Good day and welcome to the Immersion Corporation, third quarter 2014 conference call. Today’s conference is being recorded. At this time I would like to turn the conference over to Jennifer Jarman. Please go ahead ma'am.

Thank you operator. Good afternoon and thank you for joining us today on Immersion’s third quarter 2014 conference call. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the company’s website at www.immersion.com. With me on today’s call are Vic Viegas, President and CEO; and Paul Norris, CFO. During this call we may make forward-looking statements, which may include projected financial results or operating metrics, business strategies, anticipated future products, anticipated new markets, market demand or opportunities and other forward-looking topics. These statements are subject to risks, uncertainties and assumptions. Accordingly, actual results could differ materially. For a listing of the risks that could cause this, please see our latest Form 10-Q filed with the SEC, as well as the factors identified in the press release issued today. Additionally, please note that during this call we may discuss non-GAAP financial measures. For each non-GAAP financial measure discussed, a presentation of the most directly comparable GAAP financial measure and a reconciliation of the differences between the non-GAAP financial measure discussed and the most directly comparable GAAP financial measure is available in today’s press release. With that said, I'll now turn the call over to Chief Executive Officer, Vic Viegas. Vic.

Thanks Jennifer and thanks everyone for joining us this afternoon. In our third quarter we generated revenues of $12.1 million, a September quarter record, and we were profitable for the seventh quarter in a row. During the quarter we entered into a new multi-year licensing agreement with LG, with favorable terms reflecting the increasing value of Immersion haptics, saw adoption of Immersion Technology and new haptic use cases in the mobile and wearables markets and launched the first commercial tactile mobile advertisement with SHOWTIME using our new TouchSense engage platform. We are very pleased with the headway we have made to-date and the trends we are seeing in the mobile and wearables markets, to extend haptics beyond touch confirmation and utilize the capabilities haptic technology has to enhance realism and communications. We are also excited to announce that we have hired Mahesh Sundaram, a highly experienced and skilled sales executive as our Vice President of Worldwide OEM sales. As we look forward to the future, we are more confident than ever that the innovations technology and IP we have developed are gaining momentum. After Paul has provided the details of our third quarter 2014 financials, I will share our recent business updates and perspective on market developments. Paul.

Thanks Vic. As Vic mentioned, revenues for the September quarter were $12.1 million, up 6% from revenues of $11.3 million in the September quarter last year and a record for our third quarter. Revenues from royalties and licenses of $11.7 million were also up 7% from royalty and license revenues of $11 million in the third quarter of 2013. Of these amounts, in the third quarter of 2014, variable royalties based on shipping volumes and per unit prices totaled $4.2 million and fixed payment license fees totaled $7.5 million. This compares to variable royalties of $4.4 million and fixed license fees of $6.6 million in the September quarter last year. While revenue mix per line of business is expected to fluctuate on a quarterly basis due to seasonality patterns, for the third quarter of 2014, a breakdown by line of business as a percentage of total revenues was as follows: 66% from mobility; 23% from gaming; 6% from auto; and 5% from medical. Gross profit was $11.9 million or 99% of revenues compared to gross profit of $11.2 million or 99% of revenues in the third quarter of 2013. Turning now to our operating expenses. Excluding cost of revenues, total GAAP operating expenses were $10.2 million in the third quarter of 2014 compared to $10.4 million in the same quarter last year. Operating expenses in the third quarter of 2014 included non-cash charges related to depreciation and amortization of $144,000 and stock-based compensation of $1.1 million. Of the non-cash stock-based compensation charges, $230,000 were included in sales and marketing, $265,000 in research and development and $636,000 in G&A expense. Litigation related expense for the quarter was $913,000, up from $669,000 in the third quarter of 2013. Net income for the third quarter of 2014 was $1.1 million or $0.04 per…

Thanks Paul. As I mentioned earlier, we saw a number of exciting marketplace developments during the third quarter, offering us opportunities and helping build momentum for our technology and IP licensing business. I will provide more market perspective shortly, but first I’d like to share some of our specific third quarter accomplishments with you. In September we were very excited to launch TouchSense Engage, our end-to-end technology solution that enables mobile advertisers and content providers to create and deploy haptically enhanced video on mobile devices. SHOWTIME acted as our TouchSense Engage launch partner, promoting its award winning television show HOMELAND, with a campaign that featured the first ever ad to combine audio and video with the unique tactile dimension. The video ad, which ran in both the SHOWTIME ANYTIME app, and a Slate News app generated accolades and excitement throughout the advertising and mobile communities. This groundbreaking ad campaign was highlighted in top advertising, marketing and technology publications, including AdWeek, Variety, CNET and Entertainment Weekly. The industry publication, Mobile Marketer, named the SHOWTIME ad as one of the Top 10 ads of the September quarter. We are excited to come to market with an innovative and high profile partner like SHOWTIME. This program has raised the profile for Immersion haptics, as a tool for advertising and content owners to create engaging mobile video using the sense of touch. In addition, the program establishes the technological viability of our solutions and will generate useful analytics data regarding the value of haptically enhanced media. In addition to the launch of TouchSense Engage, we also teamed up with SomaTone, a leading audio and sound design studio in the gaming market. Through this relationship SomaTone will have the ability to offer haptic design services to their customers, using Immersions advanced design tools. We believe…

Thank you. (Operator Instructions). And our first question is from Josh Nichols from B. Riley Asset management.

Hi Paul, Vic. A real question; it looks like operating expenses came down pretty much across the board by a significant amount. Could you give a little bit of additional detail on how that was possible?

Yes, we as your aware keep a close on our costs in general. We are continuing to higher people. Our headcount as of the end of last quarter was up to 132 people, but we have certain marketing and other sorts of expenses, that down (ph) fall or linier progression during the year. And so I think during the last quarter we had some lower marketing expenses and some of the expenses we had last year if you’re looking at year-over-year in the patent prosecution side were due to a change in the patent regime that caused us to file fairly heavily during the mid and early part of 2013. So overall we are again managing our expenses, seeing some cyclical changes, particularly in the consulting and the marketing and third party expense side, while we ramp up to invest in opportunities in China and elsewhere.

And was there anything specific in the G&A space, because that’s the one that actually dropped year-over-year, even though there was a $900,000 plus in HTC litigation expense right?

Yes, so a number of the external consulting expenses are in G&A and also the patent prosecution expense are in G&A, so those maybe what you are looking at in particular?

Okay, great. And I guess just looking at the revised revenue, any discussion on some of the opportunities that the company sees in the fourth quarter going forward and then, that’s pretty much it?

Well, we continue to see positive momentum from our existing licensees, so we anticipate continued growth in their product launches and the units sold, which would bode well for us. We see the prospect for signing new licensees, especially in the Asia territory, China in particular. So we are quite optimistic about fourth quarter opportunities.

Okay, and I guess lastly just highlight the Asia opportunities you mentioned. Any comment or how the Lenovo’s closing of the Motorola acquisition today might help Immersion over the coming months or year?

We continue to think that that’s a good development for us. I think we mentioned before that we’ve had discussions ongoing with Lenovo as we had with the other major China OEMs and of course Motorola is our licensee, currently of our basic haptics business. So we have those two teams coming together now. So we don’t have anything specific to announce around it, but the closing of that deal kind of closes the opportunity for us to work with these two different groups together as one, so I look at it as a plus.

Great. Okay, thanks a lot guys.

Thanks Josh.

Our next question comes from David William with Ascendiant Capital.

Hey, good afternoon guys. Thanks for the time in taking my question here. I guess my first question really is on the revenue guidance you gave. It seems to be down about $1 million at the midpoint. I’m just kind of curious what you’re seeing there is a driver. I would have really thought that the signing of the LG agreement might have helped you guys out towards the back end of the year and maybe helped you get to the higher end of your guidance. Is there anything there that you are seeing may be product delays or anything that may be dampens that guide a bit or is there something else going on there?

Well David, if you do look at the guidance, its always based on the best information we have at the time. In the past we had anticipated faster licensing of OEMs in China and we had assumed a number of product launches earlier in this cycle, and so I’d point to one area. These are still opportunities that are being executed on and are not missed opportunities. They are simply moving later into the cycle, so that would be one area based on a previous set of assumptions, a little slower in terms of revenue from China. The second is in general we had anticipated some increased gaming revenue from the new consoles that had been launched from third party controller suppliers. Those suppliers have not been allowed to produce products, at least not on the Sony platform in particular and so those are revenues opportunities that we hope will then reappear in 2015. But originally we are part of our 2014 plan and have moved out what we believe at least a couple of quarters. Those are the two areas I’d point to in terms of overall business health.

Thanks, and if I can ask about the OpEx line as well, how should we think about that going forward? Obviously you saw some declines here. Is that kind of a baseline which you think that we should use going forward or should this return to more normal levels as we get into I guess 4Q and in to next year?

Good question. I think we are going to probably see, best as I can tell, slightly lower than the trajectory in the path for fourth quarter. I mean, they would tend to go up in the fourth quarter, but maybe not as much based on some of the tightening up in the last quarter. But then as you get into next year, I would say over a year time frame or more, that we are really kind of engaging in the same hiring, same investment, same activities overall. So I think we’ll be growing kind of along the same lines as we had been before this quarter.

And if I can ask one more here, I was just kind of curious if you could maybe walk us through the monetization platform around ad content and some of the gaming initiatives you have in place today. You obviously announced a new relationship. I’m just kind of wondering how you plan to monetize that and what that revenue potential could be. Maybe what your internal thoughts are about that opportunity?

Sure. We’re very excited, not only by the opportunity to generate revenue from our gaming and ad based business, but also the benefits that drive our OEM business. It gives us a chance to continue to promote new and improved solutions that provide greater experiences for users, so it helps in both directions. A little more precisely, in the gaming space we are starting to build a broader ecosystem and I’d say that this is in part from the enthusiasm that we are starting to see. People are looking for Immersion and other parties to provide haptic design services. SomaTone is I think the party you were referring to. An outstanding company that’s very well established in the mobile gaming community and one who is able to promote haptics to those game developers, as well as provide haptic design services, and so we are working closely with them to enable them to provide that capability. In the ad space, the recent success we had with the SHOWTIME HOMELAND launch was outstanding. I think it was really well recognized in the industry as a novel approach. Our early and preliminary feedback are that it did have a significant impact on user behavior, which was very important, and we continue to gather more analytic data. SHOWTIME was obviously pleased and more importantly it’s led to continued and growing interest from a number of other parties. So in that content space, we see significant demand and a lot of interest. From a revenue standpoint we still see this as early stages where we’re proving the value; we are exposing the capability, gathering analytic data, which will be used in marketing of these services. So we don’t expect significant revenue in 2014, but clearly over the next two to three years, as we move more into the monetization phase, we think that this holds out the hope of terrific growth in revenue.

Thanks and good luck guys.

Thank David.

Our next question is from Shannon Richter with Feltl & Co.

Hi Shannon. Shannon Richter - Feltl & Co.: Yes, I’m on for Jeff Shiner actually.

Oh Jeff. Shannon Richter - Feltl & Co.: Yes. Just a couple of quick questions here. Most of them were covered already, but what do you guys see as your biggest headwind that you’re facing right now as you are bringing on additional mobile licenses?

I‘m not sure we are seeing a lot of headwind. I think if anything we are seeing good tailwind. If you look at the adoption of haptics not only by the Immersion customer base, but also by other parties in the market, we are seeing areas such as new gaming controllers coming out of Microsoft, we are seeing obviously the Apple iPhone 6, 6 Plus and their watch using high end actuators. We are seeing for the first time Amazon including in their tablet an actuator, we are seeing considerable number of wearables coming out with actuators as well. So when you add up all of that momentum, that’s having a real positive impact on our ability to engage existing customers and gain new design wins, as well as attract new prospects. So I’m not seeing a lot of headwind. I’m seeing actually good tailwind and a lot of opportunity here in the near future. Shannon Richter - Feltl & Co.: Perfect. Thank you so much for taking my questions.

Thank you.

Our next question is from Matthew Galinko from Sidoti.

Hey Matt.

Hey, how are you doing?

Great.

Thanks for taking my question. The first one is around headcount, just another one there. Just curious how we should think about the pace of headcount additions as we move into 2015 and will there be as big of a build in ’15 as we’ve seen in ’14?

Yes, we will continue to invest at a relatively similar pace. We are still making our plans. We are going through a strategic planning process right now, mapping out some of the activities we are going to engage in 2015, but I see us continuing to invest particularly in the content area and to build out our China team, especially as we get further on in the licensing process. So we’ve gone up as I mentioned earlier, from around 120-ish at the beginning of the year to over 130 now and so I would continue to expect that to grow throughout 2015.

Got it. And then regarding the SHOWTIME work, I’m just curious if there’s been any sort of – anything you could share about further work with SHOWTIME on any other opportunities within that brand.

Well, I would say clearly the success of the HOMELAND campaign has given us opportunities elsewhere at other companies, as well as opportunities to continue to stay engaged with SHOWTIME. The nice thing about adoption of our SDK is once you’ve adopted the SDK in your app, then that capability is available for any further campaigns. And so if you look at Slate and SHOWTIME, both of their apps now use our SDK and bringing new content through that app is easier, less friction. So we’ve got active engagement with them and hope to continue to grow the relationship.

Got it. And then last one from me is when we think about brining on new potential OEM partners in Asia, is it reasonable to expect kind of similar process as with Huawei where its saw variable or its possible that we moved a little bit quicker into a fixed license across the handsets.

I would probably say that it will most likely follow the Huawei structure, which is there will be a handful of models launched early in the relationship, and based on the success of those models we would expect them to continue to increase the designs with haptics, and at some point as a result of increased units, increased volume, increased adoption of higher quality experiences, that we would then move to a point where bundling it into more of a fixed fee would make more sense, but initially I think it will follow the Huawei structure.

That’s all from me, thanks.

Thanks Matt.

(Operator Instructions) And as we have no further questions, I’d like to turn the call back to management for any closing comments.

Well, thank you all for being on the call with us today. We look forward to updating you again on our next quarterly call. Good day.

That does conclude our call and we appreciate your participation.