Good day everyone and welcome to the ClearOne third quarter 2013 earnings results conference call. This call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to PondelWilkinson’s, Roger Pondel.

Thank you very much. Welcome everyone and thank you for joining us today to discuss ClearOne’s 2013 third quarter financial results. On the call today are Zeyney Hakimoglu, President and CEO and Narsi Narayanan, Vice President of Finance. First some housekeeping before we begin. Please be advised that this conference call is being broadcast live on the Internet at www. ClearOne.com., a playback will be available for at least three months and may be accessed on the Internet at ClearOne’s web site. Before we begin I would like to make the cautionary statement and remind everyone that all of the information discussed on the call today is covered under the Safe Harbor Provisions of the Litigation Reform Act. The company’s discussion today will include forward-looking information reflecting management’s current forecast to certain aspects of the company’s future and actual results could differ materially from those stated or implied. With that said, let me now turn the call over to Zeyney.

Thank you Roger, thank you Kate, and good morning everyone. This morning I am calling from Europe, calling from the EAIE Partner Conference held in Istanbul. As you may have seen in our press release, ClearOne achieved exceptional revenue growth of 7% during the third quarter. This marks our fifth consecutive quarter of year-over-year revenue growth. Our vision and strategy are working. By managing our business with a relentless focus on operational excellence, growth through innovation and sensible use of hard earned growth capital we have been able to deliver a profitable performance and solid returns for our shareholders. We posted these strong results despite the negative impact the tough market conditions including continued economic weakness in EAIE and the U.S. government’s sequestration, thanks in a large part to our outstanding performance in the North America and Asia Pacific markets. Our ability to post this strong performance is a testament to our core strategy for growth which relies on the strategically built portfolio of innovative and profitable products to drive long term returns. We will continue to allocate a fair share of our resources to drive these new growth opportunities. Our performance is also a testament to the strength of the market in which we operate. We have worked to adapt to and intercept a changing market place with changing needs and we are truly seeing the demand for new and innovative products playing out much as we predicted. We recognize that there was an appetite for smart solutions to new business challenges and we align the company, ClearOne, to meet these needs head on. We are pleased with this quarter’s results and see our solid performance as a validation of our strategy, but also an exciting preview of what’s to come. Our results this quarter are especially encouraging when…

Thank you Zeyney and good morning everyone. Before I begin I would like to point out two things. First I will [indiscernible] for the non-GAAP financial measures a reconciliation of the non-GAAP measures and reported GAAP was included in the earning release that went out this morning. In our vision our financial performance for this quarter, as well as the nine month period were compatible to those in 2012 include favorable litigation related proceeds. The litigation proceeds amount can be found in the operating expense section of our statement of operations and have the positive effect of decreasing total operating expenses and increasing both operating income and net income. Now turning to our financial report of third quarter 2013. This month the following comparisons refer to the third quarter 2013 with the same quarter of 2012. Net revenue increased to $12.4 million making this quarter the strongest ever third quarter in terms of revenue. The revenue for the third quarter increased by 7% compared to $11.6 million in 2012 third quarter. Gross profit of $7.4 million are 16% of revenue compared to the $6.7 million are 15% of revenue in 2012 third quarter. This increase in gross margin was due to favorable product mix. Turning to operating expenses. Sales and marketing expense increased by 22% to $2.2 million from $1.2 million in 2012. The increase was mainly due to increased commissions to salespersons and independent reps. However when compared to the second quarter of 2013 the increase was 26%. Research and product development expense decreased about 9% to $1.8 million from $2 million. The decrease was mainly due to reduced employee costs and consulting fees, partially offset by an increase in R&D project costs. General and administrative expense decreased to $1.4 million from $1.5 million. This was a decrease of…

Thank you Narsi. Before getting in to the Q&A I wanted to be clear that while we are very pleased with the progress we have made and how far we have come we will continue to forge ahead and execute on our strategic plan to position the company for accelerated growth. ClearOne is at the center of a very unique moment in the market in which we have sharply increased our opportunity from a several hundred million dollar market to a multi-billion dollar growth market. We are confident we have the right product mix, the right road map and the right global sales channels to meet the evolving needs of this robust customer base. With that and for the time available we would now like to address any questions you may have. Kate?

(Operator Instructions) We have a question from Honchak Chandi [ph] with B. Riley & Co., your line is open.

Hi, it is Pankit Chondis [ph] from B. Riley & Co. Can you guys give us a breakdown by segment and as you always do?

What exactly do you want actually? Do you want group net or what exactly are you looking for –

Either growth rates or percentage of year’s – ideally growth rates for Pro-UCM video.

Okay let me first give the mix. America contributed for Q3, close to 70%. APAC was about 18% and EAIE] was 13% actually. Okay. Year-to-date for all nine months, America is worth about 68%, the APAC was 19.5%, and EAIE was about 13% actually. As far as -- both contributed almost all of the growth. For Q3 the growth was 19.1%. Year-to-date it was 12%. [indiscernible] for Q3 was down by 16.2% and year-to-date it was 10% down. Year-to-date it was 16% up but for this quarter it was about 14% down actually.

Okay, that helps, thanks Narsi, nice color. Now regarding visual [indiscernible] could you give us an update on their [indiscernible] for the visual offering, I am looking at my notes for the last call, I believe it was to release in September?

Yes. We talked about last quarter that we hoped to be releasing to production in the third quarter. We did have some delays on material procurement and a slightly extended design on the streaming product which will bring us to release for first customer shipped one quarter away from what we anticipated which will be the end of the fourth quarter. Of course we were disappointed with that but they were situations that we made the most of but we appear to be fully on track and look forward to that.

Understood. It seems like you are putting out a better product with adding some features to streaming, is there a holiday season buying related to this or it’s not a dominant factor. Okay thanks.

I wish it was but absolutely not.

Thanks, and one last question for me in terms of the adaptation of visual after you put out an upgrade can you help me understand what’s the -- really for the next two quarters, is there a training learning curve and do you really see material contribution in Q1 or Q2?

Like any new product when it has new features and new functionality, there is a learning curve, there is a trial curve, there is testing, speccing and bidding for various tenders, so it does take a ramp up period. We talked today about introducing some of our microphones, you know as far back as a year ago, the beam-former one full shipment ago, in terms of the quarter, so it does take time but the product is good and the market is ready which we believe it is. We should start seeing the growth in 2014.

Great, thanks a lot.

Thank you.

Our next question comes from the line of [indiscernible]. Your line is open.

Thank you. Nice job on the inventory work down this past quarter in the margins. I just wanted to get your sense as to whether you think, given this launch, you will need to build inventory this quarter and whether you can continue to maintain the 60+% margin as you have this year so far?

We have been very clear about it and we will have no problem maintaining that 60+% margin and as far as inventory of confirmed. We do have [ph] an allowance for the video product ahead. I don’t believe we are going to start up actually. We will be able to maintain this level in the future.

Okay.

I also wanted to add that generally we don’t introduce products that don’t give a positive impact to our gross margin. We are very particular about what new products we put out.

Thank you for that color and can you talk a little bit about – I realize you are trying to buy back stock – you are trying to be thoughtful, but the stock right now, it’s up today with these good results so that is going to [indiscernible] about 4.5% to $8.60 but nevertheless you have $4.63 in cash which is about 54% of your market cap and your tangible book value is about $6.50 a share. So the business itself isn’t really getting much respect from the street. You traded about 4x EBD for this year. Is there any thought of maybe doing a more accelerated buy back maybe with turning some of the cash to dividend, or on the other side, in terms of an acquisition, are we going to hear anything about cash use, just give us your sense of that.

Alan I think you hit all areas that we have considered. The cash doesn’t come very easily. As you know there is a lot of hard work to get that cash. We got a nice little windfall of cash and all of the areas that you mentioned are certainly on the table. We are not afraid of a large acquisition and we look for complementary technology or creative opportunities but you’d have to be priced right. We certainly want to be able to absorb it. We don’t want to look forward to a write-off, years ahead. So we are very particular. In terms of the stock buyback and other options. We are looking at that but the money comes painfully slowly and it is easy to eliminate it from your balance sheet quickly so we are going to be very thoughtful and we spend a lot of time planning and looking at that. Also I would say that the market needs to see growth from us. We are under-valued. We understand that we are under-valued and performance relative to growth and continued profitability, I believe, will bring our stock share value up.

I agree and I know in your case the money – really it has taken so long with these lawsuits and everything to finish but it seems like you are at the end of a road, hopefully at the end of this year, and now it is all about growth and maybe Europe coming back. Can you give us a sense since you are in Istanbul, just tell us what you think, whether Europe is going to come back – it seems like we are getting some early signs of growth there, do you see that as being the driver for next year.

Yes actually that is a great question and I had a chance to talk to about 50 partners who showed up here to participate in our conference. We showed a lot of the new products and they were extremely enthusiastic about that as well as our existing products. We see bright spots in UK. We see perhaps Italy picking up. We see, of course, Russia is a little bit uncertain but the partners were enthusiastic and feel like the worst is over. It is a little uncertain but we come in with value products and the market is looking for value products, which means a better performance at lower cost and I think that the partners are very enthusiastic, again, I had less concern to worry then when I got here. So I think things are looking bright.

Thank you.

Our next question comes from the line of Gregory Fujii with Amelon Capital Management. Your line is open. Gregory Fujii – Amelon Capital Management: Hi, Zeyney, you mentioned being at the center of a unique moment in the market, can you elaborate on this by letting us know specific customer needs are evolving and what you are doing to address those?

Okay. Thank you Greg. While the market is changing because people are looking for value. The gilded age is over. People are not looking to install expensive $250,000, $500,000 video infrastructure systems going forward. They are looking for low cost easily deployable integrated solutions which ClearOne today can offer and will offer more strongly as our new products come out. They are looking for a reduction of capital expenses. They are looking for solutions that can be upgraded easily by software upgrades rather than forklift changes of equipment. So in terms of our video products this is what is happening. In terms of Pro-Audio, dealers, architects, consultants and integrators are challenged in today’s environment to put in a system, get it working and get paid. ClearOne has offered a complete suite of solutions from the microphone to the Pro-Audio mixer including video so that an integrator can come in, put in a job, know it is going to work soup to nuts and get paid quickly. Credit is tight still. People want lower instillation costs. Equipment that is higher quality with more performance so with our integrated suite, from soup to nuts, again microphones all the way down to the mixer and video, I think we are serving a very important part of the integration market. Software based, cloud based solutions – clouds are based on software and with our core software solution and video and stream net, while we don’t have a complete cloud solution today we have the core essential elements to bring us there when the market is ready. In terms of streaming and signage that is an emerging market. Streaming and signage used to be an expensive capital expenditure because displays were expensive, special wiring to bring video was expensive. Today IP infrastructure and at least our infrastructure are unique and network based architecture is very cost effective solution to bring streaming and signage to the enterprise market where we focused. So I think our product suite is intercepting very nicely with the economic and function needs of the market and we are optimistic that that will drive our growth. Gregory Fujii – Amelon Capital Management: Thanks Zeyney.

Thanks Greg. Our next question comes from the line of George Melas with MKH Management. Your line is open. George Melas – MKH Management: Narsi can I ask you to restate the breakdown by product, but give us the percentage for the quarter.

You are talking about the mix or the growth actually George? George Melas – MKH Management: No I don’t want the growth I just wanted the mix between Pro and video.

Okay for this quarter Pro was 72% and UC was 21%, and the remainder is video. For year-to-date Pro was 68%, UC was 24%, and the balance is video. George Melas – MKH Management: Okay great, thank you. If you look at the performance of the microphone suite did you see it pick up primarily in North America or do you see that being adopted across geographies.

It really is across geographies. Of course as we get it in to China, we have not yet introduced our wireless microphones in China in a substantial way, but across geographies we see a nice little uptick. It does take time in EAIE because we just introduced our wireless microphone in EAIE as we now have the right frequency compression which EAIE standards require. The beam former has obviously is always dominant in the U.S. based on an proportionate mix of products across geographies but all areas can use this and all are enthusiastic to use it. George Melas – MKH Management: Okay great. And then I just wanted to ask you one broad question. If you look at the revenue mix by geographies EAIE is just 13% or 14%, why is it so low compared to North America, is it a matter of your distribution there or is there more competition, or is there just much less demand?

Well I think it is generally there is somewhat less demand. Of course there are international brands that are favored and probably takes up some percentage of the business but simply the demand for international is lower. There is high demand areas such as UK and Germany. I would say even the Middle East is an area where is large projects that come and go but there is a large swathe of regional area that just doesn’t have the demand or the infrastructure needs that the U. S. and more developed nations have. George Melas – MKH Management: Okay great, thank you very much.

Thank you George.

I am not showing any further questions at this time. I would like to turn the call back to management for closing remarks.

Okay, thank you Kate and we appreciate your continued interest in ClearOne and joining us today. If there are any further questions please don’t hesitate to contact ClearOne Investor Relations or contact Narsi or me. We thank you for your attention today.

Ladies and gentlemen thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a good day.