Good day ladies and gentlemen, and welcome to the Fourth Quarter 2011 TASER International, Inc. Earnings Conference Call. My name is Stacey, and I’ll be your conference moderator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instruction) As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the presentation over to your host for today to Mr. Rick Smith, CEO of TASER International, please proceed.

Thank you, and welcome everyone to our 2011 earnings call. Before we get started let me – I just got Dan read the Safer Harbor statement and we’re good to go. Dan Behrendt Hey, great thanks Rick. Certain statements contain in this presentation may be deemed to be forward looking statements as defined by the Private Security Litigation Reform Act of 1995. And TASER International intends such forward looking statements to be subject to the safe harbor created thereby such forward looking statements relate to expected revenue and earnings growth at the nation regarded as size of our target markets. Successful penetrations of all force in the market expansion of product sales through private security, military and sell (inaudible) consumer stop the test markets. Growth expectation for doing existing accounts, expansion of production capabilities, new product introductions, product safety and our business model. We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements herein. Such factors include, but are not limited to, market acceptance of our products, establishment and expansion of our direct and indirect distribution channel, attracting and retaining the endorsement of key opinion leaders in the law enforcement community, the level of product technology and price competition for our products, the degree and rate of growth of the markets in which we compete and accompanying demand for our products, potential delays in international and domestic orders, implementation risk for manufacturing automation, risks associated with rapid technological change, execution and implementation risk of new technology, new product introduction risk, ramping manufacturing production to meet demand, litigation resulting from alleged product related injuries and deaths, media publicity concerning product uses and allegations of injury and death and the negative impact this could have on sales,…

Thanks, Rick. As Rick indicated, revenue for the fourth quarter was $21.3 million, which is down approximately $1.5 million or 6.7% for the prior year. however, demand for the company’s products remain strong, having received orders totaling $1.6 million in the fourth quarter 2011, which we’ll recognize in the first quarter of 2012. Revenue for the full year was $90 million, which is up approximately $3.1 million from the prior year. The increase is driven primarily by the growing demand and successful adoption in the TASER X2, electronic control device which generated $8.1 million of revenue in the full year of 2011 with $3 million of that coming in the fourth quarter. So we definitely feel encouraged with the ramp on the X2. Gross margins for Q4 were $6.9 million or 32.4% of revenues, which is down 19.3% from the 51.7% in the prior year. the decline is driven primarily by the one-time $5.7 million charge in the fourth quarter reflect some write-off of production tooling and excess inventory for the TASER X3 and AXON video product lines. with the success of the new TASER X2, electronic control device, the company has included, when I tell through the current level X3 inventory even that will continue to sell and support the product line. The results in charges are a charge to excess inventory which is in the gross margin of $1.7 million as well as a impairment of the tooling assets to manufacture the X3, which were $558,000. Similarly with the AXON Flex video system, which we now service, we’ve concluded that the sell through the existing inventory of the first generation AXON product that resulted in a write-off of the excess inventory of $2 million, which is in the sales as well as a impairment of the tooling to…

All right, thanks Dan. One thing just to point out the Turner case from last year that Dan was referring to, we’re still awaiting the response from the court, on the post trial motions, so the judgment the jury verdict has still not been entered. This is pretty non typical for it to go this long, we do see that there is that could be interpreted as an indicator that the court is carefully considering the situation. Okay, so as Dan talked about, and you saw on the earnings release we’ve begun to breakout P&L by business unit. As you can see the profits and cash flow from our core business have been funding a major development effort in AXON and EVIDENCE.COM. We believe we are well positioned, it’s the first major mover in cloud computing for law enforcement, and we stand and what we see as an inflection point for the rapid adoption of officer based video, so while we had expensive lessons along the way that is part of building a new business as we know from even building our TASER business over the past two decades. we're confident that these investments have been the right move for TASER and position us to be a dominant player in a major new market. So even while funding this new business opportunity, the company generated $17 million in positive cash flow over the last year. So keep our eye on what will happen if the cloud and video business unit shifts from cash, consumption to cash generation. One note is well, most of the revenue I think as Dan pointed out in the video business unit, it was associated with our legacy TASER Cam product. So we actually saw a decline year-over-year in recognized revenue in the video business unit…

Yes, so go ahead and – in the case you’re willing to or like to ask a question and the operator will get you in the queue.

Thank you, (Operator Instructions) Your first question comes from the line of Steve Dyer with Craig-Hallum. Please proceed. Steven Dyer – Craig-Hallum Capital: Thanks. Good morning.

Good morning

Good morning, Steve. Steven Dyer – Craig-Hallum Capital: If I could drill in a little bit to the AXON, I think we’re four years into this whole bunch of money, a bunch was written down. It seems like a very promising product, but it has all along. What concrete evidence do you have at this point in time, this is something that you’re going to be able to overcome all the roadblocks and actually get people to do.

Well, at this point having a pre-release orders for almost 600 units, basically what you’re seeing is virtually everybody that had the previous unit is going to be converting over and having the Bay Area Rapid Transit Police placing an order for all of their options full deployment right out of the gate, we see is real helpful indicators. In terms of other specific quantifiable indicators I think you’re just going to have to keep an eye on order flow over the coming weeks as we continue to now go out and market and sell the product. So, I think the pre-orders were helpful. Most of what we have at this point is unfortunately qualitative in nature. I met with 50 or so chiefs at the ISCP where we showed Flex. I would characterize it, 48 out of 50 really reacted positively that they thought this was “the right product now” they felt our first-generation didn’t look like it was ready for prime time that they thought it was looked a bit prototypy and that the technology wasn’t quite there. But again, that's obviously just a qualitative metric where you’re just going to have to watch order flow as it develops in the bookings over the coming quarters. Steven Dyer – Craig-Hallum Capital: Okay. and then with respect to the X2, still being outsold pretty handily by the X26. by the end of the year, we’ll have, I guess 350,000 that are older than five years old, but we’re selling four, 5000 a quarter. so what are the people doing that are over five years old, but we're not seeing, is that they're just choosing to roll the dice and go with older equipment or I guess on an annualized basis, you’re selling 20,000 X2s, which is 7% or 8% of what you considered to be a really life addressable market at this point?

Yeah. Let me also, I want to add one more insight to the last answer on Flex, I mean the market when you said that even with the first generation, it seemed promising, I would say that was true in the marketplace conceptually, it was promising and well received the stumbling blocks were the execution that’s the first generation hardware just wasn't fully baked and that was really what was holding us back. So I think what hasn't changed is that it makes sense is just the implementation now is something that officers are reacting very positively to rather than the old hardware. Now shifting gears to the X2, we do have a number of things we’ll be announcing over the course of the year to continue to drive the upgrades one of course, that we’re talking about today was extending a phased approach to trade in credits. What we are seeing customers do that have units at more than five years old. These are the same agencies that have cut back on all older capital purchasing. They’re driving cars that are beyond their typical useful life. They’re not replenishing many of their supplies just given the budgetary environment. So what we’ve seen so far is they’re just continuing to use their existing inventory. And part of that is also that the training in transition costs to transition over to the new weapon platform. It’s just sometime for example that’s what I’m talking about with the customer here in Florida and that one of the first agencies that went full deployment with the X2. So I’m down here to learn about what their transition is look like. We’re streamlining online training components, so that they don’t spend it much time with officers, coming office, [reading] classrooms where we’re training, and this was logistical issue. So I mean the budget availability and the logistics of making a change have been sort of a two things that have slow the adoption to the level that we’re at now and obviously we’re looking everything we can do to help remove those obstacles and accelerate adoption over the course of the year. Steven Dyer – Craig-Hallum Capital: Okay. And then finally any insight on the cartridge number that seems relatively light this quarter versus previous quarters certainly previous Q4s where you normally see some budget money? Anything you can take from that?

This is Dan, I can take that one Rick. Yeah, I think the kind of a typical evident flow with the cartridges I can tell you that a large part of that $1.6 million of orders are received in the fourth quarter that will be recognized in the first quarter are for cartridges. And if we’d included those in a numbers then it would have been closer to this kind of levels you’d expect. So it’s just a little bit of a timing difference both which is sort of ebb and flow through the year and also this is the fact and we get some of those in late in the year and that will recognized in 2012. Steven Dyer – Craig-Hallum Capital: Okay. That’s it from me. Thanks.

Thanks, Steve.

Your next question comes from the line of Paul Coster with JPMorgan. Please proceed. Paul Coster – JPMorgan: Yes, thank you. Dan, I apologize if you already said this, I got the unit volumes, I haven't seen the revenue by product. It’s not disclosed somewhere, so I'll just take outline and go to the source?

We'll disclose out with the filing in the case. so the only thing after this one will be the unit volume now. Paul Coster – JPMorgan: Okay, got it. Looking forward, any comments on the buyback plan or the tax rate?

This is, yes, regarding the buyback, we’ve completed the fully executed the buyback and is approved from the board above the $12.5 million in March and $20 million in July. So we fully executed that, we’ll continuously obviously look at that as we go forward, but there's nothing approved at this point. On a deferred tax asset, we will continue to evaluate those as you know I’m sure that's it's a very complex calculation just to see exactly when those tax assets to be utilized, we’ve done our analysis, we just have to get through the audit on that and any changes will reflect in the 10-K when we file it? Paul Coster – JPMorgan: Great. Rick you talked about strategic objectives for 2012 rigorous execution, one of them was to drive international sales adoption, if you recall that now that sounds like a little bit of an evangelical sale, are you going to be phasing out your sales force to create that effect?

Yes, we are. We’ll provide more detail on the next conference call, but I can tell you dramatically one of the things that we’re doing is actually going to be sending, I love the term to used missionary (inaudible) the Founder and CEO of sales force used that same term with sales force expanded internationally, one of the things that they found was sending teams of people that really were trusted lieutenants within the existing organization over to help to bring up overseas capabilities was an important element of their business expansion. and that’s a play that Jeff Kukowski, our Chief Marketing Officer who is actually poising that independently of some of the reasons which I will do in that space. So part of the plan, we’ll involve taking some of our thought leaders that are part of our North American team and relocating teams of folks into key international markets to work with local agents, distributors, consultants, et cetera. and making sure that the approach to global sales is more integrated into the DNA of the company and we have teams of smart dedicated people who know the technology and have TASER in their bloodstream are end market focused and in understanding those markets and growing [them for us]. But it’s not going to be a huge budgetary, I’ll tell you the thing that we’re not planning on doing is going out and hiring a whole raft of new international sales people called – we don’t think that that’s the right approach. We do see, again, TASER is a bit of missionary, so it’s – our distributors that we’ve analyzed bit of done very well, tend to be focus distributors, small teams of people that don’t carry a lot of product lines, but they live and breath TASER and…

We are – the TASER Cam HD is now shipping. So it is out in the marketplace. We do have some agencies that have significant TASER Cam deployment that are testing the TASER Cam HD right now. Obviously, we’re hoping that we can get them through that testing and evaluation process in the first quarter, if not then we could see that [bumps slightly] in the second quarter, but it is now shipping. Paul Coster – JPMorgan: And last question, Dan, with this inventory now written down and the X3 will be sold through. can you just talk us through the accounting implications at the subsequent sales, you’re not rising back the previously written down inventory presumably it’s sort of different, talk us through the mechanics there if you would please.

Yeah, sure. So basically we’ve written down the inventory to the quality that we take we can sell through in the next two years. So to the extent that what we sell is sort of add or under that quantity there is – it will be just sort of a normal sale. For some reason the demand for that product is greater than we expected we’d actually have a higher profit, because we’d have – you’d think put back in inventories and sold that we were previously written off. But right now, our expectation is though this flow through this P&L in a normal way so we basically just written down to the number of units we expect to sell through. Paul Coster – JPMorgan: Okay, got it. Thank you, it helps. Thank you.

Thank you.

And at this time, I’d like to turn the call back over to Mr. Smith for closing remark.

Great, thank you. Well, it’s not a [secret] obviously calls like today are not the most fund conference calls, but when you are running a business and doing somethings that are potentially transformed even building out the new businesses we are. These are the things that as management team you have to work through – so we appreciate everybody participating in the call. We appreciate having your shareholders. I do think that if TASER has gone through a number of growth basis in its history. I’d invite you all to come out to our shareholder meeting and meet some of the management team. A lot of those folks who would I rely on is independent sounding boards who’ve remarked on the changes in the company and in the culture that they believe are really reflective that we are doing the right things to be able to position ourselves to really break through that $100 million revenue mark, and have an infrastructure and a team that they can scalably grow this business both in the core ECD business and in the new video and cloud space of which we are pioneering. so we look forward to so much more fun and rewarding conference calls later this year, as some of these efforts begin to take root and show their results in our financial statements. So thanks everyone. we look forward to talking to you in a few months on our next conference call. And Dan, do you have the date for our shareholder meeting?

It will be on May 24th, Rick.

May 24th. So again, we’d invite everybody to come out to see, touch and feel some of the new products and I’ll join (inaudible) on the 24th of May. So thanks, and everybody have a great day.

We thank you for your participation in today’s conference. This does conclude your presentation. You may now disconnect and have a great day.