This deliverable describes the Kudelski IoT use case prototype at the end of the second year of the project. The cryptographic protocol of the use-case is described although it was not yet implemented in the demonstrator. We focused on functionality of the said prototype, and already integrated simulated dummy calls to the FENTEC library, which should allow for a smooth integration of Functional Encryption. We thus were able to successfully complete the first phase of the implementation of our prototype on time, and have a working demonstrator. This document also presents the hardware used to build the demonstrator, and the software implementation of this first version of the prototype. A section is dedicated to the performance of our prototype regarding motion detection using motion vectors, as this proved to be a significant bottleneck when implemented naively. The performance analysis allowed us to find optimizations, allowing us to significantly save bandwidth, and which should further help us enhance the encryption and decryption processes in the next phase of our prototype implementation.