Bill Tempany – Chief Executive Officer Thomas French – Chief Financial Officer Matt Bradley – President

Dev Bhangui – Jennings Capital Inc. Eyal Ofir – Clarus Securities Inc. Naser Iqbal – Salman Partners Inc. Fadi Benjamin – Pope & Company Ltd. D. Joseph MacKay – Global Maxfin Capital Inc.

Thank you for standing by. This is the Chorus Call conference operator. Welcome to the FLYHT Aerospace Solutions’ Second Quarter 2014 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 Instruction). At this time I would like to turn the conference over to Bill Tempany, CEO of FLYHT. Please go ahead sir.

Thank you very much. Welcome everybody to the Q2 conference call as to discuss the results of the first half of the year. I think that there’s been a lot of significant positive changes and there’s some slight disappointments as far as revenue gross. But I believe we have plans in place to correct those issues. I think everybody should be very pleased with where we are from cash position at the end of the year. In end of the quarter we ended up with more than $6 million cash in the bank, a lot of that is in thanks to our faithful shareholders that exercised warrants and brought a lot of cash into the company. The other side of it is control of expenses and making sure that we’re spending the money lively as far as getting to the end goal of positive operations through this fiscal year. Some of the interesting things that I have found in the report, our receivables are up our inventories are up our trade payables were way down. Our unearned revenues stayed about the same. So our working capital position is very strong and I think, probably the strongest it’s ever been in the company. We have nearly, almost $5 million of modified working capital, which is working capital but removed the customer deposits and unearned revenue which are non-refundable money that are in the company. And just waiting for product to be shipped and turned on by the customers. So very strong positions going forward that working capital does include, repayment of our convertible debt which we believe with things we’re working on, will be in a position where that debt gets converted by the end of the year. So I’m very pleased with financially where we are and wanted to say shares that we’re working on the sales to get them upward, they should be inward you would expect them to be. The sales last year were extraordinary, because we had two major programs with revenue recognized almost $1 million, in fact over $1million of revenue recognized in the first half of last year from First Air and NetJets. NetJets has ten units up and running, they all got recognized in revenue in the first half of last year. First Air has 22 units up and running and there are about 12 of those recognized in revenue in the first half of last year. So about $1 million of recognized revenue from those programs are part of the reason. We didn’t have programs done for a long in the first half of this year. So it’s part of the reason that this year is lower than we expected. In the first half we only recognized one of the kits, the 20 that were paid for at the end of March. There was one unit that got installed in the second quarter. There were six units shipped in the second quarter, but again they just go in down in revenues. So unearned revenue continues to carry a lot of the revenue that we will see towards the end of this year. We’ve shipped five more units to China in July, in fact our July shipments, I think, exceeds our Q2 shipments. And Q3 is looking like a much better quarter as far as shipments. Whether they get installed and get recognized as revenue is not in our control, but we’re feeling really good about Q3 and where things are going. The goals that we’ve set up for 2014 to ramp up installations in China; as we reported last quarter, there were 20 units paid for in the first quarter. The majority of those are now shift and we’re expecting another order hopefully in Q3. But as always, I count my debts as far as China goes on when the cash will actually arrive, but things are moving forward in China. We are still the only ones with installations up and running in China. Between the sky blue orders that come in and orders directly installed by Bombardier, we have about 50 units installed in China now. There is nobody else with a function already in system, up and running in China. And we continue to feel very positive about the percentage of the market that we will capture in China. One guy was asking me why it’s so slow, and I said, well, if the Canadian Government came up with a regulation that everybody in Canada had to change their furnace to a high efficiency furnace and gave them the end of 2017 to do it, how many people in Russia would spend money today and how many would wait until fourth quarter of 2017 to do it. Airlines are no different than that. They are managing their cash and managing their labor pool and they’ll do all those work as late as possible. So the ramp up will continue and I think that there are some airlines that are coming to the point where they know the regulations, not going away. They see operational benefit. They’re having the communications on board. We’re working with our customers in China to add functions that will help them operationally, that will hopefully speed up that installation rate, but we continue to be very positive about the percentage of the market we’ll capture, the rate we’ll capture. That I cannot and will not predict, because I’ve been – tried and feathered for that one before. The second goal for 2014 is the business aircraft and working with other OEMs in the business aircraft community. We have meetings ongoing with Bombardier. As everybody knows, the CRJ line does installation of our boxes that the customers’ request on the line. We’re working with the Bombardier Group on business aircraft and other opportunities to try and get the installation of them in place so that we can expand the number of business aircrafts OEMs that gives our products. : We’re working on additional, commercial OEM opportunities, there is several good size OEMs on the planet today that are building aircraft that we want to get to in position to use AFIRS as standard equipment and we’re working with those people to do that. And our other goals for 2014 with positive results from operations, the settlement of the Sierra Nevada dispute, the ability for us to recruit the $2 million of R&D that had been expensed over the years in Sierra Nevada. Again this is really good shot at having positive results for 2014. The loss of $46,000 on the quarter is very positive and providing that our sales catch up and we get customers installing the product to where we expect in Q3, I honestly believe we have a really good shot at positive results from operations. And as I said earlier I’m very, very happy with working capital position of the company. We’ve never been in a better position from a working capital point of view and it’s very comforting to know that we have the resources available to execute our business plan and get to a positive point in the business. So the other things we’re working on are sales force reinforcement, few months ago we brought on a full time sales person in Singapore to look after Asia, the Asia-Pacific region. There’s a lot of very positive activity going on in that region, it’s a very high growth area as far as the aviation industry goes. More and more people in Indonesia, the Philippines, and Malaysia are travelling and want to travel. There’s a lot of airlines there in low cost and very low cost airlines that are looking for economical solutions to make sure that they flying safely and communicate with their crews and assets. And AFIRS is being well received in that part of the world. We attended a bunch of conferences after the Malaysia disaster on both fight following and data streaming. We got people working with the regulators, working with airlines, IATA, ICAO to make sure our technologies and our products are known to them, and that they understand that there is a viable solution available today. Those committees seem to be on track with delivering the requirements by the end of September and recommended mandates by the end of year. And as I said, we will make sure that our products are known and that we have products that meet those requirements as they become know to the industry. Our software products are being tailored to that type of usage so that instead of just flight following you are able to see an event changed where the aircraft isn’t being flight followed anymore and should have been and brings it to the attention of people. As everybody knows, we installed the Flight Stream product on First Air’s aircraft during the second quarter. And we have the system there and demonstrated it, we’ve demonstrated it on a BBC show that did an hour documentary on the Malaysia aircraft, its working and the customer is using it and they are very happy and proud to have it. So we are taking to other people around the world about taking Flight Stream on board for their own safety and comfort. We do have crews going back and forth to China right now on the roll out and helping in implement additional products and services in China. I don’t think we’ve not had somebody in China were all those years there’s been a lot of trips back and forth and supporting our full time resident to be in China Michael Fang there is movement in that market that’s going to be very positive to us. : Those are things we are working on I have some questions that came in by email that I’m happy to answer and then we’ll open it for questions from people on the phone. So, Mark asks we still expect to be casual breakeven this year. I think I’ve answered that. There is every indication that we will have positive results from operations this year. He asks, if it takes two years to get on an Airbus assembly line, can you then advice when that time period starts. Well, it starts today. The modern aircraft today, it will be produced in about two years from Airbus. So those are things that I believe Airbus is taking orders per acres right now. I don’t have any visibility on that and even when I do, I don’t know if I’ll be able to share it, because that’s considered Airbus/L-3 confidential information. He also asked about the volume coming off the line. So that will be something that L-3 and Airbus will tell me whether or not I can talk about. Expect they’d other partnerships with other OEMs. We’re trying really hard to do the other OEMs direct as opposed to through a partner. I think that we are to the point with the majority of those guys that we can get direct to the factory and we will work with that. Our arrangement with L-3 has been very positive. They’re a good group to work with and they certainly add a lot of value as far as their certification goes. And we will continue to work with partners as required. There is some positives in controlling your own destiny. The next question, Alex Ruus asks why revenues are down. I think I explained that it’s revenue recognition more so than a revenue point of view. Everybody knows how long it took to get NetJets moving and started. The deposits running in 2012, I guess, into unearned revenue and it was first quarter of 2013 and we actually recognized the revenue. So, again anybody analyzing our financial statement has got to look at the three numbers of the unearned revenue, the customer deposits and the revenue to see if the company is doing the right things and going in the right way. : So there is work going on in lot of places, India is already mandated that you must have flight following. I know that the U.S. Government is working on their regulations to see that, their carriers are following the regulations that are there and how they could strengthen them. So there is lots of activities, there is lots of meetings going on. To the second question from Ford was how are you planning to increase your visibility in the eyes of U.S. regulators. One of our directors is currently working with the NTSB and other regulators in the U.S., to make sure that they understand that there’s more to flight following than that on the map. And if you don’t have a learning capabilities you’re probably not doing adding much value to where the systems are today. So we do help people in the company working with everybody, U.S. regulators, Canadian regulators, we’ve got a full time (indiscernible) person in Ottawa dealing with the Canadian government and our people here are attending IATA, ICAO and ITU meetings to make sure that our products are brought in center when these recommendations come down. We have strong competitors in the U.S. or elsewhere, well it really depends on how what you classify as competitors. If you’re talking about flight following, absolutely there’s probably 300 companies on the planet that can do basic flight following. If you want to do a learning, that probably drops to 20 people. If you want to do learning with data streaming, there’s only one. And there’s others out there that claim to be able do it, nobody but us has demonstrated it and certainly nobody but us have it up in running on aircraft in a customer side today. So with that I will turn it over to questions from the audience. And I do have Matt Bradley, our President and Tom French, our CFO in the room with me. So if you ask any hard questions we’ll turn them over to Matt. Well take the first question please.

Thank you. (Operator Instructions) The first question today comes from Dev Bhangui of Jennings Capital. Please go ahead. Dev Bhangui – Jennings Capital Inc.: Good morning, gentlemen.

Hi, Dev. Dev Bhangui – Jennings Capital Inc.: Bill, a few questions, but I’m going to restrict myself to three. I don’t want to get (indiscernible). So, first question is with respect to comments about China. You said that 20 units have been – and I might have misheard, so I just want some kind of clarification here. 20 units are paid for and cash will eventually arrive. So have you recognized this into revenues first of all? Is my statement correct that 20 units have already been paid for?

There were deposits for 20 units made at the end of March. They were 50% of the kit price. They pay the other half when the kit arrives in China. The revenue recognition is the same as always until a customer turns it on and starts using it. There is no revenue recognized. So, the first part of the money is in customer deposits. The ones that have been shipped moved to unearned revenue and once a customer turns them on they become revenue. Dev Bhangui – Jennings Capital Inc.: You have no, I would say, high level of confidence in the ability as to when they will be installed?

Those 20 should be installed by the end of third quarter/fourth quarter.

Fourth quarter.

Fourth quarter. Dev Bhangui – Jennings Capital Inc.: Okay. Then the second is more of a clarification here, and either you or Matt can solve this. On Page 12 of your MD&A, it talks about unearned revenue and that is unearned revenue of approximately $541,000 for Uptime sales and then the usage of $26,000. Prior to that it talks about this particular revenue being recognized for 11 installation kits. If that is the correct tie up between the revenues and installation kits, these kits were sold at what, less than $50,000, was there a discount?

I’ve got $541,000, that 11 kits, which is $49,000 a kit. That’s probably right. Dev Bhangui – Jennings Capital Inc.: Okay. Because I thought that along with this you always – I mean no offense, the revenues recognized, there’s also the installation cost that the airline pays. And so while the hardware itself is about $50,000 or $55,000, the overall revenue per installed in our stage would be much more than $55,000. That’s what I thought.

No, we don’t do the installation. We have a third-party do that. So they pay maintenance and repair overall facility to do the installation separately. So when we’re talking to the industry and they cost – ask what it costs to put in AFIRS unit, when we say $100,000 that’s a gas of our $50,000, plus the $50,000 that’s in labor that it might cost. I heard numbers recently from some opportunities we’re chasing in Austro-Asia that they can get installations done for $10,000 to 20,000 in that part of the world. So that $50,000 number is kind of North American labor rates number and it certainly varies to country to country as you know. Dev Bhangui – Jennings Capital Inc.: Okay. That’s good. Thank you. And then, the last one would be in terms of your comments right at the beginning of the call about revenues. So the revenues, according to your stated demand up to your own expectation in Q2, and Q1 and Q2 are not dissimilar. So going forward into, I guess, actually the year and then into 2015, but more so towards, I guess, Q3 and Q4, how would you expect the Q3 and Q4 to be different and evolve differently from Q1 and Q2 both in terms of numbers? Obviously with growth expected and what is going to cause that growth? And I’m going to tie that with especially your comments earlier when you said that you’re better working with number of mid-sized commercial OEMs, I mean I know all four big ones and if you can just even – not the ones that you are working with, but in general what are some of the prominent commercial OEMs, mid-sized that we should be looking at, that will be great.

Okay. Well, our shipments for July were bigger than our shipments in Q2 and that’s why – as long as they put the kits on and turn them on, then our revenue will catch up to where we were last year and get moving again. So that’s the answer for why I think that Q3 and Q4 are on track to be better than Q1 and Q2. The OEMs out there that there is the Embraer Group, there is ATRs, there is (indiscernible) M21 out of Russia. We’ve got discussions on going with the some of the helicopter manufactures that have got long haul multi-passenger helicopters that are looking for better telemetry on what they’re doing. So there’s 20 OEMs probably on the planet that further should be using AFIRS. And as the mandates come down or how you do flight following and maybe eventually even streaming, I think we’ve got a great opportunity to get installed on those that don’t have a standard solution today. Dev Bhangui – Jennings Capital Inc.: Okay. Thanks for answering my question. And I think I’m out of the quota. So all the best.

Thank you.

The next question comes from Eyal Ofir of Clarus Securities. Please go ahead. Eyal Ofir – Clarus Securities Inc.: Thanks. Can you just talk a little bit more about the L-3 sponsored Airbus relationship? I think obviously right now coming off the line and take some time to build that out, but I think you talked about L-3 for being able to provide you some more visibility in the near-term potentially on future orders and then what are you guys looking at from a retrofit opportunity with L-3 as well.

We had a long discussion with the sales group, but L-3 – weaker, still not growing. They made a couple of trips to Toulouse in June and they are going back at the end of August to work through exactly how we are going to approach sales now that they have officially announced that our products are there on A320. We are currently working with about four major airbus operators in the retrofit market to make sure that the solution gets selected both through retrofit and new off the line. We’re working with L-3 and Airbus to expand the offering to include revenues for our services, which are not included in the standard fit out of the Airbus factory. That is getting traction there and I’m hoping to have a meeting in September-October at Airbus with our people to go through the reasons why we should be having more services added and more software added to the box that they’re sending out from the factory. So, as I said in the MD&A, I expect to have more visibility, but whether or not I can pass along will be up to Airbus and L-3. So the program is moving forward at the speed of aviation, which as we all know, is the speed of darkness. But I believe L-3 got an award at Farnborough as the top supplier to Airbus on the AFIRS’ program. So things are in good shape with the relationship and with the product. It’s just the time it takes to get this stuff done in this industry. Eyal Ofir – Clarus Securities Inc.: Okay. So if you’re able to secure some of these – one or multiple on these major operators of the Airbus aircraft, so in that situation will you expect that some of the planes are coming off the line and that some order will have this – well, not retrofit, but it will be partly OEM into the plane itself off the line? And then, on top of that there’s an opportunity for L-3 to come in there and retrofit some of the current planes that are in service. And is that kind of the way we should be thinking about? And if that is the case, once you do have a contract in hand like what’s the timeframe of actual, potentially going out and getting some of these planes retrofitted?

Well, the retrofits are always on a 12 to 18-month cycle, because of c-checks. So they would do those installations during c-checks just like always has been. So, I believe we’ll get some of those signed this year and I think we’ll see a few installed this year from that part of our market. And I don’t mean a few hundred. I mean a few. But the important part is that the words out there, it’s spreading and people are seriously looking at this, both inside the Airbus infrastructure and outside, because it’s a batch of honor for the AFIRS unit to be standard fit by an OEM. That’s customer option. I don’t misinterpret standard fit as everyone gets one, but as the customer option improved by Airbus is a big deal for a product like ours. Eyal Ofir – Clarus Securities Inc.: Okay, and sounds good. And then, just on your discussions of other OEMs. You talked about in your prepared remarks about Bombardier being an opportunity as well. If you are able to secure a Bombardier or any other commercial aircraft manufacturer from OEM standpoint, do you need to also bring in a third-party like an L-3 to help you to get those secured and actually getting that ruled out? Is that going to be more of a direct sale off the line, the OEM?

Well, Bombardier, we are currently an approved supplier. So we don’t need to get a partner to go after Bombardier. Some other OEMs, I know that Boeing goes direct to company like ours for products, we continue to talk to and work on Boeing. It’s not anything that’s eminent, but we’re definitely working with them. It really depends on requirements of the OEM. If they have hired a systems integrator to put whole systems into an aircraft like a communication system then we probably have to go through a third-party. If they are just retrofitting existing systems, then we can probably go direct. So it really depends on the OEM more than us. Eyal Ofir – Clarus Securities Inc.: Okay. And then just final question, I’ll pass the line and hop back into the queue. Just in terms of actual milestones we should be measuring. Obviously the airline sector is very slow in terms of adopting different technologies, takes some time just on deployment. But what kind of milestones should we be looking for you to be announcing or hitting over the next six to 12 months and even with now it’s like even new clients or specifically with the all three of the last Chinese opportunity?

Well, from a new client’s perspective we are still searching for at least one and two more fulltime sales people that will be responsible for direct sales to end-use customers and OEMs but mainly the end use customers. The activities in China of trying to keep everybody [boosted] (ph) on where we stand and if the competition never gains ground, so far it’s going to be seeing how quickly they rollout. Airbus the ability to get it on the aircraft is there, the certification is there. There is pre-order customers that do have access to get it on current deliveries. By the end of this year we should be getting to a point where people that could change their order to put on can get it put on, and I hope to have numbers for when and how many of those are going to be out there. And then like – sometime in Q3 I hope to know that. Again I don’t what I can say about it, but I will hopefully know about it. There is a lot of activity in the company based on the amount or whatever comes out of IATA and ICAO. We’ve got teams ready to make sure that we’ve got adverting material and magazine ads and all that stuff ready to grow as soon as those requirements are products and make sure that the industry knows what we’re doing. Eyal Ofir – Clarus Securities Inc.: Okay thanks and just before I pass the line of the comment on the L-3 in four major offering is if you do secure one, would give it on (indiscernible) being tied to what L-3 does?

I’m not in a position realty hard to announce it. I may have to leave out names but I will try and get a press release of it. And it may not say airbus, it may not say all three, it may not say the customer name, but the fact that we have the major airline that has x number of aircraft that will be putting our product on is, I will get it out somehow. Eyal Ofir – Clarus Securities Inc.: Okay that’s sounds good. Thanks. I’ll pass the line.

The next question comes from [Mark Burger of MJB Associates] (ph). Please go ahead

Hi, Bill

Hi Mark

On the regulators, the regulation that will be coming through pretty much fixed for everybody to have requirements. And my estimation when we first got involved with flight, our expectation was may be 25% to 30% of the market flyover water or areas that would need the communications. And now it looks to me that based on these regulations, the potential for our market now becomes 100% of everybody as supposed to, just 25% and 30% am I wrong?

: So Transport Canada will make a determination the FAA will, the ASA and all of the rest of the members states then will put down into regulation. We don’t know what those regulations will be? In terms of it opening up a larger market, that will apply to everyone, it will depend on how the member states interrupt the performance standards and make the regulations. But as Bill has said, we’re very confident that those, that the issue has been raised in the GAAP that currently exist which mean the way the aircraft are tracked, have been tracked and the way they are going to be tracked in the future, is a product like AFIRSTM has come. So certainly there will be an expanded market.

And how would this different from any European commission that as working to try to change things in Europe will mandate, (indiscernible) actions in Europe? With this you serve that?

Well in each jurisdiction has a number of initiatives in place SESAR and NextGen, are air traffic control regulations. This is different, this is performance based standards that are the result of an ICAO what will be, ICAO recommendations to specifically deal with enhanced tracking. So they are different from existing regulations that deal with the handling of aircraft in congested air space, which I think is what you referring to with the jurisdictions.

Yes. Okay and my third question I’ll yield back to Dev, if he wants to get back, go on and ask anymore. Thank you.

Okay thanks.

The next question comes from Naser Iqbal of Salman Partners. Please go ahead. Naser Iqbal – Salman Partners Inc.: Thank you for taking my question. I just had question on the OpEx side and in particular the admin expenses, at $1.1 million, it’s higher than Q1 of $660,000, last year was about $600,000 to $800,000. Other than all these regulatory events and the travel, but should we expect that expenses will come down in the third and fourth quarter? And what should be a fair reasonable normalized level of expenses going forward?

Well, Investor Relation is going to continue to grow, because we’re doing a lot more work internationally and in the U.S., we’re trying to expand the investor base in those markets. I don’t think it’s grow from here, but it’s going to stay high. Both the Investor Relations and travel are basically related in the same thing, the travel cost for Investor Relations are up, because of doing that. And then all of these committees, and industry groups and all those things if you’re not in front of them, you’re not part of the game. So we have people to travelling and doing that and that all gets charged to administration. So there is more activity in that area than there was before and I think it will stay above where it is right now, I don’t think it’s going go up from there, but it’s not going to go down if we want to be part of that industry group. Naser Iqbal – Salman Partners Inc.: Okay fair enough. And then how about to the other expenses doing like distribution, and R&D excluding the one-time settlement, is that the range we should expect and not increased further or like this is a good level?

Okay, well, in the distribution expense, marketing and travel going into that distribution expense. So that they we have spent more on marketing and travel and we’ll continue to spend more in that area, as we go and capture new customers. As the R&D, the main thing that was into R&D right now is our engineering cost for our supplemental types are different. There are some programs like we talked about changes to our flight borrowing systems and the addition of our flight stream to get charged in there. So, the main cost in R&D today is the engineering department for approvals of new aircraft types. That will continue probably through – I don’t know, three years to get all the types that we need for 228. It’s fairly long-term. It’s not going to go away immediately. So these levels would probably where they will be. Naser Iqbal – Salman Partners Inc.: Okay. And then just, I guess, following upon on prior questions. The revenue growth in China and the ramp in the back half of the year, can you just talk again like how many new units were shipped in July? And I think you said, so the timing on that and so recognizing revenue would be probably Q3.

It is credited on the customer. I mean, they should be in Q3. If you shipped in July, typically there will be installation July, August and by the end of September they should be turned on. But that’s outside of our control and it’s something that’s always a problem for us and it’s out of the customer’s control. It some cases we start as c-check on August 15 thinking it’s going to be two weeks. They get the aircraft torn apart and they need different parts or different repairs. It could six weeks instead of two weeks. Doesn’t get turned on, we don’t get the revenue recognition. So, the activity I am seeing from kit shift and sales opportunities and things that we have moving forward, I think Q3 is going to be a solid quarter, but from a revenue recognition point of view, outside our control. So… Naser Iqbal – Salman Partners Inc.: And can you just say like, so in Q1 you received deposit for 20 units and then once you ship it, then you can just go rid the timeline of what you received for the deposit and what you shipped and how that ties back to the revenues in terms of just the China market.

We’ll let Tom to answer.

Well, no different for China than it is for any other one. So, it comes in with $200,000 coming to customer deposit. Owing to shift it lose $100,000 in revenue, and once it’s recognized it moves from $100,000 to revenue. And if we look on Page 12, the MD&A, the two charts that show the – you can see the movement on those charts, how the revenue moves, payments received from customers to unearned and the customer deposit. And then once it is accepted on shift and not accepted, which is (indiscernible) being used, it moves into unearned and the two numbers are the same. And then that is recognized it comes out variables to record revenue?

: Naser Iqbal – Salman Partners Inc.: Again that clarification helps. Thanks very much, and that’s it from my questions.

The next question comes from Fadi Benjamin of Pope & Company. Please go ahead. Fadi Benjamin – Pope & Company: Good morning, thanks for taking my question and taking on the call here. Very quickly, I know you’re stuff for time. If you can tell me if Bill with regards to business that you may have or you expect, or that you are chasing, that’s outside of China and I’m not including here, Airbus take Airbus out of the equation. So outside of China, what business, specifically into commercial market, that you planning to chase?

Anything that works fighting anything that plays.

Well let’s do the… Fadi Benjamin – Pope & Company: In order to be little more specific because you’re heading your way into China right now. And we don’t have visibility into Airbus, so help us out here?

Yeah, we’re working very closely with the companies that fly for mining and oil companies that have requirements for life deal safety systems today. We’re working very closely with couple of governments around the world that are looking to emulate what Nigeria did for safety services for their countries. We have very active program in South East Asia to deal with the growing low cost carriers that are flying, low cost carriers that are flying ATRs and Dash 8 in their island and then Indonesia, the growth in Indonesia in small commuter aircraft is very, very large and we’ve got full time person working on that. They started in March and I think we’ll see results by this quarter which is third quarter which is pretty quick for this business. But there’s a huge need and he has great relationships there. I think that you’ll see activities in those areas. How big and how fast as always I don’t comment on that. But it’s a situation that is very – we’re aggressively out there and we’re hiring more marketing and sales people to expand our marketplaces. Fadi Benjamin – Pope & Company: Okay. You also mentioned additional services that you expect to implement what level of services that you are actually trying to get here and to which segment of your clients, which group of your clients? I know, for example, China it’s fairly limited with regards to the usage, that they get. Are you trying to may be do a little bit more to convert them a higher rate usage?

Yes. Fadi Benjamin – Pope & Company: Okay. And aside from that are you expecting any more roll-outs of new apps or applications that par on your AFIRS 228s, that are thoroughly not in the offering?

Yes, absolutely there’s teams working on that full-time. I don’t want to talk about specifics about our product strategy on an open conference call, but we have some very exciting technology that’s gone through testing in the lab that’s being demonstrated to large customers in China and outside of China, that are getting great reviews, capabilities that they’d love to add, that are unique capabilities for the AFIRS unit. So those things are evolving and it’s kind of advancing on a saw blade to keep our investors informed of what we’re doing without informing our competitors with our catch-up. Fadi Benjamin – Pope & Company: That’s perfectly fine. But would it be fair to say that, it’s still goes in the way of efficiency and approving profitability of the end user?

Efficiency and communications. Fadi Benjamin – Pope & Company: Efficiency in communications. Okay. My last question and I’ll let you go. With regards to your R&D costs, I do understand that when it comes to the admin they have to stay at the current level because of you IR. I do understand distribution you’re going to have to keep that increasing because obviously want to have more sales people, when will we see more reduction in R&D costs.

Well, a majority of that is as I said engineering and you’ve got the SEC list on our website, how many we’ve got and how many we need to get, we have all the major wins for the big fleets that we’re chasing, but when we talk about the opportunities we’re chasing with oil and gas, and mining companies, they don’t always fly the latest and greatest and they don’t always. So we got to continued invest in those approvals to make sure that we can meet the requirements of our customers. And it’s probably, if you could isolate the admin or the engineering out of the R&D, it is coming down and it will be managed and kept in control. We don’t have new products on the new hardware products which will be very expensive ones on the drawing board. We do charge to R&D software developments that we’re doing, because that implies to SRED for government programs. So, again it’s kind of a juggle of it’s kind of work that we are doing for our customers, but it is research and development, we want to get our R&D credit, so it’s booked in there. Fadi Benjamin – Pope & Company: Thank you very much sir.

Welcome.

(Operator Instructions)

I have another email question too, if we wanted to do that and then ask again.

Sure.

Okay got some questions from Dave the South American contract we were supposed to get and we close getting it, we believe that will be one of first ones that comes out of the Air Bus agreement. And I don’t have any further word on that. It says that the share buyback in cars anytime is tuned, share price is low and now is the time do it. It seems to me the company has a lot of projects going to then, you eventually have lots of recurring revenue. We are not in a position today where we would due share buyback, we do have money in the bank it’s comfortable, but we’re using that to make sure we secure the recurring revenue and the customers and growing the business to provide more value. There is a question in here about the extra cash from Sierra Nevada for the buyback. There was no cash from Sierra Nevada it was eliminating in accounts payable. And then the next part of the question is, stock spilt there is a rumors of four to one, Alba, I’ve said repeatedly we asked for permission to do a stock reverse split. If there is business reason to do it, we have no plans today, there is no business reason on the horizon for us to do that, it’s part of our arsenal to manage our public markets and be able to get on a larger exchange if it’s required. But there’s nothing today that why we need to do that and we’re certainly not planning to do one, just because. The final part of the question was, can you elaborate on the Sierra Nevada military contact, is it a big transport plan? There’s a lot of different aircraft in the U.S. military. I don’t believe there is any point, any place for us on Combat Aircraft, transport is certainly where the work has been focused and we’ll continue to be. We don’t have enough details to say what those contracts are or could be at this point just that there’s work being done to secure them. Now we’ll go back and see if there is any final phone questions.

The next question comes from Joe MacKay of Global Maxfin Capital. Please go ahead. D. Joseph MacKay – Global Maxfin Capital Inc.: Thanks. Good Morning guys.

Hi Mac. D. Joseph MacKay – Global Maxfin Capital Inc.: Two may be real quick ones and then may be one longer one. Just in terms of the earned revenue and what’s been recognized, if we look at, in the MD&A in Page 12, I think, that it indicates $541,000 of AFIRS airtime sales recognized. And what was taken into revenue on Page 12 was $447,000-ish historically those numbers have been pretty much the same. I wonder if you could just elaborate on whether the (indiscernible) dollar difference?

I going to get Tom to look that up while you guys, give me the next few questions. D. Joseph MacKay – Global Maxfin Capital Inc.: Okay, question two, really is about the decline in the usage revenue, was the second quarter in a row, sequentially the usage revenue was declined I wonder if you could just talk about what’s driving that and how we should look at that going forward?

Okay, well that should turn around in the third quarter, there was – in the first half of this year, we shipped 25 units and we had 23 come off recurring revenue. The one that came off recurring revenue were bankruptcy of, I think, eight units of World Airways. One of our customers in the Middle East, wasn’t paying us, so we suspend service. They’ve now caught up their bills and turned back on, as I think both joy and safety. One of our long-term customers in the Caribbean was moving from Dash-8s to ATR aircraft. So while they were transitioning the aircraft though the AFIRS units weren’t installed, when they arrived and they had put some on in overnight. So that was about a 13 unit fleet and those 13 units came on and off and missed a month or two of service in between. They’re now up and running with three less aircraft than they had because the ATRs are bigger than the Dash-8s. So they didn’t need as many. And so those revenues are back up as far as the third quarter goes. So we’ve had questions about having how many aircraft are there in operation, or how many aircraft are dealing in it. We put those up, just drive us around the bandwidth, trying to keep people up to date with these shifts and changes that happened, but Q3 will be back on track and growing from there. D. Joseph MacKay – Global Maxfin Capital Inc.: Okay. And then the third question really is a comment about breakeven from operations on a yearly basis. Year-to-date for the six months loss from operations is about $726,000. If I can ex- out the SNC settlement, you would have lost about $1.7 million, I believe, in the quarter. Maybe you kind of indicated that expenses are going to be relatively flat going forward. Can you put maybe because it just seems to me breakeven, it’s going to be quite a second half, I guess, is what I’m saying. So maybe can you kind of put it together forming bill in terms of – more granularity on how you get there?

Well, first of all, the operational process – I’m including the SNC settlement in that, I mean that’s an operational balance what we got $2 million back on the settlement of that through. The revenues and rate of installations of our products from China and from our other customers should speed up in the second half. We spend the last three quarters with engineers in China training MROs with our sales people lining up, confident opportunities in China, getting contracts signed, building appeal for 218 units. That should generate a lot more revenues than it exists today. There is a bunch of work that we are doing with major carriers around the world after Malaysia that I think are going to produce some pretty substantial contracts and fairly rapid installations outside of the Airbus situation. There is a lot of things that we’ve been working on for a long time in the market to establish AFIRS for operational efficiencies and things that we can do to improve the performance of airlines that I’m very confident that we’re going to see a significant increase in the adoption of these technologies in Q3 and Q4 and we have the product and STCs and the MRO trains to be able to implement them and get this thing moving. D. Joseph MacKay – Global Maxfin Capital Inc.: Okay, that’s great.

And here’s the answer to your other question.

Of that there’s two years sort of 100, some 1,000 rates, some 50, whatever that are in other revenue instead of being applying further. The equipment revenue could be spare parts, not actual units. So they have to go and now get revenue is spare parts. D. Joseph MacKay – Global Maxfin Capital Inc.: So some of it’s in the partial revenue?

It’s in the bright spot. D. Joseph MacKay – Global Maxfin Capital Inc.: Okay, that’s great. Thank you

There are no further questions at this time. I will now hand the call back over to Bill Tempany for closing comments.

Great. Thanks again everybody for taking the time and being on the call. I want to assure that the whole team here is focused on cost containment and revenues to make sure that we do achieve our goals this year and come out the back end as a very strong and healthy company and I do want to comment on some of the accolades we’re getting in the industry, the acceptance and the understanding of people in very high places in very large organizations whether they are regulator or airlines. They’d say, yes, we’ve heard a flight, we know what we do. It is important. It is something that we should be doing and we do have people’s attention and that’s very difficult thing for a small company to do. :

This concludes today’s conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.