Welcome to the Q2 2014 Identive Earnings Conference Call. My name is Alexandra, and I will be your operator for today’s call. With me on the call today are Jason Hart, CEO of Identive; and Brian Nelson, CFO. In a moment we will hear remarks from both of them and then we will take questions from sell-side analysts and registered investors. Before we begin, please note that during this call, we will also be making reference to non-GAAP results or projections, including non-GAAP gross margin, operating expenses and adjusted EBITDA. A complete reconciliation between each of these non-GAAP measures and the most directly comparable GAAP financial measure is included in today’s press release, which is available on the website at www.identiv.com. In addition, during our call today, we will be making forward-looking statements. Any statement that refers to expectations, projections or other characterizations of future events, including financial projections and future market conditions is a forward-looking statement. Actual results may differ materially from those expressed in these forward-looking statements. For more information, please refer to the risk factors discussed in the documents filed from time-to-time with the SEC, including the annual report on Form 10-K for fiscal year 2013 and our subsequent quarterly reports on Form 10-Q. Identive assumes no obligation to update these forward-looking statements, which speak as of today. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. Now it is my pleasure to turn the call over to Jason Hart. Mr. Hart, you may now begin.

Simplification focused growth. Thanks Alexandra, I know that's a mouthful to get out. Hello everyone. Well as you've seen if you look to the press release Q2 was a pretty reasonable quarter as we began to see many of the changes that we implemented in Q4 and Q1 have begun to tight effect. We saw an increase in revenue year-over-year and quarter-over-quarter. We outperformed the sectors growth rate. So again pretty reasonable result given the current state of changes within the business. I want to thank all of the team that contributed to that and the continuing growth. While at the same time we’ve been focused on the quarter and the revenue growth we’re also being focused on the restructuring and the simplification phase of the business. And that has resulted in ongoing reduction in our expense base and Brian is going to talk to that little bit later when we get to the financial section of the discussion. In addition to the operating business we also expended substantial time and a lot of one-off expense to address the company’s NASDAQ compliance requirements. Again, I know many of the shareholders on this call and many of the staff internally were very pleased that we were able to remain as a public company and I want to thank everyone involved. We had a tremendous shareholder turnout for and support with more than 96% of the shareholders voting for the changes that were needed. But that did take considerable time in Q2. So even in amongst all of the major operational moves and the organizational restructuring we did continue to fine tune in to the department. And we do foresee further improvement in the operating expense and margin over the course of the next couple of quarters. This is as a result…

Thank you, Mr. Hart. Now looking at our financial results -- before getting into the numbers please note that the reported numbers for Q2 and Q1 2014 and the comparable quarter of Q2 '13 reflect only our continuing operations. Revenues in the first quarter of 2014 were $22.3 million as compared with $18.2 million in the first quarter of 2013, an increase of 23%. The strong performance also reflects a sequential increase of 32% from the $16.9 million reported in Q1. As a reminder we began reporting in four new segments in Q1 '14; these are credentials, identity, premises and all other. Approximately 59% of our second quarter 2014 revenue or $13.2 million was derived from sales in our credential segment. This compares to revenue of $8 million in the second quarter of 2013, a 65% year-over-year increase. The growth in Q2 credential revenues resulted in a sequential increase of 84% from the $7.2 million revenue reported in the first quarter of 2014. Again as in Q1 ’14 the growth year-over-year and sequentially is primarily a result of the increased demand for our credentials to support electronic gaming, transit ticketing and other internet of things applications. Our premises segment provided $4.6 million revenue in the second quarter, up 33% sequentially from $3.5 million in the first quarter of 2014 and an increase of 9% or approximately $375,000 from the comparable quarter in 2013. The growth in the quarter is primarily a result of the company’s continued investment in sales and marketing efforts in the U.S. federal government sector. Revenue from our identity products was $3.8 million in the second quarter, a decrease of 24% from the second quarter 2013 revenues of $4.9 million. Sequentially our identity product revenue decreased 25% from the $5 million in the first quarter of 2014.…

Thanks Brian. In the first half of the year we’ve addressed liquidity, we have substantially improved the cash position of the company, we have addressed our trading compliance with NASDAQ and as you’ve seen we have implemented some extreme simplification, focusing the business on the growth identity markets. All-in-all I think a reasonable and pretty good job. We have also won some partnerships with some heavy hitting channel partners like Verizon and some others that we can’t mention. That has really positioned the business for where I think our focus is now turning, which is growth. We also know that getting back to EBIDTA neutral is about credibility. And the hardest part of that job does lie in front of us and that is unlocking and creating the shareholder value by delivering this growth. So now I would like to spend just couple of minutes and discuss some of things that we are implementing and have implemented to help up deliver the growth that we think is here in this market. Innovation is the key to driving any new business. We believe that Identive is really a bit start-up. It’s a start up that has some great credibility coming from its two decades of traditions. But we are at an interesting period in time where we’ve seen this evolution where the password is no longer good enough. We’ve seen the evolution where the physical access credential is no longer good enough. And majority of our customers are at an intersection in their history where they are replacing and having to replace both. Identive is extremely well positioned both in terms of its prior history and its legacy customer relationships as well as the injection of a lot of new innovation to be able to solve this problem. We’ve been able…

(Operator Instructions). And we have a question from Bryan Prohm from Cowen & Company. Please go ahead. Bryan Prohm - Cowen & Company: Hey good afternoon Jason and Brian thanks for taking the questions.

Hi Bryan. Bryan Prohm - Cowen & Company: Hey, so first congratulations on the positive changes in the quarter and the strong revenue growth. It looks like the revenue upside is largely again in the credential segment, 65% growth that's up from last quarter, if I recall correctly. Brian, you cited a number of end markets, so when we work through your comment on the call today it sounds like this growth is sustainable, may be this growth rate is sustainable over the near term and may be this is a revenue line that could even accelerate further from here in terms of the year-over-year growth momentum?

So Bryan, I think as you know we are trying to be extremely cautious in the numbers and expectation that we give to the street. And the reason is frankly the company has had such a poor history of predictability. We’ve had couple of quarters where things have been pretty good. We are seeing the early investment in sales and marketing have some effect. The credential business is absolutely an excellent business for us. And we do see seasonality in that business. But we also see seasonality in the other parts of the business particularly the high margin premises business. So I am expecting from a forward pipeline that you are going to see the mix change a little bit and while the top line number may not change, the bottom line margin I am expecting will move. So for now what we’ve done is provided or reaffirmed the revenue guidance that we previously guided. And of course, things could widely beyond and things could be the other way. At the moment though, all indications are that we are on track. Bryan Prohm - Cowen & Company: Right. But you are confident that either the high end or low end of that annual guidance, $80 million to $90 million you can still get adjusted EBIDTA breakeven because of the mix shift that’s anticipated, is that right way to characterize the back half?

Yeah. And I want to be clear we think we can get to adjusted EBIDTA on run rate basis. Bryan Prohm - Cowen & Company: Correct. I apologize. Yes. That’s right.

But absolutely that is the goal we currently see that as the likely outcome. Bryan Prohm - Cowen & Company: All right. So hey, Jason with all the changes what is the greatest impact them so far of improving your visibility into backlog? I mean does it give you greater confidence the growth story and the growth momentum longer term or near term?

Actually there is lot of things going on. I think anyone who took on this problem would have realized it’s a multi facet problem. And with so many spinning plates, the first thing we had to do was to understand what all those spinning plates were. We’ve got a really good handle now on and we will not represent that the company is well oil machined in every respect. We are still and Brian and his team going through and cleaning up and consolidating lots of activities. But we’ve got a really good handle now on where the expenses are. Most of what we are doing is now fine tuning. We’ve completed the large wholesale structural changes with some big things like the factory consolidation, the changes in our European workforce, changes in our U.S. workforce and so forth. So those activities, as we sit here today complete fine tuning still to occur. And so in answer the question what is the one thing it wasn’t a one thing. The visibility to the expense side important, the consolidation of the sales force to get a forward pipeline was -- had now given me more confidence in knowing what’s going on, discussions with our strategic partners, the augmentation of our sales force and some upgrades to the sales organization where now they had a full quarter to be involved and understand the business and be report back in is giving me stronger credibility with them, that we actually have a better handle not perfect but we have a much better handle now on what our forward revenue looks like certainly for the next two quarters. In to 2015, we are looking at market trends predominantly and some guidance that we are getting on the long term sales pipeline data. Some of our deals as you may know have a 12 month to 18 month sales cycle. And so as we began to see some of those we are now getting more visibility. Our partnerships, the ones that I can’t mention and plus obviously the one with Verizon, have also begun to give us some more confidence that we’ve got more sales people on the street that are incented to sell. So we created a new business development group focused entirely on those partners augmenting these sales activities. That's giving me more confidence as well that we have forward visibility. So it's multi-facet problem but again work-in-progress but I am becoming more and more confident on the forward numbers. Bryan Prohm - Cowen & Company: Great, hey so one follow up there on the [partnership] fees. So if these strong partnerships evolve and more of them become transparent, should we look at this as basically, this is an investment year in the partnerships and that return comes in '15 as part of the long-term growth strategy or what are the inflection points likely to arrive around the partnership momentum and what you've done? Thanks.

Okay. So again multi-faceted answer for you Bryan sorry. The partnerships will be how we grow the revenue substantially in a short period of time. The business does not have the capital and it is not management's intent to build an extremely large sales force in front of revenue. We just don't have the capital or access to capital to do that. Our goal is to partner heavily and put our eggs into the baskets of much larger players where we become a part of their solution or part of their offering. In addition to augmenting our current sales organization to directly influence our strategic customers, so becoming a trusted adviser because we are experts in the field. It's tough to have a partner be an expert for the space that we're in. So in becoming that trusted adviser to our strategic customers and delivering through either one or multiple of 150 resellers or throughout large OEMs, we expect to actually drive more revenue. Now it does mean we give up the piece of the pie, but that the pay-off for that of course is access to the thousands of additional sales people around the world. Early indication is that, that is the right strategy. We are seeing a stronger forward pipeline, yet to be proven that it closes and we are yet to have good historicals on closure rates but as an aside as I mentioned to you once before I've done this before, seen it a few times. This is probably -- I am more confident in than I've seen any of the other partner led organizations. So, yeah -- that helps. Bryan Prohm - Cowen & Company: Okay, great. No, that helps very much. Thanks for taking the questions, Jason and Brian and I'll pass on. Thanks.

I am surprised you didn't ask me anything about NFC, thanks Bryan.

The next question comes from Scott Matusow. Please go ahead.

Hi, guys. How are you doing, it sounds you had a good quarter there, congratulations.

Thanks Scott.

A couple of questions I heard Brian talking about partnerships and how those things are going, I guess you are going to go that way and take that business far more to partners. Is there -- it’s going to be that way, is there any time that you foresee in the future that the market is actually going to know some of these partners. I think you have to keep it quiet for certain reasons but can we expect to hear something, any given time about which partners they are?

Yeah apart from the Verizon one which we have disclosed because of the -- quite frankly the strategic investment that we've made in the current expense base, the service that's including standing up datacenters, the others are -- one of them is a retail channel and we can talk a little bit about the fact that we have seen a phenomenal growth from them in the credential sector in the last number of months. They will probably become known, but it will up to them disclose it just because of the arrangement we have with them. We are working to formulate other relationships and it is a key part of our forward strategy. The technology that we've developed for both government and international and domestic government as well as some very large technology companies that are currently customers is extremely applicable to many of our traditional competitors. And we’ve taken the route of opening up that technology to open up other markets and begin to look at key strategic partnerships that companies that may have in the past been considered competitive to us. But frankly, I’ll look at this market as a growth opportunity. We are years in front of others and this is a play for us to grow market share in combination with people who already have those customer relationships. So I can see some really good win-win and that’s what we are working on to explore right now.

That sounds really interesting. As you talk about going ahead with the plan of going with partners I guess I could assume at some point obviously you’d like to get, a few years down the road I mean that’s a long way down, but may be take some of that money from the partners and may be go on your own at some point and do anything?

Given the company size and given the fact we are so far in front technologically but our access to market is limited by our capital, partnership route is the most logical route. And in doing that you have to go in to these relationships in good faith. And the good faith is that, that your strategy it -- we won’t navigate partners that we work with. So it’s important that’s what we become. Now in terms of the size of these Scott, they are not little. We are not looking to do relationships with small companies. The organizations we are talking to are substantially larger. And frankly look at us as an incredibly interesting innovative technology company now, given that we own everything from the manufacturing of IOT devices all the way through to providing the identity and security in credentials for many governments around the world. They look to us to help them drive more revenue in their own product set. So short answer is yes, we will maintain direct relationships with strategic customers. We are up front of those with the partners. But if a customer wishes to procure through partner we would help that happen, so that we are not competitive.

That sounds good. One last question for you, I see your videos on YouTube about the Trust Your World. Am I getting this right that your main business plan here is to synergize everything in to kind of almost like a one stop shop that you are going to handle different areas of IOT and almost in a synergy and provide the synergy to your partners in that way?

Yeah. It’s a one stop shop for Identive. If you think about some of the big challenges in front of us, we have mobility, we have many, many senses that are being deployed under this Internet of things strategy from lots of different companies. We see ourselves as pieces of the pie for companies that want to implement security in those devices and provide identity in those devices. We launched our Identive Trust Service which is a webbed service infrastructure that third parties use to interface with using an application programming interface. And then we were able to deliver small transponders that have security technology in them all the way through to premises technology that have the same technology through the consumers that need to get rid of user names and passwords, be it with key [fobble] card or just on a mobile. So the fundamental technology is the same. We’ve just applied it in the three areas that we talk about, everyday items premises and information.

Very exciting. And thanks for taking my questions. I think the future looks good for you guys, wish you continued success and hope next quarter we’ll hear some better stuff from you.

Thanks Scott.

We have no further questions at this time.

Terrific, excellent. I want to thank everyone for their time. Thank you to the team for their effort through Q2, keep up the good work. And we look forward to talking to you everyone when we report back on our Q3 earnings in the few months.

Thank you everybody.