Socket Mobile, Inc.

Welcome to the Socket Mobile, Inc. Q3 2023 earnings call. My name is Jen, 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 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 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 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 10-Q 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.

Thank you very much, operator. Good afternoon, everyone, and thank you for joining us today. Our Q3 revenue was $3.2 million, a 14% decrease compared to the $3.7 million in Q3 2022. In Q3, we had an operating loss of $1.4 million compared to an operating loss of $947,000 in Q3 2022. Our Q3 revenues were much lower than expected, primarily due to changes in our distributor partners' inventory levels. I begin by explaining how our sales delivery system works. Socket Mobile delivers most of its products to our end users via two-tier distribution system. We sell our products to our distribution partners, such as Ingram, which is the first tier. Our distribution partners sell the products to resellers, like Amazon, which is the second tier. The resellers deliver to end users. Our Q3 revenues were significantly impacted because our distribution partners reduced their inventories. In Q3, our distributors reduced their inventories by 50% by selling much more than they purchased. The inventory reduction was driven by market uncertainties and higher interest rates. And while it had a dramatic impact on our reported Q3 revenue, we believe it does not have a significant impact on the underlying demand for our products. We believe that sales from distribution to resellers and end users provide a more accurate picture of the underlying demand in that business. And this demand was significantly higher than the reported revenue and was in line with our expectations. On the positive side, In Q3, we did complete many of our longer-term projects and were able to launch several significant products, products that we believe will be major contributors to revenue in the coming quarters. I would now like to turn the call over to Dave Holmes, who will provide an update on the significant products and milestones achieved in Q3. Dave.

Thanks, Kevin, and good afternoon, everyone. As Kevin said, today I'd like to highlight a few of the significant milestones that we achieved in Q3 and talk a little bit about how our investments and innovation are helping transform Socket Mobile into a more comprehensive data capture company. We launched several new products in Q3. The XtremeScan product line comprised of three different configurations, XtremeScan Case, XtremeScan and XtremeScan Grip. are designed for iPhone and works with iPhone 15, 14, 13, and 12. This product family represents a significant milestone in our commitment to delivering high quality data capture solutions for our customers in industrial, manufacturing, warehousing, oil and gas, and airports. XtremeScan is designed to enable iPhones to withstand harsh industrial conditions offering robust scanning capabilities with military-grade durability. It opens the door into new customer segments that demand the ultimate performance in the most difficult environments. We also launched SocketCam C860, an advanced cameras-based scanning solution. SocketCam C860 is a follow-on to our free camera-based scanner, SocketCam C820, that we launched in Q2. C860 is tailored for users with more demanding scanning needs, those working in challenging conditions, or those dealing with poorly printed or damaged barcodes. There are no licensing fees for app providers to include SocketCam into their apps. They simply integrate or capture SDK with SocketCam into their applications. This enables them to service a wide range of end users with various data capture requirements. This approach enables developers to service price-sensitive end users with the free C820 and address performance-sensitive needs with the C860 or any of our hardware scanners. Happy end users can access the capabilities of SocketCam C860 with a monthly subscription fee. Capture SDK was also upgraded in Q3 and is with full compatibility to iOS 17. It supports our complete range of barcode scanners and NFC reader writers across the entire Socket Mobile product line, ensuring that iOS and Android application developers can fully meet their data capture requirements and maximize performance for their end users. Socket Mobile Capture SDK has been integrated into thousands of applications across various industries. Our new products will extend our reach and diversify our customer base. SocketCam will provide SocketMobile with a recurring revenue stream each month. Ultimately, this will also make us more diversified and sustainable and less dependent on retail. We are becoming a more complete hardware and software data capture company. With that, I'll turn it over to Lynn for more details on our financial results. Lynn?