Good day, ladies and gentlemen and welcome to the TransAct Technologies First Quarter 2016 Conference Call. [Operator Instructions] I would now like to introduce your host for today’s conference, Mr. James Leahy, Investor Relations. Sir, please go ahead.

Thank you, Iya. Good afternoon, and welcome to TransAct Technologies 2016 first quarter conference call. Joining us today from the company are Chairman and CEO, Bart Shuldman and President and CFO, Steve DeMartino. Today’s call will include a discussion of the Company’s key operating strategies, progress against these initiatives and details on the first quarter financial results. We will then open the call to participants for questions. As a reminder, this conference call contains statements about future events and expectations, which are forward-looking in nature. Statements on this call maybe deemed as forward-looking and actual results may differ materially. For a full list of risks inherent to the business and the company, please refer to the company’s SEC filings, including its reports on Form 10-K and 10-Q. TransAct undertakes no obligations to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. Today’s call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in today’s press release as well as on the Company’s website. At this time, I would like to turn the call over to Bart Shuldman. Bart?

Thank you Jim and welcome to - welcome everybody joining us on this afternoon's conference call and webcast. This afternoon we reported first quarter revenue of $14.4 million, EBITDA of $1.3 million and diluted EPS of $0.08 a share. While Steve will review the financials in more detail, I'd like to start by noting that our 2016 first quarter results demonstrated our successful strategy of diversifying TransAct's product portfolio and shifting our sales mix toward higher new margin products. Products like our Epicentral promotion and bonusing print system and our growing line of AccuDate food safety terminal solutions. In particular, progress with these newest products helped drive an 80 basis points gross margins expansion to 41% in the quarter. We also made further investments in the faster growing segments of our business and believe that the progress we're making has positioned us to execute on what we see as a multi-year revenue opportunity for TransAct. Before I had the call to Steve, I want to review our ongoing efforts in the markets we serve as well as our outlook for the balance of 2016. First with our AccuDate food safety terminals, we continue to benefit from the notable shift across the business landscape with regards to how operators view the connection between food safety and their internal processes and workflows. We entered 2016 with the growing potential book of AccuDate business and that growth continued in the first quarter. Internally, we measure our success through wins where restaurant and food service companies approve our terminal for using their establishments. These wins lead to a customer doing a full roll out over time in all their establishments or they give us the opportunity to sell directly to each franchise, what we call a license to hunt. As our shareholders have inquired…

Thanks, Bart. Good afternoon everyone. 2016 first quarter net sales were $14.4 million compared to $16.2 million in the year-ago quarter. As Bart pointed out earlier, our ability to deliver year-over-year gross margin expansion of 80 basis points in the quarter clearly demonstrates the benefits of the company’s strategy, which is now focused on high-margin high-growth products such as Epicentral and AccuDate. We also continue to position the company for further growth in 2016, thanks to our continued investment and the development, sales and support of these newest product lines. Looking at our sales by market for the first quarter, food safety POS and banking sales of $3.1 million, grew 41% or $900,000 over last year’s first quarter. Sales in the period largely reflect McDonald’s undergoing rollout of our Ithaca 9000 printer throughout their stores. Important, the Ithaca 9000 has become an integral part of McDonald’s technology solution and supported their multiple new product initiatives such as customized burgers and other cook while you wait items, which should lead to strong sales for us throughout 2016. On the food safety side of the business, sales of food safety terminals were essentially flat compared with the year-ago period, as we continue to build a foundation for long-term growth. As Bart mentioned earlier, we have now won 44 distinct restaurant brands and concepts that together represent a total potential addressable opportunity of over 80,000 terminals, and we expect to execute on these initial opportunities over the next several years. Casino and gaming sales were down slightly by approximately $200,000 or 3% year-over-year to $5.4 million. However, as we have seen in the past four consecutive quarters, this business continues to benefit from strong domestic sales of our Epic casino and gaming printers, evidenced by a 29% increase in domestic printer sales in…

Thanks, Steve, great job. Before opening up the call to your questions, I want to again emphasize that we see a great number of opportunities for TransAct to grow. Epicentral continues to gain traction with casino operators worldwide. Our Epic 950 gaming device printer is taking share in the domestic marketplace and our AccuDate food safety portfolio continues to be an exciting opportunity for TransAct as it focus restaurants and foodservice operators on a technology solution to a growing issue of food safety. TransAct has been dramatically transformed over the past several years and our efforts to inject high technology, software-driven solutions into markets where our printer expertise is valued and can be coupled with software and terminal technology can happen. Finally, before opening the call to Q&A, I wanted to mention that Steve will be presenting at the 17th Annual B.Riley and Company Annual Investor Conference in California on May 26 and will be available for one-on-one investor meetings that day. For anyone attending the conference, if you are interested in meeting to hear more about TransAct and the exciting opportunities we are executing on, we just want to meet Steve. Please reach out to our IR firm JCIR at 212-835-8500. We’ll be happy to work with conference coordinators to schedule time for you to meet with Steve. Also, we will be having our Annual Shareholders Meeting in Las Vegas this year. So please join us our expanded Las Vegas office on Thursday, May 12 the 10 A.M. And finally, for anyone traveling to the Global Gaming Show in Macau for May 17 through Thursday May 19, please stop by our booth and say hello, I will be there. With that, operator, let's take some questions.

[Operator Instructions] Our first question comes from Phil Bernard from Eilers & Krejcik. Your line is now open.

Hi, guys, thanks for taking my call.

Hello, Phil, how are you.

First quick question – I am doing great. Thanks for asking. First question on restaurants. I know you mentioned the 44 brands and 80,000 terminal potential, and that this is still a nascent area for you guys. What is the penetration of that 80,000 so far if we are able to get some color there?

Yes, we knew you would ask that question.

I had to ask.

Look, it's not well penetrated. Look, McDonald’s is in that number, so we've penetrated some McDonald’s and some are ones we actually closed at the end the last year and some in the first quarter. So there is a lot go and look, we feel - I attended the ROTH Capital Investor Conference and the investors were asking good questions. How do we get more color on what the opportunity is because we talk about this 500,000 to 600,000 terminals out there, the investors are asking where are we in the process. So between us and our friends at JCIR who helps us investor relations we decided to do something like this where over time we will continue to update you on how many venues we've closed and what the potential of those venues are. And just to clarify, for instance, we've won McDonald's now not just in the US, but we've won McDonald's in other countries, but we only call that one restaurant company. So we don't put McDonald's in the different areas of the world and add that up as - add to our number, that's just one. So these are really 44 separate companies, but it's important for - we feel it's important for us to share with you because we have made success. Early, a couple years ago we talked about that we were in trials with a bunch of restaurant companies that added up to close to 100,000 terminals and that was just trials, not closed, not wins, what we define as wins. Well, now we can say to the shareholders out of that 100,000 that we were trialed at, we now have won 44 and it’s 80,000. So over time we will update you, but we are going to stay way for the exact…

Got it. Okay, well then I look forward to getting those updates in the future and that all sounds pretty good. I guess one more question in order to maybe give us a better idea on the value of some of these contracts. What percentage is McDonald's of your POS revenue? Would you be able to provide a ballpark there? Is it half of the POS, more than that?

Of our total POS, we don't break that out.

Okay. All right, great. Well, thank you. Let's move on to casino gaming, you mentioned Foxwoods Epicentral 1,900 units there and that there was another property that you're able to sign up during the quarter. Would you be able to mention who that was or how many additional units?

No, the Fox was, we mentioned because way back when we were doing the trial, we were trialing our system and announced that Fox was willing to do that for us. As some of our shareholders will remember, the market turned – the major downturns, we ran into a great recession and Foxwoods while trialing it and helping us out and helping us to work through what it was like to implement it and seeing where our bugs were and the rest, they ended up pulling it out. And I think that we asked Foxwoods if they wouldn’t mind if we announced their name, because I think it’s personally for me a great win, given the fact that they were involved with the company years ago and we're willing to come back and buy the system once they got healthier and implement it with a great testament to not only the system, but the relationship between the two companies. So we really stay away from announcing where the system is running and that's because our customers asked us to.

Got it. Okay. One more question on the top line. TransAct Services Group, is most of that revenue related to lottery implementation or lottery? Is most of that rate related to lottery sales, we should say, with IGT?

TSG breaks out into really three areas, so the biggest piece, but spare parts for of our GTECH printers of which we have 5 and 50,000 [ph] in the marketplace. The other part is service contracts, so where we go in and have signed up extended warranty service contracts with not only our printers but our terminals and you should know that we're selling extended service contracts for our terminals. And then the other piece is consumables, a lot of that being our oil and gas business. So when you see our TSG sales come down, one of the components is clearly oil and gas consumables, there is nothing we can do, right. They are not printing out as many reports as they were, so the consumable sales come down. We did see our lottery spare parts as Steve mention come down. Not typical of the business, so we are still working through what could be going on there. We still have that many printers out there and maybe it's just a quarter where they just decided to buy less for whatever reason, but it's really no indication of our relationship or the amount of printers we have out there, we still have well over 0.5 million printers out there. So what you’re seeing is really an impact of the oil and gas business in there and we are selling service contracts, so that would add to the revenue, but we also saw our lottery and spare part sales come down.

Okay, got it. And then my last question on product development, you guys are working on developing new channels and new products within Food Safety and PoS as well as on the Casino Gaming side, enhancing the Epicentral product, do you anticipate R&D spend at current levels throughout the remainder of the year?

Yeah. It will come down a tiny bit. It should come down a tiny bit. We’re in an expedited mode on the new AccuDate terminal. As I said in my talk, the opportunity that has been handed to us, we are -- people should know that we are the company that is really opening up this marketplace. We are talking to every major and minor restaurant company and people have now many different ideas of how they want to use the terminal. McDonald's has one idea, a fast casual has a different idea, a casual restaurant has a different idea and we are blazing that in. We've got what seems to be a very integrated technical solution that's been asked of us and we’re in an expedited mode to get that done. We see this is a wonderful opportunity and again we want to be first to market. We don't believe anybody else is out there, but it’s important for us to be first out there and it looks great. So we are spending a little extra money in the first half of the year. Epicentral is the same way. We've got a fair amount of customers that are asking us to do some different things with the system, a little better user interface, some ways to integrate into their process of couponing and so we’ve added some engineers to get that software done. I think this year, we’re going to have a fantastic G2E Las Vegas show with some of the things that we’re going to be able to show. So we are working pretty hard on those. If you look at the company, Phil, we were in this PoS banking market that for better word, just collapsed, right. I mean, banks are not putting printers in their branches and in fact they are closing braces, they are spending all their money on cyber security. The PoS market clearly going away from printing technology and that’s a legacy business that we have and quickly we're trying to get AccuDate and Epicentral as fast up as we can as we watch the PoS and banking business go away and our oil and gas business is down and down even more. This first quarter, this year, it was down more than the first quarter last year. We're probably at the bottom, I don't think it can get any worse, but look, that's the reality of being in the oil and gas market, it's a boom and bust industry, but it is important for us to get these AccuDate technologies done and Epicentral done. So we see the opportunities, we’re excited about them and we need the product. So you’re seeing us spent a little bit more in the first half of the year.

Got it. Great. Well, that's it for me and good luck developing those new products and winning new clients.

Thanks, Phil.

[Operator Instructions] Our next question comes from Kara Anderson from B. Riley & Company. Your line is open.

Hi, guys. Thanks for taking my questions. Let me start with Epicentral, how many are installed as of today?

It's 11 or 12, Kara.

And then just wondering on the two installations in the quarter, did you see any incremental printer sales as a result of those installations?

Well, not at Foxwoods.

Last year, for one of them.

Yeah. Last year, for one of them, we did. And that's one of the positives about Epicentral is driving incremental 950 sales.

Do you expect to see any printer sales out of the two installations that are in the pipeline?

I think they’re done. Yeah. I think they have done all the work that they needed to do with their printers.

So it's something that is done upfront ahead of installations, it sounds like?

Yes. But we have, like, we have customers right now that we are talking to, Kara, that are in the what we call the serious category about signing up for Epicentral and we know that they’re starting to buy the 950 over our competitors product because with incremental slot machines that they are buying, they’ve changed from being our competitors’ printer house to buying our printer in their new slot machines because they are getting ready to eventually go with Epicentral. So which is driving casino is the change from being a house that uses our competitor’s product to a house that now uses our product. So we see that, hence why we think the 29% increase in the first quarter. I’m curious I think it’s is tomorrow that Scientific Games comes out with their numbers, I'm curious to see what they say about the market, about how much it grew and whether it grew 29% or not.

And then you guys may have said this on the call, and I might have just missed it, what do you expect will happen with your mix for you to get to this mid-40% gross margin expectation this year?

Epicentral has got to grow even more.

Beyond the two that you have in your pipeline?

Not only in Epicentral, but AccuDate. I mean AccuDate continue, if it continues to rollout and if it grows in the year, the margin on AccuDate is higher than the company average and if you think about it, that one terminal sells for about three times of GTECH lottery printer or a PoS printer that we might sell to McDonalds, so the impact is not only on the gross margin percent, but the gross margin dollars.

[Operator Instructions] I'm showing no further questions. I would now like to turn the call back over to Bart Shuldman for any further remarks.

Sure. Thank you everyone for joining us on the call this evening. We clearly thank our shareholders for their support and I also want to thank my employees at TransAct that have just done a fantastic job of really changing the direction of the shift and getting us into these high-technology solutions and also the fact that these customers are asking us to do some much more for them, and how wonderfully they’re responding both on our engineering side or manufacturing side and the fact that our sales guys are bringing in the opportunities. So I thank the whole team at TransAct and I look forward to our next conference call after the second quarter ends. So thanks for joining us tonight.

Ladies and gentlemen, thank you for participating in today's conference. You may all disconnect. Everyone have a great day.