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, 2026

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 8, 2026, there were 9,887,181 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 months ended March 31, 2026 and 2025	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2026 and 2025	4

	Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025	6

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026 and 2025	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

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

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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,
	2026			2025
	(Unaudited)
REVENUES	$	40,576,030		$	33,510,039
COST OF REVENUES (including amortization and depreciation of
$283,736 and $486,194, respectively)		34,978,404			28,731,518

GROSS PROFIT		5,597,626			4,778,521

OPERATING EXPENSES
Sales and marketing		595,997			639,482
General and administrative expenses (including share-based
compensation of $248,817 and $198,859, respectively)		4,832,023			4,731,782
Depreciation and amortization		227,972			223,688

Total operating expenses		5,655,992			5,594,952

LOSS FROM OPERATIONS		(58,366	)		(816,431	)

OTHER INCOME (EXPENSE)
Interest income		87,403			53,430
Interest expense		(44,993	)		(55,073	)
Other income (expense), net		49,240			-

Total other income (expense), net		91,650			(1,643	)

INCOME (LOSS) BEFORE INCOME TAX BENEFIT		33,284			(818,074	)
INCOME TAX BENEFIT		(43,676	)		(94,011	)

NET INCOME (LOSS)	$	76,960		$	(724,063	)

BASIC EARNINGS PER SHARE	$	0.01		$	(0.08	)

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING		9,872,662			9,552,971

DILUTED EARNINGS PER SHARE	$	0.01		$	(0.08	)

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING		10,073,810			9,552,971

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 INCOME (LOSS)

	THREE MONTHS ENDED
	MARCH 31,
	2026		2025
	(Unaudited)
NET INCOME (LOSS)	$	76,960	$	(724,063	)

Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		607		26,105

Other comprehensive income (loss):		607		26,105

COMPREHENSIVE INCOME (LOSS)	$	77,567	$	(697,958	)

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,
	2026			2025
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	10,927,910		$	9,818,503
Restricted cash		354,678			2,647,990
Accounts receivable, net of allowance for credit losses of $49,598 and $57,454, respectively		19,194,132			15,002,571
Unbilled accounts receivable		37,711,894			33,548,228
Other current assets		4,688,348			5,196,613

Total current assets		72,876,962			66,213,905

NONCURRENT ASSETS
Property and equipment, net		468,644			480,082
Lease right of use asset		3,695,969			3,904,479
Intangible assets, net		3,073,788			3,352,296
Goodwill		5,811,578			5,811,578
Deferred tax assets, net		2,312			1,123
Other long-term assets		48,822			48,822

Total assets	$	85,978,075		$	79,812,285

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	29,625,712		$	25,891,150
Accrued expenses		34,974,561			31,159,173
Current portion of deferred revenue		4,726,949			6,114,402
Current portion of lease liabilities		704,394			751,233

Total current liabilities		70,031,616			63,915,958

NONCURRENT LIABILITIES
Lease liabilities, net of current portion		3,766,448			3,930,495
Deferred revenue, net of current portion		429,825			435,151

Total liabilities		74,227,889			68,281,604

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; 9,872,662 and 9,892,565 shares issued and outstanding, respectively		9,874			9,894
Additional paid-in capital		103,875,748			103,733,790
Accumulated other comprehensive loss		(379,058	)		(379,665	)
Accumulated deficit		(91,756,378	)		(91,833,338	)

Total stockholders’ equity		11,750,186			11,530,681

Total liabilities and stockholders’ equity	$	85,978,075		$	79,812,285

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,
	2026			2025
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	76,960		$	(724,063	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred income tax benefit		(5,000	)		(36,400	)
Depreciation expense		233,931			229,330
Provision for credit losses		7,823			6,776
Amortization of intangibles		278,509			480,552
Share-based compensation expense		248,817			198,859
Non-cash lease expense		61,766			46,444
Loss (gain) on disposal of fixed assets		(49,043	)		-
Changes in assets and liabilities:
Accounts receivable and unbilled receivables		(8,374,552	)		(1,990,901	)
Inventories		259,115			(240,208	)
Other current assets		246,757			(1,190,283	)
Other assets		-			53,717
Accounts payable and accrued expenses		7,527,183			(1,072,599	)
Income tax payable		7,444			9,543
Deferred revenue and other liabilities		(1,382,923	)		1,044,877
Other liabilities		(59,274	)		(43,235	)

Net cash used in operating activities		(922,487	)		(3,227,591	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(77,832	)		(27,632	)
Proceeds from disposal of property and equipment		49,043			-

Net cash used in investing activities		(28,789	)		(27,632	)

CASH FLOWS FROM FINANCING ACTIVITIES
Advances on bank line of credit		-			2,800,000
Repayments of bank line of credit advances		-			(2,800,000	)
Principal repayments under finance lease obligations		(131,595	)		(119,766	)
Withholding taxes paid on behalf of employees on net settled restricted stock awards		(106,879	)		(115,211	)

Net cash used in financing activities		(238,474	)		(234,977	)

Net effect of exchange rate on cash		5,845			(27,553	)

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(1,183,905	)		(3,517,753	)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period		12,466,493			7,817,395

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	11,282,588		$	4,299,642

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH CONSISTED OF THE FOLLOWING:
Cash and cash equivalents	$	10,927,910		$	3,703,169
Restricted cash		354,678			596,473
	$	11,282,588		$	4,299,642

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,
	2026		2025
	(Unaudited)
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest	$	34,946	$	41,259

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, 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

Additional

Common Stock

Paid-In

Accumulated

Issued

Amount

Capital

OCI

Deficit

Total

(Unaudited)

Balance, January 1, 2026

9,892,565

9,894

103,733,790

(379,665

)

(91,833,338

)

11,530,681

Withholdings from vesting of restricted stock

(19,903

)

(20

)

(106,859

)

(106,879

)

Stock compensation expense —

restricted

153,539

Stock compensation expense —

non-qualified stock options

95,278

Foreign currency translation —

gain

607

Net income

76,960

Balance, March 31, 2026

9,872,662

9,874

103,875,748

(379,058

)

(91,756,378

)

11,750,186

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. Additionally, the Company’s ITMS platform has received the FedRAMP Authorized status. 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, 2026 and for each of the three month periods ended March 31, 2026 and 2025 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, 2025 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, 2025. The results of operations for the three months ended March 31, 2026 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 period.

Significant Accounting Policies

There were no significant changes in the Company’s significant accounting policies during the first three months of 2026 from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 25, 2026.

Accounting Standards Update

Accounting Standards Adopted

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 adopted this guidance prospectively for the year ended December 31, 2025.

Accounting Standards under Evaluation

In November 2024, the 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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In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU amends the guidance under ASC 350-40 for internal-use software. The amendment removes reference to development-stages, clarify when capitalization may begin, and require entities to apply to property, plant and equipment disclosure requirements under ASC 350-10 to capitalize internal-use software costs. The ASU is effective for annual periods beginning after December 15, 2027, and for interim periods within those annual periods. Early adoption of ASU No. 2025-06 is permitted. The Company is evaluating the impact of these new requirements on its financial position, results of operations and cash flows.

Reclassification

Certain prior period amounts have been revised to correct an immaterial misclassification in the previously issued consolidated financial statements related to certain interchange cash back rewards. These amounts were previously recorded as revenues but should have been recorded as reductions of cost of revenues. The revision had no impact on previously reported gross profit, loss from operations, net loss, or stockholders’ equity.

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,
	2026		2025
	(Unaudited)
U.S. Federal, State, and Local Government (1)	$	15,077,116	$	12,598,664
Commercial (2)		4,166,614		2,461,361
Gross accounts receivable		19,243,730		15,060,025
Less: allowances for credit
losses (3)		49,598		57,454

Accounts receivable, net	$	19,194,132	$	15,002,571

(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, government shutdown, and continuing budget resolutions 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 months ended March 31, 2026 and 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,
	2026			2025
	As a % of			As a % of
Customer Type	Receivables			Receivables
	(Unaudited)
U.S. Federal Government		78	%		84	%

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	2026			2025
	(Unaudited)
U.S. Federal Government (1)		85	%		87	%

(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, 2026, the Company had deposits in excess of FDIC limits of approximately $9.8 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, 2026, the Company had foreign bank deposits in excess of insured limits of approximately €282,600.

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.

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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,
	2026			2025
	As a % of			As a % of
Customer Type	Unbilled Receivables			Unbilled Receivables
	(Unaudited)
U.S. Federal Government		99	%		99	%

5. Other Current Assets and Accrued Expenses

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

	MARCH 31,		DECEMBER 31,
	2026		2025
	(Unaudited)
Inventories	$	422,673	$	682,005
Prepaid project costs		1,330,977		697,360
Deferred contract costs		1,753,502		2,993,272
Prepaid expenses and other assets		1,181,196		823,976

Total other current assets	$	4,688,348	$	5,196,613

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

	MARCH 31,		DECEMBER 31,
	2026		2025
	(Unaudited)
Carrier service costs	$	29,489,650	$	25,759,570
Salaries and payroll taxes		1,906,950		2,012,510
Inventory purchases, consultants and other costs		3,453,641		3,269,533
Other		124,320		117,560

Total accrued expenses	$	34,974,561	$	31,159,173

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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,
	2026		2025
	(Unaudited)
Computer hardware and software	$	2,940,287	$	2,925,707
Furniture and fixtures		379,937		380,139
Leasehold improvements		277,341		279,762
Automobiles		80,829		136,651
Gross property and equipment		3,678,394		3,722,259

Less: accumulated depreciation		3,209,750		3,242,177

Property and equipment, net	$	468,644	$	480,082

During the three months ended March 31, 2026 and 2025 property and equipment depreciation expense was approximately $86,500 and $116,190, respectively.

During the three months ended March 31, 2026, the Company sold fully depreciated property and equipment with historical cost and accumulated depreciation of $105,200 and received proceeds of $49,043. During the three months ended March 31, 2025, the Company disposed of fully depreciated property and equipment with historical cost and accumulated depreciation of $656,200 and did not receive any proceeds from the disposal.

There were no changes in the estimated useful lives used to depreciate property and equipment during the three month periods ended March 31, 2026 and 2025.

7. Goodwill and Intangible Assets

The Company has recorded goodwill of $5,811,578 as of March 31, 2026 and December 31, 2025. There were no changes in the carrying amount of goodwill during the three months ended March 31, 2026 and 2025.

Intangible assets consists of the following:

MARCH 31, 2026

Gross Carrying

Accumulated

Net Book

Amount

Amortization

Value

(Unaudited)

Customer Relationships

2,392,000

(1,076,400

)

1,315,600

Channel Relationships

2,628,080

(2,087,863

)

540,217

Internally Developed Software

7,866,000

(7,435,736

)

430,264

Trade Name and Trademarks

1,330,472

(542,765

)

787,707

14,216,552

(11,142,764

)

3,073,788

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	DECEMBER 31, 2025

	Gross Carrying		Accumulated			Net Book
	Amount		Amortization			Value

Customer Relationships	$	2,392,000	$	(1,016,600	)	$	1,375,400
Channel Relationships		2,628,080		(2,044,062	)	$	584,018
Internally Developed Software		7,866,000		(7,283,003	)	$	582,997
Trade Name and Trademarks		1,330,472		(520,591	)	$	809,881

	$	14,216,552	$	(10,864,256	)	$	3,352,296

The Company did not capitalize any internally developed software costs for the three months ended March 31, 2026 and 2025.

There were no disposals of intangible assets during the three months ended March 31, 2026 and 2025.

The aggregate amortization expense recorded for the three months ended March 31, 2026 and 2025 was approximately $278,500 and $480,600, respectively.

As of March 31, 2026, estimated annual amortization for intangible assets is approximately:

Remainder of 2026	$	763,320
2027		540,153
2028		510,324
2029		373,452
2030		308,533
Thereafter		578,006
Total	$	3,073,788

8. Credit Agreements

The Company has 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”) that matures on May 28, 2026.

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. 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, 2026. The Company was in compliance with its covenants at March 31, 2026.

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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.

10. Income Taxes

The Company’s effective tax rate was (131.22)% and 11.5% for the three months ended March 31, 2026 and 2025, 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 provision (benefit) by the loss before income tax provision (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, 2026, there were 9,872,662 shares issued and outstanding.

During the three months ended March 31, 2026, there were 108,719 shares of restricted 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 19,903 shares withheld in satisfaction of the employees corresponding tax liability of approximately $106,879. The Company’s payment of this tax liability was recorded as a cash flow from financing activity on the condensed consolidated statement of cash flows.

During the three months ended March 31, 2025, there were 103,013 shares of restricted 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 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 condensed consolidated statement of cash flows.

There were no stock option exercises during the three months ended March 31, 2026 and 2025.

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12. Share-based Compensation

Share-based compensation (including RSAs) 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,
	2026		2025
	(Unaudited)
Restricted share-based compensation expense	$	153,539	$	170,781
Non-qualified option share-based compensation expense		95,278		28,078

Total share-based compensation before taxes	$	248,817	$	198,859

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 award shares are issued when granted and included in the total number of common shares issued and outstanding. There were no restricted stock awards granted during the three months ended March 31, 2026 and 2025.

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 100,000 stock option awards granted during the three months ended March 31, 2026. There were no stock option awards granted during the three months ended March 31, 2025.

For the three months ended March 31, 2026, the weighted-average grant date fair value per option was $0.68 - $2.51. Option pricing model assumptions for NQSO awards granted were valued using the following assumptions for the period then ended as set forth below:

	THREE MONTHS ENDED
	MARCH 31,
	2026			2025

Expected dividend yield		0	%		--
Expected volatility		66.8	%		--
Risk-free interest rate		3.6	%		--
Term	1.8 years				--

At March 31, 2026, the Company had approximately $0.4 million of total unrecognized share-based compensation expense related to share-based compensation that will be recognized over the weighted average remaining period of 1.1 years.

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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,
	2026		2025
	(Unaudited)
Basic Earnings Per Share Computation:
Net income (loss)	$	76,960	$	(724,063	)
Weighted average number of common shares		9,872,662		9,552,971
Basic and Diluted Loss Per Share	$	0.01	$	(0.08	)

Diluted Earnings Per Share Computation:
Net income (loss)	$	76,960	$	(724,063	)

Weighted average number of common shares		9,872,662		9,552,971
Incremental shares from assumed conversions
of dilutive securities		201,148		-
Adjusted weighted average number of
common shares		10,073,810		9,552,971

Diluted Loss Per Share	$	0.01	$	(0.08	)

For the three months ended March 31, 2025, the Company had unexercised stock options of 408,570 and warrants to purchase 150,000 shares of common stock, outstanding, that were anti-dilutive.

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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,
	2026		2025
	(Unaudited)
Carrier Services	$	25,784,036	$	22,401,304
Managed Services		14,791,994		11,108,735

	$	40,576,030	$	33,510,039

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

	THREE MONTHS ENDED
	MARCH 31,
	2026		2025
	(Unaudited)
U.S. Federal Government	$	34,411,929	$	29,093,879
U.S. State and Local Governments		86,338		96,822
Foreign Governments		16,223		15,408
Commercial Enterprises		6,061,540		4,303,930

	$	40,576,030	$	33,510,039

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

	THREE MONTHS ENDED
	MARCH 31,
	2026		2025
	(Unaudited)
United States	$	39,573,706	$	32,508,871
Europe		1,002,324		1,001,168