Company Quick10K Filing
Widepoint
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 85 $26
10-Q 2019-11-14 Quarter: 2019-09-30
10-Q 2019-08-14 Quarter: 2019-06-30
10-Q 2019-05-14 Quarter: 2019-03-31
10-K 2019-03-22 Annual: 2018-12-31
10-Q 2018-11-14 Quarter: 2018-09-30
10-Q 2018-08-14 Quarter: 2018-06-30
10-Q 2018-05-14 Quarter: 2018-03-31
10-K 2018-03-21 Annual: 2017-12-31
10-Q 2017-11-14 Quarter: 2017-09-30
10-Q 2017-08-14 Quarter: 2017-06-30
10-Q 2017-05-15 Quarter: 2017-03-31
10-K 2017-03-30 Annual: 2016-12-31
10-Q 2016-11-09 Quarter: 2016-09-30
10-Q 2016-08-08 Quarter: 2016-06-30
10-Q 2016-05-10 Quarter: 2016-03-31
10-K 2016-03-15 Annual: 2015-12-31
10-Q 2015-11-09 Quarter: 2015-09-30
10-Q 2015-08-10 Quarter: 2015-06-30
10-Q 2015-05-11 Quarter: 2015-03-31
10-K 2015-03-16 Annual: 2014-12-31
10-Q 2014-11-13 Quarter: 2014-09-30
10-Q 2014-08-14 Quarter: 2014-06-30
10-Q 2014-05-15 Quarter: 2014-03-31
10-K 2014-03-31 Annual: 2013-12-31
10-Q 2013-11-14 Quarter: 2013-09-30
10-Q 2013-08-14 Quarter: 2013-06-30
10-Q 2013-05-15 Quarter: 2013-03-31
10-K 2013-04-01 Annual: 2012-12-31
10-Q 2012-11-14 Quarter: 2012-09-30
10-Q 2012-08-14 Quarter: 2012-06-30
10-Q 2012-05-15 Quarter: 2012-03-31
10-Q 2011-11-14 Quarter: 2011-09-30
10-Q 2011-08-15 Quarter: 2011-06-30
10-Q 2011-05-16 Quarter: 2011-03-31
10-K 2011-03-29 Annual: 2010-12-31
10-Q 2010-11-12 Quarter: 2010-09-30
10-Q 2010-08-16 Quarter: 2010-06-30
10-Q 2010-05-17 Quarter: 2010-03-31
10-K 2010-03-31 Annual: 2009-12-31
8-K 2019-12-10 Officers, Exhibits
8-K 2019-11-14 Earnings, Exhibits
8-K 2019-10-07
8-K 2019-08-14 Earnings, Exhibits
8-K 2019-06-11 Shareholder Vote
8-K 2019-05-14 Earnings, Exhibits
8-K 2019-04-30 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-04-16 Officers
8-K 2019-04-12 Exhibits
8-K 2019-03-21 Earnings, Exhibits
8-K 2019-02-07 Officers, Regulation FD
8-K 2018-11-14 Earnings, Exhibits
8-K 2018-09-18 Shareholder Vote
8-K 2018-08-14 Earnings, Exhibits
8-K 2018-07-03 Enter Agreement, Officers, Exhibits
8-K 2018-05-14 Earnings, Exhibits
8-K 2018-04-30 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-21 Earnings, Exhibits
8-K 2018-02-19 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2017-12-29 Officers, Exhibits
WYY 2019-09-30
Part I.  Financial Information
Item 1.  Condensed Consolidated Financial Statements.
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II – Other Information
Item 1 Legal Proceedings
Item 1A Risk Factors
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
Item 3  Defautlt Upon Senior Securities
Item 4 Mine Safety Disclosures
Item 5 Other Information
Item 6. Exhibits
EX-31.1 wyy_ex311.htm
EX-31.2 wyy_ex312.htm
EX-32 wyy_ex32.htm

Widepoint Earnings 2019-09-30

WYY 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
INOD 33 53 23 56 0 -0 4 25 0% 6.0 -1%
PERI 31 256 108 0 0 0 0 -10 0%
WYY 26 54 29 90 16 -0 1 21 18% 34.1 -1%
STRM 25 32 17 16 0 -4 -3 29 0% -10.3 -13%
MTEC 22 59 54 0 0 0 0 22 134.9 0%
NETE 18 23 17 65 5 -6 -3 24 8% -9.2 -27%
MRIN 16 49 26 55 31 -32 -27 5 56% -0.2 -66%
IPAS 14 16 24 44 16 -18 -18 16 37% -0.9 -114%
EVOL 11 27 16 20 14 -24 -21 6 68% -0.3 -88%
TSRI 11 13 6 63 10 -1 -2 7 16% -4.6 -10%

10-Q 1 wyy_10q.htm QUARTERLY REPORT Blueprint
 

 
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 September 30, 2019
 
or
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from __________________ to ___________________
 
Commission File Number: 001-33035
 
WidePoint Corporation
(Exact name of Registrant as specified in its charter)
 
Delaware
 
52-2040275
(State or other jurisdiction of
 
(I.R.S. employer
incorporation or organization)
 
identification no.)
 
11250 Waples Mill Road, South Tower 210, Fairfax, Virginia 22030
(Address of principal executive offices) (Zip Code)
 
(703) 349-2577
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☑ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes ☑ No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ☐
 
Accelerated filer ☐
Non-accelerated filer ☐
 
 
Smaller reporting company ☑
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
 
As of November 14, 2019, there were 84,775,186 shares of the registrant’s Common Stock issued and outstanding.
 
Securities Registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Exchange on Which Registered
Common Stock, $0.001 par value per share
WYY
NYSE American
 

 
 
 
WIDEPOINT CORPORATION
 
INDEX
 
 
 
 
 
 
 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
 
 
 
 
 
 
 
 
 
 
 
9
 
 
 
 
 
 
 
 
 
 
22
 
 
 
 
 
 
 
 
 
 
27
 
 
 
 
 
 
 
 
 
 
28
 
 
 
 
 
 
 
 
 
 
28
 
 
 
 
 
 
 
 
 

28
28
28
28
28
 
28
 
 
29
 
 
 
 
 
 
 
 
 
 
30
 
 
 
 
 
 
 
PART I.  FINANCIAL INFORMATION
 
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
 
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
THREE MONTHS ENDED
 
 
NINE MONTHS ENDED
 
 
 
SEPTEMBER 30,
 
 
SEPTEMBER 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
REVENUES
 $29,616,940 
 $21,294,360 
 $73,626,995 
 $58,918,317 
COST OF REVENUES (including amortization and depreciation of
    
    
    
    
$233,033, $248,009, $698,192, and $802,174, respectively)
  25,302,919 
  17,609,287 
  61,002,387 
  48,134,084 
 
    
    
    
    
GROSS PROFIT
  4,314,021 
  3,685,073 
  12,624,608 
  10,784,233 
 
    
    
    
    
OPERATING EXPENSES
    
    
    
    
Sales and marketing
  406,683 
  387,407 
  1,215,556 
  1,366,989 
General and administrative expenses (including share-based
    
    
    
    
compensation of $163,451, $272,737, $536,828 and $593,075, respectively)
  3,372,269 
  3,257,262 
  10,070,383 
  10,037,904 
Depreciation and amortization
  246,293 
  104,914 
  730,905 
  312,763 
 
    
    
    
    
Total operating expenses
  4,025,245 
  3,749,583 
  12,016,844 
  11,717,656 
 
    
    
    
    
INCOME (LOSS) FROM OPERATIONS
  288,776 
  (64,510)
  607,764 
  (933,423)
 
    
    
    
    
OTHER (EXPENSE) INCOME
    
    
    
    
Interest income
  40 
  936 
  4,761 
  6,339 
Interest expense
  (78,066)
  (21,644)
  (230,983)
  (71,531)
Other income
  5,324 
  2 
  5,324 
  3 
 
    
    
    
    
Total other expense
  (72,702)
  (20,706)
  (220,898)
  (65,189)
 
    
    
    
    
INCOME BEFORE INCOME TAX PROVISION
  216,074 
  (85,216)
  386,866 
  (998,612)
INCOME TAX PROVISION
  32,364 
  24,795 
  126,816 
  45,743 
 
    
    
    
    
NET INCOME (LOSS)
 $183,710 
 $(110,011)
 $260,050 
 $(1,044,355)
 
    
    
    
    
BASIC EARNINGS (LOSS) PER SHARE
 $0.00 
 $(0.00)
 $0.00 
 $(0.01)
 
    
    
    
    
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING
  84,234,354 
  83,177,804 
  84,014,053 
  83,100,832 
 
    
    
    
    
DILUTED EARNINGS (LOSS) PER SHARE
 $0.00 
 $(0.00)
 $0.00 
 $(0.01)
 
    
    
    
    
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING
  84,271,825 
  83,177,804 
  84,051,524 
  83,100,832 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
2
 
 
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
 
THREE MONTHS ENDED
 
 
NINE MONTHS ENDED
 
 
 
SEPTEMBER 30,
 
 
SEPTEMBER 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 (Unaudited)
 
NET INCOME (LOSS)
 $183,710 
 $(110,011)
 $260,050 
 $(1,044,355)
 
    
    
    
    
Other comprehensive loss:
    
    
    
    
Foreign currency translation adjustments, net of tax
  (50,411)
  (27,459)
  (65,698)
  (62,856)
 
    
    
    
    
Other comprehensive loss
  (50,411)
  (27,459)
  (65,698)
  (62,856)
 
    
    
    
    
COMPREHENSIVE INCOME (LOSS)
 $133,299 
 $(137,470)
 $194,352 
 $(1,107,211)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
3
 
 
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
SEPTEMBER 30,
 
 
DECEMBER 31,
 
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
 
ASSETS
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 $7,099,617 
 $2,431,892 
Accounts receivable, net of allowance for doubtful accounts
    
    
of $125,496 and $106,733 in 2019 and 2018, respectively
  6,952,068 
  11,089,315 
Unbilled accounts receivable
  13,265,684 
  9,566,170 
Other current assets
  856,274 
  1,086,686 
 
    
    
Total current assets
  28,173,643 
  24,174,063 
 
    
    
NONCURRENT ASSETS
    
    
Property and equipment, net
  581,667 
  1,012,684 
Operating lease right of use asset, net
  5,690,692 
  - 
Intangibles, net
  2,640,164 
  3,103,753 
Goodwill
  18,555,578 
  18,555,578 
Other long-term assets
  141,702 
  209,099 
 
    
    
Total assets
 $55,783,446 
 $47,055,177 
 
    
    
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
    
    
CURRENT LIABILITIES
    
    
Accounts payable
 $6,108,178 
 $7,363,621 
Accrued expenses
  14,465,322 
  10,716,438 
Deferred revenue
  2,185,581 
  2,072,344 
Current portion of operating lease liabilities
  499,739 
  107,325 
Current portion of other term obligations
  62,402 
  192,263 
 
    
    
Total current liabilities
  23,321,222 
  20,451,991 
 
    
    
NONCURRENT LIABILITIES
    
    
Operating lease liabilities, net of current portion
  5,339,380 
  122,040 
Other term obligations, net of current portion
  - 
  73,952 
Deferred revenue, net of current portion
  367,065 
  466,714 
Deferred tax liability
  1,607,629 
  1,523,510 
 
    
    
Total liabilities
  30,635,296 
  22,638,207 
 
    
    
STOCKHOLDERS' EQUITY
    
    
Preferred stock, $0.001 par value; 10,000,000 shares
    
    
authorized; 2,045,714 shares issued and none outstanding
  - 
  - 
Common stock, $0.001 par value; 110,000,000 shares
    
    
  authorized; 84,775,186 and 84,112,446 shares
    
    
issued and oustanding, respectively
  84,776 
  84,113 
Additional paid-in capital
  95,462,725 
  94,926,560 
Accumulated other comprehensive loss
  (252,183)
  (186,485)
Accumulated deficit
  (70,147,168)
  (70,407,218)
 
    
    
Total stockholders’ equity
  25,148,150 
  24,416,970 
 
    
    
Total liabilities and stockholders’ equity
 $55,783,446 
 $47,055,177 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
4
 
 
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
NINE MONTHS ENDED
 
 
 
SEPTEMBER 30,
 
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net income (loss)
 $260,050 
 $(1,044,355)
Adjustments to reconcile net income (loss) to net cash provided by
    
    
   operating activities:
    
    
Deferred income tax expense
  82,237 
  - 
Depreciation expense
  832,651 
  414,507 
Provision (recovery) for doubtful accounts
  23,460 
  (6,149)
Amortization of intangibles
  596,446 
  700,430 
Amortization of deferred financing costs
  3,750 
  16,054 
Share-based compensation expense
  536,828 
  593,075 
Changes in assets and liabilities:
    
    
Accounts receivable and unbilled receivables
  330,286 
  390,672 
Inventories
  65,161 
  (61,778)
Prepaid expenses and other current assets
  128,468 
  (236,532)
Other assets
  61,661 
  (108,742)
Accounts payable and accrued expenses
  2,487,865 
  (1,890,395)
Income tax payable
  6,133 
  16,289 
Deferred revenue and other liabilities
  37,535 
  505,619 
 
    
    
Net cash provided by (used in) operating activities
  5,452,531 
  (711,305)
 
    
    
CASH FLOWS FROM INVESTING ACTIVITIES
    
    
Purchases of property and equipment
  (214,072)
  (164,573)
Software development costs
  (146,767)
  (230,101)
 
    
    
Net cash used in investing activities
  (360,839)
  (394,674)
 
    
    
CASH FLOWS FROM FINANCING ACTIVITIES
    
    
Advances on bank line of credit
  6,354,455 
  14,048,741 
Repayments of bank line of credit advances
  (6,354,455)
  (14,048,741)
Principal repayments under finance lease obligations
  (356,924)
  (75,785)
Debt issuance costs
  (5,000)
  - 
Contingent consideration payment
  - 
  (100,000)
Proceeds from exercise of stock options
  - 
  22,000 
 
    
    
Net cash used in financing activities
  (361,924)
  (153,785)
 
    
    
Net effect of exchange rate on cash and equivalents
  (62,043)
  (62,587)
 
    
    
NET INCREASE (DECREASE) IN CASH
  4,667,725 
  (1,322,351)
 
    
    
CASH AND CASH EQUIVALENTS, beginning of period
  2,431,892 
  5,272,457 
 
    
    
CASH AND CASH EQUIVALENTS, end of period
 $7,099,617 
 $3,950,106 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
5
 
 
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
NINE MONTHS ENDED
 
 
 
SEPTEMBER 30,
 
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
SUPPLEMENTAL CASH FLOW INFORMATION
 
 
 
 
 
 
Cash paid for interest
 $213,233
 $51,032 
Cash paid for income taxes
 $8,857 
 $14,418 
 
    
    
NONCASH INVESTING AND FINANCING ACTIVITIES
    
    
Insurance policies financed by short term notes payable
 $77,386 
 $76,979 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
6
 
 
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
 
Paid-In
 
 
Accumulated
 
 
Accumulated
 
 
 
 
 
 
Issued
 
 
Amount
 
 
Capital
 
 
OCI
 
 
Deficit
 
 
Total
 
 
 (Unaudited)
Balance, January 1, 2018
  83,031,595 
 $83,032 
 $94,200,237 
 $(122,461)
 $(68,950,742)
 $25,210,066 
 
    
    
    
    
    
    
Issuance of common stock —
    
    
    
    
    
    
options exercises
  50,000 
  50 
  21,949 
  - 
  - 
  21,999 
 
    
    
    
    
    
    
Issuance of common stock —
    
    
    
    
    
    
restricted
  980,851 
  981 
  (981)
  - 
  - 
  - 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
restricted
  - 
  - 
  49,884 
  - 
    
  49,884 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
non-qualified stock options
  - 
  - 
  74,520 
  - 
  - 
  74,520 
 
    
    
    
    
    
    
Foreign currency translation —
  - 
  - 
  - 
    
    
    
gain
    
    
    
  2,938 
  - 
  2,938 
 
    
    
    
    
    
    
Net loss
  - 
  - 
  - 
    
  (462,173)
  (462,173)
 
    
    
    
    
    
    
Balance, March 31, 2018
  84,062,446 
 $84,063 
 $94,345,609 
 $(119,523)
 $(69,412,915)
 $24,897,234 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
restricted
  - 
  - 
  118,034 
  - 
  - 
  118,034 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
non-qualified stock options
  - 
  - 
  77,900 
  - 
  - 
  77,900 
 
    
    
    
    
    
    
Foreign currency translation —
    
    
    
    
    
    
(loss)
  - 
  - 
  - 
  (38,335)
  - 
  (38,335)
 
    
    
    
    
    
    
Net loss
  - 
  - 
  - 
    
  (472,171)
  (472,171)
 
    
    
    
    
    
    
Balance, June 30, 2018
  84,062,446 
  84,063 
  94,541,543 
  (157,858)
  (69,885,086)
  24,582,662 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
restricted
  - 
  - 
  202,664 
  - 
  - 
  202,664 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
non-qualified stock options
  - 
  - 
  70,073 
  - 
  - 
  70,073 
 
    
    
    
    
    
    
Foreign currency translation —
    
    
    
    
    
    
(loss)
  - 
  - 
  - 
  (27,459)
  - 
  (27,459)
 
    
    
    
    
    
    
Net loss
  - 
  - 
  - 
    
  (110,011)
  (110,011)
 
    
    
    
    
    
    
Balance, September 30, 2018
  84,062,446 
 $84,063 
 $94,814,280 
 $(185,317)
 $(69,995,097)
 $24,717,929 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
7
 
 
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Additional
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
 
Paid-In
 
 
Accumulated
 
 
Accumulated
 
 
 
 
 
 
Issued
 
 
Amount
 
 
Capital
 
 
OCI
 
 
Deficit
 
 
Total
 
 
  (Unaudited)
Balance, January 1, 2019
  84,112,446 
 $84,113 
 $94,926,560 
 $(186,485)
 $(70,407,218)
 $24,416,970 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
restricted
  - 
  - 
  16,737 
  - 
  - 
  16,737 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
non-qualified stock options
  - 
  - 
  72,529 
  - 
  - 
  72,529 
 
    
    
    
    
    
    
Foreign currency translation —
    
    
    
    
    
    
(loss)
  - 
  - 
  - 
  (29,282)
  - 
  (29,282)
 
    
    
    
    
    
    
Net income
  - 
  - 
  - 
    
  384,101 
  384,101 
 
    
    
    
    
    
    
Balance, March 31, 2019
  84,112,446 
 $84,113 
 $95,015,826 
 $(215,767)
 $(70,023,117)
 $24,861,055 
 
    
    
    
    
    
    
Issuance of common stock —
    
    
    
    
    
    
restricted
  662,740 
  663 
  (663)
  - 
  - 
  - 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
restricted
  - 
  - 
  180,863 
  - 
  - 
  180,863 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
non-qualified stock options
  - 
  - 
  103,248 
  - 
  - 
  103,248 
 
    
    
    
    
    
    
Foreign currency translation —
    
    
    
    
    
    
gain
  - 
  - 
  - 
  13,995 
  - 
  13,995 
 
    
    
    
    
    
    
Net loss
  - 
  - 
  - 
    
  (307,761)
  (307,761)
 
    
    
    
    
    
    
Balance, June 30, 2019
  84,775,186 
 $84,776 
 $95,299,274 
 $(201,772)
 $(70,330,878)
 $24,851,400 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
restricted
  - 
  - 
  91,826 
  - 
  - 
  91,826 
 
    
    
    
    
    
    
Stock compensation expense —
    
    
    
    
    
    
non-qualified stock options
  - 
  - 
  71,625 
  - 
  - 
  71,625 
 
    
    
    
    
    
    
Foreign currency translation —
    
    
    
    
    
    
(loss)
  - 
  - 
  - 
  (50,411)
  - 
  (50,411)
 
    
    
    
    
    
    
Net Income
  - 
  - 
  - 
    
  183,710 
  183,710 
 
    
    
    
    
    
    
Balance, September 30, 2019
  84,775,186 
 $84,776 
 $95,462,725 
 $(252,183)
 $(70,147,168)
 $25,148,150 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
8
 
 
WIDEPOINT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1. 
Organization and Nature of Operations
 
Organization
 
WidePoint Corporation (“WidePoint” or the “Company”) was incorporated in Delaware on May 30, 1997 and conducts operations through its wholly-owned operating subsidiaries throughout the continental United States, Ireland, the Netherlands and the United Kingdom. The Company’s principal executive and administrative headquarters is located in Fairfax, Virginia.
 
Nature of Operations
 
The Company is a leading provider of trusted mobility management (TM2). The Company’s TM2 platform and service solutions enable its customers to efficiently secure, manage and analyze the entire lifecycle of their mobile communications assets through its federally compliant platform Intelligent Telecommunications Management System (ITMS™). The Company’s ITMS™ platform is SSAE 18 compliant and was granted an Authority to Operate by the U.S. Department of Homeland Security. Additionally, the Company was granted an Authority to Operate by the General Services Administration with regard to its identity credentialing component of its TM2 platform. The Company’s TM2 platform is internally hosted and accessible on-demand through a secure customer portal that is specially configured for each customer. The Company can deliver these solutions in a number of configurations ranging from utilizing the platform as a service to a full-service solution that includes full lifecycle support for all end users and the organization.
 
The Company derives a significant amount of its revenues from contracts funded by federal government agencies for which WidePoint’s subsidiaries act in the capacity as the prime contractor, or as a subcontractor. The Company believes that contracts with federal government agencies will be the primary source of revenues for the foreseeable future. External factors outside of the Company’s control such as delays and/or a change in government administrations, budgets and other political matters that may impact the timing and commencement of such work and could result in variations in operating results and directly affect the Company’s financial performance. Successful contract performance and variation in the volume of activity as well as in the number of contracts commenced or completed during any quarter may cause significant variations in operating results from quarter to quarter.
 
A significant portion of the Company’s expenses, such as personnel and facilities costs, are fixed in the short term and may be not be easily modified to manage through changes in the Company’s market place that may create pressure on pricing and/or costs to deliver its services.
 
The Company has periodic capital expense requirements to maintain and upgrade its internal technology infrastructure tied to its hosted solutions and other such costs may be significant when incurred in any given quarter.
 
2. 
Basis of Presentation and Accounting Policies
 
 
Basis of Presentation
The unaudited condensed consolidated financial statements as of September 30, 2019 and for each of the three and nine month periods ended September 30, 2019 and 2018, respectively, included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to such regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. It is the opinion of management that all adjustments (which include normal recurring adjustments) necessary for a fair statement of financial results are reflected in the financial statements for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2018 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The results of operations for the three and nine month periods ended September 30, 2019 are not indicative of the operating results for the full year.
 
 
9
 
 
 
Principles of Consolidation
 
The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and acquired entities since their respective dates of acquisition. All significant inter-company amounts were eliminated in consolidation.
 
Foreign Currency
 
Assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon exchange rates prevailing at the end of each reporting period. The resulting translation adjustments, along with any related tax effects, are included in accumulated other comprehensive (loss) income, a component of stockholders’ equity. Translation adjustments are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations. Revenues and expenses are translated at the average month-end exchange rates during the year. Gains and losses related to transactions in a currency other than the functional currency, including operations outside the U.S. where the functional currency is the U.S. dollar, are reported net in the Company’s condensed consolidated statements of operations, depending on the nature of the activity.
 
Use of Estimates
 
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring use of estimates and judgment relate to revenue recognition, accounts receivable valuation reserves, ability to realize intangible assets and goodwill, ability to realize deferred income tax assets, fair value of certain financial instruments and the evaluation of contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. There were no significant changes in accounting estimates used by management during the quarter.
 
Segment Reporting
 
Our TM2 solution offerings comprise an overall single business from which the Company earns revenues and incurs costs. The Company’s TM2 solution offerings are centrally managed and reported on that basis to its Chief Operating Decision Maker who evaluates its business as a single segment. See Note 14 for detailed information regarding the composition of revenues.
 
Significant Accounting Policies
 
There were no significant changes in the Company’s significant accounting policies during the first nine months of 2019 from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 22, 2019, except as further described below:
 
Recently Adopted Accounting Standards
 
In February 2016, the FASB issued new accounting guidance on leases (ASC Topic 842). Effective January 1, 2019, the Company adopted an accounting standards update with new guidance intended to increase transparency and comparability among organizations relating to leases. The new guidance requires lessees to recognize a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. The standards update retained a dual model for lease classification, requiring leases to be classified as finance or operating leases to determine recognition in the statements of operations and cash flows; however, substantially all leases are now required to be recognized on the balance sheet. The standards update also requires quantitative and qualitative disclosures regarding key information about leasing arrangements.
 
 
10
 
 
The Company elected the modified retrospective transition method and applied the new guidance at the date of adoption, without adjusting the comparative periods presented. The Company also elected the practical expedients permitted under the transition guidance that retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. In addition, the Company did not reassess whether any contracts entered into prior to adoption are leases.
 
Upon adoption of the standard, the Company recorded approximately $6.1 million of right of use assets and finance lease-related liabilities, respectively. The adoption of this standards update had a material impact on the Company’s Consolidated Balance Sheets and related disclosures. The adoption of this standards update did not have a material impact on the Company’s results of operations or cash flows.
 
The cumulative effect of the changes made to our January 1, 2019 balance sheet for the adoption of the standards update was as follows:
 
 
 
 
 
 
 
 
 
As Reported
 
 
 
As Previously
 
 
 
 
 
under
 
 
 
Reported
 
 
 
 
 
Topic 842
 
 
 
DECEMBER 31,
 
 
Adoption
 
 
JANUARY 1,
 
 
 
2018
 
 
Adjustment
 
 
2019
 
Operating lease right of use asset, net
 $- 
 $6,061,566 
 $6,061,566 
Property and equipment, net
  1,012,684 
  (170,000)
  842,684 
Other current assets
  1,086,686 
  (38,015)
  1,048,671 
Current portion of operating lease liabilities
  122,040 
  268,711 
  390,751 
Current portion of other term obligations
  192,263 
  (40,859)
  151,404 
Operating lease liabilities, net of current portion
  122,040 
  5,699,651 
  5,821,691 
Other term obligations, net of current portion
  73,952 
  (73,952)
  - 
 
In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718); Improvements to Nonemployee Share-Based Payment Accounting. Effective January 1, 2019, the Company adopted ASU 2018-07. The new guidance simplifies the accounting for share-based payments made to nonemployees. Under this ASU, share-based awards to nonemployees will be measured at fair value on the grant date of the awards. Entities will need to assess the probability of satisfying performance conditions if any are present, and awards will continue to be classified according to ASC 718 upon vesting, which eliminates the need to reassess classification upon vesting, consistent with awards granted to employees. The Company has not historically issued a material amount of share-based payments to non-employees. There was no material effect on the Company’s consolidated financial statements upon adoption.
 
Accounting Standards under Evaluation
 
In January 2017, ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” was issued. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss should not exceed the total amount of goodwill allocated to that reporting unit. The ASU also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity should apply this ASU on a prospective basis and for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is continuing to evaluate the effect this guidance will have on the consolidated financial statements and related disclosures.
 
3. 
Accounts Receivable and Significant Concentrations
 
A significant portion of the Company’s receivables are billed under firm fixed price contracts with agencies of the U.S. federal government and similar pricing structures with several corporations. Accounts receivable consist of the following by customer type in the table below as of the periods presented:
 
 
11
 
 
 
 
SEPTEMBER 30,
 
 
DECEMBER 31,
 
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
Government (1)
 $5,155,811 
 $7,332,338 
Commercial (2)
  1,921,753 
  3,863,710 
Gross accounts receivable
  7,077,564 
  11,196,048 
Less: allowances for doubtful
    
    
accounts (3)
  125,496 
  106,733 
 
    
    
Accounts receivable, net
 $6,952,068 
 $11,089,315 
 
(1) Government contracts are generally firm fixed price not to exceed arrangements with a term of five (5) years, which consists of a base year and four (4) annual option year renewals. Government receivables are billed under a single consolidated monthly invoice and are billed approximately thirty (30) to sixty (60) days in arrears from the date of service and payment is generally due within thirty (30) days of the invoice date. Government accounts receivable payments could be delayed due to administrative processing delays by the government agency, continuing budget resolutions that may delay availability of contract funding, and/or administrative only invoice correction requests by contracting officers that may delay payment processing by our government customer.
 
(2) Commercial contracts are generally fixed price arrangements with contract terms ranging from two (2) to three (3) years. Commercial accounts receivables are billed based on the underlying contract terms and conditions which generally have repayment terms that range from thirty (30) to ninety (90) days. Commercial receivables are stated at amounts due from customers net of an allowance for doubtful accounts if deemed necessary.
 
(3) For the nine months ended September 30, 2019, the Company recorded a provision for bad debt of approximately $23,500 for bad debt. The Company has not historically maintained a bad debt reserve for its government customers as it has not experienced material or recurring bad debt charges and the nature and size of the contracts has not necessitated the Company’s establishment of such a bad debt reserve.
 
Significant Concentrations
 
The following table presents customers that represent ten (10) percent or more of consolidated trade accounts receivable as of the periods presented below:
 
 
 
SEPTEMBER 30,
 
 
DECEMBER 31,
 
 
 
2019
 
 
2018
 
 
 
As a % of
 
 
As a % of
 
Customer Name
 
Receivables
 
 
Receivables
 
 
 
(Unaudited)
 
U.S. Customs Border Patrol
-- 
14%
U.S. Coast Guard
11%
13%
Iron Bow Technologies
-- 
15%
CDW-G
11%
-- 
 
The following table presents customers that represent ten (10) percent or more of consolidated revenues in the current and/or comparative periods:
 
 
 
THREE MONTHS ENDED
 
 
NINE MONTHS ENDED
 
 
 
SEPTEMBER 30,
 
 
SEPTEMBER 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
As a % of
 
 
As a % of
 
 
As a % of
 
 
As a % of
 
Customer Name
 
Revenues
 
 
Revenues
 
 
Revenues
 
 
Revenues
 
 
 
(Unaudited)
 
U.S. Immigration and Customs Enforcement
12%
16%
14%
18%
U.S. Customs Border Patrol
14%
15%
12%
11%
CDW-USCB
16%
--
--
--
 
 
 
12
 
 
 
4. 
Unbilled Accounts Receivable
 
Unbilled accounts receivable represent revenues earned but not invoiced to the customer at the balance sheet date due to either timing of invoice processing or delays due to fixed contractual billing schedules. A significant portion of our unbilled accounts receivable consist of carrier services and hardware and software products delivered but not invoiced at the end of the reporting period.
 
The following table presents customers that represent ten (10) percent or more of consolidated unbilled accounts receivable as of the periods presented below:
 
 
 
SEPTEMBER 30,
 
 
DECEMBER 31,
 
 
 
2019
 
 
2018
 
 
 
As a % of
 
 
As a % of
 
Customer Name
 
Receivables
 
 
Receivables
 
 
 
(Unaudited)
 
U.S. Department of Homeland Security Headquarters
--
11%
U.S. Immigration and Customs Enforcement
26%
37%
CDW-G
24%
--
U.S. Coast Guard
10%
11%
U.S. Transportation Security Administration
--
10%
 
5. 
Other Current Assets and Accrued Expenses
 
Other current assets consisted of the following as of the periods presented below:
 
 
 
SEPTEMBER 30,
 
 
DECEMBER 31,
 
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
Inventories
 $118,619 
 $183,900 
Prepaid rent, insurance and other assets
  737,655 
  902,786 
 
    
    
Total other current assets
 $856,274 
 $1,086,686 
 
Accrued expenses consisted of the following as of the periods presented below:
 
 
 
SEPTEMBER 30,
 
 
DECEMBER 31,
 
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
Carrier service costs
 $12,309,240 
 $8,476,110 
Salaries and payroll taxes
  1,364,218 
  1,308,726 
Inventory purchases, consultants and other costs
  761,822 
  913,038 
Severance costs
  7,612 
  1,634 
U.S. income tax payable
  5,900 
  8,550 
Foreign income tax payable
  16,530 
  8,380 
 
    
    
Total accrued expenses
 $14,465,322 
 $10,716,438 
 
 
 
 
13
 
 
 
6.        
Property and Equipment
 
Major classes of property and equipment consisted of the following as of the periods presented below:
 
 
 
SEPTEMBER 30,
 
 
DECEMBER 31,
 
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
Computer hardware and software
 $1,962,588 
 $2,110,298 
Furniture and fixtures
  334,430 
  333,539 
Leasehold improvements
  257,941 
  268,561 
Automobiles
  54,106 
  178,597 
Gross property and equipment
  2,609,065 
  2,890,995 
Less: accumulated depreciation and
    
    
amortization
  2,027,398 
  1,878,311 
 
    
    
Property and equipment, net
 $581,667 
 $1,012,684 
 
During the three and nine month periods ended September 30, 2019, property and equipment depreciation expense was approximately $280,500 and $832,700, respectively, as compared to $139,100 and $414,500, respectively, for the three and nine month periods ended September 30, 2018.
 
During the nine month period ended September 30, 2019 there were no material disposals of owned property and equipment. During the nine month period ended September 30, 2018 there were disposals of fully depreciated owned property and equipment with related cost and accumulated depreciation of approximately $129,000.
 
There were no changes in the estimated useful lives used to depreciate property and equipment during the three and nine month periods ended September 30, 2019 and 2018.
 
7.        
Leases
 
The Company entered into operating leases for corporate and operational facilities (“real estate leases”), computer hardware for datacenters and automobiles (collectively “all other leases”).
 
Real estate leases. Substantially all real estate leases have remaining terms of seven (7) to ten (10) years, with additional five (5) year extensions available. All of these leases require a fixed lease payment that contains an annual lease payment escalation provision ranging from 3% to 4% per year. Certain leases contain early termination provisions that would require payment of unamortized tenant improvements, real estate broker commissions paid, and up to six (6) months of rent to compensate the landlord for early termination. The cost to exit a lease would be significant and potentially range $0.2 million to $0.8 million. The earliest any lease termination provisions could be exercised would be in 2023.
 
All other leases. Non-real estate operating leases have remaining terms of two (2) to three (3) years. All of these leases require a fixed lease payment over the entire lease term with no escalation provision. There are no early termination provisions under such arrangements.
 
The components of lease expense were as follows:
 
 
THREE MONTHS ENDED
 
 
NINE MONTHS ENDED
 
 
 
SEPTEMBER 30,
 
 
SEPTEMBER 30,
 
 
 
2019
 
 
2019
 
 
 
(Unaudited)
 
Operating lease expense
 $52,043 
 $171,684 
 
    
    
Finance lease expense: