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Executives

Linda Hofflander – Chief Marketing Officer

James Granger – CEO

Darin McAreavey – VP and CFO

Scott Koller – President and COO

Analysts

Jay Meier – Feltl and Company

Jim Goss – Barrington Research

Calvin Hori – Hori Capital

Dwayne Kennedy [ph]

Jack Fred [ph] – Discovery Investment

Wireless Ronin Technologies, Inc. (RNIN) Q1 2010 Earnings Conference Call May 6, 2010 4:30 PM ET

Operator

Good day ladies and gentlemen and welcome to the Wireless Ronin 2010 first quarter earnings call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions)

As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host today, Linda Hofflander, Chief Marketing Officer. Please begin.

Linda Hofflander

Welcome everyone to our 2010 first quarter conference call. With me today are James C. Granger (Jim), Chief Executive Officer; Darin McAreavey, Vice President and Chief Financial Officer; and Scott Koller, President and Chief Operating Officer. After Jim’s opening remarks, Darin’s detailed financial review, and Scott’s sales update, we will open up the call to your questions.

Before we begin, please note that the information presented and discussed today includes forward-looking statements, which are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results in future periods may differ materially and you should not attribute undue certainty to our forward-looking statements.

Risks and uncertainties that could cause our actual results to differ from those expressed or implied by forward-looking statements, include those set forth in the risk factor section of the annual report on Form 10-K we filed on March 26, 2010.

In addition, our comments may contain certain non-GAAP financial measures including non-GAAP operating loss per share. For additional information, including a reconciliation from GAAP results to non-GAAP measures, how the non-GAAP measures provide useful information and why we use non-GAAP measures, please see the reconciliation section of our press release, which appears on our website at www.wirelessronin.com.

Now, I’d like to turn the call over to Jim. Jim?

James Granger

Good afternoon everyone and thank you for joining us on today’s call to discuss Wireless Ronin 2010 first quarter results. Today’s update will be brief since our fourth quarter 2009 earnings call was just recently held in mid-March.

During the past several quarters, we have discussed how our position in the digital signage industry and how we have been preparing Wireless Ronin for growth. We have been investing time and effort into our infrastructure and business and we believe this will pay off in the long run. Our recurring, hosting and support revenue for the first quarter affirms our efforts with a three-fold increase on a year-over-year basis.

We believe this validates our business model and that we are making the right moves for creating a strong foundation upon which our customers can rely. There is no doubt that a large commitment from our customers is what we need, but our clients have to be in a position to make those commitments to a large scale deployment.

All companies, including Wireless Ronin are recovering from the poor economy. So we will continue to invest in our RoninCast software to ensure we will be the best and be the best and be able to meet the demands of our customers and our prospects.

We believe that in addition to our continuing work to improve Wireless Ronin, the recent passage of the Healthcare Reform Act, which includes a provision regarding menu labeling, will drive higher adoption rate for digital signage over the long run.

The provision of the act requires certain restaurants and retail food establishments in the food service industry to display calorie information. When the final regulations interpreting the provisions have been determined, we believe the food service industry will turn to digital media at these solutions to quickly become 100% compliant with the new law.

Our recently published white paper outlines how digital signage is being adopted as a solution to comply with these new regulations. There has been great interest on the part of many of our customers in this much anticipated provision.

Now before I turn the call over to Darin, I wanted to mention the recent change we announced in our executive management team.

As you may have read in our press release on April 21st, Scott Koller has been promoted to President and Chief Operating Officer. I will remain the company’s Chief Executive Officer and of course, a member of the Board of Directors.

Scott’s promotion represents a natural progression and he has assumed the responsibility for the company’s sales, project management, operations and development organizations over time.

It confers a title consistent with the responsibility Scott has substantially discharged as Executive Vice President and COO. Scott has been running significant business functions based on his extensive knowledge of our employees, our customers, our investors and the industry. I am very pleased to have Scott in this role as we focus together on topline sales growth and manage scalable resource expenses to match revenues.

I would now like to turn the call over to Darin McAreavey for an update on our financials for the first quarter of 2010.

Darin McAreavey

Thanks Jim and good afternoon. The company reported revenue of $1.1 million for the first quarter of 2010, a 25% decrease from $1.4 million in the first quarter of 2009. As of March 31, 2010 the company had received purchase orders totaling approximately $1.1 million, for which did not recognize revenue.

The decline in revenue year-over-year was primarily the result of fewer digital signage deployments partially offset by an increase in service revenue as the Chrysler iShowroom initiative continued to expand. The company received several orders during the first quarter of 2010 from Chrysler for further enhancements for this web-based application accessible by all 2300 dealers.

In addition, the company completed the installation of the first 10 KFC/Taco Bell Combo test stores, a recurring hosting and support revenue for the first three months of 2010 totaled $300,000, representing an increase of 305% from the same period in the prior year. A significant portion of this revenue can be attributed to the success of the Chrysler IShowroom program.

Our gross margins on a percentage basis continued to expand from 37% in the fourth quarter of ‘09 to 39% in the first quarter of 2010 and 19% from the year ago period. This now represents our seventh consecutive quarter for improving gross margin on a percentage basis. Despite the decline in our year-over-year revenues our gross margin dollars were up.

We continue to focus on driving towards a sustainable business model with a heavy emphasis on our higher margin software and service offerings while continuing to seek to further reduce our operating expenses.

On a GAAP basis, our first quarter 2010 net loss totaled $2.8 million a $0.16 per basic and diluted share compared to a net loss of $2.9 million a $0.20 per basic and diluted share for the same period a year ago and compared to our net loss of $2.2 million a $0.13 per basic and diluted share in the fourth quarter of 2009.

Our net loss during the first quarter of 2010 slightly improved over the same period in the prior year as a result of an increase in gross margin dollars of approximately $150,000. Sequentially our net loss increased approximately $700,000 as a result of the decline in revenue and additional cost incurred in sales and marketing related to our attendance at the Digital Signage Expo and other tradeshows as well as an uptick in our research and development expenses.

Our sales and marketing costs have traditionally been higher in the first quarter of the year as a majority of our marketing budget is spent on attending several key tradeshows, which occur at this time. In addition, as Jim mentioned, we continue to invest heavily in our RoninCast software to ensure we will be able to meet the demands of our customers and prospects.

As stated in previous calls that our currently quarter non-GAAP operating loss breakeven revenue is between $5 million and $5.5 million. We are committed over the course of the next two quarters to reduce this breakeven closer to $3.5 million and an assumed gross margin of 45%. We believe not only is this a very attainable goal but a necessary one to ensure the long-term success of the company.

Excluding one-time expenses and noncash charges, the first quarter 2010 non-GAAP operating loss totaled $2.4 million or $0.14 per basic and diluted share versus a non-GAAP operating loss of $2.3 million or $0.16 per basic and diluted share in the first quarter of 2009. Sequentially, our non-GAAP operating loss totaled $1.7 million or $0.10 per basic and diluted share in the fourth quarter of 2009.

Included in today’s earnings release and financial results is a reconciliation between the GAAP and non-GAAP operating loss. This highlights one way in which we look at profitability and cash utilization for the company. It is similar to EBITDA but adjusted for certain other one time and noncash items. This supplementary schedule details the items and effects of noncash and onetime adjustments.

Turning to the balance sheet, at the end of the first quarter of 2010, cash and cash equivalents in combination with restricted cash totaled approximately $10.6 million compared to $12.7 million at the end of 2009.

As previously mentioned in March of this year, we entered into a loan and security agreement with Silicon Valley Bank to make available a line of credit up to $2.5 million. None of this amount has been drawn down. All else remaining equal, we still believe our current cash balance and access to capital is sufficient to support our operations well into 2011.

Our cash burn for the first quarter was $2 million, which was up sequentially from $1.8 million for the fourth quarter of 2009 and down from $2.4 million when compared to the same period in the prior year. We believe our ability to further improve our quarterly cash burn will largely depend upon achieving higher sales and gross margins in 2010 in addition to the further incremental reductions to our operating costs mentioned above.

Finally, I would like to summarize the financial results for the quarter as follows. We saw our seventh consecutive quarter of gross margin percentage improvement; our recurring revenue base was up 305% year-over-year and continues to grow; we continue to have a very strong cash position to fund our business into the future.

Now I’d like to turn the call over to Scott Koller for an update on our sales efforts.

Scott Koller

Thanks, Darin. First, I wanted to start by expressing my enthusiasm for my upcoming role as President and COO. I recognize and appreciate the excellent job that Jim has done in taking the company through a difficult transition period over the past couple of years. I appreciate the Board’s confidence and look forward to continuing my work with Jim, our management team and staff to address our customer’s mission critical digital signage systems needs.

I believe in our team, our technology, our strategy and the digital signage market. We have many exciting opportunities that we intend to capitalize on and I feel very confident that we are positioned to deliver.

As Jim previously mentioned, we will focus on topline sales growth and managing scalable resource expenses to match projected revenue. I’m committed to Wireless Ronin and committed to the effort of making the company profitable and creating value for our shareholders.

Turning to an update on our sales efforts, I’d like to briefly revisit what Jim discussed in the opening statement. It is becoming apparent that the food service industry is realizing that digital signage is a game changer in how they address a variety of challenges in their unique environments.

Historically static menu boards have presented food service operators numerous challenges; limited time offers, pricing compliance, and new product launches have been a longstanding execution nightmare in the food service industry. With that said, even in an existing menu board program is in compliance. There has traditionally been no way of measuring its effectiveness on sales lift and customer experience specifically as it relates to geographic or demographic regions. And most recently the enacted requirement for calorie information, which in spite of the previous machined items may prove to be the straw that breaks the static menu boards back.

As you know the first QSR to engage us was Kentucky Fried Chicken. KFC has understood these challenges and quickly realized that the digital signage was the only alternative to address all of them. We continue to work with KFC as they fine tune their digital menu board program and lay the groundwork for a large scale digital menu board initiative.

As mentioned in our recent year end call, we continue to install new locations. First quarter installations totaled 19, which included 10 new KFC/Taco Bell Combo test stores. And although the company continues discussions with KFC regarding deployment of the remaining 800 corporate stores, there is still no contractual agreement at this time. We do, however, expect to continue to work closely with them on installing digital menu boards on a market by market basis to both corporate and franchisee locations.

Also discussed on our yearend call was our continued work with other QSR clients. KFC does not represent our only opportunity in the QSR market. We have positioned ourselves to be the digital signage provider of choice for other clients by successfully navigating through numerous RFI and RFPs and by being selected for initial pilot and/or beta testing.

We are currently installed with six of the top 12 QSR companies and engaged in some capacity with nine of the top 15. We’re confident that our efforts will pay off and it is our objective to continue our sales and marketing focus on this very important vertical.

Moving to our relationship with ARAMARK, which continues to strengthen, we currently have 28 locations installed with an additional 50 locations being installed over the next six months. These installs include 40 higher education locations as well as 10 additional installs in hospitals business and K-12 accounts.

ARAMARK and WRT are working jointly to increase the visibility of ARAMARK digital signage network to all relevant stakeholders and are establishing a plan to both update collateral as well as our attendance at numerous district, regional and national meetings for ARAMARK’s various business units.

We anticipate the plan will be implemented no later than June of 2010 and that the plan will lead to significantly higher adoption rates moving forward. One of the areas of expansion with ARAMARK is the introduction of a new brand concept called TOPIO’S to their higher education customer base.

TOPIO’S is a new brand offering overall style pizza that can be customized with modern flavors and spices. TOPIO’S will roll out nationally to ARAMARK managed campuses throughout 2010 and 2011; the locations will be designed to emulate a neighborhood pizzeria, you have modern features such as menu boards. TOPIO’S represents only one of ARAMARK’s several new brand concepts. ARAMARK has made digital signage a key component to the anticipated rollout of each of these new brands.

Moving to automotive, comparing to where we were a year ago, WRT’s work with Chrysler has bounced back and the iShowroom program has been the prime catalyst.

With the desktop version of iShowroom being available to over 2300 dealerships, a growing number of digital signage systems being installed, the need of further enhancement to the program has been a significant priority for Chrysler. These enhancements being developed by WRT exclusively for Chrysler, including adding functionality and flexibility to a powerful consumer facing tool.

For example, the newly feature called "Build it my own" allows the customer to create the vehicle they want right on the showroom floor. This is particularly advantageous when the reality of the lower dealer inventory levels. WRT has also recently incorporated a sales consulted training mode within the iShowroom system extending the mission critical value of iShowroom with the Chrysler dealerships.

All of this work has resulted in new incremental revenue while we continue to realize recurring revenue with the core program. As the iShowroom footprint continues to expand within Chrysler, we are also seeing renewed interest from other manufacturers and dealer groups. Beyond our ongoing work with Ford and the Fenski Automotive Group, we continue to see a growing interest in the form of planned market tests and pilots elsewhere in the industry.

I believe it’s important to update you on our relationship with Thomson Reuters the InfoPoint Program continues to gain traction through the Thomson Reuters network. There are nearly 300 locations including JumboTron’s, elevators and lobby applications operating at 45 different countries. As a reminder, we provide a complete turnkey solution for Thomson Reuters including hardware, software and hosting.

InfoPoint was originally intended to be a pure branding initiative that was a complementary service provided by Thomson Reuters to large banks and corporate locations. However, growing interest in the product has allowed Thomson Reuters to start discussions about turning this historic call center into a profit center allowing Thomson Reuters to provide more incentives to their sales force for InfoPoint expansion.

Christopher Burtt, who leads up the digital signage initiatives for Thomson Reuters, continues to be one of our biggest supporters and we look forward to helping him take the InfoPoint Program to the next level.

In conclusion and before I open the call to your questions, let me reiterate that I’m committed to Wireless Ronin and committed to the effort of making the company profitable and to creating value for our shareholders. Together, Jim, I and the entire executive team will be focused on our topline sales growth and managing our scalable resource expenses to match revenues.

This concludes our prepared remarks and now I’d like to open the call to your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Jay Meier with Feltl and Company.

Jay Meier – Feltl and Company

Darin, about the cost reduction efforts, I think you mentioned you’d get those costs down to a breakeven run rate implying a 45% gross margin at $3.5 million in revenue. And I thought you said you do that over the next couple of quarters. Does that imply at all that we should be thinking about a $3.5 million annualized run rate in the next couple of quarters or just you get those costs down that way?

Darin McAreavey

No, the costs would come down. So not to model to that will be a fair number, it’s more the cost.

Jay Meier – Feltl and Company

Okay, that’s fine. And can you give us some idea of where you’re expecting those costs to come from? I mean G&A is your largest line item right now but I know as R&D was substantially higher than I was forecasting as well, I mean where do you expect those costs to come out of?

Darin McAreavey

Yes, I mean to your point that we have continued to make investments in R&D in the first quarter and that’s obviously an opportunity but a necessary one at the time but we will have an opportunity to reduce those over the course of the next few quarters, and then we will be making other adjustments in the other areas as well. We have to first take a look at the marketing in the first quarter with the tradeshows, those should come down now that we’ve incurred the big spend in the first quarter, and so another opportunity to reduce those as well.

Jim Granger

If I could, Jay, this is Jim, apply a little color. We felt that we had to get in front of some of the requirements in the software for a number, as Scott had mentioned, we are doing a number of pilots. So we had to make some investment in the first quarter. We think that investment and in fact we know that that investment will allow us to reduce expense further out into year particularly in the R&D area. So you hit it on the head, that’s where we believe that a big bulk of the reduction in cost can come from.

Jay Meier – Feltl and Company

Okay. And, Scott, regarding your comments on ARAMARK and the expansion plans, I thought you said June 2010, was that right?

Scott Koller

Yes sir.

Jay Meier – Feltl and Company

And can you quantify that a little bit? What exactly does that mean expansion plans? I mean you have 50 installs in the next few months. Should we be thinking multiples of that after the next few months or how do you expect that to happen?

Scott Koller

As you know ARAMARK is very large complex organization with lots of different business unit silos. So it takes a lot to reverberate the success we’re having in higher education and health and into some of those other silos. With that said, we’ve gone into some extensive talks with ARAMARK about how can we help by attending these regional meetings, these district meetings and getting more involved, how can we help; that news really spread a little more rapidly and to increase adoption at a more rapid pace. So really it’s a matter of us trying to further work with our client to navigate deeper into the account and to mimic and duplicate and expand on some of the success we’ve been having in higher education and help.

Operator

(Operator Instructions) Our next question comes from Jim Goss with Barrington Research.

Jim Goss – Barrington Research

Good to see you, Scott. Okay, a few things. First, last year there was some excitement over the notion that you’re going to have some marketing partners that were going to help, sort of lift the bar a little bit notably NEC, you didn’t even mention them at this point and I’m just wondering what’s become of that sort of concept.

Jim Granger

Well, I’m going to turn this one Jim, this is Jim Granger, I’m going to turn this one over to Scott. Scott just as a matter of fact earlier this week was in a very long discussion with the President of NEC Digital (Display) America. So I’ll let Scott talk about that because we’re quite excited about where that’s going to go.

Scott Koller

Yes, Jim to expand on that, we continue to partner with NEC in a variety of different ways. Every single QSR install we have right now has been either us bringing NEC into that relationship or NEC bringing us into that relationship. So we continue to partner to offer a complete solution to the QSR clients together. With that said, there are other areas such as cinema and other parts of the company where we can add a lot of value as well.

NEC’s primary interest in Ronin is not only to partner in that kind of manner but as they launch their (Boucana) having a software that is available to be compatible with that program and if a client such as convention center at the airport or another public space is participating in that advertising model, it needs to expand their digital signage program into interactive and a variety of other things that the (Boucana) product line does not offer that we would be the logical choice for that endeavor. So looking to position ourselves as a partner with NEC in QSR and other verticals as well as the software partner in applications that are beyond the (Boucana) capabilities, I think is where you see the most traction that we will have.

Jim Goss – Barrington Research

Okay. You talked about $300,000 recurring revenues. How many stores or locations were accounting for that dollar value?

James Granger

We have all the Reuters sites, we have all the KFCs, we’ve got the support that we get from Chrysler in the iShowroom.

Darin McAreavey

Around 2300.

Scott Koller

You’re looking at 4000 plus sites, somewhere in the 3800 to 4500 range.

Jim Goss – Barrington Research

Okay. And how much are you spending on the variety of tradeshows you do and how do analyze and frame the return you’re able to generate given your still pretty low level of revenue generation?

Darin McAreavey

So annually we spend about around $300,000 on our tradeshows today and obviously we’re going through and as part of review afterwards looking through all the lead generations and return on investment on that. I mean so we go through and make sure that we’re going to return on all the dollars that we’re spending in these trade shows, that’s a good investment and we feel strongly about that.

Jim Granger

And Jim that is – this is Jim again. That is heavily front end loaded because the foremost tradeshow of the industry, DSE is held in the first quarter and that is our largest single expenditure for tradeshow. That being said, we are also spending time and spending efforts, which I think is good marketing efforts particularly around verticals will be at NRA coming up here in the very near future, National Restaurant Association where we’ll have a prominent place and we would be talking about how the restaurant association, the partners in the restaurant association can meet their needs for digital signage. So we’re quite excited about being in there. That being said, we have to make sure that we look at every one of those spends and make sure that they are producing the kind of results that we expect.

Jim Goss – Barrington Research

Last couple of things. With KFC, ARAMARK and, let me try and think here, Reuters I guess. How much of your revenue base comes from them at the moment? The three major ones. And secondly, you were talking at the last quarterly conference call about possibly getting to around a breakeven level by the end of this year. Do you think that’s still realistic, whether you get –

Jim Granger

I think it’s more realistic now that the team and particularly, Scott and the work the Scott and Darin have done getting a projected breakeven to the 3.5 level, I think that’s still very achievable.

Darin McAreavey

So, Jim, for the three accounts that you mentioned KFC, Reuters and ARAMARK, of the $1.1 million we did this quarter, they accounted for about 36% of it.

Jim Goss – Barrington Research

Okay.

Darin McAreavey

Reuters was a more significant portion of our revenue this quarter.

Jim Goss – Barrington Research

Okay, thank you. I’ll get back to the queue if I want to ask something else.

Operator

(Operator Instructions) Our next question comes from Calvin Hori with Hori Capital.

Calvin Hori – Hori Capital

Probably more for Scott. Where do you stand with Donalds?

Scott Koller

I think we said it a couple of times. We haven’t talked about our relationship with McDonalds primarily because we’re under nondisclosure as it pertains to their endeavors in digital signage. So at this point in time we really can’t give an update, we wouldn’t be giving an update if we weren’t doing business with them or not doing business with them. So, we’ve been read really about a page long list of instructions on what we can talk about, what we can’t talk about as far as our relationship with them.

Operator

(Operator Instructions) We have a follow-up from Jim Goss.

Jim Goss – Barrington Research

Hi, I’ll just jump back in one other thing. A year ago, I could fully buy into the argument that it was really tough to get people to pull the trigger given the state of the economy even if it made sense that the investment should be made. A year later, aside from today’s market it seems like it should be an easier decision if it totally makes sense especially with, as you say the notion of menu changes because of the nutritional element. Why is it still such a struggle to get that ball rolling?

Jim Granger

Jim, this is Jim, and I’ll also have Scott answer this. Let me talk about two different things. It’s still a capital expenditure and they are difficult. While I think the economy has picked up a little bit, certainly capital expenditures have not picked up. And in fact in my last call I noted that the fourth quarter was the least spend on capital expenditures in the history of the numbers that were being tracked by the NRA, by the National Restaurant Association.

In addition, as far as the nutritional information as in my remarks I noted, we believe that will have an impact in the long run. But the covered restaurants will have nearly a year to comply before they have to comply and that timetable includes some time for the actual regulations to be written. That being said, we do believe and we’ve seen it already in the activity of our customers that they are doing trials. So we are doing trials, we are doing pilots. As Scott, mentioned we have six of the top 12 in trial or pilot and we have nine of the top 15 in some relationship or another. So I just think that the market hasn’t moved along as fast as we would all have liked but I still believe that the compelling argument for the deployment of digital signage continues to be there. Scott, your comment?

Scott Koller

Yes, I’m going to sort of segue this into your other question about our return on investment on the tradeshows. I think it’s important to go back and realize our relationship with KFC and our relationship with ARAMARK, both were a result of a tradeshow and then going through an RFP process where we were selected to be the digital signage provider of choice.

You don’t have to pick up 10 new clients at a tradeshow to get a return on investment; really one significant pilot program that leads into the adoption of your technology in that client such as in ARAMARK and into KFC, it is going to provide the ROI you need.

With that said, I will tell you, the activity in the first quarter this year as far as it pertains to RFIs and RFPs has been tremendous. We can’t stay although we can’t give details that we were selected for two additional pilots this week that represent close to 450 locations. So in the recent tradeshow we went to (Mertac). I would say at least one representative was there for 80% of the top 50 QSRs easily and each one walk into our booth, digital signage was on the forefront of one of the things they had to discuss as the calorie information became apparent. And it really is, as I mentioned before, it’s not just the calorie information. Many boards have traditionally been a mess, I mean an operational mess for our clients to manage and this is just one more requirement that really is something that just sort of pushes it over the edge.

Jim Granger

That being said, Jim, you hit it right on the head. There has not been a significant rollout. We anticipate those rollouts and what we have to do is make sure that we’re there with our clients providing great technology and great support, and I think we’re continuing to do that.

Operator

We have a follow-up from Calvin Hori with Hori Capital.

Calvin Hori – Hori Capital

I might have missed this earlier, I got on a little late. Did you update us on what you have opened now with KFC in terms of installations over the next couple of quarters?

Scott Koller

Yes, we have 19 new installations in the first quarter and I think that puts up the total up somewhere in the 170 range. We have line of sight to some more but no details at this point in time, but somewhere in the 170 range.

Calvin Hori – Hori Capital

170 in the first quarter?

Scott Koller

170 total installed, 19 in the first quarter.

Calvin Hori – Hori Capital

19 in the first quarter? You don’t have any quarters for the upcoming quarters, do you?

Scott Koller

Oh yes, we still have line of sight to the additional installs going in Q2, Q3 yes,

Calvin Hori – Hori Capital

But no hard numbers?

Scott Koller

No sir, not at this time.

Calvin Hori – Hori Capital

Okay. Let me get this straight; 170 total so far and 19 in the first quarter?

Scott Koller

Right sir.

Calvin Hori – Hori Capital

Are these all company owned or franchisees?

Scott Koller

It’s a mix, it’s primarily corporate but there are some franchisees involved with us. They do new remodels as they put in many boards with key franchisees and as they do on a case by case basis.

Calvin Hori – Hori Capital

And just kind of a follow-up to Jim’s question on the capital spending environment, I know KFC was especially hurt in terms of capital spending with you guys last year because of their big chicken program. And since that’s been essentially completed, have you seen an uptick in conversations with them in terms of faster rollouts?

Scott Koller

It’s hard to comment on faster rollouts but absolutely I mean, I’m going to try to put some passion in my voice here, so everybody can hear this. But I mean the amount of activity in QSRs as it pertains to menu boards and promotions boards, it is tremendous. With the exception of what we’re doing in automotive and a very quiet retail market at this point in time, it is a vast majority of the effort that we’re putting in in ourselves a marketing endeavor.

So the amount of activity, the amount of people we’re talking to, the amount of sales presentations we’re doing, the amount of RFPs we’re responding to, and even the success of giving a lots of these pilot tests is tremendous. And it does I believe, with the exception of a few automotive accounts represents our number one opportunity for growth.

Calvin Hori – Hori Capital

How many employees did you have at the end of the first quarter?

Jim Granger

Little over 80.

Darin McAreavey

That includes all contractors.

Jim Granger

Correct.

Darin McAreavey

That’s not full time employees. That’s employees as well as any part time contractors.

Operator

Our next question comes from Dwayne Kennedy [ph], a shareholder.

Dwayne Kennedy

I would like to know how you are positioned with the competition. How do you feel that you’re – you’re ahead of them, you gain ground or what’s going on there?

Jim Granger

Dwayne, let me take a crack at this and I’ll let Scott. I mean the fact is is that we truly believe that we have differentiated ourself from the competition particularly in our vertical markets. I mean if I start instead of with the QSR market, if I start with the automotive market, there is no application that comes anywhere close to the iShowroom application; there is none on the market today. That doesn’t mean that every automotive dealer and every automotive company is going to move in that direction. But iShowroom is unique in the industry and it has been very successful.

The second thing I would say is I go back to where we stand with our competition in the QSR marketplace, there is good competition. But that being said, I think we bring especially with some of the investment we’ve made a very highly robust software package, but more than that we also bring along a network operation center that is truly unique in the industry. We’re the only ones who bring the kind of software and network operation center that is dedicated to these mission critical applications like menu boards.

And certainly with Thomson Reuters I think our InfoPoint Program stands out. It is uniquely in terms of its uptime and in fact, we get, as Scott mentioned, Christopher Burtt repeatedly says, it’s the most amazing thing we just do not have downtime.

So always the proof is in the pudding. If there was somebody out there who’s doing significantly better than I think you could point to that, but I think you say given the fact that we win these trials, we win the pilot and we move forward with these customers, we feel like our differentiation against the marketplace is very strong.

Dwayne Kennedy

Scott is going to comment?

Scott Koller

Oh, yes, Dwayne, to build on that specifically again, Jim hit it right on the head. If you look at – let’s just look at automotive and QSR, the type of applications we’re going after are small footprints that are scalable; so anywhere from one to 10 signs within that environment. They’re mission critical, they can’t go down and each of these clients have multiple, multiple locations.

We’ve built a NOC, our software, our services, our support to manage those types of installations. We made a decision close to four quarters ago that this company, well, five quarters ago this company was not going to be everything to everyone. We manage mission critical applications with smaller footprints within clients that have multiple, multiple locations, and that’s what we do very, very well and provide a turnkey solution regardless of where they acquire the hardware, a turnkey solution that when they call our NOC, we quickly differentiate or delineate where there is a hardware/software networking or content issue and respond to that accordingly, providing a tremendous service to our clients.

And the other thing I think is important as Jim mentioned, not only our NOC not only as our software is a differentiator, I believe we have a really outstanding content group that has on more than one occasion provided us the wild factor and from a design standpoint and the execution standpoint that has differentiated us as well.

Operator

Our next question comes from Jack Fred [ph] with Discovery Investment.

Jack Fred – Discovery Investment

Jim and Scott, when you look at the top 15 QSRs, how many stores, franchise and corporate stores would that represent. Any idea, I guess the size –

James Granger

On total?

Scott Koller

It’s in excess of 30,000.

James Granger

It is probably those top 15 probably represent –

Scott Koller

No, it’s just the ones we’re engaged with.

James Granger

Oh, the ones we’re engaged with, okay, yes. (Inaudible) 30,000 and then there’s the other accounts. So you’re probably looking at somewhere in about the 35,000 to 40,000 site range.

Jack Fred – Discovery Investment

When we look at the whole QSR industry, I mean how many stores are out there just in the United States if you take a look at them?

Scott Koller

The last number that I saw Linda had put together for us was, I think there is a total of 125,000 stores but that includes some very small QSRs, mom and pop type thing.

Operator

I’m not showing any further questions at this time. I’d like to turn it back over to Linda Hofflander for closing comments.

Linda Hofflander

I’d like to thank everyone for his or her participation on today’s call. Please remember that today’s call has been recorded and will be archived in the investor section of our website at wirelessronin.com. Also this call will be available for replay. Again, the dial in information from domestic and international locations can be found on our website. Thank you and good bye.

Operator

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the conference. You many now disconnect.

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Source: Wireless Ronin Technologies, Inc. Q1 2010 Earnings Call Transcript
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