Good day and welcome to the WidePoint Corporation Second Quarter 2014 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to David Fore of Hayden, IR. Please go ahead sir.

Thank you, operator. Good afternoon all participants in WidePoint's second quarter 2014 financial results conference call. With me today are WidePoint's Chairman and CEO, Steve Komar; and Chief Financial Officer, Jim McCubbin. Steve will provide an overview of the quarterly results and Jim will provide additional financial details. Then we'll open the call to questions from participants. Before I turn the call to Steve, I'd like to remind all participants that during this conference call, any forward-looking statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Expressions of future goals, including financial guidance and similar expressions including without limitation, expressions using the terminology may, will, believe, expect, plans, anticipates, predicts, forecasts, and expressions which reflect something other than historical facts are intended to identify forward-looking statements. These forward-looking statements involve a number of risks factors and uncertainties, including those discussed in the Risk Factor sections of WidePoint's Annual Report on Form 10-K and its quarterly reports on Form 10-Q and other SEC filings the company releases. Actual results may differ materially from any forward-looking statements due to such risks factors and uncertainties. The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after this conference call, except as required by law. I would now like to turn the call over to WidePoint's Chairman and CEO, Steve Komar for opening remarks.

Thank you, David, and good afternoon to all of you that have joined us on our WidePoint Corporation quarterly earnings call this afternoon. We would obviously like to express our appreciation to each of you for your interest in our performance and in the company's outlook for the future. First I am pleased to report that WidePoint posted a strong and improved second quarter featuring an almost 30% growth in revenues from our most recent prior quarter this quarter as well as involvement -- improvement, sorry, pardon me, improvement in our gross margins to almost 30% and improving operating and bottom line results versus that same comparable prior quarter. Jim McCubbin will lead you through the performance measures and statistics during his prepared remarks, but meanwhile I would like to several minutes to share with you some of the exciting recent developments that have set the stage for a continuation and acceleration of our most recent operating results. At our last quarterly call, I referred to the fact that new business development activities were reaching hectic levels and that we we're hopeful they would be reflected in future results. Today I can report that revenue for the quarter just ended came in at the high end of our expectations and exceeded the forecast of the analysts who follow us. Allow me to add serious emphasis by saying that during the second quarter, we experienced over 70 wins and awards, split somewhat evenly between our cyber and mobile communications management key solutions offerings. If we add in more recent activity experienced during the month of July, we have now received new task orders and new contracts and new BPAs with accumulative revenue value exceeding $100 million. This dramatic increase in backlog and pipeline is an indicator of the revenue strength and…

Thank you, Steve. Hello everyone. Again thank you for joining our call today. Many of you have been our friends, associates and followers for many years and we’re excited to finally see our business model starting to yield some positive results and trends. I do want to thank you all myself personally. You have been stalwarts of everything we’ve been doing. I know that Steve is appreciative as well. Today in my remarks, I am going to discuss our second quarter financial results and discuss our financial outlook. We have a lot of ground to cover with a myriad of nice accomplishments this past quarter, which should lay the groundwork for improved financial results in the third quarter excluding any tax effects. Overall, we witnessed revenue increases sequentially and quarter-over-quarter, gross margin increases sequentially, improvements in our operating losses and net losses as compared to our first quarter 2014 augmented by a number of rewards in past quarters that should support our continued financial progress. In the second quarter, we experienced an increase in revenues of approximately 9% to $12.4 million as compared to $11.2 million in the second quarter of 2013 and an increase of approximately 29% compared to the previous first quarter of 2014. As we stated on our previously quarterly call, we believe that our first quarter revenue was the bottom point for revenue for the year and we expected higher sequential revenues in the second quarter that has come to pass. Looking into the third quarter, we continue to anticipate increasing sequential growth. In the second quarter of 2014, we witnessed increasing revenues as compared to the second quarter of 2013 in credentialing services and reselling and other services and a slight decrease in managed services. The slight decrease quarter-over-quarter was attributable to how identity managed…

Thank you, Jim. Very well done. I would like to now open the call to our listener's questions. Operator, if you can assist us by opening the line and then sequencing the questions and comments, that would be much appreciated.

Yes sir, definitely. (Operator instructions) We will take our first question from Mike Malouf with Craig-Hallum Capital Group. Your line is open sir.

Hi guys, this is Ross Licero on for Mike. First of all, I just want to say congratulations. It was on a great quarter and solid execution on the DHS contract. That is a really great job.

Thank you Ross, we appreciate it.

First question actually relates to that. Can you remind me of where you are I guess comprehensively on this contract and are you on track or ahead of expectations for it?

Ross, let me handle that. This is Jim McCubbin. One, presently we have about $30 million in funded past quarters in hand. On top of that if you extrapolate it out over the years, with the non-funded portion of that assuming the rollover, we’re sitting with about $68 million of that $600 million spoken for. On top of that, we have two more RFPs in the hopper and out for two additional components and we just received one more RFP in our hopper on Friday for us to move forward with that one as well. So it’s starting to come to fruition. Managed services, it seems to be in the lead right now. So people can determine how much in carrier services that we have. So we may see a lag in the carrier services while managed services really kind of get their hands around all the different things with the components and then you will see a catch-up with the carrier services and then you will see a blended movement forward. So we’re moving along. I would say we’re maybe a month behind our original expectations but we’re seeing positive results and positive performance and issuances.

Okay. Great. And then switching over to the Cert-on device, we’ve been doing some work on this and it looks like this could be a pretty big opportunity for you, even if you just won one major OEM. Could you give us some color on that and what it would mean for you if you were to win one OEM?

Well obviously that would depend on the OEM and as we’ve indicated we’re very actively engaged with three at least. We need to be a little cautious about being any more specific than that but it would be fairly obvious to say that at least one of those is a very strong market leader and that when we’re talking about in terms of market opportunity, if in fact we become an embedded part of their security solution, we’re taking minimally some pretty massive opportunity in terms of devices that would be sold to not only government agencies and employees but all related individuals either in an enterprise or anywhere else that have access issues associated with their intellectual property and/or their own personal security on those smartphones or tablets. We also have a couple of initiatives with the other OEM providers that are more specific and against more targeted markets. With all due respects, other than making a vague statement that is a very large market opportunity. I don’t think we can put any specifics against it at this point but certainly hope to in the very near future.

Ross, these aren’t baked into our numbers right now except we’ve been spending money as everybody can tell to make sure it does come to fruition. This would be for either carriers or OEM producers to sell through two large organizations and we all that know that security and mobility is converging and is an issue lot of people trying to solve this problem. It appears we may possibly have one of the solution sets that helps a lot of large organizations address this and we can do it in conjunction with some stronger partners that could also allow us to scale up. For us to really talk about pricing or anything else right now is premature. But nonetheless we’re excited about the potential opportunity.

All right. Thank you.

Thank you, Ross.

And we will take our question from Mike Crawford with B. Riley and Company. Your line is open sir.

Thanks very much. I would like to dig in a little bit into all these inquiries you received in July, one a day and if you could discuss what convergence cycle for something like that might be from initial inquiry to hot in the pipeline to potentially striking a deal and delivering a solution and earning revenues. Thank you.

I can address the financial metrics, Mike. Number one, over the last three or four months, we realized about 70 awards plus in general that went from anywhere from the smallest of being a small to the $5,000 just transaction all the way up to hundreds of thousands and in to the low millions for recurring services. Overall they’ll work for several months and they will -- some of them will be immediately recognized and some of them will be recognized over a year or two. As it goes to the 30 inquiries we put it out there as a measure of the interest that we realized because of those 30 metrics okay, out there or just the level of interest surprised us and a lot of it had to do with -- these are some big and large organizations who are looking for solution sets. Conversion rates, we just – it's too early to say because we’re just starting to really market as efficiently where we can start covering these metrics. The convergence could be months for some to a year or more depending on if they’re government agency or if they’re commercial enterprise. A large number of these inquiries though were commercial in nature.

Okay. Thank you, Jim. I know from your queue that just filed the TSA remains a pretty strong customer, still 17% in June. Is that something that you expect is stable, could increase or might roll off a little bit as you move on to other things.

As we get into different components, you’re going to see revenue growth broadens, you’re going to see it fall off.

I think it's fair.

On an absolute value, I am sorry, not in percent.

Well, absolute. It’s very -- somewhat constant right now and stable and there could be some growth to that. It’s a pretty large organization and we’ve just barely…

And it keeps growing.

Yeah.

So the reality is we don’t see any dilution or attrition in that run rate number. At a minimum, it’s stable and depending on what happens in the future it may well grow. But it is a semi-saturated marketplace for us, so as far as that particular customer relationship goes, we see growth through ancillary products and services rather than the deployed number of units.

Thank you. Also I see you’ve done some joint marketing and presentations with some of your MDM and other partners like Xceedium and I am wondering if there is any particular such partner that's really resonating as a complementary solution to what you are delivering the clients?

Now the truth of the matter Mike is that we've treated -- we've treated ourselves as being agnostic from those relationships and we provide that solution across the Board to all the big MDM players and that's worked rather nicely for us and we can customize the solution to the individual needs and desires of both our government and our commercial customers. So we have chosen not to play actively in that marketplace other than to provide the range of services that the various providers can give us.

And Mike just to put a little color on this, each member that we are working with is focused on different vertical and some of the partners are driving the front end and we're supporting and playing a support role. Our channel strategy overall is going to be ins supporting some of these players with solution sets and that's what it will be. We have to tell you that we cherish all the relationships that we are building right now. They are exceeding for words, important to us, and we're excited about working with all of them including some of the new ones that we are developing right now because they will be a big component part of our success in the future.

Okay. Thank you. Earlier in this call, you also talked about a dramatic increase in the pipeline and backlog and do you have numbers for either of those you can provide?

No.

Okay. I know, you haven’t provided…

Not specific numbers that you are looking for, right. Yes, I know we have -- on DHS we were at $30 million and funded right now. I know that we have -- yes and then we have not -- yes, that's unfunded, 30 is funded. And that's growing. We haven’t really looked at funded backlog and unfunded backlog. We've been looking more task orders and really just starting to build this together. We have put in sales force. We are starting to track all these metrics because they are starting to be broad and wide. So I think over the coming quarters we'll have better metrics to track to and report back on. So this is the beginning of us actually maturing our systems and are reporting back. So we can cover more and more with you, okay.

Okay. Thank you. And then I have one final question hopefully and it's kind of a complicated one, but if you look at your services mix, you have carrier services, which will be lower margin over time and I am wondering if you could frame what margin that might look like for you and I know that's going to be hard to do depending on how it comes in and then the same for management services and also the resale and other consulting type services.

Mike, right now we started reporting on the revenue mix for the first time in the first quarter and second quarter. I am not reporting on specific margins by area, because we don't segment by those area because we don't segment by those areas. We are starting to show some revenue growth by revenue areas. We are trying to put the systems in place to start looking at margins specifically, but we are not there. Generally carrier services are lower margins as you know. Managed services are our highest margins followed by reselling being low and more medium are consulting. So we do have a blend going from anywhere from 3% to 5% to 10% to 30% all the way up to some cases to 95%. We are just not prepared to comment on it besides stating that we have been seeing margins as a blend starting to rise and we continue to see that occurring especially as our managed services mix continues to increase. We are concerned a little bit about when we see a bulk of the carrier services come on how that may bring it down a little bit, but from an absolute basis we're going to have a big flow of revenues then and we will still have bottom line improvements and then after that happens, the DHS specifically because that's all we're doing it for. We should then see a continued upward trend in margins with managed services, the sticky multiyear services really coming into play.

Okay.

So I don't have a specific answer for you yet.

It's still hopeful and directionally the way we're thinking about the business. So thank you very much.

Thank you.

(Operator instructions)

And operator, last call, we had a lot of people who attempted to get online and they could not get online, could you clarify the instructions on getting online to ask a question again please.

Yes sir, definitely. (Operator instructions) And we'll take our next question from [Sam Donaldson] (ph) private investor. Sir, your line is open.

A great continued performance gentlemen and I thank you. I think it's an indication of the decision you made, but two, three years ago to spend more money to buy more equipment in a sense, but more sales force looking for new acquisitions and I think it's paying off take the short learning hit and the long run profit and that's what I now wanted to talk about your international foot that's in this door, there it is the world, think big, you are doing it. One of the big problems now in expanding internationally and for my sake I think you should continue to spend more money doing that.

Well Sam, thank you very much and although you kind of slipped by, thanks so much for mentioning our strategy associated with repositioning ourselves and investing. To some extent, that was a little bit painful as we went through it, but I do think we are seeing the very beginnings of some pretty big payback on that. So thank you. As it relates to our positioning in the international environment, the first thing we do is approach it very humbly is in our roots in our history, purely as a domestic company and I think the worst thing that we can do is move in with an arrogant attitude and underestimate the challenges that are associated in that environment bring in from cultural to regulatory, to business practices. So we are proceeding with an element of caution. We did not go out and buy a $100 million company in a fine locale, but what we sought out was a strategy that we thought made sense for us, gave us a substantive foothold in this case in the ECE marketplace with geographic expansion into the Mid Eastern Asia and I think that was the right step for us. We did it by acquiring not only a stable company and a stable revenue stream but good clients and a network of major telecommunications providers that we are comfortable and that we can live with in terms of cross-pollinating our products. We also acquired what I consider to be a very stable and very well managed infrastructure and staff and management and that to me is a very key part of our being able to launch and leverage and look for other opportunities throughout that marketplace. We are thinking bigger and bigger and internationally on a regional basis. We are cautious about Asia Pacific and we will probably take a different strategy in that marketplace in terms of alliances and partnerships rather than major capital investments into that marketplace. But we've clearly taken step one and we think at least the step two which is call it European wide presence as well as Mid Eastern Northern Africa, big step for us, but we will continue to think big and expand our presence.

Hey Sam, we've known each other for a long time and…

I recalled the name [Zeemax] (ph) don't you.

You and I have been friends for a long time. Let me say my Scottish roots sometimes just makes it hard to just keep spending and spending and spending. We really have to find a way to find a middle ground and that is what we are trying to do here. Invest in the things that can give us the biggest rewards, try not to be wasteful. Try to be prudent and as Steve says, try to be a penitent man as we approach the marketplace in different cultures. And that is what we are doing, but we are trying to take a lanced approach my friend because we have to. We are not flushed with cash. We have to make the right decisions and we cannot fail. So we have to be a little bit cautious in our behaviors.

Well, I appreciate that. Go ahead.

Right. And by the way we also are venturing into hopefully with one of our partners into the Americas as well as an aside. So we are trying to spread our wings just carefully.

The Americas, but I understand that Jim and Steve and I think no one is asking you to abandon the domestic pressure here to go around the world. I just thought the future of course is globally and I have no complaints as a person who owns some stock in your being prudent and recalling there is the bottom line and we would like to see the stock price rise. But I just don't think for this company that's come so far and gone so many trials and set back thanks to government shut downs and things like that, you are now really stepping out and I think some day this company is going to be a very, very large with a very, very big stock price and I think your strategy is I say of spending the money and going forward rather than just sitting and hoping that a little small company will be okay, I think is exactly right because that's all I meant, but yes, be prudent, don't let it all go down the drain and no one asks for humors, certainly not I.

Thank you, Sam.

Thanks very much, Sam. We do appreciate it and you know, I think you know that we are just almost maniacally focused on building and growing this company and that is what we are going to do and we appreciate your patience and tolerance in staying with us until we get there.

Well, I will stay with you till the end whenever that is and still I am reasonably good health, so it could be a long time, bye, bye.

Great to hear, bye, bye.

We'll take our next question from [John Merchant] (ph) a private investor. Sir, your line is open.

And I guess a follow-up to the question Sam had was, you use part of yourself, is there a plant to use the other half, a follow-up to that I guess -- there is a couple of other questions I have, but I'll let you answer that one first.

John, this is Jim McCubbin. Since it's a financial matter, I guess I will address it. One, we're shareholders, we try to align ourselves with the shareholders. As a policy we've only raised money be it equity and/or debt when we could buy or invest in something that would have a return for us as shareholders. That has been the guiding principle. No one can forget that. We are not here to waste resources okay, and we won't. We raised $12.5 million because we had something specific to do with it one, buy Softex, which we believe will be a valuable component to this business and will make us all money as shareholders. Two, we raised some additional money to bolster our working capital in support of the DHS award and our ability to fund some of the upfront development cost of certain device, they are both things that we believe can generate income and revenues for this company in the future. It was specific uses. If and when we pulled down the $12.5 million left on the shelf, it will be because of that guiding principle that we have something that we can make money as shareholders for collectively that will be a good news event, not a bad news event. To date, historically we've never raised money ever, just to augment either our livings, our salaries or our expenses, but to invest in this company and make a return for all investors one and all the like.

Thank you very much for that answer. The next question what is the vision that you see going forward? Are you lifecycle management or are you hardware certificates, security you see there a lot of irons in the fire and I am just trying to see if -- you see that if eluded to lifecycle as being the one that was the money maker right now, are you acquiring the new company list and training the new sales staff to sell what the money maker is or are the sales staff at the new company is continuing to sell what they’ve always sold and you’re just using their contracts. I am just trying to get a handle on what you are doing.

Sure. Understood, understood and that’s a pretty broad ranging question, but let me try to respond. Number one is -- perhaps my first response will be sort of a mechanical one which is relating to the sales force. We’ve pretty much reconstituted build and regenerated our sales resources and capabilities over the last year and a half or two. We have a new set of rules. People are focused on not only opportunities to bring in sales but to do so in a profitable prioritized basis and that’s clearly the focus of our whole organization. As it relates to us as a company, yes, managed services, lifecycle management clearly is an attractive marketplace for us. It allows us to grow with profitable margins and revenues and we have a unique positioning right now in at least a couple of markets in terms of our call it preferred competitive position. So there’s every reason in the world to continue to try and leverage that and we will. We’ve always characterized our sales as a broader company, broader in scope. So yes, building and focusing on that base, if other opportunities come up and they are opportunities that are attractive in terms of return to the company and to the shareholder, yes, we’ll pursue those. We won’t pursue them out of bounds. So we have this general concept in terms of our information technology related opportunities, our focus on both mobile communications and securitized solutions and that’s where our focus will stay. The only thing that we will do is look for incremental opportunities under that umbrella and I think that’s frankly both our medium and perhaps even very, very long term focus right now. I don’t know whether it is our long, long term focus. It may change. It may modify according to markets and opportunities. But it's certainly our short and medium term focus and we haven’t deviated from it. So I hope that’s an adequate answer for you.

Right. Well thank you very much.

You’re welcome.

We will take our next question from John Harrow with Harrow & Associates. Your line is open.

Hi John. John Harrow - Harrow & Associates: You’ve already partially answered my question but with remainder of the shelf around $13 million, do you plan on needing more capital with regards to your 2015 build out and/or do you plan on using it for an acquisition like you just completed?

John, we don’t really have anything to comment on right now. If an acquisition that came along that did and would add value to the enterprise, we could potentially use it, okay? But we’re not focused on that this second, okay? Two, as it goes to the build out, we’re funded right now within our working capital, of a little over $2.3 million of debt is already factored into that for the next year. So we really have closer to $4 million and EBIDTA should start going neutral then positive and generating. Now if we do run into an event where a partner or an OEM or somebody wants us to do something much larger and the investment will yield a great ROI force, I will leave that question to you. I am assuming you would want us to do it and take it down because in not doing it, we would give up the opportunity. So any time we look at raising money, we look at how we can make money as shareholders first and foremost. That’s why I presented the guiding principle that we follow. John Harrow - Harrow & Associates: Okay, thanks for that and yeah, I appreciate that and you’ve got two analysts currently following the stock at -- your run rate next year, December ’15 year ending December '15 of $80 million and $0.10 EPS? How does that look right now?

Right now we’re tracking to their second quarter and we exceeded their second quarter estimates. Third quarter is looking close. We don’t want to comment but we’re seeing growth and we’re in a nice trajectory. Time will tell how '15 plays out. If everything plays out well, '15 should play out well as well. I don’t want to speak to '15 yet because the geopolitical world right now, God knows what will happen. I don't want to jinx us because things are going well for us right now. We're making a lot of good decisions. If things continue, right now we're tuning the engine. Think of it that way, we're tuning the engine on wide point and when all the cylinders really come into focus and really are running on all eights, it's going to be a beautiful thing. John Harrow - Harrow & Associates: Okay. I appreciate it thanks.

Thank you.

And this does conclude our question-and-answer session. I would like to turn it back over to our presenters for any additional or closing remarks.

Thanks operator. Obviously, we have taken all the requests and operator, we thank you for your assistance. All I can say in closing is we're extremely positive about our expectations for the second half of the year, and beyond and of course the further diversification of our revenues and positive impact of both our DHS and HHS awards. All we can tell you is the management of your company is focused on and dedicated to building the business for the future and to maximizing shareholder value. So until we speak again, we thank you very much for your continued interest and support and please be sure to have a good evening. Thank you very much.

As a reminder, this does conclude today's conference. We appreciate everyone's participation.