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

Thank you. Good afternoon. Welcome to our conference call. Mike McConnell, our CFO, is with me. On the call today, we'll review and discuss Q1 results, talk about significant business developments and market conditions and provide an update on our strategy and operations. This webcast will be archived in the Investor Relations section of our website. Please note that during the course of this call, we will 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 about risk factors that may cause actual results to differ from expectations, please see the company’s filings with the SEC, including our latest Form 10-K. Mike will begin by commenting on our financial results. I will then discuss our execution strategy and outlook. Mike?

Thanks Bruce and good afternoon everyone. As we reported a year ago Q1 results last year included an $8 million revenue amount for past-due royalties received from the settlement with Verance. While total revenues in Q1 of 2013 decreased by 40% to 10.2 million from 13 million in 2012, our revenues, excluding the Verance settlement, increased by 13% year-over-year. Our net income for the quarter was $1 million, or $0.13 per share on diluted basis and the balance sheet remained in excellent shape with more than $40 million in cash and securities and no debt. Q1 results included the first full quarter of operations related to our recent acquisition of Attributor. We made significant progress in integrating the Attributor team and its operations into Digimarc. We also continued to invest in our growth initiatives, including developing and marketing Digimarc Discover, audio and packaging research and development and developing the second wave of patents, all in support of our vision of enabling computers, networks and other digital devices to see here understand and respond to their surroundings. Looking further in the details of our Q1 2013 financial results. We see that excluding the 8 million of revenue from Verance for past-due royalties in 2012 the majority of our year-over-year growth was due to inclusion of the first full quarter’s operations of Attributor along with the increases in other sources that were offset by elimination of revenues from the Nielsen joint ventures that were suspended in the first quarter of 2012. In the financial statements that we have broken out, revenue is a bit differently than in prior years. We've historically combined the license and subscription revenue on our income statement. We’ve given the recent significant increase in subscription revenues due to the Attributor acquisition, we’re now presenting license revenue and subscription…

Thanks Mike. We delivered a considerable increase in shareholder values since the ID system sale in 2008 and the value has increased six-fold in little over four years since the new Digimarc shares began trading post divestiture. That’s why record profits and cash flow, dividends and share repurchases and the share price has been languishing. Long -time shareholders have witnessed such periods over the years. Recognition of increases in value in our business have generally been event driven. There have been several defining moments in our brief 18-year history, including an enquiry from the central banks in ’97 that led to our largest and longest standing customer relationship, the IPO in ’99, acquisition of Polaris large government program business in 2001, sale of that business in 2008, and the intellectual ventures license in 2010. There are signs that another defining moments may be coming soon. Now to moving faster in a number of fronts as favourable mega trends in our target markets accelerate. Interest in our company and its technologies is growing coincident with this strategy. I will explain what I can when I can though we’d be patient regarding the scope and timing of disclosures that we will be able to make. Given confidentiality obligations we have with various companies and good terms regarding managing business relationships and competitive considerations. We intend to present further details on execution strategy in materials that we posted on our website in mid-May preceded by newswire signalling the availability of the materials. As we have been saying we are intent on making a significant progress in execution of strategy in 2013. The management team is working diligently to demonstrate and communicate progress on a number of fronts, to describe in the annual plan objectives that we shared with you as well as some…

(Operator Instructions) You have a question from Bill Gibson with Legend Merchant. Bill Gibson – Legend Merchant: Sort of shrouded the new developments in the sense of hey, we’re working on things we can’t talk about, and then you went off on things such as mobile payments and in-store advertising and TV, and basically an alternative for a barcode. Are the other things you can’t talk about larger than these? We played red basket game.

Now, what I can’t provide at this point in time is names and numbers and details of such things. So for instance in the area, the payments processing area we have been exploring some relationships with some large companies, discussing novel approaches through the mobile payments, that we and they think have promise and it’s just premature to given the details and not permitted by confidentiality restrictions. But it’s quite an interesting area and one of enormous potential and it’s consistent with much of the confidence we’ve developed them are work in security both in the central bank business and in the ID systems business that we divested in 2008. So it’s just one example, there are several of them as the script notes some which were contemplated in the – some of which have come up since then, or pulled forward in some sense from future periods where we anticipate doing certain things.

You have a question from Paul Sonz of Sonz Partners. Paul Sonz – Sonz Partners: Bruce, did you say in the call that you would be cash flow breakeven this year despite the increased expenses that you’re taking on?

That was actually Mike’s part of the presentation. As you know we don’t give detailed financial guidance but we expect to be somewhere around that range. And again we have plenty of capital, so there is no capital risk in changes in the plan that we made. So we’re obviously going to grow our staff quite materially this year. That was the main point we were making. Paul Sonz – Sonz Partners: I think the actual number beyond the people from Attributor would be an additional – I took a quick guess, it was about an extra 35 people above and beyond your normal staff plus the Attributor staff?

But more like 25, we have 107 on the 1st of December, we’ve added 19, and then we’re going to end up over 150. Paul Sonz – Sonz Partners: Now early on, and as always your scripts are very pack with information and there was one thing that I'd missed. You discussed the fact that your relationship with government business and then I think you went on to discuss how in – with the new opportunities that was -- that focus was going to change to some extent. Could you just go over that again because I didn’t quite get that?

Sure. We have historically described the area of business that includes the central banks as government programs. We will not do that anymore. That’s because there is a different axis of opportunity that we will focus on. So government programs meant that we were seeking to expand our business relations with central banks to other government agencies primarily in defense and intelligence. We’re not going to focus on that. In fact, we told you on our prior call that we were backing off on that because it was proving to be unreliable and difficult and opaque, on and on. So the central bank business is going to grow nicely this year with expanded margins but what we have discovered through some inventions and some exploration of relationships there is an opportunity that is premise on our confidence in payment processing, and central banks overseas all payment processing. So you can call if you like central bank domain but I don’t mean to imply more business as central banks. What I am talking about here is mobile payments and a novel approach to facilitating greater use of mobile payments. Paul Sonz – Sonz Partners: That is exciting. If you were to prioritize the new opportunities that you talked about on the call so far, how would you rank them in order of most likely or nearest term and latest revenue I suppose they could be different. But if you were to rank the opportunities in order of what your expectations were, how would you rank them?

I don’t think I can do that, Paul. I believe that the increased resource investments that we’re making is warranted by the portfolio of opportunities that we are working on. But I frankly don't do the exercise of trying to handicap the timing of the outcomes because it really doesn’t do me much good to try to do that. But I think that – the area where things can happen most quickly in terms of upsides that’s difficult to project is in licensing. And the other stuff takes some time to develop. And so I think in terms of services and subscription you should expect that we will able to size indicators of progress that will be leading indicators of growth in profits. Paul Sonz – Sonz Partners: In the new areas that you're so excited about, are they dependent on the second-generation of your patent portfolio, or is this stuff that’s still going to be dependent on first generation?

It’s both. What we expect to see is that the exponential growth in patents that we have demonstrated since inception will move to an even higher rate of exponential growth. All of the resources that we’re hoping to add are in R&D, IT and sales and marketing. There is no proposed increase in G&A. And so we are already filing an extremely high rate we expect to significantly increase the filing rate through the addition of the R&D and IT resources. Paul Sonz – Sonz Partners: You mentioned that you are going to have people in sales and marketing. This is new – in a way I think this is sort of a new for Digimarc, to whom will they be marketing and I mean in a general sense, not in specific sense, is this sort of a – they are marketing to half a dozen major corporations or what kind of marketing is it, sales and marketing, if you can discuss that?

I can. So we have increased the sales resources for our e-book business, our magazine publishing business and our retail business. Those are the three areas where there are increases. Paul Sonz – Sonz Partners: What is the retail business?

It’s the developing area of business that we described as key component of our 2013 strategy and plan, first embodied in terms of public announcements with the adoption by Costco in their member publication of our technology. Paul Sonz – Sonz Partners: All right. But listen, thank you very much. It’s wonderful to hear you guys so excited about this. And we’re looking forward to hearing – I think you said that there will be more information coming out in mid-May, is that right?

Yeah we plan on posting some additional information about the business in mid-May. I prefer to wait than to describe with anymore specificity of what that is. But we will put some more staff out. Paul Sonz – Sonz Partners: And are you going to be at any conferences that we should be aware of?

No.

Thank you. This concludes today’s question and answer session. I would now like to turn the call back over to Mr. Davis for any closing remarks.

All right, thank you very much everyone. We will keep up to date to the best of our ability, including any interim announcements that may be appropriately. But we will look forward to giving you another update on the strategy at the end of Q2 in an event. Thanks very much.

Thank you. This concludes your conference. You may now disconnect.