James Miller - Chairman and Chief Executive Officer Wayne Wetherell - Senior Vice President, Administration and Chief Financial Officer

Mike Malouf - Craig-Hallum Capital Howard Halpern - Taglich Brothers Harvey Kohn - HRK Strategic Advisory Robert London - London Family Trust

Well, thank you, Angela, and good afternoon to everyone. As you saw at the close of the market today, we reported financial results for the first quarter ended March 31, 2016.

I'd like to start today's call by speaking first about some specific financial results for the quarter, and afterwards walk you through some recent developments. In the first quarter of 2016 total revenue was essentially unchanged at $1 million compared to the first quarter of 2015, an in service revenue from the completion of certain identity management projects was offset by a reduction in software revenue from identification project.

Gross margin in the first quarter of 2016 increased 220 basis points to 73.3% compared to 71.1% in the same quarter a year ago. The increase was primarily due to relatively lower cost associated with the increase in service revenue.

Net loss in the first quarter of 2016 was essentially flat at $2.3 million or $9.03 negative per share. At March 31, 2016, cash and cash equivalents totaled $1.1 million compared to $3.4 million at December 31, 2015 and we continue to carry zero debt with full availability on our $5.5 million line of credit.

Moving on now to redevelopments. Since our last corporate update just two months ago we continue to post strategic partnerships with companies we believe will help commercialized our technology.

Today in concert with our partners, the TransUnion and AWS, Amazon Web Services, we launched our own biometric authentication service. Several things make this joint product unique.

First, we're targeting the enterprise and specifically the small to medium size business which employ the majority of our population, yet are not large enough to be of an immediate interest to some of our larger partners. Second, with our integration of TransUnion ID manager product into our GoVerifyID application, we are now able to provide the first true end-to-end solution that webs your identity prior to enrolment, it rolls you and allows you to use that enrolment to authenticate your identity going forward, thus so eliminating your use of password and increasing your security.

Finally, our end-to-end page you go, scale as you need offering allows quick deployment and no upfront infrastructure setup cost, reducing two significant barriers-to-entry. You can now use the biometrics of your choice, simplify your login experience, improve your IT security without large upfront cost or complicated integration process.

Here's how it works. IWS assign to a place on our multi-tenant SaaS cloud system on the Amazon Web Service.

You can use any of our standard interfaces or out-of-the-box products to support, manage or sync users such as CA Single Sign-On, Aruba’s ClearPass, one of the several IWS supported common information exchange technology such SAML, SCIM or Skim [Indiscernible] and additional third-party integrations are incredibly fast and easy. Then install GoVerifyID, by simply downloading it of the Apple or Android Store, select the biometrics of your choice, which by the way you can always change with the IWS solution and you can if desired then verify the identity of our enrollees, enroll and from that point forward, you and your users anytime, anyplace in the world will save to use password and start to use biometrics.

It's that simple. With the cost of supporting passwords and over $100 per user per year and compromise passwords causing 63% of data bridges, we think this product will be a winner.

The product will be the first true end-to-end biometric solution offered in the market. They will cover the full range of authentication including identity proofing, cloud provisioning, on-device enrolment, real-time verification and seamless integration into existing security workflows.

Trans using the identity verifying [ph] allows users to confirm online to document and other knowledge based information that you are indeed really the person you say you are when importing you biometric. This feature along with the others just referred make it a very unique end-to-end biometric product that you will not find anywhere else in the world.

We truly believe that Reflexion [ph] is worth position as an innovator in the biometric space. We'd also like to acknowledge that our partners at TransUnion had a huge role in the achievement of making this an end-to-end solution and we'd like to thank them for their commitment to our joined product.

As you know TransUnion delivers information to risk management solutions to over 500 million users in 30 countries around the world. So if we believe there will be substantial partner with a common goal.

We're also proud to announce that our first customer on this new authentication service is Extenua with whom we've already partnered and we will shortly be announcing several additional resale partners in the coming days. I want to point out that all of our resellers who are also commit to use the service for their own users, thereby generating immediate revenue for IWS.

Announcing the new groundbreaking service we have collaborated with the folks at Gartner one of the world's premier marketing analytics firm and have release joined newsletter highlighting our new solution and it’s important for login security and ease-of-use. The newsletter is entitled mobile biometric user authentication as a service, solving our password problems with multimodal biometric and you can access that from our website at IWS.com or via the link the release we and Gartner issues at the closed market yesterday.

We also made significant progress with Aruba partners where our GoVerifyID was selected to be integrated with Aruba's ClearPass Policy Manager. Aruba's internal salesforce as well as 60 reseller partners are currently being educated about the product.

We've been collaborating with the Aruba team to co-write content for sales webcast and other marketing material and setup a joint server for customers interested in demonstration. The formal sales pick up with the Aruba sales team except for this Thursday May the 12th.

Our partnership with Aruba gives us the ability to sell through a number of resales. The partnership also gives us the ability to enter into direct agreement with these resellers and we can confidently tell you that you'll be seeing more of these in the near terms.

To our knowledge the Aruba deal is the first time a network has selected to use biometrics for security purpose, reflecting the strength of our technology, with the total end user population of approximately 65 million. Aruba also represents one of the largest populations of users to be targeted for conversions from pins and passwords to biometric.

As we look ahead we believe this will more often become the case with other company and Aruba will provide image where a truly signature reference account for our commercialization strategy. Moving on to an update of some of other commercial partners, earlier this month we've signed an agreement with FEMSA to provide them our cloud ID multi-modal biometric authentication system.

FEMSA will use biometric technology to improve their overall security and identity, credential and access control management at their headquarters. And for those of you who do not know them, FEMSA is a $19 billion revenue, new stock exchange traded company in Montreal and Mexico that is a largest franchise bottler of Coca-Cola products in the world, as well as a significant shareholders in the German based beer maker.

FEMSA currently has an extremely large number employees under their umbrella and will be using our cloud ID product in a pay pilot which starts next Monday, May 16. Towards the end of the March we announce that we join the Amazon web services partner network to offer multimodal biometric authentication.

AWS delivers a collection of cloud computing service that makeup the on-demand computing platform. Through this network we're able to leverage the global scale, reliability and security offered by AWS.

Working together such as the case with today announced biometric authentication service; our role would be to drive more people on the Amazon web through our GoMobile interactive offering which will be offered at the SaaS solution on the AWS cloud. As our multimodal authentication service drivers traffic to the AWS cloud, we're also looking forward to the many benefits we will receive from the partner network, such as business, technical and marketing support in addition to the expanded geographical foot plan.

We're also pleased to announce today that during the quarter we'll become an official partner with SIT. Under our collaboration agreement between our two companies to incorporate bio metrics into SAP products, we'll have more to say on that and our plans to work with one and other in the coming weeks.

But suffices to say for today that we couldn't be happier and re-partner just one of the role greatest and largest software company. On our last call we mentioned how CA was scale testing our joint produce.

We have informed that the scale testing was completed last week. The next steps involved creating a new business arrangement around the resale of the GoVerifyID products.

After this is completed which we expect to be shortly, we will reengage in active sales in the market Last spring, we signed a binding agreement with Kuwait-based Agility to create a joint venture company based in Kuwait, which would sell IWS products suite throughout the Middle East and other countries such as India, where Agility has existing customers under contract. Agility has approximately $5 billion in annual revenue, employees over 20,000 people globally and is a leader in the supply chain management space.

We continue to work with Agility to closeout the paper work of our JV and move into the sales and marketing phase of our partnership. Moving to Extenua, we partnered with them early this integrate our GoVerifyID solution with a cloud to drive product to help enterprises, both large and small, face security challenges posed with cloud storage.

Extenua will report to us as they have signed several new customers for our joint product and we are waiting for them to move to implementation, which in turn will trigger revenue to IWS. In Germany, we have entered into the technical implementation phase of our work on the German Healthcare project.

That is the part of the project just by the formal launch we ensure that the product we are supplying is sync with hardware and other software products being supplied by others in the project. And finally, two last important items.

In the last week were awarded three patents to bring our total patent count to 19. The first patent is one of three patents that will protect ImageWare's innovative ability, store and recall biometrics for identity verification and identification across a number of used cases which allows for anonymous storage of biometric.

The second patent we've received relates to our real time biometric data management and from it being copied or integrated into existing structure, queried language database product. And the third product protects our ability to compare multiple modalities in the single biometric search process.

The awards of these patents provide further testimony to our innovative leadership and we're confident that we'll be receiving additional patent awards in the future. Finally I am very pleased to announce that Dana Kammersgard will join our Board of Directors.

Dana is currently Executive Vice President of Seagate, a global leader in data storage solution. Prior to Seagate, Dana led Dot Hill Systems Corporation from a small private company to a leading data storage player and played a significant role in the sale of that company to Seagate, last October for $694 million.

Dana's experience and wisdom will be an invaluable asset to our management team as we take ImageWare to the next level in the biometric industry. Before delivering any other closing remarks, I'd like to open the floor up for your questions.

Hey, Jim.

Hi. Harvey.

Congratulations, great duo [ph], almost eliminates the need for my question, but I figured I would ask it anyway. I understand that the companies, these mega companies as ImageWare has been partnering with typically take much longer than any of us previously imagine, would comes in the market, but my concern and again is well, kind of me -- this less of a concern, but do you think that the slowness and coming to revenues or getting revenues is just that or do you view these companies has some concern or issues with the technology?

It’s a great, actually Harvey. It’s got a couple of parts.

Thank for asking it. Well look, first and foremost I don't think there's any doubt and we've all seen it in some of this flip through it that we were really a very early foundational pioneer in this space, pretty early to the market.

And as a pioneer as the same goes you take a lot of arrows and no doubt that's happened along the trail. But we are now emerging from that long trail to different kind of biometric industries and the kind we went into.

And I think that was really the impedance for taking a look at the product, taking a look at how the market receive them, taking a look at the partner program. And as you rightly point out, lot of the big partners are wonderful, they are terrific and we wouldn't trade any of them.

But they deal in large numbers. And you've got the bulk of the workforce in the enterprise space that are smaller numbers, so in order to put a product on the street that address that marketplace and address the fact that 50% to 60% of the U.S.

workforce logs in with a smart device or smartphone and there is virtually no security around that. We wanted to provide a very easy to use service where you can pick the biometrics of your choice using our patent biometric engine in our GoVerifyID application which was still precisely for this.

And to allow people to page or go, get the scale when they need the scale, get ride of the upfront cost, make integration literally a couple of hours or not more than a day and get them to place where they can enhance the security, enhance the login experience and get us to a place where we can sell product and book revenue. And that's precisely what we've done with TransUnion and AWS today.

So I think this is a – this new product launch is responsive to that. It also allows people to as we've looked at the sales process when you pitch a large account if its large enough you go into the intricacies of a big corporation.

There is a budget, was the budget allocated such that you could make expenditure this year, this quarter on biometric and if not in some large companies the sale has to held off until the budget money is available. As pressing as a security need is we found that to be the case in a number of situations.

So rather than delay and wait, we move to put the product on the street that addresses that and I think this does this, so I think what will happen now is you're dealing instead of authorizing large capital expenses you're dealing in smaller operating expenses, these are much easier to get approval. Frankly the market for this product is bigger because as I've said the bulk of the workforce in this country and in many countries around the world people commute into work or access their workplace via smart or mobile devices.

And so I think you're going to see that the transition truly now into a very dynamic workplace, and a very in a market that has a lot of activity in it and I think this product will stimulate a lot of that in favor of us.

Okay. Thanks.

Yes. Thank you very much.

Jim, can you talk a little bit more about FEMSA, about the opportunity, is it a – I don't quite – I guess the test, you have to do a validation if everything works well, but then if it does work well, what's the opportunity for us there?

Well, thanks Bob for the question, and so it too is a good one. Look, we are offering our products as a service.

In a service model I would respectfully suggest you that every month is effectively a test to the pilot. By that I mean you're selling a product that can be used by the user on a month-to-month basis.

They're paying you for what they use, if they elect to decrease or end their use, that's that. So these distinctions that we've seen traditional about pilots and tests, this is production software.

It is going into the FEMSA headquarters. It starts on Monday enrolling folks and generating revenue, and couldn't be happier because FEMSA as I said in the remarks it has several 100,000 employees.

They are looking at this for use in a larger rollout and how it works with their existing access control systems and different processes and procedures that they have in place. So this is a very normal step on the path to making a larger purchase and a larger increasing the use of the product.

As I said FEMSA is a giant of a company and they do a lot of business and they have a lot of employees they're not only in bottling of products but they have a number almost 7000 I believe retail stores that they operate in the country of Mexico, each one with many employees. So, for us it’s a tremendous partner to be starting down the road with.

And this is exactly what we build the product for, so we are very optimistic that this will roll through and see greater use as they get use to.

Okay. Thank you.

Just one more question if I may. The financial situations that you're in, as you said $1.1 million in cash that’s on your credit lines, are we still at the same place where you think this is going to be adequate for us to get to cash flow positive mode?

Okay. Thank you.

Just one more question if I may. The financial situations that you're in, as you said $1.1 million in cash that’s on your credit lines, are we still at the same place where you think this is going to be adequate for us to get to cash flow positive mode?

Yes. I do.

I think between the cash and the use of the line, yes, we will be exactly right there. I do.

Yes, we do.

So looking on cash flow positive before we run out of money, is the bottom line?

So looking on cash flow positive before we run out of money, is the bottom line?

Yes.

All right. Thank you.

All right. Thank you.

Hi, Jim. How are you?

Hey, Bob. Good.

Thanks.

Jim, would you do me a favor to drill down on the paths and the ones that we just received and the ones that we have, how protected are we in the United States talk about where we have Russian velocity and from a pad [ph] position we're more often on the defense and also the ones which you're hope from the field of biometrics what do we have an exclusive, so if you could address those questions?

Sure. I will try my best to cover that.

It's a big range, but thanks for the question. First of all, we as I've said, we will restate our commitment to patents and creating the technology and getting credit forth in the form of the patent.

We continue to believe that these will at time in place where we either commercialized the patent in the form of a license or where ImageWare see us to be independent company that this provide value in both of those cases going forward and we think it will be large value, so we will continue to file for patents. And as I've said in my remarks we are confident that we will see patent issued in the very near term and beyond.

We have 19 Total today. We have another 14 in our pipeline pending.

We have been as I've said very prolific and we'll continue to be that. The bulk of the patents surrounds are real time, high performance data matching engine which is a product that you know as the biometric engine that has the bulk of the patent protection around it.

It is truly what separates us from other companies in the field who really have Middleware. They don't have their own separate database matching.

They don't scale. They don't do real time matching as you know our belief in the biometric industry has been that if biometrics are to become consumer used which they are in the process of in front of our very eye, you need real time and real time means in a second matching and we get that performance out of the biometric engine.

What you saw granted this week specifically are a couple of patents, couple of them what I will call to use your characterization, I think is a good one, offensive, extending the reach of the biometric engine, no surprise as any software company needs to do, we do it. Our R&D group is constantly making a good product even better.

As they innovate, they extend the reach of the already existing patents to cover new features and new ways of doing thing that the world hasn't followed before. Sometimes however we take a look back and we say, well, how can people perhaps get around the patent protection or somehow manoeuvre into a place where they could make a competitive product, not using the patent and therefore we sometimes get defensive.

One of these is really that, taking a look at sort of what I'll call normal regular text to number databases and filing a patent to ensure that those databases stay in the field that are in today and that if they come into the biometric field there need to have to be conversation held with patent owner, in this case us. So that's in terms of international protection Bob, a number of these patents have been filed and with the protection of the international patent treaty, this is treaty the U.S.

has with the number countries around the world. Generally it's not true in every case, but generally we elect to cover 11 countries in Europe, Japan, Canada, some countries in Latin America and Australia and New Zealand with the technology.

We also had a couple of patents actually in China as well. But again, we pick and choose those not every patent get that broader coverage but these latest ones in this series do in fact have that coverage.

Thanks, Jim. One more quick question if I can, and I’ll give somebody else one chance to hop in.

Did you talk about in your answer scalability, so the best way knowledge if you are willing to answer it, what you and David feel when you talk about scalability, how scalable are we and to the best of your knowledge what’s the scalability in a number of those competitors?

I don’t think anybody scales as well as the ImageWare product does. We built this to scale initially into the hundreds of millions well before as we all know there are hundreds of millions of people to fill a database.

It’s a product that is out there and it's tried and through. It is already working in environments of tens of millions.

We have run scalability tests into the hundreds of millions on the product successfully, so we are very, very confident that it will scale up in the number of pilot tests that we are actively running today. It is scaling up beautifully as large users tested precisely for that.

I don’t think there’s a product out there that’s scaled as well as ImageWare does, and I say that principally because most of these folks took a middleware approach. They didn’t build the database that runs simultaneous biometrics side by side, but they are literally a traffic cop tapping into the databases of the individual algorithms.

It’s a way less sufficient way of processing and that additional layer means time. And it times your enemy when you have 100 million people trying to get into the bank accounts all at the same hour.

You need something that is going to respond to those queries as they hit and that’s the product we built, we're proud of that and we’ll stand it up against anybody.

Terrific. Okay.

And I will hop off. Thanks, Jim.

Thanks Angela. In closing, we believe we have the right products in a burgeoning industry that’s now forecasted to reach over 34 billion by 2022, I've cited, just excited just published [Indiscernible] Research Report released earlier this week.

In 2015, more than half a billion new mobile devices came online totaling almost 8 billion globally. Mobile devices can be stolen and passwords hacked easily.

We see it every day, so it’s no wonder identity fastest skyrocketing. Passwords are not secure, they are not in expensive and they are not necessarily easy to use.

63% of all confirmed data breaches in 2015 involved weak or deficient or stolen password. According to a recent study from Infotech, password reset cost an astounding $118 per year per customer in terms of helpdesk staff time dedicated to the effort.

The good news is with ImageWare's new authentication service you can simplify your user's login experience while enhancing your IT security without a complicated integration process or huge upfront cost. So you can see why we remain confident and our clear strategy that will allow us to break into the commercial market with enterprises of all sizes, especially those small and medium sized companies that haven’t had the ability to enter into agreements for such a security product due to lack of scale.

Said very simply, our products are now enterprise ready for small or large enterprise users in either public or private sectors. It’s difficult for investors to be patient and believe me we get it, difficult for us to, but make no mistake we are in the right place, we are in the right time and we have the right products.

And as we watch the biometric move and unfold before our eyes at last to greater adoption in the private sector. We believe that 2016 will be a great year for ImageWare.

As always we’d like to thank everyone for joining today. We appreciate your time and your ongoing support and we look forward to speaking to you along the way and when we report our second quarter results in August.

And thank you all again for your time and wish you a good afternoon, good evening.