss specific strategies associated with them. In terms of the target market that’s one of the reasons they're in Chicago is to decide on we know where the sweet spot is, but the question giving up of responsibilities and making sure they're complementary and they're working to the same process systems and that’s why Dave is there. With regards to what effect they've had on the business to-date, I know that they've been in touch with over 60 airlines. They've done extensive research on the FLYHT solution, determine the target market, reached out to that target market with introductory emails, conducted an analysis on the responses and now they're in Chicago to take to the next step. How are those leads going to be passed off and to whom, what leads needs to be deconflicted with relationships that we currently with those airlines and all that work is ongoing.

Okay. I know you said you're targeting some Tier-1 airlines and companies. Is there any consideration about going after the business jet market, may be through Bombardier or others and anything with regard to leasing companies?

Business jets and leasing companies are the primary focus right now. The market that we're aggressively going afterwards is the airline market.

Okay. I saw something in the past I guess the AGM mentioning Hewlett-Packard and Microsoft had some type of may be relationship we have. Could you expand on that if there is a relationship or potential?

We've been looking for opportunities with Hewlett-Packard. Dave's background obviously he came from Hewlett-Packard and has lots of friends there and we're continuing to look for opportunities where we can work together. We have draft agreements on how a structure like that would work and we didn't finalize them because until we have a customer and make sure that makes sense when a customer is identified, but I think the work is ongoing there and I think that we presented at a conference in Singapore in March with Hewlett-Packard and Microsoft and it was very successful for both of us I believe, and there is good synergies and we look forward to finding an opportunity to move that relationship forward if it hasn't developed at this point.

We have a follow-up question from Fadi Benjamin of Pope & Company. Please go ahead.

Thank you. It's another question for Dave Perez here. One of the hurdles that were faced on adopting AFIRS has been the c-check or time and cost that are required for installing these units. Just interested in his thoughts of how he plans to persuade or mitigate that obstacle. Technically I don't believe there is a way obviously but from a sales perspective how is he going to be able to deal with it. And another question for Matt perhaps you discussed about what the sweet spot is or Dave discussed what the sweet spot is you are focusing on a deal with a large carrier. Are we to believe that that large carrier is part of your sweet spot or is this a carrier that -- that call it ACARS -- an already ACARS user.

Dave, I'll let you answer the first question for Fadi on strategies for the c-check.

So you're right technically there is really from a delivery perspective what I've been told by our team internally is really there is no technical solution around how to get the AFIRS unit board the aircraft. I think as we move forward with the sales process we are really up selling their capability of the box and being able to get the airline to a point where they are looking at ways to expedite the process of putting the unit onboard the aircraft. So I think the way we're trying to do it from a sales perspective is to work more closely with the airlines, try to determine when those aircrafts are going into the c-checks and the maintenance checks, and looking at opportunities to accelerate that if possible understanding there is some regulations at times and cycles that have to be accomplished before that. Matt do you want me to take on the other one as well or do you want to --

Yes, go ahead, Dave, by all means.

Yes, I think Matt, go ahead. Take it. I want to apologize.

Yes, so Fadi I think your question was regarding the sweet spot, so-called sweet spot. I think heard you say or ask that is the major carrier in the sweet spot or is the sweet spot lie outside an ACARS, an ACARS user. When we talk about the sweet spot it would be any carrier that is in need of being connected to help monitoring data. Those that don't have ACARS there is some overlap with ACARS and aircraft condition monitoring systems. So we look for airlines, large airlines that don't aren't equipped with ACARS first. In the case of the RFPs both are ACARS users large airlines that are ACARS users but that want to take the connectivity of Satcom further than traditional Satcom that only offer a regulatory FANS complaint for flying over the North Atlantic for instance. So they are looking for an ability to give their ACARS system more legs by using AFIRS to send ACARS messages when they are outside of VHF coverage; they are also looking for fuel information; they're looking to use the ACARS system as an aircraft interface device to their electronic flight bags a big gap in the major airlines that have to purchase another piece of equipment in addition to a Satcom unit in order to be able to connect those electronic flight bags and iPads to their satellite communication system and that area that we focused on with the RFPs, with the major carriers. So in the sense that their airlines that need a certified fans iridium solution but want to go beyond for live connectivity to EFB systems and fuel monitoring that's where these airlines are looking in and we do consider that a great spot for flight to be.

Thank you very much. That's great. And you mentioned that you are down the line with one of them. The other one was flight not shortlisted?

No, it's just the case of the development. So some airlines Fadi would have an RFP process that has one round some they have three. There is one airline that we're dealing with is we believe we are in the final round, down selected to a final round. With the other one that we provided the RFP response to, we don't know whether they will make a final selection from that RFP or whether they will down select from there. I do want to say that this is an aggressive -- flight is going aggressively after this market. It is -- there is a disruptive sales that has to happen in order to get these large airlines to think outside the box in terms of connectivity from a Satcom system that does the type of things that AFIRS set. I believe if we win that battle we will win the contracts. But as Dave will agree it's a big shift from thinking in the majors to start looking at a system that can do more than just a regulatory compliance for a FANs mandate with the Satcom system. And when FLYHT walks in and opens up the tools box and says we can do much more that it's new for them and it is there is an uphill battle in order to be able to edge get them on the benefits but we're -- Dave is doing a good job at that.

The next question is from Walter Winnitzki of Buckley Capital Partners. Please go ahead.

Yes, thanks. Bill let me ask kind of a big picture question that I think on the minds of most investors. Circling back to the one of the calls from the fall of last year you were quite optimistic about the outlook for 2015 and some of the things that were possibilities and so far we haven't seen a lot of that materialize in the first half of the year. May be you can kind of readdress the enthusiasm that you had, do you still have that and may be big picture kind of one of the thing that investors may be not looking at properly here relative to the opportunities and possibilities that could materialize sometime over the next couple of quarters and may be put also China in that bucket as well. Thanks.

Okay. Thanks for the question. I'm still -- I'm more bullish than I was last fall and people like me before I got involved in this business don't understand how conservative and how slow things move in the aviation world. The things that have happened at FLYHT in the last six to eight months have been absolutely amazing, fantastic for a company of our size. We have been presenting at the NTSB, we've been presenting at the FAA, we've been part of ICAO and IATA for over a year on all the studies they have done. There is also all that committee, where the results of all that travel and all that expense haven't come in the form of purchase orders from airlines because that isn't how the industry works. We used to get the attention of the major players and they do a whole bunch of research, they do the audits, they talk to the people, they talk to the customers, they look at the products, they go through test results. Once you get through that they say well this is a good product, this is a good company, and yes we will put on in the factory, a company the size of plate that has product being installed on the Airbus line through L-3, product installed in Bombardier using our HDC packages, we got proposals in at three other aircraft manufacturers to install our equipment, we've been selected by Alenia Aermacchi out of Italy to install AFIRS online in the factory in Italy for their C27J aircraft. Those milestones are very, very difficult to get to but they are the milestones that the industry looks us to say we want to do business with these guys. In the last two months, we've been put on the RFP list by major airlines, world renowned major airlines; to look at our product for solutions they're looking for over the next 20 or 30 years and we're being down selective in the process on those as Matt said. Each process is a little bit different but that is what I'm excited about. That is the thing that this company took 12 years to get to where you have that industry recognition, you have product support, you have customers that are using it that are happy and now the OEMs come on and say okay we want to tighten up the relationships, solidify the relationship and do things. The activities that I've been told about in the last four weeks that are going on with not only the major OEMs that the Tier-1 suppliers of those OEMs, see the advantages of the technology that we built to monitor engines and monitor aircrafts and be able to do way more than tracking has got the world's attention. And I do believe it’s coming together. Now Q1 was a great quarter for us, we were actually even positive in Q1. We look Q2 wasn’t been quite as good but we got visibility on Q3 and Q4 that I think they’re going to be very, very strong. I think that there is always something unforeseen in aviation but the things that we see today I think we're going to have really strong quarters in Q3 and Q4 and we have a team in place today to capitalize on that. One of the problems that we have and is -- I'm extremely thankful that Dave joined our team, because we’ve been searching for 18 months to find somebody to lead our sales team. And we were very selective. We talked to a whole bunch of people. We went through five or 10 candidates that were very senior sales side people and it wasn't the right fit. Dave is the right fit because he comes from that background, he talks the languages of major airlines, he has worked with them around their systems, and what they need for data to be able to be more efficient, and I believe that with assandon and Dave and the other additions we're doing to the sales department, we've got a sales team that can now capitalize on this. And I don't know if it’s going to be one quarter, two quarters or three quarters but it’s in the next short while that I believe we're going to see the results of all the efforts that has been put in by Matt and all the people in the company to get us in a position where we have a world class superior product offering industry that's in need.

Okay, thanks.

Okay. I think there is one more question and then we will wrap it up.

The last question is from Fadi Benjamin of Pope & Company. Please go ahead.

Very briefly, could you talk about any work that you’re doing in Russia and could you also talk about any work that you're doing to build a similar relationship to the one you have with L-3 on the Boeing platform, thank you.

I missed one part of the answer for the last question too and that's China and the China market, I know it’s been very frustrating but China operates its airlines and aviation is a slow industry, China kind of doubles how slow it is.

Bill, I'm not talking about China. I’m talking about Russia.

I'm answering the last question, Fadi, and then I'll answer yours.

Oh, sorry.

Because in the last question I was asked about China and I just wanted to -- I missed that. I think China is going to continue installing, I think we will continue to get our LION share of that installed base and our investment in the relationship there will pay off. In a similar way, we've been working in Russia; we’ve been trying to find the right partnership in Russia. We do have the relationship with a company that is a major provider to the Russian aviation industry and we do have a proposal in Russia. I'm not sure, where we're going to end up with that. It is -- there are problems because of the embargoes and I'm not sure that even if we won the business, we would be allowed to use the solution over there because of the political situation Russia is in, but it is there and going and what was the other part of your question, Fadi?

Do you have any -- are you establishing any partnership or relationship with an OEM that will fit you on the Boeing platform?

We have ongoing activities that we believe will get us into the Boeing platform, it's been ongoing and we continue to work on a finding way to get on Boeing. We have customers that have requested acres onboard new aircraft they’re buying and we're working on ways to be able to do that.

This concludes time allocated for questions on today's call. I’ll now hand the call back over to Bill Tempany for closing comments.

Okay. Well again thanks everybody for your time and I think I can summarize where I stand on what we're doing. I think that we've invested in the right things. I believe that we wouldn’t got somebody’s class of Dave join our sales team if we didn’t have something that is world-class and ready to go. So that gives me confidence that we were able to track somebody like Dave to come to our sales team. I cannot under emphasize the effort that's been put in for years but particularly in the last six months by Matt and his team to make sure that we have not only a world-class product, but an ability to present and demonstrate as to industry players in a way they can see it and understand it. We do have a very unique solution and we do believe that we are headed the right direction and doing the right things. I'm as disappointed as everybody where the share price is today because I don’t think it reflects the value of our business but we’re going to continue to do what we have to do, to be a success. So thanks again and we’ll talk to you next quarter.

This concludes today's conference call. You may now disconnect your lines. Thanks for participating. Have a pleasant day.