Thank you, Michelle. Good afternoon, and welcome to TransAct Technologies 2018 Second 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 second quarter financial results.

We'll 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 may be deemed as forward-looking and actual results may differ materially. For a full list of risks inherent to the business and to 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 everyone joining us on this afternoon's conference call and webcast. Just a few minutes ago, we announced our 2018 second quarter results, which included net sales of $14.8 million, operating income of $1.6 million and adjusted EBITDA of $2 million.

Our results also included gross margin of 47.4%, which reflects the benefit of our ongoing sales into high-growth technology driven markets. Steve will review the results in more detail in a few moments, but I'd like to begin by providing some high-level comments about our business.

Clearly, we're very happy with what occurred. Progress continued in the second quarter, as we've worked to build out, evolve and execute on the opportunity around our restaurant solutions products offerings.

Net sales of our terminals were up 23% in the second quarter, driven by the shipment of our AccuDate XL terminals to our current restaurants and foodservice customers. Many of these customers are also purchasing our AccuDate labels as well as our support and maintenance contracts, and as a result, total quarterly sales of our terminals and we bring offerings were approximately $1.4 million in the quarter.

Terminal and eventual software sales are -- will be reported as restaurant solutions net sales. Well, our aftermarket recurring sales labels and support and maintenance revenue related to the terminals will be reported as part of TSG net sales.

In the second quarter of 2018, we reached a key milestone, as shipments of our AccuDate XL terminal exceeded shipments of the original AccuDate 9700 terminal for the first time. With customer attention now shifting towards our software driven offerings, given the benefits these solutions provide.

With restaurant and foodservice operator spacing rising labor and food cost, this market is looking to increase the amount of automation in the back of the house. This intern is opening a much larger opportunity for terminal sales, coupled with sales of multiple software solutions.

Presenting TransAct with a significant opportunity for SaaS-based software revenue. We believe this trend will only continue going forward and are excited that it will help us build our total recurring sales, including consumable and maintenance and support contracts, which dovetail with customer implementations of the AccuDate XL.

Over the past several quarters, we have been actively staffing up our team of hardware and software developers to better exploit this opportunity, as we listen to and work with our customers. Our team is laser focused on the -- on an understanding what our customers need, to better run their businesses and we are quickly expanding our solution set to address these needs.

Restaurant and foodservice companies have all shapes and sizes, rapidly evaluating investments into technologies that can transform almost every area of their operations, to not only improve food safety, but to also operate more efficiently, cut cost and ultimately improve their profitability. We believe our AccuDate terminal solutions can be the restaurant hub for this focus and played in a good role in each of these avenues and we tend to remain at the forefront of innovation.

As we look to the future of this business, one thing is crystal clear, the opportunities remain significant and the range of functionality we can bring to our terminal is growing. At the National Restaurant Association Show in May, we debuted the new AccuDate XL2e terminal and the TransAct Enterprise Management System to a highly favorable response.

We are the only company offering an Internet capable terminal with an integrated enterprise software management system that provides a security, terminal and software upgrade capabilities that the market demands. These advancements have established a foundation around which we will add innovative new hardware and software driven offerings that will ultimately establish TransAct as the one-stop shop for all our restaurant solutions customers back of the house operations and management needs.

I think it's fair to say that TransAct's ability to quickly evolve ahead of this opportunity has positioned us not to just lead the way in innovation, but to establish the path forward for the industry. Moving on to our casino and gaming market.

This was another key to our strong second quarter results. As we saw a widespread and growing demand for our market-leading Epicentral solutions.

On the domestic front, we saw a net sales increase 30% over the prior year. Based on our shipment activity, we believe the Epic 950 continues to take share on the marketplace.

With our industry-leading customer support and the beginning production of our new Epic Edge TITO printer, we believe the growths we're experiencing will continue. Internationally, sales growth of 267% over the prior year reflects rapid real success from our decision to build out a direct sales model in Europe.

Since staffing up our sales team focus on this Vado casino and gaming market, and shifting away from previous distribution partner. We have seen customer engagement and order activity grow substantially.

Our customers indicate that the combination of TransAct proven technology and world-class customer service is a key driver of their order decisions, and we couldn't be happy with the efforts of our team to reestablish TransAct as the unmatched casino and gaming printer leader in Europe. We're also seeing the success translates the growing sales in other international markets, and we believe this momentum will continue going forward.

The third key driver of our long-term success remains growth in our TransAct Services Group, which will benefit from sales of our TransAct branded labels and the AccuDate terminals maintenance agreements and warranty support contracts. As I mentioned earlier, we saw the beginning of sales of our TransAct labels in the quarter and we believe these sales will grow in content with terminal shipments and our customers more active use of the terminals in their workflows.

Finally looking briefly at the balance of our business, a lottery business continues to benefit from spare part sales, as our large global base to lottery printers remains active in the field. At the same time, new lottery printer sales remain markedly lower, versus prior year period and we're in a likely to remain at similar low levels for the balance of 2018.

Now given the lottery printer's low margin and the unpredictability of orders, we are shifting our focus away from the lottery market, as our other opportunities are so much more larger and more lucrative. But we will continue to support our largest lottery customer.

And now Printrex remains a relatively small part of our overall net sales, the recovery in the domestic oil and gas industry continues to provide us with some sales opportunities, which remain position to exploit. Let's remember, our growth involves our laser focus in serving our customers in their restaurant, food service, casino and gaming markets.

Overall, we are really pleased with our execution in the second quarter. Our casino and gaming business is growing domestically and internationally.

And we've positioned it to gain market share on a global basis. We have begun production of the new Epic Edge, the only ticket-in/ticket-out printer to deliver 300 dpi printing.

And the progress, we continue to make in establishing our restaurant solutions business for near and long-term success becomes more tangible every and each day. We believe the restaurant solutions market is a very large revenue opportunity for TransAct.

With that, I'll turn the call over to Steve for a deeper review of the 2018 second quarter results, after which I'll make a summary remarks before opening the call to questions and answers. Mr.

DeMartino, it's your turn.

Thanks, Bart. Good afternoon, everyone.

Second quarter 2018 net sales were $14.8 million, up 8% from $13.6 million in the second quarter last year. Looking at our second quarter sales by market.

Our restaurant solution sales grew 23% year-over-year to $1.3 million. Growth in the quarter was driven by increased shipments of our AccuDate XL to existing customers.

It's also worth noting that as Ben -- as Bart mentioned, sales of our new AccuDate XL terminals and clipped sales of our AccuDate 9700 terminals for the first time during the quarter. POS Automation and maintenance sales were up 10% or $204,000 to $2.3 million in the 2018 second quarter.

The increase was driven by return to record sales levels of our Ithaca 9000 POS printer to our large quick-served customer. We expect this trend to continue into the third quarter, as sales have already started the quarter at strong levels.

On the banking side, we continue to wind down this business and plan to exit the market entirely by the end of this year. Casino and gaming sales were up 77% or $3.1 million year-over-year to $7.1 million in the second quarter of '18.

Domestic casino and gaming sales grew at 13% over the prior year and continued strength in printer sales across the domestic casino market as well as an increase in shipments of our Epic 880 to a domestic contract manufacturer, its support in the international deployment. Sales to international markets were up 267% over the prior year quarter, on the growth of both casino printer and gaming printer sales.

This broad-based strength is a direct reflection of our decision to transition international sales to a direct selling model. And the resulting strong customer demand for industry-leading Epic 950 printer.

Lottery printer sales are $481,000 were down from $2.8 million in the prior year quarter, as we saw a decline in the shipments to our largest lottery customer compared to significant shipments in the prior year quarter. As Bart stated, we are shifting our focus away from the lottery market to focus on the more lucrative restaurant solutions and casino and gaming markets.

As a result, we expect this trend of lower lottery printer sales to continue through the remainder of 2018. Printrex product sales were $333,000, up 19% from $282,000 a year ago, as the oil and gas industry continues its modest recovery.

TSG sales were down 3% year-over-year to $3.4 million on lower domestic spare part sales to our large lottery customer as well as the continuing decline of the consumable sales for our legacy banking printers. These declines were partially offset by a threefold increase in AccuDate label sales for our growing restaurant solutions business.

As noted last quarter, we expect AccuDate label sales will grow in line with our AccuDate terminal shipments over the coming quarters and believe our recurring AccuDate consumables and service contracts will become a key driver of TSG sales going forward. Gross margin for the second quarter rose 10 basis points to 47.4%, as we continue to benefit from our favorable shift and mix towards technology driven solutions, such as our AccuDate terminals.

We believe this is a sustainable trend for TransAct and expect continued gross margin expansion, as we grow sales of our AccuDate terminals, AccuDate labels and our terminal related services and software maintenance contracts. Total operating expenses for the second quarter in '18 were $5.4 million, up 5% year-over-year.

Engineering design and product development expenses grew $163,000 or 16%, as we increased stacking for hardware and software engineering as well as supported new product development initiatives in both the restaurant solutions and casino gaming markets. Selling and marketing expenses for the second quarter were up $45,000 or 2%, as increased spending for new European indirect sales team more than offset cost savings from the termination of our Suzo-Happ distribution agreement late last year.

G&A expenses for the second quarter were relatively consistent at $2.1 million, up just 2% over the prior year quarter. Operating income for the second quarter of '18 was $1.6 million, or 11% of sales compared to operating income of $1.3 million, or 9.6% of sales in the year-ago quarter.

We recorded net income of $1.2 million or $0.16 per diluted share in the 2018 second quarter and that compares to net income of $867,000 or $0.12 per diluted share in the year-ago period. And as with last quarter, the Tax Cuts and Jobs Acts resulted in a nice benefit into our effective tax rate, lowered into 20.1% in the second quarter of '18 compared to 33.1% a year ago.

Our adjusted EBITDA for the second quarter of '18 was $2 million compared to $1.7 million in the second quarter of last year. And finally, turning to the balance sheet.

We ended the 2018 second quarter with $3.8 million in cash and still no debt outstanding. We returned a total of approximately $1.1 million of capital to shareholders in the second quarter through our quarterly cash dividend of $0.09 per share and the repurchase of about 34,000 shares of common stock at an average price of $13 per share.

And as of the end of June, we had approximately $3 million remaining under our current stock repurchased authorization. And with that, I'd like to give the call back over to Bart for some closing remarks.

Thanks, Steve. The strong 2018 second quarter results we reported today demonstrate further progress with our efforts to transform our business and evolve our product line up by shifting our companywide focus to value-added software enable technology solutions.

Our success will be driven by the major opportunity we are building in the restaurant solutions market place and our success in the worldwide casino and gaming market. We believe our active investments in people and technology will allow us to monetize the evolving restaurant solutions opportunity and we believe we're ideally positioned to become a partner of choice to restaurant operators, looking to dramatically transform all aspects of their business.

As I said in our last quarterly call, we are still very much in the early innings of this new game. That said, as we lead the market with the best technology, best products and highest levels of innovation, we believe this will be a very long and very exciting 9-inning game that should greatly benefit our shareholders.

And our progress in our restaurant solutions business will be supported by TransAct continuing strong performance in the improving gaming and casino market. Before turning the call over for your questions, I want to take a moment to welcome Haydee Olinger to our Board of Directors.

Haydee brings extensive restaurant industry experience and an enormous record of accomplishments to our board having served in senior management roles in McDonald's for more than 20 years. Most recently, Haydee was global chief compliance and privacy officer at McDonald's.

She was responsible for leading finance, franchise, tax and operations teams in the implementation of various strategies within many of McDonald's markets in Europe, Asia, Latin America and has also been credited with playing an instrumental role in McDonald's entry and ongoing growth in Latin America. The board is confident in her understanding of the global restaurant industry as well as her operational and legal expertise that will help serve TransAct in our shareholders very well as we continue to execute on the large restaurant solutions opportunity we have.

And as we continue to focus on growth. I'm so happy to have Haydee on board.

In closing, I'd like to express my thanks to the work our TransAct team does every day, and to help grow and evolve our business. I also like to thank our shareholders.

For your continued trust and your continued long-term support of TransAct. Operator, at this time, we're ready for questions.

So you've previously disclosed, I guess, that through May you'd won about 6 national restaurant chains for the restaurant solutions business. It appears now 2 are rolling out, but can you provide any additional color as to where you are or in what phase you might be in with the others?

All 6 are rolling out. All 6 are in different phases of the rollout.

And then we've got a couple others that we've run since. All 6 have been rolled out.

And what's the timeframe to, like typical rollout? Like how would -- how many quarters do you expect that to go for?

It depends by customer. Some will take a year or 2, some will take a quarter or 2 or 3.

It really depends by customers. Some they roll them out by regions, there is one that we're doing where we're doing some custom software, so that will take time as they rollout terminals.

So it's -- the big thing for us, Kara is to build the backlog, right? To build the backlog of wins.

So it don't -- it shouldn't really matter how long it takes. As long as we have these wins and we keep adding to the wins, and then just keep rolling them out quarter by quarter or year after year.

So the thing that we're really focused on Kara is, of course, getting the wins, getting the software, offering the software solutions that we've have developed and continue to develop. And then work with their rollout teams and the rollout schedules.

But really the important thing for us is to keep adding wins to the backlog.

Yes. I understand that point.

And then Bart, you seem pretty positive about the casino and gaming business, but it seems like the commentary lately or at least I don't think that you that mentioned that on the call about Epicentral, it has been pretty late. Can you update us on your thoughts, the strategy or any otherwise traction you're seeing?

Yes. So I would classify how I feel about our casino and gaming market right now as thrilled.

The orders are just coming in. And we're just thrilled with what we're seeing in the marketplace, both from a standpoint of the work that we did in Europe and gaining back the customers that we believe we lost to the domestic market, which we believe were gaining significant market share.

So we're just thrilled. And we are in the process of getting our slot manufacturers to integrate our new Epic Edge printer, which really have some benefits in the marketplace.

So all this is happening even without the Epic Edge, yet, we think the casino companies are going to be thrilled with the capability of the Epic Edge to print the 300 dpi really transforming the receipts into better images, better receipts and also into having better bill acceptance. Epicentral is still there, and it's -- the thing about Epicentral is: one, it tries printer sales.

And I think that's what you're seeing. When we talk about Epicentral to casinos and they might have a mixed floor.

It takes time and it has taken time for some of these casinos to change over their floors to 100% of TransAct printers. But the conversations we're still having with casinos are positive.

I got to say that the environment in the casino market is much more positive. Things like we are rolling out to spend money it's been a tough couple of years, coming out of the recession and all that.

But we love our Epicentral, we love what it's providing our existing customers, we've got a couple of customers that we believe we're going to close over in the next couple quarters. And that only enhances our position in the marketplace as more and more casino use it.

But Kara, we're just thrilled with what's going on with our gaming and casino printer sales. It's -- we're trying to focus the business on 2 very good markets; casino and gaming, and then our restaurant solutions, our restaurant and foodservice providers.

And everybody is focused on it, our engineering is focused on it, our products are coming out, the software solutions are coming out, the opportunity for software sales in both markets and both a lot in the restaurant solutions business is very big. The conversations that we're having with some very large customers on how we're going to automate their back of the house, these are real conversations with very big numbers tied to them.

So if you look at what we're doing, you asked about the gaming and casino market, I'm just thrilled with the growth that we're getting from that market, because it's -- as you saw in the results, we're up 77%. Those are real numbers in a very profitable business.

Great. Just one more for me.

Can you discuss the increase in inventories on the balance sheet? What's that related to?

And what that might indicate?

Further sales. I think you know us.

And I think Steve can talk to it, but the second quarter had a lot of sales in it and the third quarter is going to have a lot of sales in it. And Steve and the operations team is getting ahead of it by bringing them the product as third quarter is going to be a very good quarter for us.

We're also building out the restaurant solutions inventory, Kara.

In anticipation of it, yes. So it's looking very positive right now, Kara.

So question on the label sales. They were a lot more than I was expecting in the quarter.

Are you getting a higher tax rate? Or people ordering significant numbers of labels on our, sort of, an uptick basis.

Just kind of -- if you can just walk us through how to think about it little bit better.

Yes, so and Mitch, I know this is a question you've had and clearly it's a question we have is what's the -- we close the tie ratio, right? For every terminal we sell, how many labels will we sell.

And clearly when we work with the customer and win the label sales, we try to understand what their demand's going to be, how many labels they're going to use. And between the different markets and the different customers that we have, the labels are starting to sell and pick up.

So I think it's going to take us a couple more quarters to be able to put a number associated, because some use a lot than others. There are some customers, Mitch, that are using more than what we expected and that's because their internal controls are now to the point where they're requiring them to label more than what we thought than what they first told us.

So this is going to be a learning experience for us, as we grow with these customers. As we close more AccuDate XLs and XL2e's, most of those terminals will come with label contracts.

So we'll the able to track that closely. But we're -- as you can tell, we're very thrilled with that.

And it will build that recurring revenue business. The other thing that's also coming along with it, is the maintenance and support contracts.

And that's also going to build the recurring revenue business. And we've got to remember the XL2e have to be sold with TEMS.

And TEMS is sold as a subscription model, SaaS model. So every time an XL2e goes out, that's also going to build our recurring software revenue.

So Mitch, we're at the early innings of this, but as we look out and we lookout at the opportunities that we're working on, the label sales, the software sales, the new software that we're going to be selling, on our SaaS model, the maintenance contracts and the supply contracts, you look out a couple years and this could be very big.

The good news Mitch is that, so far the labels are new, since we launched them, we've had very good success. So most of the new customers we've landed, since we've offered labels have gone with our label.

And they've repeating buying.

Fabulous. I think, you mentioned...

It's all part of a paddle. You know Mitch that we've talked to you about this in length and it is -- it's why we're so focused on this.

We've never been in this big of an opportunity, where a terminal turns into so much recurring revenue. And it's part of the model that we built and why we're so focused on this, because one terminal sale now, of course, it's not one terminal per se, it's one customer sale turns into so much potential recurring revenue for TransAct.

Sure. I think you mentioned on the call or in the body that you had 2 new customers in addition to the 6 that you're already rolling out.

Do you have a concept of how many potential terminals those 8 customers represent?

We do, yes.

That's the number you disclose?

No. It's not our thing Mitch, you know that we're never going to mention customers and we're never going to mention the size and the terminal amount.

As I was telling Kara, the big thing for us is to continue to work with -- we've got our customers, right? We have 6, we've closed a couple more.

We've got a couple of very large ones that we're working with right now. It's important for us to focus on that, work closely with them, get them the technology solution they want, we granted that the market has changed from food safety labeling to automation at the back of the house.

That is the conversation. It's not food safety anymore, it's how much can we automate at the back of the house.

And it's -- the thing for us to do is to focus on closing these customers, win their orders and then get their rollout schedules and roll these terminals out and build on that. And with that, we'll then be -- then come to see this add, winning all the way -- most of the label business, we've got service contracts is part of that.

It will come with TEMS, and then the additional software that we're offering, it will come with that also and we'll be building that. And that's what's important.

Lookout a year or 2 and say, we're working this big, and should focus on that.

With respect to the automation also to tying other products into the terminals, I know what the restaurant showed you had demonstrated a food temperature, probed that was tied to the terminal. Is that -- have you started to sell that yet?

It's being offered. And the software associated with it yes, sir.

Okay. And then the final question, it has to do with Europe.

You obviously crushed it in Europe this quarter. Is there still substantial ramp there to catch up with sales, I guess, that weren't happening for whatever particular reason?

We think it's going to continue to grow, yes. Yes, we've already received some orders that it's proven, that it's continue to grow at least in the third quarter.

The third quarter is looking very, very positive.

Couple quick questions for you. I was positively surprised to see the Ithaca 9000 strength.

And it sounds like you're going to be positive again this quarter. Can you just talk about what's going on there with your big customer?

Yes. They surprised us, Jeff.

We're shipping a lot of printers to them and they're rolling out so many new programs including Internet ordering and there has been a new terminal that they're using, that they've rolled out. It appears that they just throw out our printer and when they buy a new terminal, they buy with new printers.

And who are us to say no. It's -- the restaurant solutions business is now turning into the back of the house and the automation of the front of the house also because we also got KIOSK printers and then our 9000, which is going in some of the automation that McDonald's is doing in the front of the house.

We're also looking at automation in the back of the house with different things that are going on with Internet ordering and all that. So the 9000 is starting to really fit in into our restaurant solutions business.

That's great. So this is not necessarily only a 2 quarter phenomena, as you guys continue to, sort of, innovate, there could be some follow-on?

It looks like at this point, Jeff, yes. We're surprised by the word, I forget, but it's they're (inaudible) just still got it.

And then I think at one point, you guys were talking about that some of your software partners in the restaurant space had some things to do kind of version 2.0 to get out and now that this market is becoming real. Customers has said, hi, we really need or want this or that function et cetera.

Where are you now in terms of everybody being able to, kind of, march to the same drummer? Or are we still kind of waiting on a couple of pieces of the infrastructure to be up this enough?

Yes. So the issues that I see Jeff, and this comes from meeting with it being in the market myself and talking to executive chefs and all that.

What I -- we've said this before, right? What we see is that there is this need to do more in the back of the restaurant to be able to have more control and more information.

Internet of Things comes to mind, right? How can I measure and watch and see things and try to get ahead of even a refrigerator breaking down and losing all the food.

So what our approach to the market is a holistic approach, right? We want to be the back of the house automation and to be the hub and to also provide automation.

So we want to have, if not all the solutions, we want to have a good amount of those solutions, because it's a lot easier for us to tie a lot of the bits and pieces together, than for say an executive chef, that now have to have 4 or 5 different systems running, and then managing those different systems and being able to aggregate those different systems, and then of course, lead and manage them. So it's our desire to be providing a lot of those solutions.

And that's where we're heading, Jeff. And a lot of the work that we're doing is to be able to offer a lot of those solutions ourselves.

And that's what's so exciting to us, because it's resonating with the customer, because like they're saying to us, I don't want to hang 5 tablets on a wall and have these 5 different things being done in my restaurant. And then I'm going to have to put the tablets in my office, lock them up, charge them up every night and put them back out.

I got a purposely built terminal, I've got my printers in it. So how can I try that into the holistic solution for the back of the house.

And that's what so exciting us, is that the customers are asking us, if you can do this, this and this, we'd like to package it all together. And that's what's introducing us to all of these opportunities that go away from just selling a terminal.

And so the terminal becomes part of the solution, it's not the solution. And then the software becomes the solution.

And the terminal goes along with it. It's amazing how fast the market has moved and what's going on, but do you think about it labor cost, $15 an hour is happening, clearly food costs are going up, the economy is doing better, but costs are rising and rising quickly.

And there is pressure on restaurants to manage those costs now. They have put money into the front of the house, that's got Internet ordering, they've got kiosk things like that they got tablet ordering, but not nothing has back of the restaurant and that's where there's a big focus now.

And clearly, we're having those conversations and we're leaving those conversations. And then they're leaving us in to wanting us to do even more for them.

And we're just saying yes, and we are developing that technology.

It sounds great. It sounds like it's going to be very, very sticky solution once it's in place.

But just to go back on the current software partners that you have and are they now ready for prime time or is it still kind of holding up some of these national rollouts a little bit?

The one situation we got in with CrunchTime clearly that one is still in its -- it's not what I would call a closed order yet, so they're still working on it. All the other stuff that we're working on does not have to really deal with our other software partners, the stuff we're doing.

We want to control our destiny more, look we think the CrunchTime solution is brilliant. And they will the successful.

And that will be 1 aspect of the automation of the back of the house. Designing a new ERP system for restaurants was brilliant.

And that will sell and that will be successful. There is so much more that these restaurants want to do.

That we can do for them. We don't have to worry that much about software partners.

And that's what we're focused in, while people like CrunchTime are doing their thing and again, doing in ERP systems for the back of the house is brilliant. There are other opportunities that are there that we will do and that we will control.

Okay. And then lastly, it sounds like rightly so, you're deemphasizing some of the lower margin, more mature lower growth areas.

Like bank PLS and that kind of thing. So we should just assume, you're going to spend those resources on restaurant and Casino.

We're not going to see any kind of change or benefit except may be, again some positive mix by us to the gross margin line?

Yes. We're allocating this Jeff.

We're not going to say no to our customers. We have a lottery business.

We're not going to say no to them, but you won't see any development from us. It's not a high-growth market, it's a low-margin business.

Clearly, the situation has changed, the market has changed. The best part about it, it's turning to a declined revenue business for us, right?

We always make most of ourselves in that business is selling spare parts. And we're just extending contract longer and longer.

But when we weigh the opportunity and you look at maybe another lottery company and then opportunity for $1 million of sales and we're really looking at a $1 billion marketplace called restaurant solutions, I think you would cut my head off if I said we should focus on lottery and not restaurant solutions. So if you look at the mix of our engineers now, it's changed from mechanical engineers, to software engineers, to Android engineers to UI engineer.

I mean, this is what is exciting about the business. Not the sure change our mechanical in firmer engines, but a great staff.

But if you look at the additions that we've made, it's all in support of restaurant solutions and by the way, it's also in support of Epicentral. We -- this is a great little business for us.

And we are people that are doing a great job in Epicentral and we look more to say over the next couple of months about that. But it's all about the software, Epicentral, restaurant solution, the software we're developing for restaurant solutions, TransAct Enterprise Management Solution.

The customers were talking about doing more with the terminal. The first thing they said is, "You got to lock it down."

Nobody had a lock down. Everybody has his access to the Internet.

I tread on the sticks, so I could go anywhere with that. I can -- my crankshafts, they said, "Gosh!

You got to lock, you can only let our people go to those areas that we want them to go to." Even though you can buy a tablet with Android, it's got all of those extra mobility that they don't need.

You got to lock that down, you got to be able to push to us any security updates. Security updates are critical.

Hacking, so Android comes out with a security upgrade, we've got to be able to understand what that security update is and for the thousands of terminals, and eventually, the hundreds of thousands of terminals that are out there, we've got to be able to contact each one of them and over the air, do a security update. When you get an update on your iPhone or your Android phone, you just take it for granted, it happens, right.

It's called OTA. Oh, I got an update.

It came over the air. We've got to be able to do that to all the terminals in the marketplace.

So if you look at what we've done, which is really innovative, we're controlling that for our customers. We're telling them we can get to those updates.

We will push those updates down to you. Then when they come to us and say look we want to add that new software feature that you have.

We have the capacity and capability of looking at every one of that customer's terminals and saying, "Hey! On Friday night at 2:00 a.m., each terminal is going to be updated with our new software app."

And that's what TEMS does and that's what nobody was able to do. And we did it and that's what, kind of, we talked about some of the delays that happen over the last year, they wanted that capability, but that is out now, that is done, that was launched at NRA.

That's what's driving the momentum of our business now, because they're confident, we can do that for them. Sorry to get a little -- I'm very excited about some the things that we've done, so sorry, got a little excited there.

All right, thank you, everyone. Thank you for dealing with my excitement.

It is just -- I look at the work that our team is doing here. Steve and his operations team and finance, they just finished getting us.

So we can begin our selling overseas and doing our Oracle over Europe and all that. The team that did that for us here at TransAct at our headquarters.

I'm just thrilled with what's going on here. The opportunity is big.

I'm just very pleased with the shareholders that have given us the support. Can't be more excited that we're able to attract somebody like Haydee on to our board.

We have now real restaurant experience, knowledge, just totally excited. So let me just thank everybody for joining us on the call this afternoon.

You know that one of our biggest tradeshows is coming up. G2E in Las Vegas in October.

We'd love to see you at the Booth. Please let me know you'll be there.

I'll spend some time updating you, showing you what's going on, talking to you about the business. And then of course, we look forward to reporting back to you on further progress in our business when we report our third quarter results in November.

So thanks for being with us today and we look forward to talking again.