Bruce Davis - Chairman and CEO Charles Beck - CFO

Jeff Kessler - Imperial Capital Robert Stone - Cowen and Company Josh Nichols - B. Riley Kevin Hanrahan - KMH Capital Advisors

Good afternoon and thank you for participating in today's conference call. Now I will turn the call over to the Chairman and CEO of Digimarc Mr. Bruce Davis. Sir, please proceed.

Thank you, good afternoon. Well everyone I picked up a case of strep throat last week while travelling around so my voice is a little weak and I am calling from home, that's the delay while we got the technology all wind up to work for us here. So, I'm doing fine, but had to make the call from home, so welcome to our conference call. Charles Beck, our CFO, is on the call with me. And today we'll review our Q3 financial results, discuss significant business developments and market conditions, and provide an update on the execution and strategy. This webcast is being archived in the Investor Relations section of our website. Please note that during the course of this call, we'll be making certain forward-looking statements, including those regarding revenue recognition matters, results of operations, investments, initiatives, and growth strategies. These statements are subject to many assumptions, risks, uncertainties, and changes in circumstances. Any assumptions we share about future performance represent a point-in-time estimate. Actual results may vary materially from those expressed or implied by such statements. We expressly disclaim any obligation to revise or update any assumptions, projections, or other forward-looking statements to reflect events or circumstances that may arise after the date of this call. For more information of risk factors that may cause actual results to differ from expectations, please see our filings with the SEC, including our latest Form 10-K and the 10-Q that we expect to file shortly. Charles will begin by commenting on our Q3 financial results. I'll then discuss significant business developments, market conditions, execution of strategy and our plans for managing working capital during the development of the market for Digimarc Discover and Barcode. Now, Charles?

Thanks Bruce and good afternoon everyone. Revenue for the quarter was $6.9 million down $500,000 or 7% from the third quarter of last year due to lower license revenues, mainly from a scheduled completion of the quarterly license fee payment from Nielsen in January. License revenues were lower despite receipt of $1 million fee from Variance to renew their license. Service and subscription revenues were up year-over-year. Gross margin was 69% for the quarter, five points lower than the third quarter of 2013. The decrease in gross margin reflects the impact of lower licensing revenue and higher support costs versus new Guardian customers. Operating expenses increased by 7% due to staffing and support of our growth initiatives for Digimarc Discover and Digimarc Barcode and other aspects of our Intuitive Computing Platform. We incurred an operation loss of $3.2 million during the quarter versus an operation loss of $2 million in the third quarter of 2013. Our effective tax rate for the quarter was 39% resulting in an income tax benefit of 1.3 million on a pretax loss of $3.2 million. At the bottom line, we incurred a net loss for the quarter of $2 million or $0.28 per diluted share versus a net loss of $800,000 or $0.12 per diluted share in the same quarter of last year. We invested $3.1 million of our cash reserves during the quarter, well under the $4 million to $5 million range we projected. We chose not to raise any capital in our ATM program during this quarter. The balance sheet remains in good shape with roughly $25 million of cash and marketable securities and no debt. Absent a significant uptick in revenues, we expect to use $2 million to $3 million of our cash reserves during the fourth quarter. For further discussion of our financial results and risks and prospects for our business, please see our Form 10-Q that we expect to file shortly. Bruce will now provide his comments on significant business developments, market conditions and execution of strategy.

Thanks Charles. I'll begin with some brief comments on areas of our business other than Digimarc Discover and Barcode. In our last call we said that we expected revenues from established products and services to generate low double digit growth in the second half of the year over the first half of the year. We believe we are still on track for these gains. For the full year we expect subscription services revenues to be modestly higher than last year. I expect better growth in both areas in 2015. Licensing is another story. Revenues are down this year although license revenues are notoriously difficult to predict, we expect a continuing decline in 2015 due in part to unfavorable market conditions. And we will continue leverage to monetize our patents. However, general market conditions for patent licensing are good due to some adverse regulatory trends and court decisions. Thus the timeliness and importance of our efforts to build new sustainable revenue streams of Digimarc Discover and Barcode, which I will turn to next. We have made and continue to make significant investments in this growth initiative. We are executing well against the publicly disclosed strategic plan. Our focus is on expediting adoption of Discover and Barcode by leading retailers and brands. Awareness and interest among retailers and brand is growing. We are in production with our first customer, have a verbal commitment to begin production with another and are preparing for market tests with shoppers to enable it with a third. We are engaged with a fourth leading retailer as a result of being selected in the R&D proposal competition I mentioned on our last call. Due to customer demand, we are extending our integration of our software through additional Datalogic products and products of other leading scanning vendors. Several national brands have expressed interest in our platform and are contemplating market growth in the interim exhibition shortly. Recognize the importance of GS1 the Trade Association has developed and maintained standards of product identification in retail and numerous other industries. We've been certified as a supplier in the US Solution Partner Program. The program facilitates the implementation of GS1 Standards by connecting users, approving solution providers that can deliver services and solutions that enable quick, efficient and accurate standards implementation. We've demonstrated Digimarc Discover and Barcode at the Shopper Marketing Expo in Minneapolis this week showcasing our mobile payments solution and Money20/20 Conference in Las Vegas in early November. And I am preparing from the National Federation Show in New York City, January 12, 2014. The Shopper Marketing Expo provides an opportunity with many leading national brands, laying the foundation for more active marking of the brand next year. We have pretty modest expectations from Money20/20 given the level of complexity and competition and mobile payments. We'll assess demand in the current weather and how to proceed with R&D on this aspect of the Discover platform after the show. I will report on our findings in our next call and are [up of course for the big show] (ph) where we'll put our best foot forward in demonstrating progress during our first year in the market. The [overlap] (ph) with the Needham Annual Growth Conference in January 13 of '15 where I expect to update investors on our progress and share first impressions from the big show. Regarding competition, we have studied the Amazon Firefly features and noted many in adequacies as I noted the numerous published reviews. We are formulating our views of how to deal with their foray into mobile discovery. That's about all I can say for now about this situation. We continue to exercise our best judgment in balancing the rate of investment in market development for Digimarc Barcode and seeking to expedite adoption. So far the execution of strategy remains on track with our stated goals and timetable. We have $25 million in cash at the end of Q3. We did not raise any capital [ourselves] (ph). We'll continue to explore deals and options for financing as we maintain the level of working capital that is comfortable for customers, business partners and investors without incurring unnecessary dilution. At our Board Meeting this week, we offered an assessment of this year's performance, and our preliminary plan and budget for next year. As noted above and in our financial statements there was not much revenue growth in the legacy subscription and services business and license revenues declined, largely due to expiration of some fixed fee or maintenance paid over years. Growth rates in our subscriptions and services business should do better next year. We expect license revenues will decline one more time and as you know, the focus of our company has been on the major growth initiatives regarding Discovery and Barcode there the news is much better. We have been executing well against our publicly detailed strategic plan for Discover and Barcode and continue to believe that these initiatives will represent an inflection point in our business on a transformative technological development of great economic significance in the retail industry. Our priorities for next year begin with distribution. We've been building our sales force in response to demand and the needs for account management. We added a Vice President of Sales with substantial retail technology sales experience in Q2. In Q3 we contracted with an experienced sales representative in Europe to nurture interest amongst several leading retailers in that market. We intend to build distribution among retailers and brands and in the past software to support more point-of-sale scanners from Datalogic and other leading vendors. From the financial perspective the key things actually have been growing revenues, optimizing investments, proving our business model for the new growth areas and increasing investor confidence that we will deliver on the amazing potential of our innovation. We are confident in the technology and have still more work to do improving its value in building confidence among customers and suppliers as well as investors. We will be efficient in needs of capital reducing nonessential spending and focusing on selling what we have both in legacy and new areas of the business. Our near term goals will include expediting adoption of publicizing associated momentum for Digimarc Discover and Barcode. That's it for our prepared remarks. Now we'll open the call to questions.

(Operator Instructions) Your first question comes from the line of Jeff Kessler of Imperial Capital. Jeff Kessler - Imperial Capital: Thank you. Just a couple of questions here, first could you just elicit a little bit on the average code decisions that are hurting the patent business?

Sure, there is a case known as the Alice case that was decided in the Supreme Court earlier this year. And there have been about 10 District Court cases that have are all around trying to interpret the [precedent] (ph) and the sort of general impression that is being considered in the industry is software patents are invalid is clearly an overstatement. But it's not clear exactly what the boundaries of the Supreme Court's judgment was, but it related to patent subject matter and so everyone is spinning around in the industry right now because of that decision and the district courts have taken a pretty aggressive view of what they thought the Supreme Court was saying. And so there are various initiatives by various associations and by various companies to try to tell the government that this is going to destroy our innovative economy and that's really a bad idea to think that software patents are invalid as a matter of palatable subject matter. So most people don't think, yet can say it that is for very long and a pendulum swing and like a worst point and it's going to get better. But my view is that if their view is correct and I'm not certain it's correct, I think they are right and it will a period of years to come back, another period of months of course. And so, during that time dependants are molded by the circumstances and thus as the patentee when we sort of patents not all of our patents are software patents of course there won't be any moments or patents and it depends on just being pretty strong right now and so it's a difficult licensing environment. So it doesn’t mean we won't do any licensing. It doesn’t mean that all of our patents are software patents, but it does mean that we are in a situation which is quite the opposite of what it was a few years back when the patentees seemed to have a stronger position against the potential licensees. The tables have turned at least for the short term. Jeff Kessler - Imperial Capital: All right. Could you elaborate a little bit on what you think some of the weaknesses in the Amazon Firefly features are that do not accommodate retailers in their customer experience?

Yeah. We won't consider something known as image recognition as an element of the intuitive computing platform and we've done quite extensive technology studies and development and we haven’t yet released that means of identification to the public, because it doesn’t work well enough yet in our view. And because we want our objection capabilities to become a feature of all mobile devices and we're beginning with the branded applications of the large retailers, the quality of the customer experience is paramount. And so even though their business could stand upon stage in a very controlled demonstration with selected products and make it work, doesn’t mean it works very well in the wireless I would call it. And so, what we observed is when you take it off the stage and bring it into real life, it didn’t miss and it just doesn’t lead to a quality experience. And in the investment materials that are published on our website, I note the evolution of computer assisted shopping and I firmly believe that the world will understand soon where the ultimate answer, but the ultimate answer requires an additional processing stuff of encoding which doesn’t exist in most media today. So, you have to use some estimation and the next best means of identification known in the world is the classic of UPC that is a traditional Barcode and after that, I would probably give them credit for the work they've done in fingerprinting of music and then of course all of the niche applications and digital watermarking that are around the world. So we're heading in the right direction generally across a number of industries, but Amazon has got a little bit ahead of themselves on what they promised versus what they delivered and they've got some work to do. Jeff Kessler - Imperial Capital: Right, just one other quick question, that is, you seemed to have expanded a bit by one at least the number of retailers you're working with. Can you just go over the general nature of the types of retailers you're working with and where you're at in the process with them?

Yeah, yeah, sure. Our focus is on general merchandising grocery, because it’s the most obvious place to prove the benefits out because there are a lot of them and so a big portion of the industry involves mainly consumer packaged goods that either have labels or have the packages designs. So that's where we're trying to start now the specialty merchandising like lows and home depots and several evidence and so forth. And there is definitely a buzz developing and I think we're doing terrific against the plan that we had stated we're doing more than I said we would do and we're stretching to get it done working real hard and I realized that it's not yet publicly disclosed how things are going and we're going to disclosure as much as we can between now and show in January. But we had hoped to focus on one customer and we now have several and we have others expressing interest. Jeff Kessler - Imperial Capital: Okay, general enough. Thank you. Thank you very much. I'll get back in queue.

All right, thanks.

Your next question comes from the line of Rob Stone with Cowen and Company Robert Stone - Cowen and Company: Hi Bruce, I hope you feel better soon.

Thank you, thank you Rob. Robert Stone - Cowen and Company: So, I wanted to ask for maybe a little more detail, you said you are in production with customer one, can you help us understand what that entails, how far along are you, maybe rough idea of how many SKUs are being enabled and so forth?

Yeah, I can quite go as far as I'm going to go, but being in production means that we're not creating samples that we're actually revising the packaging and labels for products and those products are being shipped into distribution to be put on the shelves in the stores. And so by the time we get to the show I would expect to be at least dozens of products in the stores. We're ramping up several. Hard to tell how much we'll get done and the way the process works is that they send us the files and then we do our work and then we send it back. Have a QC and they might ask for rework for some of the media and then once approved, that media then goes to the print cycle, normal print cycle and the print inventories is created and that goes into a normal product inventory cycle. So that goes into the normal distribution cycle of the products within the stores and so that process is weeks to months long and thus we're not making an effort to specifically quantify to a point in time exactly how many products will be in distribution, but that gives you a general range of where we are and a sense of the timetable involved in production for consumer packaged goods. Robert Stone - Cowen and Company: Okay. And I didn’t quite catch the details of what you said was going on with numbers two through four if you could just repeat what you said before?

Sure, so we have another customer that has verbally stated that they intend to go to production with us, that's all we have to point out. So obviously we could change our mind or whatever, but they said they might be to go to work so we're trying to get up and running with them. And there's a third customer that is contemplating doing marketing trials for the shoppers enabled and not for point-of-sale throughput improvement. And then there's a fourth customer that was referred to in the last call as having selected us from an R&D competition to do studies in the spring their R&D budget and I have referred to them as top-five retailer in the world, one of the top-five in the world. So we have four that are actively engaged with us and we have others that are along in the process with us, but not thus far along as those four. Robert Stone - Cowen and Company: Okay. So with respect to the cash consumption, it's nice to see that that was less than you were expecting. What factors contributed to the difference versus the four or five that you had mentioned last time?

We'll, we're being conscious about our spending and we had a little better mix of license income than we were contemplating when we offered that range in the call last time. Robert Stone - Cowen and Company: Okay, and my final question is about scanners, I guess you said you are making some software changes to work on additional Datalogic scanners. What's going on with other scanner vendors, if anything?

Some customers have asked us to begin working with other leading scanner vendors, so we are and we're in the early stages of implementation with them. And we work with them imaging scanners and so that's a general requirement that we have and then we're becoming familiar with the architectures of these other vendors and the industry has not had any experience with application software. That's all been embedded software and so we got a little bit of mutual learning process to go through with vendors. Once we do that I think it's going to work very smoothly and easily. I don’t think there are any extraordinary difficulties in implementing our software and then we will also be integrating with point-of-sale and I think that even though we don’t require any changes with point-of-sale, I think point-of-sale may see some opportunities in what we do and so there's a third two layers of software, our software, the embedded software, the scanner, vendor and the point-of-sale software. So we're also beginning discussions with point-of-sale software vendors to see if there are some interesting things to do together. Robert Stone - Cowen and Company: Do you see potential benefit with respect to POS changes where many merchants are going to be rolling out contractor's payment and they're going to have to do changes to their terminals anyway to accommodate chip cards next year? Is that investment a thing that might cause someone to simultaneously look at the scanner and the rest of the POS hardware?

I don’t know that there is much relationship between the chip terminals and the rest of POS that would, advantage or disadvantage upside. I do believe that there will be very significant, fairly quick transition away from laser here and that it will gain momentum in '15 as it demonstrates some potential in '14. But one of the things that has changed over the course of the year for me is, I’m really anxious to get in the stores and to see the real results there because I think that an economic case might be made foregoing this, the imaging and scanning just because of us or have us feel significant contributor to those decisions and earlier in the year, I had a humbler view that we were not really part of the calculus. I think we’re likely to become part of the calculus and maybe a significant part of it as we prove out our trivial benefits and other benefits there. Rob Knipp - Janney Montgomery Scott: Yeah, I guess you could say your solution helps the merchant save money and putting in chip cards help them avoid losing money.

Yeah, exactly yes. Yeah, they’re improving their front store operations in both directions here, exactly. Rob Knipp - Janney Montgomery Scott: Great, thank you, Bruce.

Yeah, thanks Rob.

Your next question comes from the line of [Indiscernible] with Lindenberg.

Yeah. Hi, good afternoon everybody. Just a couple of questions quick on the license import. I realize it's not a big important driver of the story but the $1 million payment from Variance, is that just a typical kind of one-off thing that they’ve been doing? Every few quarters they come with a payment or whatever is that, is that becoming more standardized?

No, it's different than the prior arrangements that have been in place. So just a brief history on Variance. They have been the most contentious licensee that we’ve had. We’ve had lawsuits with them twice in the past and both of the lawsuits have resulted in settlements and license and so in the last case, which was three years ago, they entered into a license for three years in which they were paying royalties quarterly to us as a percentage of revenues. And so as a license approached exploration late this year, I have began some discussions with the CEO there and we concluded based on trends of his business and our desire to avoid unnecessary litigation that we would grant the license that would be adequate to cover their existing business for a $1 million one-time fee. And so we reduced the scope of the license a bit and we’ve fixed the fee for a one-time payment.

Okay. And you recognize that all in this quarter then?

Yeah, we’re required to do that.

Okay.

And we’ve received all of the cash in the quarter.

Okay, and then the talk about license revenue being down next year. Now I had it down in my model already. Is that -- is what you're saying kind of a downtick from what you’ve said in the recent past or is it just trying to prep people for what should be another modestly weaker year in that segment.

Well, what I’m trying to do there is just trying to give everybody heads up on the market stocks and with that said, the difficulty of projecting license revenue is unchanged. It's still difficult to predict. We could continue to have a good year, I don’t know. But what I wanted to do was as I've done at all times is to just give people heads up that that part of the business will be challenged by market conditions whereas in other parts of the business marketing conditions are fine. That’s the one area of the business where I look at and I go out at doing the hard work. So we haven’t given up. We have a lot of IP. We’re engaged in our reach. We're trying to be creative and we’re trying to figure out if we can the economic consequences of the change in market conditions, in other words what you asked for and how do you proceed with respect to target. And we’re making some modifications in our approach and our expectations, but it doesn’t mean the market is dead, it doesn’t mean you won't get any license income. I’m not quite sure what it means just yet, but I wanted to make sure everyone was aware that there was this Supreme Court decision, which seemed to just cast a damper on the entire industry and then there are some regulatory changes that have been encouraged by goodwill that are quite negative for pattern holders as well and all this is done under an umbrella of public relations called [killing] (ph) all right? But you have to be in control, there is a lot of collateral damage including a recent study I’ve read that said that 45% of Oracle’s patterns will be invalid if our softer patterns were invalid. That’s not likely to be the end result, but that’s the way the market feels right now. So it's a very hard market. So I don’t know what to do with the forecast. I just want to make everyone aware that, where something might have thought we will see that kind of history of excellent execution that it’s really an uphill challenge in the next year or two at least.

Yeah, and the last thing on the license. The talk last quarter a little bit about going after some people on the second wave of patents so in light of the market developments, have you kind of stepped back on that front a little bit?

I did, but then we were stepping forward again. I did. In the last call, I kind of indicated that we’re pausing a bit and I was trying to figure what was going on in the market and how to deal with it. And so we have some strategies that we think might work and so we’re going to press forward to see what happens. So we’re not giving up but we do recognize that there are some challenges that didn’t exist in prior years.

Okay, good and then just so as we move to on some of the discovered stuff, you talked a little bit about building your sales effort a little bit with the VP of Sales last quarter and the your sale rep in Europe this quarter. So as you’re building up these efforts, are you basically at this points kind of looking for more partners, or do you have as much work as you think you can handle right now or what’s the balance there on that side?

More partnerships and so if you look at our existing sales interface, there are two interfaces primarily for the growth initiative. One is our web interface and we continue to work on that because I firmly believe that we’ll find sufficient demand. We’ll have to work well because we won’t be able to deal with the demand on the other way. And so that’s my globally scalable efficient sales interface through customer acquisition and engagement and I did want to go there and I want to serve somebody much powerful through that interface. In the meantime, we also have virtual sales forces and so the Datalogic sales force has done wonderful asset and I can’t say enough about what a good partner Datalogic have been for us. As we begin to work with other scanner vendors, I hope they have the same attitude, which is they’re moving the industry forward into a new era and they want to be part of that. They don’t want to be left behind. And so if I can get doubling, tripling, quadrupling in my virtual sales force, it takes a lot of pressure off out and to stop it directly even though I need to have more management level or high level sales people to deal with my virtual sales forces, right? And then, we have some other relationships that are not yet publicly disclosed, which may amplify our sales capabilities even further and we’ll see how those things that we're contemplating that will be a function of how much demand we actually realize. So if we get a lot of demand we actually have a strategy for getting well beyond the virtual sales forces and the web interface and our internal sales force. For the time being, I think what we have is plenty to give us as an organization full capacity required.

Okay. Great, and the customer what I guess you could call a customer number two with the verbal agreement. Do you expect it to evolve over the same kind of timeframe as customer number one or would this happen a little faster just because it's a second time around assuming that they go ahead with the program?

Yeah, I understand the question. I hope that each customer goes faster because we learn with each one of them, we improve our business processes and they’re business processes each time we had a customer. So that’s exactly the theory that we’ll gain efficiency with each new customer acquisition.

Okay, great. And then the last thing for me would be, someone else asked about the scanners. Is that in any case a hurdle to acceptance, are there any people who come to you and say, “Boy, this looks like great technology, but we don’t have the scanners and we don’t plan on upgrading for a year or two or whatever”, or you have not run into that yet?

We haven’t run into the -- it won’t be that we won’t be able to do for a year or two. What we have encountered is people who are using vendors other than Datalogic or who use other vendors in addition to Datalogic and they say would you please go on and work with that vendor to make this feature available for us in that platform.

Okay, but it’s not that we don’t have the image scanners yet and it’s going to be a while till we get them. That’s not something you’re seeing.

Well, I expect to see that frankly. We haven’t yet because of the nature of our selling activity or selling activities largely amplified by Datalogic and so we are dealing with customers that are customers of Datalogic.

Right.

But there have been some that have come to us who are not customers who have heard about what we’re doing and who want us to enable their vendors so that they can begin trials and perhaps with option.

Okay, great. Good luck.

Thank you.

Your next question comes from the line of Josh Nichols. Josh Nichols - B. Riley: Hi, yeah. Real quick, I was just wondering OpEx has been relatively stable and I’m wondering if you’re expecting any type of big bump over the foreseeable future to fund some of these growth initiatives.

We’re not. But it’s all a function of demand and so right now we’re running a little hot because we have more retail customers that we’re attempting the service that have been the plan and we have several national brands that are engaged with us. And so if a lot of people want to get in the crowd early on, we might need to ramp up our current projection per our discussions with the Board earlier this week as they try to hold the line on OpEx so that we don’t create intolerable risk and there’s a market cap of the company. So we’re always balancing here the rate of investment against the opportunity to grow the business and my feeling continues to be that I want to get a strong proof in store to firm up our pricing model, create excess demand and then have strong negotiating positioning with customers rather than try to add a lot of customers early on and have to make confessions to get them in the line and pressure your guys with long list. I leave it there with that strategy for long term shareholding value creation and I relist it wherever it comes up. Josh Nichols - B. Riley: Okay. And then looking at the customers that are already using the Digimarc Discover application in magazines, but not some advertising as far as -- could you give a little bit of detail on what the revenue might look like as far as size is where you’re right now?

Ask me that question in a different way if you have? Josh Nichols - B. Riley: Yeah.

Other than -- what we don’t give financial projections on this regard. Josh Nichols - B. Riley: No, I’m just wondering what has current Digimarc Discover revenue look like based on what you currently have for customers as far as magazines and things like that are utilizing their service.

Yeah, it’s immaterial. It’s in 100s of thousands rather than millions. Josh Nichols - B. Riley: Okay.

And so hope that answers your question. Josh Nichols - B. Riley: No, that’s fine and then the last question was, no it's obvious it looks like any share increase to the ATM wasn’t done at all. Is there a specific price range that you were looking for or you’re just waiting or what’s the strategy with the ATM?

Our strategy is as stated publicly and we want to maintain adequate working capital about incurring unnecessary dilution and so we feel where we are right now is okay. And we have discussions on the trust of our Board, so Charles and I ponder this everyday and try to figure out what the right thing to do is and we’ve decided not to sell any shares during the quarter. Josh Nichols - B. Riley: Okay, sounds good. Thanks a lot. Appreciate it.

Yeah, you’re welcome.

(Operator Instructions) Your next question comes from the line of Kevin Hanrahan with KMH Capital. Kevin Hanrahan - KMH Capital Advisors: Hello Charles, I had a few questions for you. It looked to me just backing into a number after the prior cash flow statements that you did a buyback of a little less than a $0.5 million in Q3. Were any of those shares bought back in the open market?

No, all the share activity which is about 20,000 shares or $500,000, all of that was part of our employee incentive stock program. Kevin Hanrahan - KMH Capital Advisors: Right, so that’s what I got. Just a little bit less than $0.5 million. Well, that’s interesting. Can you update us on the buyback authorization, just tell us how much is left and when it expires?

Yeah, there is just under $4 million under the prior authorization and it expires at the end of this year. Kevin Hanrahan - KMH Capital Advisors: At the end of this year?

Yeah, I think they have a one year cycle. Kevin Hanrahan - KMH Capital Advisors: Right, so if you want to -- you could renew that I guess if you thought you needed to.

Correct. Kevin Hanrahan - KMH Capital Advisors: Okay, that’s good. I wanted to ask Bruce a question about the GS1 solution partner that you got, sort of a designation, maybe three weeks ago I saw the press release. Will that help you with retailers? In other words, does it give you kind of a stamp of approval?

Yes, it does. In fact, that’s what its purpose is. Its purpose is to give comfort to the GS1 members that we’re a qualified supplier and it give us access to some internal tools that GS1 has. I guess they have some visibility into what we’re doing. Kevin Hanrahan - KMH Capital Advisors: Right, will that also help you a little bit get into the other scanner companies other than your partner Datalogic that you were talking about, your customers want you to go there.

It actually helps everywhere because GS1 is the undisputed manager of the UPZ worldwide and so all of its members trust the association to take care of them and so just as in the investment community I would occasionally get questions of well how does GS1 feel about you? Are you a threat or an opportunity? And I say well, I think we’re an opportunity, but we need to build the relationship with them. So this is the first step in building a long-term productive relationship with the trade association. I’m quite confident that we’re an enhancement for the industry that they will want to cooperate on. Kevin Hanrahan - KMH Capital Advisors: Okay, that sounds good. Thanks a lot, Bruce. Good luck.

You’re welcome. Thanks Kevin.

At this time, this does conclude the Q&A session for today. I would like to turn the call back to Mr. Davis for any closing remarks. Sir, please proceed.

All right. Thanks very much everyone. We appreciate your continuing confidence and support for the business and we look forward to talking to you again in February. Goodbye for now.

Again, thank you for your participation. This concludes today's call. You may now disconnect.