Socket Mobile, Inc.

Welcome to Socket Mobile Inc. Q2 2023 Earnings Call. My name is Paul and I will be your operator for today's call. Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended. Such forward-looking statements include, but are not limited to, statements regarding mobile data collection and mobile data collection products, including details on timing, distribution, and market acceptance of products and statements predicting the trends, sales, and market conditions associated and opportunities in the markets in which socket mobile sells its products such statements involve risks and uncertainties and actual results could differ materially from the results anticipated in such forward-looking statements because of a number of factors including but not limited to the risk that manufacturer of sockets 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 risk that acceptance of Socket's products in vertical application markets may not happen as anticipated, as well as other risks described in Socket's most recent Form 10-K, and 10Q reports filed with the Securities and Exchange Commission. Socket does not undertake any obligation to update any such forward-looking statements. On the call with me today are Kevin Mills, Chief Executive Officer, Dave Holmes, Chief Business Officer, and Lin Zhao, Chief Financial Officer. I will now turn the call over to Kevin Mills. Mr. Mills, you may begin, sir.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. Our Q2 revenue was $5.1 million, a 19% decrease compared to the $6 million in Q2 2022. Our gross margins were 51.8 compared to 50.2, and we recorded an operating loss of $292,000 compared to an operating income of $189,000 in Q2 2022. Our Q2 revenues were impacted by the global weakness of the retail point of sale market, which remains our largest source of revenue. We saw a general malaise and uncertainty in the retail industry in North America during Q1, and we saw it continue in Q2 and spread to other regions of the world. The economic uncertainty in various regions has resulted in delayed investments and deployment decisions, which is a concern and outside our immediate control. However, we do continue to get the majority of the available business associated with iPad based point of sale solutions and believe we will benefit as the retail markets recover and strengthen based on our market-leading product portfolio. During Q2, we made significant progress on our product development plans and will get many new products into the market in Q3. Our new products are designed for both commercial services and industrial markets, which are currently more robust than retail and areas where we feel our technology could have a long and meaningful impact over time. In addition, they will reduce our dependency on the challenging retail sector. Dave will provide more details on the products and potential impact in a few moments. Q3 is going to be another challenging quarter. as we expect retail to remain weak and our new products will not have time to make a meaningful impact. We do, however, believe the new products will be able to contribute to our Q4 revenue and enable us to return to profitable operations. With that said, I'd now like to turn the call over to Dave Holmes.

Dave. Thank you, Kevin, and good afternoon, everyone. Today, I'd like to highlight a few of the significant milestones that we achieved in Q2 and talk a little bit more about some of the new products we have coming up as we continue our journey of becoming a more comprehensive data capture company. The engineering team has been working hard to develop a new line of ultra rugged industrial products that work in conjunction with Apple products. We'll be introducing our new extreme scan product line later this month. These products are targeted for harsh environments, such as manufacturing, construction, oil and gas and airports. Extreme scan will open new markets for socket mobile and also extend our reach within some of our current app partner base. Ultimately, this will also make us a more diversified and sustainable and less dependent on retail. In Q2, we continued to make significant progress promoting our free camera-based scanning as well. Our app partners are updating their apps with the latest version of our Capture SDK software to enable camera scanning with SocketCam. Building out an install base of users of our free version of SocketCam is critical. And thousands of app end users can now use SocketCam to capture data in their apps. The early adopter app partners have been extremely positive about the ease of implementation and the instant value it brings to the end users of their apps. The next step expected to go live next month is to enable these app end users who need to read damaged or more complex barcodes to upgrade from the free version to a more advanced version. SocketCam C860 on a monthly subscription basis through Apple's App Store and Google's Play Store. This upgrade will allow our app partners to support both cost-sensitive and advanced feature data capture requirements with the same application, enabling end users to select the best option for their unique needs. As customers upgrade to Socket CAMS 860, this will provide Socket Mobile with a recurring revenue stream each month. SocketCam is being adopted in apps supporting a wide variety of industries and market sectors. Delivery services, field order entry, and inventory apps, just to name a few examples. Our camera scanning continues to move forward, and we believe this is a critical step in the data capture journey. It makes us a more complete hardware and software data capture company. We feel that our camera scanning and industrial products create new opportunities for socket mobile. We can reach a larger and more diverse set of application providers and their end users. Capture SDK was also updated to include support for socket scan S370, our combo NFC and QR code reader. The socket scan S550, our NFC mobile wallet reader writer as well. This will ensure that our development partners can incorporate some of the new features expected in iOS 17 associated with personal identification. Our advances in NSC portfolio position Socket Mobile at the forefront of emerging digital ID in mobile driver's license markets. This will enable new apps, new markets, and new end users for Socket Mobile. Also, SocketScan S550 has been awarded Felica certification. Felica is a contactless RFID smart card technology developed by Sony in Japan, widely used for convenient payment, loyalty, transit, digital ID, and other quick contactless transactions. This certification makes SocketScan S550 compatible with the Felica system, used in multiple regions and countries around the world, including Japan, Bangladesh, Hong Kong, India, Indonesia, Vietnam, and many others. Our NFC portfolio is well positioned in the space as it starts picking up steam. We perceive the need for digital ID, mobile driver's license, and other contactless reader infrastructure having an impact on our revenue in 2024 and beyond. With that, I'll turn it over to Lynn for more details on our financial results. Lynn?