Bill Tempany - Chief Executive Officer Nola Heale - Chief Financial Officer Matt Bradley - President

Daniel Wong - Solvent Fadi Benjamin - Pope & Company Marc Berger - MKB Associates Gerard Halloran - Long Focus

Thank you for standing by. This is the conference operator. Welcome to the FLYHT Aerospace Solutions’ First Quarter 2015 Earnings Conference Call. As a remainder, all participants are in a listen-only mode and the conference is being recorded. The PowerPoint presentation is available at http://flyht.com/investors/videos if you would like to follow along. 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.

Thank you very much. Welcome everyone to our Q1 update. We didn’t do a PowerPoint presentation this time, there isn’t one on the Web site, sorry about that. We thought it was better to just talk to the points and answer people’s questions today. So we’re going to change the format a little bit. I’m very excited and happy about the results this quarter and the degree [ph] whom for the results through the hard work of two people that are going to talk about the results in a couple of minutes are Nola, our CFO has done outstanding work in getting the financials presented out to you and has been working really hard on the Annual Meeting we’re going to have on June 2nd. I hope you’ve all received your Information Circular and we get your votes in, I think we have some exciting stuff coming next year with another new Board Member, a very high profile Board Member and the activity that’s been generated by Matt Bradley, our President around new customers, new products and new initiatives in the business that I think are going to drive great success in the year coming. So with that I’m going to turn it over to Nola to talk about the financial results. Matt will come on and give you some updates on activities he’s working on and then at the end I’ll give you the e-mail questions and take questions from everybody, so Nola?

Good morning everyone. The first quarter has been a very busy one for the communications, financial reporting and investor relations teams with producing the year-end report, the Annual General Meeting material to end the first quarter report as Bill mentioned. We were short staffed and you will see that in some of our expenses and as this require significant efforts that this is a key focus area for FLYHT, so we hope the investors appreciate the information we provide. Complement received recently from parties who’ve acknowledged the quality and timeliness of the FLYHT communications and the efforts that Tammy Schwass has put into communication including maintaining our websites is very much appreciated. The 2015 year started well. The first quarter revenue as you’ve seen was $2.6 million and the loss for the quarter was only 60,000, certainly our best quarter yet. Sales continued the consistent increasing trend with higher revenue in all three of our primary revenue items, the AFIRS unit sales, the parts sales and the recurring voice and data revenue were all above the fourth quarter of 2014, which of course was also intern an improvement on our earlier quarters. You can see that the contracts with SNC and L-3 are paying off. The contracts last year and FLYHT moving from the engineering to the manufacturing phase on that contract has seen our services revenue decrease but that’s been more than compensated by increased parts revenue that took its place. Expenses were well controlled in the quarter, so most of the improved revenue fell to the bottom-line, giving us a loss very close to breakeven. When research and development is excluded, FLYHT made its first operating profit of $677,000 in this quarter but for order the change in working capital, operations actually generated cash of $158,000. We have shipped seven tips this year and installed 15. The uptime usage charges came back slightly to earn a 38% of our total revenue in the quarter, compared to 41% in the fourth quarter of 2014. But this is only due to the mix of the revenue because our part sales were higher and not due to a decrease in the recurring revenue. Expenses are pretty much in line with the first quarter of 2014 and even with fourth quarter of 2014, if that large provision for doubtful debt is excluded in the fourth quarter. It was more travel and marketing expense than in the fourth quarter. Investors have seen our new [indiscernible] that have been loaded on the website. There were no options awarded in this quarter, so share-based commemoration was low. We appointed during 2014, you were recall we appointed a new sales representative to grow the revenue base in the Malaysia area and of course that costs was not in the first quarter of 2014. And we’ve also committed time in this quarter to increasing the revenue sources from uptime applications and enhancements to FLYHTStream. In this quarter, we did have some contract labor costs for certification engineering on an HDC that was time sensitive and on software developments. In the working capital, receivables grew significantly from the year-end, but this is due to timing on the sales that I mentioned earlier. The balance is also during the second quarter so we do expect that cash to come back in. The other trends as such including inventory stayed in line with 2014, so all of those assets have been well controlled. Unearned revenue, which of course is a current liability on our balance sheet decreased as we have recognized revenue on some of the boxes we reported at year-end. Some large orders remain expected in the coming months, which will use the increased inventory levels where as customers delay delivery in 2014. Thank you. Matt if I could hand it over to you and you can give us some of the interesting news what we’ve been working on?

Thanks, good morning everyone. I also want to thanks the investors for their patience and their support of Nola as she hits the ground running in a new role, she has just been swamped with all of the activities that she mentioned there. And I’m really pleased with the support that she has received from the investors in terms of being patient, we’ve getting answers and as she runs ourselves off her feet with Tammy in order to be able to give you the information that you need. So thanks very much to everyone for that. And the first thing, I want to start with is on sales, which is what everybody’s interested in bringing on a new sales person. Quite a heavy hitter in the industry, his name Jim Belinga, he starts with us on May 25th. He was the Vice President of sales Guardian Mobility and Vice President of Business Development for Cargojet. He has had about 20 years in the airline industry and specifically the last early since 2009 in the whole communications and flight data monitoring solutions providing sales type of sale in the industry for Guardian and we’re very lucky to get them. He understands FDM, he understands satellite communications, he understands airlines. He was part of the key executive team with Cargojet, when they were awarded the single largest air cargo contract in Canadian history, its a billion dollar contracted revenue over the first seven years. He sold FLYHT data monitoring solutions and for people that know this industry inside out, they know how hard it is to find a good salesman number one and number two, somebody that understands the space intently. So Jim is coming on Board, he is not going to be in the office as a leader, he is going to be boots on the ground out selling for us. And specifically one of the things that [indiscernible] with is to hit that FDM mandate, it’s coming from the FAA in the states for 2018 for the regional carriers. There’s been a mandate said that that was announced in January of this year and by the FAA that regional operators be able to collect the FDM data by 2018. They not only want to collect, but they want to be able to do something with it and that’s right in our wheelhouse. And we’ve been talking to those regional operators for the last eight years, so this is another driving force to get them to pull the trigger on purchasing the AFIRS unit, so we welcome Jim and we think he’s going to be a great addition to the team. With regards to sales and general activity in China and I’m going to bounce between some of the questions that came in so that I answer questions that came in by e-mail as well as give an update. So bear with me as I jump in out of some e-mails here and answer some questions. Activity in China, we attended two conferences in China, significant conferences. We were sole sponsor that one where we were a presenter to the airlines where we presented the full AFIRS suite of capability including FLYHTStream. And we have 22 airlines in the pipe right now in China and for people that ask what’s going on in China, what are you doing in China, not only are we attending the conferences, but with the boots on the ground in China, we are at an airline every single day in China. So we cycle through those flying all around China, cycling through to be right in the operators face with regards to a steady presence and helping them to make their decision regarding their SACOM choice to meet the mandate. And not to just meet the mandate, but to expand it beyond the mandate into the kind of services that we offer FLYHTStream and the kind of services that bring an ROI. With regard to that, we’ve had some success. I know that we’ve said in previous conference calls that really what we’re doing is in China is we’re going out to meet that voice mandate, but we’ve had some success with two operators that have asked for data from FLYHT and with one of the operators the full suite of data. And we see that as a very encouraging step because that was the plan, get them on voice and then move them over onto the data because they have recognized the value that the AFIRS applications can bring. So making some progress there which I’m thrilled about. There were some questions that came in about Iridium bandwidth in China and we’d mentioned that some of the larger airlines are waiting to make their decision and it’s holding up sales somewhat because they’re tenuous about Iridium’s future in China and I’d just-- I’ll give you a little bit of background on that. There is a conflict that existed because of the Ministry of Industry and Information Technology in China, MIIT in China approved the use of the bandwidth for the Civil Aviation Authority in China to see and we’ll add one other partner in here and I don’t mean to throw acronyms around, but the governing body that governs the spectrum of bandwidth for region three which is China is the International Telecommunications Union and all of those folks have to agree on the use of the spectrum for the frequencies. And there is a slight overlapping of frequencies between the Baidu satellite constellation in China and the Iridium frequencies. Now this is not news for us, we actually demonstrated and worked with the military years ago to demonstrate that the AFIRS unit does not operate in that frequency and does not pose a threat or a problem. And we brought that information to the airlines and they’re raising that information up to say, hey there isn’t a problem here. We expect that that situation and not just because we’ve mentioned that AFIRS isn’t a challenge, but because of the work that’s being done on the ground by the CAAC, we expect that that roadblock will be cleared in the coming months. It’s not a roadblock for the small airlines, we are still actively working with the small airlines and they’re not as concerned as the big three. So that’s an explanation of the Iridium bandwidth issue in China. With regards to the – we have some questions around what’s happening with the ARJ, the ARJ-21 for those of you that don’t know it run into problems in terms of its delivery, so they’re just not rolling, they’re not able to meet their timelines and the aircraft isn’t entering into service as quickly as what they would like. And as a result, we’re not putting units on the ARJ21, because they’re not being delivered. That doesn’t mean that that programs are dead by any means. We have a strong relationship with Datang Mobile, but we’ve announced in the past and advocated for and are being considered for the C919 that’s being put out by AVIC [ph] which probably we’ll have better legs in the market than the ARJ21. So we’re actively pursuing that as a lead to get the same type of approach to this C919 as we are to the ARJ21. There was a question about whether or not NetJets recent more announcement as to their involvement in China will help our case with NetJets. And the answer is it get can’t hurt it and yes it should be able to help it. There isn’t a direct connection yet between what NetJets is doing in China with what NetJets is doing in Europe. But we have been in touch with the folks that are introducing NetJets into China for the last couple of years. They’re extremely busy getting the business stood up and less concerned about communication and about health monitoring on the aircraft just right now but we are for all of our investors to know it’s not something that we’ve overlooked, we didn’t contact with the folks and we have a lot to offer them in terms of what we can do in China, not to mentioned the fact that I just mentioned the solution that we have to deal with the bandwidth issue. But we’ve also got the contacts and the experience in China that will make any sort of a data play for them in China easier. So, yes we intend on bringing all that value to NetJets, when they get a little further along down the pipe into getting their business rolling. With regard to the tracking mandates and tracking in Asia there are a quite a few questions on that. We happen attending the ICAO meetings and there are statements out there that say that people are -- there is a lot of misinformation around this where we’re lead on this committee, we are leading, we have an edge on what the regulations will be. And I can tell you flat out nobody has edge on what the regulations will be. We are a player at the table with along with [indiscernible] all of the other SatCom providers were respected provider of information. We have a reasonable approach to it and we have a great solution and a lot of technology that we bring to it. We don’t playing to have an edge and we think in anyone that does is really hyping that situation. What we do have is technology that I’ll discuss in a moment, has some capability that it’s very valuable for the attracting mandates, I’ll talk you about that in a minute. We are at the Royal Aeronautical Society meeting in Washington in a couple of, it’s on the 14. So when there is a tracking meeting, yes we are still attending. And we are attending because it’s not that we changed our business model and that we are only pursuing tracking but we see it as an important way to get the install base up and it needs to be deal with the airlines have a pain point and we’re not going to ignore the fact AFIRS is in the sweet spot are being able to solve that pain point as well as providing an ROY to them. With regards to other events in Asia, we attended the Asia, aviation Asia event earlier in the year. And we were featured in the Hewlett-Packard and Microsoft booth and we displayed our technology right of fun center in that booth. We were mentioned in the key note address by the HP representative, it’s having technology that is cutting edge and it was recognized by all the airlines there that flight does something different and that difference is the ability to process information on the aircraft not on the ground and the ability to be able to report and change its reporting frequency and its alerting based on what’s happening on the aircraft in real time. And to quickly make the point about that, if you’re unable to do that, you’re unable to provide that on the aircraft but you have to rely on is a message coming from the aircraft or no message coming from the aircraft. And then at the regular reporting interval, you have to assume that something is wrong, which is the ’15 we’ve reporting interval and then you would take some action. Airplanes can travel a long way in 15 minutes, if 15 minute was the normal tracking frequency. And FLYHT is able to detect that immediately, whether or not it’s in a geo-fenced area, in other words it’s an area that it’s entering or leaving that we want heightened position reporting or whether there’s a fault on the aircraft. It’s a big differentiator. Add to that what HP is doing in the industry right now with its advent of its extremely fast computers and its own encompassing approach to the handling of data and they’re very excited about what AFIRS can do with regards to solving problems for the airlines in real-time aircraft-to-aircraft communications that’s right in AFIRS wheel house. And so we need a big splash at that event and we continue to work with the airlines that we have leads on as well as with potential alliances with HP and Microsoft. We have a question about a statement that we made about insurance premiums and reductions and I’ll just see if I can find that, read that out here. It said, can you elaborate on the significantly reduced insurance premiums mentioned in the new video on how larger factor this is in the ROI and what particular flight or services do clients need to get turned on to get the most in premium reduction? Well, we’ve been working on the premium reductions as a result of having AFIRS on board isn’t new, it’s something that we’ve done for the last 5 or 10 years. The most significant reduction that we had is one recently where there was an 8% reduction in the insurance premiums for the air operator due to having AFIRS on board. Now what is the percent equate to, it equated to what it would cost to install AFIRS and all of the services for five years that reduction in premium. So it was a significant reduction. We don’t always get that. It depends on the underwriter. And with regards to what services in particular, it’s not a particular service that the insurers look at. It’s the whole question of how are you providing a higher level of safety to your airline and what operational visibility do you have on your fleet. And with AFIRS ability to track, with AFIRS ability to talk to the pilots to be able to text message the pilots, be able to provide them real-time weather, the ability to be able to record all of the flight data and be able to analyze the flight data for [indiscernible] the ability to be able to see engine and air frame safety related events in real-time, all paint to picture that gives the insurer confidence that flights with AFIRS on board are safer than flights without. So we’ll continue to pursue the insurance premium deduction route as one of the ways of giving the airline an ROI. We have some questions around the RSAF and the specific question was an investor found on a public site that there was a proposal for the Royal Saudi Air Force with the response date of April 24th and RFQ to provide a licensing subscription service and support for 23 Royal Saudi Arabian C-130s aircraft that are called out AFIR specifically and I can say that just can we expand on this and are these new installations or are these units already in service or are they returning to service? So I can expand on that. We’ve submitted a proposal for continuing the voice and data service on the 23 aircraft that we have installed at RSAF, which have had major avionics cockpit upgrades. That proposal is to cover three years and we expect to get that award imminently. That is as fresh as the last couple of days that we’ve gotten feedback on that as I mentioned. April 24th was the response date, we’ve gotten the response back that the results are positive to our proposal and we expect a positive uptake of our services for another three years. That is for voice and for data and with a 3% annual escalation rate. There’s a separate transaction as well and which we’re involved in RFP for 8 to 12 more aircraft to be for cockpit modifications. That RFP went outs to the industry with AFIRS called out as mandatory equipment. So it’s clear that the Saudi is intend on expanding their program and using AFIRS for that program. That award we expect to be made this year and we expect that it would be a five year contract for those additional aircraft with options for extended periods. And the good thing about those contracts and the contracts that we’re working on is that those upgraded cockpits are likely to stay on the aircraft for 15 to 20 years. So the service revenue should continue into all of the aircraft either are retired and replaced. That’s the situation with the RSAF. We have some questions on SMC and whether or not the, what’s happening with RSAF and C130 is having an effect on our U.S. Military business. SMC has put together sales team, they’ve hired a dedicated person to sell AFIRS, we’ve been not SMC’s offices, helping them become comfortable with the system and helping teach them how to sell it and they are very excited about it. They have attended quite a few conferences and put together a whole pitch for a first and they’ve got quite a large market, they’ve got all the C130, they’ve got all the military and paramilitary, they’ve got from market all what we called great deals and resolve this civilian type aircraft that we normally with flat, but if in converted for military use. So SMC, they do things well and they put together. You may see it on our website, they went in with us on the production of the video that it’s on our website right now that describes all AFIRS functionality. So the relationship with SMC is strong and military contracts, they take longer than average, but SMC is fully engaged. Not only with the military, but they’ve also have connections in Turkey and they’re actively marketing in with their Turkish contacts as well. So things are going well in SMC. And does it bode well to be on C130 for our staff or business elsewhere on other C130s? Absolutely. It’s a great program with RSAF gets a lot of benefit out of it. And once you are in and you can demonstrate that the solution provides ROI that you talked about, it’s of course benefits all other people in that market. With regards to Africa, we got a question about, you’ve mentioned the South Africa and airline two quarters ago, what happened to that sale? What happen to it was, what happens often when we go in for sales, we go in for specific pain point somebody might need data, acres data or they need a fuel program or they need a voice solution. And then they realize it’s like renovating. You change the base ports, you’ve got change the wallpaper and now the carpet and everything else. So what they recognize is that it’s worthwhile increasing the scope to include their electronic FLYHT back program. And that’s exactly what they did, they recognize the capabilities of AFIRS and they said well, why don’t we have a look at what we’re going to do with our AFPs and then see we can connect our AFPs given the fact that AFIRS offers the solution for that connectivity as well and they are in the process of doing that. And those things take time, so that’s what happen it hasn’t going away, it’s just under, it’s part of more stakeholders got involved for the AFP solution and they’re breaking that getting those requirements known. We also just an update people were asking what we’re doing with the, we have mentioned that we are on Team Spartan which was the Fixed Wings SAR program with the Alenia Aermacchi, their bid to win the business from the Canadian government for the Fixed Wings search and rescue program. We are still involved in that and we are still talking with them and that program to determine what there needs are from a connectivity perspective and we are the Iridium choice for that program on that team. That’s an exciting project and exciting team working with, we get to talk to some great folks at Alenia Aermacchi and General Dynamics in order to put it together a solution that will do some great things for the Canadian Military on the fixed wings SAR if that program is chosen. The last I want to mention is the technical teams had been working weekends and late with applications; really impressed with what they’ve delivered in the last month. In the last month, they’ve been able to -- we made a request to them that they generisize some of our offerings, so that it’s not dependent on database from the aircraft, but actually uses the AFIR's on board GPS with full of potential. And what they’ve done with it is fantastic. They have been able to create triggers to create geo-fence for abnormalities and I realize some of this might go over your heads, but in the industry these are really important things. And they have completely revamped some of the embedded logic that we’ve put on our 228 products. And now we’re able to put those products on and our customers are really responding positively to the interface, the new interface that they’re using and the expanded capabilities for being able to have heightened alerting, tracking and geo-fencing based on GPS data alone. So from a sales perspective, we can’t get enough of that. Those are fabulous applications that that team is working on. And I think they’ve hit their stride in ways that I haven’t seen happened in the last five years in the company. So very proud of their passion and their dedication working through their weekends and late at night because they’re passionate about the program and without getting overtime and in many times not without even being paid just because they want to put out a great solution. So very proud of the teams and I want to take the opportunity to thank them. That’s all I have Nola.

Okay. Thanks very much you guys. There is a few other questions came in on e-mail that I’d like to answer and then we’ll open up the phones for the questions from everybody online. There was a question about NetJets in China and how our systems can help there. We have worked with both the NetJets folks in Europe and the OEMs of business aircraft about the China situation and what they need to do there. We have not been actively engaged with the rollout in China. What they’ve done is used aircraft from other areas of the world that went in there, so they’re already equipped with specific equipment for the business aviation world. And I’m not sure that we’ll have a big role in that for the time being. I think that it’s going to change once we’ve a number of large airlines installed. Cam asked that question as well as the insurance question on the Saudi question I think Matt answered those other questions. We had questions from Mike asking about why assets have come down in the last three quarters, Nola responded to that I think. There was a question about when will the certification process be finished for the 228? That is something that the 228 product in Airbus is certified, signed off by Airbus up and running. We continue to get STC approvals which are one level of certification on aircraft types that will be never ending. Every time we turn around there seems to be a new type out there. And the certifications on our products are done to the satisfaction of all of the equipment we are on today. One of the things that’s coming up that we know has to be done and we can’t do it, or aren’t going to the work until we have a customer that needs it, is certification for composite body aircraft like the 787, the A380. It’s a different level of certification for lightning strike; you got to put the system through, so there’s always certification efforts' going on. Suffice it to say that the box is certified for every customer we have today and we will make sure it continues to be that way. Mike also asked for a breakdown of the 15 units that we shipped this quarter. I don’t have it in front of me, but I think seven or eight of those went to China. The others were Africa and I think we shipped a couple here in Canada. Another question was who were the three largest customers? We don’t give customer names in our press release or anywhere else. There's companies out there, that's a really good marketing opportunity. So we don’t put out customer names. I think Matt answered and one of the questions on a South African carrier that we’re dealing with. The question was actually about the South American contract that we were supposed to get two quarters ago. We get to win the business, but we want it through the Airbus relationship. So that is something that will not be on our pipeline or we talked about because of our contractual relationships. Now to answer the question on the ARJ21, one of the questions was in Africa. How many of the top 10 airlines do you have AFIRS installed? I don’t know who the top 10 airlines are in China. The ones that come to mind are South African Airways and the Ethiopian Airways. So I’m not sure how many of the top 10. We have about 20 airlines in Africa in total, but that number is growing. There is a lot of activity in Africa around not only the AFIRS capability for operational data, but interest from the World Meteorological Association and getting weather data for the world food freight program and other things. With Airbus contractor, you’re getting other aircraft types. We will be waiting to see if there is a press release, and this is from our partners on that. I can’t comment any further in that. We had a question from Rima; please explain the declining cash flow, quarterly losses only 60,000? I think the big thing that gives me comfort is our receivables were up $800,000. Our payables were down $300,000 from year-end. So that makes up 1.1 million of the difference and it’s the normal operation of business. So those were the questions, we had by e-mail. And then we could open it up for questions from the investors.

[Operator Instructions] Our first question today comes from Daniel Wong of Solvent [ph]. Please go ahead.

I have a question about the segments in revenue. So at to make carrying questions, for the parts sales that look like, it was much higher than it has been historically. So I just wondering you comment what's SimVac and what level it should fall to or if it’s a one-time kind of thing?

Our parts sales is of course, very erratic revenue line because it depends on almost one-off kind of sales. It’s not a recurring revenue item. So in terms of what it will do quarter-over-quarter, a difficult one to answer. We certainly hope it’s going to stay at similar levels to where it is, but it’s definitely going to bounce both up and down. The largest part of what is in there is I mentioned in my brief, random, that we have converted our L-3 contract out of the engineering and certification stage to the manufacturing stage. So of course they are all part of what’s in there and then just several other parts orders that we received in the quarter. And that certainly where you will see that revenue included in the future quarters as well.

Okay. Just one more housekeeping item for financing term; that was also say a large, could you give us some color on what’s going on there?

Our finance income line includes both foreign exchange differences and actual finance as we would call it, and yes interest stuff. So being a company that is largely trading in U.S. dollars for our revenue side and Canadian dollars for the expense side. We do see strings in foreign exchange included in that line.

Are there any unrealized FX gains or losses there?

No, it’s a small portion, a very small portion, most of it is realized.

And kit 7, it's shipped when 15 kit is installed. For revenue recognition, is that when it's shipped or when it's installed?

It’s when it's installed, so at the points at which our revenue pipeline normally starts with the customer giving out asset deposits, so that would go into deposits on balance sheet. When we shift the kits it becomes unearned revenue and then when we install we recognize the revenue on the income statement.

[Operator Instructions] Our next question comes from Fadi Benjamin of Pope & Company. Please go ahead.

My first question is ordeals with the parts revenue and I guess the wonderful work with the transitioning to the Airbus contract to manufacturing stage. With regards to these units, do they become or is there any use for them outside of getting them turned on once they are installed getting them turned on with the AFIRS uptime service? Like, is there somebody else or some other provider that can actually latch into the unit that L-3 places on one of these Airbus A320s?

The AFIRS 228 that Airbus uses is an ACARS over Iridium certified device and when you turn on the ACARS data that revenue goes to one of the ACARS providers. A voice is available to whoever the customer wants to deal with and Airbus' comment has been that they’re not in the business of providing that that anybody can provide it. And it isn’t just anybody you have to be able to provide it legally on the AFIRS unit. So ourselves, and the two ACARS providers are licensed for that. The box that’s on the Airbus aircraft is exactly the same hardware configuration as ours and the ability for it to do other things is subject to additional wiring and software loads and I can’t talk any more about this or I’ll be in big trouble with L-3 on the call again.

No problem there. The thrust of my question is those additional revenues that are coming from the Airbus and L-3 contract, how are we going to see them transfer to more recurring revenues or should we just continue perceiving them as our parts revenue, shall we say that can just simply move erratically and there might be very little flow into recurring revenues? Interested in your thoughts on how the revenue cycle if you wish will progress on the Airbus orders?

It’s our responsibility to go and sell additional services once this is installed and we are in the process of starting that. When they do occur, those revenues will appear in our recurring revenue line of business.

And without really putting you on the spot too much Bill with regards to your view shall we say yours or Matt’s, with regards to the Airbus program I mean this was a nice uptick here. How does the landscape look going forward, if you can provide some color with regards to that to the L-3 Airbus contract?

As I’ve said in the last call we’re very happy and pleased with our relationship with our partners. Everything is going extremely well and we cannot discuss details because of contractual obligations on that program.

[Operator Instructions] Also please limit your questions to three. Our next question comes from Marc Berger of MKB Associates. Please go ahead.

Hi Bill, good quarter, nice. Could you talk a little bit more about the China and the service center that you’ve mentioned potentially might be helpful to you and maybe closing some deals with the Chinese airlines?

Yes, I certainly can, like everything in aviation is the process. You have to be certified as a manufacturer in China. Then need a Chinese partner. They get certified as an authorized repair depot. We are probably three quarters to 90% through that process. We follow the paper work not only approvals. Our quality people went to China four weeks ago or three weeks ago, went through the interview process, provided all the documentation, and passed their test that we really know what we’re doing and taking about. The next step is for a delegation to come from China to here to inspect our facilities and our processes, make sure they match the documentation we’ve provided. And at that point within probably three to four weeks of them returning to China, we should have an authorized repair depot setup in China with our partner there.

Okay. Is that going to require any amounts of cash or expenditures on our side or is it going to be basically the partner that’s going to put that up?

It’s minimal. We have to provide a test jig and parts and so on, but in inventory ready to go. The largest process is the travel and start to get all this stuff done, with everything with the government whether it’s the FAA or transport Canada or CAC, we’re responsible for paying for the tickets and the hotel and the meals for guys who come to do the inspection here. So it’s not significant dollars, it’s just a constant drip.

Okay. And can you talk a little bit more about Southeast Asia as they operate as an airlines and what our status might be over there in terms of trying to get traction?

Well it's not mentioned in Neal's presentation. He went to Southeast Asia to a very big show, 1,100 people out, and there were over 400 airlines there and we were centered in the keynote booth. There is a lot of interest and a lot of activity in Southeast Asia today, to change improve their systems and their processes. Certainly, a lot more than just play following, they’re looking at revamping and renovating the entire systems and we're a big player in that. Matt also mentioned that we’re doubling our presence in our sales and marketing team in Southeast Asia and China and those processes are ongoing. The person we hired last March is well entrenched and making good progress with customers in Southeast Asia. And we see it there is a large growth area. I think something like 60% of the aircraft being produced today, by Boeing and Airbus or going to that part of the world. It’s a very high growth area for aviation and we're part of it. We’ll likely setup in office before the end of the year somewhere in Southeast Asia, to get supports staff and additional sales people, and we have an office being established, as we speak in Beijing for our support people.

[Operator Instructions] We do have one follow-up question just came in from Fadi Benjamin of Pope & Company.

Just quickly on the new apps that Matt mentioned. Is it possible to at least quantify where you guys -- and let’s say for the late people here. Is it possible to provide us some color into where this new apps can see most demand or most use in the industry?

They're all applications around, but we can talk through all our operations control software. So operations control involve equipment status, engine status, aircraft location, the ability to access data on the aircraft to improve maintenance efficiency and operational efficiencies. So what we’ve done in the last six months is built out additional features that enhance our operational control and operational benefits for our customers.

And you expect -- obviously you’ve been getting some positive feedback from customers or partners. You do expect that these additional benefits will have strong interest in the marketplace.

We know they’ve got strong interest in the marketplace from the shows we’ve attended this spring. People are really impressed with what our abilities are in these areas. And we’re going to continue to enhance those through software development and partnerships with other companies. One of the things that is really getting harder and harder is being able to provide this data to companies that -- an example is flight planning software. If you’ve got software to plan the flights for an airline, if you can get the data to that software around wins or lost, and getting weather conditions that the previous flight got, it allows that software to do better flight planning. If you can get fuel on board to those systems, if you’re flying the same route several times and you’ve got consistent tailwinds, you don’t have to take as much fuel as you would the other way. So we’re expanding the footprint of our operational data across our customers and outside applications that can use this. And those are the things that we’re working on with partners globally.

The next question is from Gerard Halloran of Long Focus. Please go ahead.

Looks like things are rolling along pretty well.

Yes, they’re coming up.

Very glad to see that. The Iridium is putting up a new constellation of satellites, could you take a minute and talk about what that means to FLYHT?

There’s several things that the new constellation have that are complementary and potentially competition to us. The Iridium NEXT satellite system will have much higher bandwidth than the current system. But they did grandfather everything that Iridium has out there into the Next constellation. So all of our existing customers go along, there’s no change whatsoever to our hardware, our certification, our capabilities. All of the applications that we have today and any of that we’ve identified for the future will operate within the bandwidth constraints of the current constellation so that the higher bandwidth we don’t see as an advantage to our applications. We are working with -- there’s five vendors been selected to build the modems or terminals for Iridium NEXT. We’re working with three of them to be partners and providing services through those terminals. So we will be part of the Iridium NEXT strategy, but its three years to five years though before those products are ready. So for now we’ve got a very viable product that’s sustainable for the next 30 years or 40 years in the Iridium environment today. The other thing that Iridium is doing is they have a partnership with NAV CANADA called Iridium, NAV CANADA is paying to install a receiver on all of the satellites that Iridium will be launching that will receive the ADS-B location transmission from aircraft that are equipped with ADS-B transponders. That is basically how people see flight following being done globally five years to 10 years from now when the constellation is up and all the aircraft are equipped and they get the bunch worked out and we do flight tracking as part of our service, a small part of our service. This isn’t our focus. It is part of what our system is capable of doing. So that piece is probably competition to us. But I don’t see it as a big threat to our business model because we are doing operational control and information and integration into other systems that add way more value to the airlines than the tracking piece alone.

There are now no further questions. I’ll hand the call back over to Bill Tempany for any closing remarks.

Hey, well, I’d like to thank everybody who has dialed in. We’re very excited about where we are and where we’re going. The team is working hard to make sure that the long-long term investors involved in this story are going to see the light at the end of the tunnel finally. So I want to -- so the low growth for this year’s financial statements and what we’re putting out on our presentations and so on. The big white circle in the middle is the light at the end of the tunnel and it’s not free train coming. So guys thanks everybody for your time and attention and as always, Nola and Tammy and I are here and if you got questions, write, phone, send mail whatever you like. We’re here to answer your questions. Thank you very much.

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