Good day, everyone. And welcome to the WidePoint Corporation 2016 Fourth Quarter and Year End Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jeff Stanlis with Hayden IR. Please go ahead.

Thank you, Operator. Good afternoon to all participants in WidePoint's fourth quarter and full year 2016 financial results conference call. I am pleased to introduce all of you to WidePoint's new CEO, Jeff Nyweide, who today in his prepared remarks, will provide an update of his early views and initial actions during his first quarter with the Company, along with updating everyone on some recent developments and further actions the Company will be taking along with providing you with initial goals that he has established for WidePoint in 2017. Jim McCubbin, the Company’s Chief Financial Officer will provide a review of the fourth quarter and 2016 full year performance. Then we will open the call to questions from participants. Before I turn this call over to Jeff, I want to remind all participants that during this conference call any forward-looking statements are made pursuant to the Safe Harbor provisions 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, expects, plans, anticipates, predicts, forecast, and expressions which reflect something other than historical facts, are intended to identify forward-looking statements. These forward-looking statements involve a number of risk factors and uncertainties, including those discussed in the Risk Factors sections of our WidePoint's Annual Report on Form 10-K, its quarterly reports on Form 10-Q and other SEC filings that Company released. Actual results may differ materially from the forward-looking statements due to such risk 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 CEO, Jeff Nyweide. Jeff, go ahead.

Thank you, Jeff. And good afternoon to, all of you, that are joining us here today. I am Jeff Nyweide, and I have the pleasure of introducing myself to all of you as the new CEO and President of WidePoint Corporation. Before opening the floor to questions and answers, I would like to provide you with some prepared remarks. Over the past several months, I’ve purposely not spend a lot of time on external communications, which let me assure you, is something that we’ll be addressing more proactively in the second quarter. I have instead immersed myself at the Company to gain a better understanding of our products and services, our employees and management, our current clients and partners and most importantly, our prospects and outlook. This emerging process has been extremely important for me and the Company. It's allowed me the necessary time to get to know our team, learn and focus on identifying the areas that we do well along with the areas that we need to improve upon, while better understanding the investments that’s been made in the products and services, infrastructure, sales and marketing areas that have not yet delivered the expected return on investments that everyone has hoped for. During my strategic review, I’ve been impressed with the Company's foundation, a solid foundation of federal government expertise, telecom lifecycle management, differentiated proprietary tools, identity management, federal government security authorizations and processes, as well as the capabilities that I believe all of WidePoint can build upon. I am also pleased with what appears to be an addressable marketplace that offers many opportunities and prospects as the Company focuses on two key value proposition; one, the ability to save money for our clients; and two, the ability to protect our clients from threats and bad actors who…

Thank you, Jeff and hello everyone. Today in my remarks, I am going to review with you our full year 2016 and fourth quarter financial results. For most specific details, please see our Form 10-K filing, which is being filed today with the Securities and Exchange Commission. As Jeff has already mentioned, our fourth quarter financial results did not meet our expectations, which also diminished our overall full year 2016 financial results. We were disappointed in the fact that the United States Coast Guard award did not materialize, as well as some additional identity management awards that we had hoped for. We do continue to work on these opportunities, and if and when these events occur, we will let you know. We’re also reassessing our Internet of Things initiatives, including our partners in determining ways to improve our Internet of Things and overall go-to-market product strategy. We continue to have a relationship with AT&T, Samsung and other device manufacturers in regards to security and identity management solutions. So when you couple these events that did not occur along with expected usage of carrier services in the fourth quarter offset somewhat by an increase in our managed services, the quarter was almost a perfect late December storm that ended the year for us on a low note. Taking into consideration these negative events that did occur in the fourth quarter, our full year 2016 annual revenues still increased approximately 11% or $7.6 million to $78.4 million as compared to $70.8 million for the full year 2015. Of these total revenues, our carrier services represented $44.3 million or approximately 56% of our total 2016 revenues as compared to $37.5 million or approximately 53% of our total 2015 revenues. For 2016, our carrier services were higher, the result of the recognition of equipment…

Thanks Jim. I'd like now open the call to our listener's questions. Operator, if you can assist this by opening the lines take some new questions and comments from our listeners that would be appreciated.

Thank you. [Operator Instruction] And we will go first to Mike Crawford with B. Riley & Company.

In the first quarter, you charged 441,000 to software development cost associated with certain device, capitalized software development when you quote lost access to a key integrated for this solution. So what is that mean?

Jim, you want to answer that please?

There were some changes that are occurring within the IoT group within AT&T presently. Right now, there are foundry group is been revoked as they look at how they want to move forward with IoT. Given that we have built it best reverse this software capitalization.

Okay, so you have a certain on device solution that need to be customize for each particular user?

No, but we have done some work and we are at the end state of the certain device development. We were presented with some changes at AT&T and given those changes we believe that it was best to reverse the software cost that we accumulated in 2016, moving into 2017.

Okay, thank you. In the press release, you talked about 1.3 million of total restructuring cost in the quarter, while is the other portion?

The total cost concluded as I recalled, not just restructuring cost they were just one time events. Mike, there was approximately $275,000 in a reserve for bad debt expense for client that's trying to raise money right now to pay us, we felt it was best to reserve that, than there was for approximately $450,000 in some work we had worked on with some telecom cost on a contract that we have taken the charge for as well as the rest being the software reversals for this capitalization.

Okay and then what's the reduction in headcount in facilities consolidation in 2017 where you again eliminate 3.5 million of cost as it entered 2018. What would be the expected cash expense related to that as well as anticipated gap impact of onetime actions to achieve these efficiencies?

Well, we're less than half and the benefits from -- we will start entering the benefits to starting the second quarter. So where we have already streamlined and reduced headcount starting at the end of the first quarter that will continue into the second quarter and it will continue throughout the rest of the year. Part of that is moving to a signal and platform part of it is streamlining helpdesk, so it's something that we will witness and watch occur throughout the year, some of it can't happen all at once but it will happened in 2017.

Okay, thank you. And then last question is what is the status of the Coast Guard am I correct and my memory is that you are expecting them to start in December back as more as recently as mid-November?

Mike we were very disappointed and the delay we witness in December specifically in the end of December with the United States Coast Guard. I don’t like to make excuses but right now we are on a continuing resolutions there was political changes that occurred and the United States Coast Guard had to work their way through it. Right now we continue to work with them at this point so I just don’t want to go out and say when it's going to happen they are doing what they need to do, we are doing what we need to do there is lot of administrative actions that are underway. We know when we can add them to our client unless we are going to let everybody know. So I can say on Coast Guard like the second.

[Operator Instructions] Our next question comes from the line of Sam Donaldson, Private Investor.

I think many of us who've been long time investors in WidePoint and have ridden through some bad times and some disappointments have been able to do so because of the absolute base and the credibility of management. And I think that's very important now, but this led us to setback of that we continue to have that faith. And I wanted specifically to continue the discussion about the Coast Guard. It is true that on the 9th of December, Steve Komar said flatly that the signing was imminent. He didn't say he hoped it would be. He thought it was a good prospect that it would be. He said flatly it would. And I think Steve would not have said that if he didn't believe it. What happened? You say political matter. Was it the new administration the one that put the word out that everything was to be frozen? We need a little bit better explanation for something that seemed like it was in the bag and I think investors dependent on that, for what happened? Secondly at the stockholders meeting, we were told on the record publically that the Company was still on track to meet its goals for the year. And one of those goals of course was profit at the end of the year and as Jim has said it was a pretty bad miss from the expectations. So there may be good reasons but tell us what they are? Thanks very much.

Sam, first of all thanks for the welcome I appreciate being here and I'm quite pleased actually to be here and there's a lot of work to be done going forward. With regards to what happened in the fourth quarter, I was not here during that time and don't know what was said or what wasn't said. I'll ask Jim McCubbin to respond to your specific two questions and then I can return to the follow up on what he said. Go ahead Jim.

Sam as you know, I'm extremely disappointed as we all are. During that period of time we were given assurances that things were moving along. Then towards the end of December and into January, a lot of things became stagnant and this is supposition but you know as you can read in the press there was a lot of disruptions with the current political changes and also about what the Coast Guard's project would or would not be. A lot of these things as well as the Coast Guard's need to do some administrative prep given the size of the opportunity caused delays that were not expected by anyone including some of the people that run point at the United States Coast Guard as it was described to me. So, the information that we were provided by both sides at the time was accurate. Changes did happen in the environment that caused some things to get held up we believe. We're waiting, we're working we're assisting, so we can hopefully move this process forward.

I may interrupt just a second. You seem to indicate that whatever these problems you don't think they were fatal and please correct me if I'm wrong that you believe that some point the Coast Guard is still working with WidePoint and WidePoint with the Coast Guard, another question I think that if a competitor suddenly having an opportunity to take the contract and at some point, I'm not asking for a date person obviously, you believe that this can come through fruition, am I correct?

Sam, I'm going to be very pointed with you, we continue to work the opportunity.

Well that Jim, that is not very assuring, but I appreciate the color.

I mean Sam, I have been burnt, I mean right now we continue work the opportunity the Coast Guard stands to save a lot money and it's part of DHS/BPA and we are working the opportunity. I look forward to the time where we can come forward and give you more and greater details. Right now we have get through the continuing resolution.

I understand. The first -- talk about the -- first the President Trump's budget was the costar will be actually the cut that appears not to be the case now, but it serving that’s going to get increase and as you say we don’t have a final budget and it maybe sometime. First, the continuing resolution to keep the government going, feeling everyone from the hill will agree to do that as we have seen in the past that’s the question, people who just assume shut down the federal government to prove deployed and I think we understand that. But specifically wanted a discussion of what went wrong as oppose to we saw it went wrong and we are working on it?

Well nothing went wrong, we had information that was given to us and things changed. And because of things changed, we were -- things got delayed and we are pushed out, and you know this environment better than anyone. The costar articles that were written, this attached in budget and after few months, they corrected that. There is a lot of things that are going on right now, and they are working through, okay. But nonetheless, part of our efforts and experience has shown to the DHS and their agencies that we can face them a lot of money. We know that all of the agencies have been adopting it, and all of them will take a long time in doing it. But everyone that we are working with has been very pleased. And we continue to push forward there as well as with other agencies.

Well, I appreciate that, and my time is up. But I just take one more comment and see your response to this. We're one day shy of the first quarter of this year, I am not asking you for numbers, I am not asking you for that, but truly within the Safe Harbor rules, you can give us some indication as how you think this quarter is going?

Sam, this is Jeff. I stepped into the first quarter here and through my prepared remarks, you heard exactly what I found which was I think in organization that it had a lot of items that they have hope for, they were disappointing, they didn’t occur in the fourth quarter. And those impacted the clearly the revenues going forward. With regards to the organization itself in terms of how it had head them structured and as well as the economics, I identify in the process of working with the team that there were significant areas that needed to be consolidated and realigned in order to basically bring the cost structure into a realm that can be profitable on a go forward basis in the future. So, the activities in terms of consolidated and doing those activities for profitability are beginning now, I mean I have been initiating them throughout the quarter and Jim gave you some specific examples in terms of locations, personal, infrastructure and people as well. So from the standpoint of profitability, I look at this and I would look at this and I believe that the business in many cases that are very, very strong realignment in which commitments reestablishing some basic core issues which was. Number one, you need to be driving profitable revenue. Number two, you need to be focusing on those revenues that have greater margins. Number three, continue you excellence since providing customers to the services they need and identify new products and services that they what we can sell to those existing customers. I think if that's the setback that Jim talked about in the fourth quarter will definitely have an impact in terms of the first quarter. And obviously if these changes in these what I'm initiating here with the cost reductions in those activities are going to take time to be implemented throughout the system, but I believe we will have dramatically a very strong impact on the results on a go forward basis. But in the near-term I think you have to look at the fourth quarter to give you sort of an idea of what the first quarter is wind up is how that's going to be impact us.

[Operator Instructions] We will go next to Wes Cummins with Nokomis Capital.

Jim, just one quick question. What are the assets that are account for sale that's actually the reclassification of the long-term debt on the balance sheet?

We own a building in Columbus that building is held for a sale and will close on it in mid-May and so that's why we had to reclassify it, it's under-contract, we grew out of it and we are moving into another facility with originally acquired the building and had a note for about $450,000 on it. We're selling the building for approximately I think $750,000 and but that is specifically the accounting guidance on how we have to show it on our books given that it is under contract and we're closing in early May.

We will go next to Gregg Hillman with First Wilshire Securities Management.

Just a quick question on CERT. What was the revenue from CERT particularly from ongoing contracts for the year? And how much development can you put a number on the development that went into CERT in the relationship with all the partners for the year? Can you put a number on that?

Well, one if you look at our development cost of around as I recall was around $700,000 for the year. On the product development side that would be direct cost right into the product side, okay. As it goes to the sales and marketing dollars, we don’t break that out on what that cost is, but we have invested some between our G&A, our sales and marketing and product development with what we believe is far an excess $1 million last year in this area.

And how much revenues came in from CERT? Was it minimal, de minimis?

Well, no we don’t break it out on our revenue lines as you say in our identity management side revenues. Our overall prudentially sales were in the millions of dollars for the year. We do not break it out it is a component of our managed services and as part of that and you keep going back to specific CERT on device. CERT on device is really more than Cert on devices, its derived credentials it’s the whole forum and set of credentials that are being offered.

And with no further questions in the queue, I'd like to turn the conference back over to Mr. Jeff Nyweide for any additional or closing remarks.

Thank you, operator, I would like to thank all of you for joining us today on the call, and we look forward to talking to you next with the first quarter call. Again appreciate everyone being here and we look forward to your continued interest and your time and again support of WidePoint, Thank you very much.

Again that does conclude today's presentation. We thank you for your participation.