WidePoint Corp (WYY) 2009 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the WidePoint Corporation first quarter 2009 conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions). I would now like to turn the conference over to Frank Hawkins of Hawk Associates. Please go ahead.

Thank you. Good afternoon. This is Frank Hawkins. I am the Chief Executive Officer of Hawk Associates, WidePoint's IR firm. Welcome to the first quarter 2009 conference call.

On the phone today are Steve Komar, Chief Executive Officer of WidePoint, Jim McCubbin, the Company's Chief Financial Officer, and Dan Turissini, who is the Vice President, the Chief Technology Officer, and CEO of WidePoint's wholly-owned subsidiary Operational Research Consultants, or ORC, as known to most of you.

I would like to begin by reading the Company's Safe Harbor statement, and then we will hear from Steve, Jim, and Dan before they take your questions. This afternoon's discussion contains forward-looking statements that involve known and unknown risks, uncertainties, or other factors not under the Company's control. Those risks may cause actual results, performance or achievements of the Company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include but are not limited to those detailed in the Company's periodic filings with the Securities and Exchange Commission.

And now here is Steve with his opening remarks.

Thank you, Frank. And thank you to everyone on the call. Good afternoon, and on behalf of the WidePoint management team, I would like to welcome you to the Company's first quarter 2009 investor call. At our last call, which was fairly recent, in early April, we advised that WidePoint's fourth quarter 2008 performance was I think I used the term 'a bust,' but it was basically a strong quarter, and we achieved some fine results, despite some pretty severe economic conditions.

We recorded revenues that exceeded $10 million, and we also reported that we had achieved bottom line profitability. Today I am pleased to report that we have duplicated that performance in the first quarter, thereby making the last six months the strongest revenue performance in our history. And also matched by our second consecutive quarter of profitability at the fully diluted net income bottom line.

As compared to the first quarter of 2008, revenues were up over 40% in total with 42% growth in the Mobile Telecom segment, 85% growth in PKI credentialing, and 25% in the Consulting Services segment. Our gross profits in the same comparison almost doubled to $2 million. With income from operations after the exclusion of non-cash items of approximately $550,000, a $700,000 improvement versus the loss realized in the same quarter last year.

Focusing on the business segments for just a moment, revenue performance was matched by improvement in income from operations, for both the Mobile Telecom and PKI credentialing segments. 500,000 in each unit with PKI moving from a loss last year, to a gain of over $200,000, and also realizing an over 15% margin on current period revenues.

The Consulting Services segment was unable to match that pace, although it remains profitable. While we expect some volatility in this area over coming quarters, tied primarily to software sales that are difficult to time and anticipate, we believe the core business to be solid and stable, and look for additional signs that this market is in a recovery mode.

On another important front, our balance sheet and cash flows remain strong and liquid, which allowed us to continue to maintain our 2008 year end cash balances of $4.4 million, and a net working capital of approximately $3 million. Even as we paid down over $2.2 million in subordinated notes and other debt during the current quarter.

Turning to a strategic perspective for just a minute. Our first priority is that of maximizing our organic growth and target market penetration. Within our key Mobile Telecom and PKI credentialing offerings. In addition we are seeking to utilize our Intellectual Property and core capabilities to enhance our product sets.

As an example, PKI based solutions for Mobile Telecom service environments, and integrated offerings for First Responder, mass notification systems, and commercial market providers. At the same time, we continue to seek opportunities to expand our footprint in our markets, through either partnership or acquisition, of companies offering unique or competitively differentiated products and services, that would complement or offer synergies with our existing WidePoint portfolio.

As we look further into the second quarter of 2009, and the remainder of 2009, we expect this to be a very strong year for WidePoint. We believe that the trajectories that we have established will continue and accelerate. We have assumed on the other hand, that we can avoid the affects of an extended economic recession, and/or the paralysis of the government budgeting and procurement process, but given that rather broad assumption, we see the potential for continuation of revenue growth above our current record rate, as we move through the year and into 2010, with improved margins and increased levels of profitability as a direct result.

I would like to thank you all for your attention. My comments were somewhat macro in nature, and I will now turn it over to Dan Turissini, who has been introduced as the CTO of WidePoint, and the CEO of ORC for his comments, and then we turn it to Jim McCubbin for his financial comments as well.

Dan, if you would take it.

Thank you very much, Steve. I want to start with some of the synergies Steve spoke about at the WidePoint level, we have been working across companies, to get both some cost savings as well as competitive edge capabilities. We have done a look at our data center consolidation, specifically with the look at enhancing our positioning for our services with Protexx and iSYS and ORC.

With Protexx, we have now hosted their capability in a secure data center, we are taking advantage of our high availability infrastructure, which has positioned them above their competition, specifically in the hosted secure managed alerting system space, that they are pursuing aggressively. We have also pursued PKI interoperability with the iSYS iTEMS software suite. This capability has been scoped out for one of their DOD clients, to allow them to have access to the iTEM's data through their current credentialing capabilities, specifically the Common Access Card, or the CAC card, and these are all in-line with the overall objectives, to get more usability and interoperability of all of the credentialing capabilities out there, that we are involved with corporately.

Specifically, this is in-line with ORC's initiatives also, as we move on to my responsibilities of ORC, to provide once deployed, an easily replicable capability to enhance applications, to take advantage of the credentials being provided, both at the Federal government level and outsourced through ORC. We see this migrating the enablement of the iTEM software, potentially in the HSPD-12 environment, with our non-Federal employment agencies, across the Transportation Workers Identity Credential community, specifically as it may relate to maritime related industry base. And finally within the Federation for Identity Cross Credentialing, or FICCSS, where we are seeing a lot of increase, specifically in the DOD related industrial base.

Our increased revenue base in the systems engineering is also in-line with these initiatives. We have increased both our DOD and our civil agencies activities, for providing secure mutual authentication across multiple communities of interest. This has resulted in a modest but steady growth, in both our Department of Defense external certificate authority sales, and our GSA ACs, or access certificate, for electronic service credentialing capability.

It is also manifested itself in the broader adoption of our certified FICCSS, or federal interoperable credentials, for base access and logical access into DOD resources. We met a huge milestone under our subcontract with Lockheed Martin with TWIK, where they have rolled more than 1.1 million transportation workers, representing our milestone in putting us into a fully steady state production environment. And we are working closely with ports throughout the country, to extend the use case capability of the credential, and increase adoption throughout the country.

With these initiatives we expect within the next 12 to 24 months to see an increased enrollment for TWIK in the 1.5 million or above enrollments. We look at PIV or the HSPD-12 environment to meet it's deployment milestones of approximately 3 million to 3.5 million government employees and contractors. And we see the enrollment of FICCSS at the level of 100,000 to 500,000 supporting dates access and logical access, through our agreements with the American Logistics Association, and the Armed Forces Communication and Electronic Associations, two professional organizations representing a large number of DOD vendors and organizations, needing access into DOD bases and resources.

On a broader front, we are working with GSA to enhance the government's ability to allow these credentials and others, to meet the promise of a national infrastructure, that will improve citizen access to government services and information. Finally, we are seeing a significant awareness as it relates to Saber security, and all you have got to do is open a newspaper and the magazines to see where that is going. And the importance of strong identity to support fraud mitigation in these communities of interest, outside of government related services. Specifically over the last three to six months we have addressed an increasing number of inquiries in the healthcare, energy, and First Responder communities.

Steve, thank you for the time, and that is all I have.

Thank you, Dan. Appreciate that. I will now turn the microphone over to Jim McCubbin for his financial commentary.

Hello, everyone. And thank you for making the time to join us for our first quarter 2009 earnings call. Today I am going to discuss our overall financial performance from our recently reported first quarter results. More specifically, I am going to review with you some of our key financial highlights from our income statement, balance sheet, and provide you with some of our thoughts on our financial performance in this quarter, and how that performance may trend for the rest of 2009.

Overall, we are very pleased with the financial results for this quarter. We are pleasantly surprised to the upside, as revenue performance improved across all three of our segments quarter to quarter, and held mostly steady from the fourth quarter of 2008 through the first quarter of 2009. Seasonally, as many of you are aware, our first quarters of the year have tended to be our weakest for our fiscal year, so given this we are pleased with the financial results, and given these results we continue to maintain an overall positive outlook for our financial performance in 2009.

In examining some of the more mundane aspects of the financial performance during this quarter, we witnessed revenue growth of approximately $3 million. Revenues for the 2009 quarter exceeded approximately $10.1 million, as compared to approximately $7.2 million that we achieved during the first quarter of 2008. The increase in revenues were primarily attributable to growth in our Mobile Telecom Managed Services segment, and increases in our PKI Managed Services segment.

More specifically, we see that our Mobile Telecom Managed Services segment experienced revenue growth of approximately 42%, from approximately $4.5 million for the 2008 first quarter, as compared to approximately $6.4 million for the 2009 first quarter. Looking forward, we anticipate that this segment should continue to witness revenue increases as the federal agencies continue to adopt our MTEM services. We are presently in various stages of the sales cycle with a number of large federal agencies, and we very hopeful as the procurement cycle continues this year, we will witness a number of contract awards in the coming months.

In our PKI credentialing and Managed Services segment, we experienced revenue growth of approximately 85%, with revenues increasing from approximately $649,000, from $759,000 for the first quarter of 2008, to approximately $1.4 million for the first quarter of 2009. This was predominantly a result of continuing expansion of several programs that Dan previously spoke about, that all continued to show signs of adoption and acceptance, that are performing very positively.

In fact to further bolster these programs we have worked very diligently to expand our sales with several associations that Dan also discussed, which we believe will allow us to increase our reach, to what we view as a very large marketplace. As a result of these positive events, we anticipate a positive revenue trend should continue for PKI into 2009.

In our Consulting Services segment, we experienced revenue growth of approximately 25%, with revenues increasing approximately $467,000, from $1.9 million for the first quarter of 2008, to approximately $2.4 million for the first quarter of 2009. This was materially due to what we believe is a leveling, and a slight rebound that is occurring in this marketplace. We believe this rebound may be erratic quarter to quarter as the economic stabilizes near term, but we do believe it should resume an overall positive growth in the more distant future.

So in summary, we continue to anticipate revenue growth across all three of our business segments in 2009. It may be somewhat erratic quarter to quarter, but we continue to believe that our trends overall should continue to be positive for all of 2009. In looking at cost of revenues, we witnessed an increase in cost to revenues from approximately $6 million, or 85% of revenues for the first quarter of 2008, to approximately $8.1 million, or 80% of revenues for the first quarter of 2009.

The absolute increase in cost to revenues were primarily attributable to increasing revenue streams, while the decrease in our cost of revenues as a percentage of revenues, was primarily attributable to margin improvements within our PKI and MTEM segments. We anticipate that cost to sales should continue to decrease on a percentage basis in the near term, as we move beyond the initial startup phase of recent contract awards, and more product mix of our PKI services expand in relation to our other segments.

More specifically, as we move beyond achieving the cost to support our managed service offers in MTEM and PKI. We believe our incremental cost per revenue, should continue to fall, therefore increasing our margins. So net/net as a result of these events, our gross profit increased form approximately $1.1 million, or 15% of revenues in the first quarter of 2008, to approximately $2 million, or 20% of revenues in the first quarter of 2009, a nice, positive trend.

In examining sales and marketing, our expenses we saw a slight increase from approximately $166,000 for the first quarter of 2008, to approximately $229,000 for the first quarter of 2009. This was materially attributable to the hiring of some additional resources in our sales and marketing department during the second and third quarters of 2008, as well as the licensing of sales and marketing tools that are part of an initiative to expand our sales and marketing infrastructure. We anticipate the sales and marketing expenses may increase slightly in the future, but less than the rate of revenue and net margin growth.

In examining our general and administrative expenses, we saw a decrease from approximately 1.7 million, or 23% of revenues for the first quarter of 2008, to approximately $1.5 million, or 15% of revenues for the first quarter of 2009. The decrease in general and administrative expenses for the three months ended March 31, 2009, was primarily attributable to a decrease in stock compensation expense under FAS 123(R), as a result of options issued to employees in connection with the iSYS acquisition last January of 2008.

We anticipate that our G&A expense may increase slightly, but less than the rate of revenue and net margin growth, as we continue to build out our infrastructure and supporting our growth expectations, and as we comply with our Sarbanes Oxley requirements this year. So net/net as we look forward, we are very pleased at these events providing the net income that we witnessed.

Net income for the first quarter of 2009 was approximately $129,000 as compared to net loss of approximately $863,000 for the first quarter of 2008. Looking forward, it is our goal to have a profitable year, and the first quarter was a positive start to achieving this goal. Looking forward with the exception of any 123 or stock compensation charges, we believe we are on track to deliver this goal at this point, looking forward into 2009.

Examining and looking at liquidity in our balance sheet, we would also like to examine a few points that Steve had touched upon. The in fact during the quarter we managed to maintain strong cash balances, maintained a ratio of current assets to current liabilities that provided for an increase in working capital of over $300,000, while still allowing us to reduce our short-term debt exposure by approximately $2.2 million. The production of operating income less amortization, depreciation and stock compensation charges of more than $1.1 million over the past two sequential quarters have in fact allowed us to strengthen our liquidity and balance sheets. Facts that in Q1 2009 allowed us to renegotiate and provide for better terms with our financial institution, and a line of credit that we just recently renegotiated.

So given these facts, we are very pleased with the financial performance we witnessed in the first quarter, and have a positive financial outlook in 2009, as the inflection points of our businesses kind of blossom from this development stage, to what we believe is the beginnings of an early strong growth phase. So that is a quick financial review of our performance in the first quarter.

Given that, I would like to hand it back to Steve. Thank you all.

Thank you, Jim. I appreciate the comments, both from Dan and Jim, for their respective comments, and I thank them for that. I just wanted to mention very briefly, and again with a particular thank you to Dan, who did it this time through, but we intend to continue our little practice of rotating the senior management through these quarterly investor calls, to give you a chance to familiarize yourself with the individual, and/or to ask any questions you think are appropriate.

In that vane, in our next quarterly investor call, Jin Kang, who is the CEO of iSYS, and who leads our Mobile Telecom initiative will be here, and will participate with Jim and I, and you will have the opportunity to ask any questions of him you want at that time. Again, thanks to everyone.

I know we want to open the lines for questions. I just wanted to take 30 seconds or less, and summarize or resummarize for you the points or the key communication points that I think we are trying to get across today. Number one, that WidePoint is a growing, stable, cash-generating business, in a pretty attractive marketplace. Number two, from a primary focus, on our part, is placed on the aggressive growth at both Mobile Telecom and the PKI credentialing segments. And number three, that financially our goal is focused on gross margin improvement going forward, and growing increasing levels of profitability, both of which we believe will support increased value, for both our investors and our stakeholders.

Having said that, I thank you again for your time and attention. And I would ask our operator Marissa, to open the lines for any questions or comments that you may have.

Thank you sir. We will now begin the question and answer session. (Operator Instructions). Our first question comes from the line of [Sam Donaldson], Private Investor. Please go ahead.

Congratulations, gentlemen. These are outstanding results. Not only the revenue increase and the margin betterment, but the trend line clearly is up. So now let me see if I can find a problem.

To look at your market you say and the government at the moment seems to good getting it's act together in funding the government, and I take it, moving forward on contracts that they weren't able to do for a while. So let's talk about the competition, or more specifically, will you talk about the competition. Clearly others for this government business, which supplies a lot of our revenue are in there, and want to get the contracts themselves. Who are our main competitors, and what is the challenge with them?

Excellent question, Sam. Let me turn to Dan to speak to the PKI piece, and then he can also feel free to address iSYS, or he can ask Jim or myself to respond to that. Dan.

Thanks a lot, Sam. I haven't seen you in a while. Good to hear from you. Well, there is a bevy of competition, if you ask them. There are a lot of people out there that are trying to do similar things that we do. And certainly in the credentialing world, and in the information assurance world, you see a lot of folks out there that are trying to solve the problem.

Unfortunately, what they have done is try to short-cut the problem, and I do not think there are many other organizations that have invested heavily in the credential certifications, company certifications, and keeping complaint with the rules and engagements that government has laid out. And that has set us up very pretty for outside the government initiatives, including First Responder, the energy community, and healthcare.

Now that said, the 800-pound gorillas out there are folks like VeriSign, who have a very big commercial practice, maybe not as big a federal practice. There is another company called Cybertrust, who was recently purchased by Verizon. They are still trying to figure out some of the things they can do across the board. And then there is always the large systems integrators like Northrup Grumman and Lockheed Martin. Who we have been very comfortable working with, and as a matter of fact in the case of Lockheed Martin and Northrup Grumman, we do a lot of work with them in this area, where we do the back office, and they do the front office stuff.

There is a lot of competition, but when you get down to the nuts and bolts of what we are very successful in, and that is maintaining a strong authentication back office, even the competition in many times, has come to us to get that final answer, if you will. So we are trying to leverage that competition by teaming with them on a lot of these initiatives, making it easier for them to go to market, while they provide our back end as part of their front-end service.

As far as the other sectors, iTEMs in particular, I would like you to wait to ask that question next quarter, because I think Jim is going to have a similar answer. While there are, and I talked to Jim about some of this this morning, while there are other persons in this space, I am not sure there are any other organizations that have made the investment in the finite compliance and expertise in the Mobile Telecom world.

Jim, do you have any more to add to that?

Hey, Sam, simply enough, we have built a nice niche in two areas where the marketplace is young enough. With what we do specifically, there is not a whole lot of competition, less than a handful in every segment that we actually play in, in any specific area, we have done that to be competitive. We price it very well so it is hard for somebody to enter it, as well as we keep a lot of differentiation into the certifications, technology, and software, that we have to help perform that. So it is just a good place that we are in right now, both in the product life cycle, as well as in the competitive profile.

And as it expands and grows, you will always see the addition of competition, but we have positioned ourselves kind of like that BMW brand, where we are very high-end performance oriented, and we are very strong in defending that we believe. So it is leaving us in a good place as the marketplace now starts to kind of grow, and again, as I said earlier, we are going from this development stage to this growth phase. Which is a very nice place to be in how we are positioned.

And Sam, I would like to add, interestingly enough, with the new economy that we are living under, we have positioned ourselves both at ORC and at iSYS, as a preferred managed service provider. So our stuff, if you will, is ready to go. So we can go in in both cases, go into an agency, go into an organization like Northrup, or an industry like the maritime industry, and get them started right away. And much of our competition is going in there, and saying we can build something for you.

And in today's economy, the luxury of building new and building everything to specific requirements is not there any more. And the fact that we have a fully complaint capability that can be deployed very rapidly, is a big sales initiative capability.

I was just going to say, listening to you, this is very reassuring. There is always competition, and you will have to stay ahead of it. But what you seem to be saying there isn't one or two big giants, who have been sleeping, or for some other reason, who are suddenly going to come into the room, and we just cannot compete against them? We are covered for that?

Yes, I think, and we hear this a lot across town, and I go to a lot of professional association meetings, and stuff like that, it seems those bigger gorillas are many times more worried about what we are doing, than we are about what they are doing.

Well, again, congratulations to the three of you and the people who are not there. I just think it's an outstanding job, and those of us who have invested in this Company, I think, I don't want to say relocate our arms by patting ourselves on the back, we pat you on the back and we thank you.

Well, thank you very much, Sam and we appreciate your comments and your investment.

Thank you. Ladies and gentlemen, (Operator Instructions). Our next question comes from the line of David Jordan with Monarch Capital. Please go ahead.

Hi. First thing I would like to say, I was going to say I am your biggest fan, but after having been at so many conference calls, I have to defer to Sam Donaldson, because it would be hard for me to usurp his position. But I am a very, very big fan. I got in a little early, but I own close to, with my clients, close to 5% of the Company.

And Steve, I hope you do not take this personally, but I am a Jim McCubbin person. He has been working with me for a couple of years, and I love the man, and he is terrifically helpful. But I wanted to tell you, Steve, that there is a Company that I am aware of for several years called Send Word Now, which is a Company that is focused on First Responder, through I think they specialized their services on mobile devices. So you might want to take a look at that Company.

But having had the opportunity to look at your 10-Q just today, and looking at the numbers, I feel that the biggest problem that we do have that nobody has mentioned, is that we have a digital problem. And the digital problem that we have is that we have a decimal point before the price of our stock, and we should have a numeral before the decimal point. I mean, it is ridiculously priced.

And where I am going with this, is that the numbers that I see down lower in the 10-Q, are such that the numbers for iSYS are 6.356 against 4.487, and they had I think operating income, or net income of 602,000 against $108,000 for the quarter. And I pride myself on the ability to help bring companies to interesting money managers, money managers that have an interest in small companies. And I will give you my $0.02 worth, you can love it or hate it, but at least you know you got the one man's thought at the end of the day.

If it was me, WidePoint might be a great name as far as you people are concerned, but I would call this Company for the immediate future, Mobile Temporary Services, or something to highlight the dramatic growth in the iSYS division, because aside from the $6.3 million, I know there are other revenues that are generated from that division, and other parts of your Company.

And I think that from my standpoint, from having dealt in micro cap stocks my whole life, and that is 38 years worth, I think if someone looked at the track record of iSYS, and saw the tremendous growth, in fact last quarter on the conference call, we were told that they had about 60,000 units in the phone, and by late this summer they have contracts out for another maybe 150,000 to 200,000 phones, if they were successful in getting these things, and I think if one were to look at a specialty telecommunications company, which WidePoint to me doesn't imply, and something with mobile telecommunications services, I think the stock would sell at two to three or four times the price right now, even without the acknowledgement of the identity solutions management with TWIK, and the other divisions, which is a late-comer, but it is all ready to go.

And I think the opportunity here is so tremendous, except for the fact that WidePoint's name doesn't reflect the dramatic events that are occurring in your company. So I think you guys are doing a great job. Unfortunately, I was a little early in the stock. But I am happy now. And I think this thing will be a complete barn burner, if marketed effectively, because I think iSYS is doing so well, and the ID management business is coming on online. As you said, the TWIK, you get paid a certain amount of money after the 1 million point mark. So I do not want to keep babbling, but you have got the point, and I hope you listen to me, because this is my expertise. Your expertise is running the Company, my expertise is marketing stock. And so I think you are doing a great job, and I think the next year should be our day. So I thank you for doing the good work, and I hope you listen to me.

Thank you, David. This is Steve. I appreciate that. And I have been jotting notes here. So I will definitely give you your due. And we will from our side, I assure you, stay focused on managing and optimizing the Company, and we will look for guidance, to people with expertise in that area to help us, in terms of our positioning our Company for the future. So all good comments. I must tell you, you didn't hurt my feelings at all. I think a lot of Jim McCubbin too.

He sent me a T-shirt which says McCubbin on it. I never got one from you.

Oh my goodness. Really.

That was the problem.

It must be a modesty thing, I am not sure. But David, thank you very much for your comments. And by the way, as well for send word now, we will definitely look into that. And I think the comment about the mobile temp service, I hear you, and I think we are going to consider that.

And I think there are some questions about whether this is the optimum time, and I think we can probably chat about that on the side. But we like to think that the two sectors that we have targeted, both have pretty attractive growth potential, and we are thinking maybe that this is not the appropriate strategy right now. But why don't we chat about that on the side?

I would love to.

Because I respect where you are coming from.

Thank you very much for your time.

I think our focus here is just going to be to fire on all fronts, and try and build value for the investor base as well. And I would just leave it at that. And Jim, do you have something?

Thank you for your time.

Hey, David, we as you are aware, we are going to be attending the Noble Conference, and we are going to be working very diligently and hard also at making sure that a lot more people are aware of what we have, now that we have some performance that we can demonstrate. Especially in this new economic reality that we are seeing. Almost like everybody is from Missouri. We believe that we do have a very good story, and that we can go out and make sure that more people are aware of it now, because it needs to be refreshed. And we do have that positive performance. Anything that you can do to help us in that regard, we are going to very much look forward to taking any help we can from you.

Thank you very much for your time.

Thanks.

Thank you, David.

Thank you sir. Our next question comes from the line of David Clark, a Private Investor. Please go ahead.

Thanks very much, guys. You know, I have to tell you, Steve and Jim and Dan, quite a bit of time ago, I liked what you guys were doing. And put a significant bet, because that is what you are doing when you buy a share, and I bought a fair amount of shares. And my comment simple to you, is that you have delivered in spades. You are absolutely doing a fabulous job, and you should be tremendously congratulated for it. To comment, I know David Jordan and I do not think he is a bigger fan than I am, and I will take exception, I think Sam is a big fan of yours, but he is no bigger fan than I am. So maybe the three of us are your biggest fans.

But I only have one question, but before I get to that, I would just like to comment on a comment that David made about name changes. I have run publicly held companies, I have changed their names, and it never did anything for me to be honest with you. If you deliver the results, if you just keep doing what you are doing, you are going to do just fine. The only comment I have, and I was very pleased to hear from Jim, that you are going to do a conference. I don't think you have to go crazy over Investor Relations.

As I say, I have run publicly held companies myself. Two or three conferences a year, going around and meeting the types of funds that invest in you, it is definitely not something you want to turn into a full-time job, that diverts you from what you should be doing. But you have to do a little of it. And you do not want to hide a company under the rocks. And I do not believe in overpromoting things, but you have to get the word out, and I think you will. I mean, if you go around and just do a little bit, a little bit will go a long way is what I am saying.

To get to my one and only question, because I am an equity investor, I invest in equities of companies, and want to see them succeed, we all are happy when a company succeeds, and we are also happy when share price goes up and hopefully both things happen, but I always live in fear that a growth company runs out of money, and has to go to the market to raise more, and I was just wondering if you look out for the balance of this year, and say next year, you seem to be generating a lot of cash, you seem to have a great balance sheet. You paid some debt down, which presumably was right out of earnings, which is a wonderful thing. I mean that is a spectacular thing.

But do you see any reason that you might have to go to the equity market in the next couple of years to fuel your growth, or do you think you can create this organic growth on the back of your own cash flow? And I think that is my only question.

That is a pretty [inaudible] question, Dave. Obviously this one I should defer to Jim, and I will. My nonprofessional comment, if you will, or nonexpert comment is that I think we will be able to handle our organic growth without too much problem. But if we do find an opportunity, that would require us to get into some form of acquisition mode, well then we might have to rethink. But with that being my only comment on this topic, I turn it to Jim.

Hi, how are you? It is nice to hear from you. As we have held for several years, we will only raise equity in the event where it can be extremely additive to the business, and what we have gotten into. This past April we did do a small raise, we did a small of a raise as possible, so we could help support our balance sheet with the iSYS transaction. And as I think you can tell, that acquisition was highly accretive for the entire Company. So in those kind of events, yes, we would use equity, but it would be the last resort.

Presently we are generating positive cash flows, and the trend line seems to support the growth in that area. If anything right now, we are trying to pay down debt, and then after we pay down debt, then we get into a series of other questions, of what we do with that free cash generation.

But since we are also, everyone at this side of the table, and on this side of the phone, are large equity holders, in no way are we going to harm ourselves. And in the future just always remember that we share the same pole position that you do, and we are going to do things, okay, in many ways, with correspondence with many of our large holders, to improve our situation overall.

Jim, I think that is really, you are looking at it exactly the right way. And by the way, I didn't mean to say you should never issue equity, although I don't like doing it, but if you have to do it, to do an accretive acquisition, you have to do what you have got to do. And if you are looking at it as a shareholder, you are looking at it the same way I am, and I think the question was really more directed to on a steady-state sort of WidePoint, what you are saying, is it doesn't look like you would have to raise equity?

At this time things would have to fall apart. And than we would have different problems. Right now we have been working so diligently and so long in building this business, where we want to see it blossom now, and we do not want to do anything that is going to harm what that bloom is going to do for our benefit as equity shareholders.

Well that is great to hear. And I will just end with that, and just tell you, just keep doing what you are doing, because what you are doing is just terrific.

Thank you very much, David. Your comments are truly appreciated.

Thank you. (Operator Instructions). And we show no further questions. I would now like to turn it over to management for any closing remarks. Please go ahead.

Thank you Marissa, I appreciate it. And thank you to all of you that joined us in attending this first quarter call. I think from our perspective, our mission is clear, to get back and deliver on several of the directional statements that we have made today. We believe we are going to do that for the remainder of 2009, and we look forward to the opportunity to prove that to you. In the interim, thank you again, very, very much, and I wish you all a good evening.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.