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 September 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 November 13, 2024, there were 9,801,668 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 nine month periods ended September 30, 2024 and 2023		3

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

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

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

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

Notes to Condensed Consolidated Financial Statements		10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23

Item 3. Quantitative and Qualitative Disclosures About Market Risk		30

Item 4. Controls and Procedures		30

Part II. OTHER INFORMATION		31

Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3. Default Upon Senior Securities		31
Item 4. Mine Safety Disclosures		31
Item 5. Other Information		31
Item 6. Exhibits		32

SIGNATURES		33

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						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2024			2023			2024			2023
	(Unaudited)
REVENUES	$	34,620,433		$	25,733,657		$	104,868,483		$	77,770,195
COST OF REVENUES (including amortization and depreciation of $562,389, $528,298, $1,793,416, and $1,538,883, respectively)		29,928,067			21,838,836			90,617,004			66,155,797

GROSS PROFIT		4,692,366			3,894,821			14,251,479			11,614,398

OPERATING EXPENSES
Sales and marketing		530,391			490,037			1,702,210			1,553,887
General and administrative expenses (including share-based compensation of $202,584, $299,847, $986,325 and $535,417, respectively)		4,352,980			3,977,709			13,344,232			11,719,042
Depreciation and amortization		259,980			259,804			768,626			789,331

Total operating expenses		5,143,351			4,727,550			15,815,068			14,062,260

LOSS FROM OPERATIONS		(450,985	)		(832,729	)		(1,563,589	)		(2,447,862	)

OTHER (EXPENSE) INCOME
Interest income		59,882			27,681			161,033			39,122
Interest expense		(52,911	)		(69,095	)		(183,979	)		(184,783	)
Other (expense) income, net		99			(33,663	)		(36,306	)		(52,721	)

Total other (expense) income, net		7,070			(75,077	)		(59,252	)		(198,382	)

LOSS BEFORE INCOME TAX (BENEFIT) PROVISION		(443,915	)		(907,806	)		(1,622,841	)		(2,646,244	)
INCOME TAX (BENEFIT) PROVISION		(18,705	)		13,308			(44,968	)		68,422

NET LOSS	$	(425,210	)	$	(921,114	)	$	(1,577,873	)	$	(2,714,666	)

EARNINGS PER SHARE, BASIC AND DILUTED	$	(0.04	)	$	(0.10	)	$	(0.17	)	$	(0.31	)

WEIGHTED-AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		9,485,508			8,893,220			9,263,492			8,809,644

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						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2024			2023			2024			2023
	(Unaudited)
NET LOSS	$	(425,210	)	$	(921,114	)	$	(1,577,873	)	$	(2,714,666	)

Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax		49,549			(77,162	)		20,613			(7,510	)

Other comprehensive (loss) income		49,549			(77,162	)		20,613			(7,510	)

COMPREHENSIVE LOSS	$	(375,661	)	$	(998,276	)	$	(1,557,260	)	$	(2,722,176	)

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

	SEPTEMBER 30,			DECEMBER 31,
	2024			2023
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	5,636,057		$	6,921,160
Accounts receivable, net of allowance for credit losses of $48,889 and $81,359, respectively		8,498,243			8,219,793
Unbilled accounts receivable		24,784,036			16,618,639
Other current assets		2,020,459			1,083,671

Total current assets		40,938,795			32,843,263

NONCURRENT ASSETS
Property and equipment, net		588,753			780,800
Lease right of use asset		3,536,001			4,045,222
Intangible assets, net		5,554,997			7,336,348
Goodwill		5,811,578			5,811,578
Other long-term assets		489,700			483,288

Total assets	$	56,919,824		$	51,300,499

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	9,990,672		$	12,633,658
Accrued expenses		25,063,136			16,175,702
Current portion of deferred revenue		2,655,617			2,009,343
Current portion of lease liabilities		593,280			638,258

Total current liabilities		38,302,705			31,456,961

NONCURRENT LIABILITIES
Lease liabilities, net of current portion		3,699,456			4,114,516
Contingent consideration		6,900			6,900
Deferred revenue, net of current portion		944,056			1,027,770
Deferred tax liabilities, net		118,595			16,923

Total liabilities		43,071,712			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		102,878,731			102,151,381
Accumulated other comprehensive loss		(314,286	)		(334,899	)
Accumulated deficit		(88,725,820	)		(87,147,947	)

Total stockholders’ equity		13,848,112			14,677,429

Total liabilities and stockholders’ equity	$	56,919,824		$	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

	NINE MONTHS ENDED
	SEPTEMBER 30,
	2024			2023
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,577,873	)	$	(2,714,666	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred income tax expense		103,000			-
Depreciation expense		779,972			794,344
Provision for credit losses		21,584			39,979
Amortization of intangibles		1,782,070			1,533,870
Share-based compensation expense		986,325			535,417
Loss on disposal of fixed assets		-			3,211
Changes in assets and liabilities:
Accounts receivable and unbilled receivables		(8,627,232	)		1,208,899
Inventories		(71,644	)		(271,869	)
Other current assets		(864,123	)		(198,992	)
Other assets		(6,412	)		27,161
Accounts payable and accrued expenses		6,237,759			(504,739	)
Income tax payable		(68,342	)		29,780
Deferred revenue and other liabilities		551,938			1,352,781

Net cash (used in) provided by operating activities		(752,978	)		1,835,176

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(80,702	)		(166,210	)
Capitalized hardware and software development costs		-			(810,219	)
Proceeds from beneficial interest in sold receivables		259,125			469,104

Net cash provided by (used in) investing activities		178,423			(507,325	)

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		(456,825	)		(420,139	)
Withholding taxes paid on behalf of employees on net settled restricted stock awards		(258,382	)		(3,628	)

Net cash used in financing activities		(715,207	)		(423,767	)

Net effect of exchange rate on cash		4,659			23,100

NET (DECREASE) INCREASE IN CASH		(1,285,103	)		927,184

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

CASH, end of period	$	5,636,057		$	8,458,048

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)

	NINE MONTHS ENDED
	SEPTEMBER 30,
	2024		2023
	(Unaudited)
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest	$	163,400	$	168,083

NONCASH INVESTING AND FINANCING ACTIVITIES
Capitalized hardware and software development costs in accounts payable	$	-	$	22,198

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

Stock compensation expense — restricted		-		-		276,570			-			-			276,570

SEC Form 10-Q filed by WidePoint Corporation