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<SEC-DOCUMENT>0000897069-06-002443.txt : 20061120
<SEC-HEADER>0000897069-06-002443.hdr.sgml : 20061120
<ACCEPTANCE-DATETIME>20061120161218
ACCESSION NUMBER:		0000897069-06-002443
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20061116
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20061120
DATE AS OF CHANGE:		20061120

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			WIDEPOINT CORP
		CENTRAL INDEX KEY:			0001034760
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				522040275
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-33035
		FILM NUMBER:		061230036

	BUSINESS ADDRESS:	
		STREET 1:		ONE LINCOLN CENTER
		CITY:			OAKBROOK TERRACE
		STATE:			IL
		ZIP:			60181
		BUSINESS PHONE:		630-629-0003

	MAIL ADDRESS:	
		STREET 1:		ONE LINCOLN CENTER
		CITY:			OAKBROOK TERRACE
		STATE:			IL
		ZIP:			60181

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ZMAX CORP
		DATE OF NAME CHANGE:	19970530
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>dbk253.htm
<DESCRIPTION>CURRENT REPORT
<TEXT>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>UNITED STATES<BR>SECURITIES
AND EXCHANGE COMMISSION<BR>WASHINGTON, D.C. 20549 </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM 8-K </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CURRENT REPORT<BR>Pursuant to Section 13
or 15(d) of the<BR>Securities Exchange Act of 1934  </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date of Report (Date
of earliest event reported): November 16, 2006 </FONT></H1>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>WIDEPOINT
CORPORATION</B><BR>(Exact Name of Registrant as Specified in Charter)  </FONT></P>




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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH></TR>
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     <TD WIDTH=33% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Delaware</B></FONT></TD>
     <TD WIDTH=33% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>000-23967</B></FONT></TD>
     <TD WIDTH=34% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>52-2040275</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(State or Other Jurisdiction of</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Commission File Number)</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(I.R.S. Employer</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Incorporation)</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Identification No.)</FONT></TD></TR>
</TABLE>
<BR>




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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
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     <TD WIDTH=66% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>One Lincoln Centre, Oakbrook Terrace, Illinois</B></FONT></TD>
     <TD WIDTH=34% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>60181</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Address of Principal Executive Office)</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Zip Code)</FONT></TD></TR>
</TABLE>
<BR>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Registrant&#146;s
telephone number, including area code: <B>(630) 629-0003</B> </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Check the appropriate box below if
the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[_]&nbsp;&nbsp;
          Written communications pursuant to Rule 425 under the Securities Act (17 CFR
          230.425) </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[_]&nbsp;&nbsp;
          Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
          240.14a-12) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[_]&nbsp;&nbsp;
          Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
          (17 CFR 240.14d-2(b)) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[_]&nbsp;&nbsp;
          Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
          (17 CFR 240.13e-4(c)) </FONT></P>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 8.01 Other Events. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attached
is a transcript of the previously announced public conference call of WidePoint
Corporation (the &#147;Company&#148;) at which the Company&#146;s management discussed the
financial results of the quarter ended September 30, 2006 and related matters. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 9.01 Financial
Statements and Exhibits. </FONT></H1>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)&nbsp;&nbsp;&nbsp;&nbsp;
          Exhibits. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following exhibit is furnished
herewith: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibit
99.1 Transcript of the Registrant&#146;s public conference call held on November 16, 2006. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized. </FONT></P>


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     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WIDEPOINT CORPORATION</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR><U>/s/ James T. McCubbin</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: November 17, 2006</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>James T. McCubbin</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vice President and Chief Financial Officer</FONT></TD></TR>
</TABLE>
<BR>



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<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>dbk253a.htm
<DESCRIPTION>TRANSCRIPT
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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WidePoint Corporation<BR>Third
Quarter 2006 Earnings Conference Call<BR>November 16, 2006 </FONT></H1>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Good afternoon. My
name is Henry and I&#146;ll be your conference operator today. At this time, I&#146;d like
to welcome everyone to the WidePoint Corporation Third Quarter Earnings Conference Call.
All lines have been placed on mute to prevent any background noise. After the
speakers&#146; remarks there&#146;ll be a question and answer period. If you would like to
pose a question during this time, please press star, then the number one on your telephone
keypad. If you&#146;d like to withdraw your question, press the pound key. Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is now my pleasure  to turn the floor over to your host,  Mr.  Cale  Smith.  Sir,  you
may begin your conference. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Cale Smith:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you
operator. Good afternoon, this is Cale Smith of Hawk Associates. Welcome to the WidePoint
Third Quarter Conference Call. On the phone today are Steve Komar, CEO of WidePoint, Jim
McCubbin, the company&#146;s Chief Financial Officer, and Dan Turissini, WidePoint&#146;s
Chief Technology Officer and CEO of subsidiary ORC. I would like to begin by reading the
company&#146;s safe harbor statement, and then you will hear from Steve, Jim and Dan
before they take your questions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
afternoon&#146;s discussion contains forward-looking statements that involve known and
unknown risks, uncertainties, or other factors not under the company&#146;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&#146;s periodic filings with the Securities and Exchange Commission. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Now
here&#146;s Steve with his opening remarks. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you Cale,
and good afternoon to everyone. Again, I&#146;d like to welcome you to WidePoint&#146;s
Third Quarter investor call, and as always to thank you for your time, commitment and
continued support both of the management and WidePoint&#146;s business mission. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
you know, Jim McCubbin and Dan Turissini are on the call, and will be addressing comments
following my opening comments. And I&#146;d just like to mention that Mark Mirabelle, Mark
runs our commercial business sector out of our Chicago offices, was planning on joining
today but unfortunately cannot. That&#146;s the bad news. The good news is that it&#146;s
because he&#146;s engaged in some fairly intense discussions and negotiations for what may
turn out to be some real good news for our commercial sector. Let&#146;s hope that&#146;s
the case, and good luck Mark. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I&#146;ll
limit my comments to the general overview and highlights. Obviously Jim and Dan will, in
their sections will expand on that, for that expanded detail and analysis for their
respective areas of expertise and responsibility. Again, my comments, from the financial
perspective, I&#146;d like to just focus on a couple of points. Specifically, our PKI
credentialing and our managed services segments experienced revenue growth in both the
third quarter and the year to date period versus prior, versus prior period comparisons.
That is a good sign for us moving forward and we expect that obviously to aggressively
grow as we move through the next two quarters. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of
somewhat equal importance are that our cash-flows and our liquidity continue to strengthen
and increase, and that allows us the flexibility to respond to opportunities as they arise
going forward. Candidly, our revenues haven&#146;t yet felt, through the third quarter,
the full benefit of our HSPD-12 activities. However, on another account, early indicators,
we are seeing already that our operating margins are increasing substantially as expected,
and that our operating losses have been dramatically reduced. Jim, in his fantastic style,
will provide a lot more detail and analysis on that in his section, but I just wanted to
mention that up front. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From
a business perspective, I&#146;d like to focus for a minute and emphasize the six contract
wins to date that we&#146;ve experienced. The reason that I&#146;d like to do that is
because in the real world, those are the contracts that are generating business and
revenues in that sector today. And to date, WidePoint and ORC have reaped the quote,
unquote &#147;lion&#146;s share&#148; of real year to date revenues emanating from that
sector. We feel that position does very well looking into the future. As a footnote I will
also mention that we are experiencing ongoing hectic contracting activity in the course of
the fourth quarter. And that has would be both from individual agencies and from the GSA
and from other Federal agencies. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
another perspective, we are continuing to invest aggressively in both our sales and
marketing resources, and in building and strengthening our alliances. We feel that these
two activities are critical to our success in maximizing our opportunities. Indicative of
those alliances today are RSA Security, Siemens and Tumbleweed Communications just as
examples, and kind of segueing that into another point, I&#146;d like to make mention of
the recently awarded contract, the GSA MVTS contract. This contract hasn&#146;t drawn much
attention, but ORC is the prime contractor, the winning awarded servicer. We are working
in concert with RSA and Tumbleweed as partners, and just to go back &#151; MVTS in
gov-speak &#151; that means management validation/translation support services. What this
contract award does in our view is that it confirms ORC&#146;s credibility with the
government as a critical back-end service provider on a GSA-sponsored, multi-year,
multiple agency umbrella contract. We have high hopes for the opportunity that will come
to us from this contract. It involves two revenue streams, one in application development
and integration and a second year in multi, multi-year high volume transaction processing.
I know that Dan is planning to give you a little more flavor on this contracted
opportunity and the impact on ORC. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summarizing
then, I&#146;d like to assure you that the management is quite excited and optimistic
about the outlook, both for the coming months, as in now, and for the coming quarters.
HSPD-12 is real. Its roll-out continues to accelerate. We expect the implementation phase,
full roll-out call it, to take place over the next two years, followed by several
additional more years at least of recurring, of recurring annuity-based revenue streams. I
can tell you in a little bit more of a near term snapshot that management expects
meaningful improvement in revenues and operating income in the fourth quarter and
substantial growth, incremental growth, in 2007 and beyond. Today, I&#146;ll tell you that
we are confident that we are building a robust growing business enterprise for the benefit
of our shareholders. Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Now
I&#146;d like to pass this on to Jim McCubbin who will discuss the state of the business
from a financial viewpoint, and as mentioned earlier, after that Dan Turissini will chat
with you and we will then open the floor for questions. So thank you all, and Jim, if
you&#146;d take it. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hello everyone,
I&#146;m going to keep this financial review brief as most of everybody&#146;s interest is
on what Dan probably has to tell us in the form of some of the PKI business. But with
that, as a financial review, I want to tell you that the third quarter was very
productive, and that it does appear that the market is poised to provide us with the
opportunity to continue to be even more productive in the fourth quarter of 2006. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
the financial front, the quarter ran materially to plan with a few exceptions related to
deferred revenue and timing issues related to revenue recognition. Our total revenues
increased by approximately $1.5 million from $9.2 million for the nine months ended
September 30<SUP>th</SUP>, 2005, to $10.7 million for the nine months ended September
30<SUP>th</SUP>, 2006. Our total revenues for the quarter ended September 30<SUP>th</SUP>,
2006, however, decreased by approximately by $0.4 million from $3.6 million for the
quarter ended September 30<SUP>th</SUP>, 2005 to $3.2 million for the quarter ended
September 30<SUP>th</SUP>, 2006. This decrease was a result of a modification of
extensions of a customer agreement that allows for the deferrals of revenues of
approximately $0.5 million in certificate sales to be extended through August of 2007, and
also did not recognize approximately $0.5 million in sales that were contractually sold on
or about September 29th but not received fully by the customers, company&#146;s customers
until the fourth quarter of 2006. What this really meant to us is our revenues, on the
face of it, fell by $0.5 million but in reality what happened is we entered into a
deferment of a contract so we could continue to win more work under that contract and
defer some revenue that we had sitting on the books into future periods because of that,
and we also just could not ship and deliver something that was sold quick enough, and we
had a one day swing where we couldn&#146;t recognize that revenue. So factoring in those
events, our revenue streams on a pro forma basis were actually higher in the third quarter
of 2006 by approximately $0.5 million without the wins that we witnessed in September
through November this year. So, if we add the wins that we&#146;ve also published from
September through November of this year so far we are exceptionally positioned for a nice
meaningful fourth quarter of continued growth and operational profitability. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So
going further and reviewing the growth-generating segment of our business, which is our
PKI business, I do want to address that segment specifically. For the nine months ended
September 31<SUP>st</SUP>, 2006, our PKI credentialing and managed services segment
experienced revenue growth of approximately 98% with revenues increasing approximately
$331,000 from approximately $338,000 for the nine months ended September 30<SUP>th</SUP>,
2005, to approximately $669,000 for the nine months ended September 30<SUP>th</SUP>, 2006.
As I stated earlier, this growth was primarily the result of continuing early adoption
from the ECA program. As we add the HSPD-12 mandate, we believe that growth will expand in
a meaningful way, commencing in the fourth quarter. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the analysts in the crowd, here are some metrics. We sold 7,605 certificates for the nine
months ended September 30<SUP>th</SUP>, 2006, as compared to 2,976 certificates for the
nine months ended September 30<SUP>th</SUP>, 2005. Our average price point was $88 for the
nine months, as compared to approximately to $113 for the nine months ending for the
comparable period. For the quarter ended September 30<SUP>th</SUP>, 2006, our PKI
credentialing and managed services segment experienced revenue growth of approximately 83%
with revenues increasing approximately $110,000 from approximately $134,000 for the
quarter ended September 30<SUP>th</SUP>, 2005 to approximately $245,000 for the quarter
ended September 30<SUP>th</SUP>, 2006. We sold 2,380 certificates for the three months
ended September 30<SUP>th</SUP>, 2006 as compared to 1,074 certificates for the three
months ended in the comparable period. Our average price was $103 in this period, as
compared to $125 in the prior period. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
feel as this program ramps up meaningfully, this average price point will fall somewhat,
but right now our pricing points range on our schedules still from approximately $27.50 to
$150 per user, and we&#146;re realizing on the early adopter still high dollar price
points per user. Again, we anticipate that certificate sales should continue to increase
as we fulfill recent contract wins and we witness the continued early adoption of the
external certificate authority, and the HSPD-12 program. Dan is going to provide further
profile and review of this business segment, so I&#146;m going to leave the expansion of
the PKI discussion with him. So, in a financial review, it&#146;s important to note that
just from the early adopters, our price points have held strong and on our contract wins,
we feel that even though these price points will fall in the future, that the demand
function and what we&#146;re going to be selling and realizing commencing in the fourth
quarter will be meaningful and will add a lot to our cost to goods sold, so our gross
profitability. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Another
meaningful conversation and review I want to have with everybody is what is a better
barometer of our financial performance within the quarter. On our P&amp;L, even prior to
any material launch within our PKI segment, we realized net cash provided by operating
activities of approximately $188,000. Adding in the net cash provided by investment
activity, that number improves by another $155,000 to realize approximately $323,000 in
increase in cash from the end of our second quarter. As all of you know, we&#146;ve been
managing the business around a neutral cash flow, and what we have done is exceeded that
threshold in what we&#146;ve done with cash. Now that hasn&#146;t been completely
represented on the P&amp;L, but on our statement of changes in cash flow, we&#146;re very
proud on how we&#146;ve managed it, and we did end the quarter with $2.6 million in cash.
There has not been degradation in cash or working capital, there&#146;s actually been
improvements. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Looking
at the P&amp;L a little bit further, I&#146;d also like to bring your attention to the
fact that cost of sales has in fact improved for the quarter, from 73% of revenues &#151;
to 73% percent of revenues from 90% of revenues. We anticipate that to improve even more
dramatically in the future as we roll-out the segments. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
regards to our sales and marketing expenses, in the quarter we did see sales and marketing
expenses go up by approximately $111,000. That was directly related to all the PKI
proposal writing and activity that we had to do. It was a big investment that we made, but
we felt it was worthwhile, and we&#146;re seeing the results of how it was worthwhile with
our wins, and hopefully continued wins in that area. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
G&amp;A actually showed an increase this quarter, but what we have to address here is
whether that G&amp;A increase is really a correct measure quarter to quarter, and I&#146;d
like to bring your attention to the fact that really it was not. We had two events that
were not on the comparison basis actually measurable. One, we had $112,000 in stock option
expense, and we had $65,000 in one-time non recurring expenses associated with listing the
company&#146;s common stock. Backing-out those events on an adjusted EBITDA basis, the
company on a P&amp;L basis of $3.2 million actually made $51,000. That also then goes to
show how we&#146;ve also improved our cash business on our statement of changes and cash
flow. So while some of the people looked at our quarter financials, from questions
I&#146;ve had, and questioned how we were doing, on the face of it, those questions were
real, but looking into the analysis of how we really did, our performance was much greater
and in line with how we&#146;ve been growing and managing the business. This has
positioned us going into the fourth quarter in a very, very strong position where we can
add this base business, the deferred revenues and the new contract wins to fully show and
continue to show, you know, meaningful revenue growth as well as operating profitability.
So, with that, I think we&#146;re positioned well to end 2006 and enter 2007 in a strong
financial way. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
that, Steve, that&#146;s the high-level profile and review of the company&#146;s
financials. I know Dan&#146;s going to step into the PKI segment a little bit more in
detail. So, that&#146;s back to you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thanks Jim, I
appreciate it. Some good metrics there, and my guess is there just might be a question or
two about them. But before we do that, let&#146;s move on to Dan, if you&#146;d be good
enough to take the baton, and give a little expansion in regard to activities. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Sure, thank you
very much. Thank you all for joining us this afternoon. It&#146;s been an exciting
quarter, and an exhausting quarter for a lot of the folks over here that have been working
hard at the ORC segment of the company. In addition to the wins that have been announced
and that have been in the announcement, we&#146;ve also picked-up two corporate agreements
for external certificate authorities, and have seen a marked improvement in the
understanding and the need in the ECA world, and are looking forward to closing-out this
quarter and looking at a very, a very good first quarter next year on that front.
We&#146;ve also picked-up, on the DOD side, two pretty substantial tasks to do
PKI-enabling, that is the getting the applications ready to accept these certificates and
credentials, and as you know, as we make the universe of applications increase so does the
universe of users and the need to use those credentials increase. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
did win five, or we&#146;re on the team of five of the awards for HSPD-12, out of the six
that we know of that were awarded towards full implementation. In other words, these are
contracts that were actually awarded with funding to proceed for the first two years of
the program to outfit the agencies for those two years with options to operate and
maintain those agencies in the out years. Those awards came in the last, since August, and
represent roughly 60 to 65% of the funded awards for users procured to date under HSPD-12.
By my count right now there&#146;s approximately 90,000 to 100,000 users that have been
fully procured. Of that we have been on the winning team for 65,000 to 70,000 of those. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Now
let me talk a little bit about users. We had some discussions with Jim about expectations
and how we&#146;re counting and how metrics are being done. He touched a little bit on it
and so did the Roth Report that I&#146;m sure a lot of you have looked at. When we first
started talking about this environment, we talked about users and what a user needs to
proceed in this digital environment. We use the term user and certificate synonymously,
but what we&#146;re trying to relay was the certificate suite, all users in this federal
environment need multiple certificates. If you look at HSPD-12, they have what&#146;s
called an authentication certificate, they have what&#146;s called a card authentication
certificate, they have an identity non-repudiation certificate, and then they have an
encryption certificate. So when you see discussion about price per certificate versus
price per user, these are the differences we are going to be seeing. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;What
we have always quoted is an enterprise license capability that would be a user
environment. The
environment has looked at and is currently procuring in pieces, so it has been separated.
When Jim talks about the $27.50 certificate, that&#146;s a single-use certificate and
that gets a minimum requirement out for these agencies early on, but over the two year
period, it will be upgrades and requirements for the multiple certificates to fully
populate the card. What&#146;s important to that is the application and as some of you
have already researched, I know some of you talked to me about this, certainly on a DOD
side, there&#146;s been in this PKI environment, a chicken and egg environment where in
DOD we went out and we deployed five million plus credentials on smart cards.
Unfortunately, we were all dressed up in our tuxedos and had no party to go to because
there were very few applications that knew what to do with these certificates.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
significance that Steve alluded to on this new MVTS program that we just won, is that we
are part of now and are the preferred sponsored team by GSA to provide these applications
with the wherewithal they need to a) authenticate these credentials, and that&#146;s the
part that allows them to read and understand what these credentials are, but most
importantly to validate the validity of these credentials. And this is across the entire
federal community, so that regardless of the certificate you hit the application with, you
need to validate whether that certificate has been revoked or not, and this is the annuity
or the recurring part of this contract that Steve talked about. On the up front part of
this, which is, it&#146;s a three year contract to do the enabling of individual
applications, this is what we&#146;re actually doing. And we talked about, a little bit
about this early on in our presentations. We&#146;re actually going to be providing
certificates to the applications themselves. It&#146;s not enough that we know who the
individuals are, we have to also make sure that we can prove to the individuals that the
electronic resource that they&#146;re hitting, the application they&#146;re hitting
actually belongs to the agency or group that they&#146;re looking to hit and not
Joe&#146;s Garage, sending up some spoofed application. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So
we&#146;ve talked a little bit about, in the past about the potential of that environment,
and we think that it&#146;s a healthy environment that will come close to matching the
individual environment. So the significance of this MVTS award, along with the agencies
that we&#146;ve picked up so far, has been what I think is a very important milestone in
moving HSPD-12, but more than that, HSPD-12 and the rest of the federal PKI into full
operational implementation. And that, coming with that, we&#146;ve also finished testing
with a couple of states who have already adopted the federal PKI now as their way to do
business internally within the state and now with the federal government. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have also completed a pilot with the health industry where they are now moving sensitive
personal data in a small environment right now, but across the country relative to HIPAA
environmental requirements. So we&#146;re seeing adoption not only in the mandated
requirements, but the requirement that we really feel is the killer app and that is
getting everybody state wide and individuals not only dealing intra-state, but
intra-government, and moving down that path. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;And
then finally, we have also increased our presence with one of our law-enforcement
agencies, and are upgrading their current capabilities with us to a mobile environment in
which we&#146;re deploying these credentials on mobile devices such as your Palm and your
Blackberry, and this is to effect the capability for first responders if you will, the law
enforcement people in states and local municipalities to be able to enter into the federal
law enforcement databases through their Palm or Blackberry devices. So I&#146;m happy to
say that the last three months have been very beneficial to the company, and also have
changed our posture from doing a lot of planning and proposaling to right now we are
spending as much time in the implementation and deployment arena, which is very exciting.
We&#146;re seeing a lot of activity and a lot of increase in activity. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;What&#146;s
coming next? As you know we, while this has all happened, we have crossed into a new
government fiscal year, so what has happened, has happened mostly all before October, I
mean, yeah, October first of this year. We are still in a continuing resolution. Everybody
doesn&#146;t have their money yet, but we are negotiating with quite a number of agencies
still on the HSPD-12 front, and we expect that once OMB releases funds and money can start
flowing again, you will start seeing additional awards. Likewise, as you may imagine,
we&#146;ve just gone through an interesting morph in the government itself. So there are
some things going on up on, up at the hill that we have no control of, but we have already
had conversations with those people that are taking over some of the seats in the new
Congress, the areas where we are most involved with, and we are looking forward to not
only continuation of the security posture in the government, but more than likely an
enhanced security posture based on the changes and the people that we&#146;ve talked to. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So
we&#146;re very excited that things have finally got, have gotten off the top dead center.
We would have hoped that this would have started earlier in the summer. The timing was a
little off because of the turn of the fiscal year, but now we are really in full swing,
and we believe that the government is really moving towards meeting their next major
milestone which is full implementation within two years after the October 27 deadline. And
again I would like to emphasize that part of the proof of that is this MVTS contract. We
have been bidding, not bidding, we&#146;ve been working to get this as a requirement in
the GSA arena for a number of years now. Trying to help with our lessons learned and what
we&#146;ve dealt with with the DOD, and moving this forward to make sure that we
don&#146;t have a program that is setting out a bunch of cards that are not going to be
fully utilized. So, we&#146;re very happy that this is moving forward, and I&#146;ll look
forward to your questions. Steve. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you Dan, I
appreciate that. That was a really good perspective. We&#146;d probably at this point like
to open up it to questions. Cale, I don&#146;t know, are there some mechanics that need to
occur? Okay going to plan B then. Henry, are you there? </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you. At this
time, I would like to remind everyone, if you would like to pose a question, please press
star, then the number one on your telephone keypad. We&#146;ll pause for a few moments to
compile the Q and A roster. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thank
you, the first question is coming from Jeff Miller of JMG Capital. Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jeff Miller:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thanks.  Hi guys. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hello. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jeff Miller</B>:&nbsp;&nbsp;&nbsp;&nbsp; I have left
several messages for both Steve and Jim, and no one&#146;s been getting back to me for the
past, I guess about a month, so I&#146;d appreciate in the future, if someone in the
company could return, you know, a major investor&#146;s calls going forward. I know the
quarter was busy, but I had one question I&#146;ve been trying to get answered this whole
time, and that is all the contracts you guys are announcing, can you give some additional
color as to average price, number of terminals being used so we can kind of put a dollar
amount of what these contracts are worth going forward? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well first, first
Jeff, let me apologize for that. We will spiff up our act and make sure that we&#146;re a
little more responsive in the future; you have my apologies for that. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jeff Miller:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; And I
think as  regards  pricing,  Jim,  I don't  know if you want
to take  that or is that  better addressed by Dan? </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Dan, can
you address it... </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; I think what
Jeff&#146;s looking for is some kind of pricing model point, and I think maybe Dan can
take a shot at that, but we do need to be very competitively concerned about this, so Dan,
whatever you can deal with on this. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well, what I
can say is that there is no indication yet that there is any strong price reduction from a
user perspective. We have split up some of the project, as you know. MVTS is a good
example, whereas when we originally spoke about the cost to credential somebody, we were
talking in the $100 range, and that&#146;s full service, that&#146;s all the credentials
you need, the full validation suite, everything like that. Now they&#146;re breaking some
things up; some agencies are saying well I just need, I just need to buy the certificate,
one certificate today, and then I need, one per person, and then I need the validation in
six months, and going on. We&#146;re still saying across the whole federal community, and
that&#146;s the AC, the ECA, and the shared service provider, fell an average in the $65
to $85 range. And that&#146;s what we&#146;ve been maintaining, and everything&#146;s been
in that venue and you know, we&#146;re winning, so cost doesn&#146;t seem to be a terrible
driver in what we&#146;re proposing. It seems to be in line with what we&#146;ve been
estimating and how it&#146;s going forward. Of course, we haven&#146;t seen the million,
the million order yet, so, but I don&#146;t know that that&#146;s going to come right
away. I think that they&#146;re looking scaling this. There are some significant concerns
with queuing people, and they&#146;re going to take this a little bit at a time. So I
think they&#146;re going to pay a premium today to not buy something they&#146;re not
going to use right away. And will it settle out, yes I think it will settle out, but I
think we&#146;re going to stay in that $50 to $70 range. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jeff Miller:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay, so then if
you have an average price, you said, of $88 per user in Q3, is that just from some of the
legacy then contracts, and going forward it&#146;s going to come down to that range of $65
to $85, or eventually $50 to $70? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right now, with
what we have, we should continue issuing and recognizing the recognition at the $65 to $85
average. That&#146;s based on everything we&#146;ve won so far, going forward, and we
recognize, mostly based on issuing. So that&#146;s what we&#146;re seeing right now. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jeff Miller:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay, and can you
give me some sort of, I know you have to be careful about what you disclose for
competition reasons, but you know, the size of some of these orders, you know for ECA, are
those, is that like 18,000 terminals, 20,000, you know? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Between, what I
can tell you is between the five agencies that we have, we&#146;re between 65,000 and
70,000 users, with terminals or seats, whatever you want to call it. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jeff Miller:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay, great.  All
right, thank you very much. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; You&#146;re welcome. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you Jeff. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp;  Thank you.  Your
next question is coming from James Clamage of
CRT Capital Group.  Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Mazur:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hi, this is Steve
Mazur calling for Jim. Just a question regarding the, Dan, maybe this one&#146;s for you.
The MVTS contract, it&#146;s got two parts to it. It&#146;s got the annuity part, the
monthly validation per transaction, and then the software enabling. I&#146;m just
wondering if you could help us out and give us an idea of maybe you can quantify the per
transaction part of the contract, and give us a flavor for what ORC can be generating from
that. The second part is on the software enabling. I&#146;m wondering if you, whether you
can give us a feeling for what something like that would cost the government, maybe in a
random sampling of what&#146;s up to what you might charge for an application. And a third
part to a separate question is, I&#146;m sure that you have, you know, a lot of RFPs out
there, and I was wondering if you could quantify the total, or give us a flavor for how
many potential subscribers or users are basically represented in the RFPs that you have
out there, that you&#146;re kind of waiting for a response to? Thanks. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; So, on the
MVTS, two pieces. One is the transactional, and it&#146;s not per transaction. We&#146;ve
actually negotiated a tier capability, so the first tier is zero to 100,000 transactions
per month, and that&#146;s at a fixed price, at a little over $10,000 per month. Each tier
above that increases in the guaranteed amount, so once they go over the 100,000 per month
then we go to the next tier, and the tiers have been negotiated up to a million
transactions per month. At the million transactions, up to a million transactions per
month, the revenue is approximately $65,000 per month. From, and then beyond $1 million,
we&#146;d have to separately negotiate that. We have options to negotiate beyond that. As
far as, and that&#146;s one part of the annuity model for this. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
other part is there&#146;s a buy-in piece. In other words there&#146;s a set-up cost which
includes the software and the integration and the set-up. That is per application,
$45,000, and that includes the certificate that you would get, and the software you would
get to upgrade your application and the onsite configuration. We&#146;ll come in and
we&#146;ll set it up for you. And then the annual licensing of that is $10,000 per year.
So every year, just to be in the transaction capability, there&#146;s a $10,000 per
application cost. And then we also put together a fixed change request. So if they want an
upgrade or something changed or something unique, there&#146;s a $5,000 per change request.
So we made this all in a fixed price increment. So this is all based on about seven years
of enabling applications for the DOD. So we have a good feel for how got to do this, and
what we got to do, and we made it so that it is appetizing for the application to come in
there, and basically for a little, a little investment, you can have access to the five
million plus credentials that are already out there, and start taking advantage of that
capability. And the validation schema is government-wide, so that there&#146;s an economy
of scale. The pricing is to the government, to GSA, and collectively as you get more
applications and more agencies on board, of course the transactions go up, and our annuity
goes up. However, the finite cost per application does go down. So there&#146;s a win/win
situation for the applications as well as us. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;And
the third question Steve, can you re... </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Mazur:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yeah, Dan, just
going back to that one there, how many applications, you mentioned a dollar amount of like
$45,000 per something. How many applications or programs do you think that this would
apply to, you know, over the next several years? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yeah, we
already have a number that have signed up. I&#146;m not at liberty to talk about that.
We&#146;ve talked about, we&#146;ve talked in the past, and I&#146;ve talked to many of
you about my feelings on the number of applications, servers that are out there, compared
to the number of people. There&#146;s a lot out there. Now the question is, making this
appealing enough for the applications to buy this service. And I think that&#146;s there.
And with HSPD-12, every agency has two concerns. One is to get these things deployed; the
second is to make them useful. And this helps to make this useful at a very attractive
cost, and in a lot of ways GSA is allowing them to cost-share this. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Mazur:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right. And the
third part, the third question was basically if you can give us a feeling for the total
amount of potential users you have out there; based on the number of RFPs you have out
there now. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right. Right
now there are quite a number of outstanding negotiations that currently amount to about
another half a million users. The bottom line is that all of the agencies have not decided
on how they&#146;re going to get to this two-year program. Some of them have signed-up for
this, I got one cert at GSA, and now I&#146;m going to decide what I&#146;m going to do
and they&#146;re going to go through the procurement process. But right now I calculate
about another half a million users that should be procured over the next two months. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Mazur:</B>&nbsp;&nbsp;&nbsp;&nbsp; Great.  Thanks. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you, Steve. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you.  Your
next  question  is coming  from Randy  Saluck
of Mortar  Rock  Capital.  Please go ahead. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hey guys. I have
a couple questions. So when you, in responding to Steve&#146;s questions, you said that
you expect half a million users to be procured in the next two months. Does that mean that
they will be users that you will convert, or provide certificates for over the next year? </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Not necessarily me.  If we
win, that would be my guess. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; I see, so
this is what is going to be awarded over the next two
months? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; That&#146;s  what we
believe.  Based on the  proposals  that we were
 involved  with,  it looks like the count is probably about half a million. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; And over
what period of time would all of those users... </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Over the
two year period that ends two years after October 27. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay.  Who
won the one contract that you didn&#146;t? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Verisign. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; It was just
announced yesterday, for the Department of Education. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Do they have
the same capabilities as you do?  How are they able? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; I don&#146;t
know that I can talk to that in this environment. It was essentially a sole-source
environment. They&#146;ve had a relationship with the Department of Education, and
they&#146;re very comfortable with what they did going forward, and we think that&#146;s
great. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; And in terms of
the balance of the users out there, you said that there&#146;s obviously many agencies
that aren&#146;t funded yet. What is the time frame for that? I always thought that by the
deadline, all of them would have to provide awards. It seems like that was kind of a
deadline but not a real hard deadline. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well as you
know, this was a very aggressive deadline and a very aggressive program, and in many ways
GSA came out and allowed a compromise if you will. They put this program together and
basically, I don&#146;t know the exact number. I heard about 70 to 100 credentials, but
they allowed individual agencies to come in and get their first credential directly
through GSA without separately procuring. All of those, most of those agencies that we
know of, have not yet committed to a long term environment. They are still deciding how to
procure and which way to go as far as going forward to meet the next deadline, which is
two years from October 27. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; And what
is that deadline? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Two years
from October 27 that all of the agencies are fully
deployed with an HSPD-12 credential. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; For each user? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; For each user. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Each person... </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Each person, right.  That&#146;s
three to five million users that was in
the Roth Report. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; So, does
that mean that awards have to happen soon for all of the
agencies. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; That means that
if they want a non-aggressive queue, and they want two years to deploy, they have to be
deploying right quick. There is an interim milestone, and that is that by the end of the
first year, all new employees and contractors will receive the new card. So they&#146;re
not, they&#146;re really not supposed to be issuing old type cards right now. I don&#146;t
know where they are in that process, but the answer is that if they want to be less
aggressive and have an easier scale, they should be procuring over the next few months.
Otherwise they wait for the next fiscal year and they&#146;ve got to do the whole agency
within a 12 month period. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; So then, I guess
maybe another question is I think in your presentation, in the past you&#146;ve described
the opportunity as five to 15 million users over the next couple of years. Is that still
true? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right, so
that&#146;s where we go into the rest of the community. Remember if we, when I talked
earlier, HSPD-12 is one third of this requirement. HSPD-12 covers government employees
that are not DOD and their contractors that work in government buildings. So that&#146;s
about a third of that 15 million estimate. The other third of that is Department of
Defense contractors, on the external certificate authority program, and those are the
people that are going into Department of Defense applications who currently only accept
the DOD PKI and/or an external certificate authority PKI. And then the third piece of that
is the outreach beyond that, and those are state citizens, industry people who are not
working necessarily with the government, but have transactions with the government. For
example, the House of Representatives has a site where you need a certificate to upload
your lobby disclosure form. The State Department has a site right now where you upload
munitions exporting documents. EPA is coming online with an environmental reporting
capability. So that&#146;s the outreach program which is the rest of the federal program
which includes the federal bridge and the AC certificate program. So across that
continuum, the short term, and I&#146;m saying the three to five year estimate is the 12
to 15 million users. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; I see.  And
what time frame could that be over? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Three to five years. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay.  And
if you don&#146;t mind,  one last  question.  Can you go back
and discuss the annuity  nature of these  contracts?  For, you know,  when you qualify a
user and provide a  certificate,  is that something that you get paid for, for each year?
(Inaudible) period. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well, I&#146;ll
give you a different example. For instance, on the external certificate authority program,
most of our users are one year users, and they renew each year. So they come in and they
can do electronic renewal for instance, and there are some economies there, but basically
it&#146;s an annual renewal. On our HSPD-12 award, on a large share of those, we&#146;ve
done those as user-based managed services, and it&#146;s tiered based on the number of
users, but basically what we do, have done is these credentials are three year
credentials, but we&#146;ve amortized that over a three year period, so our agreements
with the agencies in this case, has been a monthly or annual cost to maintain for X number
of users, per user, right, and the same thing with the AC program. That has been very
similar to the ECA program. Those are two year credentials, and they&#146;re renewed on an
annual basis, licensing, so you can pay up front, or you can do it over a two year period.
In all cases, we offer one year, two year or three year credentials. So you can either do
it as an annuity piece or you can buy upfront a three year credential. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. One more
question, and I apologize for taking so long, I just want to make sure I understand this.
So within the next two months, we will hear about awards for 500,000 users roughly,
whether they&#146;re your wins or somebody else&#146;s wins? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; That&#146;s
what should be awarded, you know, given a couple of factors of course. The major factor
today is that we are in a continuing resolution. And they&#146;re not allowed to award a
government contract unless they have the money in their hands, or at least a part of the
money, a substantial part of the money. So assuming, you know, congress settles down,
everything gets settled with the budget and the money gets out of OMB and passed around,
we should start seeing awards, and based on the proposals that are outstanding, half a
million users should be awarded over the next two months. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; But I think we
can have, you know, we can give you a reasonable man&#146;s expectation on that, but I
guess the risk there is the government isn&#146;t always reasonable. So, from everything
we can see today, yes in fact that&#146;s what&#146;s going to happen. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; I guess I
don&#146;t understand the process of government, I&#146;m not a government, not very
familiar with this so maybe that&#146;s why, but the awards, the government hasn&#146;t
doled out the money to those agencies yet? But has it allocated the money to those
agencies? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well the
money&#146;s budgeted, but the money hasn&#146;t been released out of
the government yet. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Is that
because the agencies haven&#146;t requested it, or they&#146;ve
requested it? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp;  No it
just  takes  time.  October  1st was  the  turn of the  fiscal
 year.  Money  runs  out on 30 September,  and the new money is supposed to be budgeted
and  allocated  on the first of October.  It takes some time for it to get out of
congress, through OMB and down to the agencies. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay, but
you have no reason to think that the money won&#146;t be
there, it's just that... </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; No, it&#146;s there, it&#146;s
budgeted, it&#146;s all accepted.  It&#146;s just a
matter of allocation. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; I get it. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; It
happens every year.  This is like hell week, only it takes a
couple of months. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yep. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Your next
question is coming from Karl Birkenfeld of Westcap
Securities.  Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Karl Birkenfeld:</B>&nbsp;&nbsp;&nbsp;&nbsp; My question
was answered in the first question, someone beat me to it so I really don&#146;t have a
question other than the &#150; is the company itself making any other attempts to
diversify in the security end besides the, the certificate business? </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well I guess
I&#146;ll take a shot at that. I would, I would respond by saying that from our
perspective number one on maximizing the opportunity we have today at hand so when we
discuss priorities all our focus is on delivering on some of the comments that we&#146;ve
made to you today. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Karl Birkenfeld:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; And secondly,
and I&#146;m not trying to blow this away Karl, I&#146;m just I would say on the other
hand we also have what I would consider to be a logical businessman&#146;s approach to the
fact that if we can increase our footprint either through some strategic acquisition of
assets of resources that allows us to provide a broader both footprint and product and
services set to this, to this marketplace, this target area, that would make us even more
relevant going forward, that is something that we would pursue. I can assure you we are no
pursuing anything that we could just be a quest for revenue or &#147;roll up&#148;. That
is not in our game plan, we would consider that a delusion of our focus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Carl are you
also really addressing the other market places downstream like the Real ID Act and things
like that, because we are going after other vertical markets and we&#146;re putting out
feelers there to expand the business base as well. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Karl Birkenfeld:</B>&nbsp;&nbsp;&nbsp;&nbsp; What kind
of competition do you have there? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Dan can address
the competition in those marketplaces better than I can. I just can address the market
size, so Dan if you want to talk a little bit about some of the other programs that are
just starting to develop and what the marketplace looks like that would be great. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right, well
it&#146;s very premature to discuss that market size, I mean it&#146;s potentially huge. I
mean people you know saying well where can this lead? Well there&#146;s 280 million
Americans and you know we don&#146;t want to have a &#147;national ID card&#148; but we
sure need something similar. These programs are all converging and, and the I think the
center piece of that is the Federal PKI so who is our, who is our competition it&#146;s
the same people we&#146;ve been talking about since the beginning, the Verisigns and the
like, but now the antes been moved up a little bit because you&#146;ve got to remember
there&#146;s more than just the security backend. That&#146;s what we basically are,
we&#146;re the security backend. Now there&#146;s all these people putting there hands out
and saying well why don&#146;t you pay us to manage this, why don&#146;t you pay us to, to
queue this, why don&#146;t you pay us to help you figure out who you should be picking, so
there&#146;s a long I think, there&#146;s a big difference between what we&#146;re talking
about in these 12 to 15 million users which we&#146;re very confident within the next five
years are real to the fact that how far are we going to go with the you know the
traveler&#146;s program and the real ID and maybe a national identity and then of course
there&#146;s also the privacy requirements and all the people, the privacy advocates that
are afraid of some of this so there&#146;s a huge potential. I think what we&#146;re
seeing now is industry is starting to open their eyes and that&#146;s really where
we&#146;re, where we&#146;re focused in as far as outside of this government mandate and
that is in industries that are looking to take advantage now of this infrastructure that
the Department of Defense and that the GSA has put together and leverage that
infrastructure as a common identity management/security infrastructure and like I said we
did a small pilot with the health industry and I think it&#146;s been very successful. We
learned something, that doctors are a little more cranky about doing things then most
people but we&#146;re going to work around that and we&#146;re going to try to curve this
environment into, into what they need to operate more effectively on a daily basis. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There&#146;s
no doubt that they want to go there because as you can imagine you know with scripts and
stuff like that you know everybody complains about doctor&#146;s handwritings and stuff
like that. If you can do this digitally and do it with a digital signature it&#146;s going
to be much more capable and you know I for one if you look at the health industry, every
doctor I go to, I got to and every time I turn around and sometimes doctor&#146;s drop
insurance, you&#146;ve got to move another doctor, you&#146;ve got to sign another HIPAA
Form. These are things that are common that and that&#146;s part of this pilot, is what
common things can we keep with digital signature and a secure environment that the user
doesn&#146;t have to re-enter his name and address and everything every time they move
along. So, there are a lot of industry&#146;s that are, what we are looking at right now
and with our partners like Siemens, and RSA, and Tumbleweed and trying to extend that
logic into these new environments. It&#146;s not something that is short term but it is
the next, the next elevation of this capability if you will. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Karl Birkenfeld:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you,  as
a reminder  if you&#146;d like to pose a question
 please  press star and then the number one on your telephone keypad. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your
next  question  is coming  from Gerry  Farber of Weiss Peck and  Greer.  Please go ahead.
 Mr. Farber your line is live. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thank
you, your next question is coming from Alex Zyngier of Goldman Sachs. Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hi guys,
 just  help me out here on one  thing.  If I heard  it well  you  said you got five
 agencies  that awarded contracts to you and Verisign got one award, is that correct? </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; That&#146;s
where we see it right now yes. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; So these
are all the awards that are out there? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Correct. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay so, so far
seems like you&#146;ve got a pretty good track record and if I understand what Verisign
has well, I mean I&#146;m kind of like scratching my head in one that how are they
actually implement that? It doesn&#146;t seem like they have a product. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well, they
evidently have a product and whatever they have the Department of Education is happy with
and that&#146;s what the Department of Education said so. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; Did you
guys tell them they can come back to you and you'll do the job if Verisign can't do it? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; We never,
we never disparage our competition but we always stand by to help out the agencies. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; That&#146;s
right and they know we&#146;re there so, but no Verisign has had a long standing
relationship with the Department of Education and it was a natural migration and I, you
know I, I think that the Department of Education is going to be this combination is going
to be very good for this, for this whole environment because this will approve another
capability that&#146;s ready to move out and the more adoption we have at this point the
better off we all are. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay, now just
help me think through this again. I think Randy you know talked about some of this but you
know I just want to make sure I&#146;m looking at this the right way. You talk about five
to 15 million users in your queue, and how long do you think it takes for the market to
get there? Obviously it&#146;s the government, I&#146;m not asking you to commit to
anything. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right,
right. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; But. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well as I you
know, I&#146;m holding to our original estimates, as I think overall you know we&#146;re
looking at a two year cycle on the HSBD 12 which is about 3 to 4 million and then the rest
of it is along side and I think it&#146;s a three to five year adventure. I think that
within five years we will see that 12 to 15 million user community deployed and doing
transactions with the government, intra government, interstate and stuff like that. Beyond
that I think you know once you get that head of steam I think it&#146;s going to be almost
a standard if you will and you know kind of like when I was a kid and my dad didn&#146;t
want to go anywhere near a Bank of America or the other, MasterCard, and you know you
didn&#146;t believe in it and it took some time and now you know everybody&#146;s got
three or four Visas and three or four MasterCards in their pocket, so I think it&#146;s
just a it&#146;s a paradigm shift. It&#146;s a move towards allowing people to be
accountable, but also allowing them to maintain privacy and maintain their you know their
identity in a secure fashion and I&#146;ve told people recently in the presentations that
I&#146;ve given that the government has done it&#146;s job, it has stepped out a
requirement and we&#146;re ready to move forward and they primed the pump. They primed the
pump by mandating this with government transactions and now it&#146;s time for industry to
step up and move this into a fully functional country wide capability. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; So, let me just
instead of saying 12 to 15 if I&#146;m a lot more modest let&#146;s say the low end,
let&#146;s talk about five and let&#146;s assume that you know you&#146;re hit record you
know gets a lot worse, which we&#146;re all hoping it doesn&#146;t you know, if all
you&#146;ve got is 20% of the 5 million you get a million we go to the low end of what you
know what certificates are, we&#146;re talking million certificates at $50.00, that&#146;s
$50 million a year you know in three to five years. Am I missing something, and on top of
that you talk about validation and talked about you know I don&#146;t even, can you give
me a sense of you know how many transactions we would be talking about you know when this
is all said and done and then on top of that you have the software enabling? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right, so
number of transactions when this is all said and done. If you stay conservative
there&#146;s you know 5 million users and maybe they have the need to sign a couple of
e-mails a month, maybe they have the need to enter a couple of websites a month whatever
that is so that&#146;s 5 million users. Even if it&#146;s only, even if they only use it
10 times a month that&#146;s 50 million transactions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; With a
GSA agreement you&#146;re capturing all the validation of the transaction, is that correct? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right now we
are the only alternative to that capability. There are some more manual alternatives but I
think this is probably going to end it, because of the way the proposal was done and the
cost sharing was done with GSA it&#146;s probably the most cost effective, so right now
our job is to capture as many applications to go down this common path as possible and GSA
is pushing this as well because one of the biggest problems when you&#146;re building
infrastructures is everybody doesn&#146;t do everything exactly alike and then you have
interoperability problems. This takes, the figuring out interoperability out of the hands
of the individual application and kind of gives them a guideline to say if we do it this
way we&#146;re all going to be able to work together and we&#146;re all going to be able
to take advantage over a common infrastructure and a common transaction base. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; So you know
using those assumptions it&#146;s not unreasonable to think that you know I&#146;m not
trying to put words in you mouth and I&#146;m not trying to have you give me guidance but
it&#146;s not an unreasonable to think that in a few years from you know from certificates
generating you know 50 million plus and you know you can add on top of that validation and
software enabling, assuming the government does implement this, assuming you know you do
keep some form of a market share. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; I think
it&#146;s fair to say that that&#146;s the potential Alex. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yup. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; You know,
I don&#146;t, I don&#146;t I think we want to stop well short of telling you that that&#146;s going to
happen. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yup. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; All right. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; But
that&#146;s why I&#146;m here Alex. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; That&#146;s
why we&#146;re hoping you&#146;ll stay there. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hey Alex, this
is Jim. It is a meaningful marketplace still. It&#146;s truly a meaningful marketplace and
you know having both sides of the, working with both sides of the environment just ensures
that marketplace position you know and just really gives us a little bit more comfort that
we&#146;re even more solidified in our marketplace position. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yeah, and then
so let me ask this last thing. You clearly you know had a good head start here, now are
guys like Verisign and others catching on to this and saying this is going to be a
meaningful marketplace or you know are they just not onto it yet and how long will it take
them once they you know they do put some significant effort and then to catch up at least
you know from a technology perspective and the capability? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; If you
remember some of the things we talked about early in the year or a year ago or so, them
catching on is a great thing. I mean but not withstanding the fact that the government
doesn&#146;t like a single source for anything and they shouldn&#146;t, that the adoption
is terribly, terribly important, you know. I&#146;ve said in the past and some of the
earlier adopters we&#146;ve had a lion&#146;s share; we&#146;ve had a very high percentage
of the, of the first adopters but it&#146;s a large percentage of a very small adoption
rate and the only way this is going to be significant is by increased adoption and
Verisign is going to be very key to making this not only a fully adopted capability as
well as Cybertrust and Digital Signature Trust but really pushing this out to the states,
out to the individuals, out to everybody that really needs us, an industry so you know
like I said I believe and I&#146;ve said this at a couple of conferences lately that you
know the government has done a great job and it&#146;s spec&#146;d this out and now
it&#146;s really industry&#146;s job to now make this a, a huge marketplace and, and I
think you know credibility is an important thing. I&#146;m not worried about the three or
four company&#146;s that are competition right now because in some ways we&#146;re
partners, we&#146;re building, we&#146;re building a market share, so the thing I worry
about is let&#146;s not dilute the security fee and as long as we don&#146;t dilute that
this, the credibility of the organization is what&#146;s going to make you viable in this
marketplace. We&#146;re very credible, Verisign has credibility, Cybertrust and this is a
good thing because now we&#146;re going to make a huge marketplace for us to share in and
I am confident that we&#146;re going to be a big player in that. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Alex Zyngier:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right,
well thanks I appreciate it. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; No
problem. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you
Alex. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank
you.  Your next question is coming from Adam Wachter of
Morgan Stanley.  Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Adam Wachter:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hi guys.
I&#146;m just trying to understand the numbers here, you know if you guys already have
(inaudible) let&#146;s say 75,000 users and you&#146;re saying over the next couple of
months you think the number is 500,000, so you&#146;re saying over the next two years
three to five million, so is it either very fragmented or large agencies just aren&#146;t
looking to adopt this thing early, there going to do it late in the game, because it seems
to me there&#146;s got to be a very significant ramp because we&#146;re past October
27<SUP>th</SUP> and really only 10% to 20% have either procured or have a request for
proposal, so why is that? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; I don&#146;t
know how to answer the why question. I will say it&#146;s not atypical, that&#146;s really
why we&#146;ve been saying this is a three to five year adventure you know.
Everybody&#146;s making an earnest effort. Understand too that this is an unfunded
mandate; in other words the O&amp;B is not saying here&#146;s extra money go get this
done. O&amp;B is saying go figure out what you don&#146;t need and get this, so from that
point of view some of the competition is not our competition; it&#146;s the folks that are
doing other things that are competing for the same amount of money, but that said I have
not seen anything that would indicate that, that all of these agency&#146;s are making an
honest effort to get where they need to be over the next two years and maybe the third
year but they&#146;re all moving in that direction. Government procurement is not an easy
thing. Putting out an RFP, justifying procurement, doing the competition, it takes time
and, and I mean I&#146;ve been doing this for 20 plus years and it&#146;s frustrating
sometimes, but you know at the end of the day the government you know meets their
requirements. Sometimes they flip a little bit but they are very focused on getting this
done and again I think this MVPS award is, is very important to that because you know some
of the people that are saying well we deploy all these cards, what are we going to do with
them, now they have something to say, well we have a way to get utility out of these cards
more than just what we have today instead of trading in my $5 dollar card for a $50 dollar
card and wouldn&#146;t no what additional utility now I have a way to get some additional
utility so again the why. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Dan I think
he&#146;s also missing the point that we&#146;re talking about just government employees
as well and not the contractor outreach associated with these agencies. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Adam Wachter:</B>&nbsp;&nbsp;&nbsp;&nbsp; Wait, the
3 to 5 million includes the contractor outreach? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; It
includes the contractors that work in government buildings. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Adam Wachter:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; And each
 individual  agency is, is  responsible  for  credentialing  the people that work in
their facility which includes government employees and contractors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Adam Wachter:</B>&nbsp;&nbsp;&nbsp;&nbsp; So would you say
that the two year date from October 27, is that a hard date or is that could that just be
like well they only got a million and a half people, that&#146;s two years. I mean is
that, could that happen? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Anything
can happen but what we&#146;re seeing is I mean for instance when this procurement cycle
there are agency&#146;s that have already ordered the plastic, they&#146;ve already bought
a 150,000 cards. They haven&#146;t bought the infrastructure yet, they haven&#146;t bought
the card management system yet but they&#146;ve already bought the cards. What that tells
me is they&#146;ve found money to do something and they&#146;re going to move forward with
other things and as they uncover the money to move forward with it and then again also
understand that HSPD 12 didn&#146;t make the &#145;06 budget cycle. It didn&#146;t make
the &#145;07 budget cycle so everything for &#145;06 and everything from &#145;07 is
completely out of high, &#145;08 it made the budget cycle for in other words they were,
they new about HSPD 12 in time to effect the &#145;08 budget estimates, so I think this
year is going to be aggressive but next year, &#145;08 is going to be even more aggressive
and, and, and is it going to be only 1 million to a million and a half this year? I really
can&#146;t tell you. All I can tell you is that everybody we&#146;ve talked to in the
government on both sides, the requirement side at OMB and the agencies, they&#146;re all I
mean nobody&#146;s not talking about how they&#146;re going to be moving forward over the
next few months. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Adam Wachter:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay great. The
only, the only other question I have for you is you had mentioned that you get paid on the
transaction so if you gave an example of 50 million transactions, how much do you get per
transaction or maybe I missed that earlier? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yeah, well like
I said we&#146;re tiered right now. We&#146;ve negotiated tiers up to a million
transactions a month. We don&#146;t expect to get beyond that over the cycle of this first
year. If we look at something beyond that any transaction tiers above a million per month
is going to have to be renegotiated. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Adam Wachter:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Can you
tell him what the price point is up to... </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yeah, right
now, right now the minimum is up to 100,000 transactions per month at $10,500 a month and
at up to a million a month, once the I think the number is over 500,000, between 500,000 I
forget the exact number, that&#146;s about $65,000 dollars a month at that tier. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Adam Wachter:</B>&nbsp;&nbsp;&nbsp;&nbsp; 65,000,
so that could be meaningful. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Just to
get to one million. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Adam Wachter:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right.
 Okay all right that&#146;s great thank you guys. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank
you.  Your next question is coming from Ted Karkus of
Forrester Financial.  Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ted Karkus:</B>&nbsp;&nbsp;&nbsp;&nbsp; Greetings
gentlemen, I know the call is running kind of late so I have, just have a couple of real
quick questions for ya. First to clarify, you talk about 500,000 users worth of awards
over the next two months. Did you say the, what does it equate to in users for the six
contracts that have already been awarded? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Just
about 100,000. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ted Karkus:</B>&nbsp;&nbsp;&nbsp;&nbsp; That&#146;s been
100,000 and of the 100,000, the one award that you
lost was about 25,000? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; 25,000 to
30,000, yes. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ted Karkus:</B>&nbsp;&nbsp;&nbsp;&nbsp; That was 25 &#150;
okay. After we get beyond this 500,000 users being awarded over the next two months, when
do you see the next ramp up of awards being issued, or to put it another way if we&#146;re
looking for 3 to 5 million to be deployed we&#146;re only talking about 600,000 through
two months from now. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; So the RFPs
that have been or the proposals that have been submitted that equates to that half a
million. There are already a half a dozen or so pre-solicitation questionnaires. I got a
new one today so there&#146;s about a half a dozen other agencies that are doing some pre
solicitation market analysis which means they&#146;re probably going to submit the request
for proposals in that same two month period and you know there are some very big agencies
in that group that have been soliciting information. I would say minimum that would
probably be I know that half a million users. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ted Karkus:</B>&nbsp;&nbsp;&nbsp;&nbsp; All right
that&#146;s a half a million in &#145;06 potential new contract work, so this is going to
be an ongoing basis. Every month there&#146;s constantly going to be more awards.
It&#146;s not like there&#146;s going to be one bunch that come out over the next two
months and then it slows up for several months. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; No except
for maybe a little bit of seasonality you know in the government world. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ted Karkus:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Kormar:</B>&nbsp;&nbsp;&nbsp;&nbsp; But we
expect the pipeline and the ramp to be fairly steady. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ted Karkus:</B>&nbsp;&nbsp;&nbsp;&nbsp; And for the  500,000
users  that  you&#146;re  expecting  to be
 awarded  over  the  next  two  months, approximately how many contracts does that equate
to?  How many separate contracts are we talking about? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; I think
about six. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ted Karkus:</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; It&#146;s about
six and so then after that we&#146;re looking for another six of another 500,000
thereafter and that will keep going until we get to this 3 to 5 million objective for the
HSPD 12 initiative. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; That&#146;s
our feel. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ted Karkus:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay, I&#146;ll
leave it at that.  Thank you very much for your time. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Unknown Speaker:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thanks a
lot. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; If you&#146;d like
to ask a question please press star then one on
your touch-tone phone. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your
next question is coming from Randy Saluck of Mortar Rock Capital. Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hi I just wanted
to ask a follow up or two. Maybe you could clarify the revenue model a little bit because
you&#146;ve said a lot and you&#146;ve really been forthcoming with information, which has
been helpful, but maybe you can just put it in some baskets for me and some others
potentially. You have what I understand to be several components of revenue generation
potential. One is when you sign people up for certificates you, you get paid per
certificate. Is that correct, per year? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; That&#146;s
correct. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay,
 then you have and it can be  multiple  certificates  per  user,  it  should be and you
could get paid anywhere between 35 and 150 bucks per user, for all of the certificates.
 Is that correct? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Correct. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay, so
then we have a software business and then there&#146;s the annuity part of the business,
correct? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Can you
run through again how the software  revenue  model works and why the annuity is different
 than just an extension of the certificate business?  I&#146;m having a little trouble
understanding that. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well
there&#146;s different parts of the certificate business and of course and then
you&#146;re talking about the three different avenues. You&#146;ve got the HSPD 12 avenue,
you got the ACES avenue<B> </B>and you&#146;ve got the DOD ECA avenue but basically if, if
an organization comes in and they want full serve and basically they want certificates,
full range of certificates for everybody on a card with full validation so they can do all
their internal interactions and stuff like that. That, that&#146;s the high side of that,
that&#146;s the full service capability where people just want to you know I don&#146;t
know what I&#146;m going to use these for yet, I&#146;m just need the certificate to meet
the minimum requirement and I need it just to have access into my network or access into
this or access into a single entity, that&#146;s the low end. That&#146;s the,
there&#146;s no additional services their, they&#146;re not really doing any elegant high,
high performance or high transaction rate validation, they&#146;re just collecting URLs
every once and a while and, and doing an internal capability. So that&#146;s the different
pieces of it. When we first started this everything was full service and, and the early
ECA adopters it was one price per person per year and you get the whole soup to nuts with
that. As the government was trying to understand how they can pay for this incrementally,
we started offering these capabilities in different pieces so you know an agency would
come up to us and say well I don&#146;t want four certificates for every individual. I
just want this one minimal requirement to do this for this, can you parse it out that way.
And of course like with anything else there&#146;s difference economy&#146;s with that
kind of model. Like if three certificates or four certificates or whatever the number is
on an enterprise basis costs you know in bulk $75 dollars and but in the same bulk a
single certificate single use would not all the capability of $30 dollars, if you multiply
it by that by three you end up paying more but you&#146;re not paying more today so
it&#146;s a matter of breaking up this process. Remember PKI, Public Key Infrastructure,
it&#146;s an infrastructure &#151; it&#146;s many parts that make this work so the
credential you get, there&#146;s the credential the machine gets, they have to set up the
machine to understand it, the validation of those credentials on an ongoing basis either
online or off line. So there&#146;s a lot of different ways of skinning this cat, so to
accommodate this unfounded mandate and to move forward and to not stifle the program any
more than it&#146;s been stifled over the few years that it&#146;s been ramping up, we
have come up with different models and different ways to provide. As an aside most of our
customers are ending up with a tiered managed service environment. In other words
they&#146;re saying okay I have a total of X thousand employees and contractors but I want
to pay for the first 500 this quarter, next quarter the next 500 and so on and so on an so
on. So they&#146;re not saying I just want 100,000 off the top of shelf, I want 1,000 a
month for the next 10 months and then 2,000 a month for months thereafter. So
we&#146;ve adopted our pricing and scaling models to accommodate the way the government
wants to buy and I&#146;ll be honest with you this isn&#146;t like going out and buying
pens or pencils and stuff like that. Every procurement and like I said we&#146;ve won five
that we&#146;re involved with another half a dozen or so. Every procurement has come up
differently in saying cut it this way, cut it that way, let&#146;s do the you know to fit
a certain budget structure and a certain spend plan that each agency or each organization
has but at the end of the day when we make this in the two to three year environment
everybody&#146;s going to need the full suite because everybody&#146;s going to be signing
e-mails with each other, everybody&#146;s going to be getting into each other&#146;s
buildings and we need full interoperability, that&#146;s the end state. But the question
is how do you buy into an infrastructure at a price I can afford or a price an agency can
afford to get to where they need to go without waiting until I have you know I have the
funding to by everything all at once. Does that help? </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yeah. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp; Randy also when
you talk about the software business I mean I think the three areas that you&#146;re
talking about was the PKI side of the business where we&#146;re giving the certificates as
selling the certificates and the other side was really we&#146;re enabling the
applications and at the same time we&#146;re validating the transactions. Is that what you
were getting at? </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yes. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay
there&#146;s going to be a transcript of that call. You&#146;ll be able to flip back and
see those numbers after we publish it in a day okay to make it easy for ya. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Randy Saluck:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay or I
can always call you too. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you. Your
next question is coming from Sean Carey of XO
Risk Management.  Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hello gentlemen,
question I have is about if I look at a February 2006 PowerPoint and you&#146;re saying
that you&#146;ve got a 12 to 36, or 18 to 36 month lead over competitor&#146;s, the size
of the market on the upper end is 450 million and you&#146;ve got 60% of the market. If
you were writing that today where do we stand? I&#146;m trying to get I think I&#146;m not
so sure maybe I&#146;m just too stupid but I can&#146;t get a sense from you that the
questions that are asked what the size is of your potential market going forward either on
the short term being in the next couple of months you know, the next couple of months on
this 500,000 or over the next two years. Are we to expect that you guys will land a
majority of the business that will be given out as was the tone of the conversation on the
last quarter&#146;s call? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Hey Sean, Dan
and I can probably answer most of this where we can. Number one what Dan said on the call
is of the six contract wins issued so far for tax quarters we have won five of the six,
that&#146;s with it HSPD 12 space okay, that&#146;s number one. Anything that was said in
February clearly is out of date and needs to be updated okay, Dan also and we&#146;ve said
you know that the marketplace right now near term you know there&#146;s been about you
know 100,000 plus users okay put into place under the wins and there&#146;s another half a
million users in play right now with proposals and there&#146;s approximately another half
million users over and beyond that in the early stages of you know the proposals for the
next round, that within the HSPD 12 space alone you&#146;re going to have contract work
you&#146;re looking at a marketplace of that 3 to 4 million users and further okay
that&#146;s over a 2 to 3 year time frame that he stated. He also went so far as to say
that you know there still appears to be about the same marketplace with the ECA program as
well which is concurrently rolling. He also went and took it one step farther to say the
price points have been holding and he&#146;s been, he&#146;s looking at that $50 to $75
dollars per user price point even though we&#146;re a little higher than that right now
but early term that might be a little higher so that&#146;s kind of like an update to
marketplace, market share okay, does that help to solidify it a little bit for you? </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; A little bit. What
if you were to say is over the next two years where obviously &#145;07 it will be
aggressive as Dan said and &#145;08 will be very aggressive. What potential size of market
is out there that you guys are willing to grab around the, you know, grab around the knees
in the next two years? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well we
can&#146;t tell you how much we&#146;re going to end up with; we can tell you how much we
have right now. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Have you
any idea of the size of the market? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; I think, I
think we&#146;ve said that a couple of times, the short term over the next two years if a
4 to 5 to 6 million and if you overlap ECA maybe 7 million, but let&#146;s say 4 to 7. The
overall 3 to 5 year which is our mid term market, which is the &#147;mandated market&#148;
the market that we think is estimated based on the mandate is the 12 to 15. Now you
don&#146;t have to take our word for that, this was pretty, pretty well laid out in that
Roth Report as far as the number of users in the market and the potential in that, in the
short term if you will 3 to 5 year market and I think that&#146;s where it&#146;s going so
if you want to break it, so based on the mandates that are out there and just based on
what the government wants to do there&#146;s somewhere between 12 to 15 people that will
be in this, in the user environment over the next 3 to 5 years. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; 12 to 15
million Dan. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; What did
I say? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; 12 to 15 people  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; No
12 to 15 million. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; I was
getting really worried. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; So, but to
break that up and to say, how many are going to be in the first year and how many are
going to be in the second year, you know, the mandate right now says three to five HSBD 12
users, would by October, the end of October &#146;09, was it &#146;09? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; &#146;08,
right? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; &#145;08. And
then, ECA, we believe is at least a million, maybe 1.5 million to 2 million over the next
year to year and a half to two years, and then the rest of it is in that three to five
year range, but can it be accelerated? Possibly; but will it take a natural curve between
the next three to five years? That&#146;s possible too. There&#146;s a lot of, like I
said, there&#146;s a lot of attention being paid to this, notwithstanding all the stuff
that&#146;s going on in the government, but with all the things going on, with identity
fraud and the problems that they&#146;re having. There was another announcement in one of
the rags, I guess two days ago, about a failed identity management process that&#146;s
going on, and there&#146;s something between the government and constituents and stuff
like that. This has got to be taken care of. They are very serious about it, and it&#146;s
just a matter of how quickly we can cue people and get this into full issuance. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Going back on the
GSA award that was here in January of this year, I think, and that PSA award was
reengineered in something else, so is that correct? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; You&#146;re
talking about the BPA? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Yeah, the
Blank Purchase Agreement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right.
 So  that&#146;s  &#150; we&#146;re  winning  the  awards  we&#146;ve  won so far,  the one  that we  primed
 on that new reallocation, which is the 130 to 60 61 and 62 special item numbers that
replaced the BPA under the GSA schedule. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; On the
schedule 17, okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Correct. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Now, what &#150;
the contract that was given on 11-8, how does that differentiate between the award, the
blanket purchase agreement that was given a year ago, or less than a year ago? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp;  Which
one... </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; You
meaning the GSA award? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Talking about
the MVTS. The MVTS award. This is a contract, it&#146;s not a BPA. A BPA is just a
negotiated set of costs and prices. We were actually awarded this contract. We have
funding for set up, we have funding to get a couple of primed, prime the pump applications
on board, we have funding for the first year of transactions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; What&#146;s
the funding for the first year?  How much is it? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; It&#146;s
 around,  it&#146;s about  $800,000.  That&#146;s the primary  funding.  Now,  that&#146;s not the limit
for the first year, that&#146;s the initial funding allocated today. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Sean,
that&#146;s just for the initial work to get started. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay,
after that,  there&#146;s $100 million ceiling that this runs up to. Okay, and that&#146;s where we
got into the pricing for the  services  work for the PKI  enabling,  remember,  every
 application.  And that&#146;s also for the  transactional  side of validating.  Okay? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; So, that
initial funding is just the kickoff money. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Do you
see &#150; will they revisit this  contract  award as the days and weeks go by, and add more
funding to it or how does it work? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well, we just
had a meeting today, and right now, the initial contract was set up for the setup of this
capability, and four applications that initially signed up for the duration, and keep in
mind that we can only get funding for the year that we&#146;re working in. They can&#146;t
fund the out years yet, so part of the requirement is an adoption plan, and we are going
to, with GSA visit application owners and agencies and offer this service, so every time
an application signs up, there will be additional funding placed on the contract based on
the stipulations, the fixed price stipulations I gave earlier. So, on the software side,
as an agency signs up, whatever agreement they had with GSA, they pay GSA and GSA pays us
to add that application to the infrastructure. And then, once in total, the infrastructure
gets above 100,000 transactions per month, then we automatically are funded for the next
tier, and that goes up each time. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Has anybody done
some sort of analysis on how many, you said once you get them all up above a million
transactions, that&#146;s what, about $65,000 a month. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Right. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Do you &#150;
has anybody done any analysis or has anybody done any projections  where how many
transactions will be done per month, once everybody signs up? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; No, Sean. Right
now, it&#146;s what we just said earlier in the call, is there, I mean, as the thing ramps
out on a transaction base, there potentially would be millions transactions per month and
over the life cycle. I&#146;ll get you the transcript so that you can go back and look at
exactly what was said. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Also, the number
of applications that are out there, nobody knows the exact number. In the press release we
put out, you know, we went and, people have suggested that there&#146;s as many as 5,000
applications out there. We&#146;re just starting down this path, but what we have said is
these two revenue streams, we believe they will be meaningful to us, okay, on top of the
revenue model of the PKI business that we&#146;re already starting to ramp. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp;  Okay? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Sean Carey:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thanks
very much. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Dan Turissini:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thanks
Sean. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you.  Your
next question is coming from William Lapp,
private investor.  Please go ahead. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank
you. I didn&#146;t get to the first part of the call.  Was there any guidance  given on the
fourth  quarter at all for projection of revenue? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; No, we
don&#146;t provide guidance at this time. What we did give in both the press release and
on the call is that we believe that there will be meaningful, a meaningful up tick in
revenue in the fourth quarter and a meaningful up tick in operational profitability. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well, you
weren&#146;t profitable in the third quarter, though, right? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; No, we
were not. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay, so,
did you give any &#150; you haven&#146;t given any guidance as to how much that would be? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; No, we
have not given guidance. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Can you say,
based on the contracts you have right now with the five or the six you were rewarded, what
that represents in potential revenue for this quarter, the coming quarter? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; We have not
given that guidance. What we have done sir, is that we have said that we believe the
fourth quarter revenue will be up meaningfully, as well as operational profitability. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Well, as
meaningful, I mean, I... </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; I have
not given guidance. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. I&#146;m
just trying to figure out, you know, the five contracts, what does that represent in
potential revenue? I don&#146;t know if you can say in the quarter basis, or over a year
or something. Do you have any estimate what you can say the five contracts would equate in
revenue? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; We have not
provided that information. We have not gotten to pricing on a specific contract, because
there are so many contracts in play right now. We&#146;re doing it specifically &#150;
we&#146;re withholding that information specifically because of the competitive nature of
the environment we are in right this second. It&#146;s not that we don&#146;t want to tell you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; I
understand that. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; But, what we can
tell you is that we&#146;re realizing very positive, we&#146;re recognizing very positive
events right now, and we&#146;re seeing the improvements. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. Based on
your last conference call, it doesn&#146;t seem to be as ramping up as quick as you
thought it was in the last quarter? Is that, would that be an accurate statement? Based on
your last conference call, I was of the opinion listening to it, that it would be a &#150;
it would be a lot further along in the fourth quarter, and I understand, dealing with
government, it takes time, so would you say based on your last quarter and where
you&#146;re at now, not that the long run doesn&#146;t look as good, that you&#146;re not
as far along as you thought you would be in the previous conference call? </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Per where we
were back in August, I mean, we are pretty much where we expected to be going into the
fourth quarter, and we expect the quarter to play out per our business plan. I mean,
we&#146;re comfortable with where we are in the business right now. We are witnessing that
ramp. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay? We never
said how fast or quickly that ramp would be on a short term. What we did do is give
guidance over the medium term, that we said how many certs were in the environment, how
many users were in the environment, what we anticipated that environment to look like over
a two-year period, and three to five year period. That&#146;s what we&#146;re comfortable
providing right now. There&#146;s fluctuations in this early stage of this marketplace,
where it&#146;s just impossible to give clear guidance, but what we can say, and a small
as we are and with what is coming online, yes, we&#146;re looking for some meaningful
improvement as we go into the fourth quarter, because of those six contract wins, and
we&#146;re looking at &#146;07 and &#145;08 to provide meaningful revenue as well, because
of the mandates. So, right now we&#146;re playing everything else very close to the vest
on purpose because of how competitive the pricing marketplace is with two of our leading
competitors. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; Okay. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; And we
can&#146;t, we just can&#146;t do you the disservice by providing that information to you
and then everybody else, and then just harming the entire shareholder base and the
company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>William Lapp:</B>&nbsp;&nbsp;&nbsp;&nbsp; I
wouldn&#146;t expect you to do so.  Okay, I was just wondered what you were comfortable with.
 Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Jim McCubbin:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you.  There  appear to be no further  questions  at this
time. I will now turn the floor back over to Mr. Steve Komar for any closing statements. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp; Well, thank you,
thank you Henry. I guess we&#146;ve certainly had a very comprehensive session this
evening, and I appreciate everybody&#146;s time and attention to hearing what it is that
we have to offer up in terms of guidance and in terms of the (inaudible) tonight. I do
hope you leave this call feeling somewhat comforted and somewhat positive about our
trajectory. That&#146;s certainly the way we feel as a team, and we&#146;re really looking
forward to the fourth quarter challenges, and of course the challenges of 2007 and
&#145;08. So I once again thank you very, very much, and I appreciate your time and look
forward to our next quarterly call, and I&#146;m sure that we will be held accountable for
some of the things that we&#146;ve talked about this evening. Thank you all. I appreciate
it. Have a great evening. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; That does
conclude  today&#146;s  conference  call. You may now
 disconnect  your lines at this time and have a wonderful day. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Steve Komar:</B>&nbsp;&nbsp;&nbsp;&nbsp; Thank you
Henry. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Operator:</B>&nbsp;&nbsp;&nbsp;&nbsp; You&#146;re welcome. </FONT></P>








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