WIDEPOINT CORP

Previous wording

Revenues. Revenues for the three month period ended March 31, 2025 were $34.2 million, which was in line with $34.2 million in the same period in 2024. Our mix of revenues for the periods presented is set forth below:

Current wording

Revenues. Revenues for the three month period ended June 30, 2025 were $38.0 million, which was in line with $36.0 million in the same period in 2024. Our mix of revenues for the periods presented is set forth below:

Previous wording

We also procure, process and pay communications carrier invoices on behalf of customers. Under many of our carrier services arrangements, we recognize revenues and related costs on a gross basis. A significant portion of our overall reported revenue consists of revenue from carrier services; however, it represents an insignificant portion of our overall reported gross profit. This is a commodity type service and margins are nominal, but this is a necessary service to deliver to federal government customers that engage us to provide a full-service solution. Our carrier services revenue was $22.4 million, an increase of $3.0 million, as compared with the same period in 2024. The increase in carrier services revenues over the same period last year is a result of the growth in the number of phone lines under management during 2024 for our DHS customer.

Current wording

Carrier Service Revenues. We also procure, process and pay communications carrier invoices on behalf of customers. Under many of our carrier services arrangements, we recognize revenues and related costs on a gross basis. A significant portion of our overall reported revenue consists of revenue from carrier services; however, it represents an insignificant portion of our overall reported gross profit. This is a commodity type service and margins are nominal, but this is a necessary service to deliver to federal government customers that engage us to provide a full-service solution. Our carrier services revenue was $22.2 million, an increase of $1.8 million, as compared with the same period in 2024. The increase in carrier services revenues over the same period last year is a result of the growth in the number of phone lines under management during 2024 for our DHS customer.

Previous wording

General and Administrative. General and administrative expenses include employees in finance, human resources, information technology, and other administrative support functions; employee labor not associated with any single revenue producing activity, all company fringe benefits, including paid time off, employee health and medical insurance, 401k matching contributions, and payroll taxes. General and administrative expenses also include professional services to include audit, consulting, outside legal, and outsourcing services. Certain of these expenses, including those associated with the operation of our technical infrastructure as well as components of our operating expenses, are generally less variable in nature and may not correlate to the changes in revenue. General and administrative expenses for the three month period ended March 31, 2025 were $4.7 million (or 13% of revenues), as compared to $4.4 million (or 13% of revenues) in 2024. The dollar increase during 2025 primarily relates to general inflationary pressures, which were partially offset by $218,000 less share-based compensation expense in the first quarter of 2025 compared to the same period in 2024.

Current wording

General and Administrative. General and administrative expenses include employees in finance, human resources, information technology, and other administrative support functions; employee labor not associated with any single revenue producing activity, all company fringe benefits, including paid time off, employee health and medical insurance, 401k matching contributions, and payroll taxes. General and administrative expenses also include professional services to include audit, consulting, outside legal, and outsourcing services. Certain of these expenses, including those associated with the operation of our technical infrastructure as well as components of our operating expenses, are generally less variable in nature and may not correlate to the changes in revenue. General and administrative expenses for the three month period ended June 30, 2025 were $4.9 million (or 13% of revenues), as compared to $4.5 million (or 13% of revenues) in 2024. The dollar increase during 2025 primarily relates to general inflationary pressures, additional headcount and associated costs, which were partially offset by $200,000 less share-based compensation expense in the second quarter of 2025 compared to the same period in 2024.

Previous wording

Depreciation and Amortization. Depreciation and amortization expense for the three month period ended March 31, 2025 was $223,700 as compared to $256,500 in 2024. The slight decrease in depreciation expense is due to certain assets reaching their fully depreciated life during 2024.

Current wording

Depreciation and Amortization. Depreciation and amortization expense for the three month period ended June 30, 2025 was $233,100 as compared to $252,100 in 2024. The slight decrease in depreciation expense is due to certain assets reaching their fully depreciated life during 2024.

Previous wording

**Other Income (Expense).**Other expense, net for the three month period ended March 31, 2025 was $1,600 compared to other expense, net of $44,200 in 2024.

Current wording

**Other Income (Expense), Net.**Other income, net for the three month period ended June 30, 2025 was $37,500 compared to other expense, net of $22,100 in 2024 as a result of higher earnings on cash deposits and less borrowing under our line of credit.

Previous wording

Income Taxes. Income tax benefit for the three month period ended March 31, 2025 was $94,000 as compared to income tax benefit of $42,100 in 2024. Income taxes were accrued at an estimated effective tax rate of 11.5% for the three month period ended March 31, 2025 compared to 6.1% for the three month period ended March 31, 2024.

Current wording

Income Taxes. Income tax benefit for the three month period ended June 30, 2025 was $52,400 as compared to income tax provision of $15,800 in 2024. Income taxes were accrued at an estimated effective tax rate of 7.8% for the three month period ended June 30, 2025 compared to (3.3)% for the three month period ended June 30, 2024.

Previous wording

Net Loss.* *As a result of the cumulative factors described above, net loss for the three month period ended March 31, 2025 increased by $71,000 to $724,100 compared to net loss of $653,100 for the three month period ended March 31, 2024.

Current wording

**Net Loss.**As a result of the cumulative factors described above, net loss for the three month period ended June 30, 2025 increased by $118,900 to $618,500 compared to net loss of $499,600 for the three month period ended June 30, 2024.

Previous wording

Total managed services revenue were $11.8 million, a decrease of $3.0 million, compared with the same period in 2024 as follows:

Current wording

Managed Service Revenues. Total managed services revenue were $27.5 million, a decrease of $2.9 million, compared with the same period in 2024 as follows:

Previous wording

Cost of Revenues. Our cost of revenues include employee labor, excluding fringe benefit costs, and subcontractors directly associated with satisfying customer performance obligations, and the associated cost of products and third-party software that we resell to our end customers. Cost of revenues also includes depreciation and amortization of capitalized software related to delivering our solutions. Cost of revenues for the three month period ended March 31, 2025 were $29.4 million (or 86% of revenues), which is consistent as a percentage of revenues (or 86% of revenues) in 2024. Included in cost of revenues is carrier costs paid on behalf of our federal government customers of approximately $22.4 million and $19.4 million for the three month periods ended March 31, 2025 and 2024, respectively.

Current wording

Cost of Revenues. Our cost of revenues include employee labor, excluding fringe benefit costs, and subcontractors directly associated with satisfying customer performance obligations, and the associated cost of products and third-party software that we resell to our end customers. Cost of revenues also includes depreciation and amortization of capitalized software related to delivering our solutions. Cost of revenues for the six month period ended June 30, 2025 were $62.2 million (or 86% of revenues), which is consistent as a percentage of revenues (or 86% of revenues) in the same period in 2024. Included in cost of revenues is carrier costs paid on behalf of our federal government customers of approximately $44.6 million and $39.9 million for the six month periods ended June 30, 2025 and 2024, respectively.

Previous wording

Gross Profit. Gross profit for the three month period ended March 31, 2025 increased by $0.1 million to $4.7 million (or 14% of revenues), compared to $4.6 million (or 14% of revenues) in 2024.

Current wording

Gross Profit. Gross profit for the six month period ended June 30, 2025 increased by $0.3 million to $9.9 million (or 14% of revenues), compared to $9.6 million (or 14% of revenues) in the same period in 2024.

Previous wording

Gross profit as a percentage of managed services revenue (excluding carrier services) for the three month period ended March 31, 2025 was 40.4% compared to 31.5% in the same period last year due to lower reselling revenues, compared to the same period last year, which have a lower gross margin.

Current wording

Gross profit as a percentage of managed services revenue (excluding carrier services) for the six month period ended June 30, 2025 was 36% compared to 31% in the same period last year due to lower reselling revenues, compared to the same period last year, which have a lower gross margin.

Previous wording

**Sales and Marketing.Sales and marketing expenses include employee labor, excluding fringe benefit costs, and sales commissions associated with our sales force, commission fees paid non-employee sales agents and partners, and costs associated with travel and trade shows.**Sales and marketing expense for the three month period ended March 31, 2025 was $0.6 million and remained relatively constant at 2% of revenues to 2024.

Current wording

**Sales and Marketing.Sales and marketing expenses include employee labor, excluding fringe benefit costs, and sales commissions associated with our sales force, commission fees paid non-employee sales agents and partners, and costs associated with travel and trade shows.**Sales and marketing expense for the six month period ended June 30, 2025 was $1.3 million compared to $1.2 million in 2024 and remained relatively constant at 2% of revenues in the same period in 2024.

Previous wording

At March 31, 2025, our net working capital, excluding restricted cash, was approximately $1.6 million compared to $2.4 million at December 31, 2024. We believe that our existing cash balances and our anticipated cash flows from operations and interim access to our credit facility through its maturity on February 28, 2026, will be sufficient to meet our working capital, expenditure, and contractual obligation requirements for the next 12 months. There is no assurance that, if needed, we will be able to borrow or raise capital on favorable terms or at all.

Current wording

At June 30, 2025, our net working capital, excluding restricted cash, was approximately $1.6 million compared to $1.4 million at December 31, 2024. We believe that our existing cash balances and our anticipated cash flows from operations and access to our credit facility, will be sufficient to meet our working capital, expenditure, and contractual obligation requirements for the next 12 months. There is no assurance that, if needed, we will be able to borrow or raise capital on favorable terms or at all.

Previous wording

For the three months ended March 31, 2025, net cash used in operations was approximately $3.2 million driven by delayed billing and collections of accounts receivables with a federal government customer and is partially offset by temporary payable timing differences. The delays on billing and collections relate to administrative contract actions that the Company continues to work toward resolving; however, there is no guarantee that the process for billing these receivables will be enhanced. In the same period in 2024, $1.6 million net cash was used in operations.

Current wording

For the six months ended June 30, 2025, net cash used in operations was approximately $0.1 million driven by delayed billing and collections of accounts receivables with a federal government customer and is partially offset by temporary payable timing differences. The delays on billing and collections relate to administrative contract actions that the Company continues to work toward resolving; however, there is no guarantee that the process for billing these receivables will be effectively enhanced. In the same period in 2024, $2.6 million net cash was used in operations.

Previous wording

For the three months ended March 31, 2025, cash used in investing activities was approximately $27,600 and consisted of purchases of property and equipment.

Current wording

For the six months ended June 30, 2025, cash used in investing activities was approximately $0.1 million and consisted of purchases of property and equipment.

Previous wording

For the three months ended March 31, 2024, cash provided by investing activities was approximately $0.3 million and consisted of receipt of deferred portion of proceeds from factoring arrangement offset by purchases of property and equipment.

Current wording

For the six months ended June 30, 2024, cash provided by investing activities was approximately $0.2 million and consisted of receipt of deferred portion of proceeds from factoring arrangement offset by purchases of property and equipment.

Previous wording

For the three months ended March 31, 2025, cash used in financing activities was approximately $0.2 million and reflects line of credit advances and payments of $2.8 million, finance lease principal repayments of approximately $120,000, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $115,200.

Current wording

For the six months ended June 30, 2025, cash used in financing activities was approximately $0.4 million and reflects line of credit advances and payments of $2.8 million, finance lease principal repayments of approximately $246,600, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $130,700.

Previous wording

For the three months ended March 31, 2024, cash used in financing activities was approximately $0.3 million and reflects line of credit advances and payments of $1.0 million, lease principal repayments of approximately $137,500, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $218,800.

Current wording

For the six months ended June 30, 2024, cash used in financing activities was approximately $0.5 million and reflects line of credit advances and payments of $4.6 million, lease principal repayments of approximately $278,600, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $258,400.

Previous wording

For the three months ended March 31, 2025 and 2024, minor fluctuations in the Euro and U.S. dollar exchange rate decreased the translated value of our foreign cash balances by approximately $27,600 as compared to last year.

Current wording

For the six months ended June 30, 2025 and 2024, fluctuations in the Euro and U.S. dollar exchange rate decreased the translated value of our foreign cash balances by approximately $43,960 as compared to last year.