PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for WidePoint Corporation, including statements of operations, comprehensive loss, balance sheets, cash flows, and changes in stockholders' equity, along with detailed notes explaining accounting policies, significant accounts, and other financial disclosures for the periods ended June 30, 2025 and 2024 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, gross profit, operating loss, and net loss for the reported periods | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $37.88 million | $36.04 million | $72.10 million | $70.25 million | | Gross Profit | $5.12 million | $4.89 million | $9.90 million | $9.56 million | | Loss from Operations | $-0.71 million | $-0.46 million | $-1.52 million | $-1.11 million | | Net Loss | $-0.62 million | $-0.50 million | $-1.34 million | $-1.15 million | | EPS, Basic and Diluted | $-0.06 | $-0.05 | $-0.14 | $-0.13 | [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the net loss and other comprehensive income/loss components for the reported periods | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $-0.62 million | $-0.50 million | $-1.34 million | $-1.15 million | | Foreign currency translation adjustments, net of tax | $0.06 million | $-0.01 million | $0.09 million | $-0.03 million | | Comprehensive Loss | $-0.55 million | $-0.51 million | $-1.25 million | $-1.18 million | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific dates | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :---------------------------------------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $6.82 million | $6.78 million | | Restricted cash | $0.40 million | $1.04 million | | Accounts receivable, net | $16.75 million | $11.93 million | | Unbilled accounts receivable | $29.12 million | $31.80 million | | Total current assets | $61.20 million | $55.32 million | | Total assets | $76.58 million | $71.58 million | | Accounts payable | $20.48 million | $16.52 million | | Accrued expenses | $29.08 million | $30.85 million | | Current portion of deferred revenue | $8.74 million | $4.77 million | | Total current liabilities | $59.16 million | $52.88 million | | Total liabilities | $64.01 million | $58.00 million | | Total stockholders' equity | $12.56 million | $13.58 million | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $-0.06 million | $-2.64 million | | Net cash used in investing activities | $-0.12 million | $0.24 million | | Net cash used in financing activities | $-0.38 million | $-0.54 million | | Net effect of exchange rate on cash | $-0.04 million | $0.01 million | | Net decrease in cash, cash equivalents, and restricted cash | $-0.60 million | $-2.92 million | | Cash, cash equivalents, and restricted cash, end of period | $7.22 million | $4.00 million | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section details changes in common stock, additional paid-in capital, and accumulated deficit over the period | Metric | Balance, January 1, 2025 ($) | Balance, June 30, 2025 ($) | | :-------------------------------- | :----------------------- | :--------------------- | | Common Stock Issued | 9,485,508 | 9,655,173 | | Common Stock Amount | $9,487.00 | $9,656.00 | | Additional Paid-In Capital | $103.10 million | $103.34 million | | Accumulated Other Comprehensive Loss | $-0.45 million | $-0.36 million | | Accumulated Deficit | $-89.08 million | $-90.42 million | | Total Stockholders' Equity | $13.58 million | $12.56 million | - During the six months ended June 30, 2025, 197,933 shares of restricted common stock vested, with 28,268 shares withheld for tax liability, resulting in a cash outflow of approximately **$0.13 million**[61](index=61&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, significant accounts, and other financial disclosures [1. Organization and Nature of Operations](index=9&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations) This note describes the company's corporate structure, global operations, and core business as a TMaaS provider - WidePoint Corporation, incorporated in Delaware in 1997, operates through wholly-owned subsidiaries across the U.S., Ireland, the Netherlands, and the UK, with its headquarters in Fairfax, Virginia[24](index=24&type=chunk) - The Company is a leading provider of Technology Management as a Service (TMaaS), offering solutions through its federally compliant Intelligent Technology Management System (ITMS™) platform, which is SSAE 18 compliant and has FedRAMP Authorized status[25](index=25&type=chunk) [2. Basis of Presentation and Accounting Policies](index=9&type=section&id=2.%20Basis%20of%20Presentation%20and%20Accounting%20Policies) This note outlines the financial statement preparation basis, accounting standards adopted, and significant adjustments - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC regulations, with certain information condensed or omitted[27](index=27&type=chunk) - The Company adopted ASU 2023-07 (Segment Reporting) retrospectively for fiscal year 2024, with no impact on financial position, results of operations, or EPS[32](index=32&type=chunk) - An out-of-period adjustment in Q1 2025 decreased revenues by **$2.70 million** and cost of revenues by **$2.46 million**, deemed immaterial to prior periods and not expected to be material for the full year 2025[35](index=35&type=chunk) [3. Accounts Receivable and Significant Concentrations](index=10&type=section&id=3.%20Accounts%20Receivable%20and%20Significant%20Concentrations) This note details the composition of accounts receivable and highlights significant customer concentrations and credit risks | Customer Type | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :---------------------------------- | :-------------------------- | :------------------ | | U.S. Federal, State, and Local Government | $14.61 million | $9.68 million | | Commercial | $2.20 million | $2.29 million | | Gross accounts receivable | $16.81 million | $11.98 million | | Less: allowances for credit losses | $0.06 million | $0.05 million | | Accounts receivable, net | $16.75 million | $11.93 million | | Customer Type | June 30, 2025 (% of Receivables) | December 31, 2024 (% of Receivables) | | :---------------------- | :------------------------------- | :--------------------------------- | | U.S. Federal Government | **87%** | **81%** | | Customer Type | Q2 2025 (% of Revenue) | Q2 2024 (% of Revenue) | H1 2025 (% of Revenue) | H1 2024 (% of Revenue) | | :---------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | U.S. Federal Government | **81%** | **83%** | **83%** | **82%** | - The Company had deposits in excess of FDIC limits of approximately **$6.90 million** and foreign bank deposits in excess of insured limits of approximately **€0.04 million** as of June 30, 2025, exposing it to credit risk[41](index=41&type=chunk) [4. Unbilled Accounts Receivable](index=11&type=section&id=4.%20Unbilled%20Accounts%20Receivable) This note explains unbilled accounts receivable, representing earned but uninvoiced revenues, primarily from government contracts - Unbilled accounts receivable, primarily from carrier services and hardware/software products, represent earned but uninvoiced revenues due to timing or fixed contractual billing schedules[42](index=42&type=chunk) | Customer Type | June 30, 2025 (% of Unbilled Receivables) | December 31, 2024 (% of Unbilled Receivables) | | :---------------------- | :---------------------------------------- | :------------------------------------------ | | U.S. Federal Government | **98%** | **99%** | [5. Other Current Assets and Accrued Expenses](index=11&type=section&id=5.%20Other%20Current%20Assets%20and%20Accrued%20Expenses) This note provides a breakdown of other current assets and accrued expenses, including inventories and carrier service costs | Other Current Assets | June 30, 2025 ($) | December 31, 2024 ($) | | :------------------------- | :------------ | :---------------- | | Inventories | $0.56 million | $0.31 million | | Prepaid project costs | $0.45 million | $0.57 million | | Deferred contract costs | $5.53 million | $2.13 million | | Prepaid expenses and other assets | $1.57 million | $0.76 million | | Total other current assets | $8.12 million | $3.77 million | | Accrued Expenses | June 30, 2025 ($) | December 31, 2024 ($) | | :------------------------------- | :------------ | :---------------- | | Carrier service costs | $24.00 million | $25.12 million | | Salaries and payroll taxes | $2.07 million | $2.21 million | | Inventory purchases, consultants and other costs | $3.00 million | $3.50 million | | Other | $0.01 million | $0.03 million | | Total accrued expenses | $29.08 million | $30.85 million | [6. Property and Equipment](index=12&type=section&id=6.%20Property%20and%20Equipment) This note details the company's property and equipment, including gross cost, accumulated depreciation, and related expenses | Property and Equipment | June 30, 2025 ($) | December 31, 2024 ($) | | :----------------------------- | :------------ | :---------------- | | Gross property and equipment | $3.16 million | $3.72 million | | Less: accumulated depreciation and amortization | $2.66 million | $3.18 million | | Property and equipment, net | $0.50 million | $0.54 million | - Property and equipment depreciation expense was approximately **$0.09 million** for Q2 2025 and **$0.18 million** for H1 2025[46](index=46&type=chunk) - The Company disposed of property and equipment with a historical cost of **$0.78 million** and recognized a loss of **$0.01 million** during the six months ended June 30, 2025[47](index=47&type=chunk) [7. Goodwill and Intangible Assets](index=12&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) This note presents the carrying values of goodwill and various intangible assets, along with their amortization expenses - Goodwill **remained constant** at **$5.81 million** as of June 30, 2025, with no changes during the reporting periods[49](index=49&type=chunk) | Intangible Assets (Net Book Value) | June 30, 2025 ($) | December 31, 2024 ($) | | :--------------------------------- | :------------ | :---------------- | | Customer Relationships | $1.50 million | $1.61 million | | Channel Relationships | $0.67 million | $0.76 million | | Internally Developed Software | $1.08 million | $1.79 million | | Trade Name and Trademarks | $0.85 million | $0.90 million | | Total | $4.10 million | $5.06 million | - Aggregate amortization expense for intangible assets was approximately **$0.49 million** for Q2 2025 and **$0.97 million** for H1 2025[51](index=51&type=chunk) [8. Credit Agreements](index=13&type=section&id=8.%20Credit%20Agreements) This note describes the company's credit facilities, including a revolving line of credit and terminated purchase agreements - The Accounts Receivable Purchase Agreement with Republic Capital Access, LLC **terminated** in April 2024 and was not renewed[53](index=53&type=chunk) - The Company entered into a **$4.00 million** revolving line of credit facility with Old Dominion National Bank on February 29, 2024, maturing on February 28, 2026, with **no outstanding balance** as of June 30, 2025[54](index=54&type=chunk)[55](index=55&type=chunk) [9. Leases](index=13&type=section&id=9.%20Leases) This note outlines the company's lease agreements, including new office leases and associated right-of-use assets and liabilities - Effective March 1, 2025, the Company entered a new 76-month office lease in Hampton, Virginia, resulting in a **$0.54 million** leased right-of-use asset and associated liability[56](index=56&type=chunk) [10. Income Taxes](index=13&type=section&id=10.%20Income%20Taxes) This note details the company's effective tax rates and explains the primary factors influencing tax expense or benefit | Period | Effective Tax Rate | | :------------------------------- | :----------------- | | Three Months Ended June 30, 2025 | **7.8%** | | Six Months Ended June 30, 2025 | **9.8%** | | Three Months Ended June 30, 2024 | **(3.3%)** | | Six Months Ended June 30, 2024 | **2.2%** | - The difference in effective tax rate from the U.S. federal statutory rate is primarily due to a full valuation allowance against deferred tax assets and state minimum taxes[57](index=57&type=chunk) [11. Stockholders' Equity](index=14&type=section&id=11.%20Stockholders%27%20Equity) This note provides information on common stock, additional paid-in capital, and changes in stockholders' equity - As of June 30, 2025, the Company had 9,655,173 shares of common stock issued and outstanding[59](index=59&type=chunk) - During the six months ended June 30, 2025, 197,933 restricted common stock shares vested, with 28,268 shares withheld for tax liabilities, totaling approximately **$0.13 million**[61](index=61&type=chunk) [12. Share-based Compensation](index=14&type=section&id=12.%20Share-based%20Compensation) This note details the share-based compensation expense recognized for restricted stock and non-qualified options | Share-based Compensation Expense | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restricted share-based compensation expense | $0.14 million | $0.34 million | $0.31 million | $0.73 million | | Non-qualified option share-based compensation expense | $0.03 million | $0.03 million | $0.06 million | $0.06 million | | Total share-based compensation before taxes | $0.17 million | $0.37 million | $0.36 million | $0.78 million | - As of June 30, 2025, the Company had approximately **$0.50 million** of unrecognized share-based compensation expense, to be recognized over a weighted average remaining period of 1.2 years[67](index=67&type=chunk) [13. Earnings (Loss) Per Common Share (EPS)](index=15&type=section&id=13.%20Earnings%20%28Loss%29%20Per%20Common%20Share%20%28EPS%29) This note presents the calculation of basic and diluted earnings per share, considering net loss and weighted average shares | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $-0.62 million | $-0.50 million | $-1.34 million | $-1.15 million | | Weighted average number of common shares | 9,586,166 | 9,390,154 | 9,569,660 | 9,151,265 | | Basic and Diluted Loss Per Share | $-0.06 | $-0.05 | $-0.14 | $-0.13 | - Unexercised stock options, RSAs, and warrants were anti-dilutive for both the three and six-month periods ended June 30, 2025 and 2024[70](index=70&type=chunk)[71](index=71&type=chunk) [14. Revenue from Contracts with Customers](index=16&type=section&id=14.%20Revenue%20from%20Contracts%20with%20Customers) This note disaggregates revenue by service type, customer type, and geographic region for the reported periods | Revenue Type | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Carrier Services | $22.22 million | $20.40 million | $44.62 million | $39.79 million | | Managed Services | $15.66 million | $15.64 million | $27.47 million | $30.46 million | | Total Revenues | $37.88 million | $36.04 million | $72.10 million | $70.25 million | | Customer Type | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | U.S. Federal Government | $30.64 million | $29.88 million | $59.73 million | $57.95 million | | U.S. State and Local Governments | $0.12 million | $0.11 million | $0.22 million | $0.21 million | | Foreign Governments | $0.02 million | $0.02 million | $0.04 million | $0.03 million | | Commercial Enterprises | $7.10 million | $6.02 million | $12.11 million | $12.05 million | | Total Revenues | $37.88 million | $36.04 million | $72.10 million | $70.25 million | | Geographic Region | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $36.80 million | $34.99 million | $70.02 million | $68.24 million | | Europe | $1.08 million | $1.05 million | $2.08 million | $2.01 million | | Total Revenues | $37.88 million | $36.04 million | $72.10 million | $70.25 million | [15. Segment Information](index=17&type=section&id=15.%20Segment%20Information) This note clarifies that the company operates as a single reportable segment, focusing on TMaaS solutions - The Company operates as a **single reportable segment**, WidePoint, providing managed services for government and commercial clients including Identity Management (IdM), secure Mobility Managed Services (MMS), Telecom Lifecycle Management, Digital Billing & Analytics, and IT as a Service (ITaaS)[75](index=75&type=chunk) - The Chief Operating Decision Maker (CODM) assesses performance and allocates resources based on consolidated revenue, gross profit, net income (loss), and other key financial indicators[76](index=76&type=chunk) [16. Commitments and Contingencies](index=17&type=section&id=16.%20Commitments%20and%20Contingencies) This note discloses the company's commitments and potential liabilities from employment agreements and legal proceedings - The Company has employment agreements with certain executives and is involved in various legal proceedings, none of which are expected to have a **no material adverse effect** on its financial position, results of operations, or cash flow[79](index=79&type=chunk)[80](index=80&type=chunk) [17. Subsequent Events](index=17&type=section&id=17.%20Subsequent%20Events) This note confirms the evaluation of events occurring after the balance sheet date, with no material adjustments required - The Company evaluated subsequent events up to the financial statement issuance date and identified no events requiring adjustment or disclosure[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on WidePoint's financial performance, strategic focus, and liquidity, detailing revenue and expense trends, cash flows, and capital resources [Cautionary Note Regarding Forward-Looking Statements](index=17&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This note warns about forward-looking statements, highlighting risks and uncertainties that could affect future results - The report contains forward-looking statements subject to risks and uncertainties, including the ability to retain the DHS CWMS 2.0 ID/IQ Contract, market competitiveness, technological changes (especially in AI), inflationary pressures, limited financial resources, fixed operating costs, potential future net losses, loss of significant federal contracts, and key personnel[82](index=82&type=chunk)[84](index=84&type=chunk) [Business Overview](index=18&type=section&id=Business%20Overview) This section describes the company's core business as a leading provider of Technology Management as a Service (TMaaS) solutions - WidePoint is a leading provider of Technology Management as a Service (TMaaS), offering federally certified communications management, identity management, interactive bill presentment and analytics, and Information Technology as a Service solutions[87](index=87&type=chunk) - TMaaS solutions are delivered through a flexible managed services model, hosted on a secure federal government certified proprietary portal, enabling customers to manage, analyze, and protect communication assets and deploy identity management solutions[88](index=88&type=chunk) [Strategic Focus and Notable Events](index=19&type=section&id=Strategic%20Focus%20and%20Notable%20Events) This section outlines the company's long-term strategic goals, including market expansion, technology investments, and growth initiatives - The Company's longer-term strategic focus is to expand critical mass to fund technology investments, introduce new sales and marketing initiatives, and increase market share for sustainability and growth[92](index=92&type=chunk) - Winning the DHS CWHS 3.0 re-compete[93](index=93&type=chunk) - Finding additional avenues for capturing new sales opportunities[93](index=93&type=chunk) - Leveraging FedRAMP Authorized status as a differentiator[93](index=93&type=chunk) - Growing recurring managed services revenues[93](index=93&type=chunk) - Adding incremental capabilities to Technology Management solutions and developing/acquiring new high-margin business lines[93](index=93&type=chunk) - Leveraging software platforms to grow SaaS revenues and capitalize on remote working opportunities[93](index=93&type=chunk) - Expanding commercial customer base organically[93](index=93&type=chunk) - Exploring integration of artificial intelligence into solutions for better information security, improved service delivery, and reduced costs[93](index=93&type=chunk) - Pursuing accretive and strategic acquisitions[93](index=93&type=chunk) - Transitioning data center and support infrastructure to a cost-effective, federally approved cloud environment[97](index=97&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, gross profit, and net loss trends [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=19&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) This section compares the company's financial results for the three months ended June 30, 2025, against the prior year | Revenue Type | Q2 2025 ($) | Q2 2024 ($) | Dollar Variance ($) | | :-------------------- | :---------- | :---------- | :-------------- | | Carrier Services | $22.22 million | $20.40 million | $1.82 million | | Managed Service Fees | $9.23 million | $9.18 million | $0.05 million | | Billable Service Fees | $1.29 million | $1.24 million | $0.05 million | | Reselling and Other Services | $5.14 million | $5.22 million | $-0.08 million | | Total Managed Services | $15.66 million | $15.64 million | $0.02 million | | Total Revenues | $37.88 million | $36.04 million | $1.84 million | - Gross profit increased by **$0.20 million** to **$5.10 million** (**15%** of revenues) in Q2 2025, up from **$4.90 million** (**14%** of revenues) in Q2 2024[99](index=99&type=chunk) - Net loss increased by **$0.12 million** to **$0.62 million** in Q2 2025, compared to **$0.50 million** in Q2 2024[106](index=106&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=21&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) This section compares the company's financial results for the six months ended June 30, 2025, against the prior year | Revenue Type | H1 2025 ($) | H1 2024 ($) | Dollar Change ($) | | :-------------------- | :---------- | :---------- | :------------ | | Carrier Services | $44.62 million | $39.79 million | $4.84 million | | Managed Service Fees | $18.48 million | $17.86 million | $0.62 million | | Billable Service Fees | $3.07 million | $2.43 million | $0.64 million | | Reselling and Other Services | $5.93 million | $10.17 million | $-4.25 million | | Total Managed Services | $27.47 million | $30.46 million | $-2.99 million | | Total Revenues | $72.10 million | $70.25 million | $1.85 million | - Gross profit increased by **$0.30 million** to **$9.90 million** (**14%** of revenues) in H1 2025, compared to **$9.60 million** (**14%** of revenues) in H1 2024[110](index=110&type=chunk) - Net loss increased by **$0.10 million** to **$1.30 million** in H1 2025, compared to **$1.20 million** in H1 2024[119](index=119&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's working capital, cash flows from operations, investing, and financing activities - Net working capital, excluding restricted cash, was approximately **$1.60 million** at June 30, 2025, up from **$1.40 million** at December 31, 2024[122](index=122&type=chunk) - Net cash used in operating activities was approximately **$0.10 million** for H1 2025, a **significant improvement** from **$2.60 million** used in H1 2024, primarily due to delayed billing and collections of accounts receivables with a federal government customer[123](index=123&type=chunk) - Cash used in investing activities was approximately **$0.10 million** for H1 2025, consisting of property and equipment purchases, compared to **$0.20 million** provided by investing activities in H1 2024[126](index=126&type=chunk) - Cash used in financing activities was approximately **$0.40 million** for H1 2025, reflecting line of credit advances and repayments, finance lease principal repayments, and withholding taxes paid on restricted stock awards[127](index=127&type=chunk) [Off-Balance Sheet Arrangements](index=23&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of off-balance sheet arrangements as defined by SEC regulations - The Company has **no existing off-balance sheet arrangements** as defined under SEC regulations[131](index=131&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not required for smaller reporting companies, and thus no disclosures regarding quantitative and qualitative market risk were provided - This item is **not required** for smaller reporting companies[132](index=132&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting related to revenue recognition for government contracts - Disclosure controls and procedures were **not effective** as of June 30, 2025, due to **material weaknesses** in internal control over financial reporting[133](index=133&type=chunk) - Deficiencies were identified in the revenue recognition process for government contracts, specifically in estimating unbilled amounts and monitoring evolving circumstances for revenue accruals[134](index=134&type=chunk) - Management is executing a remediation plan, including designing and implementing review processes for new contracts and carrier services revenue/cost accruals, with full remediation expected by year-end[135](index=135&type=chunk) PART II. OTHER INFORMATION This part covers legal proceedings, risk factors, equity sales, and other disclosures [Item 1. Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any material legal proceedings - The Company is **not currently involved in any material legal proceeding**[137](index=137&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) The Company's risk factors have not materially changed from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - Risk factors have **not materially changed** from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the repurchase of common stock shares withheld from vesting stock-based compensation awards to cover employee income tax withholding for the periods indicated | Period | Total Number of Shares Purchased | Average Price Paid Per Share ($) | | :------------- | :----------------------------- | :--------------------------- | | January 2025 | 21,613 | $4.84 | | March 2025 | 3,004 | $3.53 | | May 2025 | 3,681 | $4.22 | | Total | 28,298 | $4.62 | [Item 3. Default Upon Senior Securities](index=25&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - There were **no defaults** upon senior securities[140](index=140&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The Company reported no mine safety disclosures - There were **no mine safety disclosures**[140](index=140&type=chunk) [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2025, there were no modifications, adoptions, or terminations by directors or officers to any Rule 10b5-1(c) trading plans or agreements - **No modifications, adoptions, or terminations** by directors or officers to any Rule 10b5-1(c) trading plans or agreements occurred during the three months ended June 30, 2025[140](index=140&type=chunk) [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications, interactive data files (XBRL), and the cover page interactive data file - Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit 31.1)[142](index=142&type=chunk) - Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit 31.2)[142](index=142&type=chunk) - Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Exhibit 32)[142](index=142&type=chunk) - Interactive Data Files (XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase - Exhibit 101)[142](index=142&type=chunk) - Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101 - Exhibit 104)[142](index=142&type=chunk) SIGNATURES The report is duly signed on behalf of WidePoint Corporation by its President and Chief Executive Officer, Jin H. Kang, and Chief Financial Officer, Robert J. George, on August 14, 2025 - The report was signed by Jin H. Kang, President and Chief Executive Officer, and Robert J. George, Chief Financial Officer, on August 14, 2025[145](index=145&type=chunk)

Core Insights - WidePoint Corporation (WYY) and CSG Systems International, Inc. (CSGS) are both benefiting from digital transformation trends impacting enterprise and government IT priorities [1] - WidePoint focuses on federal IT contracts and cybersecurity, while CSG Systems is transitioning to a diversified SaaS platform with a presence in fintech and healthcare [2][8] Group 1: WidePoint Corporation - WidePoint is a government IT solutions provider specializing in mobile telecom lifecycle management and secure identity management, serving critical federal agencies [4] - The company achieved FedRAMP authorization for its Intelligent Technology Management System (ITMS), enhancing visibility among federal agencies [5] - WidePoint has secured three task orders under Spiral 4 and anticipates increased awards as Spiral 3 concludes, while investing in a Device-as-a-Service (DaaS) model and smart city initiatives [6] - Revenue growth for WidePoint is inconsistent due to the nature of government contracts and procurement delays, with recent accounting adjustments raising concerns [7][24] Group 2: CSG Systems International, Inc. - CSG Systems has evolved from a telecom billing provider to a diversified SaaS operator, generating over one-third of its revenue from fast-growing sectors like financial services and healthcare [8] - The company is focused on a capital-light model, reducing working capital needs and pursuing high-margin acquisitions to enhance its SaaS platform [9] - CSG Systems aims for a long-term operating margin of 18-20%, supported by a growing base of recurring, high-margin SaaS revenues [9] - CSG Systems returned $32 million to shareholders in Q1 2025 and plans to return over $100 million in 2025, showcasing strong cash generation and shareholder-friendly practices [11] Group 3: Financial Performance and Valuation - The Zacks Consensus Estimate for WidePoint suggests a 10.5% increase in sales and a 33.3% increase in EPS for 2025, with earnings estimates remaining unchanged [13] - CSG Systems is projected to see a 6% increase in sales and a 1.1% increase in EPS for 2025, with earnings estimates rising by 1.7% in the past 60 days [17] - WidePoint's stock has declined 5.7% over the past year, underperforming the industry and S&P 500, while CSG Systems shares have gained 55.5% [20] - WidePoint trades at a forward P/S ratio of 0.20X, significantly below the industry average of 1.77X, while CSG Systems has a forward P/S ratio of 1.56X [22] Group 4: Investment Outlook - WidePoint's niche in federal IT services and FedRAMP certification provide growth opportunities, but its smaller scale and revenue volatility may deter investors [24] - CSG Systems offers a more diversified SaaS model with disciplined capital allocation and high-margin recurring revenue, positioning it as a stronger investment choice [25][26]

Core Insights - WidePoint Corporation (WYY) is making significant progress under the Department of Defense's Spiral 4 contract, which has a potential value of up to $2.7 billion across multiple vendors, presenting a major pipeline opportunity [1] - The company secured two new task orders under Spiral 4 in Q1 2025, adding to a previously announced base-year award with a potential 10-year value of approximately $25 million, indicating growing traction despite modest award sizes [2][11] - WidePoint is expanding its internal team dedicated to Spiral 4, reflecting confidence in pipeline conversion and long-term execution, and differentiating itself by offering managed mobility and lifecycle services beyond core carrier offerings [3][11] - The transition from Spiral 3 to Spiral 4 is expected to drive momentum for WidePoint as several awards under Spiral 3 are set to expire by mid-2025 [2][4] Competitive Landscape - Other federal mobility providers, such as EchoStar Corporation (SATS) and T-Mobile US, Inc. (TMUS), are also positioning themselves under the Spiral 4 contract [5] - EchoStar, through its subsidiary Hughes Network Systems, is focusing on integrated 5G and satellite-backed connectivity solutions for federal mobility, although it faces operational scrutiny regarding its wireless service obligations [6] - T-Mobile has been selected by the U.S. Department of the Navy as a wireless solutions provider under a $2.67 billion contract, offering a range of services supported by its nationwide 5G network [7][8] Financial Performance - WidePoint's shares have declined by 14.6% over the past three months, contrasting with an 8.4% rise in the industry [9] - The Zacks Consensus Estimate for WidePoint's earnings in 2025 has shifted from a profit of 1 cent per share to a loss of 14 cents, while earnings for 2026 are projected to grow robustly by 175% [13] - The company's stock is currently trading at a forward 12-month price-to-sales multiple of 0.18X, significantly below the industry average of 1.8X, indicating an attractive investment opportunity [16]

Core Insights - WidePoint Corporation (WYY) is strategically positioned to benefit from increasing federal IT spending, particularly through its alignment with government priorities and contract momentum [1][8] - The recent FedRAMP authorization for WidePoint's ITMS platform enhances its visibility in the federal marketplace, leading to more secure government opportunities [1] Federal Contracts and Relationships - WidePoint is making significant progress under the Department of Defense's Spiral 4 contract, with management confident in continued heightened activity due to strong differentiation in managed mobility offerings [2] - The company is also deepening its federal footprint through relationships with agencies like the Department of Homeland Security, with optimism about retaining critical contracts due to increased IT budgets [3] Value Proposition and Market Position - Despite some federal agencies facing budget pressures, WidePoint's value proposition of helping agencies reduce costs while enhancing efficiency is well-received [4] - The company's pipeline indicates growing demand from federal agencies focusing on cybersecurity, efficiency, and mobility solutions, which could enhance its revenue in 2025 and beyond [5] Stock Performance and Valuation - WYY's shares have decreased by 31.3% over the past six months, contrasting with a 2.6% rise in the industry [6] - The stock is currently trading at a low forward price-to-sales (P/S) ratio of 0.18X, significantly below the industry average of 1.81X, indicating a potential investment opportunity [8][9] Earnings Estimates - The Zacks Consensus Estimate for 2025 has shifted from projected earnings of 1 cent per share to a loss of 14 cents, while the company reported an adjusted loss of 21 cents per share in 2024 [11] - Earnings for 2026 are expected to grow robustly by 175%, while competitors are projected to have modest growth or declines in earnings [13]

Core Insights - WidePoint Corporation (WYY) is focused on returning to profitability through strategic initiatives aimed at enhancing long-term earnings potential [1] - The company is shifting towards higher-margin business segments, particularly in managed services and federal contracts [1][4] Financial Performance - In Q1 2025, WidePoint maintained a gross profit margin of 14% relative to total revenues, consistent with the previous year, but gross profit margin excluding lower-margin carrier services rose to 40%, up from 32% a year earlier [2][3] - The improvement in gross margin is attributed to a reduction in lower-margin reselling activities, indicating a positive shift in revenue mix [3] - WidePoint continues to generate positive free cash flow and adjusted EBITDA, with a goal of achieving positive earnings per share (EPS) in 2025 [4][8] Market Position - WidePoint's stock has declined by 10.4% over the past three months, contrasting with a 6.8% rise in the industry [6] - The company's current forward price-to-sales (P/S) ratio is 0.19X, significantly below the industry average of 1.82X, suggesting an attractive investment opportunity [9] Earnings Estimates - The Zacks Consensus Estimate for 2025 has shifted from projected earnings of 1 cent per share to a loss of 14 cents, while the company reported an adjusted loss of 21 cents per share in 2024 [11] - Earnings for 2026 are expected to grow robustly by 175%, while competitors CACI International and Cass Information Systems are projected to grow by 17% and 93.5%, respectively [11]

Core Insights - WidePoint Corporation (WYY) shares have decreased by 43.5% over the past month, underperforming the Zacks Computer - Services industry, which rose by 0.6%, and the broader S&P 500, which grew by 2.5% [1][2] Financial Performance - The decline in stock price follows weaker-than-expected Q1 2025 results, with a reported loss of 8 cents per share, missing the Zacks consensus estimate of a loss of 1 cent. Revenues were $34.2 million, falling short by approximately $5 million [10][12] - A $2.7 million accounting adjustment related to reselling contracts negatively impacted reported revenues, causing confusion around growth trends [11] - Cash reserves have dropped to $3.7 million due to delayed payments from a major customer, raising short-term liquidity concerns [12] Market Position and Strategic Developments - WidePoint has secured three task orders under the $2.7 billion Spiral 4 contract, with expectations for increased activity in H2 2025 [7][17] - The company achieved FedRAMP authorization for its Intelligent Technology Management System (ITMS), enhancing its position with federal agencies [16] - WidePoint is also investing in commercial growth opportunities, including its Device-as-a-Service (DaaS) offering and early-stage smart city initiatives [18][19] Valuation and Analyst Sentiment - WYY stock is trading at a forward 12-month price-to-sales (P/S) multiple of 0.19X, significantly below the industry average of 1.82X, indicating a potentially attractive investment opportunity [20] - Analysts maintain a bullish outlook, with an average price target of $7.50, suggesting a potential upside of 126.6% from the last closing price of $3.31 [23][24] Investment Considerations - Despite strategic progress, near-term challenges such as the recent earnings miss, accounting adjustment, and declining cash reserves present executional risks [25] - Investors are advised to monitor the company's ability to convert pipeline opportunities into revenue and improve liquidity before making new investments [26]

Financial Performance - WidePoint Corporation reported total revenues of approximately $142.6 million for the full year 2024, a 35% increase compared to $106 million in 2023[22]. - The company achieved $2.6 million in adjusted EBITDA for the year, reflecting a robust 229% increase over the prior year[28]. - Free cash flow for 2024 was $2.5 million, a significant improvement from negative free cash flow of approximately $300,000 in 2023, representing a 933% increase[29]. - The carrier services revenue for the fourth quarter was $24.6 million, an increase of $8.9 million compared to the same period in 2023[23]. - Full-year net loss improved by $2.1 million to $1.9 million or a loss of $0.21 per share, compared to a net loss of $4 million or a loss of $0.46 per share in the previous year[30]. - Net loss for Q4 improved to $356,000 or a loss of $0.04 per share, compared to a net loss of $1.3 million or a loss of $0.15 per share for the same period last year[30]. - Cash balance at year-end was $6.8 million, consistent with the end of 2023, with a revolving line of credit providing $4 million of potential borrowing capacity[31]. Contract and Backlog - WidePoint secured $51.2 million in total contract value for the year, with $45.6 million awarded by federal agencies[8]. - As of December 31, 2024, WidePoint's contract backlog stood at approximately $290 million, excluding a recent $25 million task order award[14]. - Anticipated task order award under the Spiral 4 contract totals $25 million over a 10-year period, indicating continued government spending despite budget cuts[33]. - The Spiral 4 contract is expected to generate an additional $2.5 million annually, contributing positively to the company's revenue[63]. - The company ended 2024 with a contract backlog of approximately $290 million, providing a strong revenue outlook for 2025[63]. Operational Efficiency - General and administrative expenses for the year were $17.6 million, or 12% of revenue, compared to 15% in 2023, indicating improved operational efficiency[27]. - Sales and marketing expenses for the year were $2.3 million, remaining constant as a percentage of revenues at 2%[26]. Product Development and Market Strategy - The company launched two new solutions in 2024: MobileAnchor and M365 Analyzer, aimed at enhancing security and providing actionable insights for clients[10]. - Focus on commercialization of new solutions, particularly MobileAnchor and M365 Analyzer, to capture mobile digital credential market share[37]. - New products such as the M365 Analyzer and MobileAnchor are expected to meet significant market demand, enhancing revenue potential[63]. Future Outlook - Company aims to expand strategic relationships and grow contract backlog, with a focus on the MobileAnchor solution expected to be fully commercialized in 2025[35]. - Goal to deliver positive earnings per share for the full year 2025, driven by technological innovations and strong performance across business lines[38]. - Guidance for 2025 will be provided after Q1, with expectations for double-digit percentage growth in top line and similar growth in EBITDA and cash flow[58]. - The company plans to provide confident guidance during the Q1 call, indicating a positive outlook despite macroeconomic uncertainties[62]. - The company is optimistic about capturing additional work from the DOGE project, which is anticipated to be a tailwind for growth[63]. Compliance and Authorization - The company achieved FedRAMP authorized status for its Intelligent Technology Management System (ITMS), enhancing its market position and access to federal contracts[11]. - Preparing for the DHS CWMS 3.0 recompete, with a proposal team formed to address anticipated RFP requirements[36].

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: WidePoint (WYY) - WidePoint currently holds a Momentum Style Score of B, indicating potential as a solid momentum pick [2][3] - The company has a Zacks Rank of 2 (Buy), suggesting it is positioned to outperform the market [3] Price Performance - Over the past week, WYY shares increased by 18.91%, while the Zacks Computer - Services industry rose by 1.3% [5] - In the last month, WYY's price change was 84.67%, significantly outperforming the industry's 10.16% [5] - Over the past quarter, WYY shares rose by 32.5%, and over the last year, they increased by 100.76%, compared to the S&P 500's -2.89% and 12.85% respectively [6] Trading Volume - WYY's average 20-day trading volume is 138,466 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, two earnings estimates for WYY have been revised upwards, while none have been lowered, leading to an increase in the consensus estimate from -$0.12 to $0.01 [9] - For the next fiscal year, one estimate has moved upwards with no downward revisions [9] Conclusion - Considering the positive price trends and earnings outlook, WYY is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a potential candidate for near-term investment [11]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," rather than traditional strategies of buying low and waiting for recovery [1][2] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks can lose momentum when their valuations exceed future growth potential [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Company Spotlight - WidePoint (WYY) - WidePoint (WYY) has shown significant recent price momentum, with a four-week price change of 84.7%, indicating growing investor interest [4] - Over the past 12 weeks, WYY's stock has gained 32.5%, and it has a beta of 1.81, suggesting it moves 81% more than the market in either direction [5] - WYY has a Momentum Score of B, indicating a favorable time to invest based on its momentum characteristics [6] Group 3: Earnings and Valuation - WYY has received a Zacks Rank 2 (Buy) due to upward trends in earnings estimate revisions, which attract more investor interest [7] - The stock is currently trading at a Price-to-Sales ratio of 0.36, suggesting it is undervalued, as investors pay only 36 cents for each dollar of sales [7] Group 4: Additional Opportunities - Besides WYY, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify potential winning stocks based on various investing styles [9]

Financial Data and Key Metrics Changes - The company recorded total revenue of $34.2 million for the quarter, remaining in line compared to the same quarter last year [23] - Gross profit for the first quarter was $4.8 million, or 14% of revenues, compared to $4.7 million, or 14% of revenues in the same period in 2024 [25] - Net loss for the first quarter was $724,000, or a loss of $0.08 per share, compared to a net loss of $653,000, or a loss of $0.07 per share for the same period last year [27] - Adjusted EBITDA for the first quarter was $92,400, marking the thirty-first consecutive quarter of positive adjusted EBITDA [27] Business Line Data and Key Metrics Changes - Carrier services revenue for the quarter was $22.4 million, an increase of $3 million compared to the same period in 2024, driven by growth in the number of lines under management for the DHS customer [24] - Managed services fees for the quarter were $9.3 million, an increase of $564,000 compared to the same period last year, primarily due to a new federal end customer [24] - Reselling and other services revenue decreased to $789,000, a drop of $4.2 million from the same period last year, with $2.7 million of the decrease attributed to an out-of-period adjustment [25] Market Data and Key Metrics Changes - The federal contract backlog as of March 31, 2025, stood at $268 million, indicating a strong pipeline of future revenue opportunities [25] - The company is experiencing increased activity under the SPIRO-four contract, with two additional task orders awarded this quarter [6][7] Company Strategy and Development Direction - The company aims to deepen relationships with existing partners while building new ones, particularly through its Device as a Service initiative [11] - The company plans to prepare for the upcoming DHS CWMS three point zero recompete, believing it is well-positioned to win the contract again [11] - Strategic investments will be made in sales and marketing capabilities to drive visibility and growth across core markets [20] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the alignment with federal government priorities, particularly in reducing waste and improving efficiency [9] - The company is focused on capturing opportunities in a politically dynamic and economically uncertain environment, with a commitment to delivering long-term value for shareholders [12] - Management expressed confidence in achieving positive earnings per share for 2025, despite the ongoing economic challenges [12] Other Important Information - The company plans to increase capital investments by approximately $500,000 for the year to support strategic priorities, including the Device as a Service program [28] - The cash balance at the end of the quarter was $3.7 million, impacted by administrative challenges with a major customer [28] Q&A Session Summary Question: Clarification on accounting adjustment impact - The analyst inquired if the reported numbers should be adjusted to reflect the out-of-period adjustment, to which the CFO confirmed that revenue and EBITDA should be grossed up accordingly [31][32] Question: Timeline for CWMS recompete - Management indicated that the recompete is expected to occur this year, with an award made prior to the expiration of the current contract in November [35][36] Question: Details on SPIRO-four contract - Management confirmed that SPIRO-four has a total contract value of $2.7 billion, with the company having captured several task orders under this contract [41][42] Question: Commercial opportunities and resource allocation - Management highlighted that there are significant commercial opportunities, particularly in the Device as a Service sector, and emphasized ongoing investments to support these initiatives [57][58]