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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended
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or |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from __________________ to ___________________ |
Commission File Number:
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(Exact name of Registrant as specified in its charter) |
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(State or other jurisdiction of |
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(I.R.S. employer |
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incorporation or organization) |
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identification no.) |
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(Address of principal executive offices) |
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(Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
Trading Symbol |
Name of Exchange on Which Registered |
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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:
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):
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.
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Large accelerated filer |
☐ |
Accelerated filer |
☐ |
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☒ |
Smaller reporting company |
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Emerging growth company |
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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
As of November 10, 2025, there were
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WIDEPOINT CORPORATION
INDEX
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Page No. |
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Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 |
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5 |
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9 |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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31 |
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34 |
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CERTIFICATIONS |
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| 2 |
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| Table of Contents |
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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THREE MONTHS ENDED |
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NINE MONTHS ENDED |
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SEPTEMBER 30, |
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SEPTEMBER 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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(Unaudited) |
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REVENUES |
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$ |
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$ |
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$ |
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$ |
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COST OF REVENUES (including amortization and depreciation of $
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GROSS PROFIT |
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OPERATING EXPENSES |
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Sales and marketing |
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General and administrative expenses (including share-based compensation of $
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Depreciation and amortization |
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Total operating expenses |
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LOSS FROM OPERATIONS |
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(
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) |
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(
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) |
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(
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) |
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(
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) |
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OTHER INCOME (EXPENSE) |
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Interest income |
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Interest expense |
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(
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) |
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(
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) |
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(
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) |
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(
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) |
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Other income (expense), net |
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(
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) |
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Total other income (expense), net |
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(
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) |
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LOSS BEFORE INCOME TAX PROVISION (BENEFIT) |
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(
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) |
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(
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) |
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(
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) |
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(
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) |
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INCOME TAX PROVISION (BENEFIT) |
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(
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) |
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(
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) |
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(
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NET LOSS |
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$ |
(
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) |
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$ |
(
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) |
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$ |
(
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) |
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$ |
(
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) |
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EARNINGS PER SHARE, BASIC AND DILUTED |
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$ |
(
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) |
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$ |
(
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) |
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$ |
(
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) |
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$ |
(
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) |
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WEIGHTED-AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
|
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| Table of Contents |
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|
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THREE MONTHS ENDED |
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NINE MONTHS ENDED |
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||||||||||
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SEPTEMBER 30, |
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SEPTEMBER 30, |
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||||||||||
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2025 |
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2024 |
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2025 |
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2024 |
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(Unaudited) |
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NET LOSS |
|
$ |
(
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) |
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$ |
(
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) |
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$ |
(
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) |
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$ |
(
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) |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments, net of tax |
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Other comprehensive income (loss): |
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COMPREHENSIVE LOSS |
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$ |
(
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) |
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$ |
(
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) |
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$ |
(
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) |
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$ |
(
|
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
|
|
| Table of Contents |
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
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SEPTEMBER 30, |
|
|
DECEMBER 31, |
|
||
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2025 |
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2024 |
|
||
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(Unaudited) |
|
|||||
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ASSETS |
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|||||||
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net of allowance for credit losses of $
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Unbilled accounts receivable |
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Other current assets |
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Total current assets |
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NONCURRENT ASSETS |
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Property and equipment, net |
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Lease right of use asset |
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Intangible assets, net |
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Goodwill |
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Other long-term assets |
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Total assets |
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$ |
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|
$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
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CURRENT LIABILITIES |
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Accounts payable |
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$ |
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$ |
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|
Accrued expenses |
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Current portion of deferred revenue |
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Current portion of lease liabilities |
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Total current liabilities |
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NONCURRENT LIABILITIES |
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Lease liabilities, net of current portion |
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Deferred revenue, net of current portion |
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Deferred tax liabilities, net |
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Total liabilities |
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Commitments and contingencies (Note 16) |
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STOCKHOLDERS' EQUITY |
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Preferred stock, $
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- |
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|
- |
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|
Common stock, $
|
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Additional paid-in capital |
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Accumulated other comprehensive loss |
|
|
(
|
) |
|
|
(
|
) |
|
Accumulated deficit |
|
|
(
|
) |
|
|
(
|
) |
|
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Total stockholders’ equity |
|
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Total liabilities and stockholders’ equity |
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
|
|
| Table of Contents |
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
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|
NINE MONTHS ENDED |
|
|||||
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SEPTEMBER 30, |
|
|||||
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|
2025 |
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2024 |
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||
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|
(Unaudited) |
|
|||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
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||
|
Net loss |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
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Deferred income tax expense |
|
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Depreciation expense |
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Provision for credit losses |
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Amortization of intangibles |
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Share-based compensation expense |
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Non-cash lease expense |
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Loss on disposal of fixed assets |
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|
Changes in assets and liabilities: |
|
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|
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|
Accounts receivable and unbilled receivables |
|
|
|
|
|
|
(
|
) |
|
Inventories |
|
|
(
|
) |
|
|
(
|
) |
|
Other current assets |
|
|
(
|
) |
|
|
(
|
) |
|
Other assets |
|
|
|
|
|
|
(
|
) |
|
Accounts payable and accrued expenses |
|
|
(
|
) |
|
|
|
|
|
Income tax payable |
|
|
(
|
) |
|
|
(
|
) |
|
Deferred revenue and other liabilities |
|
|
|
|
|
|
|
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|
Other liabilities |
|
|
(
|
) |
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
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|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(
|
) |
|
|
(
|
) |
| Proceeds from beneficial interest in sold receivables |
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
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|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
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|
|
Advances on bank line of credit |
|
|
|
|
|
|
|
|
|
Repayments of bank line of credit advances |
|
|
(
|
) |
|
|
(
|
) |
|
Principal repayments under finance lease obligations |
|
|
(
|
) |
|
|
(
|
) |
|
Withholding taxes paid on behalf of employees on net settled restricted stock awards |
|
|
(
|
) |
|
|
(
|
) |
|
Net cash used in financing activities |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
| Net effect of exchange rate on cash |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH CONSISTED OF THE FOLLOWING: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
| Restricted cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
|
|
| Table of Contents |
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
|
|
|
|
|
NINE MONTHS ENDED |
|
|||||
|
|
|
SEPTEMBER 30, |
|
|||||
|
|
|
2025 |
|
|
2024 |
|
||
|
|
|
(Unaudited) |
|
|||||
|
SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
|
|
|
||
|
Cash paid for interest |
|
$ |
|
|
|
$ |
|
|
|
Cash paid for income taxes |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
ROU asset obtained in exchange for lease liability |
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 7 |
|
|
| Table of Contents |
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 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock — restricted |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — restricted |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — non-qualified stock options |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation —(loss) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2024 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock — restricted |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — restricted |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — non-qualified stock options |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation —(loss) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2024 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — restricted |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — non-qualified stock options |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation —gain |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2024 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
|
Accumulated |
|
|
||||||||||
|
|
|
Issued |
|
|
Amount |
|
|
Capital |
|
|
OCI |
|
|
Deficit |
|
|
Total |
|
||||||
|
|
|
(Unaudited) |
||||||||||||||||||||||
|
Balance, January 1, 2025 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock — restricted |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — restricted |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — non-qualified stock options |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation — gain |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2025 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock — restricted |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — restricted |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — non-qualified stock options |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation — gain |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2025 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — restricted |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation expense — non-qualified stock options |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation — gain |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2025 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 8 |
|
|
| Table of Contents |
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 September 30, 2025 and for each of the three and nine month periods ended September 30, 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 and nine month periods ended September 30, 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.
| 9 |
|
|
| Table of Contents |
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 nine 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 Financial Accounting Standards Board (“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 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.
| 10 |
|
|
| Table of Contents |
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 $
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:
|
|
|
SEPTEMBER 30, |
|
|
DECEMBER 31, |
|
||
|
|
|
2025 |
|
|
2024 |
|
||
|
|
|
(Unaudited) |
|
|||||
|
U.S. Federal, State, and Local Government (1) |
|
$ |
|
|
|
$ |
|
|
|
Commercial (2) |
|
|
|
|
|
|
|
|
|
Gross accounts receivable |
|
|
|
|
|
|
|
|
|
Less: allowances for credit |
|
|
|
|
|
|
|
|
|
losses (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
$ |
|
|
|
$ |
|
|
(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, as further discussed in Note 17, 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 and nine month periods ended September 30, 2025 and 2024, 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.
| 11 |
|
|
| Table of Contents |
Significant Concentrations
The following table presents consolidated trade accounts receivable by customer as of the periods presented below:
|
|
|
SEPTEMBER 30, |
|
|
DECEMBER 31, |
|
||
|
|
|
2025 |
|
|
2024 |
|
||
|
|
|
As a % of |
|
|
As a % of |
|
||
|
Customer Type |
|
Receivables |
|
|
Receivables |
|
||
|
|
|
(Unaudited) |
|
|||||
|
U.S. Federal Government |
|
|
|
% |
|
|
|
% |
The following table presents revenue by customer for each of the periods presented:
|
|
|
THREE MONTHS ENDED |
|
|
NINE MONTHS ENDED |
|
||||||||||
|
|
|
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
||||||||||
|
|
|
As a % of |
|
|
As a % of |
|
|
As a % of |
|
|
As a % of |
|
||||
|
|
|
Revenue |
|
|
Revenue |
|
|
Revenue |
|
|
Revenue |
|
||||
|
Customer Type |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
(Unaudited) |
|
|||||||||||||
|
U.S. Federal Government (1) |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
(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 September 30, 2025, the Company had deposits in excess of FDIC limits of approximately $
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.
| 12 |
|
|
| Table of Contents |
The following table presents customers that represent ten (10) percent or more of consolidated unbilled accounts receivable as of the dates presented below:
|
|
|
SEPTEMBER 30, |
|
|
DECEMBER 31, |
|
||
|
|
|
2025 |
|
|
2024 |
|
||
|
|
|
As a % of |
|
|
As a % of |
|
||
|
Customer Type |
|
Unbilled Receivables |
|
|
Unbilled Receivables |
|
||
|
|
|
(Unaudited) |
|
|||||
|
U.S. Federal Government |
|
|
|
% |
|
|
|
% |
5. Other Current Assets and Accrued Expenses
Other current assets consisted of the following as of the dates presented below:
|
|
|
SEPTEMBER 30, |
|
|
DECEMBER 31, |
|
||
|
|
|
2025 |
|
|
2024 |
|
||
|
|
|
(Unaudited) |
|
|||||
|
Inventories |
|
$ |
|
|
|
$ |
|
|
|
Prepaid project costs |
|
|
|
|
|
|
|
|
|
Deferred contract costs |
|
|
|
|
|
|
|
|
|
Prepaid expenses and other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other current assets |
|
$ |
|
|
|
$ |
|
|
Accrued expenses consisted of the following as of the dates presented below:
|
|
|
SEPTEMBER 30, |
|
|
DECEMBER 31, |
|
||
|
|
|
2025 |
|
|
2024 |
|
||
|
|
|
(Unaudited) |
|
|||||
|
Carrier service costs |
|
$ |
|
|
|
$ |
|
|
|
Salaries and payroll taxes |
|
|
|
|
|
|
|
|
|
Inventory purchases, consultants and other costs |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
| 13 |
|
|
| Table of Contents |
6. Property and Equipment
Major classes of property and equipment consisted of the following as of the dates presented below:
|
|
|
SEPTEMBER 30, |
|
|
DECEMBER 31, |
|
||
|
|
|
2025 |
|
|
2024 |
|
||
|
|
|
(Unaudited) |
|
|||||
|
Computer hardware and software |
|
$ |
|
|
|
$ |
|
|
|
Furniture and fixtures |
|
|
|
|
|
|
|
|
|
Leasehold improvements |
|
|
|
|
|
|
|
|
|
Automobiles |
|
|
|
|
|
|
|
|
|
Gross property and equipment |
|
|
|
|
|
|
|
|
|
Less: accumulated depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
|
|
|
$ |
|
|
During the three and nine month periods ended September 30, 2025 property and equipment depreciation expense was approximately $
During the three month period ended September 30, 2025, there were no material disposals of property and equipment. During the nine month period ended September 30, 2025, the Company disposed of property and equipment with historical cost of $
During the three month and nine month period ended September 30, 2024, the Company disposed of fully depreciated property and equipment with historical cost and accumulated depreciation of approximately $
There were no changes in the estimated useful lives used to depreciate property and equipment during the nine month periods ended September 30, 2025 and 2024.
7. Goodwill and Intangible Assets
The Company has recorded goodwill of $
| 14 |
|
|
| Table of Contents |
Intangible assets consists of the following:
|
|
|
SEPTEMBER 30, 2025 |
|
|||||||||
|
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Book |
|
|||
|
|
|
Amount |
|
|
Amortization |
|
|
Value |
|
|||
|
|
|
|
|
|
|
|||||||
|
Customer Relationships |
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
Channel Relationships |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Internally Developed Software |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Trade Name and Trademarks |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
DECEMBER 31, 2024 |
|
|||||||||
|
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Book |
|
|||
|
|
|
Amount |
|
|
Amortization |
|
|
Value |
|
|||
|
|
|
|
|
|
|
|||||||
|
Customer Relationships |
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
Channel Relationships |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Internally Developed Software |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Trade Name and Trademarks |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
The Company did not capitalize any internally developed software costs for the three and nine month periods ended September 30, 2025 and 2024.
There were no disposals of intangible assets during the three and nine month periods ended September 30, 2025 and 2024.
The aggregate amortization expense recorded for the three and nine month periods ended September 30, 2025 was approximately $
As of September 30, 2025, estimated annual amortization for intangible assets is approximately:
|
Remainder of 2025 |
|
$ |
|
|
|
2026 |
|
|
|
|
|
2027 |
|
|
|
|
|
2028 |
|
|
|
|
|
2029 |
|
|
|
|
|
Thereafter |
|
|
|
|
|
Total |
|
$ |
|
|
| 15 |
|
|
| Table of Contents |
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 $
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 $
Advances under the Credit Facility are subject to a borrowing base equal to the lesser of (i) $
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 $
10. Income Taxes
The Company’s effective tax rate was (
On July 4, 2025, the U.S. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14", commonly referred to as the One Big Beautiful Bill (“H.R. 1”). The enactment of H.R. 1 did not result in a material impact on the Company’s tax position or consolidated financial statements.
| 16 |
|
|
| Table of Contents |
11. Stockholders’ Equity
Common Stock
The Company is authorized to issue
No shares of common stock were issued under the vesting terms of RSAs during the three month period ended September 30, 2025. During the nine month period ended September 30, 2025, there were
No shares of common stock were issued under the vesting terms of RSAs during the three month period ended September 30, 2024. During the nine month period ended September 30, 2024, there were
There were no stock option exercises during the nine month periods ended September 30, 2025 and 2024.
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:
|
|
|
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
(Unaudited) |
|
|||||||||||||
|
Restricted share-based compensation expense |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Non-qualified option share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total share-based compensation before taxes |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
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. During the three and nine month period ended September 30, 2025, the Company granted
Stock Options.
| 17 |
|
|
| Table of Contents |
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
For the three and nine month periods ended September 30, 2025, the weighted-average grant date fair value per option was $1.89. 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 |
|
|
NINE MONTHS ENDED |
|
||||||||||
|
|
|
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Expected dividend yield |
|
|
|
% |
|
|
-- |
|
|
|
|
% |
|
|
-- |
|
|
Expected volatility |
|
|
|
% |
|
|
-- |
|
|
|
|
% |
|
|
-- |
|
|
Risk-free interest rate |
|
|
|
% |
|
|
-- |
|
|
|
|
% |
|
|
-- |
|
|
Term |
|
|
|
|
|
-- |
|
|
|
|
|
|
-- |
|
||
At September 30, 2025, the Company had approximately $
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.
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 |
|
|
NINE MONTHS ENDED |
|
||||||||||
|
|
|
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
(Unaudited) |
|
|||||||||||||
|
Basic and Diluted Earnings Per Share Computation: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net loss |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
Weighted average number of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss Per Share |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
| 18 |
|
|
| Table of Contents |
For the three month period ended September 30, 2025, the Company had unexercised stock options of
For the nine month period ended September 30, 2025, the Company had unexercised stock options of
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 |
|
|
NINE MONTHS ENDED |
|
||||||||||
|
|
|
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
(Unaudited) |
|
|||||||||||||
|
Carrier Services |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Managed Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The Company recognized revenues from contracts with customers for the following customer types as set forth below:
|
|
|
THREE MONTHS ENDED |
|
|
NINE MONTHS ENDED |
|
||||||||||
|
|
|
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
(Unaudited) |
|
|||||||||||||
|
U.S. Federal Government |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
U.S. State and Local Governments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Governments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
| 19 |
|
|
| Table of Contents |
The Company recognized revenues from contracts with customers in the following geographic regions:
|
|
|
THREE MONTHS ENDED |
|
|
NINE MONTHS ENDED |
|
||||||||||
|
|
|
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
(Unaudited) |
|
|||||||||||||
|
United States |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
During the three month periods ended September 30, 2025 and 2024, the Company recognized approximately $
During the nine month periods ended September 30, 2025 and 2024, the Company recognized approximately $
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.
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.
| 20 |
|
|
| Table of Contents |
The following table reflects certain financial data for our reportable segment:
|
|
|
THREE MONTHS ENDED |
|
|
NINE MONTHS ENDED |
|
||||||||||
|
|
|
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
||||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
(Unaudited) |
|
|||||||||||||
|
REVENUES |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Carrier services cost |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Managed service costs |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Depreciation and amortization |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Stock based compensation |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Other segment items (1) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Interest expense |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Income tax (provision) benefit |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS FOR THE PERIOD: |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
|
(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 involved in various legal proceedings arising in the ordinary course of business. Management does not believe that the outcome of these matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations, or cash flow.
Property Theft Matter
During the third quarter of 2025, the Company identified a theft of certain assets resulting in an estimated loss of approximately $
The matter has been investigated internally and resolved operationally, though law enforcement and Insurance investigations will be ongoing.
While the Company believes the recorded amount reflects the best estimate at this time, there remains a possibility of additional exposure related to this matter. Management does not currently expect any additional loss, if incurred, to be material to the consolidated financial statements.
The Company continues to monitor the matter and will adjust its estimates as new information becomes available.
17. Subsequent Events
On October 1, 2025, the U.S. federal government entered a partial shutdown following the expiration of funding under the fiscal year 2025 continuing resolution. As a result, certain federal agencies temporarily suspended or limited operations. The Company is assessing potential impacts on its existing and anticipated government contracts; however, management does not currently expect the shutdown to have a material effect on the Company’s financial position, results of operations, or cash flows.
| 21 |
|
|
| Table of Contents |
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:
|
|
· |
We may be unable to retain our Department of Homeland Security for Cellular Wireless Managed Services (CWMS) 2.0 ID/IQ Contract (DHS CWMS 2.0 IDIQ), which contract is up for renewal in a competitive process in November 2025 and which represents a significant portion of our revenue. |
|
|
· |
Our market is highly competitive and we may not be able to compete effectively or gain market acceptance of our products and service. |
|
|
· |
We may not be able to respond to rapid technological changes with new software products and services, especially in the area of artificial intelligence, which could harm our sales and profitability and our competitiveness in the market. |
|
|
· |
Inflationary pressures on costs, such as costs for devices, labor and distribution costs may impact our financial condition or results of operations. |
|
|
· |
Our financial resources are limited and the failure of one or more new product or service offerings could materially harm our financial results. |
|
|
· |
We have significant fixed operating costs, which may be difficult to adjust in response to unanticipated fluctuations in revenues. |
|
|
· |
We have incurred net losses in the past and may incur net losses in the future. |
|
|
· |
The loss of significant federal customer contracts could also have an adverse impact on our financial results. |
|
|
· |
Federal agencies and certain large customers can unexpectedly terminate their contracts with us at any time without penalty and the loss of a large customer would have an adverse impact on our financial results. |
|
|
· |
The loss of key personnel or an inability to attract and retain additional personnel may impair our ability to grow our business. |
|
|
· |
Acquisitions we undertake may present integration challenges, fail to perform as expected, increase our liabilities, and/or reduce our earnings. |
|
|
· |
Federal government contracts contain provisions giving government customers a variety of rights that are unfavorable to us, including the ability to audit us and/or assess fines and/or penalties for non-compliance. |
| 22 |
|
|
| Table of Contents |
|
|
· |
A federal government shutdown occurred on October 1, 2025, which temporarily limited the availability of federal personnel and delayed certain government activities. Future shutdowns or continuing resolutions may disrupt the federal contracting process and could adversely affect our results of operations or cash flows. Federal government shutdowns, the failure of the Federal government to approve a budget or reduction in government spending in the areas in which we serve would have a negative impact on our cash flows. |
|
|
· |
Federal government’s current efforts to eliminate fraud waste and abuse could pose unknown risks to WidePoint. Risks such as shutting down of whole agencies or departments we serve could negatively impact WidePoint’s ability to maintain and/or grow revenue. |
|
|
· |
Our inability to access our working capital line of credit or otherwise maintain compliance with the required covenants would have an adverse impact on our financial condition. |
|
|
· |
Security breaches or cybersecurity events could result in the loss of customers and negative publicity and materially harm our business. |
|
|
· |
Actual or perceived breaches of our security measures, or governmental required disclosure of customer information could diminish demand for our solution and subject us to substantial liability. |
|
|
· |
Our ability to mitigate the impacts 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.
Our Department of Homeland Security for Cellular Wireless Managed Services (CWMS) 2.0 ID/IQ Contract (DHS CWMS 2.0 IDIQ) is up for renewal in a competitive process in November 2025. However, on October 30, 2025, the US Department of Homeland Security notified the Company of its intent to issue a contract modification to exercise its option to extend services for a 2-month base period and four additional 1-month options, representing a potential total of six months of additional performance under the contract.
| 23 |
|
|
| Table of Contents |
On October 1, 2025, the U.S. federal government entered a partial shutdown following the expiration of funding under the fiscal year 2025 continuing resolution. As a result, certain federal agencies temporarily suspended or limited operations. We are assessing potential impacts on its existing and anticipated government contracts; however, management does not currently expect the shutdown to have a material effect on our financial position, results of operations, or cash flows.
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 CWMS 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 among our IT as a Service, Identity Management (IdM), Telecommunications Lifecycle Management (TLM) and Digital Billing & Analytics (DB&A) solutions, |
|
|
· |
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 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. |
| 24 |
|
|
| Table of Contents |
Results of Operations
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Revenues. Revenues for the three month period ended September 30, 2025 were $36.1 million, an increase of $1.5 million (or 4%) compared to $34.6 million in the same period in 2024. Our mix of revenues for the periods presented is set forth below:
|
|
|
THREE MONTHS ENDED |
|
|
|
|
||||||
|
|
|
SEPTEMBER 30, |
|
|
Dollar |
|
||||||
|
|
|
2025 |
|
|
2024 |
|
|
Variance |
|
|||
|
|
|
|
|
|
|
|
|
|||||
|
Carrier Services |
|
$ | 20,406,680 |
|
|
$ | 22,412,970 |
|
|
$ | (2,006,290 | ) |
|
Managed Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed Service Fees |
|
|
10,092,020 |
|
|
|
8,513,799 |
|
|
|
1,578,221 |
|
|
Billable Service Fees |
|
|
1,280,704 |
|
|
|
1,673,944 |
|
|
|
(393,240 | ) |
|
Reselling and Other Services |
|
|
4,345,803 |
|
|
|
2,019,720 |
|
|
|
2,326,083 |
|
|
Total Managed Services: |
|
|
15,718,527 |
|
|
|
12,207,463 |
|
|
|
3,511,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 36,125,207 |
|
|
$ | 34,620,433 |
|
|
$ | 1,504,774 |
|
Managed Service Revenues. Total managed services revenue were $15.7 million, an increase of approximately $3.5 million compared with $12.2 million in the same period in 2024 as follows:
|
|
· |
Our managed service fees were $10.1 million, an increase of $1.6 million or 18.5% from $8.6 million in the same period last year. |
|
|
|
|
|
|
· |
Our billable service fees were $1.3 million, which is materially consistent with the same period in 2024. |
|
|
|
|
|
|
· |
Reselling and other services were $4.3 million compared to $2.3 million in the same period last year. Included in reselling and other services is $0.3 million of connectivity and device resales under our Spiral 4 contract. Reselling and other services are transactional in nature, and the amount and timing of revenue varies from quarter to quarter. |
Carrier Service Revenues. 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 $20.4 million, a decrease of $2.0 million, as compared with the same period in 2024. The decrease in carrier services revenues over the same period last year is a result of variations in the total number of lines managed 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 September 30, 2025 were $30.8 million (or 85% of revenues), an increase of $0.9 million from $29.9 million (or 86% of revenues) in the same period in 2024. Included in cost of revenues is carrier costs paid on behalf of our federal government customers of approximately $20.4 million and $22.4 million for the three month periods ended September 30, 2025 and 2024, respectively.
Gross Profit. Gross profit for the three month period ended September 30, 2025 increased on a dollar basis by $0.6 million to $5.3 million (or 15% of revenues), compared to $4.7 million (or 14% of revenues) in the same period in 2024.
| 25 |
|
|
| Table of Contents |
Gross profit as a percentage of managed services revenue (excluding carrier services) for the three month period ended September 30, 2025 was 34% compared to 38% in the same period last year due to slightly higher labor costs, as we bolster our customer delivery and relatively more reselling revenues which carry lower margins, compared to the same period last year.
|
|
|
THREE MONTHS ENDED |
|
|||||
|
|
|
SEPTEMBER 30, |
|
|||||
|
|
|
2025 |
|
|
2024 |
|
||
|
Revenues: |
|
|
|
|
|
|
||
|
Carrier Services |
|
$ | 20,406,680 |
|
|
$ | 20,403,278 |
|
|
Managed Services |
|
|
15,718,527 |
|
|
|
12,207,463 |
|
|
Total revenue |
|
|
36,125,207 |
|
|
|
32,610,741 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit: |
|
|
|
|
|
|
|
|
|
Carrier Services |
|
|
- |
|
|
|
- |
|
|
Managed Services |
|
|
5,275,312 |
|
|
|
4,692,366 |
|
|
Total gross profit |
|
|
5,275,312 |
|
|
|
4,692,366 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin: |
|
|
|
|
|
|
|
|
|
Carrier Services |
|
|
- |
|
|
|
- |
|
|
Managed Services |
|
|
34 | % |
|
|
38 | % |
|
Total gross margin |
|
|
15 | % |
|
|
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 September 30, 2025 increased by $0.2 million to $0.7 million (or 2% of revenues) compared to $0.5 million (or 2% of revenues) in 2024, reflecting increased sales and marketing activities in the third quarter of this year.
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 September 30, 2025 were $4.8 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, additional headcount and associated costs, which were partially offset by $50,000 less share-based compensation expense compared to the same period in 2024.
Depreciation and Amortization. Depreciation and amortization expense for the three month period ended September 30, 2025 was $225,900 as compared to $260,000 in 2024. The slight decrease in depreciation expense is due to certain assets reaching their fully depreciated life during 2024.
Other Income (Expense), Net. Other income, net for the three month period ended September 30, 2025 was $35,900 compared to other income, net of $7,100 in 2024 as a result of higher earnings on cash deposits and less borrowing under our line of credit.
Income Taxes. Income tax provision for the three month period ended September 30, 2025 was $134,400 as compared to income tax benefit of $18,700 in 2024. Income taxes were accrued at an estimated effective tax rate of (31.6)% for the three month period ended September 30, 2025 compared to 4.2% for the three month period ended September 30, 2024.
| 26 |
|
|
| Table of Contents |
Net Loss. As a result of the cumulative factors described above, net loss for the three month period ended September 30, 2025 increased by $134,000 to $559,200 compared to net loss of $425,200 for the three month period ended September 30, 2024.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Revenues. Revenues for the nine month period ended September 30, 2025 were $108.2 million, compared with $104.9 million in the same period in 2024. Our mix of revenues for the periods presented is set forth below
|
|
|
NINE MONTHS ENDED |
|
|
|
|
||||||
|
|
|
SEPTEMBER 30, |
|
|
Dollar |
|
||||||
|
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
|
|
|
|
|
|
|
|
|
|||||
|
Carrier Services |
|
$ | 65,031,039 |
|
|
$ | 62,198,919 |
|
|
$ | 2,832,120 |
|
|
Managed Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed Service Fees |
|
|
28,569,401 |
|
|
|
26,375,256 |
|
|
|
2,194,145 |
|
|
Billable Service Fees |
|
|
4,350,543 |
|
|
|
4,101,724 |
|
|
|
248,819 |
|
|
Reselling and Other Services |
|
|
10,272,165 |
|
|
|
12,192,584 |
|
|
|
(1,920,419 | ) |
|
Total Managed Services: |
|
|
43,192,109 |
|
|
|
42,669,564 |
|
|
|
522,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 108,223,148 |
|
|
$ | 104,868,483 |
|
|
$ | 3,354,665 |
|
Managed Service Revenues . Total managed services revenue were $43.2 million, which was relatively consistent with $42.7 million in the same period in 2024 as follows:
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· |
Our managed service fees were $28.6 million, an increase of $2.2 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. |
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· |
Billable service fees were $4.4 million, an increase of $0.2 million, compared with the same period in 2024. |
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Reselling and other services were $10.3 million, a decrease of $1.9 million, compared with the same period in 2024. The decrease is partially due to 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. Included in reselling and other services is $0.6 million of connectivity and device re-sales under our Spiral 4 contract. |
Carrier Services Revenues. 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 $65.0 million, an increase of $2.8 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 2025 for our DHS customer.
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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 nine month period ended September 30, 2025 were $93.1 million (or 86% of revenues), which is consistent with $90.6 million (or 86% of revenues) in the same period in 2024. Included in cost of revenues is carrier costs paid on behalf of our federal government customers of approximately $65.0 million and $62.2 million for the nine month periods ended September 30, 2025 and 2024, respectively.
Gross Profit. Gross profit for the nine month period ended September 30, 2025 increased by $0.9 million to $15.2 million (or 14% of revenues), compared to $14.3 million (or 14% of revenues) in the same period in 2024.
Gross profit as a percentage of managed services revenue (excluding carrier services) for the nine month period ended September 30, 2025 was 35% compared to 33% in the same period last year due to a combination of increased managed service fees and lower reselling revenues, compared to the same period last year.
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NINE MONTHS ENDED |
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SEPTEMBER 30, |
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2025 |
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2024 |
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Revenues: |
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Carrier Services |
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$ | 65,031,039 |
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$ | 62,198,919 |
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Managed Services |
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43,192,109 |
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42,669,564 |
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Total revenue |
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108,223,148 |
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104,868,483 |
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Gross Profit: |
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Carrier Services |
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- |
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- |
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Managed Services |
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15,171,075 |
|
|
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14,251,479 |
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Total gross profit |
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15,171,075 |
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14,251,479 |
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Gross Margin: |
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Carrier Services |
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- |
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- |
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Managed Services |
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35 | % |
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33 | % |
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Total gross margin |
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14 | % |
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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 nine month period ended September 30, 2025 was $2.0 million compared to $1.7 million in 2024 reflecting increased sales and marketing activities in 2025, though remained relatively constant at 2% of revenues from the same period in 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 nine month period ended September 30, 2025 were $14.5 million (or 13% of revenues), as compared to $13.3 million (or 13% of revenues) in the same period in 2024. The dollar increase during 2025 primarily relates to general inflationary pressures, additional headcount and associated costs, which were partially offset by $467,000 less share-based compensation expense in the first nine months of 2025 compared to the same period in 2024.
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Depreciation and Amortization. Depreciation and amortization expense for the nine month period ended September 30, 2025 was $683,000 as compared to $769,000 in the same period in 2024. The slight decrease in depreciation expense is due to certain assets reaching their fully depreciated life during 2024.
Other Income (Expense), Net. Other income, net for the nine month period ended September 30, 2025 was $71,700 compared to other expense, net of $59,300 in the same period in 2024, as a result of higher earnings on cash deposits and less borrowing under our line of credit in the comparable period of 2024.
Income Taxes. Income tax benefit for the nine month period ended September 30, 2025 was $12,000 as compared to income tax benefit of $45,000 in the same period in 2024. Income taxes were accrued at an estimated effective tax rate of 1.0% for the three month period ended September 30, 2025 compared to 2.8% for the nine month period ended September 30, 2024.
Net Loss. As a result of the cumulative factors described above, net loss for the nine month period ended September 30, 2025 was $1.9 million which was relatively consistent with the net loss of $1.6 million for the nine month period ended September 30, 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.
As part of our ongoing liquidity management, we elected to temporarily delay payment to certain vendors (approximately $7.5 million) to strengthen our cash position amid uncertainty related to the federal government shutdown. This action was precautionary in nature, and we expect normal payment activity to resume once funding stability is restored. At quarter-end, the Company maintained sufficient liquidity, including available cash and borrowing capacity, to meet all anticipated operating and contractual needs.
At September 30, 2025, our net working capital was approximately $2.2 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 access to our credit facility, 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.
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Cash Flows from Operating Activities
For the nine months ended September 30, 2025, net cash provided by operations was approximately $5.8 million driven by collections of accounts receivables and is partially offset by temporary payable timing differences. In the same period in 2024, $0.8 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.
Cash Flows from Investing Activities
Cash used in investing activities provides an indication of our long term infrastructure investments. We maintain our own technology infrastructure and may need to make additional purchases of computer hardware, software and other fixed infrastructure assets to ensure our Information Technology environment is properly maintained and can support our customer obligations. We typically fund purchases of long term infrastructure assets with available cash or capital lease financing agreements.
For the nine months ended September 30, 2025, cash used in investing activities was approximately $0.1 million and consisted of purchases of property and equipment.
For the nine months ended September 30, 2024, cash provided by investing activities was approximately $0.2 million and consisted of receipt of deferred portion of proceeds from factoring arrangement offset by purchases of property and equipment.
Cash Flows from Financing Activities
Cash provided by (used in) financing activities provides an indication of our debt financing and stock option exercises.
For the nine months ended September 30, 2025, cash used in financing activities was approximately $0.5 million and reflects line of credit advances and payments of $2.8 million, finance lease principal repayments of approximately $412,300, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $130,700.
For the nine months ended September 30, 2024, cash used in financing activities was approximately $0.7 million and reflects line of credit advances and payments of $4.6 million, lease principal repayments of approximately $456,800, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $258,400.
Net Effect of Exchange Rate on Cash and Equivalents
For the nine months ended September 30, 2025 and 2024, fluctuations in the Euro and U.S. dollar exchange rate decreased the translated value of our foreign cash balances by approximately $52,300 as compared to last year.
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Off-Balance Sheet Arrangements
The Company has no existing off-balance sheet arrangements as defined under SEC regulations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, our chief executive officer and chief financial officer concluded that these disclosure controls and procedures are not effective as of September 30, 2025, due to material weaknesses in our internal control over financial reporting. As fully described in our 2024 Annual Report on Form 10-K, during our year-end closing process, we identified deficiencies related to the revenue recognition process for government contracts, specifically in the estimation of unbilled amounts related to a large government agency. During the assessment process, we identified additional deficiencies in the design of controls over the monitoring of evolving circumstances that require specific, customer level analysis relating to recording revenue accruals. This deficiency led to errors in the timing of revenue that required adjustment during the 2024 fiscal year closing process.
Remediation Plan
Management is in the process of executing its remediation plan to address the material weaknesses. Management has completed the design and implementation of a review and assessment process for newly awarded contracts and a review process for carrier services revenue and cost accruals, if billings are more than 1 month in arrears. However, additional time is required to test the operating effectiveness of these and previously implemented controls to demonstrate the effectiveness of the remediation efforts. The material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time, which management believes will be year end, and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
Except as described above, there were no changes in the Company’s internal control over financial reporting during the three month period ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company is not currently involved in any material legal proceeding.
ITEM 1A RISK FACTORS
Our risk factors have not changed materially from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Repurchase of Securities
The following table represents information with respect to shares of common stock withheld from vesting’s of stock-based compensation awards for employee income tax withholding for the periods indicated:
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Dollar Value of Shares Purchased as |
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Maximum Dollar Value of Shares |
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Total Number of Shares |
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Average Price Paid |
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as Part of Publicly Announced Plans or |
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that may be Purchased Under Approved Plans or |
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Purchased |
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Per Share |
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Programs |
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Programs |
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January 2025 |
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21,613 |
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$ | 4.84 |
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- |
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$ | - |
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March 2025 |
|
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3,004 |
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$ | 3.53 |
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May 2025 |
|
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3,681 |
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$ | 4.22 |
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Total |
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28,298 |
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$ | 4.62 |
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- |
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$ | - |
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ITEM 3 DEFAULT UPON SENIOR SECURITIES
None
ITEM 4 MINE SAFETY DISCLOSURES
None
ITEM 5 OTHER INFORMATION
Directors and Executive Officers . Our directors and executive officers may purchase or sell shares of our common stock in the market from time to time, including pursuant to equity trading plans adopted in accordance with Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and in compliance with guidelines specified by the Company. In accordance with Rule 10b5-1 and the Company’s insider trading policy, directors, officers and certain employees who, at such time, are not in possession of material non-public information about the Company are permitted to enter into written plans that pre-establish amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s equity plans (“Rule 10b5-1 Trading Plans”). Under a Rule 10b5-1 Trading Plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them. The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted, terminated or modified by our directors and executive officers during the three months ended September 30, 2025, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).
|
Name and Title |
Adoption, Termination or Modification |
Date of Adoption, Termination or Modification |
Scheduled Expiration Date of Plan |
Number of Shares to be Sold under the Plan |
|
Jason Holloway Executive Vice President, and Chief Revenue Officer |
Adoption |
September 17, 2025 |
April 6, 2026 |
Up to 140,000 |
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Todd Dzyak Executive Vice President, and Chief Operating Officer |
Adoption |
September 17, 2025 |
August 20, 2026 |
Up to 30,000 |
| 32 |
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ITEM 6. EXHIBITS
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EXHIBIT NO |
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DESCRIPTION |
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101. |
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Interactive Data Files |
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101.INS+ |
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XBRL Instance Document |
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101.SCH+ |
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XBRL Taxonomy Extension Schema Document |
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101.CAL+ |
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XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF+ |
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XBRL Taxonomy Definition Linkbase Document |
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101.LAB+ |
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XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE+ |
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XBRL Taxonomy Extension Presentation Linkbase Document |
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104. |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| 33 |
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| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| WIDEPOINT CORPORATION | |||
| Date: November 13, 2025 | /s/ JIN H. KANG | ||
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Jin H. Kang | |
| President and Chief Executive Officer | |||
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Date: November 13, 2025 |
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/s/ ROBERT J. GEORGE |
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Robert J. George |
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Chief Financial Officer |
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| 34 |