Revenue Performance - Revenues for the year ended December 31, 2023, were $106.0 million, an increase of $11.9 million (or 13%) compared to approximately $94.1 million in 2022[209]. - Revenues for the year ended December 31, 2023, were $106.0 million, an increase of $11.9 million (or 12.6%) compared to $94.1 million in 2022[211]. - Carrier Services revenue increased to $58.2 million in 2023 from $53.3 million in 2022, a variance of $4.9 million[210]. - Total Managed Services revenue rose to $47.8 million in 2023, up from $40.8 million in 2022, reflecting an increase of $7.0 million[210]. - Sales to U.S. Federal Government increased by $10.1 million to $84.5 million, while sales to foreign governments decreased by $67.0 thousand to $79.6 thousand[211][218]. Financial Metrics - Cost of revenues for 2023 was $90.4 million, representing 85% of revenues, consistent with 2022[215]. - Gross profit for the year ended December 31, 2023, was $15.6 million, maintaining a gross profit margin of 15%[219]. - General and administrative expenses for 2023 were approximately $15.9 million (15% of revenues), up from $14.7 million (16% of revenues) in 2022[224]. - Net loss for the year ended December 31, 2023, was $4.0 million, or negative $0.46 per share, compared to a net loss of $23.6 million, or negative $2.70 per share in 2022[233]. - Cash provided by operating activities for 2023 was approximately $0.6 million, down from $6.1 million in 2022[239]. - Cash used in investing activities for 2023 was approximately $0.6 million, primarily for computer hardware and software purchases[241]. - The company’s net working capital decreased to approximately $1.4 million at December 31, 2023, from $1.8 million at December 31, 2022[234]. Strategic Initiatives - The company aims to attain full FedRAMP certification in 2024 to enhance its service offerings[178]. - The company plans to grow recurring high-margin managed services revenues and expand its solution offerings into the commercial space[178]. - The company is focused on executing cross-sell opportunities identified from the ITA acquisition, including Identity Management and Digital Billing & Analytics solutions[177]. - The company is exploring the integration of artificial intelligence into its solutions to improve information security and service delivery[189]. - The company is committed to expanding its customer base organically and leveraging strategic partnerships to capture additional market share[176]. Impairment and Financial Assessment - The company recorded a $16.3 million non-cash goodwill impairment charge for the three-month period ended June 30, 2022[198]. - The company performed its annual impairment assessment as of December 31, 2023, which did not result in any additional impairment of goodwill[200]. Financing Activities - The company entered into a new $4 million revolving line of credit facility with Old Dominion National Bank, maturing on February 28, 2025[250][251].

WidePoint Corporation (NYSE:WYY) Q3 2023 Earnings Conference Call November 14, 2023 4:30 PM ET Company Participants Jin Kang - President and CEO Jason Holloway - Chief Revenue Officer Robert George - Chief Financial Officer Conference Call Participants Scott Buck - H.C. Wainwright Operator Good afternoon. Welcome to WidePoint's Q3 2023 Earnings Conference Call. My name is Paul, and I will be your operator for today's call. Joining us for today's presentation are WidePoint's President and CEO, Jin Kang; Chie ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements of WidePoint Corporation, including statements of operations, comprehensive loss, balance sheets, cash flows, and changes in stockholders' equity, along with detailed notes explaining the company's organization, accounting policies, fair value measurements, accounts receivable, intangible assets, and other financial details for the periods ended September 30, 2023 and 2022 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) WidePoint Corporation reported a net loss of $0.92 million for the three months ended September 30, 2023, an increase from $0.54 million in the prior year, while the nine-month net loss significantly decreased to $2.71 million from $14.69 million due to the absence of a goodwill impairment charge | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenues | $25,733,657 | $25,271,572 | $77,770,195 | $70,765,353 | | Gross Profit | $3,894,821 | $3,799,452 | $11,614,398 | $11,015,821 | | Loss from Operations | $(832,729) | $(595,622) | $(2,447,862) | $(18,895,039) | | Net Loss | $(921,114) | $(540,883) | $(2,714,666) | $(14,692,989) | | EPS, Basic and Diluted | $(0.10) | $(0.06) | $(0.31) | $(1.68) | - Goodwill impairment charge of **$16,277,000** was recorded in the nine months ended September 30, 2022, with no such charge in 2023, significantly impacting the year-over-year net loss comparison for the nine-month period[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The company reported a comprehensive loss of $0.998 million for the three months ended September 30, 2023, and $2.722 million for the nine months ended September 30, 2023, which includes net loss and foreign currency translation adjustments | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Loss | $(921,114) | $(540,883) | $(2,714,666) | $(14,692,989) | | Foreign currency translation adjustments, net of tax | $(77,162) | $(118,524) | $(7,510) | $(258,213) | | Comprehensive Loss | $(998,276) | $(659,407) | $(2,722,176) | $(14,951,202) | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets decreased slightly to $48.39 million from $49.01 million at December 31, 2022, with total liabilities increasing to $32.83 million, leading to a decrease in total stockholders' equity | Metric | September 30, 2023 | December 31, 2022 | | :------------------------------------ | :----------------- | :---------------- | | **ASSETS** | | | | Total current assets | $28,728,962 | $27,988,052 | | Total noncurrent assets | $19,615,728 | $21,080,649 | | Total assets | $48,390,693 | $49,012,661 | | **LIABILITIES** | | | | Total current liabilities | $27,316,608 | $26,143,812 | | Total noncurrent liabilities | $5,513,269 | $5,117,646 | | Total liabilities | $32,829,877 | $31,261,458 | | **STOCKHOLDERS' EQUITY** | | | | Total stockholders' equity | $15,560,816 | $17,751,203 | | Total liabilities and stockholders' equity | $48,390,693 | $49,012,661 | - Cash increased by **$927,184** from **$7,530,864** at December 31, 2022, to **$8,458,048** at September 30, 2023[12](index=12&type=chunk) - Current portion of deferred revenue increased from **$1,704,933** to **$2,209,524**, and deferred revenue, net of current portion, increased from **$364,837** to **$1,208,293**[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash provided by operating activities decreased to $1.84 million from $3.22 million, while cash used in investing and financing activities also decreased | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $1,835,176 | $3,217,347 | | Net cash used in investing activities | $(507,325) | $(3,063,120) | | Net cash used in financing activities | $(423,767) | $(1,314,126) | | Net effect of exchange rate on cash | $23,100 | $(258,761) | | NET INCREASE (DECREASE) IN CASH | $927,184 | $(1,418,660) | | CASH, end of period | $8,458,048 | $5,061,320 | - The decrease in cash from operating activities was a result of systems and process changes that slowed billing in the first half of 2023[121](index=121&type=chunk) - The decrease in cash used in investing activities reflects capital investments in delivery platforms beginning to reach completion[124](index=124&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity decreased from $17.75 million at January 1, 2023, to $15.56 million at September 30, 2023, primarily due to net losses and foreign currency translation losses, partially offset by stock compensation expense | Metric | January 1, 2023 | September 30, 2023 | | :------------------------------------ | :---------------- | :----------------- | | Common Stock (Issued Amount) | $8,726 | $8,894 | | Additional Paid-In Capital | $101,194,185 | $101,725,806 | | Accumulated Other Comprehensive Loss | $(350,234) | $(357,744) | | Accumulated Deficit | $(83,101,474) | $(85,816,140) | | Total Stockholders' Equity | $17,751,203 | $15,560,816 | - Net loss for the nine months ended September 30, 2023, was **$(2,714,666)**, contributing to the accumulated deficit[9](index=9&type=chunk)[20](index=20&type=chunk) - Share-based compensation expense (restricted and non-qualified options) totaled **$535,417** for the nine months ended September 30, 2023, increasing additional paid-in capital[20](index=20&type=chunk)[63](index=63&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide essential context and detail for the condensed consolidated financial statements, covering the company's operations, accounting principles, specific asset and liability breakdowns, and significant events [1. Organization and Nature of Operations](index=7&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations) WidePoint Corporation provides Technology Management as a Service (TMaaS) through its federally compliant ITMS™ platform, managing mobile communications assets and identity credentialing, while facing fixed short-term expenses and periodic capital requirements - WidePoint Corporation provides Technology Management as a Service (TMaaS) through its Intelligent Technology Management System (ITMS™) platform[23](index=23&type=chunk) - The ITMS™ platform is SSAE 18 compliant and has an Authority to Operate from the U.S. Department of Homeland Security and the General Services Administration for its identity credentialing component[23](index=23&type=chunk) - A significant portion of the Company's expenses (personnel, facilities) are fixed in the short term, and there are periodic capital expense requirements for technology infrastructure upgrades[24](index=24&type=chunk) [2. Basis of Presentation and Accounting Policies](index=8&type=section&id=2.%20Basis%20of%20Presentation%20and%20Accounting%20Policies) The unaudited condensed consolidated financial statements are prepared in accordance with SEC regulations and U.S. GAAP, maintaining consistent accounting policies with no material impact from the adoption of ASU No. 2016-13 - The condensed consolidated financial statements are unaudited and prepared in conformity with U.S. GAAP, with certain information condensed or omitted as per SEC regulations[25](index=25&type=chunk) - There were no significant changes in the Company's significant accounting policies during the first nine months of 2023 from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[30](index=30&type=chunk) - The adoption of ASU No. 2016-13, 'Financial Instruments - Credit Losses (Topic 326),' on January 1, 2023, did not have a material impact on the consolidated financial statements[31](index=31&type=chunk) [3. Fair Value Measurements](index=9&type=section&id=3.%20Fair%20Value%20Measurements) The company's contingent consideration liabilities, totaling $6,900, are categorized as Level 3 fair value measurements, valued using a Monte Carlo simulation model, with no change in fair value for the reported periods | Description | September 30, 2023 | December 31, 2022 | | :------------------------------------ | :----------------- | :---------------- | | Contingent consideration - cash settled | $6,500 | $6,500 | | Contingent consideration - warrants | $400 | $400 | | Total liabilities measured and recorded at fair value | $6,900 | $6,900 | - Contingent consideration is categorized as **Level 3** within the fair value hierarchy and valued using a Monte Carlo simulation model[32](index=32&type=chunk)[33](index=33&type=chunk) - There was no change in the fair value of contingent consideration for the three and nine-month periods ended September 30, 2023[34](index=34&type=chunk) [4. Accounts Receivable and Significant Concentrations](index=10&type=section&id=4.%20Accounts%20Receivable%20and%20Significant%20Concentrations) Accounts receivable, net, decreased to $8.91 million, with U.S. Federal Government customers representing a significant concentration of 73% of receivables and 79% of total revenue, exposing the company to credit risk from uninsured deposits | Customer Type | September 30, 2023 | December 31, 2022 | | :------------------------------------ | :----------------- | :---------------- | | U.S. Federal, State, and Local Government | $6,740,135 | $7,272,993 | | Commercial | $2,244,138 | $2,055,782 | | Gross accounts receivable | $8,984,273 | $9,328,775 | | Less: allowances for credit losses | $72,398 | $51,666 | | Accounts receivable, net | $8,911,875 | $9,277,109 | | Customer Type | Sep 30, 2023 (% of Receivables) | Dec 31, 2022 (% of Receivables) | | :---------------------- | :------------------------------ | :------------------------------ | | U.S. Federal Government | 73% | 78% | | Customer Type | Nine Months Ended Sep 30, 2023 (% of Revenue) | Nine Months Ended Sep 30, 2022 (% of Revenue) | | :---------------------- | :------------------------------------------ | :------------------------------------------ | | U.S. Federal Government | 79.9% | 78.9% | - At September 30, 2023, the Company had deposits in excess of FDIC limits of approximately **$7.1 million** and foreign bank deposits in excess of insured limits of approximately **€560,000**, exposing it to credit risk[38](index=38&type=chunk) [5. Unbilled Accounts Receivable](index=11&type=section&id=5.%20Unbilled%20Accounts%20Receivable) Unbilled accounts receivable, representing earned but uninvoiced revenues, decreased to $9.96 million, with the U.S. Federal Government remaining the primary customer for 96% of these receivables - Unbilled accounts receivable represent revenues earned but not invoiced due to timing or fixed contractual billing schedules, primarily consisting of carrier services and hardware/software products[39](index=39&type=chunk) | Customer Type | September 30, 2023 (% of Receivables) | December 31, 2022 (% of Receivables) | | :---------------------- | :------------------------------------------ | :------------------------------------------ | | U.S. Federal Government | 96% | 97% | [6. Other Current Assets and Accrued Expenses](index=11&type=section&id=6.%20Other%20Current%20Assets%20and%20Accrued%20Expenses) Other current assets increased to $1.40 million due to higher inventories and prepaid assets, while accrued expenses decreased to $10.62 million, driven by a reduction in carrier service costs | Other Current Assets | September 30, 2023 | December 31, 2022 | | :--------------------- | :----------------- | :---------------- | | Inventories | $494,101 | $222,279 | | Prepaid insurance and other assets | $908,744 | $713,699 | | Total other current assets | $1,402,845 | $935,978 | | Accrued Expenses | September 30, 2023 | December 31, 2022 | | :--------------------- | :----------------- | :---------------- | | Carrier service costs | $7,845,150 | $8,402,770 | | Salaries and payroll taxes | $1,665,088 | $1,637,628 | | Inventory purchases, consultants and other costs | $1,004,362 | $1,205,209 | | Total accrued expenses | $10,624,832 | $11,327,269 | [7. Property and Equipment](index=12&type=section&id=7.%20Property%20and%20Equipment) Net property and equipment decreased to $0.86 million as of September 30, 2023, from $0.98 million at December 31, 2022. Depreciation expense for the nine months ended September 30, 2023, was approximately $281,900, a slight decrease from $305,100 in the prior year | Property and Equipment | September 30, 2023 | December 31, 2022 | | :--------------------- | :----------------- | :---------------- | | Gross property and equipment | $4,218,473 | $4,067,664 | | Less: accumulated depreciation and amortization | $3,360,606 | $3,089,446 | | Property and equipment, net | $857,867 | $978,218 | - Property and equipment depreciation expense was approximately **$281,900** for the nine months ended September 30, 2023, compared to **$305,100** for the same period in 2022[42](index=42&type=chunk) [8. Leases](index=12&type=section&id=8.%20Leases) Effective January 1, 2022, the company amended its Tampa office lease, allowing termination on June 30, 2022. As a result, the lease right-of-use asset and lease liability were removed from the balance sheet, and the lease was accounted for on a month-to-month basis - The Company amended its Tampa office lease agreement, changing the term to allow termination on **June 30, 2022**[44](index=44&type=chunk) - As a result of the amendment, the lease right-of-use asset and lease liability for the Tampa office were removed from the condensed consolidated balance sheet, and monthly rent expense was recorded[44](index=44&type=chunk) [9. Goodwill and Intangible Assets](index=12&type=section&id=9.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained constant at $5.81 million as of September 30, 2023. Net intangible assets decreased to $7.13 million from $7.40 million, primarily due to amortization. The company capitalized $832,400 in internally developed software costs for the nine months ended September 30, 2023, related to ITMS™ and secure identity management upgrades. Aggregate amortization expense for intangible assets was $1.53 million for the nine-month period - Goodwill remained at **$5,811,578** as of September 30, 2023, with no changes in its carrying amount during the nine-month period[45](index=45&type=chunk) | Intangible Assets | September 30, 2023 (Net Book Value) | December 31, 2022 (Net Book Value) | | :-------------------------- | :---------------------------------- | :--------------------------------- | | Customer Relationships | $1,913,600 | $2,093,000 | | Channel Relationships | $978,230 | $1,109,634 | | Internally Developed Software | $3,232,563 | $3,119,550 | | Trade Name and Trademarks | $1,009,452 | $1,075,976 | | Total | $7,133,845 | $7,398,160 | - For the nine months ended September 30, 2023, the Company capitalized **$832,400** of internally developed software costs, primarily for upgrading its ITMS™ and secure identity management technology[47](index=47&type=chunk) - Aggregate amortization expense for intangible assets was approximately **$1,533,900** for the nine months ended September 30, 2023[50](index=50&type=chunk) [10. Line of Credit and Factoring Agreement](index=13&type=section&id=10.%20Line%20of%20Credit%20and%20Factoring%20Agreement) WidePoint's Loan and Security Agreement with Atlantic Union Bank matured in June 2023 and was not renewed. The company subsequently entered into an Accounts Receivable Purchase Agreement with Republic Capital Access, LLC on April 28, 2023, for the non-recourse sale of eligible U.S. Government receivables, with a maximum limit of $4 million outstanding, expandable to $14 million. For the nine months ended September 30, 2023, the company sold $5.2 million in receivables, receiving $5.1 million net of fees - The Loan and Security Agreement with Atlantic Union Bank matured in **June 2023** and was not renewed[51](index=51&type=chunk) - On **April 28, 2023**, the Company entered into an Accounts Receivable Purchase Agreement with Republic Capital Access, LLC for the non-recourse sale of eligible U.S. Government receivables[52](index=52&type=chunk) - The Purchase Agreement has a maximum limit of **$4 million** outstanding Purchased Receivables, with an available increase to **$14 million**. For the nine months ended September 30, 2023, the Company sold **$5.2 million** of receivables for proceeds net of fees of **$5.1 million**[52](index=52&type=chunk)[54](index=54&type=chunk) [11. Income Taxes](index=14&type=section&id=11.%20Income%20Taxes) The company's effective tax rate for the nine months ended September 30, 2023, was (2.6)%, compared to 19% in the prior year. This difference is primarily due to a full valuation allowance against deferred tax assets and state minimum taxes | Period | Effective Tax Rate (2023) | Effective Tax Rate (2022) | | :------------------------------------ | :------------------------ | :------------------------ | | Three Months Ended September 30 | (1.5)% | 18% | | Nine Months Ended September 30 | (2.6)% | 19% | - The difference in the effective tax rate and the U.S. federal statutory rate was primarily due to the full valuation allowance the Company maintains against its deferred tax assets and state minimum taxes[54](index=54&type=chunk) [12. Stockholders' Equity](index=14&type=section&id=12.%20Stockholders'%20Equity) As of September 30, 2023, there were 8,893,220 shares of common stock issued and outstanding. The 2017 Omnibus Incentive Plan was amended to increase authorized shares by 1.3 million. The company accounts for contingent warrants as a liability and suspended its stock repurchase plan in March 2022 to invest excess funds into the business. The At-The-Market Issuance Sales Agreement was terminated effective March 27, 2023 - As of September 30, 2023, there were **8,893,220** shares of common stock issued and outstanding[55](index=55&type=chunk) - The 2017 WidePoint Omnibus Incentive Plan was amended on **June 22, 2023**, to increase the number of shares authorized for issuance by **1,300,000**[55](index=55&type=chunk) - The stock repurchase plan was suspended in **March 2022** to use excess funds for business investments, and the At-The-Market Issuance Sales Agreement was terminated effective **March 27, 2023**[61](index=61&type=chunk)[62](index=62&type=chunk) [13. Share-based Compensation](index=15&type=section&id=13.%20Share-based%20Compensation) Total share-based compensation expense before taxes for the nine months ended September 30, 2023, was $535,417, an increase from $384,267 in the prior year, driven by both restricted share-based compensation and non-qualified option expense. The company granted 628,572 restricted stock shares and 288,570 stock option awards during the nine-month period in 2023. A new Long-Term Incentive Plan (LTIP) was approved in August 2023, including 250,000 RSUs and 250,000 performance-based RSUs | Share-based Compensation Expense | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Restricted share-based compensation expense | $276,570 | $115,141 | $512,140 | $384,267 | | Non-qualified option share-based compensation expense | $23,277 | - | $23,277 | - | | Total share-based compensation before taxes | $299,847 | $115,141 | $535,417 | $384,267 | - During the nine months ended September 30, 2023, the Company granted **628,572** restricted stock shares and **288,570** stock option awards[64](index=64&type=chunk)[67](index=67&type=chunk) - A Long-Term Incentive Plan (LTIP) was approved in **August 2023**, covering 2023-2026, including **250,000 RSUs** and **250,000 performance-based RSUs**, none of which have been awarded as of September 30, 2023[68](index=68&type=chunk) [14. Earnings Per Common Share (EPS)](index=16&type=section&id=14.%20Earnings%20Per%20Common%20Share%20(EPS)) Basic and diluted loss per share for the three months ended September 30, 2023, was $(0.10), compared to $(0.06) in the prior year. For the nine-month period, it improved significantly to $(0.31) from $(1.68). Unexercised stock options, RSAs, and warrants were anti-dilutive for both periods | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(921,114) | $(540,883) | $(2,714,666) | $(14,692,989) | | Weighted average number of common shares | 8,893,220 | 8,725,476 | 8,809,644 | 8,734,471 | | Basic and Diluted Loss Per Share | $(0.10) | $(0.06) | $(0.31) | $(1.68) | - Unexercised stock options, RSAs, and warrants (**150,000 shares**) were anti-dilutive for both the three and nine-month periods ended September 30, 2023 and 2022[70](index=70&type=chunk)[71](index=71&type=chunk) [15. Revenue from Contracts with Customers](index=16&type=section&id=15.%20Revenue%20from%20Contracts%20with%20Customers) Total revenues for the nine months ended September 30, 2023, increased to $77.77 million from $70.77 million in the prior year. Carrier Services and Managed Services are the primary revenue streams, with the U.S. Federal Government being the largest customer segment, contributing $62.16 million. North America remains the dominant geographic region for revenue | Revenue Type | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------- | :----------------------------- | :----------------------------- | | Carrier Services | $42,487,301 | $39,495,108 | | Managed Services | $35,282,894 | $31,270,245 | | Total Revenues | $77,770,195 | $70,765,353 | | Customer Type | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------- | :----------------------------- | :----------------------------- | | U.S. Federal Government | $62,160,270 | $55,846,663 | | U.S. State and Local Governments | $318,528 | $313,112 | | Foreign Governments | $61,942 | $74,253 | | Commercial Enterprises | $15,229,455 | $14,531,325 | | Total Revenues | $77,770,195 | $70,765,353 | | Geographic Region | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------ | :----------------------------- | :----------------------------- | | North America | $74,712,967 | $68,222,879 | | Europe | $3,057,228 | $2,542,474 | | Total Revenues | $77,770,195 | $70,765,353 | [16. Commitments and Contingencies](index=17&type=section&id=16.%20Commitments%20and%20Contingencies) The company has employment agreements with certain executives that include compensation levels and severance provisions. WidePoint is not currently involved in any material legal proceedings - The Company has employment agreements with certain executives that set forth compensation levels and provide for severance payments[76](index=76&type=chunk) - The Company is not involved in any material legal proceedings[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, including a business overview, revenue mix factors, strategic focus, detailed results of operations for the three and nine-month periods, liquidity, capital resources, and the impact of inflation [Cautionary Note Regarding Forward-Looking Statements](index=18&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements about the company's business, operations, and financial performance, which are subject to known and unknown risks and uncertainties beyond the company's control - The report contains forward-looking statements concerning business, operations, and financial performance, subject to risks and uncertainties[79](index=79&type=chunk) - These statements are based on current expectations and assumptions but are not guarantees of future performance[79](index=79&type=chunk) - The Company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by law[80](index=80&type=chunk) [Business Overview](index=18&type=section&id=Business%20Overview) WidePoint is a leading provider of Technology Management as a Service (TMaaS), offering federally certified solutions for communications management, identity management, interactive bill presentment, analytics, and ITaaS. Its flexible managed services model, delivered through secure portals, helps clients manage and protect communications assets and deploy identity management solutions - WidePoint is a leading provider of Technology Management as a Service (TMaaS), including communications management, identity management, interactive bill presentment and analytics, and Information Technology as a Service solutions[82](index=82&type=chunk) - TMaaS solutions are offered through a flexible managed services model, designed for scalability and comprehensive functional capabilities[83](index=83&type=chunk) - Solutions are hosted and accessible on-demand through secure federal government certified proprietary and enterprise portals[83](index=83&type=chunk) [Revenue Mix](index=18&type=section&id=Revenue%20Mix) The company's revenue mix is subject to fluctuations influenced by customer-driven factors such as technology refresh cycles, new customer onboarding, optimization of carrier services, product/service delivery delays, and changes in customer control or funding. These factors can lead to quarterly variations in revenue - Revenue mix fluctuates due to customer-driven factors including timing of technology/accessory refresh, onboarding of new customers requiring carrier services, and subsequent decreases in carrier services as usage is optimized[85](index=85&type=chunk) - Other factors include delays in delivering products or services, and changes in customer control, leadership, laws, or funding[85](index=85&type=chunk) [Strategic Focus and Notable Events](index=19&type=section&id=Strategic%20Focus%20and%20Notable%20Events) WidePoint's long-term strategy focuses on expanding critical mass to fund technology investments, increase market share, and broaden offerings for sustainability and growth. Key 2023 goals include new sales opportunities, customer service, FedRAMP certification, growing high-margin managed services, M&A, and cloud environment transition. The company continues to face supply chain issues and price increases, mitigating them through stock on hand and volume discounts - Long-term strategic focus is to expand critical mass to fund technology investments, introduce new sales/marketing initiatives, and increase market share and breadth of offerings[89](index=89&type=chunk) - Key goals for 2023 include capturing new sales, providing unmatched customer service, attaining full FedRAMP certification, growing recurring high-margin managed services, and pursuing accretive acquisitions[90](index=90&type=chunk) - The company continues to experience ongoing supply chain issues and supply price increases, which it mitigates by keeping sufficient stock and seeking volume discounts[91](index=91&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) This section details the financial performance for both the three and nine-month periods ended September 30, 2023, compared to the prior year, highlighting changes in revenues, cost of revenues, gross profit, operating expenses, and net loss, with specific explanations for key variances [Three Months Ended September 30, 2023 as Compared to Three Months Ended September 30, 2022](index=19&type=section&id=Three%20Months%20Ended%20September%2030%2C%202023%20as%20Compared%20to%20Three%20Months%20Ended%20September%2030%2C%202022) For the three months ended September 30, 2023, revenues increased by 2% to $25.7 million. Carrier services revenue grew by $0.58 million, and billable service fees increased by $0.65 million, while reselling and other services decreased by $1.36 million. Gross profit remained consistent at 15% of revenues, and net loss increased to $0.92 million from $0.54 million, primarily due to higher general and administrative expenses and a shift from an income tax benefit to a provision | Metric | Sep 30, 2023 | Sep 30, 2022 | Dollar Variance | | :---------------------- | :----------- | :----------- | :-------------- | | Revenues | $25,733,657 | $25,271,572 | $462,085 | | Carrier Services | $14,648,540 | $14,062,700 | $585,840 | | Managed Service Fees | $8,094,912 | $7,513,642 | $581,270 | | Billable Service Fees | $1,560,177 | $909,943 | $650,234 | | Reselling and Other Services | $1,430,028 | $2,785,287 | $(1,355,259) | | Gross Profit | $3,894,821 | $3,799,452 | $95,369 | | Net Loss | $(921,114) | $(540,883) | $(380,231) | - Reselling and other services decreased primarily due to the timing of reselling opportunities near the government fiscal year end, as these services are transactional[97](index=97&type=chunk) - General and administrative expenses increased primarily due to an increase in share-based compensation expense[100](index=100&type=chunk) [Nine Months Ended September 30, 2023 as Compared to Nine Months Ended September 30, 2022](index=20&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202023%20as%20Compared%20to%20Nine%20Months%20Ended%20September%2030%2C%202022) For the nine months ended September 30, 2023, revenues increased by 8% to $77.8 million, driven by a $2.99 million increase in carrier services and a $1.65 million increase in billable service fees. Gross profit rose to $11.6 million, though the percentage slightly decreased to 15% due to costs related to reselling new capabilities. Net loss significantly improved to $2.7 million from $14.7 million, primarily due to the absence of a $16.3 million goodwill impairment charge recorded in the prior year | Metric | Sep 30, 2023 | Sep 30, 2022 | Dollar Variance | | :---------------------- | :----------- | :----------- | :-------------- | | Revenues | $77,770,195 | $70,765,353 | $7,004,842 | | Carrier Services | $42,487,299 | $39,495,109 | $2,992,190 | | Managed Service Fees | $21,865,158 | $21,470,041 | $395,117 | | Billable Service Fees | $4,666,084 | $3,016,746 | $1,649,338 | | Reselling and Other Services | $8,751,654 | $6,783,457 | $1,968,197 | | Cost of Revenues | $66,155,797 | $59,749,532 | $6,406,265 | | Gross Profit | $11,614,398 | $11,015,821 | $598,577 | | Net Loss | $(2,714,666) | $(14,692,989) | $11,978,323 | - The increase in carrier services revenue is primarily due to increased contracting activity with federal customers[106](index=106&type=chunk) - The significant improvement in net loss is primarily due to the absence of a **$16.3 million** non-cash goodwill impairment charge recorded in the nine months ended September 30, 2022[114](index=114&type=chunk)[118](index=118&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) WidePoint's liquidity sources include cash, receivables, and a factoring arrangement with Republic Capital Access, LLC, with an initial capacity of $4 million, expandable to $14 million. Net working capital decreased to $1.4 million at September 30, 2023, from $1.8 million at December 31, 2022. Cash balance was $8.5 million, temporarily increased due to working capital management in anticipation of a potential US government shutdown. Net cash from operations decreased to $1.8 million for the nine months ended September 30, 2023, due to billing slowdowns - Immediate liquidity sources include cash, accounts receivable, unbilled receivables, and a factoring arrangement with Republic Capital Access, LLC, with an initial capacity of **$4 million**, expandable to **$14 million**[120](index=120&type=chunk) - Net working capital decreased to approximately **$1.4 million** at September 30, 2023, from **$1.8 million** at December 31, 2022[120](index=120&type=chunk) - Cash balance at September 30, 2023, was **$8.5 million**, temporarily increased as a defensive position against a potential US government shutdown[121](index=121&type=chunk) - Net cash provided by operations decreased to approximately **$1.8 million** for the nine months ended September 30, 2023, from **$3.2 million** in the prior year, due to systems and process changes that slowed billing[121](index=121&type=chunk) [Inflation](index=23&type=section&id=Inflation) Heightened inflation and potential macroeconomic worsening pose risks to WidePoint, impacting costs, profits, margins, and cash flows, especially for fixed-price contracts without economic price adjustments. Inflation also affects borrowing costs and fair value measurements of intangible assets. Management continues to monitor and evaluate these effects - Heightened inflation presents a risk, potentially increasing costs and pressuring profits, margins, and cash flows, particularly for existing fixed-price contracts[130](index=130&type=chunk) - The Company has not been able to secure economic price adjustments (EPA) on its fixed-price contracts to mitigate unexpected inflation[130](index=130&type=chunk) - Inflation will affect the cost of borrowing and may impact gross and net margins due to wage inflation, as well as fair value measurements of intangible assets[130](index=130&type=chunk) [Off-Balance Sheet Arrangements](index=23&type=section&id=Off-Balance%20Sheet%20Arrangements) WidePoint Corporation has no existing off-balance sheet arrangements as defined under SEC regulations - The Company has no existing off-balance sheet arrangements as defined under SEC regulations[132](index=132&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 this filing - This item is not required for the current filing[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2023. There were no material changes in internal control over financial reporting during the three-month period - The company's disclosure controls and procedures were evaluated and concluded to be effective as of September 30, 2023[134](index=134&type=chunk) - No material changes in internal control over financial reporting occurred during the three-month period ended September 30, 2023[135](index=135&type=chunk) [PART II. OTHER INFORMATION](index=23&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) WidePoint Corporation is not currently involved in any material legal proceedings - The Company is not currently involved in any material legal proceeding[136](index=136&type=chunk) [Item 1A. Risk Factors](index=23&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, 2022 - Risk factors have not changed materially from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[137](index=137&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's stock repurchase plan, which had been increased to $5.0 million, was suspended in March 2022 after repurchasing $818,200 of common stock, to redirect funds towards business investments. For the period, 1,993 shares were withheld from vested stock-based compensation awards for employee income tax withholding - The Board suspended the stock repurchase plan in **March 2022** to use the company's excess funds to invest into the business, after repurchasing **196,586 shares** for **$818,200**[139](index=139&type=chunk) | Shares Withheld for Tax | Number of Shares | Price Paid Per Share | | :---------------------- | :--------------- | :------------------- | | March | 1,993 | $1.82 | [Item 3. Default Upon Senior Securities](index=24&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) There was no default upon senior securities during the reported period - There was no default upon senior securities[141](index=141&type=chunk) [Item 4. Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There are no mine safety disclosures to report - There are no mine safety disclosures[141](index=141&type=chunk) [Item 5. Other Information](index=24&type=section&id=Item%205.%20Other%20Information) During the three months ended September 30, 2023, there were no modifications, adoptions, or terminations by any directors or officers to any Rule 10b5-1 trading agreements - During the three months ended September 30, 2023, there were no modifications, adoptions, or terminations by any directors or officers to any Rule 10b5-1 trading agreements[141](index=141&type=chunk) [Item 6. Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including a task order, certifications from the CEO and CFO, and various Interactive Data Files (XBRL) - Exhibits include a Task Order dated **October 11, 2023**, CEO and CFO certifications (302 and 906 of Sarbanes-Oxley Act), and Interactive Data Files (XBRL)[142](index=142&type=chunk)[143](index=143&type=chunk) [SIGNATURES](index=25&type=section&id=SIGNATURES) [Signatures](index=25&type=section&id=SIGNATURES_details) The report is duly signed on November 14, 2023, by Jin H. Kang, President and Chief Executive Officer, and Robert J. George, Chief Financial Officer, on behalf of WidePoint Corporation - The report was signed on **November 14, 2023**, by Jin H. Kang, President and Chief Executive Officer, and Robert J. George, Chief Financial Officer[147](index=147&type=chunk)

Financial Data and Key Metrics Changes - For Q2 2023, revenue was $26.8 million, an increase of $3.7 million or 16% from $23.1 million in the same period last year [13] - For the six-month period ended June 30, 2023, revenue was $52.1 million, an increase of $6.8 million or 14% from $45.5 million in the same period last year [13] - Net loss for Q2 2023 was $842,000, compared to a net loss of $13.8 million in the same period last year [19] - The company ended the quarter with $7.8 million in cash, aided by accelerated cash receipts [20] Business Line Data and Key Metrics Changes - Carrier services revenue for Q2 2023 was $14.2 million, an increase of $1.7 million from $12.5 million in Q2 2022 [14] - Managed services revenue for Q2 2023 was $6.9 million, showing marginal growth compared to $6.7 million in the same period last year [15] - Billable services fees increased to $1.9 million in Q2 2023 from $1 million in Q2 2022 [15] - Reselling and other services revenue was $3.8 million in Q2 2023, up from $2.9 million in the same period last year [16] Market Data and Key Metrics Changes - The company noted increased interest from both government and commercial entities in technology management solutions [10] - Cybersecurity threats are rising, with 2,200 cyber-attacks per day, highlighting the demand for secure solutions [11] Company Strategy and Development Direction - The company is focused on operational efficiency and has seen improvements despite a leaner team due to recent workforce reductions [4][5] - Investments in technology management systems are expected to conclude by the end of the year, with FedRAMP authorization anticipated [8][22] - The company is exploring M&A opportunities that could benefit existing operations [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating unpredictable macroeconomic trends, including potential government budget issues [6][26] - The company expects to improve cash flow year-over-year by approximately $3.5 million [23] - Management believes they are approaching an inflection point in growth, driven by increased client retention and expanded service scope [24] Other Important Information - The company has completed remote issuance of certificates and developed a hybrid issuance capability for clients [9] - The gross profit for Q2 2023 was $3.9 million, or 15% of revenues, compared to $3.3 million, or 14% of revenues in Q2 2022 [17] Q&A Session Summary Question: How does the current federal government budget discussions affect FEMA and WidePoint? - Management stated that current contracts are funded with little risk to revenue, but new projects could face delays [26] Question: Can you provide more color on your FedRAMP status? - Management indicated they are awaiting final authorization from the ATF, with expectations for completion in Q4 2023 [27]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to ___________________ Commission File Number: 001-33035 WidePoint Corporation (Exact name of Registrant as specified in its charter) Delaware 52-2040 ...

Financial Data and Key Metrics Changes - In Q1 2023, the company's revenue was $25.3 million, an increase of $2.8 million or 13% from $22.5 million in the same period last year [16] - GAAP net loss for Q1 2023 was $950,000 or $0.11 per diluted share, compared to a net loss of $393,000 or $0.04 per diluted share in the same period last year [21] - Adjusted EBITDA for Q1 2023 was $20,000, down from $344,000 in the same period last year [21] Business Line Data and Key Metrics Changes - Carrier services revenue increased to $13.6 million, up approximately $700,000 from $12.9 million in Q1 2022, primarily due to a federal government client increasing phone lines managed by 75% [17] - Managed services revenue remained consistent at $8.1 million, while billable services fees revenue was $8.4 million, also consistent with the previous year [18] - Reselling and other services revenue rose to $3.6 million, an increase of $2.5 million from $1.1 million in the same period last year, driven by the resale of text capture capabilities to federal clients [18] Market Data and Key Metrics Changes - The company has signed three key deals with CSG International, contributing significantly to revenue growth [5][6] - The company is experiencing increased traction in the federal government sector, particularly in text capture capabilities for archival purposes [6] Company Strategy and Development Direction - The company is focusing on inorganic growth through M&A opportunities and is evaluating potential candidates with the help of investment banks [23][24] - Continued investment in technology infrastructure is aimed at capturing new opportunities, including the launch of Unified Communication Analytics solutions [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a cash flow positive status by the end of the year, driven by sales and marketing efforts and client retention [25][26] - The company expects revenues for the full year to range between $103 million and $108 million, with a GAAP net loss projected between $2.8 million and $3.2 million [25] Other Important Information - The company has achieved its 23rd consecutive quarter of being EBITDA positive [16] - The current ratio at the end of Q1 2023 was 1.1:1, with cash decreasing to $4.6 million from $7.5 million at the end of 2022 due to billing delays [22] Q&A Session Summary Question: If the debt limit problem is not solved, are there funds available to pay WidePoint? - Management believes that funds have been obligated to contracts, and they expect to be paid for services rendered, despite potential delays in payments if the government shuts down [28][29]

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents WidePoint Corporation's unaudited condensed consolidated financial statements for Q1 2023 and 2022, including key financial statements and accompanying notes [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations show a significant increase in net loss for the three months ended March 31, 2023, primarily driven by higher cost of revenues and a shift from other income to other expense compared to the prior year Key Financial Metrics | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | REVENUES | $25,273,681 | $22,436,427 | | COST OF REVENUES | $21,463,741 | $18,539,702 | | GROSS PROFIT | $3,809,940 | $3,896,725 | | LOSS FROM OPERATIONS | $(888,401) | $(688,034) | | Total other income (expense), net | $(56,776) | $244,062 | | NET LOSS | $(951,479) | $(392,897) | | EARNINGS PER SHARE, BASIC AND DILUTED | $(0.11) | $(0.04) | - Revenues increased by approximately **$2.8 million (13%)** from $22.4 million in Q1 2022 to $25.3 million in Q1 2023. However, net loss widened from **$(392,897) to $(951,479)** year-over-year[9](index=9&type=chunk)[98](index=98&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The Condensed Consolidated Statements of Comprehensive Loss show an increased comprehensive loss for the three months ended March 31, 2023, primarily due to the higher net loss, partially offset by positive foreign currency translation adjustments Comprehensive Loss Details | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | NET LOSS | $(951,479) | $(392,897) | | Foreign currency translation adjustments, net of tax | $37,248 | $(4,835) | | COMPREHENSIVE LOSS | $(914,231) | $(397,732) | - Comprehensive loss increased from **$(397,732)** in Q1 2022 to **$(914,231)** in Q1 2023, despite a positive foreign currency translation adjustment of **$37,248** in 2023 compared to a loss of **$(4,835)** in 2022[10](index=10&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets indicate a slight decrease in total assets and stockholders' equity as of March 31, 2023, compared to December 31, 2022, primarily due to a reduction in cash and an increase in accounts payable Balance Sheet Summary | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash | $4,577,963 | $7,530,864 | | Total current assets | $27,563,060 | $27,988,052 | | Total assets | $48,389,103 | $49,012,661 | | Total current liabilities | $26,422,285 | $26,143,812 | | Total liabilities | $31,415,643 | $31,261,458 | | Total stockholders' equity | $16,973,460 | $17,751,203 | - Cash decreased by approximately **$2.95 million** from December 31, 2022, to March 31, 2023. Total stockholders' equity also decreased by approximately **$0.78 million** during the same period[12](index=12&type=chunk)[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows show a significant shift from cash provided by operating activities in Q1 2022 to cash used in operating activities in Q1 2023, contributing to a net decrease in cash Cash Flow Summary | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(2,489,048) | $2,825,427 | | Net cash used in investing activities | $(359,270) | $(983,873) | | Net cash used in financing activities | $(129,196) | $(1,014,840) | | NET (DECREASE) INCREASE IN CASH | $(2,952,901) | $787,764 | | CASH, end of period | $4,577,963 | $7,267,744 | - Net cash used in operating activities was **$(2.49) million** in Q1 2023, a substantial decrease from **$2.83 million** provided by operations in Q1 2022, primarily due to systems and process changes that slowed billing[16](index=16&type=chunk)[113](index=113&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) The Condensed Consolidated Statements of Changes in Stockholders' Equity reflect a decrease in total stockholders' equity for the three months ended March 31, 2023, mainly due to the net loss, partially offset by share-based compensation and foreign currency translation gains Stockholders' Equity Changes | Metric | Balance, January 1, 2023 ($) | Balance, March 31, 2023 ($) | | :-------------------------------- | :----------------------- | :---------------------- | | Common Stock Issued | 8,725,476 | 8,739,317 | | Common Stock Amount | $8,726 | $8,740 | | Additional Paid-In Capital | $101,194,185 | $101,330,659 | | Accumulated OCI | $(350,234) | $(312,986) | | Accumulated Deficit | $(83,101,474) | $(84,052,953) | | Total Stockholders' Equity | $17,751,203 | $16,973,460 | - Total stockholders' equity decreased by approximately **$0.78 million** from January 1, 2023, to March 31, 2023, primarily due to a net loss of **$(951,479)**, partially offset by **$140,116** in stock compensation expense and **$37,248** in foreign currency translation gain[18](index=18&type=chunk)[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed information supporting the condensed consolidated financial statements, covering accounting policies, fair value, receivables, assets, liabilities, equity, and revenue recognition [1. Organization and Nature of Operations](index=7&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations) WidePoint Corporation, incorporated in Delaware in 1997, operates through wholly-owned subsidiaries across the US, Ireland, Netherlands, and UK. It is a leading provider of Technology Management as a Service (TMaaS) via its federally compliant ITMS™ platform, offering secure lifecycle management of mobile communications assets and identity credentialing - WidePoint Corporation provides federally certified Technology Management as a Service (TMaaS) solutions through its Intelligent Technology Management System (ITMS™) platform, which is SSAE 18 compliant and has an Authority to Operate from the U.S. Department of Homeland Security and General Services Administration[21](index=21&type=chunk)[22](index=22&type=chunk) [2. Basis of Presentation and Accounting Policies](index=7&type=section&id=2.%20Basis%20of%20Presentation%20and%20Accounting%20Policies) The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and U.S. GAAP, consolidating all wholly-owned subsidiaries. Key accounting policies include foreign currency translation, use of estimates, and single-segment reporting. The adoption of ASU No. 2016-13 on credit losses did not materially impact the financial statements - The Company operates as a single segment, with its Chief Operating Decision Maker evaluating the business based on its TMaaS offerings[28](index=28&type=chunk) - The adoption of ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326)," on January 1, 2023, did not have a material impact on the consolidated financial statements[30](index=30&type=chunk) [3. Fair Value Measurements](index=8&type=section&id=3.%20Fair%20Value%20Measurements) The Company's liabilities measured at fair value on a recurring basis consist of contingent consideration, categorized as Level 3 within the fair value hierarchy. These are valued using a Monte Carlo simulation model, and there was no change in their fair value for the three months ended March 31, 2023 Fair Value Liabilities | Description | March 31, 2023 (Level 3) ($) | December 31, 2022 (Level 3) ($) | | :------------------------------------ | :----------------------- | :-------------------------- | | Contingent consideration - cash settled | $6,500 | $6,500 | | Contingent consideration - warrants | $400 | $400 | | Total liabilities measured and recorded at fair value | $6,900 | $6,900 | - Contingent consideration is categorized as Level 3 and valued using a Monte Carlo simulation model, incorporating probability of achievement, risk-free rates, and volatility. No change in fair value occurred in Q1 2023[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [4. Accounts Receivable and Significant Concentrations](index=9&type=section&id=4.%20Accounts%20Receivable%20and%20Significant%20Concentrations) Accounts receivable primarily stem from U.S. federal government contracts, which represent a significant concentration of revenue. The Company maintains an allowance for credit losses for commercial customers but not historically for government customers due to low credit loss experience Accounts Receivable Breakdown | Customer Type | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | U.S. Federal, State, and Local Government | $7,952,334 | $7,272,993 | | Commercial | $2,322,209 | $2,055,782 | | Gross accounts receivable | $10,274,543 | $9,328,775 | | Less: allowances for credit losses | $72,271 | $51,666 | | Accounts receivable, net | $10,202,272 | $9,277,109 | Revenue Concentration by Customer Type | Customer Type | Three Months Ended March 31, 2023 (%) | Three Months Ended March 31, 2022 (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | | U.S. Federal Government | 80.0% | 77.7% | - U.S. Federal Government customers accounted for **80.0%** of total revenue in Q1 2023, up from **77.7%** in Q1 2022, indicating a continued significant concentration[39](index=39&type=chunk) [5. Unbilled Accounts Receivable](index=10&type=section&id=5.%20Unbilled%20Accounts%20Receivable) Unbilled accounts receivable represent earned revenues not yet invoiced, primarily from carrier services and hardware/software products. A substantial portion, 96% as of March 31, 2023, is attributable to U.S. Federal Government customers Unbilled Receivables by Customer Type | Customer Type | March 31, 2023 (As a % of Receivables) | December 31, 2022 (As a % of Receivables) | | :-------------------- | :------------------------------------- | :---------------------------------------- | | U.S. Federal Government | 96% | 97% | - Unbilled accounts receivable for U.S. Federal Government customers remained a dominant portion, at **96%** in Q1 2023, consistent with **97%** in Q4 2022[43](index=43&type=chunk) [6. Other Current Assets and Accrued Expenses](index=10&type=section&id=6.%20Other%20Current%20Assets%20and%20Accrued%20Expenses) Other current assets include inventories and prepaid insurance, showing a slight increase. Accrued expenses, primarily carrier service costs, decreased from December 31, 2022, to March 31, 2023 Other Current Assets | Other Current Assets | March 31, 2023 ($) | December 31, 2022 ($) | | :--------------------------- | :-------------------------------- | :-------------------------------- | | Inventories | $239,658 | $222,279 | | Prepaid insurance and other assets | $699,529 | $713,699 | | Total other current assets | $939,187 | $935,978 | Accrued Expenses | Accrued Expenses | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Carrier service costs | $8,159,230 | $8,402,770 | | Salaries and payroll taxes | $1,609,058 | $1,637,628 | | Inventory purchases, consultants and other costs | $746,113 | $1,205,209 | | Total accrued expenses | $10,652,753 | $11,327,269 | [7. Property and Equipment](index=11&type=section&id=7.%20Property%20and%20Equipment) Net property and equipment remained relatively stable, with minor increases in computer hardware and software. Depreciation expense increased in Q1 2023 compared to Q1 2022 Property and Equipment Details | Property and Equipment | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Computer hardware and software | $3,268,634 | $3,158,428 | | Gross property and equipment | $4,184,486 | $4,067,664 | | Less: accumulated depreciation and amortization | $3,205,853 | $3,089,446 | | Property and equipment, net | $978,633 | $978,218 | - Property and equipment depreciation expense was approximately **$116,400** for Q1 2023, an increase from **$93,700** in Q1 2022[46](index=46&type=chunk) [8. Leases](index=11&type=section&id=8.%20Leases) The Company amended its Tampa office lease, allowing termination on June 30, 2022, and subsequently accounted for it as a month-to-month lease, removing the associated right-of-use asset and liability from the balance sheet - The Company terminated its Tampa office lease right of use asset and lease liability from its balance sheet as of June 30, 2022, and now accounts for the lease on a month-to-month basis[48](index=48&type=chunk) [9. Goodwill and Intangible Assets](index=11&type=section&id=9.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained constant at $5,811,578. Intangible assets, primarily internally developed software, decreased slightly due to amortization, despite new capitalizations for ITMS™ upgrades - Goodwill remained unchanged at **$5,811,578** as of March 31, 2023[49](index=49&type=chunk) Intangible Assets Net Book Value | Intangible Asset | March 31, 2023 (Net Book Value) ($) | December 31, 2022 (Net Book Value) ($) | | :-------------------------- | :------------------------------ | :--------------------------------- | | Customer Relationships | $2,033,200 | $2,093,000 | | Channel Relationships | $1,065,832 | $1,109,634 | | Internally Developed Software | $3,026,372 | $3,119,550 | | Trade Name and Trademarks | $1,053,802 | $1,075,976 | | Total | $7,179,206 | $7,398,160 | - The Company capitalized **$453,300** of internally developed software costs in Q1 2023, primarily for ITMS™ upgrades, with **$280,220** transferred from capital work in progress[51](index=51&type=chunk) [10. Line of Credit](index=12&type=section&id=10.%20Line%20of%20Credit) The Company was non-compliant with its Atlantic Union Bank line of credit covenant and will not renew it, instead entering a new $4 million accounts receivable purchase agreement - The Company was not in compliance with the tangible net worth covenant of its Atlantic Union Bank line of credit as of March 31, 2023, and does not plan to renew the facility expiring June 15, 2023[59](index=59&type=chunk) - On April 28, 2023, WidePoint entered into a new Accounts Receivable Purchase Agreement with Republic Capital Access, LLC for non-recourse sale of eligible trade receivables, with an initial capacity of **$4 million**, expandable to **$10 million**[60](index=60&type=chunk) [11. Income Taxes](index=13&type=section&id=11.%20Income%20Taxes) The Company's effective tax rate was (0.7)% for Q1 2023, a significant decrease from 11.5% in Q1 2022, primarily due to a full valuation allowance against deferred tax assets and state minimum taxes. The valuation allowance increased by approximately $238,000 during the quarter Income Tax Metrics | Metric | Three Months Ended March 31, 2023 (%) | Three Months Ended March 31, 2022 (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | | Effective Tax Rate | (0.7)% | 11.5% | | Income Tax Provision (Benefit) | $6,302 | $(51,075) | - The effective tax rate decreased from **11.5%** in Q1 2022 to **(0.7%)** in Q1 2023, mainly due to the full valuation allowance maintained against deferred tax assets[61](index=61&type=chunk)[62](index=62&type=chunk) [12. Stockholders' Equity](index=13&type=section&id=12.%20Stockholders'%20Equity) Stockholders' equity details common stock, contingent warrants, and the stock repurchase program. Common stock shares increased slightly due to vested restricted stock awards. The stock repurchase plan was suspended in March 2022 to invest funds into the business - As of March 31, 2023, there were **8,741,310** shares of common stock issued and outstanding. **15,837** shares of common stock vested in Q1 2023, with **1,993** shares withheld for tax liability[63](index=63&type=chunk) - The stock repurchase plan, which had repurchased **196,586** shares for **$818,200** in Q1 2022, was suspended in March 2022 to reallocate funds for business investments[69](index=69&type=chunk) [13. Share-based Compensation](index=14&type=section&id=13.%20Share-based%20Compensation) Share-based compensation expense, primarily from restricted stock awards, decreased in Q1 2023 compared to Q1 2022. No new restricted stock awards were granted during these periods Share-based Compensation Expense | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Restricted share-based compensation expense | $140,116 | $179,741 | | Total share-based compensation before taxes | $140,116 | $179,741 | - Share-based compensation expense decreased from **$179,741** in Q1 2022 to **$140,116** in Q1 2023. No new Restricted Stock Awards (RSAs) were granted in either period[71](index=71&type=chunk)[72](index=72&type=chunk) [14. Earnings Per Common Share (EPS)](index=14&type=section&id=14.%20Earnings%20Per%20Common%20Share%20(EPS)) Basic and diluted loss per share increased to $(0.11) in Q1 2023 from $(0.04) in Q1 2022, reflecting the higher net loss. Outstanding stock options, RSAs, and warrants were anti-dilutive in both periods Earnings Per Share Calculation | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(951,479) | $(392,897) | | Weighted average number of common shares | 8,739,317 | 8,782,452 | | Basic Loss Per Share | $(0.11) | $(0.04) | | Diluted Loss Per Share | $(0.11) | $(0.04) | - Basic and diluted loss per share worsened to **$(0.11)** in Q1 2023 from **$(0.04)** in Q1 2022, with all potentially dilutive securities being anti-dilutive[75](index=75&type=chunk) [15. Revenue from Contracts with Customers](index=15&type=section&id=15.%20Revenue%20from%20Contracts%20with%20Customers) Total revenues increased in Q1 2023, driven by growth in both carrier services and managed services. The U.S. Federal Government remains the largest customer segment, and North America is the primary geographic region for revenue generation Revenue by Type | Revenue Type | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :----------------- | :-------------------------------- | :-------------------------------- | | Carrier Services | $13,597,701 | $12,932,055 | | Managed Services | $11,675,980 | $9,504,372 | | Total Revenues | $25,273,681 | $22,436,427 | Revenue by Customer Type | Customer Type | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | U.S. Federal Government | $20,230,576 | $17,433,723 | | Commercial Enterprises | $4,935,525 | $4,844,155 | | Total Revenues | $25,273,681 | $22,436,427 | Revenue by Geographic Region | Geographic Region | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :------------------ | :-------------------------------- | :-------------------------------- | | North America | $24,209,410 | $21,434,634 | | Europe | $1,064,271 | $1,001,793 | | Total Revenues | $25,273,681 | $22,436,427 | [16. Commitments and Contingencies](index=16&type=section&id=16.%20Commitments%20and%20Contingencies) The Company has employment agreements with certain executives and is not currently involved in any material legal proceedings - The Company is not involved in any material legal proceedings[80](index=80&type=chunk) [17. Subsequent Events](index=16&type=section&id=17.%20Subsequent%20Events) As of April 28, 2023, the Company entered into an Accounts Receivable Purchase Agreement with Republic Capital Access, LLC for the non-recourse sale of eligible trade receivables, as further described in Note 10 - On April 28, 2023, the Company entered into an Accounts Receivable Purchase Agreement with Republic Capital Access, LLC for the non-recourse sale of eligible trade receivables[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's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the Company's financial condition, operations, liquidity, and capital resources for Q1 2023 and 2022 [Cautionary Note Regarding Forward-Looking Statements](index=17&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties, including supply chain issues, profitability, financing access, market acceptance, contract execution, competition, and economic factors. Readers are cautioned not to place undue reliance on these statements - Forward-looking statements are subject to risks such as supply chain issues, ability to sustain profitability, access to financing, market acceptance, contract execution, competition, and the impact of volatile public equity markets[82](index=82&type=chunk) [Business Overview](index=17&type=section&id=Business%20Overview) WidePoint is a leading provider of Technology Management as a Service (TMaaS), offering federally certified solutions for communications management, identity management, interactive bill presentment and analytics, and IT as a Service. These solutions help clients manage mobility, IT, and cybersecurity objectives through a flexible, scalable, and secure managed services model - WidePoint provides federally certified Technology Management as a Service (TMaaS) solutions, including communications management, identity management, and IT as a Service, through a flexible managed services model[85](index=85&type=chunk)[86](index=86&type=chunk) [Revenue Mix](index=17&type=section&id=Revenue%20Mix) The Company's revenue mix fluctuates due to customer-driven factors such as technology refresh cycles, new customer onboarding, optimization of carrier services, delivery delays, and changes in customer control or funding, leading to quarterly variations - Revenue mix fluctuates due to factors including customer technology refresh requirements, onboarding of new customers, optimization of carrier services, delivery delays, and changes in customer control or funding[88](index=88&type=chunk) [Strategic Focus and Notable Events](index=17&type=section&id=Strategic%20Focus%20and%20Notable%20Events) WidePoint's long-term strategic focus is to expand its critical mass to fund technology investments, increase market share, and broaden offerings for sustainability and growth. Key goals for 2023 include mitigating inflation, capturing new sales, growing high-margin managed services, enhancing software platforms, and expanding the customer base organically and through acquisitions - Long-term strategic focus is to expand critical mass to fund technology investments, increase market share, and broaden offerings[91](index=91&type=chunk) - Key goals for 2023 include mitigating inflation, finding new sales opportunities, growing recurring high-margin managed services, attaining FedRAMP certification, enhancing software platforms for SaaS growth, and expanding the customer base[92](index=92&type=chunk)[93](index=93&type=chunk) - The Company continues to experience supply chain issues, leading to changes in inventory strategy (keeping sufficient stock) and seeking volume discounts to mitigate price increases[96](index=96&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) This section details the financial performance for the three months ended March 31, 2023, compared to the same period in 2022, highlighting changes in revenues, cost of revenues, gross profit, operating expenses, other income/expense, income taxes, and net loss [Three Months Ended March 31, 2023 as Compared to Three Months Ended March 31, 2022](index=18&type=section&id=Three%20Months%20Ended%20March%2031,%202023%20as%20Compared%20to%20Three%20Months%20Ended%20March%2031,%202022) Revenues increased by 13% to $25.3 million, driven by carrier services and reselling activities. However, gross profit percentage declined due to higher cost of revenues from third-party partner resales, leading to a widened net loss Revenue Comparison | Metric | 2023 (3 months) ($) | 2022 (3 months) ($) | Dollar Variance ($) | | :---------------------- | :-------------- | :-------------- | :-------------- | | Carrier Services | $13,597,699 | $12,932,059 | $665,640 | | Managed Service Fees | $6,852,099 | $7,258,277 | $(406,178) | | Billable Service Fees | $1,250,334 | $1,120,106 | $130,228 | | Reselling and Other Services | $3,573,549 | $1,125,985 | $2,447,564 | | Total Revenues | $25,273,681 | $22,436,427 | $2,837,254 | - Revenues increased by **$2.8 million (13%)** to **$25.3 million** in Q1 2023, primarily due to a **$2.5 million** increase in reselling and other services from new third-party partner capabilities for federal contracts, and a **$0.7 million** increase in carrier services[98](index=98&type=chunk)[101](index=101&type=chunk) - Gross profit decreased from **$3.9 million (17% of revenues)** in Q1 2022 to **$3.8 million (15% of revenues)** in Q1 2023, mainly due to higher cost of revenues associated with the resale of third-party partner capabilities[9](index=9&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk) - Net loss widened to approximately **$(951,500)** in Q1 2023 from **$(392,900)** in Q1 2022, influenced by the lower gross profit percentage and a shift from other income to other expense[9](index=9&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's liquidity sources include cash, receivables, and a new factoring arrangement. Net working capital decreased to $1.4 million. Cash used in operating activities increased significantly due to billing slowdowns, while cash used in investing activities decreased. Financing activities primarily involved line of credit advances and repayments - Immediate liquidity sources include cash, accounts receivable, unbilled receivables, and a new factoring arrangement with Republic Capital Access, LLC (initial capacity **$4 million**, expandable to **$10 million**)[111](index=111&type=chunk) - Net working capital decreased from **$1.8 million** at December 31, 2022, to **$1.4 million** at March 31, 2023, primarily due to investments in computer hardware/software and capitalized internally developed software costs[112](index=112&type=chunk) - Net cash used in operating activities was approximately **$2.5 million** in Q1 2023, a decrease from **$2.8 million** provided in Q1 2022, attributed to systems and process changes that slowed billing[113](index=113&type=chunk) - Cash used in investing activities decreased from **$1.0 million** in Q1 2022 to **$0.4 million** in Q1 2023, primarily for computer hardware/software purchases and capitalized internally developed software costs[116](index=116&type=chunk)[117](index=117&type=chunk) - Cash used in financing activities was approximately **$0.1 million** in Q1 2023, reflecting **$4.3 million** in line of credit advances and repayments, lease principal repayments, and withholding taxes[119](index=119&type=chunk) - The Company has experienced wage inflation, particularly in its commercial ITA business, and continues to monitor potential future inflationary pressures on equipment and labor costs[122](index=122&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=20&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item states that no disclosures are required regarding quantitative and qualitative market risk - No quantitative and qualitative disclosures about market risk are required for this report[124](index=124&type=chunk) [Item 4. Controls and Procedures](index=20&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023. There were no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2023[125](index=125&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the three months ended March 31, 2023[127](index=127&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=21&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 proceedings[128](index=128&type=chunk) [Item 1A. Risk Factors](index=21&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, 2022 - Risk factors have not materially changed from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[129](index=129&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=21&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's stock repurchase plan, which was suspended in March 2022, and information regarding shares withheld from stock-based compensation awards for employee income tax withholding - The stock repurchase plan, which had authorized up to **$5.0 million**, was suspended in March 2022 after repurchasing **196,586** shares for **$818,200** in Q1 2022, to invest excess funds into the business[130](index=130&type=chunk) Shares Purchased | Period | Total Number of Shares Purchased | Average Price Paid Per Share ($) | | :----- | :------------------------------- | :--------------------------- | | March | 1,993 | $1.82 | [Item 3. Default Upon Senior Securities](index=21&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) The Company reported no default upon senior securities - There was no default upon senior securities[134](index=134&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The Company reported no mine safety disclosures - There were no mine safety disclosures[134](index=134&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) The Company reported no other information - There was no other information to report[134](index=134&type=chunk) [Item 6. Exhibits](index=22&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Accounts Receivable Purchase Agreement, certifications, and XBRL interactive data files - Exhibits include the Accounts Receivable Purchase Agreement (10.1), CEO and CFO certifications (31.1, 31.2, 32), and various XBRL interactive data files (101.INS+, 101.SCH+, etc.)[134](index=134&type=chunk)

PART I This section outlines WidePoint Corporation's business operations, strategic solutions, market approaches, and key risk factors affecting its financial stability [ITEM 1. BUSINESS](index=3&type=section&id=ITEM%201.%20BUSINESS) WidePoint Corporation is a leading provider of Technology Management as a Service (TMaaS), offering solutions in communications management, identity management, interactive bill presentment and analytics, and IT as a Service - WidePoint Corporation 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[15](index=15&type=chunk) - The company's TMaaS solutions are delivered through a flexible managed services model, hosted on secure federal government certified proprietary and enterprise portals, designed for scalability and quick configuration[17](index=17&type=chunk) - WidePoint is one of two DoD designated External Certificate Authorities, offering federally certified digital certificates for strong multifactor authentication (MFA) in government and private sectors[19](index=19&type=chunk) - The sales cycle is lengthy and unpredictable, often exceeding **12 months** for contract entry and several months for full implementation, influenced by customer processes, budgetary delays, and competitive bidding[22](index=22&type=chunk)[23](index=23&type=chunk) - Sales approaches include a direct sales model and partnerships with large systems integrators and strategic partners, with recent growth significantly driven by partnerships for larger opportunities[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - A significant amount of revenue is derived from federal government contracts, making the company's financial performance directly susceptible to changes in federal government fiscal or spending policies[34](index=34&type=chunk)[36](index=36&type=chunk) - Product development initiatives focus on enhancing existing client-facing platforms and software solutions, with approximately **$3.2 million** and **$2.6 million** capitalized in 2022 and 2021, respectively, for next-generation TMaaS, Secure Identity Management, and UCAS solutions[41](index=41&type=chunk)[43](index=43&type=chunk) - The TMaaS solution framework holds multiple security certifications and accreditations from federal government agencies, including Authorizations to Operate (ATOs) from DHS, GSA, DoD, and DoC, attesting to high cybersecurity standards[44](index=44&type=chunk) - As of December 31, 2022, WidePoint employed **215 full-time employees** (183 in the US, 32 in Europe), 5 consultants, 3 part-time staff, and 15 subcontractors, with an average employee tenure of approximately seven years[58](index=58&type=chunk)[64](index=64&type=chunk) [Company Overview](index=3&type=section&id=Company%20Overview) WidePoint Corporation 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 - WidePoint Corporation 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[15](index=15&type=chunk) - TMaaS solutions are delivered through a flexible managed services model, hosted on secure federal government certified proprietary and enterprise portals, allowing customers to manage, analyze, and protect communications assets and deploy identity management solutions[17](index=17&type=chunk) [Our Solutions](index=4&type=section&id=Our%20Solutions) WidePoint offers comprehensive solutions including Telecom Lifecycle Management, Mobile and Identity Management, Digital Billing and Unified Communications Analytics, and IT as a Service - WidePoint offers comprehensive Telecom Lifecycle Management, providing full visibility of telecom assets to reduce costs for public and private sectors[18](index=18&type=chunk) - As a DoD designated External Certificate Authority, the company provides federally certified digital certificates for strong multifactor authentication (MFA) and comprehensive mobile security solutions[19](index=19&type=chunk) - Digital Billing and Unified Communications Analytics Solutions offer interactive online bill viewing and analysis for large communication service providers (CSPs), improving customer experience and profitability[20](index=20&type=chunk) - IT as a Service (ITaaS) includes cybersecurity, cloud services, network operations, professional services, development operations support, AI implementation, and Microsoft stack technologies, with migration to cloud services for scalability and cost savings[21](index=21&type=chunk) [Sales Cycle](index=4&type=section&id=Sales%20Cycle) The sales cycle for WidePoint's service solutions is long and unpredictable, often taking over 12 months to secure a contract and several months for full implementation - The sales cycle for WidePoint's service solutions is long and unpredictable, often taking over **12 months** to secure a contract and several months for full implementation, due to customer-specific processes, budgetary delays, and competitive bidding[22](index=22&type=chunk)[23](index=23&type=chunk) [Sales Approaches](index=5&type=section&id=Sales%20Approaches) WidePoint utilizes both direct sales and partnerships with large systems integrators and strategic partners, focusing on upselling existing TMaaS offerings - WidePoint utilizes both direct sales and partnerships with large systems integrators and strategic partners, with recent significant new sales coming through partnerships for larger market opportunities[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - The company also focuses on upselling and cross-selling existing TMaaS offerings to onboarded customers and may use indirect sales through third-party channel partners, though less frequently due to high commission costs[27](index=27&type=chunk)[28](index=28&type=chunk) [Marketing and Branding](index=5&type=section&id=Marketing%20and%20Branding) Marketing strategy aims to build brand and increase market awareness among key decision-makers through broad-based and targeted campaigns - Marketing strategy aims to build brand and increase market awareness among key decision-makers (IT executives, finance executives, communications managers) through broad-based campaigns (industry events, whitepapers, webcasts) and targeted campaigns (SEO, direct email, co-marketing)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [Customer Concentrations](index=6&type=section&id=Customer%20Concentrations) A significant portion of WidePoint's revenues is derived from federal government agencies, making the company susceptible to changes in government spending policies - A significant portion of revenues is derived from federal government agencies, with a primary focus on this sector for the foreseeable future, although efforts are underway to increase commercial customer footprint[34](index=34&type=chunk)[36](index=36&type=chunk) - Negative changes in federal government fiscal or spending policies, including budget delays or shutdowns, directly impact financial performance due to high customer concentration[34](index=34&type=chunk) - The loss of any single significant customer could have a material adverse effect on operations, prompting a focus on diversifying revenue across public and private sectors[37](index=37&type=chunk) [Government Contracts](index=6&type=section&id=Government%20Contracts) WidePoint holds numerous government contracts and contract vehicles, which typically allow for termination at any time for convenience - WidePoint holds numerous government contracts and contract vehicles, including GWACs, BPAs, and ID/IQ contracts like the DHS CWMS 2.0 IDIQ, and serves as an approved subcontractor for several other major government contracts[38](index=38&type=chunk)[39](index=39&type=chunk) - Government contracts typically allow for termination at any time for convenience, with reimbursement for allowable costs and proportionate profit on work performed[38](index=38&type=chunk) [Product Development and Technology Solution Enhancements](index=7&type=section&id=Product%20Development%20and%20Technology%20Solution%20Enhancements) Product development focuses on enhancing existing client-facing platforms and software solutions to improve efficiency, effectiveness, and meet evolving customer requirements - Product development focuses on enhancing existing client-facing platforms and software solutions to improve efficiency, effectiveness, and meet evolving customer requirements[41](index=41&type=chunk) Product Development Costs Capitalized | Year Ended December 31, | Capitalized Costs ($) | | :---------------------- | :---------------- | | 2022 | $3.2 million | | 2021 | $2.6 million | - Current development activities are centered on integrating heterogeneous services delivery platforms and improving the security posture and delivery of IT services[41](index=41&type=chunk) [Security Certification and Accreditation](index=7&type=section&id=Security%20Certification%20and%20Accreditation) WidePoint's TMaaS solution framework has multiple security certifications and Authorizations to Operate (ATOs) from federal agencies, confirming compliance with cybersecurity requirements - WidePoint's TMaaS solution framework has multiple security certifications and Authorizations to Operate (ATOs) from DHS, GSA, DoD, and DoC, confirming compliance with Federal Information Management Act cybersecurity requirements at Moderate and High levels[44](index=44&type=chunk) [Data Centers](index=7&type=section&id=Data%20Centers) The company hosts proprietary solutions and operates servers in multiple data centers in North America and Europe, with plans to migrate more customers to the cloud - The company hosts proprietary solutions and operates servers in multiple data centers in North America and Europe, with plans to migrate more customers to the cloud[45](index=45&type=chunk) - Data centers feature robust security, redundant environmental controls, fire suppression, and electrical generators, along with a multi-tiered system configuration for near real-time data recovery and asynchronous data replication[45](index=45&type=chunk) [Intellectual Property](index=7&type=section&id=Intellectual%20Property) WidePoint protects its intellectual property through a combination of patent, copyright, trademark, service mark, trade secret, and contractual provisions - WidePoint protects its intellectual property through a combination of patent, copyright, trademark, service mark, trade secret, and contractual provisions, including confidentiality agreements with employees, customers, consultants, and partners[46](index=46&type=chunk) [Market Competition](index=8&type=section&id=Market%20Competition) The TMaaS market is highly fragmented, with WidePoint competing with various companies but differentiating itself by offering all four critical services with transparent pricing - The TMaaS market is highly fragmented, with WidePoint competing with various companies in mobile management, identity management, ITaaS, and digital billing/analytics, but believes it is the only provider offering all four critical services[47](index=47&type=chunk)[48](index=48&type=chunk) - WidePoint emphasizes transparent pricing, offering full-service or selected services for a single inclusive fee, contrasting with competitors who often use opaque pricing and heavy discounts[49](index=49&type=chunk)[50](index=50&type=chunk) - Principal competitors include MDSL/Calero, Tangoe, Brightfin, DMI, A&T Systems, Entrust Corp., IdenTrust, XTec Inc., Amdocs Britebill, Globys Inc., BMC Software, HPE, and large federal government integrators like Lockheed Martin and Northrop Grumman[53](index=53&type=chunk)[54](index=54&type=chunk) [Contracting](index=9&type=section&id=Contracting) WidePoint prefers to serve as the prime contractor but frequently partners with large systems integrators or enters strategic teaming agreements to pursue market opportunities - WidePoint prefers to serve as the prime contractor but frequently partners with large systems integrators as a subcontractor or enters strategic teaming agreements to pursue market opportunities[55](index=55&type=chunk) [Seasonality](index=9&type=section&id=Seasonality) WidePoint's business is not seasonal, but revenues and operating results can fluctuate quarterly due to contract timing, billable days, carrier services revenues, and the U.S. Federal Government's budgeting process - WidePoint's business is not seasonal, but revenues and operating results can fluctuate quarterly due to contract timing, billable days, carrier services revenues, and the U.S. Federal Government's budgeting process[56](index=56&type=chunk) [Regulation](index=9&type=section&id=Regulation) The company is subject to significant regulation related to U.S. government contracts, with non-compliance potentially leading to severe penalties - The company is subject to significant regulation related to U.S. government contracts, including the Federal Acquisition Regulation, Truthful Cost or Pricing Data Act, Procurement Integrity Act, Cost Accounting Standards, and restrictions on classified/sensitive data[57](index=57&type=chunk)[60](index=60&type=chunk) - Non-compliance with government contract regulations can lead to civil and criminal penalties, contract termination, forfeiture of profits, and debarment from doing business with U.S. government agencies[57](index=57&type=chunk) [Human Capital](index=9&type=section&id=Human%20Capital) WidePoint considers human capital a strategic asset, fostering a safe, professional work environment with competitive compensation and benefits Employee Count (as of December 31, 2022) | Category | Count | | :-------------- | :---- | | Full-time (US) | 183 | | Full-time (Europe)| 32 | | Consultants | 5 | | Part-time staff | 3 | | Subcontractors | 15 | | **Total** | **238** | - WidePoint considers human capital a strategic asset, fostering a safe, professional, and harassment-free work environment guided by core values of People, Service, and Integrity[59](index=59&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - The company offers a competitive compensation package and benefits, including healthcare, training, 401K, and paid time off, contributing to an average employee tenure of approximately **seven years**[63](index=63&type=chunk)[64](index=64&type=chunk) [Corporate Information](index=10&type=section&id=Corporate%20Information) WidePoint Corporation was incorporated in Delaware on May 30, 1997, with its principal executive offices located in Fairfax, Virginia - WidePoint Corporation was incorporated in Delaware on May 30, 1997, with its principal executive offices in Fairfax, Virginia[65](index=65&type=chunk) [ITEM 1A. RISK FACTORS](index=10&type=section&id=ITEM%201A.%20RISK%20FACTORS) WidePoint faces significant risks across its business operations, including intense market competition, the challenge of keeping pace with rapid technological changes, and the potential for loss of key customer contracts, particularly with the federal government - The market is highly competitive and fragmented, with rapid technological changes posing a risk to WidePoint's ability to maintain market acceptance and profitability[11](index=11&type=chunk)[67](index=67&type=chunk)[70](index=70&type=chunk) - The loss of significant customer contracts, especially the DHS IDIQ (which accounted for approximately **39% of 2022 managed service revenue**), could materially impact financial results and operating cash flow[16](index=16&type=chunk)[72](index=72&type=chunk) - Inflationary pressures on device, labor, and distribution costs are expected to continue into 2023, potentially impacting financial condition and operating results if not offset by price increases or cost-saving initiatives[11](index=11&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - The company has significant fixed operating costs that are difficult to adjust to revenue fluctuations, and an unanticipated decrease or delay in contracts could lead to underutilized employees and adverse financial effects[11](index=11&type=chunk)[78](index=78&type=chunk) - WidePoint was not in compliance with its Tangible Net Worth covenant at December 31, 2022, and expects to be out of compliance through the June 15, 2023, credit facility expiration, requiring a waiver or alternative funding[11](index=11&type=chunk)[81](index=81&type=chunk) - Federal agencies and certain large commercial customers can terminate contracts for convenience at any time without penalty, posing a risk of lost revenues and increased expenses for allocated staff[16](index=16&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - Security breaches or cybersecurity events could result in loss of customers, negative publicity, and substantial liability due to the management and protection of sensitive government and personal data[16](index=16&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Failure to comply with complex government procurement laws and regulations could lead to civil and criminal penalties, contract termination, forfeiture of profits, and debarment from government business[57](index=57&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - The company's common stock price has been volatile due to various factors, including public announcements, analyst estimates, operating results, and general economic conditions, and future sales of common stock may be dilutive[135](index=135&type=chunk)[136](index=136&type=chunk)[138](index=138&type=chunk) PART II This section covers administrative and operational disclosures, including property leases, legal status, market for common equity, and management's financial analysis [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=22&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) WidePoint Corporation has no unresolved staff comments from the SEC - The company has no unresolved staff comments[144](index=144&type=chunk) [ITEM 2. PROPERTIES](index=23&type=section&id=ITEM%202.%20PROPERTIES) WidePoint Corporation leases all of its property locations, including its headquarters in Fairfax, VA, and operational offices in Columbus, OH, Hampton, VA, and Dublin, Ireland - All of WidePoint's property locations are leased, including its headquarters in Fairfax, VA, and other offices in Columbus, OH, Hampton, VA, and Dublin, Ireland[144](index=144&type=chunk) Property Locations (as of December 31, 2022) | Location | Lease Expiration | Approx. Sqft | Base Annual Cost ($) | | :---------------------------- | :--------------- | :----------- | :--------------- | | Fairfax, VA (Headquarters) | March 2029 | 11,852 | $328,000 | | Columbus, OH (Sales/Operations)| September 2038 | 18,833 | $189,000 | | Hampton, VA (Customer Support)| December 2024 | 6,440 | $109,000 | | Dublin 18, Ireland (Europe office)| March 2026 | 6,000 | $185,000 | [ITEM 3. LEGAL PROCEEDINGS](index=23&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) WidePoint Corporation is not currently involved in any material legal proceedings, governmental actions, investigations, or claims that are expected to have a material adverse effect on its business or financial condition - The company is not currently involved in any material legal proceedings, governmental actions, investigations, or claims[145](index=145&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=23&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) WidePoint Corporation has no disclosures related to mine safety - Mine safety disclosures are not applicable to the company[146](index=146&type=chunk) [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=23&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) WidePoint's common stock is listed on the NYSE American, with no dividends paid, a terminated ATM equity program, and a suspended stock repurchase plan - WidePoint's common stock is listed on the NYSE American under the symbol "WYY"[147](index=147&type=chunk) - As of March 23, 2023, there were **80 registered holders** of record for the company's common stock[148](index=148&type=chunk) - The company has never paid dividends on its common stock and plans to retain earnings for business growth, with any future dividend decisions at the discretion of the Board of Directors[150](index=150&type=chunk) - An At-The-Market (ATM) Issuance Sales Agreement, allowing for the sale of up to **$24 million** in common stock, was terminated on March 27, 2023; no shares were sold under this program in 2022[151](index=151&type=chunk)[152](index=152&type=chunk)[214](index=214&type=chunk) - A stock repurchase plan, initially approved for **$2.5 million** and increased to **$5.0 million** in November 2021, was suspended in March 2022 after repurchasing **196,586 shares** for **$818,200**, to reallocate funds for business investment[153](index=153&type=chunk) [ITEM 6. [RESERVED]](index=24&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) WidePoint Corporation, a TMaaS provider, reported a net loss of $23.6 million in 2022, a significant decline from a net income of $0.34 million in 2021, primarily due to a $16.3 million goodwill impairment charge - WidePoint Corporation is a leading provider of Technology Management as a Service (TMaaS), offering federally certified communications management, identity management, interactive bill presentment and unified communication analytics solutions, and IT as a Service[157](index=157&type=chunk) - The company's strategic goals for 2023 include expanding its critical mass, funding technology investments, introducing new sales and marketing initiatives, and expanding solution offerings into the commercial space[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - WidePoint operates as a single segment, providing managed services for government and commercial clients, including Identity Management, secure Mobility Managed Services, Telecom Lifecycle Management, Digital Billing & Analytics, and IT as a Service[166](index=166&type=chunk) - Revenue recognition policies vary by service type: managed services are recognized monthly based on user/device counts, identity services upon issuance, proprietary software ratably over license term, billable services based on hours/costs, and reselling/carrier services on a gross basis when control is exercised[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - Goodwill is tested for impairment annually and between annual tests if circumstances change; a **$16.3 million** non-cash goodwill impairment charge was recorded in Q2 2022 due to a significant decrease in share price and market capitalization[175](index=175&type=chunk)[177](index=177&type=chunk) - The company recorded an additional valuation allowance against all domestic deferred tax assets in 2022, as management determined it was unlikely to earn sufficient income to realize these assets[186](index=186&type=chunk) - Net cash provided by operations significantly increased to **$6.1 million** in 2022 from **$1.2 million** net cash used in 2021, driven by accounts receivable collections and an Employee Retention Tax Credit[216](index=216&type=chunk) - Cash used in investing activities decreased to **$3.4 million** in 2022 from **$7.4 million** in 2021, primarily due to the absence of a large acquisition like ITA in 2022[218](index=218&type=chunk) - The company's **$7.0 million** working capital credit facility requires maintaining financial covenants, including minimum adjusted EBITDA and tangible net worth; a waiver was obtained for the tangible net worth covenant at December 31, 2022[213](index=213&type=chunk)[223](index=223&type=chunk) [Organizational Overview](index=24&type=section&id=Organizational%20Overview) WidePoint Corporation, incorporated in Delaware on May 30, 1997, is a leading provider of Technology Management as a Service (TMaaS), offering federally certified communications management, identity management, interactive bill presentment and unified communication analytics solutions, and IT as a Service - WidePoint Corporation, incorporated in Delaware on May 30, 1997, is a leading provider of Technology Management as a Service (TMaaS), offering federally certified communications management, identity management, interactive bill presentment and unified communication analytics solutions, and IT as a Service[157](index=157&type=chunk) - The company's 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 communications assets and deploy identity management solutions[158](index=158&type=chunk) [Strategy](index=25&type=section&id=Strategy) WidePoint's strategy focuses on expanding its customer base, leveraging strategic partnerships, and growing high-margin managed services, with long-term goals including technology investments and commercial expansion - In 2022, WidePoint achieved FedRAMP "In Process" status for ITMS™ and completed the integration of IT Authorities, Inc. assets, focusing on customer base expansion and leveraging strategic partnerships[159](index=159&type=chunk) - Long-term strategic goals include expanding critical mass, funding technology investments, introducing new sales and marketing initiatives, and expanding solution offerings into the commercial space to improve sustainability and growth[160](index=160&type=chunk)[161](index=161&type=chunk) - Key strategies for achieving long-term goals involve selling high-margin managed services, executing cross-sell opportunities from the ITA acquisition, growing the sales pipeline, pursuing opportunities with system integrators, and expanding into the commercial sector[161](index=161&type=chunk) [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) WidePoint operates in a single segment, with revenue recognition varying by service type, and goodwill tested annually for impairment, leading to a significant charge in 2022 - WidePoint operates in a single segment, providing managed services for government and commercial clients, including Identity Management, secure Mobility Managed Services, Telecom Lifecycle Management, Digital Billing & Analytics, and IT as a Service[165](index=165&type=chunk)[166](index=166&type=chunk) - Revenue recognition for managed services is generally on a monthly basis, fixed-price per device or user, while identity services are recognized upon issuance, and proprietary software is recognized ratably over the license term[170](index=170&type=chunk)[171](index=171&type=chunk) - Goodwill is tested for impairment annually, and an interim test in Q2 2022 resulted in a **$16.3 million** non-cash impairment charge due to a significant decrease in the company's share price and market capitalization[175](index=175&type=chunk)[177](index=177&type=chunk) - Deferred tax assets and liabilities are determined based on temporary differences, with a valuation allowance established when realization is not more likely than not; an additional allowance was recorded in 2022 against domestic deferred tax assets[183](index=183&type=chunk)[186](index=186&type=chunk) - Business combinations and contingent consideration require significant estimates and judgments, with the fair value of contingent consideration valued using a Monte Carlo Simulation Model[188](index=188&type=chunk)[190](index=190&type=chunk) [2022 Results of Operations](index=29&type=section&id=2022%20Results%20of%20Operations) WidePoint reported an 8% revenue increase to $94.1 million in 2022, but gross profit decreased due to a higher mix of lower-margin carrier services, leading to a net loss of $23.6 million primarily from a goodwill impairment charge Revenue Breakdown (Years Ended December 31) | Category | 2022 Revenue ($) | 2021 Revenue ($) | Change ($) | Change (%) | | :--------------------------- | :--------------- | :--------------- | :------------- | :--------- | | Carrier Services | 53,339,949 | 49,730,949 | 3,609,000 | 7.26% | | Managed Service Fees & Billable Fees | 28,102,695 | 25,215,996 | 2,886,699 | 11.45% | | Reselling and Other Services | 12,660,721 | 12,391,152 | 269,569 | 2.18% | | **Total Revenues** | **94,103,365** | **87,338,097** | **6,765,268** | **7.75%** | Revenue by Customer Type (Years Ended December 31) | Customer Type | 2022 Revenue ($) | 2021 Revenue ($) | Change ($) | | :--------------------------- | :--------------- | :--------------- | :------------- | | U.S. Federal Government | 74,416,288 | 73,130,465 | 1,285,823 | | U.S. State and Local Governments | 411,511 | 240,473 | 171,038 | | Foreign Governments | 146,538 | 69,718 | 76,820 | | Commercial Enterprises | 19,129,028 | 13,897,441 | 5,231,587 | | **Total Revenues** | **94,103,365** | **87,338,097** | **6,765,268** | - Cost of revenues increased to **$79.5 million** (**85% of revenues**) in 2022 from **$70.9 million** (**81% of revenues**) in 2021, driven by an increase in lower-margin carrier services and higher costs in the ITA business[200](index=200&type=chunk) - Gross profit decreased to **$14.6 million** (**15% of revenues**) in 2022 from **$16.4 million** (**19% of revenues**) in 2021, primarily due to the higher mix of lower-margin carrier services and lower margins from the ITA acquisition[202](index=202&type=chunk) - General and administrative expenses increased to **$14.7 million** in 2022 from **$12.7 million** in 2021, due to the absence of a **$1.3 million** payroll tax credit recognized in 2021 and a full year of ITA expenses[205](index=205&type=chunk) - A goodwill impairment charge of **$16.3 million** was recorded in 2022, with no such charge in 2021[206](index=206&type=chunk) - Net loss for 2022 was **$23.6 million**, compared to a net income of **$0.34 million** in 2021, primarily due to the goodwill impairment charge, lower margins, and increased expenses[212](index=212&type=chunk) [Liquidity and Capital](index=30&type=section&id=Liquidity%20and%20Capital) WidePoint's liquidity is supported by cash and a $7.0 million credit facility, despite non-compliance with a tangible net worth covenant in 2022, with improved operating cash flow and reduced investing activities - Immediate liquidity sources include cash and cash equivalents, accounts receivable, unbilled receivables, and a **$7.0 million** working capital credit facility with Atlantic Union Bank[213](index=213&type=chunk)[222](index=222&type=chunk) - The company was not in compliance with its Tangible Net Worth covenant (**$4.5 million** vs. **$6.5 million** required) at December 31, 2022, but received a waiver from the lender[213](index=213&type=chunk)[223](index=223&type=chunk) - Net cash provided by operating activities was **$6.1 million** in 2022, a significant improvement from **$1.2 million** net cash used in 2021, driven by accounts receivable collections and a **$1.3 million** Employee Retention Tax Credit[216](index=216&type=chunk) - Cash used in investing activities decreased to **$3.4 million** in 2022 (primarily for hardware/software purchases and capitalized development costs) from **$7.4 million** in 2021 (which included **$4.7 million** for the ITA acquisition)[218](index=218&type=chunk) - Cash used in financing activities was **$1.5 million** in 2022, reflecting lease principal repayments, common stock repurchases (**$818,200**), and withholding taxes on restricted stock awards[219](index=219&type=chunk) - The At-The-Market (ATM) equity program, with **$18.2 million** remaining capacity as of December 31, 2022, was terminated on March 27, 2023, with no shares sold in 2022[214](index=214&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=32&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) WidePoint Corporation, as a smaller reporting company, is not required to provide quantitative and qualitative disclosures about market risk - Quantitative and qualitative disclosures about market risk are not required for smaller reporting companies[226](index=226&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA](index=32&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTAL%20DATA) This section refers to the consolidated financial statements and schedules, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive (Loss) Income, Changes in Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements, which are listed under Item 15 - The consolidated financial statements and schedules are listed under Item 15[227](index=227&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=32&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) WidePoint Corporation reports no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[228](index=228&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=32&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) WidePoint's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes during the fourth quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of December 31, 2022[230](index=230&type=chunk) - Management assessed and concluded that internal control over financial reporting (ICOFR) was effective as of December 31, 2022, based on the COSO framework[231](index=231&type=chunk) - As a non-accelerated filer, WidePoint is not required to include an attestation report from its independent registered public accounting firm regarding ICOFR[232](index=232&type=chunk) - There were no changes in the company's ICOFR during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, ICOFR[234](index=234&type=chunk) [ITEM 9B. OTHER INFORMATION](index=33&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) This item contains no other information - There is no other information to disclose under this item[235](index=235&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=33&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) WidePoint Corporation has no disclosures regarding foreign jurisdictions that prevent inspections - This item is not applicable[236](index=236&type=chunk) PART III This section provides information on WidePoint's corporate governance, executive compensation, security ownership, and related party transactions [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=33&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information regarding WidePoint's directors, executive officers, and corporate governance is incorporated by reference from its definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information concerning directors, executive officers, and corporate governance is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[237](index=237&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=34&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation is incorporated by reference from WidePoint's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information concerning executive compensation is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[239](index=239&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=34&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information on security ownership of certain beneficial owners and management, along with related stockholder matters, is incorporated by reference from WidePoint's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information about security ownership is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[240](index=240&type=chunk) Equity Compensation Plan Information (as of December 31, 2022) | Category | Number of Securities to be Issued | Weighted Average Exercise Price ($) | Number of Securities Remaining Available | | :------------------------------------- | :-------------------------------- | :------------------------------ | :--------------------------------------- | | Approved by security holders | 7,500 | $4.90 | 241,273 | | Not approved by security holders | - | $0.00 | - | | **Total** | **7,500** | **$4.90** | **241,273** | [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=34&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships and related transactions, as well as director independence, is incorporated by reference from WidePoint's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information concerning certain relationships and related transactions, and director independence, is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[243](index=243&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=34&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding principal accounting fees and services is incorporated by reference from WidePoint's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information concerning principal accounting fees and services is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[244](index=244&type=chunk) PART IV This section presents the company's consolidated financial statements, schedules, and a comprehensive list of exhibits [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=34&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the consolidated financial statements, including the Independent Auditor's Report, Balance Sheets, Statements of Operations, Comprehensive Income, Changes in Equity, Cash Flows, and Notes, along with all filed exhibits - The financial statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive (Loss) Income, Changes in Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[245](index=245&type=chunk)[246](index=246&type=chunk) - Exhibits filed include corporate governance documents (Certificate of Incorporation, Bylaws), loan agreements, employment agreements, and certifications (CEO/CFO Sarbanes-Oxley certifications)[247](index=247&type=chunk)[248](index=248&type=chunk)[254](index=254&type=chunk) [Financial Statements and Financial Statement Schedule](index=34&type=section&id=Financial%20Statements%20and%20Financial%20Statement%20Schedule) This section details the consolidated financial statements and schedules, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive (Loss) Income, Changes in Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements - The financial statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive (Loss) Income, Changes in Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[245](index=245&type=chunk)[246](index=246&type=chunk) [Exhibits](index=35&type=section&id=Exhibits) Exhibits include corporate governance documents, loan and security agreements, employment agreements, and various certifications filed with the Form 10-K - Exhibits include corporate governance documents (Amended and Restated Certificate of Incorporation, Bylaws), loan and security agreements, employment agreements, and various certifications (e.g., Sarbanes-Oxley Act certifications)[247](index=247&type=chunk)[254](index=254&type=chunk) [Report of Independent Registered Public Accounting Firm](index=37&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Moss Adams LLP issued an unqualified opinion on WidePoint's consolidated financial statements, identifying goodwill valuation as a critical audit matter due to significant judgment and the 2022 impairment expense - Moss Adams LLP, the independent registered public accounting firm, issued an unqualified opinion on WidePoint Corporation's consolidated financial statements for the years ended December 31, 2022 and 2021, stating they are presented fairly in all material respects[259](index=259&type=chunk) - The valuation of goodwill was identified as a critical audit matter due to significant management judgment and audit effort involved in evaluating valuation methods and assumptions, particularly after a **$16.3 million** impairment expense in 2022[265](index=265&type=chunk)[266](index=266&type=chunk) [Consolidated Balance Sheets](index=39&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased significantly by 35.07% in 2022, primarily due to a $16.3 million goodwill impairment charge and a substantial reduction in net deferred tax assets, leading to a 57.41% decrease in total stockholders' equity Consolidated Balance Sheet Highlights (as of December 31) | Item | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :------------------------ | :----------- | :----------- | :------------ | :--------- | | Total Assets | 49,012,661 | 75,489,338 | (26,476,677) | -35.07% | | Total Liabilities | 31,261,458 | 33,813,343 | (2,551,885) | -7.55% | | Total Stockholders' Equity| 17,751,203 | 41,675,995 | (23,924,792) | -57.41% | | Cash and cash equivalents | 7,530,864 | 6,479,980 | 1,050,884 | 16.22% | | Accounts receivable, net | 9,277,109 | 12,536,584 | (3,259,475) | -26.00% | | Goodwill | 5,811,578 | 22,088,578 | (16,277,000) | -73.70% | | Deferred tax assets, net | 86,909 | 5,127,482 | (5,040,573) | -98.30% | - Total assets decreased significantly by **35.07%** in 2022, primarily driven by a **$16.3 million** goodwill impairment charge and a substantial reduction in net deferred tax assets[270](index=270&type=chunk) - Total stockholders' equity decreased by **57.41%** in 2022, largely due to the net loss of **$23.6 million** and the goodwill impairment[274](index=274&type=chunk) [Consolidated Statements of Operations](index=40&type=section&id=Consolidated%20Statements%20of%20Operations) Revenues increased by 7.75% to $94.1 million in 2022, but gross profit decreased by 10.95% due to a higher proportion of lower-margin carrier services and increased cost of revenues, resulting in a significant net loss of $23.6 million primarily from a goodwill impairment charge Consolidated Statements of Operations Highlights (Years Ended December 31) | Item | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :---------------------------- | :------------ | :------------ | :------------ | :--------- | | Revenues | 94,103,365 | 87,338,097 | 6,765,268 | 7.75% | | Cost of Revenues | 79,527,893 | 70,970,391 | 8,557,502 | 12.06% | | Gross Profit | 14,575,472 | 16,367,706 | (1,792,234) | -10.95% | | Sales and marketing | 2,134,240 | 2,008,733 | 125,507 | 6.25% | | General and administrative expenses | 14,720,497 | 12,724,522 | 1,995,975 | 15.69% | | Goodwill impairment | 16,277,000 | - | 16,277,000 | N/A |\ | Total operating expenses | 34,209,177 | 15,760,093 | 18,449,084 | 117.06% | | (Loss) Income from Operations | (19,633,705) | 607,613 | (20,241,318) | -3331.00% | | Net (Loss) Income | (23,585,291) | 341,096 | (23,926,387) | -7014.90% | | Basic EPS | (2.70) | 0.04 | (2.74) | -6850.00% | | Diluted EPS | (2.70) | 0.04 | (2.74) | -6850.00% | - Revenues increased by **7.75%** to **$94.1 million** in 2022, but gross profit decreased by **10.95%** due to a higher proportion of lower-margin carrier services and increased cost of revenues[276](index=276&type=chunk) - The company reported a significant net loss of **$23.6 million** in 2022, compared to a net income of **$0.34 million** in 2021, primarily driven by a **$16.3 million** goodwill impairment charge[276](index=276&type=chunk) [Consolidated Statements of Comprehensive (Loss) Income](index=41&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) Comprehensive loss for 2022 was $23.7 million, a significant decrease from comprehensive income of $0.2 million in 2021, primarily due to the net loss Consolidated Statements of Comprehensive (Loss) Income (Years Ended December 31) | Item | 2022 ($) | 2021 ($) | | :---------------------------- | :------------ | :------------ | | Net (Loss) Income | (23,585,291) | 341,096 | | Foreign currency translation adjustments, net of tax | (108,648) | (136,971) | | **Comprehensive (Loss) Income** | **(23,693,939)**| **204,125** | - Comprehensive loss for 2022 was **$23.7 million**, a significant decrease from comprehensive income of **$0.2 million** in 2021, primarily due to the net loss[279](index=279&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=41&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity decreased from $41.7 million at the end of 2021 to $17.8 million at the end of 2022, primarily due to the net loss of $23.6 million Changes in Stockholders' Equity (Years Ended December 31) | Item | 2022 ($) | 2021 ($) | | :------------------------------------ | :------------ | :------------ | | Balance, January 1 | 41,675,995 | 40,551,723 | | Common stock repurchased | (818,211) | (1,243,069) | | Issuance of common stock — restricted | (49,224) | (140,894) | | Issuance of common stock — warrants | 108,000 | - | | Stock compensation expense — restricted | 528,582 | 804,192 | | Stock compensation expense — non qualified stock options | - | 79,571 | | Foreign currency translation — (loss) | (108,648) | (136,971) | | Net (Loss) Income | (23,585,291) | 341,096 | | **Balance, December 31** | **17,751,203**| **41,675,995**| - Total stockholders' equity decreased from **$41.7 million** at the end of 2021 to **$17.8 million** at the end of 2022, primarily due to the net loss of **$23.6 million**[282](index=282&type=chunk) [Consolidated Statements of Cash Flows](index=42&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to $6.1 million in 2022 from a net cash outflow of $1.2 million in 2021, while investing activities decreased, leading to a $1.05 million increase in cash and cash equivalents Consolidated Statements of Cash Flows Highlights (Years Ended December 31) | Cash Flow Activity | 2022 ($) | 2021 ($) | | :---------------------------------- | :------------ | :------------ | | Net cash provided by (used in) operating activities | 6,068,227 | (1,222,662) | | Net cash used in investing activities | (3,408,679) | (7,443,525) | | Net cash used in financing activities | (1,467,873) | (705,699) | | Net effect of exchange rate on cash and equivalents | (140,791) | (144,982) | | **Net Increase (Decrease) in Cash** | **1,050,884** | **(9,516,769)**| | Cash and cash equivalents, end of period | 7,530,864 | 6,479,980 | - Net cash provided by operating activities significantly improved to **$6.1 million** in 2022 from a net cash outflow of **$1.2 million** in 2021[284](index=284&type=chunk) - Net cash used in investing activities decreased to **$3.4 million** in 2022, compared to **$7.4 million** in 2021, primarily due to lower acquisition-related spending[285](index=285&type=chunk) - Cash and cash equivalents increased by **$1.05 million** in 2022, reaching **$7.53 million** at year-end, reversing a decrease of **$9.52 million** in 2021[285](index=285&type=chunk) [Notes to Consolidated Financial Statements](index=43&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes to the consolidated financial statements, offering further context and breakdown of reported figures PART III This section provides information on WidePoint's corporate governance, executive compensation, security ownership, and related party transactions [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=33&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information regarding WidePoint's directors, executive officers, and corporate governance is incorporated by reference from its definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information concerning directors, executive officers, and corporate governance is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[237](index=237&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=34&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation is incorporated by reference from WidePoint's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information concerning executive compensation is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[239](index=239&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=34&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information on security ownership of certain beneficial owners and management, along with related stockholder matters, is incorporated by reference from WidePoint's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information about security ownership is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[240](index=240&type=chunk) Equity Compensation Plan Information (as of December 31, 2022) | Category | Number of Securities to be Issued | Weighted Average Exercise Price ($) | Number of Securities Remaining Available | | :------------------------------------- | :-------------------------------- | :------------------------------ | :--------------------------------------- | | Approved by security holders | 7,500 | $4.90 | 241,273 | | Not approved by security holders | - | $0.00 | - | | **Total** | **7,500** | **$4.90** | **241,273** | [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=34&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships and related transactions, as well as director independence, is incorporated by reference from WidePoint's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information concerning certain relationships and related transactions, and director independence, is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[243](index=243&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=34&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding principal accounting fees and services is incorporated by reference from WidePoint's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information concerning principal accounting fees and services is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[244](index=244&type=chunk) PART IV This section presents the company's consolidated financial statements, schedules, and a comprehensive list of exhibits [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=34&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the consolidated financial statements, including the Independent Auditor's Report, Balance Sheets, Statements of Operations, Comprehensive Income, Changes in Equity, Cash Flows, and Notes, along with all filed exhibits [Financial Statements and Financial Statement Schedule](index=34&type=section&id=Financial%20Statements%20and%20Financial%20Statement%20Schedule) This section details the consolidated financial statements and schedules, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive (Loss) Income, Changes in Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements - The financial statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive (Loss) Income, Changes in Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[245](index=245&type=chunk)[246](index=246&type=chunk) [Exhibits](index=35&type=section&id=Exhibits) Exhibits include corporate governance documents, loan and security agreements, employment agreements, and various certifications filed with the Form 10-K - Exhibits include corporate governance documents (Amended and Restated Certificate of Incorporation, Bylaws), loan and security agreements, employment agreements, and various certifications (e.g., Sarbanes-Oxley Act certifications)[247](index=247&type=chunk)[254](index=254&type=chunk) [Report of Independent Registered Public Accounting Firm](index=37&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Moss Adams LLP issued an unqualified opinion on WidePoint's consolidated financial statements, identifying goodwill valuation as a critical audit matter due to significant judgment and the 2022 impairment expense - Moss Adams LLP, the independent registered public accounting firm, issued an unqualified opinion on WidePoint Corporation's consolidated financial statements for the years ended December 31, 2022 and 2021, stating they are presented fairly in all material respects[259](index=259&type=chunk) - The valuation of goodwill was identified as a critical audit matter due to significant management judgment and audit effort involved in evaluating valuation methods and assumptions, particularly after a **$16.3 million** impairment expense in 2022[265](index=265&type=chunk)[266](index=266&type=chunk) [Consolidated Balance Sheets](index=39&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased significantly by 35.07% in 2022, primarily due to a $16.3 million goodwill impairment charge and a substantial reduction in net deferred tax assets, leading to a 57.41% decrease in total stockholders' equity Consolidated Balance Sheet Highlights (as of December 31) | Item | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :------------------------ | :----------- | :----------- | :------------ | :--------- | | Total Assets | 49,012,661 | 75,489,338 | (26,476,677) | -35.07% | | Total Liabilities | 31,261,458 | 33,813,343 | (2,551,885) | -7.55% | | Total Stockholders' Equity| 17,751,203 | 41,675,995 | (23,924,792) | -57.41% | | Cash and cash equivalents | 7,530,864 | 6,479,980 | 1,050,884 | 16.22% | | Accounts receivable, net | 9,277,109 | 12,536,584 | (3,259,475) | -26.00% | | Goodwill | 5,811,578 | 22,088,578 | (16,277,000) | -73.70% | | Deferred tax assets, net | 86,909 | 5,127,482 | (5,040,573) | -98.30% | - Total assets decreased significantly by **35.07%** in 2022, primarily driven by a **$16.3 million** goodwill impairment charge and a substantial reduction in net deferred tax assets[270](index=270&type=chunk) - Total stockholders' equity decreased by **57.41%** in 2022, largely due to the net loss of **$23.6 million** and the goodwill impairment[274](index=274&type=chunk) [Consolidated Statements of Operations](index=40&type=section&id=Consolidated%20Statements%20of%20Operations) Revenues increased by 7.75% to $94.1 million in 2022, but gross profit decreased by 10.95% due to a higher proportion of lower-margin carrier services and increased cost of revenues, resulting in a significant net loss of $23.6 million primarily from a goodwill impairment charge Consolidated Statements of Operations Highlights (Years Ended December 31) | Item | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :---------------------------- | :------------ | :------------ | :------------ | :--------- | | Revenues | 94,103,365 | 87,338,097 | 6,765,268 | 7.75% | | Cost of Revenues | 79,527,893 | 70,970,391 | 8,557,502 | 12.06% | | Gross Profit | 14,575,472 | 16,367,706 | (1,792,234) | -10.95% | | Sales and marketing | 2,134,240 | 2,008,733 | 125,507 | 6.25% | | General and administrative expenses | 14,720,497 | 12,724,522 | 1,995,975 | 15.69% | | Goodwill impairment | 16,277,000 | - | 16,277,000 | N/A | | Total operating expenses | 34,209,177 | 15,760,093 | 18,449,084 | 117.06% | | (Loss) Income from Operations | (19,633,705) | 607,613 | (20,241,318) | -3331.00% | | Net (Loss) Income | (23,585,291) | 341,096 | (23,926,387) | -7014.90% | | Basic EPS | (2.70) | 0.04 | (2.74) | -6850.00% | | Diluted EPS | (2.70) | 0.04 | (2.74) | -6850.00% | - Revenues increased by **7.75%** to **$94.1 million** in 2022, but gross profit decreased by **10.95%** due to a higher proportion of lower-margin carrier services and increased cost of revenues[276](index=276&type=chunk) - The company reported a significant net loss of **$23.6 million** in 2022, compared to a net income of **$0.34 million** in 2021, primarily driven by a **$16.3 million** goodwill impairment charge[276](index=276&type=chunk) [Consolidated Statements of Comprehensive (Loss) Income](index=41&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) Comprehensive loss for 2022 was $23.7 million, a significant decrease from comprehensive income of $0.2 million in 2021, primarily due to the net loss Consolidated Statements of Comprehensive (Loss) Income (Years Ended December 31) | Item | 2022 ($) | 2021 ($) | | :---------------------------- | :------------ | :------------ | | Net (Loss) Income | (23,585,291) | 341,096 | | Foreign currency translation adjustments, net of tax | (108,648) | (136,971) | | **Comprehensive (Loss) Income** | **(23,693,939)**| **204,125** | - Comprehensive loss for 2022 was **$23.7 million**, a significant decrease from comprehensive income of **$0.2 million** in 2021, primarily due to the net loss[279](index=279&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=41&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity decreased from $41.7 million at the end of 2021 to $17.8 million at the end of 2022, primarily due to the net loss of $23.6 million Changes in Stockholders' Equity (Years Ended December 31) | Item | 2022 ($) | 2021 ($) | | :------------------------------------ | :------------ | :------------ | | Balance, January 1 | 41,675,995 | 40,551,723 | | Common stock repurchased | (818,211) | (1,243,069) | | Issuance of common stock — restricted | (49,224) | (140,894) | | Issuance of common stock — warrants | 108,000 | - | | Stock compensation expense — restricted | 528,582 | 804,192 | | Stock compensation expense — non qualified stock options | - | 79,571 | | Foreign currency translation — (loss) | (108,648) | (136,971) | | Net (Loss) Income | (23,585,291) | 341,096 | | **Balance, December 31** | **17,751,203**| **41,675,995**| - Total stockholders' equity decreased from **$41.7 million** at the end of 2021 to **$17.8 million** at the end of 2022, primarily due to the net loss of **$23.6 million**[282](index=282&type=chunk) [Consolidated Statements of Cash Flows](index=42&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to $6.1 million in 2022 from a net cash outflow of $1.2 million in 2021, while investing activities decreased, leading to a $1.05 million increase in cash and cash equivalents Consolidated Statements of Cash Flows Highlights (Years Ended December 31) | Cash Flow Activity | 2022 ($) | 2021 ($) | | :---------------------------------- | :------------ | :------------ | | Net cash provided by (used in) operating activities | 6,068,227 | (1,222,662) | | Net cash used in investing activities | (3,408,679

WidePoint Corporation (NYSE:WYY) Q4 2022 Earnings Conference Call March 27, 2023 4:30 PM ET Company Participants Jin Kang - Chief Executive Officer & President Jason Holloway - Chief Revenue Officer Robert George - Chief Financial Officer Conference Call Participants Scott Buck - H.C. Wainwright Operator Good afternoon. Welcome to WidePoint's Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is Matthew and I'll be your operator for today's call. Joining us for today's presentation are Wide ...

WidePoint Corporation (NYSE:WYY) Q3 2022 Earnings Conference Call November 14, 2022 4:30 PM ET Company Participants Jin Kang - Chief Executive Officer & President Jason Holloway - Chief Revenue Officer Robert George - Chief Financial Officer Conference Call Participants Operator Good afternoon. Welcome to WidePoint's Third Quarter 2022 Earnings Conference Call. My name is Matthew, and I will be your operator for today's call. Joining us for today's presentation are WidePoint's President and CEO, Jin Kang; C ...