B.O.S. Better Online Solutions

Ladies and gentlemen, thank you for standing by. Welcome to the BOSS third quarter 2021 results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference call is being recorded and will be available on the BOSS website as of tomorrow. With us on the line today are Mr. Eyal Cohen, CEO, and Mr. Moshe Zeltser, CFO, Before I turn the call over to Mr. Cohen, I would like to remind everyone that forward-looking statements for the respective company's business, financial condition, and results of its operation are subject to risk and uncertainties, which could cause actual results to differ materially from those contemplated. Such forward-looking statements include but are not limited to product demand, pricing, market acceptance, changing economic conditions, risk in product and technology development, and the effect of the company's accounting policies, as well as certain other risk factors which are detailed from time to time in the company's filing with the various securities authorities. I would now like to turn the call over to Mr. Eyal Cohen, CEO. Mr. Cohen, please go ahead. Thank you.

Thank you for joining me on this call. I want to dedicate this call to the most critical challenge we are facing, the operating loss of the robotic division. First, I want to share with you some background on the nature of the business of the robotics division. The division develops and sells custom-made robotic systems. It doesn't sell off-the-shelf robots. Building a customized robotic system involves many phases. It has a long and expensive sales cycle and a low closing rate. because it requires significant investment from the customer. The system's pricing is very complex because it is based on an initial concept of the machine rather than on a final detailed design. The time of delivery takes on average half a year. Customized robots require the development of a unique feature and therefore there are development risks. We did see an 80% reduction in the operating loss of the robotics division in the first nine months of the year 21 as compared to the comparable period last year. However, we have not yet been able to successfully reflect the inherent risks of this business in our pricing. Going forward, in order to mitigate the risks and optimize our sales resources, we will focus our sales effort mainly on the Israeli market rather than worldwide. At the end of the third quarter, we closed our sales office in the US and turned walking through a distributor. We realized that in order to succeed, In the U.S. market, we have to increase our U.S. sales, marketing, and support persons significantly, but we cannot afford this cost at this stage. In the Israeli market, we will focus on strategic customers that we define as heavy automation consumers from varied industries. We will learn these customers' needs, products, standards, production and logistic processes. We expect our learning curve to improve gradually and the inherent risk of the business to decrease accordingly. Focusing on Israel is expected to also shorten the sales cycle, reduce our associated sales cost and increase the transaction closing rates. Securing about 10 new strategic Israeli customers will dramatically change the operational result of the robotic business. We believe that it will lead this division to a break-even point during the year 22, and that in the years after, it should be the growth engine of both. That completes my review, and now I will take your questions.

Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press star 1. If you wish to decline from the polling process, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. I repeat, if you have a question, please press star 1. There are no questions at this time. Before I ask Mr. Cohen to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available on the company website, www.boscom.com, by tomorrow. Mr. Cohen, would you like to make your concluding statement?

Yes, thank you. Thank you for joining our call today, and I am looking forward to meeting you on our next call. You're welcome to contact me anytime by phone, WhatsApp, or e-mail. Thank you for your support.

This concludes BOSS Third Quarter 2021 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.