Good afternoon and welcome to the Inpixon's Earnings Conference Call for the Second Quarter Ended June 30, 2018. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there’ll be an opportunity to ask questions. [Operator Instructions] Participants on this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A replay of the call will be available approximately one-hour after the end of today’s call September 9, 2018. I would now like to turn the conference over to Scott Arnold, Managing Director of CORE IR the Company's Investor Relations firm. Please go ahead, sir.

Thank you, Steve. And please turn to Slide 2 for the Safe Harbor statement. Thank you for joining today's conference call to discuss Inpixon's corporate development and financial results for the second quarter ended June 30, 2018. With us today are Nadir Ali, the Company's CEO; and Wendy Loundermon, VP of Finance. At 4:05 p.m. Eastern Time today, Inpixon released financial results for the second quarter ended June 30, 2018. If you have not received Inpixon's earnings release, please visit the Investors page at www.inpixon.com. During the course of this conference call, the Company will be making forward-looking statements. The Company cautions you that any statement that is not a statement of historical fact is a forward-looking statement. This includes any projections of earnings, revenues, cash or other statements relating to the Company's future financial results; any statements about plans, strategies or objectives of management for future operations; any statements about our ability to complete the spinoff in a timely manner or at all or those that satisfy the various closing conditions through the spinoff, impact of the spinoff on our business and that of Sysorex and inflictions in Sysorex’s ability to execute the respective business strategies prior spinoff; any statements concerning proposed new products; any statements regarding anticipated new relationships or agreements; any statements regarding expectations for the success of the Company's products in the U.S. and international markets; any statements regarding future economic conditions or performance; statements of belief; and any statements of assumptions underlying any of the foregoing. These statements are based on expectations and assumptions as of the date of this conference call and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Some of these risks are described in the section of today's press release titled Cautionary Note on Forward-Looking Statements, and in the public periodic reports the Company files with the Securities and Exchange Commission. Investors or potential investors should read these risks. Inpixon assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. In addition, to supplement the GAAP numbers, the Company has provided non-GAAP adjusted net loss and net loss per share information in addition to non-GAAP adjusted EBITDA information. The Company believes these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance. A table reconciling the GAAP information to the non-GAAP information is included in the Company's financial release. I will now turn the call over to Nadir Ali, Inpixon’s CEO.

Thanks, Scott, and good afternoon everyone. Welcome to our second quarter 2018 earnings call and corporate update. I wish to express my sincere thanks for your continued support in Inpixon. We do have some slides that we’re sharing as we talk through the call today, so feel free to log in. I am currently on Slide 3 and follow along on those if you wish. We’re pleased to have announced on August 7, 2018, that Inpixon’s Board of Directors formally approved the separation of our infrastructure segment or value-added reseller business from our indoor positioning analytics business through a pro rata distribution of all of our shares of common stock of Sysorex Inc. to holders of our outstanding common stock preferred stock and certain warrants pursuing to a separation and distribution agreement by and between Inpixon Sysorex. Before we discuss the details of the forthcoming spinoff, more specifically including the reasons for the spinoff and it anticipated implications, I would like to take some time to review our accomplishments during the second quarter, which in many ways support our upcoming transition and position each of Inpixon and Sysorex to capitalize on what we believe is their best potential. While we recognize lower revenues from the bar business this quarter as a result of some the credit issues experienced during 2017 and early 2018, which we are continuing to repair and rebuild we have been able to continue to strengthen our balance sheet, significantly reducing our liabilities and increasing stockholders equity allowing us to be able to regain compliance with NASDAQ stockholders equity requirement. We anticipate that the VAR business will have improved results during the third and fourth quarters of 2018, as a result of the efforts we have made to rebuild our vendor and supplier relationships as well as…

Thank you, Nadir. Net revenues for the three months ended June 30, 2018, were $1.8 million compared to $15.1 million for the comparable period in the prior year. This $13.3 million decrease or approximately 88% is primarily associated with the decline in revenues earned by the infrastructure segment as a result of the supplier credit issues and a $1.6 million decrease in revenue resulting from the adoption of the new ASC 606 revenue recognition policy beginning in January 2018. For the three-months ended June 30, 2018, Indoor Positioning Analytics revenue was $1.3 million compared to $1.2 million for the prior-year period. Infrastructure revenue was $564,000 million for the three months ended June 30, 2018, and $13.9 million for the prior year period. We anticipate the infrastructure segment revenue which will be part of the Sysorex going forward will start to recover in the third and fourth quarters of 2018, as we rebuild our supplier relationship and head into the federal government busy season. Gross profit for the three months ending June 30, 2018, was $1 million compared to $3.4 million for the prior year period. The gross profit margin for the three months ended June 30, 2018, was 55% compared to 22% during the three months ended June 30, 2017. This decrease in gross margin is primarily due to the decrease in lower margin storage and maintenance sales. Indoor Positioning Analytics gross margin for the three months ended June 30, 2018 and 2017 were 72% and 67% respectively. Gross margins for the infrastructure segment for the three months ended June 30, 2018 and 2017 were 19%. GAAP net loss attributable to common stockholders for the three months ended June 30, 2018 was $5.9 million compared to $6.4 million for the prior-year period. This decrease in loss of $500,000 was attributable…

Thanks Wendy. We are on the forefront of the landscape that will forever change the way technology, data and human experience intersect with the immediate solutions to tomorrows needs and location based analytics that are predicted to demonstrate during this growth and demand. We are leading the innovation rates and have revised our strategic growth approach to a land grab that we are confident will increase returns upon execution. This has not been an easy path nor one that has rewarded our investors and stakeholders just yet. We understand and acknowledge the difficulties for those of your continued support the Company during recent times. We believe we have faced our challenges head-on and are strategically pivoting to position our company to move past the challenges and get back on the track to grow. It is now yet reflecting in our fundamentals, but we believe that we have corrected course and that the results will follow. With that, Keith, we are ready to open up the call for any questions.

[Operator Instructions] And the first question comes from Ross Silver with Sylva International.

Just two questions for you. The first one is as it relates to the indoor positioning analytics, could you tell us a little bit about client base or the customers you are targeting on that side, just to get an idea of size and scope of these types of customers?

Sure. So, certainly on the security side use cases or applications with our technology, we are targeting, not only government agencies which we have talked about quite a bit in the past and continue to grow our customer base with government agencies, but we are also looking at enterprise customers. We have engaged with several large enterprise customers in the Fortune1000 in pilots and deployments. And I expect as IoT security issues become more pervasive just like other cyber security breaches, one big one figures a lot of attention and focus from others. We expect that will happen and I am sure there is probably some IoT security breaches already have occurred and we just haven’t heard about them yet. But we think that's another huge opportunity I mentioned earlier on the call today that a high-tech company here in Silicon Valley, that’s a very large Fortune 500 type company. We have others that are now starting to see the need for protecting the airwaves that are better in their facilities right, so that's where our security don't term comes in, and we’re ready to protect those airways. So I think corporate boards are definitely going to be start thinking more and more about this, and we will have to address the security risks associated with all of these connected devices in their facility, especially with -- in this day and age of rapid corporate espionage and hacking.

And then just one other question is it relates to the spinoff, congratulations on getting that done here fairly soon, it sounds like it’ll be done before the end of the month. Could you just talk a little bit about the benefit associated with the spinoff and kind of thinking behind it?

Sure, yes, I mean I covered some of that on the call, but let me add to what I said earlier. Certainly, there is -- the aspect of both companies being able to focus their energies and resources on their own business plan and growth strategies. For Inpixon in particular it allows us to dedicate our resources and energies on this multibillion-dollar location and analytics opportunity and really spend all of our efforts along that side. I think it also will help our shareholders because the messaging to the street will be much clearer. We’ve had two companies under one banner all this time. So, I think separating these two with the Board's decision to do so some time ago and it’s just -- and in the time process you get it done, makes a lot of sense and certainly feedback that I received from analysts and shareholders is that they also feel that the message will be much clear, and I think Inpixon will finally be seen truly as the technology company after the separation. And Sysorex likewise, can then flourish on its own as the systems integration bar business and really become a leader in that space because that’s historically where that business has done well and has a brand reputation. But for Inpixon I think because it was incubated inside of this part of this all the time. This will be the first time that it's a standalone technology company and I think the market will react well to that. I think it will also attract investors and partners, employees, etc. who have always wanted to be part of the IPA story but were reluctant to get involved and so this separation happened so we’re looking forward to that as well.

Thank you, and this concludes our question-and-answer session, and I would like to turn the conference back over to Nadir Ali for any closing remarks.

Alright, thanks Keith. Thank you again for your support and interest in Inpixon. We look forward to updating you on our continued progress. Thank you for joining us today.

Thank you. This conference is now concluded. Thank you for attending to today’s presentation. You may now disconnect your lines.