SuperCom, Ltd.

Ladies and gentlemen, thank you for your patience. This conference will begin shortly. Once again, thank you for your patience, and this conference will begin shortly. Thank you. Thank you. Thank you. Thank you.

Ladies and gentlemen, good morning and welcome to Supercom's fourth quarter and year-end 2022 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your phone keypad. To withdraw your question, please press star, then 2. Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. I'd now like to turn the call over to Stephanie Prince of PGC Advisory. Stephanie, over to you.

Thank you, Jenny, and thank you to everyone joining us. With me on the call today is Ordan Trebelsi, Supercom's President and Chief Executive Officer. I'd like to remind you that during this call, Supercom management may be making forward-looking statements, including statements that address Supercom's expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties, and other factors that may cause Supercom's actual results to differ materially from those statements. For information about these risks, uncertainties, and factors, please refer to the risk factors described in Supercom's most recently filed periodic reports on Form 20F and Form 6K and Supercom's press release that accompanies this call, particularly the cautionary statements in it. Today's conference call also includes EBITDA, a non-GAAP financial measure that Supercom believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation table located in Supercom's earnings press release that accompanies this call. Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time-sensitive information that is accurate only as of today, April 20th, 2023, except as required by law. Supercom disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Supercom's President and CEO, Ordan Tribelsi. Ordan?

Just checking, Oden, are you on mute?

Yes, yes, thank you. Sorry about that. Thank you, Stephanie, and good morning, everyone. And thank you for joining us today. Earlier this morning, we issued a press release with our financial results for the fourth quarter and year-ended 2022. You can find a copy of the investor relations section or our website at supercom.com. Today, I'll start my comments with a brief update on our recent business highlights strategy and Q4 and 2022 results, followed by Q&A sessions. Supercom had a great year in 2022. Annual revenues increased by 44% to $17.7 million, and the company reached a positive EBITDA in both the third and fourth quarters after years of investment in our leading IoT technology. We also improved our operating cash flow significantly from an operating cash use of $9.4 million in 2021 to $4.7 million in 2022, roughly half, reflecting positive cash flow generation from new and old projects. During this past year, we won several important contracts in the U.S. and Europe, valued at over $40 million in total, and we're excited at the opportunities we see ahead. I'll go more into details in a few moments. For those new to Supercom, Supercom's mission is to revolutionize the public safety sector worldwide through proprietary electronic models and technology, data intelligence, and complementary services. Over the past 34 years, since founding in 1988, we've been a trusted partner to dozens of governments worldwide, providing them with cutting-edge electronic and digital security solutions. Our strategy is to deliver our technology, develop top-notch solutions, expand our presence, and deliver outstanding services. We successfully executed that strategy by focusing on the following key factors. Our proprietary electronic monitoring technology scores highly in competitive RFPs and supports various programs such as house arrest, GPS monitoring, rehabilitation services, domestic violence prevention, and more. Supercom has won over 50 new multi-year governmental projects since 2018. And just in the past year alone, we announced project wins valued at over $40 million. Our strong reputation and recognition as a premium provider of electronic monitoring technology and services also contributes to our win rate. With each new customer win and project deployment, we've further strengthened our reputation and competitive position. Third is management's strategic focus and attention to our IoT tracking business in developed countries, where the opportunity is the greatest. The electronic monitoring market is estimated to reach roughly $2.1 billion by 2026, up from $1.2 billion in 2021. The U.S. and Europe constitute about 95% of these markets. In Europe, there has recently been an increase in RFP activity, with over $200 million in project bid opportunities in the past 18 months. Although these successes and opportunities have resulted in a growing pipeline of business that is an average of a high recurring revenue rate after installation, In 2022, we continue to invest in R&D to ensure our products remain the most competitive in the market and continue to introduce new features technology to our proprietary platform, such as results. We specifically finalized development and deployment of two new products, one which is called PureProtect, life-saving domestic violence monitoring solution. This groundbreaking product has undergone rigorous testing and has already been successfully implemented in multiple projects, including a $33 million project in Romania.

to expand the company's addressable market. Another new product that was launched this year is the Pure One.

It's an all-in-one ankle-based monitoring solution that integrates comprehensive monitoring capabilities into a single device. With its lightweight design, longer battery life, high precision, and future-proof features, the 301 offers a more efficient and effective electronic monitoring solution. This product also expands Supercom market reach to markets that favor a one-piece solution, such as many regions in the U.S. We've been very pleased with its early reception and traction of our newest products and expect them to facilitate rapid expansion of Supermarket also into the U.S. market. In 2022, we not only maintain our technological advantage, but also invested in enhancing our operational infrastructure and expanding our workforce. Furthermore, we've altered the company's global sales efforts by recruiting new sales team members with industry expertise to drive our shifts from passive bidding to an active outreach strategy. Throughout the year, we announced many new project wins in the U.S. and Europe, with Supercom being the team that's displacing incumbent vendors with an over 65% win rate in European competitive RFPs. We're proud to have won so many new contracts in such a short period, especially during economic uncertainty and market volatility due to the looming threat of recession and unstable geopolitics. Our business is recession-resistant in nature, and as the possibility of potential recession increases, we have multiple tailwinds to support our growth. As many of you have heard me describe before, these global factors include high recidivism rates, roughly 75% or more, prison overcrowding of over 100%, and high incarceration costs. In 2020, the U.S. alone spent over $80 billion to keep a possibility of 2.3 million people incarcerated, which equates to nearly 1% of the entire U.S. population. For those reasons, among others, we see a growing global trend of government turning to innovative solutions and alternatives to incarceration to ensure public safety, and our peer security technology solutions have been designed to address those trends. Peer security provides an effective way for institutions to enforce home confinement while easing prisoner overcrowding and significantly lowering costs. For example, the total daily cost for monitoring an offender at home, the assignment, or GPS monitoring is approximately $10 to $35 a day, compared to the much higher cost of $100 to $140 a day at a correctional facility. Most importantly, home confinement has been shown to reduce recidivism, highlighting its effectiveness in helping offenders improve their lives and communities. On top of these, gross drivers. We have witnessed a surge in the adoption of addiction protection solutions worldwide, which aligns perfectly with our strategic plan and the launch of our new product, SureProtect. During the past year, we extended our business across Europe by winning significant new contracts, which, as I mentioned, are typically awarded through a competitive RFP process. Supercom now does business in over 10 countries across Europe, and we look forward to increasing that number in the years ahead. Revenue from European countries increased by 230%, to $9.6 million from $2.9 million in 2021, and accounted for roughly 54% of our sales in 2022. We won the largest industry award of the year for national electronic monitoring project in Romania, valued at $33 million, and includes up to 15,000 monitored offenders per month. Our domestic violence solution with PureProtect is expected to enhance the security of many families as part of this project, up to 15,000 per month over six years. Just a few weeks ago, we announced that we had received a $7.1 million follow-on order, the second order under the contract, which follows the initial order of over $8.1 million back in 2022. We've also launched a domestic violence solution in other regions of Europe and are planning to launch it in the U.S. soon. In Israel, there's potential for a new domestic violence project as well, as the government is trying to pass a law requiring domestic violence offenders to be monitored with technology such as ours. Finland was one of the most recent project launches. The $3.6 million National Electronic Monitoring Project was awarded by the national government to deploy Supercom's Peer Security Electronic Monitoring Suite. Earlier this year, we also won contracts in Sweden and Croatia. Supercom was awarded Croatia's first National Electronic Monitoring Project, which we have already launched. And we secured a new contract for Sweden's Juvenile National Electronic Monitoring Project, the third and final remaining national EM contract in Sweden, which are now all held by Supercom. We've also been working to increase our business in the U.S., We're proud to have made good progress towards our goals of multiple projects in California, Idaho, Texas, and Wyoming during 2022. For example, in the fourth quarter, Leaders and Community Alternatives, or LCA, are wholly owned subsidiaries based in California. One of the new project contracts valued at approximately $4.25 million. We're the Northern California County to provide adult reentry services. LCA has provided services in this county for many years, including adult day reporting services and electronic monitoring, The new project expands the scope of the contracted reentry services to include jail-based sites and several community-based sites. It also focuses on reentry services, including case management, substance abuse education, job preparedness, and criminogenic risk reduction. This program was already launched in Q1 of 2023. The recent win in Idaho represents our third win and third new customer in Idaho in less than a year, which adds to our organically growing customer base. These wins also clearly illustrate how rapidly our technology can spread to adjacent new customers. Supercom now does business in multiple U.S. states, with U.S. revenue now accounting for 39% of our sales mix in 2022. Also, in the fourth quarter, Supercom, a data protection and security subsidiary called Safeend, received two orders totaling approximately $870,000. The first value of $270,000 from a government security agency to renew and expand their cybersecurity protection programs The other is valued at $600,000, and it's for license fees, for additional seat expansion, and recurring maintenance fees for 50,000 seats. Since its high-margin products have been around for years, a promising outlook has continued. The rapid advancement of digital technology has led to an alarming rise in cybersecurity threats, making cybersecurity solutions more crucial than ever before. As a result, savings products are in high demand as they offer effective protection against cyber attacks. Our new strategic sales team and new wins have been the first steps in executing the company's U.S. market expansion strategy and have already driven increased activity with existing customers and numerous new demos and evaluations with new potential ones. And as we talked about before, we believe there is also an opportunity to enhance our U.S. growth through strategic acquisitions of local electronic management service providers with a strong reputation and a customer base in the respective local markets. We constantly monitor the market for potential acquisitions that could generate significant value by immediately expanding market presence and providing vertical integration synergies. Our acquisition of LT8 in 2016 for $3 million is a great example. Acquired at less than one times revenues with very strategic synergies on the top line and to a cost effective. Successful acquisition has led to over $30 million in new projects in California alone since that acquisition. I'll now turn over to financials. During our previous conference call, I mentioned that we were anticipating contributions to our financial results in Q4 for the projects we discussed. I'm delighted to share that our revenue has recorded a remarkable year-over-year growth of 69%, amounting to $5.1 million in the fourth quarter. Moreover, our annual revenue growth increased by 44% to $17.7 million in 2022, with our IoT division being the primary growth engine. To put things into perspective, While the global electronic monitoring market growth was approximately 10% in 2022, Supercom's IoT revenues achieved a staggering 76% growth during the same period. This growth is a testament to the fact that the market prefers our solution over the alternatives. Furthermore, we are proud to announce our return to positive EBITDA in the third and fourth quarter, and we achieved the EBITDA of $400,000 in the third quarter and $770,000 in the fourth quarter of 2022. and positive EBITDA in 2022 altogether, which resulted in targeted spending and high year-over-year increases in revenue. Revenue from developed countries continues to increase, reflecting the completion of our transition plan to transform our business from unstable emerging countries to developed countries. As a reminder, the legacy business comprised of one-time project revenues in Africa and South America, with sometimes hard collectability attempts, which is a sharp contrast to our ISD-tracked business in developed countries, which generates high recurring revenue high collectability, and high predictability with multi-year government contracts. Gross profit increased by 3% to $6.4 million compared to $6.2 billion in the year before. This increase was concurrent with increases in cost of goods, which resulted from supporting the launch phase of the mentioned new projects. Typically, the initial stages of projects tend to incur higher expenses, while the more advanced stages yield higher gross margins. As a result, our gross profit fluctuates depending on the composition of a project's portfolio and the distribution of projects upon the stages. Thus, short-term decrease in gross profit accompanied by an increase in income can signify anticipation of long-term growth in gross profit. This of course contingent upon ever evolving composition of our full project portfolio. Equipment purchase for the years ended December 31st, 2022 and 21 amounted to $524,946 respectively. It's worth noting the inventory from previous years was helpful and our business in 2022 as well. We increased our annual research and development expenses by $650,000, while we continue to develop and launch new products and improve existing ones, keeping us at the edge of innovation and technology leadership in our space. In addition, our annual sales and marketing expenses increased by $1 million to support the company's new proactive growth strategy, and general administrative expenses increased by $1 million to continue to expand our management and finance teams. Our cash, cash equivalents, and restricted cash balance at the end of 2022 was $4.5 million, compared to $4.6 million at the end of 2021. Our cash position is stable. We have credit facilities in place, and we reduce our cash needs for cash if we continue to win and execute larger projects, such as we saw in 2022, where our cash use went down from $9.4 million to roughly $4.7 million when compared to the previous year. In addition, the company had one-time expenses of roughly $1.1 million, driven mainly by reorganization expenses pertaining to the legacy business and allowance of doubtful debt. The company had an operating loss of $6 billion versus an operating loss of $6.7 million in the previous year. In closing, we're excited about the growth we're experiencing and about the growing demand for our products. After five years in which we transitioned from our legacy business to the IoT business, we finally see the shift to growth in revenue for the second year in a row, and believe that we'll position for continued growth by capitalizing on the many new opportunities before us. These are being driven by multiple factors, including our strong presence and reputation in the U.S. and European markets, the counter-cyclical nature of electronic monetary industry, the growing public policy shift to monitoring the set of incarceration, and the return to post-COVID return levels of this activity. We anticipate sustained growth by further expanding our market share in the U.S. and Europe, our commitment to preserving our technological advantage Airbus Road Foundation remains steadfast as we continue to invest in these areas. With that, I'll turn the call over to operator to open for questions. Operator.

Thank you very much. Ladies and gentlemen, if you wish to ask a question on today's call, you'll need to press star, then number one on your phone keypad. If you are using a speakerphone, then please pick up your handset before entering your request and speaking on the call. If your question has been answered and you wish to withdraw your request, you may do so by pressing the pound key. One moment whilst we poll for questions. Thank you. Your first question is coming from Matthew Galinko of Maxim Group. Matthew, your line is live.

All right, great. Thanks for taking my question and congrats on really strong close to the year and the growth we're seeing. I'd like to touch on sales and marketing, particularly, you know, I know you were up year over year for the full year, but if we kind of look at the sequential pattern, you're down to sort of the run rate you were at at the end of 21. So I'm just curious if, you know, Why are we seeing that decline in the back half in sales and marketing spending? And, you know, does that tell us anything about, you know, waning investment in the initiatives in the U.S., or is that still full steam ahead?

Great question. Let me just open up some of the financials from last year. because you're talking about comparison to the first quarters of 2021?

Yeah, or even if you look sort of sequentially from, you know, Q3 22 to Q4 22, or from, you know, Q2 22 to Q4 22, you'll see that sort of step down over a couple of quarters. Okay, so from some

Okay.

So from just one more moment, please. Got it. Yes. Okay.

So the terms of marketing does depend on the projects that we're trying to secure. It's not just a fixed cost, as you might think of a normal sales team, because the commissions also fall into it. So when a new project is won, we typically have higher commission payments to our sales teams. And also, if we have any partnerships or other companies that are working with us, there's also expenses around that. That being said, our sales and marketing expenses are on average relatively stable. We did hire new sales people, so there's expansion in our sales and marketing expenses compared to, let's say, the beginning of 2021 or 2020. And we continue to expect to invest in sales and marketing in the U.S. and Europe. That being said, we're also going to look for opportunities to optimize our costs with our consideration for a goal of improved profitability and lower cash use, as you see the trend that we're exemplifying already from 2021 to 2022 to use less operating cash. And we're keeping that in mind as we continue to grow our expansion throughout the world.

Got it. Thanks. And then I guess a follow-up question on that last point. You know, obviously very strong performance on the EBITDA line in the second half of 22 and, you know, very strong revenue performance throughout the year. I know you're not guiding to it, but is it reasonable for us to expect EBITDA or is it a target to be EBITDA positive in 2023?

We were EBITDA positive as you know as well, roughly $400,000 and $770,000 in Q3 and Q4. We try to maintain EBITDA positivity even though we are aware of those fluctuations because of the project nature of our business. In Romania, Q3 and Q4 are It's the launch of the project, and there's a lot of revenue associated with it. We announced another order of $7 billion earlier this year in 2023, and that can create some fluctuations in revenues as we fall between the quarters. And accordingly, that can create the fluctuation in the EBITDA. So while the EBITDA could fluctuate between the quarters, when we look at an annual basis or a long-term basis, we try to stay above the zero to be EBITDA positive. And as we continue to maintain more steady revenues and revenue growth, We also look for additional pockets to optimize our expenses. We have the natural operating leverage baked in because we have the same fixed expenses for customer support and inventory management and project deployment, whether it's a $30 million project or a $2 million project. So as the project sizes grow, we're seeing improvements and growth in our potential contribution for each unit that's deployed. It's not yet reflected in the growth margins of the financials because we're in early stages of Romania where the growth margins are lower because there's a lot of installations in deployment of IT, but the projects will continue and that will be less of the prevailing revenue mix and that will allow for increases of growth margins for that project specifically. Now, based on how other projects will fall into the mix, we'll see how the growth margin evolves altogether and as well as the EBITDA which we hope to maintain positive, even though it's not a clear guidance, because we're still more guided by our long-term goals to expand our market presence and get closer and closer to leader positions as a player in the EM market.

All right, thanks. I'll jump back in the queue.

thank you very much just as a reminder if you do have any remaining questions please press star 1 on your phone keypad now okay we have another question in from matthew galenko matthew your line is life all right thanks um i wanted to ask about the

the competitive environment, particularly in Europe, where I know you've talked about some large opportunities in the pipeline. Has it intensified in recent quarters? Do you feel like you still have an edge to maintain the sorts of win rates you've seen in the last couple of years?

Great question. And what we've been seeing over the past few years, just after the win in Romania, which we didn't even expect because it was a new project for them, And it's a new project for Croatia. So besides the existing projects that are running that we try to win by displacing a competitor, new ones keep arising. And they reach out to us usually through local companies. And we're still considered a player with great technology and a very strong momentum in the market. As we mentioned, our IoT revenues grew by 75%, 76% year over year, whereas the market grew by 10%. So we're still, our reputation is still very strong and our technology still scores very highly. We don't, even though the competition does sometimes invest in R&D and developing new products, we haven't seen much of a threat from a technology perspective or a technology scoring perspective. Our challenges and competitiveness is how to place players that have a very comfortable position in a country where they've been for 5, 10, 15, 20 years. I'm talking about more of an operations side. having the officers get a company with new technology, with new processes, with a new company, a new vendor, that is more of a hurdle for us than the actual technology scores, because we still have the newest features, the newest capabilities, the best performance, the best metrics, and we continue to invest and continue to come up with new products, as we mentioned earlier. Pure One and Pure Protect, new products, we brought brand new products this year, which are leaders in the industry. And two players also in the industry have merged in the last year, two large players, and we believe that makes it easier for us to compete, a little bit less stress on pricing and variability because they would have to have two bids into the competition when we only have one. So we maintain the competitive advantage as discussed. We have the new products, and the Pure One is actually – an important product for us in completing a gap, so to speak, in our product portfolio. Because in the U.S., a lot of the vendors focus on the one-piece solution. They haven't yet introduced solutions with a smartphone, with communications, and with other capabilities that a smartphone offers. And judges in counties and other small regions in the U.S. are less familiar with the new technology of the smartphone integrated in this kind of solution. So they asked for a one-piece solution. So we developed a one-piece solution for them. similar to the old architecture, but we made it in our version with longest battery life and lightest weight and mobile battery charging and more capabilities and, you know, sleek design. So that really helped us in terms of our competitive edge on the product front, what we were missing, and on the areas where we have been for many years, like the house wraps and GPS monitoring and domestic violence, we maintain a strong leading position in the league.

Got it. Maybe last one for me is a little bit of maybe a two-part question. You mentioned continuing to invest in R&D and product. Do you anticipate or is it reasonable to expect that you'll have more products that roll out in the next year or two that you expect to either capture new customers with or upsell into existing customers? Is that Something that you could kind of continue to grow while a chair, if it makes sense to ask it that way. And I'll start with that one.

Okay. Yeah, we do expect to have new products and new generations of our existing products. It does depend on the projects that we win. For example, we won the Sweden Ministry of Justice project a few years ago, a $7 million project, and they required also inmate tracking in the prison. So the same bracelet would track offenders while they're in prison. And when they go on holidays or weekends, sometimes to their families, they would track them in the city, outside the prison facility. In some areas, they wanted alcohol monitoring, where we monitored the alcohol in someone's sweater. Here, they wanted domestic violence in Romania, which we had, and we, of course, enhanced. Also, to support a project of such a size, 15,000 offenders simultaneously, but also to integrate new capabilities that we saw our customers were interested in from our previous deployments of domestic violence around the world. So as we run more projects, we continue to evolve our platform, and that same evolved platform goes with us when we bid on other new projects. Now another thing you mentioned which is important is multiple modules to the same customer. So some of these customers start with house arrest or GPS monitoring or alcohol monitoring or domestic violence, but then they expand into other capabilities. Because typically once a government is running this kind of solution, There's no reason to only have one program. There's no reason to only have house arrest. You have house arrest people that are required to stay at home, but some are, are able to also go to work and, and, uh, finance their families and they're not at risk. So they're okay. And you allow them GPS monitoring. Um, some are not even on house arrest. They're just under domestic violence. They can't be the adverse training order. They can't be close to their wife or whoever is the victim. And so each of these programs, while, um, they have different applications and, uh, They're all in the criminal justice umbrella. They're very useful in different manners. And once you have a platform deployed, it's very, very easy to add additional products. The cost is lower, and also the relationship is there with the customer. So as we've done, and we've been doing this for 34 years at Supercom, even before we started focusing on tracking. Back in the e-gov identification space, we would do driver licenses, and then passports, and visas. And at some point, we even tried to integrate payments and other solutions. So once we get our foot in the door, so to speak, we look to expand with additional modules. And now we have so many different modules and programs that we can offer to our customers. So a lot of the revenues and the wins that we've announced are the first module, or the first one or two. And over the years, they expand. And then we expect existing customers to grow in revenues and also new customers to opt in for a more holistic solution with more capabilities, more cost savings for them, and better security for the constituents and their communities.

Got it, thanks.

Last question, really around, you talked a little bit about electronic monitoring being counter-cyclical or having some counter-cyclical talent. Anything specific you could point to conversations with customers or just broadly in talking to existing or pipeline customers? Is there a sense that municipalities and governments are increasingly recognizing the um, the cost of not, um, being in an EM program or, you know, anything you could point to there would be great. Thanks.

And what was it that you say? Are customers experiencing the cost of not being?

Right. Yeah. So to the extent that, um, you know, being, uh, if EM is, uh, attractive alternative to incarceration on a cost from a cost perspective, Are you seeing additional interest due to the environment we're in today?

Yes. Well, first of all, as you mentioned, and we talked about this for a while, there's roughly 90% savings. So if it was $80 billion operating prisons in the U.S. in 2020, it would have been, in a code state, $72 billion if we put everyone on house arrest. Not everyone is a good fit for house arrest, but a vast majority of them. A big population is nonviolent offenders, which could be great for programs like these. So there is definitely the element of cost savings. There's also the element of reducing recidivism, because right now a lot of people go to prison. They sometimes become more knowledgeable in committing crime, and then when they return to society, if they don't have the proper branch services and proper... the company and the society, they end up wreaking any crimes. There's a high recidivism rate of over 75%. We have been able to, on various programs around the world, you see that go down to 35%. So beyond the cost, there's a general improvement in public safety. When I say counter-cyclical, yes, when the markets are looking into a looming recession, they're trying to save costs. You see that with corporations and also with government entities. We certainly look at this as a viable opportunity for them at the same cost, but also it's counter-cyclical and redundant and resilient. And we saw that also during COVID because people have to, there has to be criminal justice services and you have to continue to detain offenders. So it's a potential service, as you might say. So even as, if there is a recession one day, putting aside the fact that the recession could lead to lower economic situation for many families and more crime, which will actually lead to more tracking of offenders. That's one opportunity, but at the least it will continue running as is. So all these programs almost that we see around the world, whether it's in Europe or the U.S., they started in 2004 and are right now 100 or 1,000 times larger than they were back then over the last 19, 20 years. They've grown a lot. and continue to grow through various market cycles through 2008, 2010, through COVID, and we expect that to continue. It is interesting that investors talk to us sometimes who are looking for some diversity in their portfolio and something that's going to be a little less sensitive to the macroeconomy. This is a great opportunity for them because they have to continue monitoring offenders. The criminal justice industry has to continue running. It's cost-saving and also which is unfortunate. Recessions and low economic status for families lead to more crime in the community, and then we have a bigger role to help prevent the crime and help monitor these offenders.

Thank you.

Thank you very much. Your next question is coming from Malcolm Moschwitz, who is a private investor. Malcolm, your line is live.

Yeah, thanks. My name is . First of all, I want to congratulate you for the great quarter and great year. And I wanted to ask you, you raised money the last quarter. Do you think you have enough money to continue on with your business?

Yes, good question. And I talked about this on the script and on the Q&A. We still have a negative cash burn from operations, cash use. In 2021, we had a $9.4 million. That has decreased to $4.7 million in 2022. And that's because of these projects that are generating positive cash flow. We expect Romania to continue generating positive cash flow and some of these other projects in Sweden and Denmark. And as we continue to add more projects, the positive cash flows from them will overcome any any fixed costs that you have from being a public company and just running a visualization world um so at that stage we'll be uh casual positive and we hope to achieve that but but meanwhile we raised some cash and and our balance uh is good and it gives us it gives us the ability to launch more projects and to support existing ones uh for for the near future and so over time we'll expect to have a lower need for operating cash support from the market. And it will depend on what kind of projects we launch. We have over $200 million in our pipeline. Some of these are massive projects, and some require working capital increases. If you're deploying a project of $100 million or more in size, you need some more working capital than what we have today. But I think if that happens, the market will be happy to support our projects.

increase growing the working capital needs of time okay okay great thanks and another follow-up question um do you have any negotiations or do you hear anything in the market about the company wants to buy you can you pick up any negotiations about companies wanting to buy, are you, are you on the shelf? I mean, other, other companies maybe want to buy you, maybe a safety company or I don't know, a security company. They didn't want to buy you. Do you talk with any companies about it?

So we are currently not on the shelf. We have not, uh, you know, put ourself out there for acquisition. We think we have a good opportunity going forward. We're trying to capitalize on it before doing something like that. That being said, because we continuously win against many of our competitors, there's been, let's say, vague discussions from various sources of potential interest to buy Supercom, but it's not something that we have pursued yet. extensively looked into because we're really focused on our current organic growth and our business planning prospects.

Thank you. Thank you. I appreciate you taking my call and keep up the good work. Thank you very much. Thank you very much.

Thank you as well. Thank you very much. If there's any remaining questions, you can press star one on your phone keypad. Okay, Ordon, I think we have no more in the queue now. I can hand back over to you for any closing remarks.

Oh, yes, sorry.

Thank you, operator, and I want to thank all of you for participating in today's call and for your interest in Supercom. Please contact us directly if you have any additional questions or through our iPhone. We look forward to sharing our progress with you on our next conference calls, filings, and press releases. Thank you once again, and have a great day.

Thank you very much, everybody. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.