Question-and-Answer Session
Operator
Thank you, Mr. Ehrlich. (Operator instructions) We’ll take our first question from Arthur Winston with Pilot Advisors.
Arthur Winston – Pilot Advisors
Yes, good morning.
Robert Ehrlich
Hi, Art.
Arthur Winston – Pilot Advisors
Hi, Bob. We’ve been hearing about different stories on what’s going on with this Armor Division. First it was you couldn’t get the cars, then it was a change in the type of car, and now it’s absence of raw materials. I wonder if you could just explain straight as an arrow in English what happened here, what’s happening and what may happen? I’m just curious how much we’ve lost so far in this division this year and what the sales were?
Robert Ehrlich
The sales have dropped substantially. We had anticipated selling eight cars a month for the first six months. We sold far fewer than that. We only shipped I think six in June. Altogether we shipped less than ten. We suffered very much from the things that you talk about. First of all, the absence – the lateness of the car arriving, then the car design being changed by the army, and most importantly then the materials from our supplier failed the tests. That wasn’t our problem. We order the materials well in advance. The army tested them and they failed, and they gave them back and said they had to remake them. And that obviously did not allow us for armor cars because we don’t have the armor material and we can’t function. All of those problems have been corrected. As I said, we shipped nine cars in July. We should be able to ship a steady eight cars a month for the balance of the year. We are working on a significant follow-on order. The army is happy with the cars. The chief staff of the IDF was at a meeting. Recently they gave us an award because of one of our cars stopped the Paris attach in Gaza and he was particularly impressed with the performance of the car. I think that we see opportunities in India, particularly we are now – we delivered a model to a show in India that was very well received and we are now bidding for a number of projects, none of which will materialize in ’08, but should begin to materialize in ’09 and 2010. It’s a tough business though. There is no question that we are looking to find ways to enter other markets with our armor materials and our armor cars to expand their opportunities to not have these – not to be subject to these kinds of problems in a limited fashion.
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