Jim Miller - Chairman and CEO Wayne Wetherell - CFO

Thank you and good morning to you all. As you saw at the close of the market yesterday, we reported financial results for the third quarter ended September 30, 2015.

And I’d like to begin today’s call by speaking first about some specific financial results for the quarter and afterwards, I’ll walk you through some recent developments. In the third quarter of 2015, total revenue increased 29% to $1.2 million compared to $900,000 in the year ago quarter, primarily due to software license revenues in connection with the United States Department of Veterans Affairs for the identity management system we created for them over eight years ago.

I’d like to point out that during the quarter; we received an award from the VA for a total of $3 million, if all options are exercised over the next two years. There remains a total of $2.6 million left on that order.

Gross margin in the third quarter was essentially unchanged at 72.9% compared to 73% in the year ago quarter. Net loss in the third quarter was $1.9 million or a negative $0.02 per share compared to a net loss of $2.2 million or a negative $0.02 per share in year ago quarter.

At September 30, 2015, cash and cash equivalents totaled $4.9 million compared to $200,000 at December 31, 2014. That increase is a result of the company’s convertible preferred offering completed in February 2015.

We continue to make progress on various partnerships, as we recently announced our partnership with Extenua has advanced to the next stage of the product launch cycle. This partnership has evolved from testing to agreement to integration and now official market launch.

The operating cycle of these events is what we’ve expected from the outset of our go-to-market strategy and we will continue to validate the strategy through the advancement of other commercial partnerships. We have a high number of pilots and opportunities currently in progress that are headed for closure and with the closure of one dependant on size or [Indiscernible] we will generate positive cash flow for the quarter.

If those slip however our cash flow and profitability target will move to the follow on quarter. Moving on to specific commercial partnerships.

In March, we signed a binding agreement with Kuwait-based Agility to create a joint venture company based in Kuwait, which will sell the IWS product suite throughout the Middle East and other countries such as India where Agility has existing customers under contract. Agility is a $5 billion annual revenue company, employing over 20,000 people globally and is a leader in the supply chain management space.

We continue our negotiations with Agility in the hope of closing this deal during the current fourth quarter. Moving on to Extenua.

Extenua is a pioneering developer of enterprise security software that simplifies the use and access of cloud storage. We partnered with them earlier this year to deliver the industries first enterprise grade and the end secured cloud storage platform for office and mobile devices.

Our GoVerifyID solution has been integrated with their Cloud2Drive product to help enterprises both large and small face security challenges as opposed with cloud storage. Just last week, we officially launched our joint product on Amazon Web Service, American Systems Corporation along with several United States Federal Agencies have already signed up as initial users.

We also know and can share with you that Extenua is close to signing several additional use of historical. As you may recall from our last corporate update we were in the process of finalizing integration of our GoVerifyID Extenua’s Cloud2Drive product on another platform.

However, due to customer requirements that could not be met by that platform Extenua decided to move to Amazon Web Services causing a delay in bringing the product to market. And this serves as a perfect example of one of the many hurdles we must sometimes overcome in getting our product to market that are completely out of our control.

In early November, we announced a new partnership with CDW Corporation who provides the GoVerifyID, IWS CloudID to CDW customers. CDW is a leading provider of integrated IT Solutions with the large diversified customer base consisting of private businesses, government entities, educational institutions and healthcare companies.

This partnership will now offer CDW Customers, easily integrated scalable identity managed solution for their device. We have completed initial training for CDW sales reps and our commencing joint sales calls with the special emphasis on healthcare and retail customers.

Moving on to our German project, since our last call we have successfully completed all of our final testing and have approval to proceed. We have been holding, waiting for the German government to promulgate an eHealth regulation and this is finally occurred requiring the implementation of the project we're participating in.

We are advised by our partner at Deutsche Telekom that we will begin implementation during the current fourth quarter. Additional Deutsche Telekom has begun its initial marketing effort to establish pilot project for payment in the banking industry using our GoVerifyID product in Europe.

At 2016 -- excuse me at the end of 2014 we entered into partnership with TransUnion to integrate their ID manager solution with our GoVerifyID product allowing ImageWare to advanced fraud prevention capabilities to organization. Through the relationship, consumer identities will be thoroughly analyzed using both biometrics and the TransUnion ID Manager 2.0 platform.

TransUnion has now completed its software upgrade as well as the integration of the IWS GoVerifyID product and has begun to pilot GoVerify internally, so, that they will have the product knowledge and experience to support the product when it sold outside customers. With that being said, we believe we are very close to their first customer.

At Computer Associate or CA, we have received final product certification. CA Technologies has been other partner that has now initiated its sales activities.

If you take a look at the CA global website, you will see IWS products are featured in a number of places. We continue to jointly call on a number of selected financial institutions that our current users of the CA single sign-on software that is integrated with our GoVerifyID product.

It's also worth noting that this week we are presenting at CA World in one of their core exhibition areas as a featured product. Our global contract with Fujitsu to jointly market a cloud-based multi-biometric identity management continues to make progress.

Fujitsu is aggressive marketing our product and has a number of fine opportunities underway in Japan and South Korea. ImageWare has completed the integration of the Fujitsu PalmSecure, biometric palm vein algorithm in our GoCloud ID and GoVerifyID solution, in order to extend our software suite to Fujitsu's current palm vein customer base.

Fujitsu has pilots underway with several of their large customers as well as several internal pilots within their organization. We expect these pilots will move to revenue generating systems during the first part of 2016.

At Lockheed Martin in the beginning of June we entered into a three-year licensing agreement under which we were integrate our biometric engine into the Lockheed Martin cloud-based multimodal biometric IDHaystack identity as a service platform. Lockheed Martin is then offering the identity service to the federal government, and other customers through its FedRAMP approved government community cloud, where it is one of three approved vendors for the United States Government.

The integration effort of IDHaystack near completion as Lockheed Martin continues to make some small additions on their end to the joint product. During this integration process Lockheed has already discussions with various government bodies.

There could be no argument that Lockheed is a world-class company and we believe that this serves as yet another example that we continue to be recognized as the go-to-company for cloud-based multimodal identification management services as our large partners begin to navigate the emerging business opportunities that is Biometric Identity Management. In July, we executed an agreement with OnlineAuction.com to provide ImageWare’s patented GoVerifyID mobile biometric security software to their 200,000 OnlineAuction members.

OnlineAuction also known as OLA.com provides online auctioning services throughout the world via the Internet and is expecting significant expansion as to begin its service to the Asian Pacific marketplace. OLA members will access their accounts via biometric authentication of their identity using voice and facial recognition.

Integration of the GoVerifyID has begun and we anticipate completion by the end of this year 2015. In summary, we continue to believe that we have the right products, we're in the right place and this is the right time especially as commercial and consumer adoption gain traction across the globe.

The growing need for biometric solutions is further demonstrated by the organizations around the globe that experience security each and every day. These indisputable trends drive our strong outlook for ImageWare as we look to leverage our commercial partners to reach millions of users across the globe.

And now, I'd like to open it up for some of your questions.

Okay. Hello.

The question.

Would you like to question now?

Yes.

Okay. Will you please address the lose items that was on the internet on October the 29th or the 30th and then taken off on October the 31st, saying that Fujitsu have created the technology that does not need a server for Fujitsu's new login system and they're saying that it will superior to the finger and the eye organ, I'd like to hear your comments on that?

Well, I would just say, the ImageWare Fujitsu relationship is one that has – it’s very, very strong and we are working on an number of different biometrics, not just finger, face or voice, but we've just integrated their palm vein which is their own flagship biometric algorithm. I think what you're referring to and I'm not entirely certain is a technology that Fujitsu touted.

It really and I know there's a lot of noise in this marketplace, sometime it's easy to be confused about these things, but what their touting has literally very little or nothing to do with biometric identity management. It is not a replacement for it.

It is not a real alternative to it. It is still years away from being a real technology.

So, we're pretty comfortable that that's going to have a zero impact on where we're going and what we're doing with Fujitsu. And as I said Fujitsu has a number of pilot projects already significantly down the road, underway, so I just think it has no effect on us at all.

Well, thank you. There's a lot of very exciting prospects at ImageWare and we have a number of active pilot program which are moving as very close to hitting critical mass.

We continue our drive to be cash flow positive in the fourth and based upon the expectations to closing deals and the pilots we have in progress we fully expect that 2016 will be a very profitable year for ImageWare. As always we'd like to thank everyone for joining.

We appreciate your time and ongoing support. We look forward to speaking to you along the way and when we'll report our fourth quarter next March.

Thank you all again for your time today.