SuperCom, Ltd.

Ladies and gentlemen, good morning and welcome to SuperComm's first quarter 2025 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 one on your telephone keypad. To withdraw your question, please press star, then two. 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. Joining me from SuperComm's leadership team is Oran Trebelci, SuperComm's President and Chief Executive Officer. I'd like to remind you that during this call, SuperComm management may be making forward-looking statements, including statements that address SuperComm's expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties, and other factors that may cause SuperComm's actual results to differ materially from those statements. For more information about these risks, uncertainties, and factors, please refer to the risk factors described in SuperComm's most recently filed periodic reports on Form 20F and Form 6K, and SuperComm's press release that accompanies this call, particularly the cautionary statements in it. Today's conference call includes EBITDA and non-GAAP financial measures that SuperComm 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 SuperComm'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, May 14, 2025. Accepted as required by law, SuperComm 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 SuperComm's President and CEO, Ordon Trevallese.

Thank you, Operator, and good morning, everyone. And thank you for joining us today. Earlier this morning, we released our financial results for the first quarter ended March 31, 2025. You can find a copy of the press release in the investor relations section of our website at supercomm.com. Today, I'll provide an overview of our first quarter performance, including financial highlights followed by the Q&A session. But first, I'll provide a high-level overview of our business and strategy. We're pleased to report a strong start to 2025, building on our record-breaking success in 2024 with even more milestone achievements this quarter. However, we are working with numerous governments around the world on making big changes to the way they help protect their communities. This takes time, and thus our outlook is long-term. With many multi-year government contracts running in unison, reviewing one specific quarter or a small few may not suffice to understand the long-term progress of our business. I'll try to give a high-level view for you to understand our goals, our progress, and what levers to track to understand that progress going forward. At Supercomm, our mission is to revolutionize public safety through cutting-edge electronic monitoring technology and data-driven solutions. For over three decades, we have partnered with dozens of national governments across the globe to deliver secure, scalable, and innovative platforms that enhance security for their country. Our focus in recent years has shifted more and more toward solutions to criminal justice and offender electronic monitoring technology with ankle bracelets. Our strategy is centered around three pillars. One, innovative technology. We've invested over $40 million in our technology platforms and our proprietary solutions consistently outperform in competitive tenders, particularly in Europe, where we've had a win rate of approximately 65%. Our platform supports critical programs such as GPS tracking, house arrest, and domestic violence protection. Recently, we've also integrated AI-driven analytics to enhance predictive insights and client outcomes in our system. The second pillar is expanding our global presence. Our global presence is significant and expanding rapidly, with more and more geographies adopting our electronic monitoring technology. Our strategic focus on the electronic monitoring market, where we see growing demand and where the market is projected to reach around $2.3 billion by 2028. Estimates show that the US and Europe account for roughly 95% of this market. And our third pillar is delivering outstanding service. Our reputation as a trusted partner grows with each new deployment. Some of our government customers have been with us for more than 20 years, often starting with a single program and expanding into multiple solutions over time. Since 2018, we've secured over 70 multi-year government projects across multiple regions. In the past year, we've experienced accelerated expansion, whereby we added more than 20 new contracts across North America, alongside five strategic partnerships with leading regional service providers. We continue to amplify our technological leadership with significant R&D investments, leading to the launch of advanced solutions like PureProtect, also branded as PureShield, and PureOne. These offerings are already making headway in various markets, including the US, and are pivotal in Supercom's expansion. PureProtect, or PureShield, is a lifesaving domestic violence monitoring solution, providing preventive measures to families suffering from domestic violence or stalking, thereby increasing their safety. PureOne is an -in-one GPS tracking ankle bracelet monitoring solution, integrating comprehensive monitoring capabilities into a single device. Like many of our products, it offers top-notch features, placing it above the competition in most rentrics, such as battery life, weight, and other tracking and security features. Our tethered ankle bracelet technology, together with our cloud-based software-enabled PureSecurity product line, has been particularly effective in continuously monitoring offenders and managing real-time information. The real-time advantage is a game changer, empowering authorities with actionable insights and timely interventions to mitigate potential risks and enhance public safety. Our technology is not just enabling better outcomes. It's actively redefining industry standards. In the past year and a half, we consistently displaced long-term incumbents, such as the 24-year incumbent EM provider in Sweden and the nearly 20-year incumbent EM provider in Israel, both of which we displaced. And in both cases, our technology edge, agility, and innovation proved decisive in the competitive tenders. We've also helped governments establish their first-ever national electronic monitoring programs, as seen in countries such as Romania, where we're supporting a program for up to 15,000 simultaneously monitored individuals, and Croatia, where we were selected to lead the country's first step into modern electronic supervision. These wins underscore the adaptability of our platform and the growing demand for comprehensive EM solutions around the world. Our continued investment in product innovation is driving measurable market expansion. The successful adoption of PureProtect and PureOne has expanded our addressable market, supporting deeper penetration into existing geographies and entry into new ones, particularly in the U.S. and Europe. We've also reinforced the operational infrastructure and enhanced our -to-market approach. Our sales team, with industry veterans, has played a key role in securing wins and building our pipeline. In the fourth quarter, together with ElectroSecurity, our partner, we secured a multi-year national contract with the Israel Prison Service to deploy our PureSecurity suite. The program encompasses all offender monitoring nationwide. This win follows a rigorous competitive process and replaced a provider that's held the contract for nearly two decades, underscoring our technological advantage and proven execution capability. As of today, over 1,200 individuals are actively monitored under this program, with that number continuing to grow as the rollout progresses. More broadly, we continue to gain momentum in competitive tenders across Europe and the U.S., often displacing incumbents. Our strong track record and reliable delivery remain core to our growth. We view every new deployment as a start of a long-term relationship by planting seeds in multiple regions and consistently delivering value. We've seen customers expand their engagement with us over time, often growing into multiple growing projects that span over years. In Europe, our strategic execution continues to drive long-term growth. Over the past few years, we've secured over 15 national electronic monitoring programs in Europe through competitive tenders, including large-scale domestic violence initiatives aligned with regional public safety priorities. Notably, in Armenia, we were awarded the largest industry award of 2022, an over $33 million program covering up to 15,000 individuals simultaneously. This project remains active and demonstrates the scalability of our PureSecurity platform. Another great example of our long-term expansion strategy, which reflects the strength of our reputation, is Sweden. Since our initial award from the Ministry of Justice in 2019, we've been selected again and again by Swedish government agencies, including the Swedish Police Authority and Juvenile Justice System. This ongoing trust reflects our consistent delivery and the high level of satisfaction with our technology and support. We also expanded in Finland with the national deployment of our domestic violence solution and recently launched our third national project in Latvia, awarded via a formal tender to support the state police with offender compliance and victim protection. In parallel, we continue to actively run programs in other European countries, such as Denmark and Bulgaria, and continue to receive follow-on orders from existing European partners. These follow-ons highlight the reliability of our technology and the strength of our relationships. And as governments increasingly adopt proactive monitoring policies, we believe our proven model positions us well for sustained success in the region. While Europe maintains an important, remains an important growth driver, the U.S. market presents an even greater long-term opportunity, projected to grow to six times the size of the European market in coming years. With the launch of PureOne and our domestic violence solutions, we believe SuperComm is well positioned to unlock substantial growth potential in this on-tap market. From the research that shows 2.3 billion total market size expected in 2028, the U.S. market is six times that of Europe in the estimates. And also, although SuperComm already does business in multiple U.S. states, we're actively focused on further expanding our presence in the U.S. market. Our subsidiary, LCA, continues to grow in California through new contracts and rebids, while our nationwide expansion strategy has gained significant traction. Since mid-2024, we've secured over 20 new electronic monitoring contracts, entered eight new U.S. states, and formed five new strategic partnerships with regional service providers to accelerate market access. Through a mix of direct government contracts and partner-led deployments, we've established a presence in key new states, including Utah, Kentucky, Alabama, South Dakota, Arizona, Ohio, and others. We are also expanding into Wisconsin, Minnesota, and Michigan through the Midwest Focus Partnership and launched a GPS modernized initiative in Canada with a long-standing provider. These wins demonstrate our growing ability to display legacy vendors and deliver recurring revenue from both urban and rural jurisdictions. Our strong technology capabilities, coupled with our foractive -to-market approach, continue to differentiate SuperComm and competitor bins. Our expanded sales organization has driven a sharp increase in demos, pilot programs, and qualified opportunities, resulting in the growing U.S. pipeline of recurring revenue opportunities. With sustained demand and good execution, we believe we are well positioned to further scale our U.S. footprint throughout 2025 and beyond. One of our advantages in the U.S. is a centralized system on the cloud, centralized inventory management, and a 24-7 service and support center, which supports active projects, state and wide. This structure significantly improves operational efficiency and lowers costs compared to Europe, where projects typically require country-specific servers, local language editations, and decentralized support. As a result, we're able to launch programs in the U.S. more quickly and more cost-effectively, whether at small scale or statewide, giving us greater flexibility and faster time to revenue, along with higher potential margins. Despite macroeconomic uncertainties and ongoing global challenges, including those in Israel, SuperComm solutions are becoming increasingly relevant. We continue to see growth driven by high recidivism rates, the escalating cost of incarceration, and a surge in the adoption of victim protection solutions worldwide. The company's peer security technology solutions have been designed to address these trends, offering an effective way for institutions to enforce home confinement, ease prison overcrowding, and lower costs significantly. For example, monitoring an offender on home confinement or GPS costs about $10 to $35 a day, which is 90% less than the $100 to $140 a day cost at a correctional facility in the U.S. Moreover, home confinement helps reduce repeat offenses, highlighting its effectiveness in helping offenders improve their lives and communities. In parallel, we continue to value strategic acquisition opportunities in the U.S. market. Acquiring established local service providers can expand our footprint, unleash synergies, and enhance vertical integration. A proven example is our 2016 acquisition of LCA in California, which has since generated over $35 million in project wins in California alone. I'll now turn to the financials, considering this quarter Q1 in comparison to the same period last year. I'm pleased to report another strong quarter of financial performance, reflecting the maturing of our project portfolio, discipline execution, and operating leverage across geographies. Note that since our projects are mostly multi-year contracts, this can create variability on a quarterly basis, so trends are best understood in the context of a broader multi-year period. Let's look at the quarterly performance of Q1 2025. Revenue increased to $7.05 million, up from $6.85 million, driven by new contract wins and continued expansion across both U.S. and European programs, as well as the map. Growth profit increased to $4.46 million, a .8% increase from $3.79 million in the same period last year. Growth margin improved significantly to .6% compared to 55.3%. This significant margin expansion of nearly 8% reflects improved scale and favorable revenue mix from projects. Operating income doubled year over year to $1.22 million, up from $0.72 million, with operating margin improving to 73% compared to .5% last year. We also reported gap net income of $4.23 million, a substantial improvement from $0.8 million last year. This growth was driven by contributions from new projects and improved revenue mix, ongoing operational efficiencies, and the positive impact of strategic deals with our debt holders, which together further strengthen our capital structure. On an on-gap basis, net income totaled $5.24 million, up from $1.35 million last year. EBITDA for the quarter reached $2.5 million, compared with $2 million last year, representing a 25% year over year increase and marking our 11th consecutive quarter of positive EBITDA and further demonstrating the strength and consistency of our core operations. Gap earnings per share was $1.2, compared to $0.8 in Q1 of 24, adjusted for reverse split. And non-gap EPS was $1.5, compared to $1.4 in Q1 of 24, again adjusted for reverse split. From the balance sheet perspective, we ended the quarter with a stronger position. Long-term loans were reduced to $24.2 million, down from $29.7 million at the year end, and from $34.3 million in Q1 last year, reflecting a total reduction of over $10 million year over year. This is achieved through -to-equity exchanges at premiums of up to over 100% above market price. And an amendment to our senior debt agreement, which extended maturity to December 20, 2028 and lowered our interest rate. Following the reduction of debt, we raised over $16 million in gross proceeds, including $6 million through a registered direct offering and $10.2 million from warrant exercises, leading to a solid cash position, with cash and cash equivalents increasing to $17.1 million up from $3.2 million at year end, 2024. Working capital increased to $38.9 million, compared to $22.6 million at year end as well. In closing, I want to thank our global team for their continued commitment and execution. We've entered 2025 with strong momentum, delivering record financial results, accelerating expansion in key markets, and further validating the effectiveness of our solutions. As governments seek smarter, more humane, and more cost-effective alternatives to incarceration, SuperComm is uniquely positioned to lead. Our proven technology, growing contract base, and scalable infrastructure provide us a strong foundation to continue our growth across the US, Europe, and beyond. And to better understand our progress, we encourage stakeholders to track several key indicators, our win rate in competitive tenders, expansion into new geographies, and new projects from existing customers. Another important thing to remember is project mix. This quarter, gross margin reached 63.3%, reflecting the increase in contribution of high-margin programs. While not yet our steady state, it offers a glimpse into our long-term profitability potential, where projects tend to achieve higher margins over time as they mature and grow. We remain focused on advancing public safety, creating long-term value, and building on the consistent progress we've achieved in recent years. With that, I'll turn the call over to the operator to open for questions. Operator?

Thank you. Ladies and gentlemen, if you wish to ask a question on today's call, you will need to press star, then the number one on your telephone. If you are using a speakerphone, 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 question, you may do so by pressing star, then two.

One

moment

please for the first question. Once again, that will be star one on your phone today if

you wish to ask a question. The first question today is coming from Matthew Galinko from Maxim Group. Matthew, your line is live.

Hi, thanks for taking my questions. Oran, congrats on the great results in the first quarter. Can you maybe touch on where your R&D focus is at this point? I know you kind of led with your win rate and how your technology is just better than most of the competitors you go into tenders against. But how do you maintain that going forward and what sorts of work do you do to make sure that you have an edge?

Okay, great question. One of the things that we've been adding on recently is the integration of AI that we started describing and we hope to improve on that. We're improving the quality of our GPS solutions in terms of reliability. Many of our competitors can't track effectively underground and subways or within cities because of interference. We use GNSS and we integrate many other location protocols as well and that helps us track within cities, within buildings, underground. And so we continue to improve on that. We also improve the battery life for our solutions. Our battery life for our bracelets can reach up to one year, whereas many of our competitors only have one or two days battery life. So we continue to add on to our existing solutions while adding additional features and also looking at new solutions which will help complement the needs of our customer and customers. Reliability is also an important factor which we continue to improve on from every additional project that we deploy.

Got it. I guess the follow up. Maybe you give us a big picture view of how the US opportunity is shaping up and how important is it that you're continuing to add new stage and geographies within the US market? Does the win in Utah support additional wins in Utah or how does that kind of expansion work?

Great question. And it's important to understand the difference in the US market in Europe. In Europe, we entered through national projects, RFPs, which are sometimes more defined in size. It's much more competitive. There's a longer competitive process where they evaluate you more in depth on a national scale. And the size of the project is pretty much well defined. At the beginning, they typically add or many times we see them add additional projects because they like our relationship and what we're doing, as we've seen in Sweden or in Finland. But the size is better defined. In the US, it's much more fragmented. We see county level, state level. There's through resellers and value added providers. There's federal level projects. And what we're doing in the US at this point is mainly trying to plant seeds. We're trying to plant more seeds in more locations, more states, more providers. And they see our technology and they like it and they choose to add it to their portfolio or to select us. That could start with 100 units and grow to 500 units, 1000 units and more. It depends which opportunity and which geography you're at. So for us to grow over the long term, it's important for us to plant our seed in our presence in as many places as possible. And together over time, as we've seen, they use our technology, they like it more and more, and they expand and expand and expand. And our goal over long term is to have larger projects and more numerous projects in many regions throughout the world. And that's by expanding our presence and by deploying our technologies and our capabilities into every region we've expanded in and by deploying effectively. That's how you grow the programs. Thank you.

Okay. Thank you.

And once again, if you do wish to ask a question on today's call, that will be star one on your phone at this time. Once again, thank you. And that's star one

if

you wish to ask a question on today's call.

We will hold for more questions.

Once again, that is star one on your phone at this time if you wish to ask a question.

And once again, it's

star one

if

you wish to ask a question on today's call. And we did have a follow-up coming from Matthew. Matthew Galinko, your line is live.

Thanks for taking my follow-up question. I know we're, I think, watching the follow-on election in Romania to see sort of what the outcome is there. And I'm curious how you're looking at that. Is there a risk if it goes in one direction or the other? Or would you say the program is fairly popular across the political spectrum in that country?

Can you repeat the last part? I just had a hard time hearing. You were asking about Romania and the political atmosphere there, but what was the second part of the question? Yeah,

I guess, is your sense that there's support for the program regardless of the outcome of the election and is it a fairly popular program in the country?

Yes, the program has actually been going very well and the deployment has even, it's been faster than even expected. It's supported by the major parties. It's mandated by the EU. So the EU directive to implement domestic violence there, they pretty much have to do it. The situation with the elections can impact various additional programs, but the existing program is going very well and is very much needed.

And we see that from the responses from the customer. Got it. Thank you.

Thank you. And once again, if there were any other questions at this time, please press star one on your phone. That's star one if

you

wish to ask a question at this time. And the next question is coming from Dan Schaitz and Dan is a private investor. Dan, your line is live.

Dan, your line is live. Please

go ahead with your question.

Hey, can you guys hear me now? Sorry, I think I was on mute.

Yes, go ahead.

Okay, great. Hey, Orden. Wonderful quarter. Wonderful to see the gross profit and the margins increase and trending up. A couple questions for you. One more strategically, strategically with the US market. What percentage of opportunities do you see Supercom working through a reseller or service provider versus doing direct? Is it almost all through another agency, a service provider or reseller?

It's a great question. And in the US, it's different from Europe and because in Europe, there's different languages, different laws and it's you have to adapt to each location. We typically have a local provider that helps us partnership to handle all these different projects with the different environments in the US. We're very familiar with the environment there. It's all in English and the programs run pretty similar and they all run on the same cloud software. We typically bring in the value of resellers when the customer is looking for also services like human services, not just technology services, like someone to meet the vendor to put the bracelet on the vendor to check up on them. And what we see in the US is some of the larger counties and agencies and states, they have their own officers who run these programs, but the smaller ones, it's hard for them to understand the different technologies, to stay up to date. So they outsource everything. Also the human services and also technology services. And then you see these value-added resellers aggregate them. That's what we saw in LCA. We did that acquisition in 2016. We got very close, understood the market from a very detailed matter on the different counties and the needs and that's how we adopted our solution for the US. And we've been expanding also directly with many of our contracts and also we're now expanding, starting to expand also through value-added resellers. But it's valuable to be able to offer so many different solutions, whether it's GPS or alcohol monitoring or house arrest or domestic violence and services if needed and so forth. That's how we open up the market and we are able to access a much bigger opportunity.

Great. And if I can infer from your comments on this call and from a previous call that you guys are looking at possibly strategic acquisitions of additional service providers or some potential partnerships with other service providers that exist here in the US. Yes,

yes. We've done the deal in 2016 and worked very well for us and we work, we know the industry well. We work with, just recently, the last year we signed up five new service providers. And as we work with them and we see their operations, sometimes it's a great opportunity for acquisition because then they give you physical presence of personnel in that location. And nothing like having persons there that are close to the government, customers that know of the RFPs coming out, that have good relationships and are able to offering more comprehensive solutions. Also, the synergies are almost immediate because all these companies, they procure their hardware and software technologies from vendors in the field. There's roughly 10 players in the field and we would upon acquisition be able to replace to put our technology. So very nice synergies there off the bat and also on top line. Now that they have our technology, which usually scores very well and the competitive vendors, as you see, they're able to go to existing customers, offer more capabilities, better technology and also grow their top line. So if the price is right, let's say, then there's some interesting opportunities there. And we look at that closely and over time we'll see if it makes sense to do that again like we did in

2016. Great. And then I guess extending on that a little bit, it sounds like you recently did, we raised some additional capital, we're sitting on a significant amount of cash on the books now. We've reduced our long term debt, but that's now, they're actually not too far apart from each other. If you looked at the long term debt versus the cash on the books, we're only slightly negative. Previously we had significant net debt. What are, do you have a specific plan?

We're also receiving. I just wanted to say we're also receiving interest on the cash, which is close to the level of interest that we're paying on the loans, which is also interesting. Kind

of offsetting each other. Yes, yes. Do you have specific plans with that cash for use? I'm assuming you do, otherwise you wouldn't have done that.

Yeah, the plans with the cash balance is to allow for increases of working capital when we need them. Projects like Romania and others that we're looking to and hopefully will win over time. Once you win it, you have a very short period of time to deploy tons and tons of units. It's hard in that process to go secure a loan or some other type of financing. You don't know exactly where the stock's going to be there at the time and where the market's going to be. It's good to have that as we continue to see more and more demand from customers around the world. And also the potential acquisitions is also something we'll be able to implement more effectively with this cash balance. So it's both, but in general for strategic growth of the business and to be able to respond to various needs and changes as our relationships in the market evolve. Okay,

makes perfect sense. One last thing. What is the, if we're fully diluted, what's the fully diluted share count as of the end of the

first quarter? Mr. Chair, I don't have the exact number at the end

of the first quarter, but we filed recently filing to register older warrants that we issued and that had the count roughly 4.5. 4.5

million? Okay. Yeah. At the date of the filing. Yeah. Okay, I'll check that out. That's all I have. Okay. Thank you.

Thank you. And once again, if there were any other questions on today's call, please press star one on your phone at this time.

That's star one. If there were any other questions at

this time.

And

there were no other questions from

the lines at this time. At this time, we'll pass the call back to Ardan for closing remarks. I

just want to update one thing on the last question. Yes, but the fully diluted, the 4.5 that we filed is more or less outstanding, the exact numbers on filing. On top of that, there's additional 700,000, a little bit over 700,000 of warrants. And they're at 1350 exercise price. So the diluted will

be the combination of both. Thank you. Thank you. And there were no other questions at this time, Ardan. Any further closing comments?

Oh, yeah. So that's it. 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. We look forward to sharing our progress with you on our next conference call, filings,

and press releases. Thank you and have a good day.

Thank you. This does conclude today's conference. You may disconnect at this time. Have a wonderful day. Thank you for your participation.