wyy_10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2024
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________________ to ___________________

	Commission File Number: 001-33035

WidePoint Corporation

(Exact name of Registrant as specified in its charter)

Delaware		52-2040275
(State or other jurisdiction of		(I.R.S. employer
incorporation or organization)		identification no.)

11250 Waples Mill Road, South Tower 210, Fairfax, Virginia		22030
(Address of principal executive offices)		(Zip Code)

(703) 349-2577

(Registrant’s telephone number, including area code)

Securities Registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Common Stock, $0.001 par value per share	WYY	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of Augst 14, 2024, there were 9,652,172 shares of the registrant’s Common Stock issued and outstanding.

WIDEPOINT CORPORATION

INDEX

		Page No.
Part I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

	Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2024 and 2023	3

	Condensed Consolidated Statements of Comprehensive Loss for the three and six month periods ended June 30, 2024 and 2023	4

	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	5

	Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2024 and 2023	6

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six month periods ended June 30, 2024 and 2023	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Default Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30

SIGNATURES		31

CERTIFICATIONS

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

WIDEPOINT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30,						JUNE 30,
	2024			2023			2024			2023
	(Unaudited)
REVENUES	$	36,040,771		$	26,762,857		$	70,248,050		$	52,036,538
COST OF REVENUES (including amortization and depreciation of $654,122, $508,025, $1,231,027, and $1,010,585, respectively)		31,147,549			22,853,220			60,688,937			44,316,961

GROSS PROFIT		4,893,222			3,909,637			9,559,113			7,719,577

OPERATING EXPENSES
Sales and marketing		559,926			542,172			1,171,819			1,063,850
General and administrative expenses (including share-based
compensation of $365,958, $95,454, $783,741 and $235,570, respectively)		4,542,769			3,830,513			8,991,252			7,741,333
Depreciation and amortization		252,112			263,684			508,646			529,527

Total operating expenses		5,354,807			4,636,369			10,671,717			9,334,710

LOSS FROM OPERATIONS		(461,585	)		(726,732	)		(1,112,604	)		(1,615,133	)

OTHER (EXPENSE) INCOME
Interest income		51,725			9,245			101,151			11,441
Interest expense		(72,331	)		(56,910	)		(131,068	)		(115,688	)
Other (expense) income, net		(1,534	)		(18,864	)		(36,405	)		(19,058	)

Total other (expense) income, net		(22,140	)		(66,529	)		(66,322	)		(123,305	)

LOSS BEFORE INCOME TAX (BENEFIT) PROVISION		(483,725	)		(793,261	)		(1,178,926	)		(1,738,438	)
INCOME TAX (BENEFIT) PROVISION		15,828			48,812			(26,263	)		55,114

NET LOSS	$	(499,553	)	$	(842,073	)	$	(1,152,663	)	$	(1,793,552	)

EARNINGS PER SHARE, BASIC AND DILUTED	$	(0.05	)	$	(0.10	)	$	(0.13	)	$	(0.20	)

WEIGHTED-AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		9,390,154			8,794,704			9,151,265			8,767,163

The accompanying notes are an integral part of these condensed consolidated financial statements.

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WIDEPOINT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30,						JUNE 30,
	2024			2023			2024			2023
	(Unaudited)
NET LOSS	$	(499,553	)	$	(842,073	)	$	(1,152,663	)	$	(1,793,552	)

Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax		(6,716	)		32,404			(28,936	)		69,652

Other comprehensive (loss) income:		(6,716	)		32,404			(28,936	)		69,652

COMPREHENSIVE LOSS	$	(506,269	)	$	(809,669	)	$	(1,181,599	)	$	(1,723,900	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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WIDEPOINT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	JUNE 30,			DECEMBER 31,
	2024			2023
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	4,000,899		$	6,921,160
Accounts receivable, net of allowance for credit losses of $78,334 and $81,359, respectively		10,560,802			8,219,793
Unbilled accounts receivable		25,784,217			16,618,639
Other current assets		1,527,940			1,083,671

Total current assets		41,873,858			32,843,263

NONCURRENT ASSETS
Property and equipment, net		617,203			780,800
Lease right of use asset		3,707,771			4,045,222
Intangible assets, net		6,098,664			7,336,348
Goodwill		5,811,578			5,811,578
Other long-term assets		489,700			483,288

Total assets	$	58,598,774		$	51,300,499

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	14,033,887		$	12,633,658
Accrued expenses		22,594,181			16,175,702
Current portion of deferred revenue		2,269,718			2,009,343
Current portion of lease liabilities		600,819			638,258

Total current liabilities		39,498,605			31,456,961

NONCURRENT LIABILITIES
Lease liabilities, net of current portion		3,874,080			4,114,516
Contingent consideration		6,900			6,900
Deferred revenue, net of current portion		1,059,922			1,027,770
Deferred tax liabilities, net		138,077			16,923

Total liabilities		44,577,584			36,623,070

Commitments and contingencies (Note 14)		-			-

STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 2,045,714 shares issued and none outstanding		-			-
Common stock, $0.001 par value; 30,000,000 shares authorized; 9,485,508 and 8,893,220 shares issued and outstanding, respectively		9,487			8,894
Additional paid-in capital		102,676,148			102,151,381
Accumulated other comprehensive loss		(363,835	)		(334,899	)
Accumulated deficit		(88,300,610	)		(87,147,947	)

Total stockholders’ equity		14,021,190			14,677,429

Total liabilities and stockholders’ equity	$	58,598,774		$	51,300,499

The accompanying notes are an integral part of these condensed consolidated financial statements.

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WIDEPOINT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	SIX MONTHS ENDED
	JUNE 30,
	2024			2023
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,152,663	)	$	(1,793,552	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred income tax expense		117,700			-
Depreciation expense		516,833			532,557
Provision for credit losses		13,725			34,037
Amortization of intangibles		1,223,491			1,007,555
Share-based compensation expense		783,741			235,570
Loss on disposal of fixed assets		-			3,211
Changes in assets and liabilities:
Accounts receivable and unbilled receivables		(11,774,202	)		(2,158,825	)
Inventories		82,917			(85,066	)
Other current assets		(511,277	)		(54,040	)
Other assets		(6,412	)		27,161
Accounts payable and accrued expenses		7,856,266			2,197,714
Income tax payable		(90,629	)		25,535
Deferred revenue and other liabilities		303,130			1,049,118

Net cash (used in) provided by operating activities		(2,637,380	)		1,020,975

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(18,001	)		(103,014	)
Capitalized hardware and software development costs		-			(614,914	)
Proceeds from beneficial interest in sold receivables		259,125			143,116

Net cash provided by (used in) investing activities		241,124			(574,812	)

CASH FLOWS FROM FINANCING ACTIVITIES
Advances on bank line of credit		4,600,000			6,493,284
Repayments of bank line of credit advances		(4,600,000	)		(6,493,284	)
Principal repayments under finance lease obligations		(278,574	)		(255,436	)
Withholding taxes paid on behalf of employees on net settled restricted stock awards		(258,381	)		(3,628	)

Net cash used in financing activities		(536,955	)		(259,064	)

Net effect of exchange rate on cash		12,950			57,150

NET (DECREASE) INCREASE IN CASH		(2,920,261	)		244,249

CASH, beginning of period		6,921,160			7,530,864

CASH, end of period	$	4,000,899		$	7,775,113

The accompanying notes are an integral part of these condensed consolidated financial statements.

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WIDEPOINT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

	SIX MONTHS ENDED
	JUNE 30,
	2024		2023
	(Unaudited)
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest	$	117,521	$	115,019

NONCASH INVESTING AND FINANCING ACTIVITIES
Capitalized hardware and software development costs in accounts payable	$	-	$	77,873

The accompanying notes are an integral part of these condensed consolidated financial statements.

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WIDEPOINT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

					Additional
	Common Stock				Paid-In			Accumulated			Accumulated
	Issued		Amount		Capital			OCI			Deficit			Total
	(Unaudited)
Balance, January 1, 2023		8,725,476	$	8,726	$	101,194,185		$	(350,234	)	$	(83,101,474	)	$	17,751,203

Issuance of common stock — restricted		13,841		14		(3,642	)		-			-			(3,628	)

Stock compensation expense — restricted		-		-		140,116			-			-			140,116

Foreign currency translation — gain		-		-		-			37,248			-			37,248

Net loss		-		-		-			-			(951,479	)		(951,479	)

Balance, March 31, 2023		8,739,317	$	8,740	$	101,330,659		$	(312,986	)	$	(84,052,953	)	$	16,973,460

Issuance of common stock — restricted		153,903		154		(154	)		-			-			-

Stock compensation expense — restricted		-		-		95,454			-			-			95,454

Foreign currency translation — gain		-		-		-			32,404			-			32,404

Net Loss		-		-		-			-			(842,073	)		(842,073	)

Balance, June 30, 2023		8,893,220	$	8,894	$	101,425,959		$	(280,582	)	$	(84,895,026	)	$	16,259,245


	Common Stock				Additional Paid-In			Accumulated			Accumulated
	Issued		Amount		Capital			OCI			Deficit			Total
	(Unaudited)
Balance, January 1, 2024		8,893,220	$	8,894		102,151,381			(334,899	)		(87,147,947	)		14,677,429


Issuance of common stock — restricted		418,541		419		(219,202	)		-			-			(218,783	)

Stock compensation expense — restricted		-		-		389,393			-			-			389,393

Stock compensation expense — non-qualified stock options		-		-		28,390			-			-			28,390

Foreign currency translation — (loss)		-		-		-			(22,220	)		-			(22,220	)

Net loss		-		-		-			-			(653,110	)		(653,110	)

Balance, March 31, 2024		9,311,761	$	9,313	$	102,349,962		$	(357,119	)	$	(87,801,057	)	$	14,201,099

Issuance of common stock — restricted		173,747		174		(39,772	)		-			-			(39,598	)

Stock compensation expense — restricted		-		-		337,568			-			-			337,568

Stock compensation expense — non-qualified stock options		-		-		28,390			-			-			28,390

Foreign currency translation — (loss)		-		-		-			(6,716	)		-			(6,716	)

Net loss		-		-		-			-			(499,553	)		(499,553	)

Balance, June 30, 2024		9,485,508	$	9,487	$	102,676,148		$	(363,835	)	$	(88,300,610	)	$	14,021,190

The accompanying notes are an integral part of these condensed consolidated financial statements.

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WIDEPOINT CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Nature of Operations

Organization

WidePoint Corporation (“WidePoint” or the “Company”) was incorporated in Delaware on May 30, 1997 and conducts operations through its wholly-owned operating subsidiaries throughout the continental United States, Ireland, the Netherlands and the United Kingdom. The Company’s principal executive and administrative headquarters is located in Fairfax, Virginia.

Nature of Operations

The Company is a leading provider of Technology Management as a Service (TMaaS). The Company’s TMaaS platform and service solutions enable its customers to efficiently secure, manage and analyze the entire lifecycle of their mobile communications assets through its federally compliant platform Intelligent Technology Management System (ITMS™). The Company’s ITMS platform is SSAE 18 compliant and was granted an Authority to Operate by the U.S. Department of Homeland Security. Additionally, the Company was granted an Authority to Operate by the General Services Administration with regard to its identity credentialing component of its TMaaS platform. The Company’s TMaaS platform is internally hosted and accessible on-demand through a secure customer portal that is specially configured for each customer. The Company can deliver these solutions in a number of configurations ranging from utilizing the platform as a service to a full-service solution that includes full lifecycle support for all end users and the organization.

A significant portion of the C

SEC Form 10-Q filed by WidePoint Corporation