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 March 31, 2025

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 May 15, 2025, there were 9,780,587 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 month periods ended March 31, 2025 and 2024	3

	Condensed Consolidated Statements of Comprehensive Loss for the three month periods ended March 31, 2025 and 2024	4

	Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024	5

	Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2025 and 2024	6

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three month periods ended March 31, 2025 and 2024	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	26

Item 4.	Controls and Procedures	26

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Default Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	27

SIGNATURES		28

CERTIFICATIONS		29

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

WIDEPOINT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	THREE MONTHS ENDED
	MARCH 31,
	2025			2024
	(Unaudited)
REVENUES	$	34,217,739		$	34,207,279
COST OF REVENUES (including amortization and depreciation of $486,193 and $576,905, respectively)		29,439,218			29,541,388
GROSS PROFIT		4,778,521			4,665,891

OPERATING EXPENSES
Sales and marketing		639,482			611,893
General and administrative expenses (including share-based compensation of $198,859 and $417,783, respectively		4,731,782			4,448,483
Depreciation and amortization		223,688			256,534

Total operating expenses		5,594,952			5,316,910

LOSS FROM OPERATIONS		(816,431	)		(651,019	)

OTHER (EXPENSE) INCOME
Interest income		53,430			49,426
Interest expense		(55,073	)		(58,737	)
Other (expense), net		-			(34,871	)

Total other expense, net		(1,643	)		(44,182	)

LOSS BEFORE INCOME TAX BENEFIT		(818,074	)		(695,201	)
INCOME TAX BENEFIT		(94,011	)		(42,091	)

NET LOSS	$	(724,063	)	$	(653,110	)

EARNINGS PER SHARE, BASIC AND DILUTED	$	(0.08	)	$	(0.07	)
WEIGHTED-AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		9,552,971			8,897,819

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
	MARCH 31,
	2025			2024
	(Unaudited)
NET LOSS	$	(724,063	)	$	(653,110	)

Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		26,105			(22,220	)

Other comprehensive income (loss):		26,105			(22,220	)

COMPREHENSIVE LOSS	$	(697,958	)	$	(675,330	)

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

	MARCH 31,			DECEMBER 31,
	2025			2024
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	3,703,169		$	6,775,139
Restricted cash		596,473			1,042,256
Accounts receivable, net of allowance for credit losses of $54,282 and $46,150, respectively		14,625,251			11,930,474
Unbilled accounts receivable		31,176,066			31,798,431
Other current assets		5,206,547			3,771,473

Total current assets		55,307,506			55,317,773

NONCURRENT ASSETS
Property and equipment, net		490,587			544,723
Lease right of use asset		4,534,938			4,183,561
Intangible assets, net		4,583,243			5,063,795
Goodwill		5,811,578			5,811,578
Deferred tax assets, net		30,635			-
Other long-term assets		605,369			659,086

Total assets	$	71,363,856		$	71,580,516

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	15,948,105		$	16,524,863
Accrued expenses		30,394,770			30,851,255
Current portion of deferred revenue		5,953,990			4,770,683
Current portion of lease liabilities		842,402			735,152

Total current liabilities		53,139,267			52,881,953

NONCURRENT LIABILITIES
Lease liabilities, net of current portion		4,470,842			4,200,019
Deferred revenue, net of current portion		788,088			907,160
Deferred tax liabilities, net		-			11,415

Total liabilities		58,398,197			58,000,547

Commitments and contingencies (Note 16)		-			-

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; 9,563,904 and 9,485,508 shares issued and outstanding, respectively		9,565			9,487
Additional paid-in capital		103,187,223			103,103,653
Accumulated other comprehensive loss		(424,840	)		(450,945	)
Accumulated deficit		(89,806,289	)		(89,082,226	)

Total stockholders’ equity		12,965,659			13,579,969

Total liabilities and stockholders’ equity	$	71,363,856		$	71,580,516

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

	THREE MONTHS ENDED
	MARCH 31,
	2025			2024
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(724,063	)	$	(653,110	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred income tax (benefit) expense		(36,400	)		45,200
Depreciation expense		229,330			260,302
Provision for credit losses		6,776			7,566
Amortization of intangibles		480,552			573,137
Share-based compensation expense		198,859			417,783
Non-cash lease expense		46,444			-
Changes in assets and liabilities:
Accounts receivable and unbilled receivables		(1,990,901	)		(5,317,052	)
Inventories		(240,208	)		(291,356	)
Other current assets		(1,190,283	)		(251,778	)
Other assets		53,717			(6,412	)
Accounts payable and accrued expenses		(1,072,599	)		3,909,794
Income tax payable		9,543			(72,015	)
Deferred revenue and other liabilities		1,044,877			(178,728	)
Other liabilities		(43,235	)		-

Net cash used in operating activities		(3,227,591	)		(1,556,669	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(27,632	)		(6,494	)
Proceeds from beneficial interest in sold receivables		-			259,125

Net cash (used in) provided by investing activities		(27,632	)		252,631

CASH FLOWS FROM FINANCING ACTIVITIES
Advances on bank line of credit		2,800,000			1,000,000
Repayments of bank line of credit advances		(2,800,000	)		(1,000,000	)
Principal repayments under finance lease obligations		(119,766	)		(137,469	)
Withholding taxes paid on behalf of employees on net settled restricted stock awards		(115,211	)		(218,783	)

Net cash used in financing activities		(234,977	)		(356,252	)

Net effect of exchange rate on cash		(27,553	)		7,064

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(3,517,753	)		(1,653,226	)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period		7,817,395			6,921,160

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	4,299,642		$	5,267,934

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH CONSISTED OF THE FOLLOWING:
Cash and cash equivalents	$	3,703,169		$	5,267,934
Restricted cash		596,473			-
	$	4,299,642		$	5,267,934

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)

	THREE MONTHS ENDED
	MARCH 31,
	2025		2024
	(Unaudited)
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest	$	41,259	$	51,940

NONCASH INVESTING AND FINANCING ACTIVITIES
ROU asset obtained in exchange for lease liability	$	542,232	$	-

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, 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

					Additional
	Common Stock				Paid-In			Accumulated			Accumulated
	Issued		Amount		Capital			OCI			Deficit			Total
	(Unaudited)
Balance, January 1, 2025		9,485,508	$	9,487		103,103,653			(450,945	)		(89,082,226	)		13,579,969

Issuance of common stock — restricted		78,396		78		(115,289	)		-			-			(115,211	)

Stock compensation expense — restricted		-		-		170,781			-			-			170,781

Stock compensation expense — non-qualified stock options		-		-		28,078			-			-			28,078

Foreign currency translation — gain		-		-		-			26,105			-			26,105

Net loss		-		-		-			-			(724,063	)		(724,063	)

Balance, March 31, 2025		9,563,904	$	9,565	$	103,187,223		$	(424,840	)	$	(89,806,289	)	$	12,965,659

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 Company’s expenses, such as personnel and facilities costs, are fixed in the short term and may not be easily modified to manage through changes in the Company’s marketplace that may create pressure on pricing and/or costs to deliver its services.

The Company has periodic capital expense requirements to maintain and upgrade its internal technology infrastructure tied to its hosted solutions and other such costs may be significant when incurred in any given quarter.

2. Basis of Presentation and Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements as of March 31, 2025 and for each of the three month periods ended March 31, 2025 and 2024 included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to such regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. It is the opinion of management that all adjustments (which include normal recurring adjustments) necessary for a fair statement of financial results are reflected in the financial statements for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2024 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The results of operations for the three month period ended March 31, 2025 are not necessarily indicative of the operating results for the full year.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and acquired entities since their respective dates of acquisition. All significant inter-company amounts were eliminated in consolidation.

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Foreign Currency

Assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon exchange rates prevailing at the end of each reporting period. The resulting translation adjustments, along with any related tax effects, are included in accumulated other comprehensive income, a component of stockholders’ equity. Translation adjustments are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations. Revenues and expenses are translated at the average month-end exchange rates during the year. Gains and losses related to transactions in a currency other than the functional currency, including operations outside the U.S. where the functional currency is the U.S. dollar, are reported net in the Company’s condensed consolidated statements of operations, depending on the nature of the activity.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring use of estimates and judgment relate to revenue recognition, allowance for credit losses, ability to realize intangible assets and goodwill, ability to realize deferred income tax assets, fair value of certain financial instruments and the evaluation of contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. There were no significant changes in accounting estimates used by management during the quarter.

Significant Accounting Policies

There were no significant changes in the Company’s significant accounting policies during the first three months of 2025 from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on April 15, 2025.

Accounting Standards Update

Accounting Standards Adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company adopted ASU 2023-07 for our annual period beginning fiscal year 2024 on a retrospective basis to all periods presented. The adoption did not have an impact to our financial position, results of operations and earnings per share. See Note 15 for additional information.

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes – Improvements to Income Tax Disclosures, requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company is currently evaluating the impacts of the new standard.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220) Disaggregation of Income Statement Expenses (“ASU 2024-03”), to enhance the transparency and decision usefulness of financial information presented in the income statement by requiring disaggregated information about certain income statement expense line items. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is evaluating the impact of these new requirements on its income statement presentation and disclosures.

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Out of Period Adjustment

During the three months ended March 31, 2025, the Company recorded an out of period adjustment to correct an error identified by management related to its revenue recognition for certain reselling contracts. The adjustment resulted in a decrease to revenues of $2,695,148, with a corresponding increase to deferred revenue, and a decrease to cost of revenues of $2,461,832, with a corresponding increase in deferred contract costs. The Company has evaluated the impacts of this error, both quantitatively and qualitatively, and has concluded the error was not material to any prior interim or annual period. The correction is not expected to be material to the year ending December 31, 2025.

3. Accounts Receivable and Significant Concentrations

A significant portion of the Company’s receivables are billed under firm fixed price contracts with agencies of the U.S. federal government and similar pricing structures with several commercial entities. Accounts receivable consist of the following by customer type in the table below as of the periods presented:

	MARCH 31,		DECEMBER 31,
	2025		2024
	(Unaudited)
U.S. Federal, State, and Local Government (1)	$	12,222,516	$	9,684,059
Commercial (2)		2,457,017		2,292,565
Gross accounts receivable		14,679,533		11,976,624
Less: allowances for credit losses (3)		54,282		46,150

Accounts receivable, net	$	14,625,251	$	11,930,474

(1) Government contracts are generally firm fixed price not to exceed arrangements with a term of five (5) years, which consists of a base year and four (4) annual option year renewals. Government receivables are billed under a single consolidated monthly invoice and are billed approximately thirty (30) to sixty (60) days in arrears from the date of service and payment is generally due within thirty (30) days of the invoice date. Government accounts receivable payments could be delayed due to administrative processing delays by the government agency, continuing budget resolutions or a government shutdown that may delay availability of contract funding, and/or administrative only invoice correction requests by contracting officers that may delay payment processing by our government customers.

(2) Commercial contracts are generally fixed price arrangements with contract terms ranging from two (2) to three (3) years. Commercial accounts receivables are billed based on the underlying contract terms and conditions which generally have repayment terms that range from thirty (30) to ninety (90) days. Commercial receivables are stated at amounts due from customers net of an allowance for credit losses if deemed necessary.

(3) For the three month period ended March 31, 2025, the Company did not recognize any material provisions of recoveries of existing provision for credit losses. The Company has not historically maintained an allowance for credit losses for its government customers as it has not experienced material or recurring credit losses and the nature and size of the contracts has not necessitated the Company’s establishment of such an allowance for credit losses.

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Significant Concentrations

The following table presents consolidated trade accounts receivable by customer as of the periods presented below:

	MARCH 31,			DECEMBER 31,
	2025			2024
	As a % of			As a % of
Customer Type	Receivables			Receivables
	(Unaudited)
U.S. Federal Government		83	%		81	%

The following table presents revenue by customer for each of the periods presented:

	THREE MONTHS ENDED
	MARCH 31,
	As a % of			As a % of
	Revenue			Revenue
Customer Type	2025			2024
	(Unaudited)
U.S. Federal Government (1)		85	%		82	%

(1) Sales to the U.S. federal government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government.

Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash on deposit with financial institutions, the balances of which frequently exceed federally insured limits. If the financial institution with whom we do business were to be placed into receivership, we may be unable to access the cash we have on deposit with such institutions. If we are unable to access our cash and cash equivalents as needed, our financial position and ability to operate our business could be adversely affected. At March 31, 2025, the Company had deposits in excess of FDIC limits of approximately $2.9 million. The Company also maintains deposits with a financial institution in Ireland that are insured by the Central Bank of Ireland up to a maximum of €100,000 per financial institution. At March 31, 2025, the Company had foreign bank deposits in excess of insured limits of approximately €354,100.

4. Unbilled Accounts Receivable

Unbilled accounts receivable represent revenues earned but not invoiced to the customer at the balance sheet date due to either timing of invoice processing or delays due to fixed contractual billing schedules. A significant portion of our unbilled accounts receivable consist of carrier services and hardware and software products delivered but not invoiced at the end of the reporting period.

The following table presents customers that represent ten (10) percent or more of consolidated unbilled accounts receivable as of the dates presented below:

	MARCH 31,			DECEMBER 31,
	2025			2024
	As a % of			As a % of
Customer Type	Unbilled Receivables			Unbilled Receivables
	(Unaudited)
U.S. Federal Government		99	%		99	%

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5. Other Current Assets and Accrued Expenses

Other current assets consisted of the following as of the dates presented below:

	MARCH 31,		DECEMBER 31,
	2025		2024
	(Unaudited)
Inventories	$	553,046	$	312,429
Prepaid project costs		493,637		565,999
Deferred contract costs		3,301,729		2,134,182
Prepaid expenses and other assets		858,135		758,863

Total other current assets	$	5,206,547	$	3,771,473

Accrued expenses consisted of the following as of the dates presented below:

	MARCH 31,		DECEMBER 31,
	2025		2024
	(Unaudited)
Carrier service costs	$	24,939,210	$	25,116,590
Salaries and payroll taxes		2,158,350		2,210,150
Inventory purchases, consultants and other costs		3,259,390		3,495,405
Other		37,820		29,110

	$	30,394,770	$	30,851,255

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6. Property and Equipment

Major classes of property and equipment consisted of the following as of the dates presented below:

	MARCH 31,		DECEMBER 31,
	2025		2024
	(Unaudited)
Computer hardware and software	$	2,448,773	$	3,052,569
Furniture and fixtures		379,351		382,419
Leasehold improvements		162,172		157,715
Automobiles		131,569		127,233
Gross property and equipment		3,121,865		3,719,936
Less: accumulated depreciation and amortization		2,631,278		3,175,213

Property and equipment, net	$	490,587	$	544,723

During the three month periods ended March 31, 2025 and 2024 property and equipment depreciation expense was approximately $116,190 and $91,100, respectively.

During the three month period ended March 31, 2025, the Company disposed of fully depreciated property and equipment with historical cost and accumulated depreciation of $656,200. During the three month period ended March 31, 2024, there were no material disposals of property and equipment.

There were no changes in the estimated useful lives used to depreciate property and equipment during the three month periods ended March 31, 2025 and 2024.

7. Goodwill and Intangible Assets

The Company has recorded goodwill of $5,811,578 as of March 31, 2025 and December 31, 2024. There were no changes in the carrying amount of goodwill during the three month period ended March 31, 2025.

Intangible assets consists of the following:

MARCH 31, 2025

Gross Carrying

Accumulated

Net Book

Amount

Amortization

Value

(Unaudited)

Customer Relationships

2,392,000

(837,200

)

1,554,800

Channel Relationships

2,628,080

(1,912,658

)

715,422

Internally Developed Software

7,837,115

(6,400,499

)

1,436,616

Trade Name and Trademarks

1,330,472

(454,067

)

876,405

14,187,667

(9,604,424

)

4,583,243

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	DECEMBER 31, 2024

	Gross Carrying		Accumulated			Net Book
	Amount		Amortization			Value

Customer Relationships	$	2,392,000	$	(777,400	)	$	1,614,600
Channel Relationships		2,628,080		(1,868,857	)		759,223
Internally Developed Software		7,837,115		(6,045,723	)		1,791,392
Trade Name and Trademarks		1,330,472		(431,892	)		898,580

	$	14,187,667	$	(9,123,872	)	$	5,063,795

The Company did not capitalize any internally developed software costs for the three month periods ended March 31, 2025 and 2024.

There were no disposals of intangible assets during the three month periods ended March 31, 2025 and 2024.

The aggregate amortization expense recorded for the three month periods ended March 31, 2025 and 2024 was approximately $480,600 and $573,100, respectively.

As of March 31, 2025, estimated annual amortization for our intangible assets is approximately:

Remainder of 2025	$	1,265,961
2026		1,032,204
2027		521,993
2028		503,106
2029		373,451
Thereafter		886,528
Total	$	4,583,243

8. Credit Agreements

On April 28, 2023, the Company entered into an Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Republic Capital Access, LLC for the non-recourse sale of eligible accounts receivable relating to U.S. Government prime contracts or subcontracts of the Company. The Purchase Agreement terminated in April of 2024 and was not renewed. Prior to the 2024 termination, we sold a total of $2.9 million of receivables in the three month period ended March 31, 2024, for $2.8 million in proceeds net of fees.

On February 29, 2024, the Company entered into a Loan and Security Agreement (the “Loan”) and Promissory Note (the “Note,” and, together with the Loan, the “Agreements”) with Old Dominion National Bank. The Agreements provide for a $4,000,000 revolving line of credit facility (the “Credit Facility”). On February 18, 2025, the Company renewed the Credit Facility for an additional year until February 28, 2026.

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Advances under the Credit Facility are subject to a borrowing base equal to the lesser of (i) $4,000,000 or (ii) 80% of billed accounts receivable less than 90 days outstanding. Interest accrues on the outstanding principal balance of the Credit Facility at an annual rate equal to the Prime Rate published in The Wall Street Journal, subject to a floor rate of 7.25%. Outstanding interest on the amount borrowed is payable monthly and all outstanding interest and principal is due on the maturity date of February 28, 2026. The Credit Facility includes customary covenants and events of default, including the following items that are measured annually: (i) a minimum tangible net worth of $2.0 million; (ii) a minimum annual EBITDA of $1.0 million and (iii) a ratio of current assets to current liabilities of not less than 1.0 to 1.0. The Company did not have an outstanding balance on its Credit Facility as of March 31, 2025. The Company was in compliance with its covenants at March 31, 2025.

9. Leases

Effective March 1, 2025, the Company entered into a new lease agreement to lease office space in the Hampton, Virginia area, that replaced its existing lease in Hampton, Virginia. The lease is for a term of seventy-six months, with a monthly rent obligation of $8,235, subject to annual rent increase of 3%. The operating lease resulted in the Company recording a leased right to use asset of $542,232 and associated liability.

During the three month period ended March 31, 2025, the Company disposed of a fully amortized right of use asset with historical cost of $283,800.

10. Income Taxes

The Company’s effective tax rate was 11.5% and 6.1% for the three month periods ended March 31, 2025 and 2024, respectively. The difference in the effective tax rate and the U.S. federal statutory rate was primarily due to the full valuation allowance the Company maintains against its deferred tax assets and state minimum taxes in the United States. The effective tax rate is calculated by dividing the income tax benefit by the loss before income tax benefit.

11. Stockholders’ Equity

Common Stock

The Company is authorized to issue 30,000,000 shares of common stock, $0.001 par value per share. As of March 31, 2025, there were 9,563,904 shares issued and outstanding.

During the three month period ended March 31, 2025, there were 103,013 shares of common stock vested in accordance with the vesting terms of the restricted stock awards (RSAs). Certain employees received less than the shares vested because they elected to have a total of 24,614 shares withheld in satisfaction of the employees corresponding tax liability of approximately $115,200. The Company’s payment of this tax liability was recorded as a cash flow from financing activity on the consolidated statement of cash flows.

During the three-month period ended March 31, 2024, there were 503,313 shares of common stock vested in accordance with the vesting terms of the RSAs. Certain employees received less than the shares vested because they elected to have a total of 84,772 shares withheld in satisfaction of the employees corresponding tax liability of approximately $218,800. The Company’s payment of this tax liability was recorded as a cash flow from financing activity on the consolidated statement of cash flows.

There were no stock option exercises during the three month periods ended March 31, 2025 and 2024.

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12. Share-based Compensation

Share-based compensation (including restricted stock awards) represents both stock option-based expense and stock grant expense. The following table sets forth the composition of stock compensation expense included in general and administrative expense for the periods then ended:

	THREE MONTHS ENDED
	MARCH 31,
	2025		2024
	(Unaudited)
Restricted share-based compensation expense	$	170,781	$	389,393
Non-qualified option share-based compensation expense		28,078		28,390

Total share-based compensation before taxes	$	198,859	$	417,783

The Company’s stock incentive plan is administered by the Compensation Committee of the Board of Directors and authorizes the grant or award of incentive stock options (ISO), nonqualified stock options (NQSO), restricted stock awards (RSA), restricted stock units, stock appreciation rights, dividend equivalent rights, performance unit awards and phantom shares. The Company issues new shares of common stock upon the exercise of stock options.

Restricted Stock

The Company records the fair value of all restricted stock shares based on the grant date fair value and amortizes stock compensation on a straight-line basis over the vesting period. Restricted stock shares are issued when vested and included in the total number of common shares issued and outstanding. There were no restricted stock share awards granted during the three month periods ended March 31, 2025 and 2024.

Stock Options

The Company estimates the fair value of nonqualified stock awards using a Black-Scholes Option Pricing model (“Black-Scholes model”). The fair value of each stock award is estimated on the date of grant using the Black-Scholes model, which requires an assumption of dividend yield, risk free interest rates, volatility, and expected option life. The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. Expected volatilities are based on the historical volatility of our common stock over the expected option term. The expected term of options granted is calculated using the simplified method. The Company recognizes forfeitures as they occur. There were no stock option awards granted during the three month periods ended March 31, 2025 and 2024.

At March 31, 2025, the Company had approximately $0.5 million of total unrecognized share-based compensation expense, net of estimated forfeitures, related to share-based compensation that will be recognized over the weighted average remaining period of 1.2 years.

Long-Term Incentive Plan

The Company maintains a long-term incentive plan (LTIP) that covers the period of January 1, 2023 through January 1, 2026. The LTIP has two components of equity-based compensation. The first is 250,000 Restricted Stock Awards (RSAs) that were granted to members of management on April 2, 2024 and vested 33% on the date of grant with the remainder to vest on January 1, 2025 and 2026, subject to continued service. The estimated fair value of these RSAs of $640,500 will be recorded over the service period. The second is 250,000 Performance- based Restricted Stock Units (PSRUs) that would vest upon meeting certain revenue or adjusted EBITDA performance targets through December 31, 2025, subject to continued service. The estimated fair value of these PRSUs of $640,500 will be recorded if and when the Company concludes that it is probable that either performance condition will be achieved.

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13. Earnings (Loss) Per Common Share (EPS)

The computations of basic and diluted earnings (loss) per share were as follows for the periods presented below:

	THREE MONTHS ENDED
	MARCH 31,
	2025			2024
	(Unaudited)
Basic and Diluted Earnings Per Share Computation:
Net loss	$	(724,063	)	$	(653,110	)
Weighted average number of common shares		9,552,971			8,897,819
Basic and Diluted Loss Per Share	$	(0.08	)	$	(0.07	)

For the three month period ended March 31, 2025, the Company had unexercised stock options of 288,570, RSAs of 220,007 and warrants to purchase 150,000 shares of common stock, outstanding, that were anti-dilutive. For the three month period ended March 31, 2024, the Company had unexercised stock options of 288,570, RSAs of 112,679 and warrants to purchase 150,000 shares of common stock, outstanding, that were anti-dilutive.

14. Revenue from Contracts with Customers

The following table was prepared to provide additional information about the composition of revenues from contracts with customers for the periods presented:

	THREE MONTHS ENDED
	MARCH 31,
	2025		2024
	(Unaudited)
Carrier Services	$	22,401,304	$	19,342,789
Managed Services		11,816,435		14,864,490

	$	34,217,739	$	34,207,279

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The Company recognized revenues from contracts with customers for the following customer types as set forth below:

	THREE MONTHS ENDED
	MARCH 31,
	2025		2024
	(Unaudited)
U.S. Federal Government	$	29,093,879	$	28,067,572
U.S. State and Local Governments		96,822		96,679
Foreign Governments		15,408		10,392
Commercial Enterprises		5,011,630		6,032,636

	$	34,217,739	$	34,207,279

The Company recognized revenues from contracts with customers in the following geographic regions:

	THREE MONTHS ENDED
	MARCH 31,
	2025		2024
	(Unaudited)
United States	$	33,216,571	$	33,250,246
Europe		1,001,168		957,033

	$	34,217,739	$	34,207,279

During the three months ended March 31, 2025 and 2024, the Company recognized approximately $3.2 million and $908,900, respectively, of revenue related to amounts that were included in deferred revenue as of December 31, 2024 and 2023, respectively.

15. Segment Information

Segments are defined by authoritative guidance as components of a company in which separate financial information is available and is evaluated by the chief operating decision maker (CODM), or a decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is the chief executive officer and is responsible for reviewing segment performance and making decisions regarding resource allocation.

The Company operates as one segment based on the consolidated information used by its CODM in evaluating the financial performance of its business and allocation resources. This single segment represents the Company’s business, WidePoint, which is providing managed services for government and commercial clients that include Identity Management (IdM), secure Mobility Managed Services (MMS), Telecom Lifecycle Management, Digital Billing & Analytics and IT as a service (ITaaS). The Company presents a single segment for purposes of financial reporting and prepared consolidated financial statements upon that basis.

The CODM assesses performance for the reporting segment and decides how to allocate resources based on consolidated revenue, gross profit and net income (loss), which also is reported on the Consolidated Statement of Operations, in addition to other key financial indicators, including gross margin, guiding strategic decisions to align with company-wide goals. The CODM uses the performance measures and key financial indicators in managing the business, allocating resources, making operating decisions, assessing financial performance, deciding investment decisions such as acquisitions.

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The measure of segment assets is reported on the balance sheet as total consolidated assets. In addition, substantially all of the Company's revenues and long-lived assets are attributable to operations is in the United States for all periods presented.

The following table reflects certain financial data for our reportable segment:

	THREE MONTHS ENDED
	MARCH 31,
	2025			2024
	(Unaudited)
REVENUES	$	34,217,739		$	34,207,279
Carrier services cost		(22,392,283	)		(19,382,671	)
Managed service costs		(6,560,742	)		(9,581,812	)
Depreciation and amortization		(709,882	)		(833,439	)
Stock based compensation		(198,859	)		(417,783	)
Other segment items ⁽¹⁾		(5,172,404	)		(4,642,593	)
Interest expense		(55,073	)		(58,737	)
Interest income		53,430			49,426
Other expense		-			(34,871	)
Income tax benefit		94,011			42,091

NET LOSS FOR THE PERIOD:	$	(724,063	)	$	(653,110	)

(1) Other segment items include sales and marketing costs, general and administrative expenses.

16. Commitments and Contingencies

Employment Agreements

The Company has employment agreements with certain executives that set forth compensation levels and provide for severance payments in certain instances.

Litigation

The Company is not involved in any material legal proceedings.

17. Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Form 10-Q are forward-looking statements. You can identify these statements by words such as “aim,” “anticipate,” “assume,” “believe,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “positioned,” “predict,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management's beliefs and assumptions. These statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

	·	Our ability to successfully execute our strategy;
	·	Our ability to sustain profitability and positive cash flows;
	·	Our ability to gain market acceptance for our products;
	·	Our ability to win new contracts, execute contract extensions and expand scope of services on existing contracts;
	·	Our ability to compete with companies that have greater resources than us;
	·	Our ability to penetrate the commercial sector to expand our business;
	·	The impact of supply chain issues;
	·	Our ability to identify potential acquisition targets and close such acquisitions;
	·	Our ability to successfully integrate acquired businesses with our existing operations;
	·	Our ability to maintain a sufficient level of inventory necessary to meet our customers demand due to supply shortage and pricing;
	·	Our ability to retain and recruit key personnel;
	·	The impact of increasingly volatile public equity markets on our market capitalization;
	·	Our ability to mitigate the impacts of inflation;
	·	Our ability to mitigate the imparts of the Department of Government Efficiency (DOGE) and
	·	The risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on April 15, 2025.

The forward-looking statements included in this Form 10-Q are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Readers are cautioned not to put undue reliance on forward-looking statements. In this Quarterly Report on Form 10-Q, unless the context indicates otherwise, the terms “Company” and “WidePoint,” as well as the words “we,” “our,” “ours” and “us,” refer collectively to WidePoint Corporation and its consolidated subsidiaries.

Business Overview

We are a leading provider of Technology Management as a Service (TMaaS) that consists of federally certified communications management, identity management, interactive bill presentment and analytics, and Information Technology as a Service solutions. We help our clients achieve their organizational missions for mobility management, information technology management, and cybersecurity objectives in this challenging and complex business environment.

We offer our TMaaS solutions through a flexible managed services model which includes both a scalable and comprehensive set of functional capabilities that can be used by any customer to meet the most common functional, technical and security requirements for mobility management. Our TMaaS solutions were designed and implemented with flexibility in mind such that it can accommodate a large variety of customer requirements through simple configuration settings rather than through costly software development. The flexibility of our TMaaS solutions enables our customers to be able to quickly expand or contract their mobility management requirements. Our TMaaS solutions are hosted and accessible on-demand through both a secure federal government certified proprietary portal and/or through a secure enterprise portal that provides our customers with the ability to manage, analyze and protect their valuable communications assets, and deploy identity management solutions that provide secured virtual and physical access to restricted environments.

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For additional information related to our business operations, see the description of our business set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on April 15, 2025.

Strategic Focus and Notable Events

Our longer-term strategic focus and goals are driven by our need to expand our critical mass so that we have more flexibility to fund investments in technology solutions and introduce new sales and marketing initiatives in order to expand our marketplace share and increase the breadth of our offerings in order to improve company sustainability and growth.

In fiscal 2025, we continue to focus on the following key goals:

	■	Winning the DHS CWHS 3.0 re-compete,
	■	Finding additional avenues for capturing new sales opportunities,
	■	Providing unmatched level of services to our current customer base,
	■	Leveraging our FedRAMP Authorized status as a differentiator from our competitors in pursuing government business,
	■	Growing our recurring managed services revenues,
	■	Adding incremental capabilities to our Technology Management solution set and develop and possibly acquire new high margin business lines,
	■	Leveraging our software platforms to grow our SaaS revenues and take advantage of the opportunities emerging from the growth in remote working,
	■	Expanding our commercial customer base organically,
	■	Continuing to leverage the R2v3 Certification,
	■	Executing cross-sell opportunities identified from ITA acquisition, including Identity Management (IdM), Telecommunications Lifecycle Management (TLM) and Digital Billing & Analytics (DB&A) solution,
	■	Growing our sales pipeline by continuing to invest in our business development and sales team assets,
	■	Pursuing additional opportunities with our key systems integrator and strategic partners, and
	■	Expanding our solution offerings into the commercial space,
	■	Exploring integration of artificial intelligence into our solution to provide better information security, and improve service delivery while reducing response time and cost.

Our strategy for achieving our longer-term goals include:

	■	Establishing a market leadership position in the trusted mobility management (TM2) sector,
	■	Pursuing accretive and strategic acquisitions to expand our solutions and our customer base,
	■	Delivering new incremental offerings to add to our existing TM2 offering,
	■	Creating and testing innovative new offerings that enhance our TM2 offering, and
	■	Transitioning our data center and support infrastructure into a more cost-effective and federally approved cloud environment to comply with perceived future contract requirements.

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Results of Operations

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Revenues. Revenues for the three month period ended March 31, 2025 were $34.2 million, which was in line with $34.2 million in the same period in 2024. Our mix of revenues for the periods presented is set forth below:

	THREE MONTHS ENDED
	MARCH 31,				Dollar
	2025		2024		Variance

Carrier Services	$	22,401,299	$	19,382,669	$	3,018,630
Managed Services:
Managed Service Fees		9,245,700		8,681,097		564,603
Billable Service Fees		1,782,196		1,190,200		591,996
Reselling and Other Services		788,544		4,953,313		(4,164,769	)
Total Managed Services:		11,816,440		14,824,608		(3,008,168	)

	$	34,217,739	$	34,207,279	$	10,460

Total managed services revenue were $11.8 million, a decrease of $3.0 million, compared with the same period in 2024 as follows:

	·	Our managed service fees were $9.2 million, an increase of $0.5 million, compared with the same period in 2024. The increase in managed service fees was primarily due to a new federal end customer which began in September of 2024.

	·	Billable service fees were $1.7 million, which is relatively consistent compared with the same period in 2024.

	·	Reselling and other services were approximately $800,000 and decreased by $4.2 million from the same period last year. The decrease is primarily due to the out of period adjustment of $2.7 million and recognition of revenue for SaaS agreements over the period of performance compared to point-in -time recognition. Reselling and other services are transactional in nature, and the amount and timing of revenue varies from quarter to quarter.

We also procure, process and pay communications carrier invoices on behalf of customers. Under many of our carrier services arrangements, we recognize revenues and related costs on a gross basis. A significant portion of our overall reported revenue consists of revenue from carrier services; however, it represents an insignificant portion of our overall reported gross profit. This is a commodity type service and margins are nominal, but this is a necessary service to deliver to federal government customers that engage us to provide a full-service solution. Our carrier services revenue was $22.4 million, an increase of $3.0 million, as compared with the same period in 2024. The increase in carrier services revenues over the same period last year is a result of the growth in the number of phone lines under management during 2024 for our DHS customer.

Cost of Revenues. Our cost of revenues include employee labor, excluding fringe benefit costs, and subcontractors directly associated with satisfying customer performance obligations, and the associated cost of products and third-party software that we resell to our end customers. Cost of revenues also includes depreciation and amortization of capitalized software related to delivering our solutions. Cost of revenues for the three month period ended March 31, 2025 were $29.4 million (or 86% of revenues), which is consistent as a percentage of revenues (or 86% of revenues) in 2024. Included in cost of revenues is carrier costs paid on behalf of our federal government customers of approximately $22.4 million and $19.4 million for the three month periods ended March 31, 2025 and 2024, respectively.

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Gross Profit. Gross profit for the three month period ended March 31, 2025 increased by $0.1 million to $4.7 million (or 14% of revenues), compared to $4.6 million (or 14% of revenues) in 2024.

Gross profit as a percentage of managed services revenue (excluding carrier services) for the three month period ended March 31, 2025 was 40.4% compared to 31.5% in the same period last year due to lower reselling revenues, compared to the same period last year, which have a lower gross margin.

	THREE MONTHS ENDED
	MARCH 31,
	2025		2024
Revenues:
Carrier Services	$	22,401,299	$	19,382,669
Managed Services		11,816,440		14,824,610
Total revenue		34,217,739		34,207,279

Gross Profit:
Carrier Services		-		-
Managed Services		4,778,521		4,665,891
Total gross profit		4,778,521		4,665,891

Gross Margin:
Carrier Services		-		-
Managed Services		40.4%		31.5%
Total gross margin		14%		14%

Sales and Marketing. Sales and marketing expenses include employee labor, excluding fringe benefit costs, and sales commissions associated with our sales force, commission fees paid non-employee sales agents and partners, and costs associated with travel and trade shows. Sales and marketing expense for the three month period ended March 31, 2025 was $0.6 million and remained relatively constant at 2% of revenues to 2024.

General and Administrative. General and administrative expenses include employees in finance, human resources, information technology, and other administrative support functions; employee labor not associated with any single revenue producing activity, all company fringe benefits, including paid time off, employee health and medical insurance, 401k matching contributions, and payroll taxes. General and administrative expenses also include professional services to include audit, consulting, outside legal, and outsourcing services. Certain of these expenses, including those associated with the operation of our technical infrastructure as well as components of our operating expenses, are generally less variable in nature and may not correlate to the changes in revenue. General and administrative expenses for the three month period ended March 31, 2025 were $4.7 million (or 13% of revenues), as compared to $4.4 million (or 13% of revenues) in 2024. The dollar increase during 2025 primarily relates to general inflationary pressures, which were partially offset by $218,000 less share-based compensation expense in the first quarter of 2025 compared to the same period in 2024.

Depreciation and Amortization. Depreciation and amortization expense for the three month period ended March 31, 2025 was $223,700 as compared to $256,500 in 2024. The slight decrease in depreciation expense is due to certain assets reaching their fully depreciated life during 2024.

Other Income (Expense). Other expense, net for the three month period ended March 31, 2025 was $1,600 compared to other expense, net of $44,200 in 2024.

Income Taxes. Income tax benefit for the three month period ended March 31, 2025 was $94,000 as compared to income tax benefit of $42,100 in 2024. Income taxes were accrued at an estimated effective tax rate of 11.5% for the three month period ended March 31, 2025 compared to 6.1% for the three month period ended March 31, 2024.

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Net Loss. As a result of the cumulative factors described above, net loss for the three month period ended March 31, 2025 increased by $71,000 to $724,100 compared to net loss of $653,100 for the three month period ended March 31, 2024.

Liquidity and Capital Resources

Our immediate sources of liquidity include cash, accounts receivable, unbilled receivables and access to our credit agreement with Old Dominion National Bank.

At March 31, 2025, our net working capital, excluding restricted cash, was approximately $1.6 million compared to $2.4 million at December 31, 2024. We believe that our existing cash balances and our anticipated cash flows from operations and interim access to our credit facility through its maturity on February 28, 2026, will be sufficient to meet our working capital, expenditure, and contractual obligation requirements for the next 12 months. There is no assurance that, if needed, we will be able to borrow or raise capital on favorable terms or at all.

Cash Flows from Operating Activities

For the three months ended March 31, 2025, net cash used in operations was approximately $3.2 million driven by delayed billing and collections of accounts receivables with a federal government customer and is partially offset by temporary payable timing differences. The delays on billing and collections relate to administrative contract actions that the Company continues to work toward resolving; however, there is no guarantee that the process for billing these receivables will be enhanced. In the same period in 2024, $1.6 million net cash was used in operations.

Our single largest cash operating expense is the cost of labor and the Company sponsored healthcare benefit programs. Our second largest cash operating expense is our facility costs and related technology communication costs to support delivery of our services to our customers. We lease most of our facilities under non-cancellable long term contracts that may limit our ability to reduce fixed infrastructure expenditures in the short term. Any changes to our fixed labor and/or infrastructure costs may require a significant amount of time to take effect depending on the nature of the change made. We also may experience temporary collection timing differences from time to time due to customer invoice processing delays that are often beyond our control. New customers often take more time to implement our billing processes. Further, changes within existing customers deployment of our services can cause temporary delays in billings. While we have historically been able to resolve these administrative matters timely, given the scale of several new customer implementations, failure to resolve these matters on a timely basis could negatively impact our cashflows from operations.