Gino Pereira - President and CEO Vincent Miceli - Vice President and CFO Michael Orlando - President, FitPay Stanley Washington - President, Healthcare.

Brian Kinstlinger - Alliance Global Partners Kris Tuttle - SoundView Technology Group Michael Diana - Maxim Group.

Good day, ladies and gentlemen and welcome to the NXT-ID IR Update Webcast Conference Call. [Operations Instructions] I would now like to turn the conference over to Gino Pereira, Chief Executive Officer. You may begin..

Thank you very much. Good afternoon, everyone. Thank you for joining our call today to discuss NXT-ID's unaudited financial and operational results for the three months and six months ended June 30 2018 and we are going to give a general update on the progress of our business.

So during this morning's call we'll be making forward statements which consist of statements that cannot be confirmed by reference to existing information including statements regarding our beliefs, goals, expectations, forecasts, projections, and future performance and the assumptions underlying such statements.

Please note that there are a number of factors that will cause actual results to differ materially from our forward-looking statements including the factors identified and discussed in our SEC filings.

Please recognize that except as required by applicable law, we undertake no duty to update any forward-looking statements and you should not place any undue reliance on such statements.

So with me today on the call today is Vin Miceli, our Chief Financial Officer; and Michael Orlando, our Chief Operating Officer and President of FitPay; and Stanley Washington, Chief Revenue Officer and Head of our Healthcare division.

So I'll begin the call with a summary of our progress to date and then turn the call over to Vin for a review of our financial results and then Mike stand for an update on payments and healthcare respectively. We will then take a few calls from the analysts.

So our results for the second quarter of 2018 were largely similar to those for the first quarter of 2018. Revenues in the first and second quarters were down fairly significantly compared to the same period in 2017, but our gross profit was approximately the same. So the profitability of the products that we sold were substantially increased.

Revenues in Q2 of 2018 were about 5% up on revenues for Q1 of 2018 which in turn was about 10% up on Q4 of 2017, so we have exhibited a consistent quarter to quarter sales growth over the last three quarters.

Our expenses for Q1 and Q2 of 2018 were higher compared to the same period the previous year largely because of the merger with FitPay but most of the increase was for R&D costs for future customers and products, so that's really an investment in the company's future.

And notably we saved a significant amount in interest expense with the conversion of the revolving credit line to a term loan as we previously announced earlier this year and that should significantly help us on cash flow.

On the payment side of the business Garmin Pay is now featured in 10 smart watches from Garmin and these watches carry the FitPay payment technology and this is up from two watches the previous quarters, that's grown pretty substantially and we continue to make progress in our Flip crypto conversion products.

Our development work is now done and we're going through the certification with networks and other third-party certification. So we expect to launch the product in late Q3, early Q4 and we also expect to have a new payment platform for launch late Q4 2018 or early Q1 2019. In healthcare, LogicMark continues to perform very strongly.

Cumulatively revenues at LogicMark had grown about 64% since we acquired the company about two years ago and now we are bringing LogicMark's products to a wider customer base through expanded distribution as well as looking to increase our penetration within our primary customer which is the VA.

We are also launching new product initiatives in the area of safety and security for individuals as well as telehealth monitoring.

Our product development pipeline is really strong with a new number - with a number of new product introductions for 2019 and I believe we are on track to continue building our company through a combination of increased marketing for existing products and introducing new technology forward products that we feel will substantially contribute to our growth in the future.

So that's really a high level summary of the progress that we've made in the last quarter and now for more detail, I will turn the call over to Vin Miceli, our Chief Financial Officer..

Thank you, Gino. Good afternoon everyone. I'd like to go over some of the key items, key highlight if you will on both the income statement and balance sheet for the company at June 30.

Revenues for the three and six months ended June 30 were $5.2 million and $10.1 million respectively and compared to where revenues for the comparable 2017 period $7.7 million and $14.3 million. On a sequential basis revenues for the second quarter increased by approximately $250,000 over the first quarter 2018.

The decrease in our revenues in both the three and six months of 2018 versus the three and six months of 2017 is primarily attributable to a reduction in the company's shipment of smart cards to WorldVentures in the 2018 period as compared to 2017.

The company's gross profit margin was approximately 68% in both the three and six months ended June 30, 2018 as compared to 50% in both 2017 periods.

The favorable gross margin in both periods was primarily attributable to the strong LogicMark sales that Gino alluded to earlier as well as the gross margin earned on the FitPay sales in both the - well actually in Q2. Our operating expenses for Q2 2008 were up about 900,000 at $4 million as compared to $3.1 million in the second quarter of 2017.

And this increase was primarily attributable to higher R&D expenses which came on as a - primarily as a result of layering on the FitPay expenses for the full second quarter of the 2018 whereas in 2017 we have them in for a partial second - just actually it was about five weeks of the week second quarter of 2017.

For the six months 2018 pretty much the same reasoning. Our operating expenses were about $2.6 million higher, they came in at $8.2 million for the six months of the '18 compared to $5.6 million a year ago. And again it's primarily the layering on of the FitPay expenses for the full six months as opposed to just five weeks of 2017.

Interest expense for both the three and six months ended June 30 were both lower by approximately $700,000 and $1.6 million in the three and six months compared to 2017. The decrease was pretty much attributable to three factors. One, as Gino alluded to, we refinanced the revolver debt in Q2 to a term loan facility.

So there was some interest savings in Q2. In addition, we had lower deferred debt issue cost to amortization in the six months of 2018 versus 2017 and we also lower note discount from the conversion of the exchange notes that we had back in 2017.

The net loss for the three and six months ended June 30 was approximately $1 million and $2.6 million compared to $1.2 million and $1.9 million for the comparable 2017 periods. During the six months ended June 30, 2018 the company's net loss included about $1.5 million in non-cash charges.

Moving over to our balance sheet, just some of the major captions. Cash at the end of June, we ended with cash up from $1.3 million. We had approximately $2.5 million of favorable working capital. As we already discussed we refinanced the revolved debt.

We should have some very nice savings, prospectively from the interest rate - from the savings on the interest rate reduction. And lastly equity was about $18.1 million at June 30. So with that I'll turn it back over to Gino for more discussion..

Thanks, Vin. I think we will move to Michael Orlando now to bring us up to date on what's been going on at FitPay..

Thanks, Gino. Good afternoon, everyone. So Gino provided some highlights in terms of what it's been taking place during Q2 in the payments business. First and foremost it's been the number of new devices that Garmin has launched in the market.

As Gino mentioned, we grew from two devices to 10 and it really crosses across a number of different product categories for Garmin.

So we're touching anything today from with Garmin Pay functionality powered by FitPay, we are touching everything from mass market, fitness watches which is the vívoactive 3, the one that we launched with all the way into their aviation line that they just released here at the end of June early July timeframe.

So for us we're seeing an increase in activations.

If anyone is curious on what the Garmin's result is, they have seen a 24% increase in smart watch sales quarter-over-quarter and year-over-year and so we're to certain extent benefiting from that growth rate as those new devices begin to gain market share and all those new devices have Garmin Pay as an active feature in there.

In addition we continue to grow our footprint for Garmin Pay on the FitPay platform. We are in 25 different countries today and over 170 banks and that's an increase of about 8 countries and 35 banks over the last 90 days or so.

So that momentum continues to build and as we look to geographies and continents I think we are on - we have a penetration and activity in virtually every continent except for Latin America today and that will be coming later this quarter.

When you look at our other products and other development works that we've been working on, certainly Flip is something where we will spent a lot of time of both on the R&D and also on the business development side putting together partnerships and relationships that we needed to do to create that crypto currency to USD conversion products.

And so we've completed the hardware development and all the software and application development that was required. And it's pretty intensive. We had to build a new wallet experience.

We had to create integration to an exchange platform, develop new relationship with banking partners, work with the network partners to sponsor the coin to USD conversion on their brand and then go through the process of getting all of that developed into a very clean sleek user experience.

So all that work is done, inclusive of the hardware coins, the Flip coin which will be first device that's out there and currently the device is in the certification process.

We have to go through a pretty intensive certification process to ensure interoperability of that device across all the terminals globally and then also part of the solution insurance process with the network. And we expect that to be done in the next four to five weeks and then we will be shipping first units by the end of Q3 is our target.

And then in addition to that we're continuing to develop and work with our partners on use cases for our tokenization platform and we will be looking to announce and have some new business offerings and revenue models coming out towards the end of this year and beginning of 2019. And with that, Gino, I will turn it back to Stan, I think..

Yes.

Stan?.

Thank you, Mike and Gino. On the LogicMark front, LogicMark continues to perform well. 2018 is off to our strongest start with the company performing at over 10% over last year. The VA continues to drive the majority of our revenue and our profit and we are continuing to enjoy a very strong area of opportunity within the AA as well.

Gross margin has continued to increase and this is due to a shift in our product mix again primarily at the VA and we've been able to maintain our headcount year to date that is pretty much flat and we've been building our operations primarily through scale by demand on demand.

For 2018 revenue of - the LogicMark business has been performing at about $8.7 million year-to-date. We are at over 4,000 units sold through Q2 and our gross margin is roughly at 73% - 73.6%, so the business again has been performing very, very well in this particular market.

We continue to maintain a - our primary supplier position within the VA, this has been a really strong effort by our sales force and the grassroots effort that we have within the VA overall, this has also allowed us to identify new opportunities to expand products and to deliver new offering.

We're in the process of developing a very strong R&D roadmap which we would utilize to continue to strengthen our position as the no fee, no contract product in the marketplace, a very strong position which we currently enjoy.

As we look forward, LogicMark really has four primary areas of focus that we're really looking to continue to drive both on our government sector which specifically is where we're servicing the VA. We are continuing to drive our medical alert business.

This business is very robust and there is a significant amount of penetration still available within the VA and with other verticals within that group as well, the DoD and other types of key business opportunities there. From a commercial standpoint we're really moving hard into some emerging categories.

This includes safety and security, panic buttons which really are starting to gain quite a bit of momentum in the marketplace with that in the hospitality industry and rest are in the real estate industry and other interesting emerging categories.

This really lends itself to a good utility of our current devices and give us an opportunity to continue to grow revenue and to acquire new revenue - new market share.

We also believe we have a great opportunity to be disruptive within retail, again having a dominant position from a no contract, no fee standpoint with a large percentage of the marketplace being a monitored monthly subscription business. We think this gives us a real advantage and gives consumers an alternative to having to pay a monthly fee.

And then finally we are, as we've discussed previously, really working towards new solutions in data connectivity and in overall solutions for the Home healthcare industry, specifically in telehealth and telemedicine.

We think this is a really strong growth opportunity for LogicMark and we anticipate having strong alliances and partnerships as we move into 2019 and are looking to launch our new products at that time as well. Gino, that's it for right now on LogicMark..

Okay, thank you. So as we've heard, for the period of three months we've made a tremendous amount of progress which is not entirely reflected in the actual numbers that we see but we believe very strongly that we are building a strong platform on both sides for growth going forward and we're excited about that.

So I think at this point we can take some calls from analysts please..

Thank you. [Operator Instructions] Our first question comes from Brian Kinstlinger of Alliance Global Partners. Your line is now open..

Hi, good evening. Thanks. I appreciate all the information on LogicMark, but I did miss because there was a blip there for a second. I think you guys mentioned the revenue run rate of LogicMark. I think it was up 10%, you gave the gross margins, but I missed the revenue.

If you could just repeat that?.

Yes, it's - currently the run rate is reflecting a 10% growth in 2018 versus 17..

Right.

But I think you actually gave a revenue number, am I mistaken and I misunderstood?.

I think Stan mentioned a revenue number today. Stanley..

Yeah. Overall, year to date revenue at LogicMark is up over about 8 million..

Over 8 million. Great. That's helpful. Okay. So I'm curious, it's been a great recovery for the last two quarters in terms of building back the business up.

Can you talk about what's driving that growth? Is it the payments division, is it LogicMark? If it's both, can you talk about how the weighting has occurred?.

Yes, so I will take that question. So we're building both - so the blip is basically down to one customer that we had in payments division where the demand dropped off fairly quickly. But that didn't really change anything or derail us from the basic platform and initiatives that we have.

So we have really just kind stuck to our guns and just continue to develop the technologies that we have, with the vision that we have. So on the healthcare front, it's a strong profitable division, it's more mature than the payments division and so that definitely drives a lot more of the - within that unit it's highly profitable.

And so we're looking at ways to expand within the segment that we are currently very successful in as well as expanding distribution outside. We think there is lot of growth to that.

And from the beginning our intention when we acquired LogicMark was a fairly traditional personal monetary response business was how do we take this traditional business and bring it into 21st century with - in the world of IoT and connected devices and the new products that we're working on are going to do exactly that.

So we think we are very hopeful we are in - that we would be in a very - in a technology leading position when these products are launched and that should help us with further growth as well as expand the potential markets that we see our products in.

And then on fintech side, Flip has obviously made great strides in terms of penetration launches and this one is more of a slow roll to get to revenue. It's a tremendous business as it builds out, but it's a slower roll as we need to form alliances with large like Garmin and those contracts definitely take time We have a number in the works.

We've said that before. Some of these are actually closed and we can't announce until the partner itself launches its product. And then it's just a question of time. With more penetration we get more activations and then that generates more revenue, but that's definitely more of slow roll build.

But having said that FitPay itself is in great position in terms of its technology platform because other than - people like other manufactures of products like Apple and Samsung, Fitbit and Google, we are the only really independent payment platform supplier which is - gives us access to companies like Garmin, other large manufactures of watches or other IoT devices that would like to have digital payments as part of their platform.

And so we are kind of go to for that, let's say this. It's a bit of slow roll as we bring these customers on and they are large complicated arrangements. But for the long term we're very confident that it's a solid successful business. So that's really what we're focused on how we are developing the business..

And I appreciate that. That's a great forward look. What I just want to understand also is, you've grown 20% from the bottom in the fourth quarter sequential over the last six months on a quarterly basis.

It seems to me if LogicMark is growing 10% that's going to only contribute about half the growth, whereas the payments business as a whole, is that right, is contributing about half the growth or is that not accurate?.

Well, it's just in terms of the second quarter there was definitely an increased contribution from the payments business, right, as we had more activations coming on we will see more of this. Mike mentioned, we've seen activation growth almost on a weekly basis with new Garmin customers..

Right. So that was my next question actually..

Yes. So we expect that to continue..

Can you quantify the impact, I mean, of Garmin machinations either from your revenue or have they given numbers on activation rates and I know 24% year over year growth is what they have in your active is what was said by I think Chris in their watches but they actually have to be activated.

So are you cleared all by activation rates and what has been the contribution maybe in a quarter if you are able to provide that..

Mike, do you want to speak a little bit to how you've seen the activation rates grow over the last few quarters?.

Yeah. So Garmin doesn't release product specific information. If you talk about growth rates in the categories in general I think for us as we've seen the activity grow, it's really been around the devices that have entered the market.

So as I mentioned going from two to ten and then the number of banks particularly when we added Chase and PayCentre in Germany and open up that market and about half in late in the second quarter, so mid-June is when those happened.

And we saw during that first 7 to 10 day period about a 25% to 30% increase in our activations and that's continued to grow over time. So and continue to click up on a weekly basis.

So encouraged by the growth of the global activity that happens and it's both enabling it for new customers, that's what we do with the banks and then when more people buy watches, so it's really just kind of inflection point that we're starting to see in terms of our activation rates..

Well, then, seeing that those banks were at the end of June and also seeing that we have a holiday season in December, should we see a - should we expect a significant increase in contribution from Garmin in the second half of the year?.

I think it will be a combination of - again, continue to grow our footprint. Garmin continues to sell more and then we also expect to have another one to two devices that will be launched before holiday season.

Token, one that we've spoken about on previous calls expects there for shipments to happen prior to the holiday and then we've got a couple of other fashion branded devices that we will launch in the first part of Q4, all in time for holiday..

So who are those two new devices from?.

We haven't launched, we haven't announced the names yet. We will when those products hit the market in the first part of Q2..

But they are Tier 1 OEMs..

They are Tier 1 fashion watches..

Got you. Okay. And then maybe you can provide an update on WorldVentures.

Do we expect Flye card sales to be additional sales this year or at all going forward or do you think that that relationship is when it's closed?.

I think where we see it is, they will continue to be flat to down. We're working closely with WorldVenture on turn inventory and trying to move that inventory through the membership channel and then what could be next in terms of product solutions for them. So the relationship this is still there.

We continue to help them get the products out into their membership base and then, as I said, continue to develop the dialog around are there other things that we might be able to do together in the future..

So modest amount of revenue for them?.

Yes..

And then finally, I just want to make sure I understood.

With $1.3 million in balance sheet, did I understand - I can't remember, we said there was $2.5 million favorable working capital adjustment, is that after the quarter close or you've got $3.8 million minus maybe $0.05 million cash burn per month?.

And I think that statement from Vin was, that was just a statement on the positive working capital on the balance sheet at the end of June..

So the $1.3 million wasn't benefitted after the quarter by any collections or anything like that?.

Correct. Well, I mean, it's course of business collection..

Right. Okay, thank you..

Thanks you. Our next question comes from Kris Tuttle of SoundView Technology Group. Your line is open..

Okay, thank you. I just have a few and let me try to organize them. I will start with payments. So can you comment on - you talked about Flip in terms of its likely shipping time frame.

Can you give us some sort of feel for what the preorders were for that and then what kind of capacity do you have for actually delivering the Flip product let's say on a monthly or quarterly basis?.

Yes. So we've been in preorder mode for about four months. It's been well relatively steady although we've got spent a ton of resources advertising on building the preorders as we get closer to shipments and then I think the other piece for us has been lot of online and social media outlets have limited our ability to advertise.

So we're looking at and trying new ways of getting the product out there.

As we mentioned in a release earlier in the quarter we've signed a distribution agreement with musical artist to help us reach a new category of customer, those that have a very strong bias towards the crypto currency and that actually gave us a nice boost in terms of preorders and so we will continue to look for other distribution partners to keep that going.

And in terms of capacity, we don't feel capacity will be any issue for us. Our supplier on the chip side of the manufacture of the physical hardware chips and the antennas that are there has - it's a top tier provider, so we don't see capacity issues with them at all.

In fact we've already set up the preorders to fulfill what we would expect to be orders through the end of the year. And then the manufacturing ODM partner has commitments to us to produce what we need to do in terms of minimum order quantity.

So I think we're stacked in terms of fulfilling the demand that we expect through 2018 with the Flip product..

And what's the cycle time on when you order a product and when it actually is available for sale?.

Yes. So once we regain shipments that would be - there's no delay or anything, we will go straight to fulfillment. Our order to delivery time from our ODM is about two weeks, so pretty short timeframe..

Okay.

And just to confirm, when you actually start shipping those products, you have customers who receive it will be able to link at least one of the recognized bitcoin service providers like a coin base or something like that on day one?.

Yes, they'll be able to link their bitcoin account for their bitcoin provider through their wallet, so they will be able to link their current bitcoin wallet from whoever that provider is to our wallet and do the exchange to USD. It will only be bitcoin. We won't be accepting any other crypto currencies at launch..

Okay. And one other question on the payment side. I noticed Google Pay has made a little bit of progress and I was wondering if you could just give us a couple of bullet points on how FitPay pay is differentiated from Google Pay for an ODM..

Yes, sure. So I think our value proposition to the OEMs and the manufacturers of the devices is that we are platform and operating system agnostic. So Google Play only works in the context of having Android Wear as part of the operating system in your smart watch or your other device.

And so for the likes of Garmin who have built their entire portfolio of products around their own proprietary operating system that wouldn't work for them.

Secondly, for those that are looking to only add payments as part of the new capabilities of their fashion watch and not add all the smart watch capabilities that are part of that, Google Pay would not be a solution for them.

And then the third advantage we have is that Google Pay operates in what's called host card emulation mode and that requires a different level of certification, a different level of encryption that they need to build inside the device and a lot more horsepower to operate where our platform operates with a secure element.

So it's a different hardware enclave that doesn't require the same power capabilities and memory draw Google Pay or a host card emulation payment system would require.

And so from those perspectives we think we have a very striking advantage when we're talking to device manufacturers because they're going to want to focus on their own operating system and that puts Android Wear and then Google Pay off to the side and also look to reduce their cost and development times by using a secure element versus a software encryption model..

Is that secure element, I mean is it fair to say it's - because it's in the hardware, right, it's more secure?.

That's debatable. There's a lot of different opinions on that and so it's our enclave versus creating an encryption model on there and in either way they have all been certified by the networks, so some folks in our market tend to think that secure element is more secure, others believe that the software is equally secure.

So I can't formulate an opinion on that myself..

Okay, all right. Thanks, Chris.

Moving on to LogicMark I was curious to know, I know you've been working on some additional channels for the LogicMark products in the retail and what should we - how should think about the LogicMark revenue outside of the VA in six months and in a year and a half? Is it 5% to 10%, is it 30% to 40% outside of VA in a year? How should we think about the growth in non-VA channels for the LogicMark product line?.

That's a good question, Kris. Let me answer to a - first let me say that within the VA we think there's significantly more growth opportunities, so we think we have a lot more room to run there as well when we're not as deeply penetrated as we're capable of being.

That being said, we think the opportunities for growth outside of the VA specifically within the security and safety category with all the momentum that is happening today around the panic buttons in particular, you're starting to see cities and states perhaps legislation mandating to use the panic buttons by hospitality providers.

I think you are going to continue to see that in other categories as well. So we think that there is significant amount of growth for us in these areas, through these channels as we get into 2019. I think that's plus 10% [indiscernible] question.

I'd be reluctant rather I think now to put a firm number on it because we're still building out our strategic plan in terms of how we're going to attack those markets.

We are in discussions now with enterprise partners who have the distribution capability to help us push products out and we are really I think narrowing down where we think the best bets are going to be made.

But most certainly we're moving very aggressively into that particular channel and we are as Gino indicated earlier developing products right now that we think are based on our core capability or core products that - but have I think unique features and benefits which will be able to serve that particular market..

Okay. I mean, some of the things that you talked about in terms of market opportunity, I mean we follow the digital health space pretty closely and there is staggering amount of activity and opportunity out there right now.

In terms of resources, are you looking at - are you actively looking at potentially some small acquisitions can help you guys get to market sooner in some of these areas?.

So in terms of acquisitions, it's not - we don't really base our growth strategy on acquisitions. We're on the lookout for acquisitions that can contribute to the bottom line and to quicker growth. We're certainly not looking at early stage acquisitions that would require a lead time to get to market.

Having said that we've done - in this particular sector we have done a fair amount of work ourselves in developing a suite of telehealth monitoring products that we will be talking more about in the coming months and that product development is very far along.

And we've also identified potential partners to start doing testing with and doing some initial rollout of these products. So it's not necessarily - it's not really acquisition based, but definitely in terms of how it gets implemented, it will be not us going out selling things one by one.

It will actually be a partnership with a much larger group that will be pushing the product out, benefit from these products..

That sounds exciting. I am eager to see. That will be very exciting progress to have these kind of products on the market. I think my last question here just a couple of housekeeping things on the balance sheet.

So it look like you're making some good progress on - I mean, AR was flat I believe quarter-over-year, but it looks like you guys collected a good chunk from older aged AR. I think WorldVentures dropped considerably quarter-to-quarter.

Is that a sustainable kind of improvement in AR from them?.

I think the AR situation continues to improve and we expect it continue in the next few quarters..

Okay, that's excellent.

And can you give us an update just where does the cash balance stand sort of June 30 seems like a long time ago now, this year in mid-August?.

It's pretty flat, Kris. We have been right in that 1.3, 1.5 range..

Okay.

Do you have a little room on the revolver if - just from a working capital standpoint? I don't know if that's exactly what you're talking about, Vin, with the 2.5, but if you guys just to give you some operating flexibility, do you have a little room on that to take it up and down as you need?.

So the revolver facility that we had in place with ExWorks has been refinanced out, if you will and we are with a term loan Facility only now..

Okay, so it's fixed, expect for when you - payments that you make?.

Exactly. Except for any future pay downs or..

Okay, excellent. I get it. Well, that's all I have. I have to say, it's really great on the huge interest rate reduction and all the progress on the products. I know we're going to see the revenue is kind of course forthcoming on some of these, but I don't know, it's great job, I guess. So we will talk to you again soon..

Thanks so much, Kris..

Thank you. And our next question comes from Michael Diana of Maxim Group. Your line is now open..

Okay, thank you. Well, as you might imagine, most of my questions about asked. I was interested though in some of the other questions related to sort of the timing of the new products.

It's most of products you - new products you talked about, you expect some contribution in 2019, is that right?.

I think, yes, that's correct for the - I mean, we expect some contribution potentially late in 2018, but there's definitely - it's difficult for us to predict exactly when they're going to start [indiscernible] so we're really focused on them as 2019 product launches, but we're also aiming to target to get some of these - some product revenues from new products late in 2018..

Okay, great. Let me just ask one more sort of more specific question. I missed the name of the German bank that you signed up at the end of the second quarter..

It's PayCentre..

PayCentre, okay. And that's what sort of triggered some activations in Germany of your smart watches..

Yeah, so we were the first pay wallet to launch in Germany. Android Pay has followed us in the last couple of weeks, but we're the first one to launch in Germany. PayCentre is a large issued prepaid and debit card portfolio across retailers and fuel card platforms.

So they are a really large distribution model and in those we've seen quite an uptick in activations from that group in general and then Germany is a well-developed contactless market as well..

Yeah, I am sure. Okay, great. Thank you very much..

Thank you. [Operator Instructions] We do have a follow-up question from Brian Kinstlingerof Alliance Global Partners. Your line is now open..

Great, thanks. I think you mentioned it, and I could be mistaken and I couldn't type fast enough.

What did you say the expense of FitPay was right now?.

We didn't specifically call out the expenses of FitPay. We just mentioned that most of the increase in spend over the prior year was attributable to FitPay expenses which are also primarily R&D expenses for future product development and future customers.

So you might be able to do - you can probably do a little bit of math and back into it, it'll give you a pretty good idea..

Okay, I thought I missed it. Thank you..

Thank you. And this does conclude our question-and-answer session. I would now like to turn the call back over to Gina Pereira for any closing remarks..

Thank you very much. So as you can see we've been hard at work and think we've made some pretty good progress on a number of fronts. We're going to continue to push hard to move the business forward and we look forward to speaking to everybody else in another quarter. Thank you very much..

Well, ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day..