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 maybe recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Gary Levine. Please go ahead, sir.

Thank you, Tunisha. 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 risk includes general economic conditions, market factors, competitive factors and pricing pressures. Others described in the company's filings with the SEC. Please refer to the section on forward-looking statements included in the company's filings with the Securities and Exchange Commission. During today's call, Victor will provide an update on our business segment and our strategic progress. And then I'll discuss our second quarter financials then we'll open it up to your questions. Victor?

Thanks, Gary. We performed well financially in the second quarter, as we continue to make progress against our operational and strategic initiatives. Sales were up 44% in the quarter and we reported EPS of $0.13 versus a loss of $0.19 a year ago. In the High Performance products division, we released a new network adapter for our customer evaluation and made excellent progress and driving market penetration of our network adapter products. In the Technology Solutions division, our managed service pipeline is ramping up, recurring revenue was growing and our cross-selling strategy between locations and divisions is working. With that, I will get right into the segment review starting with the High Performance product division. ACP had a strong quarter with revenue increasing 30.1% year-over-year. Myricom’s legacy product suite continues to perform very well. We had expected revenues from these products to decline over time though we have been able to keep sales at a steady pace. The real long-term strategic opportunity for Myricom however lies in our next-generation products which have potentials to expand the commercial market and be the primary growth factor for HPP. During Q2 we launched our new next-generation FPGA network adapter product branded as Myricom Arc Series E Class for the packet capture and financial service markets. The Arc Series E Class is currently in production as well as in evaluation at multiple customer sites. This product suite benefits from our experience and launching our first next-generation FPGA product about a year ago. The E Class product is a high performing, cost competitive fully functional network adapter when compared to other solutions in the market. During the quarter, we secured our first major engagement for the packet capture market. In fact, we shipped a larger order to our first hyperscale data center end user. This…

Thanks Victor. Revenues increased 44% to $27.1 million from $18.9 million a year ago. Our total cost of sales for Q2 was $20 million, $20.8 up 40% from the prior year. Gross profit for the quarter was $6.3 million compared to $4 million a year ago. Gross margins increased to 23.3% from 21.4% in the prior year as a result of volume leverage. Second quarter engineering and development expenses decreased to $790,000 from $826,000 a year ago. Primarily as a result of planned turnover of our engineering personnel, as we hired talent that is in line with our strategic initiatives. As a percentage of sales Q2 engineering and development expenses were 2.9% compared to 4.4% last year. This is below our expected range of between 3.5% to 4% of sales due to the increased sales volume in the quarter. SG&A expenses were $4.7 million or 7.2% of sales compared to $3.9 million or 20.4% of sales in the previous year. Based on our planned investment we expect SG&A expenses in the range of 17.8% to 18.2% for fiscal 2016. The effective tax rate for the quarter was 34% compared to 12% in the prior year. We expect our overall tax rate going forward to be approximately 36%. We reported net income of $503,000 or $0.13 per diluted share compared with a net loss of $675,000 or $0.19 per share a year ago. Cash in short-term investments decreased to $10 million from $11.2 million at year-end as a result of the payment of the quarterly dividend, purchase of capital equipment partially offset by cash from operations. Lastly, our Board of Directors voted to pay a quarterly dividend of $0.11 per share to shareholders of record on May 27, 2016 and payable June 10, 2016. We aim to improve our bottom-line performance by focusing on our growth programs, increasing the level of high margin products and aligning our cost containment initiatives across the organization. I'll now turn the call back to Victor.

Thanks Gary. Looking ahead in the High Performance products division. We soft launch our newest Myricom ARC’s E Class series adapter and we expect to see meaningful revenue in the ARC Series suite adapter beginning Q3 and we anticipate royalty revenue for four more E-2D planes during the second half of the year. In the Technology Solutions division, we remain focused on executing against managed service strategy which we expect to be an excellent driver of growth in recurring sales for the long-term. Our pipeline is building and we look forward to capitalizing on the opportunity. In addition, we expect to see continued progress on the strategy of cross-selling between Technology Solutions international location as well as between Technology Solutions and High Performance products. While we still have much work to do, the most significant changes to transform the business are in place. And we begin to see positive results through the solid execution of our strategy. We have created many opportunities with CSPI and we are looking forward to leveraging our potential in fiscal 2016 and beyond. Now we will ready for your questions.

[Operator Instructions] And we will go ahead and take our first question from Joseph Nerges with Segrum Investments. Please go ahead. Your line is open.

Good morning, gentlemen.

Good morning.

Congratulations on a terrific quarter.

Thank you, Joe.

Thanks, Joe.

I can’t tell you how long I waited for this quarter. It’s been a long time, perfect job. A couple of quick questions – maybe clarifications. On your Class E adapter that you released, at what point in the quarter did we release that adapter in other words how much time of the three months that we actually begin selling that adapter?

It towards the end, very end of the quarter.

For both the financial services as well as the…

Yes, for everything, yes, because we went – alpha, beta and we are still in that beta general…

Environment?

Far right now, we are still working through with our major customers.

Actually we are still able to get a significant ordering of packet capture area is that correct, is that what you are saying in the press release as far as the new order...

Yes, that was for hyperscale but that wasn’t with the Arc Series that was with the…

With the LANai.

With the LANai, the legacy product.

Okay, it was a legacy product, so it wasn’t really one of your – Class E product?

Correct, that’s correct.

But at this point in time, you are still in the beta testing or we – had that’s been released at all for both areas, for both financial and packet capture?

For packet capture, yes. The general availability for packet capture but we still beta very closed to GA within – we are hoping within the next 30 days give or take.

For the financial service group?

Yes.

Correct.

Okay. Very good. Thank you. On the – have you expanded your Technology Solutions sales force is that number gone up considerably or fair amount in the last six months or so?

We’ve expanded it, we actually started expanding it in North Florida both engineering and sales. And locally in the Deerfield office which you are at, we have added a few here also.

Okay.

Right, and then what we’ve done in Germany, in the UK we brought UK completely under German management and we turn some sales people over and we’ve also hired some new folks that more in line with we are going with the managed services, cloud-based sales and more solution-based selling.

As the – I noticed the – our partnership was announced [indiscernible] German to get this press release, but I know you have a partnership with Exabeam out of California with the German unit of Technology Solutions. I know that’s just recent March or something like that, are you familiar with that and has that taken whole to any extent out there or is that too early yet to tell?

It’s still too early but those we’re bringing up partners often but that’s something that fit a security hole that Germany was looking at. So it’s a new partnership, we’ll see how it turns out.

And has the UK – being that the German division is overseeing the UK now, has that security emphasis been moved over to UK to any extent in other words the hiring people have that technology background?

Exactly, Joe, exactly.

And are we doing anything on security in the U.S. to advance some of that expertise, let’s put it that I’d like to hear?

Yes, we’ve been doing that here in the U.S. we have security engineers here, its just Germany has been focus on security hole for decade. So the majority of their engineers is security focus. So we’ve been doing in the U.S. also but we are moving to everything is moving in that direction. So as that moves we’re trying to hire that correct talent in the security market space also here in the U.S.

And just one other additional question and that is on the MultiComputer. Beyond the E-2D royalty stream that we’re getting according to its four more planes you are expecting for the rest of this year. Are we doing anything at all on some of that – the other series, the series 2000, 3000 is anything – any progress there…

Yes, we still have customers, Joe and we’re providing customers do programs that we started over the years and so we’ll be supplying those over the next few years we got some projections for those. So there is other customers that we’re providing and we’ve got potential orders that will be coming in this year and then over the next two years.

All right, well, terrific job. Congratulations and I certainly look forward to quite a few more in the future. Thanks a lot guys.

Thanks, Joe.

Thanks, Joe. Have a good day.

Thank you. [Operator Instructions] Our next question comes from William Lauber with Sterling Capital Management. Please go ahead. Your line is open.

Yes, Victor, your referred to recurring revenue and you give us some idea as to what percent that is now at the total and what your goals are – over the next two, three years in terms of that as a percent of the total?

It’s still not that significant but it’s growing, I don’t know exact percentage, maybe 1%, 2% at this stage but I guess between the cloud services and managed service piece of that.

And what would you like to get it to and say…

As high as possible, I would say if I can get it 5% to 10% over the next 18 months that will be a good goal maybe lofty but something that we will strive for.

Okay, you attributed that was one big order I didn’t catch it – the whole all the details, one big order that contributed in this quarter how much was – how much – what kind of an impact did that have on the total bottom line?

The order was closed to $1 million. Just to give you an idea of how big it was and its significant profit – 60% plus, 65% profit margin on that order, so how extrapolated down exactly I’m not sure but just gives you an idea of – it definitely helps considering we had no planes for the most part in this quarter.

Okay, well, are there any other deals or orders that in the pipeline similar to this.

That customer is not a one-and-done customer, so what – the next rollout we will be receiving its not going to be as large it will be smaller over a period of time, but I don’t know exactly, what the next rollout looks like yet, we will be receiving that I’m guessing in the next month or two. And we are actively pursuing a number of other larger accounts but they take quite a deal of time as this order did too, because you go to a qualification testing and so it takes quite a number of months to go through that.

In this space that we also targeting the OEM space getting integrated in other manufacturers product that’s a long cycle but once you get expecting easily you are there for quite a while years. So that’s something that we are focused on also in this – there is a few things going on a couple of opportunities that are fairly close.

Okay, in your – I’m going to make a generalization and correct me if I’m wrong. It seems like all areas are clicking you didn’t sight any particular weakness in anyone division or area whether it would be domestic or international is that a fair assessment and the things are going at least as well as you had planned and anticipated?

Yes, I would say the plans and the strategy I mentioned for the last two years its still consistent the tactical plans we are driving through, we make changes as we go, as we think we can improve upon that we make changes but things are going pretty good right now, we do have a ways to go to get that consistency but we feel pretty good with the personnel changes, the engineering changes, the sales changes and some of the process and procedures that we put in place is starting to take effect.

Okay. Thank you.

Thanks, Bill. Have a good one.

Okay.

Thank you. [Operator Instructions] And our next question comes from Brett Davidson with Private Investor. Please go ahead. Your line is open.

Good morning, very impressive quarter. Two questions that I’d like to pass by you guys. The first one is related to the legacy products, the network cards. And is there any indication at all but these customers that are ordering these legacy – plan on ordering the new version when it’s released.

I think a lot of them are looking at it right now, so there is potential for them to move in the future but it’s kind of early to say because we are concentrating on the high frequency trading market which is one that we don’t have that many customers in currently. But the others certainly are available packet capture and other areas.

And the other thing that we moved into where legacy Myricom moves into the Microsoft side of the house we also moved into the Linux side of the house so a lot of the customers that we are targeting, our brand new through CSPI and Myricom.

So none of like the high frequency trading, none of them are indicating that they want these carriages stop get measures until the new versions released and they plan on updating once that’s released, that getting any of that kind of valid from those customers.

The conversations are being had but right now until we get it released they are buying the legacy, LANai cards and until I got focus as to right now are also has been – because our customers are buying is to focus on net new customers to CSPI and also our whole new market space in the Linux that we historically never played in.

Got it. And then the other question I have is regarding the E-2D, I was wondering if anything has changed as far as the insight you guys get as far as orders or billing and if there is any indication about the ramp ups that suppose to occur in production of those planes?

No, we really, we deal with our Arc customer constantly but there is not a lot of information that comes out, Brett, nothing has changed from that standpoint, when they get their orders from their customer it filtered down. So we don’t get that much advanced warning it’s just – we are at that mercy.

Got it, if say example – that they had dramatically increased production rates in the next couple of years what kind of lead time would you guys get on that I mean if they get all of a sudden 50% more product and you’re supplying them now I mean would that be difficult for you guys to pull it together on short notice or they need to provide you some kind of notice for that.

Well, remember we are getting a royalty.

Yes.

So its not really us so what we are providing there is we have parts and we have enough parts to certainly provide it to the integrator. So from that standpoint there is really not much that we are doing other than sending parts based on what they tell us, they need.

And you guys can handle what the parts – you guys can handle any volume they were looking for?

Right, under the current set of circumstances certainly we can meet their requirements.

Got it. All right. Thank you very much.

Thank you.

Thanks, Brett.

Thank you. [Operator Instructions] And speakers it does appear we have no further questions at this time. I will now hand the program back over to you for any additional or closing remarks.

Thank you, all for joining us this morning. We look forward to speaking with you again on our next call. Thank you.

And that does conclude today’s program. We’d like to thank you for your participation. Have a wonderful day. And you may discount at any time.