Greetings and welcome to the Socket Mobile, first quarter 2013 conference call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). It is now my pleasure to introduce your host, Jim Byers of MKR Group. Thank you Mr. Byers; you may begin.

Great. Thank you operator. Good afternoon and welcome to Socket’s conference call today to review financial results for its 2013 first quarter ended March 31, 2013. On the call today from Socket are Kevin Mills, President and CEO; and Dave Dunlap, Chief Financial Officer. Socket Mobile distributed its earnings release over the wire service at the close of the market today. The release has also been posted on Socket’s website at www.socketmobile.com. And in addition, a replay of today’s call will be available at Vcall.com shortly after the call’s completion and a transcript of this call will be posted on the Socket website within a few days. We’ve also posted replay numbers in today’s press release for those wishing to replay this call by phone. The phone replays will be available for one week. Before we begin, I would like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 as amended and Section 21-E of the Securities and Exchange Act of 1934 as amended. Such forward-looking statements include, but are not limited to statements regarding mobile computer data collection and handheld computer products, including details on timing, distribution and market acceptance of the product and statements predicting trends of sales and market conditions and opportunities in the markets in which Socket sells its products. Such statements involve risks and uncertainties and actual results could differ materially from the results anticipated in such forward-looking statements as a result of a number of factors, including but not limited to, the risk that manufacture of Socket’s products may be delayed or not rolled out as predicted due to technological, market or financial factors, including the availability of product components and necessary working capital, the risk that market acceptance and sales opportunities may not happen as anticipated, the risk that Socket’s application partners and current distribution channels may choose not to distribute the products or may not be successful in doing so, the risks that acceptance of Socket’s products and vertical application markets may not happen as anticipated, as well as other risks described in Socket’s most recent form 10-K and 10-Q reports filed with the Securities and Exchange Commission. Socket does not undertake any obligation to update any such forward-looking statements. Now with that said, I would like to turn the call over to Socket’s President and CEO, Kevin Mills.

Thanks Jim. Good afternoon everyone and thank you for joining us today. In today’s call I will begin with a brief review of our first quarter 2013 results and then discuss the business opportunities we see ahead in 2013. We are pleased to report a strong sequential increase in revenue and profitability for the first quarter. Our revenue for Q1 was $4.3 million consisting of $2.4 million of cordless scanning related products, $1.4 million of SoMo related products and $500,000 from service OEM and legacy related products. Our higher product sale coupled with lower expense levels have enabled us to record a profit if $75,000 or $0.02 per share. Achieving profitability marks a major step in our effort to return socket mobile to being a financially stable, profitable and growing company. This achievement is a result of a tremendous amount of hard work and sacrifice on the part of our employees, coupled with excellent cooperation from our suppliers. We are pound of this important first milestone, but we remain diligently focused on the continued work ahead to fully capitalize on the significant market opportunity we see ahead. I would now like to review our progress and outlook for both our cordless scanning and SoMo businesses, starting with our cordless scanning business. Our cordless scanning business grew strongly in Q1, with revenues increasing more than 50% sequentially and by more than 60% over the same quarter last year. This strong growth has been driven by an increasing number of mobile applications that are starting to be deployed across a number of industries and this is a trend we expect to continue throughout 2013 and beyond. We are seeing significant changes in the retail industry that are positive. The point to sale terminal or cash register is becoming increasingly obsolete and is…

Thank you Kevin. We are pleased with the strong order taste we reported in our February 12 management call, continued through the balance of the first quarter, resulting in revenue of $4.3 million, an increase of 54% over the previous quarter. In combination with reduced operating expenses, we achieved profitability of $75,000 or $0.02 per share. A more traditional measure of profitability is EBITDA, Earnings Before Interest, Taxes, Depreciation and Amortization. Our EBITDA profitability for the quarter was $324,000 or $0.07 per share. Another measure of the pace of order growth is our backlog, which are orders on hand at the beginning of the quarter, shippable during the quarter. We ended the first quarter with a backlog of $1.1 million, a typical backlog level. We ended the second quarter with a backlog of $1.9 million, giving us a strong start for the second quarter. As Kevin noted, the first quarter revenue increased in both of our primary product lines, cordless barcode scanning and handheld computing. Our cordless barcode scanning revenues increased 60% over the fourth quarter from $1.5 million to $2.4 million or approximately 10,000 units sold in the first quarter. The number of software application developers registering to use our barcode scanning software developer kit is now above 350. When a developer inserts our socket scan application programming interface calls into their application, then any of our barcode scanning products may be used with that application, providing easy to use tools to edit and process linear and 2D barcode scanned information. We are benefiting from the growing adoption by businesses of Smartphones and tablets for barcode scanning applications and our compatibility with the popular Smartphone and tablet operating systems, including Apple, Android, Blackberry and Windows Mobile. The worldwide availability of our products, the ease of use and sophisticated editing…

Thank you. (Operator Instructions). Our first question comes from the line of David Savory a Private Investor. Please proceed with our question.

Hi, good afternoon gentlemen. I wanted to start off by saying a very good quarter.

Thank you.

I got a couple of questions here. Can you just for a little information, can you tell me how many of the 70 iScanners you sold for the quarter.

Approximate 6,000.

6,000 okay. And can you elaborate a bit on how international sales are gong, especially Japan?

Yes, well the deal we had in Japan was for 3,200 units, which was delivered in the quarter. So that obviously skewed the Asia Pac region in this quarter and it did better than it traditionally does. So other than that, I think our revenue was pretty evenly spaced. U.S. was a little bit stronger. So maybe we were at 65% at domestically and 35% internationally. Europe was a little bit weaker than we expected and the economy over there seems to still be suffering greatly, but nothing too extraordinary.

Okay, thank you. I was so surprised that you did $0.5 million on service OEM legacy. Is that something we should see going forward or is it jut kind of an anomaly with it being a little high.

Well, Q1 was really a clean up of some end of life products, but we will have more products in this category starting in Q2. So even though it won’t be the same products per say, it will be in that range. As you may know we have discontinued our bluetooth modules and wireless LAN and we provided last time by opportunities to customers and those were delivered in Q1. We have some, as I said new opportunities starting in Q2. So the number should be reasonably in that area going forward.

Okay nice, nice. On your SoMo, can you tell me how many for the revenue of $1.4 million, how many units you sold?

Approximately 1,600.

1,600, okay. And I know over the last year you started selling fewer of the barcode scanners that’s accessory attachment. Have you seen any pickup in this at all?

I’d have to go and look, but nothing I would say that stood out as being significantly up or significantly down. I think that just speaking briefly on the SoMo, I think the timing of our transition in hindsight was not the best, not that we could do anything about it, but the fact that we launched a new product in July 2012 and the uncertainty entered the markets in August 2012, and it kind of sat there for a few months until Microsoft clarified the situation in January. Essentially I would say it set us back four to six months on the introduction of this product. So Q1 was encouraging, but I think as I said, it was encouraging that we see a general uplift. I think as we now talk to customers and better understand their decision processes, we will know of what rate this uptake will continue at.

Okay, it was nice to see that most of the growth was broad based. Do you see any large deals coming forward and do you have any update on ethical (ph).

We don’t see any large deals. I mean we are working on a number of large deals, but I don’t have a feeling that they are imminent. At this state we have not made any progresses with that account.

Okay, that will do it for me. Thank you very much and I look forward to the future.

Thank you very much David.

(Operator Instructions). Our next question comes from the line of Vinod Patel a Private Investor. Please proceed with out question.

Good morning fellows.

Hi Dr. Patel. How are you?

Good, good. Nice to see them turn profitable.

We share that view.

Okay, with yearly sales going up, how many could we produce on a daily or weekly basis? If we have full production, well could we increase it or what?

I’ll give you the example of how many hamburgers could you cook. Well, if you have them already in the pantry, its much easer to just start cooking them, and that’s the hard part in this is that our customers are coming and saying, can I have one now and we have to forecast. The lead times we deal with are items like the engines and other suppliers tend to be six to eight weeks minimum. So we have to make those commitments well in advance and then we work with our suppliers to bring in more as we need, but in terms of long-term capacity we really have no limitations. In terms of short term capacity, yes, we are managing our inventory very tightly and we are trying to bring in the right number that we believe we have sales for and because as I mentioned our cash position is tight and we can’t afford to have inventory sitting here for a month, because a customer delayed. So that has been part of the challenge of getting through this, but we really have no capacity per say in terms of volume of scanners we could produce. Just personally, when I stated with Logitech, we were doing a 1,000 mice a day. Within two years we were doing 14,000 and then six years 75,000 a day. So I know how to do that.

All right, that sounds good. Okay, by the way with the SoMo anything to do with the cardio hospitals or in England with HP.

Not really. I think as I said to David Savory previously, I think we’ve really lost a whole bunch of time due to the uncertainty and thus the market really stalled because people didn’t know what to do, so they did nothing. Most of the money thus is spent is on the software application, and not knowing whether you could reuse that investments caused people to do noting. This now has been clarified and we are seeing people come back, but I think it’s too early to start making predictions on the SoMo just jet.

Okay. Now on the second quarter you anticipate that to be a profitable quarter.

We do.

Okay. You anticipate it to be more profitable than the first quarter or greater sales I would say.

Yes. I mean one of the things we have to do is get people back on a full time basis, which we’ve done as of April 1. That will add additional expenses. We believe that there will be sufficient increase in sales to cover that expenses and still remain profitable.

Okay. Well you have a big deal, maybe not eminent but working on it. Is that a fair statement?

Absolutely. I mean absolutely. So I think we’ve seen larger deals come in, but I think the key thing to focus on is not the deals arriving, it’s the fact that developers are continuing to arrive and are writing applications that ultimately drive these sales and we are seeing a increasing number of developers and they seem to be working on larger and larger projects.

Right, the developer for the SoMo, how many did you say that we have for those.

We said we’d over 50.

Over 50.

Now we said that we’ve downloaded 80 as the case of different unique companies rise and both of those statements are true.

Okay. Now how was the Japanese order than we sent, the 3.2 I think it was. Are you getting feedback on that? Does that seem too successful?

Well first of all we only sent this at the end of March, okay, so there is currently as best we can understand. They are in a training and deployment phase. I do plan to travel to Japan this quarter to meet with the customer and understand how things are going and what’s the long term potential. The customer has the ability to order many, many more scanners.

How many would you say, if they may?

Well, lets say that they have in excess of 50,000 retail outlets.

50,000 outlets.

Correct. So they are a big company.

Okay, that could be 50,000 scanners.

It could be three times that if they had more than one scanner per shop.

Exactly, it would be a 100,000 scanners.

So it could be a big number.

Okay.

But we shouldn’t specialty too much because – we should wait until we meet with them and then understand and once we do and then we understand, we’ll be happy to report as best we can.

Okay you go over and be nice and friendly now.

Okay Dr. Patel, thank you very much.

Okay, I think believe or not I have nothing more to say. But another thing is that I’m very pleased. I think we turned the corner and we are profitable and things are going good now and I know your going to do this anyhow. Hopefully you keep all the expenses down, because that’s what causes the profitability.

We understand. It’s been a hard tough road and it has taken us a long time to get here and we intend to stay on this side for as long as we possibly can.

Okay.

All right, thanks again.

Right.

Our next question comes from the line of Steve Swanson a Private Investor. Please proceed with your question.

Sorry, I joined the call late. How is the cash situation looking at the end of quarter and how does it look for the next three months.

Well Steve, we reported over $600,000 on the balance sheet at the end of March, but we have still – our payables are extended beyond where we like them to be. So we have plenty of uses for that cash, but we’ve been building the working capital cycle with our higher levels of shipments sufficient to get us to the $4.3 million revenue number in Q1 and is best in growing; its increasing the cash flow from operations. Plus we have a bank line as you know in place that up to $2.5 million it’s based on receivables. So as our shipping increases we are able to increase the amount of cash we can borrow with the bank line and we’ve had good support from our investors in terms of short term needs to prime the pump and get that working capital cycle up and running. And so we have the ability to continue to meet customer demands, bring product in and continue to operate in a profitable operating fashion with the cash that we have or can get our hands on. But there is a need and a desire to catch up our payables faster than we might do from just the stage of growth. Particularly growth itself requires us to be able to financing growth and receivables and perhaps some inventory. So with the support we’ve had from our investors, its very helpful and we do intend to pay those short-term funds back. We’ve raised a total of $550,000 in the first quarter as a subordinated short-term line. We will use that during the second quarter, but we do expect to pay it back as quickly as we can thereafter.

Yes, and Steve just to summarize. Cash remains extremely tight, but we have enough, but I think if we seek rapid growth we will have greater challenges responding that growth unless we can get some more cash.

And so we were cash flow positive from operations in the first quarter.

Yes we were. Because the effects of working capital, but then with working capital we elected to pay down some of our vendors and the like. So we reapplied that cash back into the working capital cycle. But we were generating positive cash from operations throughout the quarter.

Okay. So we don’t feel we are going to have any issues with cash going forward.

We think we can operate and meet our objectives with the cash that is being generated and the programs such as our bank line that are currently in place.

Yes. Okay, thank you.

There are no further questions in the queue. I’d like to hand the call back over to management for closing comments.

Thank you. I’d just like to thank everyone for participating in today’s call and wish you all a good afternoon. Thank you.

Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.