Orbital Infrastructure Group, Inc. (OIG) Q3 2013 Earnings Call Transcript

Bill Clough – President and CEO Dan Ford – CFO

Eric Stine – Craig-Hallum Capital Group Andrew D`Silva – Merriman Capital Alex Blanton – Clear Harbor Asset Management Dan Trang – Stonegate Securities Evan Richert – Sidoti Jim Kennedy – Marathon Capital Management

Good day ladies and gentleman, and welcome to the CUI Global Inc. Q3 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session instructions will be given at that time. (Operator Instructions) As a reminder, this call is being recorded. I’d now like to turn the conference over to your host for today Mr. [indiscernible] Investor Relations. Sir, you may begin.

Thank you and good morning. Welcome to the CUI Global earnings call for the third quarter of 2013. We appreciate you joining us today. With me on the call is Mr. Bill Clough Chief Executive Officer, and Dan Ford, Chief Financial Officer. The purpose of today’s call is to review the company’s financial results for the quarter as well as provide you with some additional color on the business. Following opening remarks the operator will provide instructions regarding Q&A. As a reminder this call will contain certain forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 as amended and Section 21-E of the Securities and Exchange Act of 1934 as amended. Such statements are subjects to risks and uncertainty that could cause actual results to vary materially from those projected in the forward-looking statements. The company may experience significant fluctuations in the future operating results due to a number of economic competitive and other factors including among other things our reliance on third party manufacturers and suppliers, the government agency budgetary and political constrains, new or increased competition, changes in market demand and the performance or liability of our products. These factors and other could cause operating results to vary significantly from those in prior periods and those projected in forward-looking statements. Additional information with respect to these and other factors which could materially affect the company and its operations are included in certain forms the company has filed with the Securities and Exchange Commission. With that I’d like to introduce Mr. Bill Clough CEO of CUI.

Thank you [indiscernible] and thank you everybody for joining us. I’m going to start off with a few comments and then turn over to Dan for some details and then come back and update some of the new technologies. We’re pretty excited about this quarter frankly. We think that it shows that our acquisition of Orbital was a very positive and very accretive acquisition We, our revenues year-to-date are up over 55% year-over-year compared to last year over 70% if you look quarter-to-quarter year-over-year. Even the electro-mechanical CUI company is up $460,000 in top line revenue if you look quarter-to-quarter year-over-year and our quarter-to-quarter comparison is $17.2 million this quarter compared to $10.7 million a year ago this time. Most significantly we have increased our cash position are now cash and cash equivalents most about $29.6 million which means we are up about $1.5 million quarter-over-quarter. Again that demonstrates that we are now earnings money and profitable which is obviously something that’s showing up in the quarter. Most significantly our cash from operating activities this year is about $2.37 million up from a loss last year same time of just over $1 million which is an increase of $3.5 almost $3.5 million again we’ve turned the corner in that regard. The other end of it is if you look at our margins they’ve increased dramatically in fact from about 34% I’m sorry SG&A has increased dramatically from about 34% down now at about 29% year-to-date about 39% down about 31%. So the SG&A as a percentage of sales is dramatically lower. The margins over the course of the period have stayed pretty consistent. As I think we’ve said in the past we shoot for between 37% and 40% margins gross margins that were right in that 38% ballpark. So again we believe it’s quite a good quarter and a quarter that we’re proud of and that is showing the company is moving in very much the right direction probably the most significant thing I would say at this point is for the first time in its history this company profitable for the year which is quite a dramatic change. And again that’s something that Dan I talked about with the Orbital acquisition that we felt we’ve turned the corner profitability wise and we have in fact done that. So, with that being said I’m going to turn it over to Dan to go through some of the numbers in detail and then I’ll be back to talk about the new technologies.

Thank you Bill and everyone on the callers I want to appreciate, look forward to sharing the financial figures and chatting through that and heading back over to Bill to talk through the more of the operational activities going on. Some of that Bill has already attested on but I’ll go in to a little bit greater detail. For the balance sheet the cash and cash equivalent balance is $18.7 million short term investments $10.9 million that is a new line item for us as we have captured appliance and investments. That can by in as about $29.6 million which as Bill mentioned is $1.5 million increase since June 30th of this year. Some of them we spoke about on the last call but it’s the question that comes from time to time is what our plans for cash. I just want to reiterate the intention of the cash and investment balance is to maintain that in order to fund growth opportunities and needs surrounding that growth that we see coming down on things like funding accounts receivable, inventory needs and other areas for strategic items. One strategic item that we identified that we saw an opportunity to essentially improve the bottom line on a go forward basis was acquiring our CUI Global headquarter facility in Oregon as a subsequent event that project did save us several $100,000 in cash expenses annually and resulting an increase to the bottom line going forward. Of note that acquisition was financed by Wells Fargo and along with that all the security improved terms on the line of credit. So, strengthening cash and cash equivalents and short term investments balance for the company over all our current assets are about $5.8 million and total assets are $92.1 million roughly. That includes the other key item that was added in the quarter was the July 2013 acquisition of the VE-Probe exclusive global technology rights and that is recorded as amortizing intangible asset. Total liabilities is about $20.5 million and as the acquisition of the headquarter facility was a subsequent event neither the assets nor liabilities include that on the statements for this quarter. Bill mentioned cash flow generated, has generated $2,370 million from operating activities during the year-to-date period as compared to using $1.1 million in the prior year. Some of the key items for that was the company generated a year-to-date net income compared to the prior year loss. We had decreases in accounts receivable which was associated with primarily with two large payments from customer one at CUI and one at Orbital totaled about actually about $3.2 million just having little timing and projects in receivables and then one large increase of about $0.9 million from an Orbital customer. Similarly we had increases in inventory associated with customer orders and project and progress increasing prepaid expense for year-to-date which is largely associated with prepaid royalties on the GasPTi as well as Angle insurance premiums. We had an increase in accounts payable just obviously with timing of payables because then that is largely associated with inventory and projects. Decrease in incurring expenses most significant portion that was related accrued balance on the books of Orbital at the date of acquisition. A decrease in incurred tax payable also similarly related to orbital and the large payment on VAT. Increase in unearned revenue and billing in excess cost which is related to timing of projects in sales to customer’s activity. And then there is cash flow from operating activities contributed directly to the quarter-to-quarter increase from June 30th $1.5 million in the cash in short term investments. Pretty exciting cash flow for us, the other items on there we did invest about $400,000 to acquire a little – actually the VE-Probe otherwise was pretty consistent in the June 30th report. The P&L year-to-date pretty excited about the results so far. Revenues for the quarter were $17.2 million this year and then year-to-date was $45.4 million. Of the quarterly revenue the power and electro-mechanical group generate $11.2 million and the gas group generated $6 million. For the year-to-date period which is $45.4 million again the power and electro-mechanical group generated $33.4 million which is an increase on the year-to-date period of $4.2 million compared to prior year or about 14.5% and the gas group contributed just under $12 million for the year-to-date. Of that $12 million for gas group the Orbital contribution was $11.6 million during the year-to-date period. The power and electro-mechanical increase is attributed to a variety of factors including continued growth through the existing distribution channels as well as the addition of Future Electronics for the distribution channel. Continued sales and marketing efforts specifically targeting OEM manufacturers and projects in that regard as well as continued product introductions during the year related to the CUI electro-mechanical business and CUI Japan mention as well. We’ve introduced over 500 new products this year many of those going straight through distribution as well as targeting OEM markets. Backlog CUI’s backlog is $13.8 million at the end of the quarter and Orbital is $23.9 million something that’s come up in the past is how much of Orbital’s backlog is national grid related as of the end of the quarter is about – a little more than 70% but the total backlog for the combined business is $37.7 million. Gross margins Bill mentioned this earlier but I want to touch on it as well. The quarter was 38.3% this year versus 36.7% in 2012 an increase of 1.6. For the year-to-date period its 38.9% compared to 37.7% in 2012 an increase of 1.2%. The power and electro-mechanical group for the quarter contributed gross margins of 39.9% and the gas group contributed 35.4% both of which are right in line with sort of the targets for those business models. The Orbital team has largely targeting 35% or better margin and the CUI Group is turning in that 37% to 40% margin group both of those are obviously subject to opportunities larger opportunities will go below those but on mix basis we’ve been maintaining that 37% to 40% margin historically at both businesses on a combined basis. And then the year-to-date power and electro-mechanical group contributed 39.6% gross margins and the gas 36.9% so pretty good margins for the company. SG&A Bill mentioned also but for the quarter it was roughly $5 million compared to $3.7 million in the prior year. It’s an increase of $1.3 million however that represents the decrease to 29.2% of revenues versus 34.9% in the prior year quarter just about 6% reduction and of that amount for the quarter Orbital accounts for $1.4 million. For the year-to-date the SG&A was $14, 250,000 million compared to $11.4 million it’s an increase of $2.85 million again similarly a decrease as a percentage of revenues Bill mentioned the decrease to 31.4% compared to 39.1% or 7.7% reduction. Of the overall increase for the year end period Orbital accounted for $2.5 million of that and then another contributing factor was the acquisition and expense cost surrounding the equity raise were excess of $200,000 in the year-to-date. Depreciation and amortization is up for the year and the quarter largely kind of deal with the amortization of acquisition related intangibles. For the quarter depreciation and amortization was $1 million as compared to $225,000 that’s of that amount $735,000 of the quarter related to the amortization of Orbital acquisition intangibles. Year-to-date was $2.2 million compared to $522,000 for the year-to-date period the amortization intangibles accounted for $1.47 million. Taxes for the quarter were $116,000 and provision for tax $116,000 and the year-to-date was $318,000 due to primarily UK related taxes the UK does not allow for the amortization of intangibles from the acquisition when calculating taxable income and the bond rate in UK for the year-to-date period is about 21%. Net income for the quarter was $214,000 this year as compared to $463,000 loss just under $700,000 improvement from the prior year’s quarter. The year-to-date was a profit of $47,000 again as Bill mentioned earlier we’re pretty excited about that as year-to-date profit even considering all the amortization almost $1.5 million of amortization related to the acquisition intangibles and that compares to a loss in the prior year of $2.25 million a very dramatic improvement over $2.3 million even with the amortization. EPS was $0.01 for the quarter compared to a $0.04 loss in the prior year and year-to-date EPS was a break even compared to $0.23 loss pretty dramatic improvements. EBITDA another figure that we’re really excited about, I think it’s an important measure for the company met largely due to the amortization of the intangible from the acquisition the quarterly unit was $1.45 million this year as compared to a loss of $50,000 last year. So it represents per share of $0.07 this year, for the quarter. And then the year-to-date EBITDA was $2.9 million compared to a loss of $1.2 million in the prior year that’s EBITDA per share of $0.17 compared to a loss of $0.12 last year. Again we feel is a good measure of the progress of the company and thickening contributors to the quarterly amortization was $705,000 and led the amortization of intangibles and a 1.47 from that same for year-to-date. Turning to the pro-forma statement in there it looks back what the company would have looked like how the acquisition acquired January – Orbital acquisition occurred January 1 2013 in January 1 2012 again the pro-forma is does not necessarily indicate what would have happened have the commitment together but as you look back compared to – of simply giving analysis in that regard. 2013 revenues would have been $49.99 million compared to $47.9 million an increase about $2 million of that Orbital accounted for $16.2 million in the current year and $18.7 million in the prior year. It’s important to note the Q1 2013 revenue was lighted than Q2 and Q3, Q2 and Q3 have been where we expected the company would be from the Orbital acquisition forward. Q1 we did about $4.6 million. Since the acquisition, however they done $11.6 million which is in line with what they did in prior years. Management expects continued performance similar to Q2 and Q3 for the rest of the year related to systems integration business. Another key item to highlight there is as part of the acquisition we’ve gotten them on our U.S. GAAP standard, part of that review included reviewing how they complete it in present year completion in the current year and the comparative prior year. The prior year as a result of that review moved some revenues from 2011 actually into 2012 for the comparison just to make it appropriate under U.S. GAAP. And generally those are companies on target for what we expect them to be going. Bringing it through the net loss on the pro forma schedule, for 2013 the net loss would have been $1.5 million compared to a loss in 2012 on a pro forma basis $1.9 million. The 2013 loss includes a $1.5 million bonus approximately, that was approved and expensed during Q1 approvals part of the acquisition and it was approved by the prior owner. So, and that was a one-time event. Exclusive of that, the pro forma would have shown breakeven for the year-to-date as well. Finally, I just want to say thank you again to everyone’s being on the call and I want to reiterate that we’re pretty excited about the results including the increased cash in short-term investments. Generating cash flows from operating activities, solid backlog in customer orders, maintaining and actually improving gross margins, it’s early to say about this when the profitability for the quarter and the year-to-date, two quarters in a row profitability, EBITDA of nearly $3 million for the year-to-date period and just the dramatic opportunities from the newer technologies that Bill is going to speak more about. Thank you, very much.

Thanks Dan. So, let’s talk a little bit of an update of where we’re at especially in the gas technology. So, let me start with the GasPTi, the GasPTi unit. As of the end of the third quarter we had sold 62 units, as of today we now sold 75 units, we’re still quite confident in our ability to reach to 95 to 100 maybe a little bit more this year. We’ve signed 14 distributors, are actively negotiating with eight more, I’ve had very strong response from those distributors. Many of the sales frankly have been distributor sales, but we – it is our plan over the course of the next couple quarters, probably if not first quarter if not next quarter first quarter of 2014 to be able to tell you those sales figures, in other words how many units the distributors actually sold to end users. We know we have had the good uptake in direct sales however, as we announced National Grid is in the process of converting their 60 gas turbines to use our GasPTi device, we’ve already delivered eight of those for them so that’s included in that number. We have – again had a great deal of interest from a number of different sources, actually that are now coming to us as oppose to them coming to – as oppose to us going to them. As far as Snam Rete is considered I have a two meetings now at a very highest level with them, we are still the only technology they’re looking at. They have two additional projects, they want to put us into. They are in a process of issuing another purchase order for devices for just standard monitoring within their system. There is still they tell me on track to complete this 1500 unit upgrade in the next 15 to 16 months. It is Italy though and again I won’t kid you there is no urgency there, they are moving at their own speed and that’s kind of how they’re going to move. In regards to IRIS we’ve had some really dramatic news in the area of IRIS. We are actually today meeting with United Utilities in the UK because they would like to apply our IRIS technology to their order monitoring systems which really is very much the same as gas it’s just a different form of liquid if you will so again that’s quite exciting for us. As far as the IRIS project with the UK we’ve installed about 65 of those units, they do have a total of 390 stations that they want done, they’re in the process of putting together a large bid for that work under the EU trees that they belong to they have to put that bid out broadly. We are quite confident that we’re going to get the bid now because we’re really the only ones with the technology. And then finally the VE-Probe, we’re seeing a good uptake on that. We’re talking now with ConocoPhillips and Statoil about placing the VE-Probe both in its thermowell application and as a sampling system. We announced last week I think it was a new relationship with the Yokogawa Electric which is very, very large metering company out of Japan. We are going to be there sole representative in the UK and it looks like now that we’re going to be able to translate that into their sole representative throughout Europe. And in conjunction with that press release one of the things which probably also noticed is we announced for the first time our ability to export another one of our technology is the odorization systems that we designed for the UK to West African company, that’s a big deal for us now it is a big deal because there is some good dollars attached to it but it is the first time that overall as an entity is really starting to export its technology. And I guess one of the most exciting things that I have to updates on, I can’t say much about frankly as most of you know. We were schedule to have a conference or a meeting with GE on the Tuesday of this week, last week due to their – some issues they had we changed that meeting from a technical meeting to a commercial meeting. I spent the day with them on Tuesday, I can tell you that I’m now operating under a very comprehensive NDA that limits me from saying much of anything other than to tell you that there is a great deal of urgency to this deal and we hope to have something to announce before the end of the year. With that being said, I think I will [indiscernible] questions. Casey?

Operator?

(Operator Instructions) Our first question comes from the line of Eric Stine. [Craig-Hallum Capital Group]. Your line is open. Please go ahead. Eric Stine – Craig-Hallum Capital Group: Hi, Bill. Hi, Dan.

Hey Eric.

Hey Eric. Eric Stine – Craig-Hallum Capital Group: So, first question from me just on the distributors when you gave where you stand now who you’re in discussions with. Just a thought where you might end up end of this year how that’s tracking towards your plan. Also, on that front just some thoughts on how long you think it takes those distributors to get up to speed?

Yeah I think two things, one is I think we’re still targeting 35 to 40, I don’t think we’ll hit that by year end, I think we’ll be somewhere north of 20 25 by year end. And one of the reasons for that is simply to be frank with you I pull some of my sales guys off going after distributors and I pushed them to really go after end users particularly in the UK where we’ve got some pretty good traction with board gas we got some great discussion on projects and then hoper that I wanted to get involve in. So, again I redirected a couple of people from the distributors to direct sales which I thought was something we needed to do. But again I think to answer your question we’ll be north of 20 maybe 25 by the end of the year. And I think we’re still targeting 35 to 40. Started getting up to speed, it really depends on the distributor, I will tell you that we’ve already had IOPS out of – out of Philadelphia and (Kontram) and Norsk out of Norway and Sweden who have coming for training. So, we need to get that two day training done. And then they’re up and ready to go I mean the Norsk in particular is dealing with Statoil. And they’re already starting to place units. So, IOPS is another one they’ve already start to place units with some LNG terminals that they’re looking at. So, everybody it does depend on the distributors. The difference though and as we talked about this in the past the difference with these new distributors that we’re getting is these are companies that are already in the industry that are already selling metering units that in the case of heights for example has their own installation set up, they are – they can service. These are companies that are already up to speed. So, really it’s just getting them familiar with the technology which strong idea that technology is simpler and easier to install. So, it’s not an issue that’s not an issue for them. So, again pretty quick uptake. Eric Stine – Craig-Hallum Capital Group: Got it. And clearly I mean you’d probably the first to admit that timing of adoption has been frustrating is there anything in working with these distributors that can help you get a better read on the market as far as planning your business over the next few months and over the next few years just better visibility into the opportunity.

Yeah absolutely, that’s the exact reason Eric that to your point that’s exactly that we’re going with these more sophisticated distributors. We have pushed them, we don’t have it yet but we have pushed them to do just that to do forecasting to figure out what they’re going to need and how they’re going to move forward because they know their industries they know their geography better than we knew and these guys are very capable of doing that, that’s exactly what we’re pushing them to do. Part of the distribution agreement is the rolling six months forecast and every one of them is fully prepared to do that, that obviously they want to get to their customers first so they can get a handle on it but that is exactly what we’re doing so we can get a much more transparent view of what’s happening going forward. I mean we as you all know, we do not and really are not in a position right now to give any guidance simply because we’re bringing new technology to the market and it’s very difficult to figure out sales cycles. We also know that in the next three or four quarters certainly sometime next year we’re going to have to start giving some forecasting and that’s something we’re prepared to do but only when we have the data available and that’s the whole reason for these more sophisticated distributors. Eric Stine – Craig-Hallum Capital Group: Got it. Okay. Maybe just turning to IRIS, you touched on the new opportunities there in the past you talked about National Grid, that they have a smaller program this year so maybe an update on where that stands. And then a larger project which again as to go to a lot of your bid but that’s something you think you win next year?

Yeah, actually – and the one thing I didn’t mention with IRIS is interestingly and I don’t think particularly coincidentally. GE is also very interested in IRIS. We have a team of GE representatives coming to meet us in the UK actually on November 26th next week because they would like the rep IRIS in North America, they think there is a huge opportunity there and of course they do all the hardware, we design the software but they’re actually – it sits on their platform. So, we’ll be talking to them as well. But you have to update National Grid, National Grid really wanted to give the contract on [indiscernible] but unfortunately their procurement says they can’t do that they have because it’s 300 well now about 320, same 320 units if they’re going to need to install. They have to – and their process is put this out to bid throughout the EU throughout the European Union as part of – it’s part of the 3D designer standard that form the European Union. So they are fully intended to do that. That process will take – it’s going to take a couple of months there is no doubt about that they already told us that they’re looking for something first quarter early second quarter next year to put that bid up. But the fact is there is no one else who does we do their entire platform is set up now since we’ve installed approaching 70 units their entire platform is set up to work with our technology and our software. So, we feel quite confident that we’re going to get the – we will get the larger contract. The issue now is instead of giving it our piece now they’re going to have to do it under a larger contract. So, that’s something we’re waiting to get and as soon as we get it, we’ll be bidding on it. And it will be a publicly available contract so the moment it comes out, we will announce that we’re bidding on it. Eric Stine – Craig-Hallum Capital Group: Right. Got it. Maybe this is a GE question and maybe this is one that you can answer but just thoughts on if they were to rep in the U.S. any thoughts on the market opportunity whether overall or annual or if it’s early to say?

It’s too early to say, that’s IRIS you’re talking about right? Eric Stine – Craig-Hallum Capital Group: Yeah, talking about IRIS.

Yeah IRIS. It’s – all I can tell you is as I mentioned to you it’s a very – that the National Grid system is relatively small compared to U.S. this 390 metering in the compressor station they would be applicable too. If you look at the UK, it’s about 16,000 miles of pipeline. If you look at Kinder Morgan in the U.S. it’s 81,000 miles of pipeline, one pipeline operator 81,000 miles of pipeline, 700 compressor stations, I don’t know how may metering stations. So, I mean you could see that the opportunity in the U.S. is much more – is much larger much more dramatic but it really is too early for me to say what dealing with GE would look like. And I’ll tell you, if it’s anything like the what we’re doing with the GasPTi right now that our clamp a NDA on until we have a finalized agreement. So, again I can tell you that we’re meeting with them next week, I can tell you that they’re sending people to us and that I’m spending my Thanksgiving with them there and we’ll see what comes about from them. Eric Stine – Craig-Hallum Capital Group: This maybe the last one from me. On the Yokogawa, just curious how that relationship came about whether it was from the petrochem client or not and then can that expand to the GasPTi? Thanks.

Yeah, it can, it will be a smaller market there because it is really more of an industrial user but yes it will expand the GasPTi. And they care about is Yokogawa is been looking for a representative, they try to penetrate the UK market themselves, they actually have a UK subsidiary and they just have not had much success, they were looking to partner with somebody who is respective in the industry in the UK who could give them the answer that they need and they chose us, they came to us it’s been about I’ll say three or fourth month negotiation process now and they – we were quite happy to bring them on board. So, they’ll in essence we will be wrapping them like say immediately in the UK and we think it’s going to be a Europe line at the end of the day Europe line relationship. Eric Stine – Craig-Hallum Capital Group: Okay. Thank you, very much.

Sure. Thanks Eric.

Thank you. Our next question comes from the line of Andrew D`Silva of Merriman Capital. Your line is open. Please go ahead. Andrew D`Silva – Merriman Capital: Hey guys, thanks for taking my call. Just a first question a wrap about what’s the seasonality like with Orbital-UK [Technical Difficulty] your second and your third.

Yeah, let me – I’m going to let Dan answer that, talking about the first quarter. Dan, go ahead.

They doesn’t necessarily have seasonality but it is project based. So, it comes to the timing of when projects are coming through and how long they’re scheduled to take for a completion. The Q1 period again it was before we had them, their annual target though is right on line with what they had projected for the year. So, us and internally it’s less seasonal but honestly it is for example we have next we went on – we enter contract for 320 IRIS systems, that’s being spread over a period of time and it could be spread over say it’s nine quarters that’s going to go two year plus one quarter. So, that’s the type of impact from a seasonality standpoint but it’s not they aren’t like peaks and valleys in the ordering scheme for them. National Grid is a main – these are our largest customer I should say and they’re continually doing systems projects, it’s not seasonal based on an upswing, there is not a seasons holiday season, therefore they do deal with weather impacting so on their projects but that’s more of a week or two delay, now if you got a four concrete pad you’ve got a wait up the rain. But it’s not – it’s seasonality is less in their business and we’ve looked at it historically it’s not the seasonal business but this impacted frankly by timing of project schedules and those are project by project deal so. I should say also to that’s – that is something that we’re trying to obviously be able to even out that’s a big reason why we’re focusing on global markets with the technologies it’s vigorous and why we’ve got product technologies in the gas platform now it’s a GasPTi the IRIS and the VE-Probe so. Six months into it, we’re working on since we making that an easier thing and easier item to look at and see what’s going on going forward which is why though they’re hopeful to have history and sufficient understanding of our markets from our customers to be able to get some better guidance or actually not better to be able to give guidance to the market sometime next year. Andrew D`Silva – Merriman Capital: Good, that is excellent. And then kind of sidetracking the Snam Rete, what – when was the subsidy coming from Italy and you were talking about $80 million subsidy expiring in 2015 sometime I mean is that still on and another kind of lack of basic with the way they choosing for them. Is there a timeline for them or it just kind of in the year again.

No, it’s not a subsidy it’s a bond, then the bond has been fully funded and it is €80 million that’s exactly right. And under the – as I understand it in terms of their live they do not spend that money on that project within the next 15 months I think it is 15 to 16 months so yeah early 2015, then that money goes back to the bond holders. So, they do have a drop deadline but for them that it should be months away. So, there is – there just is not a lot of urgency I like to say that they were very urgent, they want it. But they are moving forward with that technology, there is no other technology, they’re even looking at and I could say they’re not talking about plugging this into two other relatively large projects. So, I think it’s a matter of they’re just sole movers, there is no doubt about it but there is absolutely no negative anyway from anybody at the very highest level down to the engineering team. Andrew D`Silva – Merriman Capital: Then I mean for them to get the bond essentially is that 15 months they have to start placing orders is that they have to start construction and what’s the actual deadline mean for the 15 months now?

Yeah, no I – as I understand it, they have to spend the money, they have to finish the project. So, they have in essence 15 months to finish the project. Andrew D`Silva – Merriman Capital: So, I mean it is though it could be – you guys could recognize orders in sometime nine months from now because the project could take six months to complete away.

Exactly. I think that’s a very fair statement, yes. Andrew D`Silva – Merriman Capital: Okay. Good. And then, Dan can you elaborate on the IRIS opportunity and we all know the GAAP PTQ is such a large robust opportunity, everybody kind of needs it. How is IRIS compared to that as far as total market and total sales?

Yeah IRIS is, and again just a reminder IRIS is connected by which the gas or not just gas pipeline but any fluid pipeline, it can be controlled remotely. What it does is that it allows the operator to – the pipeline operator to control valves, meters, compressor stations all remotely. I mean instead of doing it though a relatively non-dynamic almost a dark space system which is steady right now it gives the operator the ability to operate the system on a platform that they own basically server platform that they own that can be accessed by anyone who has the password from anything from a laptop to a tablet to a smartphone for that matter. And they cannot judge ascertain if there is problem at the station they can actually look at the problem it has a diagnostic function where it can tell them what the problem is allow them to diagnose the problem. And they can actually control the device or control the station from remote. They can open valves, close valves they can sort of like press they can do any number of things they’re just not capable of doing that. And literally it’s for the more complex station it’s a 100,000 pound unit per station. And as I mentioned in the UK there is 390 such stations we’ve been installed I think 65 to 70 of them at this point under an initial contract, they’re all working perfectly frankly we have set up on a server that we designed and put into their National Grids facility and then now we’re translating that in the UK from gas with United Technologies or rather United Utilities to water because again you have the same issues with water as you have in gas the same flow, the same station, the same metering its obviously you’re looking at different thing but it’s the same general idea and so we’re going to apply that IRIS system to the water system as well. And so that dramatically broadens the market. Now what’s the size of the market – and I mentioned that before if you look at the UK there is $390 of these potential stations on the transmission system the big network there is 1800 of these stations that would be on the distribution system or the network that actually goes direct to consumer and that’s in a very relatively small market. If you take that and move it into the U.S. or into continental Europe the numbers are exponential. I mean the issue is well how do we move it into those markets that’s one of the reasons meeting with GE is so interesting because they are quite interested in wrapping it. They do have the platform they are hardware producers for what we use and so they would be wrapping our software basically in the U.S. So I have to give numbers because I mean they are huge but before I have some handle on what they want to do would be a little pretty mature I think for me to jump into that. Andrew D`Silva – Merriman Capital: How about okay, so the GasPTi to you how many stations are there metering parts in National Grid in the UK, is it over 390? I mean I’m just trying to get a sense of –

Yeah for GasPT2 now? Andrew D`Silva – Merriman Capital: Yes.

For GasPT2 as a comparison although it’s not apples-to-apples obviously as a comparison the National Grid is set as so as they need as many as 400 for the GasPT2 devices that would 60, they got 60 gas turbines for compressor turbines and then other metering points that they have. So in that regard they’re looking 400 roughly GasPTi devices and there is 390 metering stations but there is no, that’s not apples-to-apples comparison you wouldn’t find that necessarily on for example another pipeline that just has to be their ratio. Andrew D`Silva – Merriman Capital: Okay and then shifting gears going to the electrical components business. And what do you see is being next catalyst there and then what was I mean I know its – kind of [indiscernible] but why was there such a sequential decline in that business as well?

Yeah there is no next big catalyst in the electronics industry. The electronics business is a very mature commodities driven business. I think the reason for the sequential decline and we talked about it last quarter. Last quarter was historically very high quarter for us it was great we’ve seen a lot of up take from some of our efforts to go after OEMs. We have seen a great degree of up take from our relationship with Future and that’s all continued. But again I think quarter is much more in line with what we expect to do in the electro-mechanical business. The ability – so why do I put on that is there will be I think some significant ramp-up in that business as Novum and Solus coming to market. We’ve been real quick on that too that’s a late 2014 into 2015 timeframe we’re starting to introduce it, we’ve got some nice design wins, we’ve got some good customers looking at it. But the design cycle in the electronics business is 18 months to two years that’s just the fact so. There is no real catalyst. What it is, is it’s a very nice commodity business that grows at about 9% to may be as much as 12% year-over-year we’ve had a great, we had an 18% growth in the first quarter, 22% growth in the second quarter and really that was that came from the initiatives that you saw well that’s going after OEMs and with Future. But we were very clear about the fact that, that we didn’t expect that to continue. I think I’ve heard Dan say number of times we expect the growth rate in the electro-magnetic, sorry in the electro-mechanical to be somewhere in the high single to low double digit area and that’s been reopened. And so again I think what you saw is, you saw a great second quarter and a third quarter was more in line with what we expect. Dan, would you want to add to that?

No I would say that’s exactly what I’ve communicated in the past and just now as well. The business pipeline is still full. It’s going really well there has been no change with our distributors, distribution channel other than they’re still progressing and doing very well. The Future relationship is continuing to be very strong and we’re continuing looking at how we expand the channel reaching new OEMs and getting growth [indiscernible] in Future but no the sequential quarter-the-quarter growth decline this year is as just Bill mentioned. The Q2 was significantly higher and we did mention that on the call. That had to do with a very large backlog from the end of the year and the continued growth during the first six months of the year in the ordering. So the Q3 was right in line with where we were expecting it and for the year as Bill mentioned is, and now its spot on so. Andrew D`Silva – Merriman Capital: Okay thanks for that info guys. And then I guess the last thing I got for you is just how is the acquisition going on I mean is everything going to plan more all good everyone I mean are you considering this rising that you thought everything going as planned with Orbital UK?

Yeah I will tell you. Its Bill, it’s been much I think much smoother and much more pleasant than I ever expected. I will tell you that I’ve been expecting to see them get amount of time over there and to my pleasant surprise the management team is much deeper than I ever thought. We’ve restructured that management team somewhat because we obviously are plugging a product company on top of what had been a contractual company. They’d really, really come to play with that moral is very high obviously because I mean I didn’t even think about at the time. We’ve taken a company that’s historically has been run by one guy first the father Peter [indiscernible] and then the son Andy [indiscernible] and it puts an automatic glass ceiling on everybody. No one is going to get very high or above a certain level in that company because really at the end of the day up until we took over it’s a company that was dedicated to putting money in one guy’s pocket. We changed that philosophy market obviously when I was talking about profit sharing and may be getting them involved in some of the equity in the company. So all of a sudden these guys all feeling ownership interest in this company and we’ve expanded their horizons and with the addition of the product company we’ve opened assignments that they never had access to before. So, there is some real, real, real exciting things happening over there and some great enthusiasm. They really are moving very, very well. I’ll also let Dan talk briefly because we are obviously continuing to implement check some balances but let me let Dan talk about that.

Sure from a, the financial aspect of the integration has been going very well. They have a solid team over there that’s continually working on. They’re obviously learning U.S. GAAP standards as compared to UK GAAP they’ve done a good job with that adjustment. The most significant I think change for them is how to do percentage completion revenue recognition on project based work that they do and that’s been, they handle that very well. The other piece is that we’re doing as working on Sarbanes-Oxley work for internal control financial reporting that’s an ongoing project. Their control systems that they had in place when we acquired them were very good it’s just a matter of more getting them to where they need to be for us. But in general we’ve got solid controls in place over there and that’s just, it’s a work in progress but I see that far as an ongoing project, it’s going very well and the team is working. They’re meeting expectations very well. So we’re pleased. Andrew D`Silva – Merriman Capital: Perfect. Good to hear guys and thanks for taking my call and good luck going forward.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Alex Blanton of Clear Harbor Asset Management. Your line is open. Please go ahead. Alex Blanton – Clear Harbor Asset Management: Good morning.

Good morning. Alex Blanton – Clear Harbor Asset Management: I think this is partially covered but you went over the numbers so fast, I did not get. Did you break down the third quarter revenues into Orbital and old CUI?

Yeah I did and I can do that again. The Q3 total revenue was $17.2 million. Alex Blanton – Clear Harbor Asset Management: Right.

The power and electro-mechanical group generated $11,172 million and the gas group generated $6,042,000 million of that. Alex Blanton – Clear Harbor Asset Management: 6,042,000.

Yeah. Alex Blanton – Clear Harbor Asset Management: Okay. Yeah you’re calling a gas group and electrical mechanical instead of old CUI?

Right yeah I know that the segments we’ve given basically the power electro-mechanical is what would have been old CUI, CUI and CUI Japan and the gas group well in the past it was GasPT2 under CUI but it’s the systems integration and gas work at all plus the GasPT2 the Probe, IRIS those things. Alex Blanton – Clear Harbor Asset Management: So you basic, you covered the reason from the electro-mechanical decline and I see Orbital is pretty much is up 400,000, 442,000 from last quarter 492. But you really haven’t seen an acceleration as a result of these new products of course. And let me just check on the numbers you gave, 62 units through the second quarter?

Correct we have purchase orders for 62 units, I’m sorry no through the third quarter second quarter 50 units that’s purchase orders. Alex Blanton – Clear Harbor Asset Management: No, no I think you gave a number 62 for the second quarter 72 to the third quarter and 100 target for the year.

No, no, no its second quarter is 50 units I’m sorry I reported. At the end of the third quarter we had 62 units, purchase orders for 62, what I said is as of today we have purchase orders for 75… Alex Blanton – Clear Harbor Asset Management: Okay at the end of the third quarter was 62.

Correct. Alex Blanton – Clear Harbor Asset Management: And at the end, and today its 75 all right.

Correct. Alex Blanton – Clear Harbor Asset Management: Okay so we’re not talking about very much here I mean see the third quarter was only an increase of 12 units so that’s why basically sales are flat. The pro-forma numbers you mentioned what are they?

Excuse me? Alex Blanton – Clear Harbor Asset Management: You mentioned a number of pro-forma numbers in your opening remarks but I didn’t see those in the release.

The pro-formas in the 10-Q. Alex Blanton – Clear Harbor Asset Management: 10-Q.

Its yeah, it’s a comparative analysis and then just to compare what the acquisition would have been like have happened January 1 2012 and 2013 and it’s in as though it had happened it’s there is no guarantee that that would have been the exact results but that’s… Alex Blanton – Clear Harbor Asset Management: Yeah I know right okay and finally on the subject of guidance I know you said you’re not giving guidance. But the consensus for what is worth for the quarter was $0.05 you did one that. So the consensus for the year has been $0.10 so to make that you’d have to $0.09 in the fourth quarter but that doesn’t look like it’s going to happen is that correct?

Here it is over… Alex Blanton – Clear Harbor Asset Management: Expectations is what I’m saying.

Here it is, I’ll answer that. I saw the consensus and I will tell you that consensus is based on at least three analyst reports from analysts who’ve never talked to us, never talked to us. Alex Blanton – Clear Harbor Asset Management: Is that right? Okay.

So nobody has never talked to us. Merriman talks to us they have been talked to us about their model in I would say a year, year and a half. So, again I can’t speak to projections that I had no input into none. I will tell you that the most relevant and I think the most accurate analysis that we’ve seen is Craig Hallum and frankly Stonegate and they’re the only two analyst who are talking to us on a regular basis and even then I mean in the case of Craig Hallum I think they put us in 7.9 million and then we hit 7.2 million this quarter so pretty accurate and I think at the end of the day they have is it – $64 million something like that for the year. Alex Blanton – Clear Harbor Asset Management: What are you talking $7.9 million what?

$17.9 million.

$17.9 million I’m sorry, $17.9 million for the quarter and we hit 17… Alex Blanton – Clear Harbor Asset Management: 17 okay.

But let me address to, when we, because we are not giving guidance the analysts are building their models based on historical projections and what they see as the opportunity. We’re giving as much input as we can but right now we are not giving guidance. And a big reason for that and I’ll just address this quickly as, we just acquired Orbital in April. We’ve now got six months under our belt with them. We’re implementing a lot of initiatives over there to reach a global from now as well as continue to penetrate their existing market. And more so than that we are launching new technology in an industry that is very conservative and we are targeting reps so we can get better input into what the market looks like, but quite frankly our sales team is whale hunting if you will. They’re going after significant businesses that are going to have huge opportunities right now. And that’s I think why – why this opportunity is so fantastic is because of those opportunities. So we’re not looking for 5 or 10 it’s what we’re working on is opportunities like the GE opportunity planning the Snam Rete opportunity and continue to penetrate customers that were working but we’re addressing a new market with the technology that is new to them. Alex Blanton – Clear Harbor Asset Management: Is Craig Hallum analyst, has he asked question on this call yet.

Yes Eric Stine he was actually the first one on. Alex Blanton – Clear Harbor Asset Management: Eric Stine okay and you mentioned there were three estimates in the consensus but you mentioned four companies. Which one doesn’t have an estimate?

I mean they all have estimates. Alex Blanton – Clear Harbor Asset Management: Excuse me.

They all have estimates. Alex Blanton – Clear Harbor Asset Management: You mentioned Sidoti, Merriman, Craig Hallum and Stonegate which one is not in the consensus?

I think they’re all in the consensus, I’m not saying…

I can address we don’t build the consensus either so it’s between on who’s consensus you’re going off of and who is building the consensus. But the consensus that we’ve been told about is about $90 million consensus which means the out layers are the high ones so. Alex Blanton – Clear Harbor Asset Management: Well there is no way anyone can make a forecast for next year given the fact that it depends so much on stuff that hasn’t happened yet so those consensus numbers don’t mean a lot except for maybe the current quarter. All right thank you very much. I appreciate.

You welcome.

Sure no problem. Thank you.

Thank you. Our next question comes from the line of Marco Rodriguez from Stonegate Securities. Your line is open. Please go ahead. Dan Trang – Stonegate Securities: Hello this is actually Dan Trang sitting in for Marco Rodriguez. Regarding the GE testing noticed you mentioned in the MD&A that the GasPTi has gone through second phase of testing, can you provide some more color on the feedback you received and what’s the timeline for – regarding GE for approval?

Yeah I can’t provide much of anything I will tell you, I mean here is what I can tell and you take this for what it’s worth. We were scheduled to have a technical meeting on last Tuesday. Last week they contacted us and said they would like to change that a commercial meeting. We knew the test went well because I can say that because we had people there I mean there were people at the test. The test went incredibly well. But so to answer your question though we were told that they wanted to change that to a commercial meeting, they said as a very comprehensive NDA. We negotiated the NDA back and forth because there were things, some things in there we didn’t we were not prepared to sign. We executed the NDA and had a full day meeting with them on Tuesday under the terms of that NDA I can say nothing other than there is a great deal of urgency on their side especially and we have, we are hopeful that we can release we will be able to release something publicly before the end of the year. So I mean I can’t say much more in that frankly. Dan Trang – Stonegate Securities: Okay. A follow up regarding GasPTi systems, wondering if there is any other updates you can provide as it relates to customers, is there a testing…

I think, we’ve been pretty open about where we’re at I mean I think that we talked last time a little bit about the fact that we’re putting a test here into a turbine in New Jersey for Kinder Morgan that was their approach as on that so that’s pretty exciting. And the fact that we’ve been able to have such an interest from these distributors in North America has been obviously quite exciting for us. We’re in still on negotiations with benchmark engineering at Calgary, Canada for distribution through Canada in the TransCanada. We think that’s a big opportunity but again, Dan hit it right on the head we’re not – we’re really focusing on whale hunting if you will we’re looking at the big customers. We believe that its very, very important that this device be adopted by a large scale customers Snam Rete, GE, TransCanada, Kinder Morgan and once that happens we think they’ll be a pretty dramatic ramp up of the technology and that’s where we’re out. We’re out on the one hand hunting the whales and on the other hand still getting these distributors on board so we have more transparency into the market and frankly so that when we get one of these bigger customers we have people on the ground who can serve them. For example one of the great thing is about signing up a company like hives that are filled up because they deal with Kinder Morgan. So we can go with Kinder Morgan get them aboard and have somebody who they are familiar with to deal with them on a, in their location so. Other than that there is not much more I can tell you. Dan Trang – Stonegate Securities: Okay can you provide an update as far as you standing reporting to bringing the calibration of GasPTi in house?

Yeah we did that, we actually did that last quarter. We talked about that, it’s done, we have – we got four facilities, we’ve already made the capital investment, we have the labs created, we’re ready to do that. We simply haven’t started I think we have done it on a test basis, we simply haven’t started doing it because we don’t need it yet. We have 300 some on new ones sitting on the shelf that already calibrated. So, there is no need for us to begin that. But if we were say if the land value is bigger account so the land and account that needed a number of units quickly. We have the ability to do as many as 500 units a month at our facility. So, we could ramp up very quickly but it’s there it’s all set up, it’s been tested, we can do it later we could pull the trigger on a momentary basis, we just haven’t done it because we don’t need it at this point.

And the last question regarding the VE-Probe can you talk little bit about what efforts you mad – have made in selling you device into other measurement industries or applications other applications?

Sure. As I mentioned, we’re in negotiation right now with ConocoPhillips and Statoil. Statoil wants to put the device the thermal well actually in the – that which is a VE-Probe application in one of their high-end fuel processing plants, that would be a very large order. ConocoPhillips wants to look at it both for offshore and onshore application. So, we’re moving forward on the VE-Probe. We think at the end of the day well the ASP is much low, I think we talked about this the VE-Probe runs from around $7000 and its most basic format a thermowell up to as much as 23,000 24,000 for a complex sampling system. Even though that it’s a lower ASP we think there is a much broader application for across the industry. So, again we are definitely working with the companies and getting it out there and as I think we’ve talked about in the past there are more than a 150 of them of the VE-Probe in the National Grid system right now. So, and they’ve been out there for as long as in some cases two years. So, again they’re working and they’re working quite well and we think it’s going to have quite a broad application as we move forward.

Okay. Thank you.

Sure.

Thank you. Our next question comes from the line of Evan Richert of Sidoti. Your line is open. Please go ahead. Evan Richert – Sidoti: Hi. Thanks guys. Most of my question have been answered. Just one question on the segment reporting, I saw in between Q2 and Q3 obviously had a pickup in the gas business on revenue but you reported I think it was an $80,000 loss versus an $80,000 profit. Is that just increased sales or is there any other cost that go into that?

Yeah, no it has to do with cost of sales, you notice that the gross margin of that business went to – I think one segment go back to that number. The gross margin moved slightly back to 35.4% for the quarter compared to 36.9% on the year-to-date which the year- to-date number is basically the Q2 and Q3. So, it’s slight little gross margin for that business, 35% is the target for them generally. I think the big factor on the result when looking at that always is all of that acquisition realization the impact that expense line so for the quarter that was 735,000 of amortization of intangibles that impact that bottom-line I heard so. Evan Richert – Sidoti: Okay, sure. And then as far as the orders of the PT I mean based on the numbers Bill gave for both the quarter and then 75 to-date pretty set to say increasing by 12 I think you want to get adding more by the end of the year obviously it’s safe to say we got a sequential gain in revenue from the gas side of the business from the third quarter to the fourth just like we did from 2 to 3?

Again, we don’t give guidance in that regard. I – I’m not going to say whether there is a reason, I think we’re going to hit this 95 to 100 I think that’s what we’re going to have with the GasPTi and we’ll see what comes in that contractually but again we’re two quarters into this business and I’m not prepared to start predicting what we’re going to have at the end of – till the next year. Evan Richert – Sidoti: Okay.

One thing about this business is it’s not a quarter-to-quarter business right now it’s an opportunity. We got you really great underlying operating companies with Orbital and CUI doing great in their individual segments power electrical mechanical for CUI and systems integration at Orbital. The homeruns that we’ll work on are the technology launch and that’s the big opportunity that’s where we’re all working towards. So, quarter-to-quarter we expect the business to do well, we’re looking to maintain profitability for the quarter and the year-to-date, we’re looking to continue to grow as much as we can for these annual comparisons. But what we’re also striving towards is landing the technology business and getting that back going. So, we’re putting resources into that and that’s our focus. Evan Richert – Sidoti: Okay, great. And then could you just provide some color on the odorization units first, what are the ASPs on those and then any additional markets you think you can penetrate?

Yeah actually we’re starting to work on that already, they’re pretty big ticket of above £500,000 for odorization skid so about $750,000. They are designed to in essence to exactly what they say they put the sulfur smell if you will into gas in the natural gas. We design the systems originally for the UK when they changed their philosophy, they were odorizing at the transmission level which no one else on earth does and when they decided to start transferring some natural gas back to Continental Europe, they have to – they were talking about stripping the sulfur out so the gas disorder is thicker than Europe like everywhere else they don’t odorize the transmission level. As oppose to putting in I think at the time was 214 million pound sulfur stripping station at their interconnect ordure talk them and to doing individual odorization stations at the transmission level is what again what everybody else in the world does. And in conjunction with that they design these odorization skids which is really a unit that’s put together and odorizes the gas in a very efficient manner. And odorization of gas obviously is very important and the level which it’s done is very important because if it’s over odorized you have hundreds and hundreds of faults reports of leaks because you’ll have a gas now everywhere obviously if it’s under odorized you can end up with a catastrophic problem with gas leaking and not knowing. So, it’s a very specific way that has to be done. And again what we’ve been able to do with this West African deal is take our odorization technology the way that we do at the squid that we have which is proprietary does is and sell it outside. There is obviously great opportunity for it, it’s not something that we’ve started to pursue in a big way but it is something that we’re going to start moving to Continental Europe and outside, it is – it would be – in the case of Africa it’s new because they don’t have anything – we’re actually doing what we did in the UK we’re replacing not – we’re actually creating the system. In Europe or other places that had gad odorization already it would be more of a maintenance issue so it would be something that would be a limited market but again in Africa it’s quite a big market and we’re going to keep pushing in that regard, we’ve got a general contract in there that does a lot of work in Africa and they really like what they see in. So, we’ll push it. I do not have the market quantify at this point I couldn’t tell you what the size of it is or really anything more than the fact that we are now working on exporting technology there. Evan Richert – Sidoti: Okay, great. And then I obviously understand the NDA with GE so setting them aside, I was wondering if you could talk on any expectations you have from some of the other big customers as far as what ending they’re in for trials I mean I know you mentioned Kinder Morgan and Benchmark but any of the other big customers outside of GE for any feedback you’ve gotten as far as what else take me to kind of make up their minds.

Sure. Again I think the other big one is the Umbrella and I think they’re talking about this in the past but what we’re seeing on the other areas is really orders of 4, 5, 6, 8 10 units at a time all project driven I mean we’re still in negotiations with a number of different big companies , we just we talked about this last quarter, we provided six units to Alliance pipeline, Alliance is now building a sub line from the Bakken to their Northwest pipeline and they expect to use our device on that, that could be as many as 20 units but again they are just in the beginning phases of planning that and starting to build it up. I met them Tuesday when I was down in the Houston I actually did meet with ETP again, they’re very happy with their – the device they’ve had on their line testing, we’re going to do a couple of tweaks to the screen they want a little different than this way and we’re going to do for them and so we’re still talking to them but really I think as far as the big orders are concerned and they’re really looking at either GE or Snam Rete when we’re talking numbers. Everyone else is really – it’s going to be a project by project driving that business out there and I think that’s where we really get the assistance from these distributors. Evan Richert – Sidoti: Okay, great. And then just a housekeeping item, any expectations for SG&A just the cash expenses for the fourth quarter and into 2014 selling side on depreciation, amortization based directionally?

No, we actually.. Evan Richert – Sidoti: Directionally.

No, we were pretty well set up with SG&A. So as a percentage of revenue standpoint we see it being – we are kind of right around this neighborhood and getting better especially as revenues ramp we expect improvement in this. We’ve already got a team built out for the Gas Technologies for high risk VE-Probe and Gas-PT and that business is in early phase of revenue. So that team now is it’s fully built so it’s an expense line item that has future growth potential to it. So now we feel that the team is pretty well in place right now. Evan Richert – Sidoti: Okay. That’s it from me. Thanks guys.

Thank you.

Thanks, Eric.

Thank you. Our next question comes from the line of Jim Kennedy of Marathon Capital Management. Your line is open. Please go ahead. Jim Kennedy – Marathon Capital Management: Hi Bill, hi Dan.

Hey Jim. Jim Kennedy – Marathon Capital Management: As you can probably imagine my questions have been asked, just want to say congratulations on your financial management and building for the future.

Jim, thank you so much. I really appreciate it. Thank you. Jim Kennedy – Marathon Capital Management: Okay guys. Thanks.

Thank you. Our next question comes from the line of [Morgan Frank] of Manchester Management. Your line is open. Please go ahead.

Hey guys, just one quick question. Can you talk about the progress in finding distributors for Poland?

Yeah, actually we’ve interviewed three and frankly they did not work out and primarily because we’re coming to find that in Poland if you want somebody to distribute your product you may be prepared to pay them a very large and healthy bribe which we don’t do. So we are in the process of adding another two, we’ve been directed to, we just – unfortunately its apparently it’s the way they rolled out there these guys want some pretty excessive under the table cash payments that were obviously not only – we are not prepared to do, we legally cannot do. And so we are still looking for the right partner and until we get that right partner there is not much we can do about it, it’s just, it’s one of the issues of doing work worldwide. We have not frankly seen that anywhere else but in Poland it’s obviously a very strong part of their economy and a quite apparently a quite normal thing to be asked of.

Got it. Thanks.

Thanks, Morgan.

Bye, Morgan. Anything else. I just think, yes.

I’m sorry, I was just going to say that, that concluded our Q&A for today session and I’d like to turn the conference back over to Mr. Clough for any closing remarks.

Thank you. And again I just want to thank everybody for your time and attention and again for your continued support. I can tell you that we have some dramatic things I think you’re going to see in the very near future. But that being said I also feel very strong as we came in with what we see Dan and I certainly see is a very strong quarter and we expect the profitability to continue, we expect companies to keep running as they are running, very well managed and creating new opportunities. And we do feel quite strong in this, the new technologies are trying to grab some traction and that we’ll all be quite happy as we move on. So again thank you for your time, attention and support. Thanks to everybody. Thank you.

Thank you.

Ladies and gentlemen thank you for your participation in today’s conference. This does conclude the program and you may all disconnect. Have a great rest of your day.