WidePoint(US:WYY)2025-05-15 20:05Part I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for Q1 2025 reflect stable revenues, an increased net loss, a slight decrease in total assets, and a significant increase in cash used in operations Condensed Consolidated Statements of Operations Revenues remained flat in Q1 2025, while increased operating expenses led to a wider net loss of $724,063 compared to the prior year Condensed Consolidated Statements of Operations (Unaudited) | Financial Metric | Three Months Ended March 31, 2025 (USD) | Three Months Ended March 31, 2024 (USD) | | :--- | :--- | :--- | | Revenues | $34,217,739 | $34,207,279 | | Gross Profit | $4,778,521 | $4,665,891 | | Loss from Operations | ($816,431) | ($651,019) | | Net Loss | ($724,063) | ($653,110) | | Earnings Per Share (Basic and Diluted) | ($0.08) | ($0.07) | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets slightly decreased to $71.36 million, while total liabilities increased, leading to a decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | March 31, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Total Current Assets | $55,307,506 | $55,317,773 | | Total Assets | $71,363,856 | $71,580,516 | | Total Current Liabilities | $53,139,267 | $52,881,953 | | Total Liabilities | $58,398,197 | $58,000,547 | | Total Stockholders' Equity | $12,965,659 | $13,579,969 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased to $3.23 million in Q1 2025, resulting in a net decrease in cash and equivalents Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 (USD) | Three Months Ended March 31, 2024 (USD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($3,227,591) | ($1,556,669) | | Net Cash (Used in) Provided by Investing Activities | ($27,632) | $252,631 | | Net Cash Used in Financing Activities | ($234,977) | ($356,252) | | Net Decrease in Cash | ($3,517,753) | ($1,653,226) | | Cash, Cash Equivalents, and Restricted Cash, End of Period | $4,299,642 | $5,267,934 | Notes to Condensed Consolidated Financial Statements The notes detail the company's TMaaS operations, an out-of-period revenue adjustment, significant U.S. Federal Government concentration, and an unused $4 million revolving credit facility * The company is a leading provider of Technology Management as a Service (TMaaS) through its federally compliant Intelligent Technology Management System (ITMS™) platform20 * An out-of-period adjustment in Q1 2025 decreased revenues by $2,695,148 and cost of revenues by $2,461,832 to correct a revenue recognition error, which was deemed immaterial to prior periods31 * The U.S. Federal Government accounts for 85% of revenue in Q1 2025 and 83% of net accounts receivable as of March 31, 2025, indicating significant concentration36 * The company renewed its $4 million revolving line of credit facility with Old Dominion National Bank until February 28, 2026, with no outstanding balance as of March 31, 2025, and covenant compliance5153 * The company operates as a single reportable segment, providing managed services including Identity Management (IdM), Mobility Managed Services (MMS), and Telecom Lifecycle Management71 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses flat Q1 2025 revenues, a shift in service mix improving managed services gross margin, an increased net loss due to G&A, and higher cash used in operations from delayed federal government collections * Key strategic goals for 2025 include winning the DHS CWHS 3.0 re-compete, growing recurring managed services revenues, leveraging FedRAMP authorization, and expanding the commercial customer base89 Revenue by Service Type (Q1 2025 vs Q1 2024) | Service Type | Q1 2025 Revenue (USD) | Q1 2024 Revenue (USD) | Dollar Variance (USD) | | :--- | :--- | :--- | :--- | | Carrier Services | $22,401,299 | $19,382,669 | $3,018,630 | | Managed Services | $11,816,440 | $14,824,608 | ($3,008,168) | | Total Revenues | $34,217,739 | $34,207,279 | $10,460 | * The decrease in Managed Services revenue was primarily due to a $4.2 million decline in reselling and other services, partly caused by a $2.7 million out-of-period adjustment and changes in revenue recognition for SaaS agreements94 * Gross profit margin for Managed Services (excluding carrier services) improved to 40.4% in Q1 2025 from 31.5% in Q1 2024, driven by a lower mix of low-margin reselling revenues9395 * Net cash used in operations increased to $3.2 million in Q1 2025 from $1.6 million in Q1 2024, primarily due to delayed billing and collections of accounts receivables with a federal government customer103 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, WidePoint Corporation is exempt from providing these market risk disclosures * Disclosure is not required for smaller reporting companies114 Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of March 31, 2025, due to a material weakness in revenue recognition for government contracts, with remediation ongoing * Disclosure controls and procedures were concluded to be not effective as of March 31, 2025115 * The ineffectiveness stems from a material weakness in internal control over financial reporting related to revenue recognition for government contracts, specifically concerning the estimation of unbilled amounts for a large government agency115 * Management is executing a remediation plan, but the material weakness cannot be considered remediated until the new controls have operated effectively for a sufficient period117 Part II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceeding * The Company is not currently involved in any material legal proceeding119 Risk Factors No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024 * Risk factors have not changed materially from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024120 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 24,614 shares of common stock in Q1 2025 at an average price of $4.68 per share for employee tax withholding related to stock-based compensation Repurchase of Securities for Tax Withholding - Q1 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share (USD) | | :--- | :--- | :--- | | January 2025 | 21,610 | $4.84 | | March 2025 | 3,004 | $3.53 | | Total | 24,614 | $4.68 | Other Information No directors or officers modified, adopted, or terminated any Rule 10b5-1 trading plans during Q1 2025 * During Q1 2025, there were no modifications, adoptions, or terminations by directors or officers to any Rule 10b5-1 trading plans122 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and Interactive Data Files (XBRL)