Good day, everyone, and welcome to today’s program. At this time, all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note, this call may be recorded. I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Mr. Gary Levine. You may begin, sir.

Good morning everyone, and thank you for joining us. With me on the call today is Victor Dellovo, CSPI’s Chief Executive Officer. Before we begin, I would like to remind you that during today’s call we’ll take advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, with respect to statements that may be deemed to be forward-looking under the Act. The company cautions that numerous factors could cause actual results to differ materially from forward-looking statements made by the company. Such risks include general economic conditions, market factors, competitive factors and pricing pressures, and others described in the company's filings with the SEC. Please refer to this section on forward-looking statements included in the company's filings with the Securities and Exchange Commission. During today’s call, I’ll discuss our financials of third quarter results and then Victor will provide an update on our business segments and on our strategic progress. Then we’ll open it up to your questions. Revenues declined 2% to $22.3 million from $22.6 million a year ago. Foreign exchange had a negative year-over-year effect of $1.4 million. Our total cost of sales for Q3 was $17 million, up 3% compared with the prior year. Gross profit for the quarter was $5.3million, compared to $6.1 million a year ago. Gross margins for the quarter were 23.6%, compared to 27% in the prior year. The decrease was primarily the result of a loss in the UK due to additional product and service costs for which we were unable to bill additional revenue. In addition, we had approximately $200,000 in expense for a change in our accounting policy for recognizing post delivery obligations on the Myricom product line for deferred costs. We've taken aggressive actions in the UK to rectify the situation and improve that…

Thanks, Gary. Our overall performance in Q3 was solid in all regions except the UK, where we realized the operating losses that Gary mentioned. During the quarter, we continued to execute to get each aspect of our long-term growth strategy. Myricom is performing better than expected. Our new product rollout strategy is proceeding in the business has good potential to help us smooth out the lumpiness inherent in our high performance product division. And in the Technology Solution division, we continue to have health managed service pipeline, we’re focused on closing deals. With that, I’ll get right into the segment review starting with the high performance product division. Revenue decrease in the quarter compared with last year due to lower multicomputer product sales and last year we had a larger customer order Myricom product. We still had another strong from Myricom, historical products suite, which we initially had expected to decline over time. Sales of these products have surpassed our expectations and our sales force is being very aggressive in continuing to drive demand. The real opportunity for Myricom however, is in the next generation products. We made significant investments in development of these products to capitalize on opportunities in the new commercial markets and we are continuing to focus our efforts right now on the financial service in packet capture markets. As we have stated before, we see Myricom as an opportunity to expand our commercial market reach and help strengthen the High Performance Product division. Keep in mind that these new products are focused on entirely new markets for us. So there will be cannibalism with our current products. We have recently announced a general availability of our fourth generation of Myricom network adapters for the financial service market, where they are being used at high frequency trading.…

[Operator Instructions]. Our first question is from William Kidston from North & Webster. Your line is open.

Good morning gentlemen.

Good morning.

I just want to touch base on three kind of business units here Myricom, the legacy multicomputer segment which is essentially E2-D and technology solutions. Can you guys break out Myricom performance for this past quarter revenue in operating income?

Well, we don’t breakout income on that basis, but I will give you the revenue stand, because we have consolidated into one operating unit, but the Myricom sales were $1.8 million for the quarter. The high performance group’s operating income was $871,000.

And what was the total HPP revenue.

$3.9 million.

$3.9 million, thank you very much. Can you guys just touch on the UK loss a little bit, a little bit more, what was the operating loss there? I think you may have mentioned, but I may have missed it.

Well as we mentioned in the press release, it was $550,000 and it was a lack of oversight by the management and following our proper internal controls, which we took immediate action, when we discovered this within the quarter.

And what was the revenue for the UK segment last quarter?

It was about just under $1 million, $978,000.

And then how about Germany and the U.S. both top line and bottom line if you can provide that or just elaborate it?

The U.S. and the technology solutions was $12.5 million and their operating income was $186,000, Germany’s was $4.8 million and their operating income was $200,000.

And then what is the change around the revenue recognition policy that you folks mentioned, is that just related to Myricom or is that ultimately the…

Yes, it’s the Myricom is the way that we differ related to the ongoing maintenance for the product, so we had a change, we did some analysis and had it reviewed by the auditors and had to make that change from the methodologies that we were using prior to that.

And what time the revenue hit did that produce?

Well we defer a portion of - I don’t have the number in front of me but we defer a portion of the revenue related to ongoing maintenance which goes over and that’s the period of time that we’re analyzing because we’re changing our benefit periods for service and like that. So at the moment, we’re using a three year period for the deferral.

Okay.

[Operator Instructions] Our next question comes from Joseph Nerges from Segrum Investments. Your line is open.

Good morning gentlemen, how are you today?

Hey Joe.

I guess couple of quick questions, on your Alpha version of the 100gig Myricom product that you’re talking about, in first quarter 2016 now is that calendar first quarter or is that fiscal first quarter 2016?

Fiscal.

Okay, so talking about the October to December quarter, you’re expecting to release the Alpha version of it?

Yes Alpha version to get inside customers hands, so they can test it and see the performance on it and go from there.

Yes I just want to clarify was it at the end of this year or the beginning of next year with the calendar year? For non-computer person, what is the Alpha version of a product, what is the description that Alpha version means?

Alpha version is just where we developed, we developed the card in the software and we get it into customer’s hands, so we can get into our real life development. Product development and we find out the bugs that are in it and then we get the feedback on the performance of the card and how it performs inside real life data centers.

Is that different than the Beta version that you have Alpha - call Beta sites?

Yes in the Beta we open it up to more customers at that point, the Alpha is very finite amount of customers.

Okay. On engineering development, I see for the quarter you’re down to $626,000 you mentioned that from last two quarters I guess about $200,000 plus more each quarter for that segment, is that changed, where is that drop in the $200,000 coming up of engineering?

What it’s been primarily is that we have been changing our staff around, so we have been migrating, so we had people that we have left simply because their skill sets don’t go along with our initiatives in the new products and we’re starting to ramp up with new hires, Joe.

Okay. So you just realize some people that weren’t particularly…

It’s a different technology, right?

Yes. And you’re moving into different group of expertise needed in some segments you’re into.

Exactly.

Okay. You talk about the Myricom markets and you say new markets, I’m little confused financial training has always been a market. What new markets are we entering that you are referring to, isn’t the packet capture having we always been involved with that market also. I’m going to understand new - you mentioned…

Yes. The new markets we are looking at OEMs that we normally haven’t targeted in the past.

Okay.

We’re talking to other manufacturers to spec in our 10 and 100 gig product inside their organizations and then other commercial whether it’s banking and other areas once we open up to the new packet capture products. So we were very focused on the financial area for a long time so.

So what basically you’re saying new market?

Right. It’s for us, Joe.

Your existing market was like packet capture into new industries.

Yes. Correct.

Okay. And the 100 gig product, is that something that’s almost specifically designed for the OEM?

No.

No.

Not necessarily, but that’s where our main focus is right at this particular time. There is also some defense areas that we’re talking to also.

That was [indiscernible]

That’s looking to put it inside different types of networking servers, networking switches, routers, type of environments also.

Okay. And then lastly, I guess I have to say extremely disappointed with MultiComputer. We are not getting, we just - I mean are you getting the royalty in that sales, a greatest sales in oral that is royalty deal you did with Lockheed, but I don’t see sales of 3000, I don’t see anything of any volume coming out of that particular segment. I mean, right now they are picking up a royalty taking it to the bank and that particular subset. Yet, I see - I guess a competitor of yours somewhat Mercury Systems continually announcing pretty sizable contracts in that particular niche market I would think. I’m not sure exactly all of what they compete with U.S. but I don’t see any great sales in that particular niche. Any benefit of a reason why we’re not closing deals in that series 3000?

Well, we changed, I mean the - what we’ve made the decision Joe is that with the availability in the defense department for opportunities is very limited and for us the R&D efforts to try to break into to new opportunities with no payback guaranteed whatsoever was very limited. \ So we’ve changed our focus over to the Myricom product line. We’re supporting our existing customers and providing what they need but to develop new products and get into new opportunities is very limited and it’s, the payback when we did an analysis was just too difficult. We were spending a lot of R&D money and the projects are not happening. The government would say you would have an opportunity between 1 and 15, but we don’t know if we are going to deliver you get us one and then we will make a decision in the years compared to prior years where you got some R&D money related to it. Some dark money opportunities and there is not those things, so we’ve kind of focused ourselves on the Myricom market. We believe that’s a much bigger payback for us and with the larger competitors they are in the programs and things that we don’t and we can’t compete at their level, when you see that, the R&D level is what in the payback, Joe.

Okay. Well then, I guess my question is how many people are still working in that particular subset of the market, you have a Vice President of MultiComputer, right now.

Note - Vice President of high performance, which includes the Myricom2 so the focus is more on the Myricom side of that Joe.

I understand but I so you still have some personal servicing the Multicomputer business is what you said.

Correct yes we do.

And yes, just and that’s why you’ve seen a decrease in some of the engineers in R&D overall cost is taking those engineers that were working on the R&D for the Multicomputer side, giving them a some type of service package and now we’re in the process of hiring the engineers to support the Myricom growth.

Okay and so let me ask you ask - question let you go minute the write-off, the development write-off that you talked about is - was that specifically in the Multicomputer area?

No, that was not.

Okay, well do you have any write-offs in that area that we need to address in the future.

No, we’ve taken action on those right now Joe.

Okay.

We distance the stuff as it goes on, we’re not capitalizing anything that we need write-off on.

So we think that any future for the 300 series at all?

Limited I mean we where there is opportunity within existing customer base were going after them and we but it’s a difficult situation for us.

We had some sales in that area of..

Yes, we do and we continued to have sales we’re moving product to existing customer so we are selling into that new opportunities are very limited in that.

Alright, well thank you very much. Let’s just hope to Myricom to do bring the results that we’re expecting over the next year or so.

We can do our best Joe.

Thank you very much gentlemen. End of Q&A

And we have no additional questions at this time. I would like to turn the call back over to Mr. Victor Dellovo

Thank you for joining us today and for your support at CSPI. We look forward to speaking with you again on our Q4 call. Thank you.

Thank you