Greg Falesnik - Managing Director for MZ North America Shlomi Cohen - CEO Assaf Cohen - CFO

Josh Elving - Lake Street Capital Markets Kevin Dede - HCW

Thank you, operator. Earlier this afternoon that OTI released financial results for the fourth quarter ended December 31, 2017.

The release is available on the Investor section of the Company’s website at www.otiglobal.com. Please be advised that certain information discussed on this conference call will contain forward-looking statements.

They can be identified by the use of terms such as, may, will, expect, believe, intend, plan and other comparable terms. For example, forward-looking statements include statements regarding our expectation to continue growing sales and profitability to continue to ramp up and ATM sales and deployment to deliver Cryptocurrency features that will make adoption easier and smoother, expected revenue increases in certain segments, adjusted EBITDA and expected margins and revenues, momentum and growth, and exceeded our expectations regarding future product launches and growth into new markets, such as India [ph], our expected deliveries and install base and our expectations regarding our outlook and opportunities.

While forward-looking statements reflect good faith, belief and best judgment based upon current information, they do not guarantee of future performance. They are subject to known and unknown uncertainties and risk factors, including those detailed from time to time in the company's filings, periodic reports, registration and filed with the SEC.

OTI assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. The full Safe Harbor provisions are set forth in the earnings press release we issued this morning.

OTI’s CEO Shlomi Cohen is your host today and he will introduce the rest of the team joining him on the call. With that I will turn the call over to your Shlomi.

Thank you, Greg and thank you to everyone joining us on today’s call. For those of you who maybe new to On Track Innovation’s or OTI, I wanted to take a brief moment to extend, who we are and what we do.

OTI is a global Company focused on cashless payment solution, these solutions include payment with credit cards payment, with our mobile phone or [indiscernible] we offer a variety of solutions many of which incorporate bear field communication or NFC technology. We operate in four main verticals, which I will briefly explain along with an example of each.

Automated retail, we are dominant players in the [indiscernible] retail market providing cashless payment solution hardware as well as software. These include the payment system on vending machine, payment kiosk, ATM and electric vehicle charging station.

Mass transit ticketing, our solutions are ideal for e- ticketing by putting our payment solution on a ticketing machine, patrons are able to purchase tickets with cards, phone or [indiscernible] which expedites line. We can do this on a small scale or a very large scale, such as entire mass transit solution for cities.

This can also be done quickly and seamlessly. One example is that in Poland we manage the ticket sales network for several businesses.

Fuel management, we also have complete solution for fuel management payment which eliminates cash handling issues. While improving billing and information management, typically we contract with fleet we have found tremendous value in this.

As an example, On Track [indiscernible] on the gas tank that communicates to a gas nozzle. This communication ensure that the right gas is going into the detail and automatically handles the payment portion of fueling, while also communicating key statistics like the vehicle, automotive, engine hours driven et cetera.

This is high margin division and an area where we experienced tremendous growth during 2017, more on this later. Finally, a very exciting business line we define as Internet of Payment Things and World.

We have developed technology in the form of payment capsule and flexible payment band that can be integrated into all types of items such as bracelets, rings and more. Next, I will also welcome Assaf Cohen to his first quarterly earnings call as our new CFO.

Assaf has been strongly within our finance department while holding increasing roles of responsibility within our company. Assaf is termed as our Corporate Controller since 2015 and most recently stepped in as our CFO, where he has done a fantastic job.

We’re pleased to have him on board and look forward to leveraging his big financial experience as we continue to grow our presence in the marketplace to increase long-term value for shareholders. Finally, it’s also worth noting that Assaf and I are most not despite holding the same last name.

2017 marked yet another continued execution for OTI and we entered 2018 with a company in a better position than ever before in its history. Our laser focus on rising the shift and streamlining the business is now largely complete and our focus on the future is all about growth.

A few key highlights from 2017, I would like to mention include our continuous focus and execution on growing sales. in 2017, we achieved over 9% revenue growth despite one of our largest accounts for provisioning [ph] away which accounted for 24% of sales or $4.9 million in 2016.

We believe our ability not only to overcome this largest account provisioning away, but also successfully grow on top of that is particularly impressive. In 2017, we continued to further trim operating cost, cost at the end of 2017 has now decreased by more than 27% over the past year all while growing in revenues by more than 21% in the same period.

We have worked diligently and consistently to cut unnecessary cost and we are pleased with the cost structure as it stands today. We continue to increase our gross margin ending 2017 with a gross margin of 51% for the overall year.

In conjunction with our cost cutting initiative, we have put heavy focus on transitioning our revenue for one-time sales of hardware to higher margin, the current revenue opportunities. Today our recurring revenue total $5.1 million or 23% of our total revenue for 2017.

We expect continued growth in our recurring revenue base, which will drive margin higher, while providing more predictable revenues and smooth out sales lumpiness experienced in the past. Finally, I am pleased to announce that 2017 marked the first year in the Company’s 28-year history that OTI experience positive adjusted EBITDA.

We are very proud of this accomplishment which is evidence to the hard work of our entire team for streamlining the business. We are for the first time in a position to be self-sufficient moving forward as we look to continue growing sales and profitability.

Before going further, I would like to turn the call over to our CFO, Assaf to walk us through some financial for the fourth quarter and full year. Assaf.

Thank you Shlomi and good morning everyone. Before the market opened today, we issued the results of our fourth quarter and fiscal year ended December 31, 2017 in a press release.

A copy of the release is available on the Investor Relations section of our website. Revenues for the full year ended December 31, 2017 increased by 9% to $22.4 million compared to $20.6 million in 2016.

This increase was mainly due to an increase in sales and retail and mass transit ticketing segment, traction in the Japanese market, growth in our petroleum segment sales, as well as our automotive solution in Europe. Revenues in the fourth quarter of 2017 increased by 21% to $6.7 million compared to $5.6 million of revenues for the fourth quarter of 2016.

I would now like to breakdown our revenues for the full year of 2017 by source and percentage of total revenue. Retail and mass transit ticketing revenues were $15.4 million or 59% of total sales.

Petroleum revenues were at $5.1 million or 23% of total sales. MediSmart and access control product revenues were $1.9 million or 8% of total sales.

In the fourth quarter of 2017, retail and mass transit ticketing revenues were at $4.7 million or 70%. Petroleum revenues were $1.5 million or 22% and MediSmart and aa access control product revenues were $550,000 or 8%.

When looking at geographic contribution of revenue for the full year of 2017, America accounted for $7.2 million or 32% of our total sales, Europe accounted for $7.3 million or 33% of total sales, Africa accounted for $4.3 million or 19% of total sales and APAC accounted for $3.6 million or 16% of total sales. Looking at the fourth quarter of 2017, America accounted for $2 million or 30%, Europe accounted for $1.9 million or 29%, Africa accounted for $1 million or 14% and APAC accounted for $1.8 million or 27%.

For the full year 2017, gross profit increased 12% to $11.4 million or 51% of revenue compared to $10.2 million or 50% of revenue in 2016. The increasing gross margin was mainly attributed to a change in our revenue mix.

Gross profit for the fourth quarter of 2017 increased 35% to $3.2 million or 48% of revenue compared to $2.4 million or 43% of revenue in Q4, 2016. This improvement of more than 500 basis points in our gross margin is mainly due to shift in our revenue mix to higher margin and to increase of recurring revenues.

Operating expenses in 2017 totaled $12.7 million compared to $12.1 million in 2016. In the fourth quarter of 2017 operating expenses total $3.5 million compared to $3.4 million in the fourth quarter of 2016.

Net loss from continuing operation for the full year totaled $1.7 million or negative $0.04 per share compared to a net loss from continuing operations of $2.4 million or negative $0.06 per share in 2016. Net loss from continuing operations in the fourth quarter of 2017, totaled $4,013 or negative $0.01 per share compared to a net loss from continuing operations of $1.2 million or negative $0.03 per share for the fourth quarter of 2016.

Now turning to our non-GAAP results, we use adjusted EBITDA from continuing operation and non-GAAP metric as we believe it provides a useful indication of our operating results. Positive adjusted EBITDA in 2017 totaled $240,000 compared with an adjusted EBITDA loss of $241,000 in 2016.

As Shlomi noted in his opening remarks, this is the first year of positive adjusted EBITDA in the company 28-year operating. Positive adjusted EBITDA in the fourth quarter of 2017 totaled $53,000 compared with an adjusted EBITDA loss of $516,000 for fourth quarter of 2016.

Please refer today’s earnings release on our website for further details about this non-GAAP metrics including a reconciliation of adjusted EBITDA to our comparable GAAP results. Now, turning towards the balance sheet.

Cash and cash equivalent and short-term investments at December 31, 2017 were $10.1 million this compared with $11.5 million of cash and cash equivalents and short-term investments at December 31, 2016. Our total debt balance as of December 31, 2017 was $5 million compared to $5.6 million as of December 31, 2016.

This completes my financial summary. For more detail analysis of our financial results, please reference our Annual Report on Form 10-K, which we plan to file by March 30, 2018.

With that, let me now turn the call back to Shlomi.

Thank you, Assaf. As I noted in my opening remarks, we entered 2018 in a strong position than ever before.

When I joined as a CEO in 2015, we refocused the overall business strategy and worked diligently to cut costs, grow revenues and ultimately as a business with a significant cash flow generation that drives shareholders value over the long term. Today I am pleased to announce that this effort has proven very successful.

Having posted OTI first year of positive adjusted EBITDA in the Company’s history of over 28 years, while continuing to reduce debt and grow revenues. Contributing to this was our revenue growth of more than 9% which is particularly impressive, giving some of our major accounts transitioned out in 2017, which accounted for $4.9 million or 24 % of our revenue in 2016, that we had to overcome and replace in 201 7.

I would like to dig a little deeper into what drove revenues during the quarter and year, as well as areas of focus moving forward. Revenue growth and most explicitly recurring revenue growth which has been strong, has been a core area of focus for OTI and is also major potential focus for 2018 and beyond.

We’re pleased to announce that our recurring revenues stream accounted for 23% of revenues in 2017. Two years ago, we established the strategy of moving from being a product company to a company that utilized software and offers complete turnkey solution.

Although this process took time, it was clear to us and is increasingly becoming more clear based on our financial results, that this strategy will ultimately provide us with a stable customer base, with stable revenue, at much higher margin, making the company significantly more valuable. As part of this focus, we have also worked to bring on some top talent to our sales and marketing team.

In our automated retail division, we've made tremendous progress in several categories, I’d like to touch on a few. First, Japan continue to be a very attractive opportunity for OTI while the Japanese market can be difficult to enter with new technology, we have tremendous progress.

In the last 12 months we received purchase orders of more than 7000 of our most advanced payment system. We believe this purchase orders showcase that our partners and their customers, pleased with the functionality of our system and ability to integrate seamlessly in this unique environment.

Admittedly this growth has been slower than anticipated but it's still a major initiative in 2018. Another key area for the company in the automated retail space is ATMs, where we continue to increase sales and deployments around the world.

Most of the banks are looking to add secure methods for operation of ATM other than traditional card and pin which has been used for decades. Consumer preferences for use of mobile wallets are driving this adoption and OTI has benefited and expects to continue benefiting from this shift.

During 2017 our ATM sales went up dramatically, from 1800 systems in 2016 to more than 10,000 systems in 2017. This represents a one-year increase of more than five times.

This breakout yield marks a significant landmark and our customers are pure happy with ATM specific reader product we have developed. Moving forward over the course of 2018, we expect to see continued ramp up in ATM sales and deployments, as an example in March, we announced that we received a purchase order for an additional 8,000 systems for the smart ATM market.

As an innovative company, we are always looking to add to our capabilities allowing for an enhanced experience for both our customers and end users. To that end, we have made significant effort to invest some of our resources for the introduction of Cryptocurrency capability across our solution, which we believe is a natural fit for the automotive [re-vertical], but also of course other [indiscernible].

As a leader in cashless payment solution over the past 28 years which allows a strong base of technology solution across the globe, introducing the ability to pay with crypto currencies seems like a natural fit for our products. We also understand the market as well as all key players in the market.

Our goal is to make Cryptocurrency more accessible to the Micro payment market. In our fueling decision, we have [indiscernible] and expect to continue to do so in 2018.

Our fueling division provide OTI high margins and has continued to grow rapidly. 2017 proved to be a breakthrough year for our fueling technologies division where we experience revenue of $5.1 million which represent a significant 24% increase as compared to 2016.

During the third quarter, we received a sizable purchase order for India which was our first entry into the Indian market. This we believe a significant growth opportunity in 2018 along with several other markets we currently serve.

Now before providing my closing remarks, I would like to open the lines to Q&A and we turn it back over to the operator. Operator please.

Good afternoon guys. Thanks for taking my question.

First, I really wanted to congratulate Shlomi on reaching positive EBITDA, I think it is an assessment for how hard you guys worked over the past couple of years to turnaround a chronically money losing operation and getting it back to breakeven. That said, I think there are a lot of expectations out there for now turning to significant growth and profitability.

So, I wanted, touched based on maybe a couple of topics. And the first for me is Japan, I think for us we are really excited about the opportunity there and we are kind of hoping/thinking that perhaps you might get to some level of readers deployed to Japan over the next couple years in the 50 to 100,000 range.

And yet here we are couple of quarters later and we are still having trouble moving beyond that first letter of intent. Can you maybe talk about what your expectations are for 2018 for either commitments or purchase orders to the Japanese market?

Good morning Josh, I think that we will be touching the Japanese market few times and maybe I need to make a few things little bit more clear. I think that the expectation from the market absolutely from our side was needless to say higher than that and I think that I also expressed it during the point that I mentioned before.

To focus now what will be the potential during ’18 and 19 from the Japanese market it will be a little bit difficult. But it's very important to emphasize the face that in the Japanese market today we’re working in full steam ahead and we’re expecting to see positive results in ’18 and I believe that the result in ’18 will be better than ’17.

This is our expectation. I mentioned also the fact previously that there is a lot of cultural issues, you know the way that Japanese are doing business and I think most of the audience are very, well Japanese market and with the challenges that we’re having over there.

Saying that I see we’re investing heavily in this market because we already find this market is our most strategic market for the coming years, not only because of the potential and not only because it’s the most profitable market that we’re having, also because this market actually took few major decisions on the regulation level that supports the conversion of the entire systems, the existing systems that they are having. So, to tell you that everything is going to be converted till 2020 as they stated, it's difficult to say but we’re still positive regarding this market.

And then I think the other topic I want to touch based on petroleum, you talked little bit about having some success there. My understanding is that the success has primarily been in the fleet subcomponent of petroleum, but with the pilot you have in India, I guess that hoping just get a little bit more color that is specific to the consumer application correct, and if I remember correctly, I believe it was about 80,000 units that were sent to the Indian market.

Can you tell me what percentage of those are actually installed and if the program is live and you are actually processing transactions through that system today?

So, regarding the Indian market, it was a major milestone for us, simply the fact that it’s the first consumer installation that we’re having worldwide, this is actually, this installation implementing the new consumer fact that we develop for the consumer market. The majority of this delivery already installed successfully I have to say, very successfully.

And this is for us our major installation also because its consider to be quite sizable meaning that it’s more than 60,000 units that we are installing in this market so far.

And are you currently processing transactions, and can you talk at all about the economics. Is it a per gallon fee?

No, I cannot. Yeah, we are processing transaction over that, but I cannot speak about the data that we are having regarding that, because this is -- first of all we are not giving guidance from the other end, I have to say it, because we are working B2B, I’m not able to expose the numbers of that, but I’m saying again it’s a very successful installation that we are having very promising market for us, the Indian market and we believe that during 2018, we will see also a positive impact on other market as well and it’s not going to be the last consumer production that we are having.

Okay. And I guess one follow up to that and then I'll hop back in queue.

You have a, I believe a distribution relationship with Dover that is potentially exclusive to United States. I was wondering if this is an application that you could bring to United States with dover and if you have plans to do that in the next year or two?

The answer is positive.

Hi. This is Rishi in for Michael Latimore.

Thanks for taking my call. Could you say who are your top three customers in the quarter.

And how much, what percent of revenues came from them?

The major customer or the major accounts that we are having is Japanese one, it will be the biggest one in the automakers and retail. The second one is indicating the city of [Warsaw].

And the third one eventually in the state and I prefer not to mention its name, because it’s a little bit sensitive, but those are the major ones, basically we are not disclosing the amount of this account, but I think that we mentioned a little bit about the Japanese market. And I think that the rest of the data is actually in our report.

But again, I’m saying basically we are not exposing the amount of business that we are generating with the specific account.

Okay. Thanks.

And are there any other large mass ticketing service deals in the pipeline currently?

Ticketing for mass transit, at the moment this business is mainly relevant in the European region. And we are doing it via our subsidiary based in Poland.

We are working now on few major accounts in Poland and also outside of Poland. At the moment it will be relevant needless to say that we will inform the market as well.

Okay. And just one last question, where might our overall gross margin trend this year?

I’m not sure I understand, you’re asking from where the gross margin is what?

Will trend for this year for FY’18?

Okay if I understand the question correctly that the gross margin is with, let’s say the positive impact that we’re having on the gross margin is mainly coming from the market and because its relatively with high gross margins, the ATM vertical and the fueling business that consider to be the most profitable division that we are having.

I’m glad to see there is positive EBITDA from the company, a good job. Regarding easy fuel, getting back to the Dover situation in the United States, I think on a previous conference call you mentioned that there were to be some activity or sales late 2017 early 2018.

I haven’t seen an announcement, so can you give us an update on that.

So, regarding this account, we actually signed on the contract during Q1, ’17 and the exclusivity that we’re having with them, the legal agreement that we’re having with this account is actually until the end of ’18 and the majority of the activity is from business prospective is going to take place during this year, during ’18. very important to mention the fact that we are already having a positive history with this account, outside of U.S.

So, we’re expecting to see some kind of, I would say business contemplating the U.S market with this important account.

Again, on easy fuel, I think the last quarter you mentioned that the potential for easy fuel over the next five years is $50 million in revenues, five years. Actually, by the 70% to 80% growth per year on 5.1 million that you posted last year, do you feel confidence in those numbers that you can grow easy fuel 70% to 80% a year.

Okay like we invested quite a lot in other activities needless to say in the automated retail market, we will bring the same thing also in the level of petrol [smart]. Our fueling management division.

And I think we now can see significant results and I think that in ’17, we’re presenting 24% growth year-over-year. As I mentioned before we’re expecting to continue to see those positive results also in ’18 and the year ahead.

I think that with not only with the infrastructure activities that we are having in the last 2.5 years but also with the contract that we signed such as with Dover and also with [indiscernible] and with the Indian market, I think that we will continue to see a significant growth also in the coming years as well. This is our expectation, this is our focus.

We were very well focused.

You still feel over easy fuel can be 50 million in five years, do you see over the easy fuel can be a $50 million revenue producing stores in five years?

I think that it can be significantly major activities in the OTI Group also because we are stepping into the consumer market that this is a game changer for us. And then the numbers needless to say are going to change the entire landscape of our business.

Yes.

Okay. Getting back to the quarter announcement in January.

Do you have any plans for mine from Bitcoin or developed your own Bitcoin currency or just going to have a reader that will accept various Bitcoin currencies?

Okay. That’s a good point, so I’m not saying Bitcoin because Bitcoin is specifically cryptocurrency.

We are actually, what we are doing now and I believe that soon you will see and we are working on that intensively. We are working on a solution that you will be able to user cryptocurrency in the Micro payment market.

Now, there are two major challenges using cryptocurrency in the Micro payment market. One is the transaction time, because today when you come to a vending machine or to a kiosk or to easy charger you’re doing the transactions that is less than three seconds.

When you’re using for example and again just for the sake of the Bitcoin except something between $10 million to $15 million until you’re getting the approval, the transaction approval. So, this is one challenge.

The second challenge is the fee, the transaction fees. So, today the analyst transaction fees you are using again just for the sake for Bitcoin you’re paying something like 30 bucks, so no one is going to be use automated machine or vending machine if he is going to buy coke and is going to pay 30 bucks only for the fee.

So, with those two challenges in OTI, we are working on a solution in order to tackle those challenges and I believe that soon you will see significant results for OTI regarding this.

Okay. And regarding the US, AT relationship that is -- there is a dead relationship or are you still talking to those for US, AT or what’s happening there?

Cannot comment on that, sorry.

Okay. And where are both, are you doing anything with that or is that a dead issue?

No, we are doing quite a lot of activities in the account, it's mainly related to the regulation that we -- that both Mastercard and Visa need to initiate. I believe in the very near future with existing regulation its challenging to use the IoT, the payment IoT.

But I believe that still when both Mastercard and Visa will release the new program that they are having for the IoT payment it will be more accessible to the market and I believe that OTI will be able to play in this game as well.

Hi, Shlomi, welcome Assaf. So, Shlomi, nobody's really questioned you on your outlook for this year and I know you will retain some pretty severe customer changes last year and I’m just wondering how you think that translates to growth this year and how much you can speak to that and how you see your recurring revenue mix change to the course of this year.

So first of all, I think that, 2017 and I’m not speaking about the positive adjusted EBITDA that its installed the record, the fact that we actually step out from the biggest and major account that the company was having during ’16 and we were able to do a full recovery on that. I think that this is related to the infrastructure and to the strength that we’re having inside the company to overcome such kind of a market events and we were able to do a full recovery plus presenting that is almost 10% and this is for my point of view is a huge achievement.

One of the positive change that’s happened from this negative event is the fact that we were able to approach slight a lot of other accounts that in the past we were not able to approach directly. And I think this is significant change in our mode of operation compared to the previous year.

I think that one of the things that you can see is the fact that the gross margin went up and will continue to go up because we’re implementing the approach and the fact that we’re selling solution. We began to be a one stop shop for our vending and kiosk operators and we’re avoiding of selling product as a product, that’s not our intention.

More than that, I think that one of the biggest changes is that we implemented this approach not only in the automated [indiscernible] division but also in the fueling and needless to say in ticketing. So today those three divisions are implementing the recurring revenue approach or I would say the one stop shop approach and following that we’re in each one of those divisions generating recurring revenue and my expectation is that we will continue to increase the recurring revenue as a percentage of our total revenue that we’re generating and this is very important and needless to say it's going to create a very positive impact on our total gross margin.

Okay fair enough, can you talk a little bit about how you are extracting that recurring revenue. I mean specifically with the Japan business that you’ve seen very excited about also the new fueling option and that clearly has transaction processing associated with it.

Can you talk to that recurring revenue quotient in your various business models and why you're so confident and seeing expand?

So, if you mentioned Japan, I think that after the first installation, or immediately after the first installation, we started to generate our recurring revenue per machine, per month from the Japanese market, something by the way that was not obvious in the beginning. So, I’m having and want to say that generating from each one of those payment solutions that we deliver to the Japanese market, are recurring revenue and needless to say that this is something that increases the stickiness that we’re having in this business.

In Europe it’s the same thing, in Europe by the way, we engaged with payment processor and with bad investor reason I mentioned the term of one stop shop and because of that, we are generating again per machine, per month. In the fueling division, probably on top of the fact that we are delivering a full and very comprehensive solution to the gas stations and to the energy companies that they are, our partners, we are compensated to the government as well.

And this is something that we are implementing and we will continue to implement in much aggressive way when we will proceed and we will have a progress with new installation as well. And ticketing needless to say that after we were doing the first installation, the majority of the activity is actually based on the recurring revenue, because [indiscernible] system.

And the corpus that we are earning in the mass must transit is for vacant [ph]. So, in mass transit our contract at the moment is until 2022 and 2023.

And the majority of the income is actually based on the recurring revenue and needless to say that today we are chasing after new contract like that before 2022 and 2023, to recruit such kind of account it takes quite a lot of time.

Okay. Shlomi the NFC combo with the ATM looks very promising.

I was hoping you could clear that a little bit. This is a complete change in machine, right it’s not an added retrofit.

And can you just make sure that I understand how the business model works, you’re not selling one clear or one straight machine. You’re somehow trying into processing there too?

No, so ATM is the only versatile that we are not generating classic recurring revenue, and I will explain because although we are working with the ATM manufacturer. So, when you go to our website you will see that the solution that we are delivering, the product, that represent the solution is the Uno-8.

Uno-8 from the beginning designed for the ATM industry and although there we are implementing quite a lot of software package in order to support the entire request and demand from the banks that the way that they defined the demand for the ATM. Now, the Uno-8 can be implemented and installed on existing ATM machines and also in new ATM machines, okay, in both cases and that’s exactly what we are doing by the way.

And it’s true that we are not generating our recurring revenue over there, but we are generating let's say a maintenance contract that cover a software upgrade and under maintenance request that the ATM manufacturer are having.

And where do you see, Shlomi just on that topic, where do you see some of the major ATM competitors and are they to incorporate NFC and are they sort of in a similar situation where they work with their customers to sign maintenance agreements on software upgrades.

I know who is the -- let's say once the major competitors that we are [indiscernible] but I don’t exactly how they working and with whom they are working. I can guess but I don’t want to do it now.

Okay fair enough. Last question for me is just on the cryptocurrency and you’re handling that, I was wondering how much work you did you researching the addressable market there.

I mean not to be super skeptical but it just seems to me that’s still kind of a stretch, I don’t think many people are looking at cryptocurrency and using it on a day to day basis. Not that that doesn’t change overtime, I’m just wondering how you see that market developing, whether or not you think your customers are really demanding a product of that nature and when you’re able to deliver it, what kind of market reception you will see.

Okay it's true that at the moment as you don’t see, major request and demand regarding cryptocurrency and [indiscernible] markets. But sometimes you need to have a vision and we believe, we strongly believe by the way that cryptocurrency later will be part of our life.

This is our assumption and based on this assumption we decided to see how we’re able to implement the use of cryptocurrency in the unattended payment market. I’m specifically saying unattended payments market not because OTI playing in this market but also because that eventually when Cryptocurrency will start to be implemented in our life and in the different market, the unattended markets will be the pioneer of using the Cryptocurrency.

Because I don’t think that you will go the restaurant and the first thing that you’re going to do is to use Cryptocurrency, but I think that in the future I don’t want to see if it's going to be in the long of the new future and automated machine will start to accept a Cryptocurrency. This is our assumption and based on this assumption we’re going to present fully and comprehensive solution that will be accessible and simple to use in the different machines in the market.

This is what we’re doing and I believe that soon you will see positive results.

Okay again on that topic, do you think that it will be a retrofit again to existing machines and mostly just really kind of software retrofit?

Yes. It’s a good point, the concept that we’re developing is to give the ability to implement our solution on any existing vending kiosk or other automated machine.

The idea is not to replace the infrastructure that you’re using but to put something on top of it, that will be placed on software and not on hardware.

Okay. And the plan is to work across what all the major existing cryptos like Ethereum, I mean you know you spoke to Bitcoin already, but there all these other folks of it.

And I’m just curious how you plan on staying on top of all that?

Yeah. So, look today we’re adding more than 1,500 different cryptocurrencies and needless to say that not all of them are going to be relevant.

Another function that we are having is that sooner or later consolidation will be in this market. The market will not stay with 1,500 different cryptocurrencies, it doesn’t make sense.

And I believe that eventually we’ll say, I don’t know which with 100 with 50 or with something like that. And those one that would be the major will be relevant to use in the unattended payment market.

But, now there is another issue, what we are doing now and what we are developing we’re trying to implement it on the Mico payment market, not only in the unattended payment market. Mico payment can be anything I will say up to 100 buck transaction, so think about Starbucks and McDonalds and Subway and all the automated machines and so on.

This is relevant market for us and what we are developing can be relevant also for those fast food chain for example as well.

Hi, thanks. I just had a couple of questions, I know you touched on them briefly.

I just want to get a better sense. On the gross margin it was lower in the fourth quarter than it was in the previous three quarters.

And looking back at 2016, it looks like the gross margin was significantly lower in the fourth quarter as well. A, is there any seasonality there and or B, was it just due to a higher mix of hardware sales?

Okay. So, first of all you’re correct regarding the Q4, there are a few explanations for that.

First of all, it’s a mainly derived from a revenue mix that is basically comes to that. And there is another I think that we need to take under consideration that in Q4, we had bonus and expenses that also expand us.

I’m sorry, so there was some seasonality or some…

It’s a mix of, I’m not sure that it will be like that all the time, but in the last -- sorry in Q4, 2016, we were facing exactly what Assaf mentioned but on top of it we were having also purchase order from significant account that was actually a low gross margin account. Together with exactly what Assaf mentioned is actually creating such kind of impact on our Q4 results.

Today it’s going to be like that, it also in the other quarters, in the other Q4 quarters it’s a question mark.

Okay fair enough and then just on the operating expense side, I mean obviously you have made great progress in reducing and controlling operating expenses, is a little higher than the modeling forward is due in part to the higher revenue and higher commissions. And then also would you suggest that some of the higher may be little bit higher G&A and marketing, maybe due to ramping some infrastructure for growth in 2018?

Sometimes when we’re actually stepping into a new markets and new accounts we’re actually a little bit more aggressive than usual. So that’s the reason that you can see, I will say such kind of impact.

That’s the major reason for that.

And let me correct myself, regarding the gross margin indeed come from, derives from revenue mix but when I say regarding the year-end bonuses, it's of course related to the operating expenses and for your question regarding the increase in Q4, this is the answer.

Great and then I guess just looking to 2018. I know you’re not providing formal guidance, but as far as how do we think about operating expenses, are you guys trying to maintain at this level and then grow revenue show leverage on the model or should we, how do we think about your requirements investment in the OpEx.

I believe that it's difficult to focus those things but I would say that we will be around the number, the existing numbers that we’re having today.

In closing we expect 2018 to be a great year for own innovations. As the pioneer and leader in the cashless payment solution arena we strongly believe our technology will continue bringing a tremendous amount of failure [ph] to our industry while resulting in predictable high margin recurring revenue for the company and great value for you our shareholders.

In conclusion we thank you for your continued support. Thank you for your attention.

Have a good day.