Greetings, and welcome to the Intellicheck Q2 2017 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to the Intellicheck team for opening remarks. Thank you. You may begin.

Thank you for joining us today for our conference call to discuss Intellicheck's results for the fiscal quarter ending June 30, 2017. Joining me on today's call are Dr. William Roof, Intellicheck's President and CEO; and Bill White, Intellicheck's CFO. Following our prepared remarks, we will take questions for our largest investors. All investors who have questions pertaining to today's call can submit them via email to q2earnings@intellicheck.com. Before we get started, I will take a few minutes to read the forward-looking statement. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. When used in this conference call, words, such as will, believe, expect, anticipate, encourage and similar expressions as they relate to the company or its management, as well as any assumptions made by and information currently available to the company's management, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs about current and future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements whether resulting from changes, new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained under the headings of Safe Harbor statement and Risk Factors listed from time to time in the company's filings with the SEC. Statements made on today's call are as of today, August 14, 2017. Management will use the financial term adjusted EBITDA in today's call. Please refer to the company's press release issued this afternoon for further definition, reconciliation and context for the use of this term. I will now introduce Dr. William Roof, Intellicheck's Chief Executive Officer.

Now turning to our second quarter results. Today, we will present corporate earnings information for the quarter ending June 30, 2017. I would like to begin by welcoming our shareholders to the call today and specifically welcome to our newest investors who supported our capital raise that closed last week. Since our last call, we see many of the opportunities we discussed during that call materializing and we issued press releases that support the information we discussed during our last call. To recap, on May 24 we announced a top-five U.S. Bank contracted with us for our Retail ID product suite. On June 22, we announced that a prominent U.S. concert venue services provider contracted with us for our Age ID product. On July 11, we announced that a prominent U.S. department store chain completed a rollout of Retail ID. On July 18, we announced that the Liquor and Cannabis Law Enforcement Arm of West Coast State purchased Age ID for their enforcement agents , and on August 3, we announced that we completed all Nlets requirements and are now live with our Law ID system at the Nlets Network Operations Center in Phoenix. Over the past few months, many of our shareholders indicated concern over our potential loss of market opportunities due to our lack of growth capital. We agreed with these concerns and took the appropriate steps to position the company for more rapid growth. We believe that although it wasn't necessary to do a capital raise at this time, that there were significant and immediate growth opportunities and benefits to strengthening the balance sheet. The company intends to use the net proceeds from the offering for general corporate purposes, including product development in key markets, the integration of new features into existing products, and expansion of a sales force and engineering staff. I will discuss this topic with more detail after Bill White concludes his review of the company's second-quarter financial results. Bill?

Good day to our shareholders, guests and listeners. I'd like to discuss some of the financial information that was contained in our press release for the second quarter ending June 30, 2017, which we released a short while ago. We anticipate that our quarterly report on Form 10-Q will be filed with the SEC later today. I will begin with our second quarter results. Revenue for the second quarter ending June 30, 2017, was $951,000 versus $940,000 for the same period last year. Our SaaS revenue was approximately $300,000 for Q2 of 2017, an increase of approximately 117% as compared to $138,000 in Q2 2016. The company's booked orders improved 5.4% quarter-over-quarter. For the three months ended June 30, 2017, booked orders were approximately $895,000 versus $849,000 in the second quarter of 2016. Gross profit as a percentage of revenue was 78.5% for the quarter ending June 30, 2017 compared to 79.6% for the quarter ending June 30, 2016. The slight decrease in gross profit was due to the revenue mix that included equipment sales related to a customer that concluded a paid pilot and went live in their retail locations during the quarter. We continue to control expenses. Operating expenses, which consist of selling, general, and administrative and research and development expenses decreased approximately 27% or $681,000 to $1,847,000 for the three months ending June 30, 2017 from $2,528,000 for the three months ended June 30, 2016. The company posted a 38% improvement in net loss to $1,099,000 for the three months ending June 30, 2017, compared to a net loss of $1,775,000 for the quarter ending June 30, 2016. Adjusted EBITDA for the quarter ending June 30, 2017 improved 30% to a negative $902,000 compared to a negative $1,293,000 in the same quarter last year. Interest and other…

Thank you, Bill. To provide consistency from earnings call to earnings call, we organized this script in a way that investors can measure progress as the company moves forward. To do this, we address five main areas and articulate our progress in each area, those being resources, markets, products, processes, and intellectual property. Based upon this format and order, we will begin with resources. I will begin by addressing our capital raised that closed on August 9. As I stated previously, many of our investors indicated concern over our potential loss of market opportunities due to insufficient staffing levels and growth capital. We understood these concerns and took the appropriate steps to position the company for more rapid growth. We believe that we may have been missing opportunities to make the company more valuable as we hold operational expenses at all levels. We have in our opinion exciting new features, products, markets and strategies to address. We believe that waiting to address these opportunities may close windows that are open for us now. Understanding our opportunity pipeline and the need to increase our sales, engineering and customer support organizations, we went forward with the capital raise. As we planned for this event, there were numerous internal and external factors that led to our selection of Oppenheimer and Northland as our investment bankers. We look forward to working with them and to realize the benefits of the wide range of services that they offer to the company and our investors. Our SaaS model is working and we are continuing to increase our recurring revenue. In our second quarter SaaS revenue increased by approximately 11% over Q1. This growth was largely absent two deals, collectively worth approximately $1 million annually that were originally expected to begin producing revenue in Q1 but didn't…

Thank you. Ladies and gentlemen, we'll now be conducting a question-and-answer session. [Operator instructions] Our first question comes from the line of Tanner Hoban with Oppenheimer and Company. Please proceed with your question.

Hi Bill. Can you touch on the balance between some of your new hires and your late 2017, early 2018 profitability goal? What sort of timeframe do you expect your new hires to begin demonstrating some levels of productivity just thinking from that perspective, thanks?

Yeah, that's a great question. Actually, we're planning that out right now and what is you would call a project plan, and so we're time phasing the addition of new resources or estimating how long it will take them to come up to speed and what it can really contribute to revenue, and we're in the process of that now, and I don't really have an answer today, but that is something that we'll be reviewing over the next few weeks.

Got it. Now as a strong traction in Age ID, is that primarily coming from the retail division?

That's coming from our retail and law. Actually, so Age ID is a tremendous crossover product between law and retail markets for us. It gets us introduced into both where we have Retail ID , we can follow on within the retail market. We have Law ID we can follow on within the law market. So, it's a tremendous introduction to these markets for our other products.

Do you see a balance of strong traction between law and retail at similar levels for the Age ID?

We see a lot of traction in Age ID, and I'd say it's probably equivalent to retail from an interest perspective, interest point of view. We also expect to see Law ID start to ramp up now that we have concluded our Nlets audits, and I would assume that by next earnings call we'll have some pretty good news on Law ID also.

Got it. Thanks. That's helpful. And if I can fit one more in here. Your Nlets your opportunity there, do you have any sort of timeframe on that opportunity or if the mix shift of your new hires and focal points are being directed towards this opportunity. Any sort of color on that front would be helpful, thank you.

Sure. We've begun installing or connecting our first two law-enforcement agencies. That began as soon as we got the go-ahead from Nlets and depending on how available the state resources are to do our message testing back and forth and then move our system from the test environment to the operational environment, we'll dictate when the revenue start to flow, but a lot of these customers, these clients in the law world are very, very anxious to get the product in their hands. So, we're hoping that we see a pretty accelerated schedule for implementation.

Got it. Thank you very much.

Thank you.

Thank you. [Operator instructions] There are no additional questions at this time. I'd like to turn the call back to management for closing comments.

Thank you very much for joining our call today. I know it was lengthy. There was a lot of information in our script and a lot of that information was requested by shareholders and they asked us to please cover this and cover that and we did our best to do that. If we missed anything, we hope to hear from you, and we'll be able to do to speak with you about anything we may have missed. I appreciate your time today and I look forward to some real good news hopefully in the near future. Thank you very much.

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.