WIDEPOINT CORP

Previous wording

We were incorporated on May 30, 1997 under the laws of the state of Delaware. We are a leading provider of Technology Management as a Service (TMaaS) that consists of federally certified communications management, identity management, and interactive bill presentment and unified communication analytics solutions and IT as a Service. We help our clients achieve their organizational missions for mobility management and security objectives in this challenging and complex business environment.

Current wording

We are a leading provider of Technology Management as a Service (TMaaS) that consists of federally certified communications management, identity management, and interactive bill presentment and unified communication analytics solutions and IT as a Service (ITaaS). We help our clients achieve their organizational missions for mobility management and security objectives in this challenging and complex business environment.

Previous wording

We offer our TMaaS solutions through a flexible managed services model which includes both a scalable and comprehensive set of functional capabilities that can be used by any customer to meet the most common functional, technical and security requirements for mobility management. Our TMaaS solutions were designed and implemented with flexibility in mind such that it can accommodate a large variety of customer requirements through simple configuration settings rather than through costly software development. The flexibility of our TMaaS solutions enables our customers to be able to quickly expand or contract their mobility management requirements. Our TMaaS solutions are hosted and accessible on-demand through a secure federal government certified proprietary portal that provides our customers with the ability to manage, analyze and protect their valuable communications assets, and deploy identity management solutions that provide secured virtual and physical access to restricted environments.

Current wording

We offer our TMaaS solutions through a flexible “As-a-Service” model or “Xaas” which includes both a scalable and comprehensive set of functional capabilities that can be used by any customer to meet the most common functional, technical and security requirements for mobility management. Our TMaaS solutions were designed and implemented with flexibility in mind such that it can accommodate a large variety of customer requirements through simple configuration settings rather than through costly software development. The flexibility of our TMaaS solutions enables our customers to be able to quickly expand or contract their mobility management requirements. Our TMaaS solutions are hosted and accessible on-demand through a secure federal government certified proprietary portal that provides our customers with the ability to manage, analyze and protect their valuable communications assets, and deploy identity management solutions that provide secured virtual and physical access to restricted environments.

Previous wording

During 2024, we completed the integration of the acquired assets of ITA. In addition, we focused on increasing our customer base and our sales pipeline and leveraging our strategic relationships with key system integrators and strategic partners to capture additional market share. On February 19, 2025 WidePoint’s Intelligent Technology Management System (ITMS) achieved FedRAMP Authorized status from the Federal Risk and Authorization Management Program (FedRAMP) Program Management Office (PMO). In fiscal 2025, we will continue to focus on the following key goals:

Current wording

During 2025, we focused on increasing our customer base and our sales pipeline and leveraging our strategic relationships with key system integrators and strategic partners to capture additional market share. On February 19, 2025 WidePoint’s Intelligent Technology Management System (ITMS) achieved FedRAMP Authorized status from the Federal Risk and Authorization Management Program (FedRAMP) Program Management Office (PMO). In fiscal 2026, we will continue to focus on the following key goals:

Previous wording

We believe these actions could drive a strategic repositioning our TM2 offering and may include the sale of non-aligned offerings coupled with acquisitions of complementary and supplementary offerings that could result in a more focused core set of TM2 offerings.

Current wording

We believe these actions could drive a strategic repositioning to our TM2 offering and could include the sale of non-aligned offerings coupled with acquisitions of complementary and supplementary offerings that could result in a more focused core set of TM2 offerings.

Previous wording

Refer to Note 2 to the consolidated financial statements for a summary of our significant accounting policies referenced, as applicable, to other notes. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management’s judgment in its application. Our senior management has reviewed these critical accounting policies and related disclosures with its Audit Committee. See Note 2 to consolidated financial statements, which contain additional information regarding accounting policies and other disclosures required by U.S. GAAP. The following section below provides information about certain critical accounting policies that are important to the consolidated financial statements and that require significant management assumptions and judgments.

Current wording

Refer to Note 2 to the consolidated financial statements for a summary of our significant accounting policies referenced, as applicable, to other notes. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management’s judgment in its application. Our senior management has reviewed these critical accounting policies and estimates and related disclosures with its Audit Committee. See Note 2 to consolidated financial statements, which contain additional information regarding accounting policies and other disclosures required by U.S. GAAP. The following section below provides information about certain critical accounting policies and estimates that are important to the consolidated financial statements and that require significant management assumptions and judgments.

Previous wording

A substantial portion of our revenues are derived from firm fixed price contracts with the U.S. federal government that are fixed fee arrangements tied to the number of devices managed. Our actual reported revenue may fluctuate month to month depending on the hours worked, number of users, number of devices managed, actual or prospective proven expense savings, actual technology spend, or any other metrics as contractually agreed to with our customers.

Current wording

A substantial portion of our revenues are derived from firm fixed price contracts with the U.S. federal government that are fixed fee arrangements tied to the number of devices managed. Our actual reported revenue may fluctuate quarter to quarter depending on the hours worked, number of users, number of devices managed, actual or prospective proven expense savings, actual technology spend, or any other metrics as contractually agreed to with our customers.

Previous wording

Revenues for the year ended December 31, 2024 were $142.6 million, an increase of $36.5 million (or 34%), compared to approximately $106.0 million in 2023. Our mix of revenues for the periods presented is set forth below:

Current wording

Revenues for the year ended December 31, 2025 were $150.5 million, an increase of $7.9 million (or 6%), compared to approximately $142.6 million in 2024. Our mix of revenues for the periods presented is set forth below:

Previous wording

Cost of revenues for the year ended December 31, 2024 were $123.5 million (or 87% of revenues) compared to $90.4 million (or 85% of revenues) in 2023. Increased carrier services costs as well as costs related to reselling contributed to the increase. Our cost of revenues will fluctuate due to our revenue mix.

Current wording

Cost of revenues for the year ended December 31, 2025 were $129.5 million (or 86% of revenues) compared to $123.5 million (or 87% of revenues) in 2024. Increased carrier services costs as well as costs related to reselling contributed to the dollar increase. Our cost of revenues will fluctuate due to our revenue mix.

Previous wording

Gross profit percentage for the year ended December 31, 2024, excluding carrier services was 33% and consistent with the prior period.

Current wording

Gross profit percentage for the year ended December 31, 2025 of our managed services was 36% compared to 34% in the prior period.

Previous wording

Gross profit for the year ended December 31, 2024 was $19.0 million (or 13% of revenues), compared to $15.6 million (or 15% of revenues) in 2023. The lower gross margin as a percentage of revenues is related to increased carrier services in 2024 compared to 2023.

Current wording

Gross profit for the year ended December 31, 2025 was $21.0 million (or 14% of revenues), compared to $19.0 million (or 13% of revenues) in 2024. The higher gross margin as a percentage of revenues is related to increased gross margins experienced in our managed services in 2025 compared to 2024.

Previous wording

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 year ended December 31, 2024 were $2.3 million (or 2% of revenues), compared to $1.7 million (or 2% of revenues) in 2023.

Current wording

Sales and marketing expenses include employee labor, excluding fringe benefit costs, and sales commissions associated with our sales force, commission fees paid to non-employee sales agents and partners, and costs associated with travel and trade shows. Sales and marketing expense for the year ended December 31, 2025 were $2.7 million (or 2% of revenues), compared to $2.3 million (or 2% of revenues) in 2024.

Previous wording

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.

Current wording

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, 401(K) matching contributions, and payroll taxes. General and administrative expenses also include professional services to include audit, consulting, outside legal, and outsourcing services.

Previous wording

General and administrative expenses for the year ended December 31, 2024 were $17.6 million (or 12% of revenues), as compared to $15.9 million (or 15% of revenues) in 2023. The dollar increase primarily relates to an increase in employee compensation, including compensation expense, and increased health insurance costs compared to the same period last year.

Current wording

General and administrative expenses for the year ended December 31, 2025 were $19.7 million (or 13% of revenues), as compared to $17.6 million (or 12% of revenues) in 2024. The dollar increase primarily relates to an increase in employee compensation, and increased health insurance costs compared to the same period last year.

Previous wording

Depreciation and amortization expense was $1.0 million for the year ended December 31, 2024 as compared to $0.8 million in 2023.

Current wording

Depreciation and amortization expense increased to $1.3 million for the year ended December 31, 2025 as compared to $1.0 million in 2024, primarily due to increased depreciation expense recognized on certain disaster recovery assets based on their assessed in-service dates.

Previous wording

Net other expense for the year ended December 31, 2024 was $(0.1) million as compared to net other expense of $(0.2) million in 2023.

Current wording

Net other income (expense) for the year ended December 31, 2025 was $0.1 million as compared to net other income (expense) of $(0.1) million in 2024.

Previous wording

Income tax benefit for the year ended December 31, 2024 was $4,000 compared to an income tax provision of $0.1 million in 2023.

Current wording

Income tax provision for the year ended December 31, 2025 was $97,700 compared to an income tax benefit of $4,000 in 2024.

Previous wording

As a result of the factors above, net loss for the year ended December 31, 2024 was $1.9 million or $0.21 loss per share as compared to a net loss of $4.0 million in 2023 or $0.46 loss per share.

Current wording

As a result of the factors above, net loss for the year ended December 31, 2025 was $2.7 million or $0.28 loss per share as compared to a net loss of $1.9 million in 2024 or $0.21 loss per share.

Previous wording

Our sources of liquidity include cash on hand, our anticipated cash flows from operations, and funds available under the Old Dominion Credit Facility, through its maturity on February 28, 2026. At December 31, 2024, our net working capital was approximately $2.4 million as compared to $1.4 million at December 31, 2023. The increase in net working capital was primarily driven by reduced investments in computer hardware and software purchases and capitalized internally developed software costs, as well as, an increase in unbilled receivables primarily drive by administrative delays in billing. 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.

Current wording

Our sources of liquidity include cash on hand, our anticipated cash flows from operations, and interim funds available under the Old Dominion Credit Facility, through its maturity date of May 28, 2026. At December 31, 2025, our net working capital was approximately $2.3 million as compared to $2.4 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, 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

Cash provided by operating activities provides an indication of our ability to generate sufficient cash flow from our recurring business activities. Our single largest cash operating expense is labor and company sponsored benefits. Our second largest cash operating expense is our facility costs and related technology communication costs to support delivery of our services to our customers. We lease our facilities under non-cancellable long-term contracts. Any changes to our fixed labor and/or infrastructure costs may require a significant amount of time to take effect depending on the nature of the change made and cash payments to terminate any agreements that have not yet expired. We experience temporary collection timing differences from time to time due to customer invoice processing delays that are often beyond our control. One US government agency, under the Department of Homeland Security, accounted for $14.4 million and $1.4 million of our unbilled receivables at December 31, 2024 and 2023, respectively.

Current wording

Cash provided by operating activities provides an indication of our ability to generate sufficient cash flow from our recurring business activities. Our single largest cash operating expense is labor and company sponsored benefits. Our second largest cash operating expense is our facility costs and related technology communication costs to support delivery of our services to our customers. We lease our facilities under non-cancellable long-term contracts. Any changes to our fixed labor and/or infrastructure costs may require a significant amount of time to take effect depending on the nature of the change made and cash payments to terminate any agreements that have not yet expired. We experience temporary collection timing differences from time to time due to customer invoice processing delays that are often beyond our control. One US government agency, under the Department of Homeland Security, accounted for $6.8 million and $14.4 million of our unbilled receivables at December 31, 2025 and 2024, respectively.

Previous wording

For the year ended December 31, 2024, net cash provided by operations was approximately $1.6 million driven by collections of accounts receivable and temporary payable timing difference, as compared to approximately $0.6 million net cash provided by operations for the year ended December 31, 2023.

Current wording

For the year ended December 31, 2025, net cash provided by operating activities was approximately $5.7 million driven by collections of accounts receivable and temporary payable timing differences, as compared to approximately $1.6 million net cash provided by operations for the year ended December 31, 2024.

Previous wording

For the year ended December 31, 2024, cash provided by investing activities was approximately $0.1 million and consisted of $0.2 million in proceeds from factoring arrangement offset by purchases of property and equipment. In 2025, we expect to spend additional funds to pay for, and refresh equipment related to our increasing workforce.

Current wording

For the year ended December 31, 2024, cash provided by investing activities was approximately $0.1 million and consisted of $0.2 million in proceeds from our factoring arrangement offset by purchases of property and equipment.

Previous wording

For the year ended December 31, 2023, cash used in financing activities was approximately $0.6 million and reflects line of credit advances and payments of approximately $6.5 million, finance lease principal repayments of approximately $586,500 and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $3,600.

Current wording

For the year ended December 31, 2025, cash used in financing activities was approximately $0.7 million and reflects line of credit advances and payments of approximately $2.8 million, finance lease principal repayments of approximately $580,200, proceeds from stock option exercises of approximately $52,300 and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $130,700.

Previous wording

For the year ended December 31, 2024, cash used in financing activities was approximately $0.9 million and reflects line of credit advances and payments of approximately $5.6 million, finance lease principal repayments of approximately $636,500 and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $258,400.

Current wording

For the year ended December 31, 2024, cash used in financing activities was approximately $0.9 million and reflects line of credit advances and payments of approximately $5.6 million, finance lease principal repayments of approximately $0.6 million and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $0.3 million.

Previous wording

For the year ended December 31, 2024, the gradual depreciation of the Euro relative to the US dollar decreased the translated value of our foreign cash balances by approximately $31,900 compared to last year. For the year ended December 31, 2023, the depreciation of the Euro relative to the US dollar decreased the translated value of our foreign cash balances by approximately $23,800.

Current wording

For the year ended December 31, 2025, the gradual depreciation of the Euro relative to the US dollar decreased the translated value of our foreign cash balances by approximately $72,200 compared to last year. For the year ended December 31, 2024, the depreciation of the Euro relative to the US dollar decreased the translated value of our foreign cash balances by approximately $31,900.

Previous wording

On February 29, 2024, we entered into a Loan and Security Agreement (the “Loan”) and Promissory Note (the “Note,” and, together with the Loan, the “Agreements”) with Old Dominion National Bank. The Agreements provide for a $4,000,000 revolving line of credit facility (the “Credit Facility”). On February 18, 2025, the Company renewed its line of credit for an additional year through February 28, 2026. See Note 21.

Current wording

On February 29, 2024, we entered into a Loan and Security Agreement (the “Loan”) and Promissory Note (the “Note,” and, together with the Loan, the “Agreements”) with Old Dominion National Bank. The Agreements provide for a $4,000,000 revolving line of credit facility (the “Credit Facility”) until May 28, 2026. The Company expects to renew its line of credit for a full year term on May 28, 2026 or sooner.

Previous wording

Advances under the Credit Facility are subject to a borrowing base equal to the lesser of (i) $4,000,000 or (ii) 80% of eligible accounts receivable. Interest accrues on the outstanding principal balance of the Credit Facility at an annual rate equal to the Prime Rate published in The Wall Street Journal, subject to a floor rate of 7.25%. Outstanding interest on the amount borrowed is payable monthly and all outstanding interest and principal is due on the maturity date of February 28, 2026. The Credit Facility includes customary covenants and events of default, including the following items that are measured: (i) a minimum tangible net worth of $2.0 million; (ii) a minimum annual EBITDA of $1.0 million and (iii) a ratio of current assets to current liabilities of not less than 1.0 to 1.0. We are in compliance with the covenants at December 31, 2024.

Current wording

Advances under the Credit Facility are subject to a borrowing base equal to the lesser of (i) $4,000,000 or (ii) 80% of eligible accounts receivable. Interest accrues on the outstanding principal balance of the Credit Facility at an annual rate equal to the Prime Rate published in The Wall Street Journal, subject to a floor rate of 7.25%. Outstanding interest on the amount borrowed is payable monthly and all outstanding interest and principal is due on the maturity date of May 28, 2026. The Credit Facility includes customary covenants and events of default, including the following items that are measured: (i) a minimum tangible net worth of $2.0 million; (ii) a minimum annual EBITDA of $1.0 million and (iii) a ratio of current assets to current liabilities of not less than 1.0 to 1.0. We were in compliance with the covenants at December 31, 2025.