WYY 10-K & 10-Q changes, risk factors and insider trading
Widepoint Corp. · NYSE · Services-Computer Integrated Systems Design · CIK 1034760 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We may be unable to achieve profitability.”
New heading “Our contracting environment is becoming increasingly complex and subject to heightened regulatory requirements and enforcement, which increases our operational and compliance risk.”
Removed heading “The loss of significant customer contracts, including our IDIQ with the Department of Homeland Security, could also have an adverse impact on our financial results.”
Removed heading “We may be unable to maintain profitability.”
Removed heading “A global pandemic similar to the COVID 19 pandemic, or an epidemic, could have a material adverse impact on our business and operations.”
Removed heading “Pandemics have in the past adversely affected certain elements of our business and our operations due to quarantines, government orders and guidance, facility closures, illness, travel restrictions, implementation of precautionary measures and other restrictions applicable to us and our business partners. The COVID-19 pandemic or another future pandemic or epidemic could lead to an extended disruption of economic activity and high unemployment levels, and disruption of the global supply chain, and as such, cause a material negative impact on our consolidated results of operations, financial position and cash flows.”
Removed heading “We have identified material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.”
Largest changes
“We operate in a regulatory and contractual environment that continues to evolve and become more complex. Many of our contracts, particularly those with government and regulated commercial customers, are subject to extensive statutory, regulatory, and contractual requirements. These requirements may relate to procurement rules, cybersecurity standards, data protection, labor compliance, cost accounting, reporting obligations, supply chain integrity, and other compliance mandates. …”see in full comparison
“Most of our contracts with customers have terms of three (3) to five (5) years, with optional additional renewal periods. Our government contracts generally consist of a base period award with 4 option periods depending on the needs of the agency issuing the contract award. Our commercial contracts have contractual terms of 3 or more years with automatic annual renewals in most cases. Most of our contracts are offered at firm fixed price per performance obligation such as price per unit managed. …”see in full comparison
“We have identified material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.”see in full comparison
“Pandemics have in the past adversely affected certain elements of our business and our operations due to quarantines, government orders and guidance, facility closures, illness, travel restrictions, implementation of precautionary measures and other restrictions applicable to us and our business partners. …”see in full comparison
“In addition, because many of our contracts are firm fixed-price, we bear the risk of cost increases, including those resulting from inflation, labor shortages, supply chain disruptions, tariffs, or other economic conditions, and we may be unable to pass such increases on to customers. …”see in full comparison
“We have access to a credit facility consisting of a variable line of credit used primarily to meet short-term working capital requirements. The availability of borrowings under this facility is subject to certain conditions, including compliance with financial covenants measured annually as of December 31 and a borrowing base calculation based on eligible billed accounts receivable pledged as collateral. …”see in full comparison
Full comparison: every changed paragraph (44)
We may be unable to renew the DHS CWMS 2.0 IDIQ upon its expiration in November 2025.IDIQ.
During 2025 and 2024 approximately 77% and 79%, respectively, of our revenues were from the Department of Homeland Security for Cellular Wireless Managed Services (CWMS) 2.0 ID/IQ Contract (DHS CWMS 2.0 IDIQ). Our DHS CWMS 2.0 IDIQ contract is currently subject to re-competition, in a competitive process, and we are awaiting the government’s award decision; there can be no assurance that we will be awarded the successor contract, or that the terms, scope, or timing of any extension, bridge arrangement, or successor award will not materially differ from the current contract. This contract represents a significant portion of our revenue. We estimate that the loss of the DHS CWMS 2.0 IDIQ, without any offsetting aggregate contract wins, would have a significant adverse impact on our operating cash flow and financial results; and we would likely be faced with a decision to initiate cost reduction actions that would largely include reductions in force for personnel and assets affected by the contract loss. Further, the availability of our line of credit is dependent on having sufficient billed accounts receivable as collateral.
If we are unable to rewin the DHS CWMS 2.0 IDIQ contract on substantially similar terms or at all, our financial condition and results of operations will be materially adversely impacted.
During 2024 and 2023 approximately 79% and 75%, respectively, of our revenues were from the Department of Homeland Security for Cellular Wireless Managed Services (CWMS) 2.0 ID/IQ Contract (DHS CWMS 2.0 IDIQ), which is up for renewal in a competitive process in November 2025. The DHS CWMS 2.0 IDIQ, like other government contracts, is awarded through a competitive procurement process. The costs we incur in the competitive procurement process may be substantial and we may not be successful in our bid to win such a contract or may be required to make significant concessions (or partner with another company) in order to rewin the contract. Many of the competitors involved in the procurement process will likely have greater financial and other resources than us. Additionally, there can be no assurance that the DHS will seek another similar contract. If we are unable to rewin the DHS CWMS 2.0 IDIQ contract on substantially similar terms or at all, our financial condition and results of operations will be materially adversely impacted.
The loss of significant customer contracts, including our IDIQ with the Department of Homeland Security, could also have an adverse impact on our financial results.
While we believe that our business relationships with key decision makers are strong and represent a strong competitive advantage for us; however, it is possible that the strength of our relationship could diminish if our primary customer contacts leave their firm or the customer is acquired by another firm that uses a competitor to deliver the same services. We estimate that the loss of any large contract, such as the DHS CWMS 2.0 IDIQ, without any offsetting aggregate contract wins, would have a significant adverse impact on our operating cash flow and financial results; and we would likely be faced with a decision to initiate cost reduction actions that would largely include reductions in force for personnel and assets affected by the contract loss. Further, the availability of our line of credit is dependent on having sufficient billed accounts receivable as collateral. If DHS CWMS 2.0 IDIQ were terminated or we did not re-win the contract upon re-bidding or another large customer contract was terminated, it would have a material adverse impact on our future revenue, profitability and cash flows.
Inflationary or other pressures on costs, such as inputs for devices, laborlabor, tariffs, and distribution costs may impact our financial condition or results of operations.
As a provider of TMaaS services, weWe sell equipment manufactured by various suppliers and depend on suppliers to provide us, directly or through other suppliers, with items such as network equipment, customer premises equipment, and wireless-related equipment and other connected devices. In the past few years, the costs of these inputs and the costs of labor necessary to develop and maintain our networks and our products and services rapidly increased. In addition, many of these inputs are subject to price fluctuations and supply issues from a number of factors, including, but not limited to, market conditions, demand for raw materials used in the production of these devices and network components, weather, climate change, energy costs, currency fluctuations, supplier capacities, governmental actions, wars or other low-intensity conflicts, acts of terror, import and export requirements (including tariffs),requirements, and other factors beyond our control. Although we are unable to predict the impact on our ability to source materials in the future, we expect these supply and inflationary pressures are likely to continue intofor 2025.the foreseeable future. In addition, we may face additional cost pressure via new tariffs imposed on the items we import.
We may be unable to achieve profitability.
We have a history of operating losses. A significant contributing factor driving such prior net operating losses were investments in product development projects, sales and marketing that did not produce the expected return on investment; and as a result placed a significant cumulative strain on our networking capital and overall financial position. There is no guarantee that we will be able to meet our financial goals of growing top line revenue and positive net income without closing significant new business and incremental contract expansions and maintain control over operating costs. An inability to successfully grow our sales pipeline and close on new business that is profitable, adequately control costs, could affect our long-term viability, profitability and ultimately limit the financial resources we have available to grow our business and achieve our desired financial results. Further, our lack of profitability and limits on access to capital may cause us to be disqualified from winning new contracts or recompeted contracts, or require us to team, and thus share in revenues, with another larger prime contractor to be successful in winning.
A high percentage of our operating cash outlays, particularly personnel, rent and communications costs, are fixed in advance of any particular quarter. As a result, an unanticipated or prolonged decrease in the number or average size of, or an unanticipated delay in the scheduling for our projects may cause significant variations in operating results in any particular quarter and could have a material adverse effect on operations and cash flow for that quarter. An unanticipated termination, decrease or delay in the implementation of a significant anticipated customer contract could require us to maintain underutilized employees and that could have a material adverse effect on our cash flow, financial condition and results of operations. Other factors that may negatively affect our earnings and free cashflow from quarter to quarter include changes in:
We have access to a credit facility consisting of a variable line of credit used primarily to meet short-term working capital requirements. The availability of borrowings under this facility is subject to certain conditions, including compliance with financial covenants measured annually as of December 31 and a borrowing base calculation based on eligible billed accounts receivable pledged as collateral. Although we have adequate collateral and were in compliance with our covenants as of December 31, 2025, we may not be able to maintain compliance or sufficient eligible collateral in future periods. If we fail to satisfy these requirements, our lender could restrict or terminate our ability to borrow under the facility, accelerate repayment of outstanding amounts, impose unfavorable renewal terms, or decline to renew the agreement. Any such actions could materially and adversely affect our liquidity. If sufficient borrowing capacity is not available, we may need to obtain additional financing, which may not be available on favorable terms or at all.
We have access to a credit facility, which consists of a variable line of credit primarily to meet short-term working capital requirements. Our credit facility agreement requires us to maintain certain financial covenants measured annually on December 31. We are currently in compliance with our covenants at December 31, 2024; however, if we are unable to meet future covenants, our lender could take adverse actions that might include accelerating in part or in full payment of all unpaid principal and interest, reducing the amount of our credit facility, or offering renewal terms that are unfavorable, or refusing to renew our credit agreement, all of which could have a material adverse impact on our ability to meet periodic short term operational cash flow requirements and manage through prolonged government shutdowns. If we are unable to achieve and maintain our covenants under our credit facility, our business and operating results could suffer and we may need to obtain additional funding or raise capital, which may not be available on favorable terms or at all. The availability of our line of credit is dependent on having sufficient billed accounts receivable as collateral. If we do not have sufficient collateral, that could have a material adverse impact on our ability to meet periodic short term operational cash flow requirements.
We may be unable to maintain profitability.
We have a history of operating losses. A significant contributing factor driving such prior net operating losses were investments in sales and marketing and product development projects that did not produce the expected return on investment; and as a result placed a significant cumulative strain on our networking capital and overall financial position. There is no guarantee that we will be able to leverage our recent improvements in financial performance and meet our financial goals of growing top line revenue and positive net income without closing significant new business and incremental contract expansions and maintain control over operating costs. An inability to successfully grow our sales pipeline and close on new business that is profitable, adequately control costs, could affect our long-term viability, profitability and ultimately limit the financial resources we have available to grow our business and achieve our desired financial results. Further, our lack of profitability and limits on access to capital may cause us to be disqualified from winning new contracts or recompeted contracts, or require us to team, and thus share in revenues, with another larger prime contractor to be successful in winning.
Our contracting environment is becoming increasingly complex and subject to heightened regulatory requirements and enforcement, which increases our operational and compliance risk.
We operate in a regulatory and contractual environment that continues to evolve and become more complex. Many of our contracts, particularly those with government and regulated commercial customers, are subject to extensive statutory, regulatory, and contractual requirements. These requirements may relate to procurement rules, cybersecurity standards, data protection, labor compliance, cost accounting, reporting obligations, supply chain integrity, and other compliance mandates. Non-compliance with applicable laws, regulations, or contractual provisions can result in substantial penalties, including fines, contract termination, suspension or debarment, repayment obligations, reputational damage, or exclusion from future bidding opportunities.
In addition, we are increasingly pursuing contracts with broader scope, greater technical complexity, and more sophisticated performance and compliance obligations. These contracts often contain detailed pricing structures, performance metrics, indemnification provisions, audit rights, flow-down requirements, and other risk-shifting mechanisms that may expose us to financial or operational risk if not properly negotiated or managed.
Our ability to effectively mitigate these risks depends in part on maintaining adequate internal resources, including personnel with appropriate legal, regulatory, contracting, pricing, and compliance expertise. If we fail to devote sufficient resources to contract review and negotiation, or if we are unable to attract and retain qualified personnel capable of managing increasingly complex contractual and regulatory obligations, we may enter into agreements on unfavorable terms, underestimate compliance costs, or fail to maintain effective internal controls. Any such failure could result in increased costs, disputes, penalties, diminished profitability, or other material adverse effects on our business, financial condition, and results of operations.
As regulatory scrutiny increases and contractual complexity grows, the consequences of errors in contract negotiation, compliance oversight, or performance management may become more significant
Most of our contracts with customers have terms of three to five years, often with optional renewal periods. Our government contracts generally consist of a base period with multiple option periods, while our commercial contracts typically have initial terms of three or more years with automatic annual renewals in many cases. Substantially all of these contracts are structured on a firm fixed-price basis per performance obligation.
The long-term and fixed-price nature of these contracts increases the importance of accurately defining the scope of work, appropriately pricing our services, and effectively managing performance obligations over the contract term. Our ability to do so depends in part on maintaining adequate personnel resources, including employees with sufficient experience and expertise in contract scoping, pricing, operational planning, and contract administration. If we do not maintain adequate staffing levels or do not have personnel with the appropriate level of experience to assess contractual terms, evaluate pricing assumptions, and manage performance risks, we may misprice contracts, underestimate costs, or fail to anticipate operational complexities.
In addition, because many of our contracts are firm fixed-price, we bear the risk of cost increases, including those resulting from inflation, labor shortages, supply chain disruptions, tariffs, or other economic conditions, and we may be unable to pass such increases on to customers. Any failure to accurately scope, price, or manage our contracts, or to complete our performance obligations in accordance with contractual requirements, could negatively affect our profitability over multiple years and could have a material adverse effect on our business, financial condition, and results of operations.
Most of our contracts with customers have terms of three (3) to five (5) years, with optional additional renewal periods. Our government contracts generally consist of a base period award with 4 option periods depending on the needs of the agency issuing the contract award. Our commercial contracts have contractual terms of 3 or more years with automatic annual renewals in most cases. Most of our contracts are offered at firm fixed price per performance obligation such as price per unit managed. Due to the long-term nature of our firm fixed price contracts, any failure on our part to accurately define the scope of work and properly manage scope creep, properly price our products to match the customer’s operating environment to properly factor in inflation and labor costs, or to effectively manage our costs to deliver against these performance obligations could have an adverse negative impact to our financial position and results of operations over a number of years. Accordingly, we may be unable to pass on the recent increases in costs for labor and supplies as a result of general inflationary conditions or tariffs to such customers. Additionally, our failure to complete our contractual performance obligations in a manner consistent with the contract could adversely affect our overall profitability and could have a material adverse effect on our business, financial condition and results of operations.
A global pandemic similar to the COVID 19 pandemic, or an epidemic, could have a material adverse impact on our business and operations.
Pandemics have in the past adversely affected certain elements of our business and our operations due to quarantines, government orders and guidance, facility closures, illness, travel restrictions, implementation of precautionary measures and other restrictions applicable to us and our business partners. The COVID-19 pandemic or another future pandemic or epidemic could lead to an extended disruption of economic activity and high unemployment levels, and disruption of the global supply chain, and as such, cause a material negative impact on our consolidated results of operations, financial position and cash flows.
Our TMaaS solution derives its value in significant part from our communications management software’s ability to interface with and support the interoperation of diverse communications devices, billing systems and operational support systems. The emergence of a single or a small number of widely used communications devices, billing systems or operational support systems using consolidated, consistent sets of standardized interfaces for the interaction between communications service providers and their enterprise customers could significantly reduce the value of our solution to our customers and potential customers. Furthermore, any such communications device, billing system or operational support system could make use of proprietary software or technology standards that our software might not be able to support. In addition, the manufacturer of such device, or the carrier using such billing system or operational support system, might actively seek to limit the interoperability of such device, billing system or operational support system with our software products for competitive or other reasons. This could be accelerated through the use of artificial intelligence. The resulting lack of compatibility of our software products would put us at a significant competitive disadvantage, or entirely prevent us from competing, in that segment of the potential market if such manufacturer or carrier, or its authorized licensees, were to develop one or more communications management solutions competitive with our solution.
A government shutdownshutdown, agency specific shut downs, or changes in the spending policies or budget priorities of the federal government could cause us to lose revenues.
We currently derive a majority of our annual revenues from contracts funded by federal government agencies. We believe that contracts with federal government agencies will continue to be a significant source of our revenues for the foreseeable future. Accordingly, shutdowns or changes in federal government fiscal or spending policies or changes in U.S. federal budget could directly affect our financial performance. Currently, it is uncertain whether the federal government spending cuts being implemented with the new U.S. Presidential administration and theThe newly formed Department of Government Efficiency (DOGE) willcould have a negative impact on our revenues from the federal government. Among the factors that could harm our business are:
TheFederal newlygovernment formedefficiency Departmentinitiatives ofand Governmentrestructuring Efficiency (DOGE)efforts could negativelyadversely impactaffect our revenues from the government customers.revenues.
From time to time, the federal government undertakes initiatives intended to improve efficiency, reduce costs, streamline procurement, or restructure agencies and programs. These efforts, whether implemented through specific agencies, task forces, or broader policy directives, may result in reductions in government spending, changes in procurement priorities, workforce reductions, agency consolidations, or the elimination or modification of programs.
As a government contractor, our business operations, contract awards, and revenue streams may be adversely affected by such initiatives, including through reduced demand for our services, delays or cancellations of contracts, changes in customer requirements, or the loss of key government personnel with whom we maintain working relationships. Although our solutions are designed to help government customers operate more efficiently and reduce costs, there can be no assurance that these initiatives will not result in decreased funding, contract terminations, or other actions that could materially and adversely impact our financial condition, results of operations, or growth prospects.
The newly formed Department of Government Efficiency (DOGE) has implemented new policies and oversight mechanisms aimed at reducing federal expenditures, streamlining procurement, and increasing operational efficiency. DOGE has reduced the number of federal employees and agencies and continues to do so. As a government contractor, we believe we have saved, and continue to help save, our government customers money; however, our business operations, contract awards, and revenue streams are subject to DOGE actions, which may introduce material risks to our financial performance and strategic growth. In addition, DOGE could eliminate an agency that we work with, terminate persons with whom we have business relations with or cancel a contract with us. Any failure to comply with DOGE actions, shifts in federal procurement strategies, or budgetary reductions imposed by the agency could materially and adversely impact our financial results, competitive positioning, and overall business operations.
Most if not all federal, state and local governments, as well as commercial contracts are awarded through a competitive procurement process that could be a year or more from the initial solicitation to final contract award. We expect that much of the business we seek in the foreseeable future will be awarded through competitive procedures and similar lengthy sales cycle. Competitive procurements imposecan incur substantial upfront costs and present a number of potential risks, including:
The costs we incur in the competitive procurement process may be substantial and, to the extent we participate in competitive procurements and are unable to win particular contracts, these costs could negatively affect our operating results. For example, our DHS contract iswas up for renewal in November 2025 and weour mayproposal is currently under evaluation. There can be unableno toguarantees we rewin suchthe contractcontract, or may be required to make significant concessions in order to renewrewin it. DHS has issued a modification that extends the current CWMS 2.0 IDIQ contract through April 24, 2026 and provides for one more additional 1-month extension, which if exercised, would provide for performance through May 24, 2026. Task orders issued while CWMS 2.0 is under extension can be executed upon up to 1 year after award. In addition, the General Services Administration multiple award schedule contracts, government-wide acquisitions contracts, blanket purchase agreements, and other indefinite delivery/indefinite quantity contracts do not guarantee more than a minimal amount of work for us, but instead provide us access to work generally through further competitive procedures. This competitive process may result in increased competition and pricing pressure, requiring that we make sustained post-award efforts to realize revenues under the relevant contract.
If a federal government customer terminates one of our contracts for convenience, we may recover only our incurred or committed costs, settlement expenses, and profit on work completed prior to the termination. If a federal government customer were to unexpectedly terminate, cancel, or decline to exercise an option to renew with respect to one or more of our significant contracts, such as the DHS IDIQ,contracts or suspend or debar us from doing business with the federal government, our revenues and operating results would be materially harmed.
Many of the services we provide involve managing and protecting information involved in sensitive or classified government functions.functions as well as sensitive commercial information. A security breach or cybersecurity event in one of these systems could cause serious harm to our business, damage our reputation, and prevent us from being eligible for further work on sensitive or classified systems for federal government customers. In addition, sensitive personal data could be illegally accessed and/or stolen through a cybersecurity event. We could incur losses from such a security breach that could exceed the policy limits under our insurance. Damage to our reputation or limitations on our eligibility for additional work resulting from a security breach in one of the systems we develop, install, and maintain could materially reduce our revenues.
Although we attempt to limit the amount and type of our contractual liability for defects in the applications or systems we provide and carry insurance coverage that mitigatesmay mitigate this liability in certain instances, we cannot be assured that these limitations and insurance coverages will be applicable and enforceable in all cases. Even if these limitations and insurance coverages are found to be applicable and enforceable, our liability to our customers for these types of claims could still exceed our insurance coverage and be material in amount and affect our business, financial condition and results of operations.
If we or our stockholders sell substantial amounts of our common stock, the market price of our common stock could fall. Such stock issuances may be made at a price that reflects a discount from the then-current trading price of our common stock. These issuances would dilute our stockholders percentage ownership interest, which would have the effect of reducing our stockholders’ influence on matters on which our stockholders vote, and might dilute the book value of our common stock. There is no assurance that we will not seek to sell additional shares of our common stock in order to meet our working capital or other needs in a transaction that would be dilutive to current stockholders.
Various provisions of our certificate of incorporation, by-laws and Delaware law could make it more difficult for a third party to acquire us, even if doing so might be beneficial to WidePointus and our stockholders. We are subject to the provisions of Section 203 of the General Corporation Law of Delaware. Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with any interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is (i) a person who, together with affiliates and associates, owns 15% or more of our voting stock or (ii) an affiliate or associate of ours who was the owner, together with affiliates and associates, of 15% or more of our outstanding voting stock at any time within the 3-year period prior to the date for determining whether such person is “interested.”
We have identified material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
During our 2024 year-end closing process, we identified deficiencies related to the revenue recognition process for government contracts, specifically in the estimation of unbilled amounts related to a large government agency. During the assessment process, we identified additional deficiencies in the design of controls over the monitoring of evolving circumstances that require specific, customer level analysis relating to revenue recognition. This deficiency led to errors in the timing of revenue that required adjustment during the year-end close. As a result of these deficiencies, we identified material weaknesses in our internal control over financial reporting, which have not been remediated to date.
If we fail to effectively remediate the material weaknesses in our internal control over financial reporting, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls when required to do so in the future, we may be unable to accurately or timely report our financial condition or results of operations. In addition, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, when required, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our stock price could be adversely affected.
Management's Discussion & Analysis (MD&A)
Largest changes
“There was no definite-lived intangible asset impairment during 2024. Definite-lived intangible asset impairment charge for the year ended December 31, 2023 was $0.2 million following impairment testing on definite-lived intangible assets performed during the year.”see in full comparison
“Reselling arrangements require the Company to procure third-party products and services in order to satisfy customer contractual obligations. The Company recognizes revenue and related costs on a gross basis in arrangements in which it controls the specified products or services prior to transfer to the customer. …”see in full comparison
“In arrangements in which the Company does not control the underlying products or services prior to transfer and instead arranges for third parties to provide such products or services to customers on their own account, the Company acts as an agent. In these transactions, the Company recognizes revenue on a net basis, reflecting the fees or margins earned for arranging the transaction, with no corresponding recognition of the related third-party costs Our revenue recognition policies for our billable carrier services is summarized and shown below:”see in full comparison
“On April 28, 2023, the Company entered into an Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Republic Capital Access, LLC (the “Buyer”) for the non-recourse sale of eligible accounts receivable relating to U.S. Government prime contracts or subcontracts of the Company (collectively, the “Purchased Receivables”). The Purchase Agreement terminated in April of 2024 and was not renewed. Prior to the 2024 termination, we sold a total of $2.9 million of receivables for $2.8 million in proceeds net of fees.”see in full comparison
“For reselling transactions in which the Company is the principal, revenue from product resales is generally recognized upon delivery, while revenue from resold services is generally recognized over the contractual service period. When the Company enters into Software-as-a-Service (“SaaS”) arrangements in which it is the principal, revenue is recognized in a manner that reflects the customer’s consumption of the services over the period of access.”see in full comparison
“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.”see in full comparison
Full comparison: every changed paragraph (36)
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.Service (ITaaS). We help our clients achieve their organizational missions for mobility management and security objectives in this challenging and complex business environment.
We offer our TMaaS solutions through a flexible managed services“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.
During 2024, we completed the integration of the acquired assets of ITA. In addition,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 2025,2026, we will continue to focus on the following key goals:
Our strategy for achieving our longer-term goals include:
We believe these actions could drive a strategic repositioning to our TM2 offering and maycould 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.
Critical Accounting Policies and Estimates
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.
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 monthquarter to monthquarter 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.
Reselling arrangements require the Company to procure third-party products and services in order to satisfy customer contractual obligations. The Company recognizes revenue and related costs on a gross basis in arrangements in which it controls the specified products or services prior to transfer to the customer. In these arrangements, the Company acts as the principal, as it is primarily responsible to the customer for fulfillment, bears inventory and credit risk for undelivered products and services, directly contracts with and issues purchase orders to third-party suppliers, and has discretion in selecting among multiple suppliers.
For reselling transactions in which the Company is the principal, revenue from product resales is generally recognized upon delivery, while revenue from resold services is generally recognized over the contractual service period. When the Company enters into Software-as-a-Service (“SaaS”) arrangements in which it is the principal, revenue is recognized in a manner that reflects the customer’s consumption of the services over the period of access.
In arrangements in which the Company does not control the underlying products or services prior to transfer and instead arranges for third parties to provide such products or services to customers on their own account, the Company acts as an agent. In these transactions, the Company recognizes revenue on a net basis, reflecting the fees or margins earned for arranging the transaction, with no corresponding recognition of the related third-party costs Our revenue recognition policies for our billable carrier services is summarized and shown below:
Our revenue recognition policies for our billable carrier services is summarized and shown below:
Cost of revenues for the year ended December 31, 20242025 were $129.5 million (or 86% of revenues) compared to $123.5 million (or 87% of revenues) compared to $90.4 million (or 85% of revenues) in 2023.2024. 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.
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.
Gross profit percentage for the year ended December 31, 2024,2025 excludingof carrierour managed services was 33%36% andcompared consistentto with34% in the prior period.
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.
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, 20242025 were $2.3$2.7 million (or 2% of revenues), compared to $1.7$2.3 million (or 2% of revenues) in 2023.2024.
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, 401k401(K) 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 year ended December 31, 20242025 were $19.7 million (or 13% of revenues), as compared to $17.6 million (or 12% of revenues), as compared to $15.9 million (or 15% of revenues) in 2023.2024. 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.
There was no definite-lived intangible asset impairment during 2024. Definite-lived intangible asset impairment charge for the year ended December 31, 2023 was $0.2 million following impairment testing on definite-lived intangible assets performed during the year.
Depreciation and amortization expense wasincreased $1.0to $1.3 million for the year ended December 31, 20242025 as compared to $0.8$1.0 million in 2023.2024, primarily due to increased depreciation expense recognized on certain disaster recovery assets based on their assessed in-service dates.
Other Income (Expense) Income
Net other income (expense) for the year ended December 31, 20242025 was $(0.1)$0.1 million as compared to net other income (expense) of $(0.20.1) million in 2023.2024.
Provision (Benefit) Provision for Income Taxes
Income tax benefitprovision for the year ended December 31, 20242025 was $4,000$97,700 compared to an income tax provisionbenefit of $0.1 million$4,000 in 2023.2024.
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 ondate Februaryof May 28, 2026. At December 31, 2024,2025, our net working capital was approximately $2.4$2.3 million as compared to $1.4$2.4 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.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.
For the year ended December 31, 2024,2025, net cash provided by operationsoperating activities was approximately $1.6$5.7 million driven by collections of accounts receivable and temporary payable timing difference,differences, as compared to approximately $0.6$1.6 million net cash provided by operations for the year ended December 31, 2023.2024.
For the year ended December 31, 2024,2025, cash providedused byin investing activities was approximately $0.1$0.3 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.
For the year ended December 31, 2023,2024, cash usedprovided inby investing activities was approximately $0.6$0.1 million and consisted of $0.5$0.2 million in proceeds from our factoring arrangement offset by $1.1 millionpurchases of computer hardwareproperty and software purchases and capitalized internally developed software costs primarily associated with upgrading our ITMS™ and Soft-ex platform, secure identity management technology and network operations center.equipment.
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.
For the year ended December 31, 2023,2025, cash used in financing activities was approximately $0.6$0.7 million and reflects line of credit advances and payments of approximately $6.5$2.8 million, finance lease principal repayments of approximately $586,500$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 $3,600.$130,700.
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.
On April 28, 2023, the Company entered into an Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Republic Capital Access, LLC (the “Buyer”) for the non-recourse sale of eligible accounts receivable relating to U.S. Government prime contracts or subcontracts of the Company (collectively, the “Purchased Receivables”). The Purchase Agreement terminated in April of 2024 and was not renewed. Prior to the 2024 termination, we sold a total of $2.9 million of receivables for $2.8 million in proceeds net of fees.
During the year ended December 31, 2023, we sold a total of $5.2 million of receivables for $5.1 million in proceeds net of fees.
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”). Onuntil FebruaryMay 18,28, 2025,2026. theThe Company renewedexpects to renew its line of credit for ana additionalfull year throughterm Februaryon May 28, 2026.2026 Seeor Note 21.sooner.
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 FebruaryMay 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 arewere in compliance with the covenants at December 31, 2024.2025.
What changed in the latest 10-Q
Risk Factors
Our risk factors have not changed materially from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Second Quarter Highlights”
Largest changes
“Contingent Cash Requirement. As previously disclosed, the Company has been selected for award of the successor DHS Cellular Wireless Managed Services ("CWMS 3.0") contract. The award remains subject to a bid protest, and the timing and ultimate outcome of the protest process are uncertain. Upon final resolution of the protest process in the Company's favor and satisfaction of the applicable conditions, the Company would become obligated to pay up to approximately $0.6 million of cash incentive compensation under previously approved employee incentive arrangements. …”see in full comparison
“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. …”see in full comparison
Atsee in full comparisonMarchJune31,30, 2026, our net working capital was approximately $2.8 million compared to $2.3 million at December 31, 2025.In response to the DHS-specific partial government shutdown, the Company took prudent steps to preserve liquidity, including the temporary deferral of approximately $7 million of cumulative payments.We believe that our existing unrestricted cash balance of$10.9$10.0 million 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.The Company is working with Old Dominion National Bank to extend the maturity date under substantially the same terms as previous iterations of the line of credit.
“Cost of Revenues. Our cost of revenues include employee labor, excluding fringe benefit costs, and subcontractors directly associated with satisfying customer performance obligations, cash back rewards received associated with vendor payments made on behalf of customers, 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. …”see in full comparison
“Management believes that existing cash balances, cash generated from operations and available sources of liquidity will be sufficient to fund these anticipated capital expenditures.”see in full comparison
Full comparison: every changed paragraph (46)
Our Department of Homeland Security for Cellular Wireless Managed Services (CWMS) 2.0 ID/IQ Contract (DHS CWMS 2.0 IDIQ) contract is currently subject to re-competition, in a competitive process, and we are awaiting the government’s award decision; there can be no assurance that we will be awarded the successor contract, or that the terms, scope, or timing of any extension, bridge arrangement, or successor award will not materially differ from the current contract.
Second Quarter Highlights
On June 24, 2026, we were selected as the single awardee of the Department of Homeland Security's (DHS) Cellular Wireless Managed Services (CWMS) 3.0 contract, a 10-year Indefinite Delivery, Indefinite Quantity (IDIQ) contract consisting of a one-year base period and nine one-year option periods with a contract ceiling value of approximately $3.1 billion. Under the CWMS 3.0 award, we will deliver and manage an integrated portfolio of solutions that support lifecycle management, connectivity, security, and operational requirements across all DHS components. Although the Company has been selected for the contract, on June 29, 2026, we were notified that a post-award protest was filed with respect to the contract.
Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025 Revenues. Revenues for the three months ended MarchJune 31,30, 2026 were $40.6$38.0 million, an increase of $7.1$0.7 million (or 21%2%) compared to $33.5$37.3 million in the same period in 2025. Our mix of revenues for the periods presented is set forth below:
Managed Service Revenues. Total managed services revenue was $14.8$13.9 million, ana increasedecrease of $3.6$1.1 million compared with $11.1$15.1 million in the same period in 2025 as follows:
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 $25.8$24.1 million, an increase of $3.4$1.8 million, as compared with the same period in 2025. 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 the second half of 2025 for our DHS customer.
Cost of Revenues. Our cost of revenues include employee labor, excluding fringe benefit costs, and subcontractors directly associated with satisfying customer performance obligations, cash back rewards received associated with vendor payments made on behalf of customers, 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 months ended MarchJune 31,30, 2026 were $34.9$32.2 million (or 86%85% of revenues), anand increasewas ofconsistent $6.2with million from $28.7 million (or 86%cost of revenues) in the same period in 2025. Included in cost of revenues is carrier costs paid on behalf of our federal government customers of approximately $25.1$23.3 million and $21.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively.
Gross Profit. Gross profit for the three month period ended MarchJune 31,30, 2026 increased on a dollar basis by $0.8$0.7 million to $5.6$5.8 million (or 14%15% of revenues), compared to $4.8$5.1 million (or 14% of revenues) in the same period in 2025.
Gross profit attributable to carrier services revenue (excluding managed services), for the three-months ended MarchJune 31,30, 2026 was 2%3% compared to 3% in the same period last year, the gross profit reflected related to carrier services results from cash back rewardsfees received from third party payment platforms associated with vendor payments made on behalf of customers. Gross profit as a percentage of managed services revenue (excluding carrier services) for the three months ended MarchJune 31,30, 2026 was 34%36% compared to 37%30% in the same period last year due to slightly$1.1 million increase in the higher labormargin costs,managed as we bolster our customer delivery and relatively more reselling revenues which carry lower margins,services compared to the same period last year.
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 to non-employee sales agents and partners, and costs associated with travel and trade shows. Sales and marketing expense for the three months ended MarchJune 31,30, 2026 was $0.6 million (or 1%2% of revenues) and remained relatively consistent compared to $0.6 million (or 2% of revenues) in 2025.
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 months ended MarchJune 31,30, 2026 were $4.8$4.9 million (or 12%13% of revenues), and remained relatively consistent compared to $4.7$4.9 million (or 14%13% of revenues) in 2025, with the slight increase primarily due to higher share-based compensation of approximately $50,000.2025. The increase was partially offset by approximately $0.5$0.7 million of internal IT labor costs that are typically reflected within general and administrative expenses but were reassigned during the current period to implementation activities associated with a long-term customer contract. These costs were deferred during the period in connection with implementation activities under the long-term customer contract. Because the implementation services do not represent a distinct performance obligation, the related revenue and costs are deferred and will be recognized over the contract term.
We expect to incur additional costs in future periods related to our move from a smaller reporting company to an accelerated filer, including increased external audit fees, consulting services, additional personnel and other compliance-related expenditures. Based on current estimates, these incremental costs are expected to approximate $0.8 million during the second half of 2026.
We also expect to incur certain compensation costs associated with previously approved employee incentive arrangements that are contingent upon the final resolution of the protest process with respect to our CWMS 3.0 award. These arrangements include up to approximately $0.6 million of cash incentive compensation expected to be paid upon satisfaction of the applicable performance condition, as well as up to approximately $0.4 million of stock-based compensation that would be recognized over the applicable requisite service periods following satisfaction of the performance condition. The timing, amount and financial statement impact of these costs will depend on the outcome and timing of the protest process, the final terms of the award, employee service requirements, forfeitures, and other factors. Accordingly, there can be no assurance as to the timing or amount of any future compensation expense.
Depreciation and Amortization. Depreciation and amortization expense for the three months ended MarchJune 31,30, 2026 was $228,000$181,400 which is consistent as compared to $223,700$233,100 in 2025.
Other Income (Expense), Net. Other income, net for the three months ended MarchJune 31,30, 2026 was $91,650$58,100 compared to other expense,income, net of $1,600$37,500 in 2025 as a result of higher earnings on cash deposits and a gain on sale of property and equipment.deposits.
Income Taxes. Income tax benefitprovision for the three months ended MarchJune 31,30, 2026 was $43,700$2,100 as compared to income tax benefit of $94,000$52,400 in 2025. Income taxes were accrued at an estimated effective tax rate of (131.22)% for the three months ended March 31, 2026 compared to 11.5% for the three month period ended March 31, 2025.
Net Income (Loss). As a result of the cumulative factors described above, net income for the three months ended MarchJune 31,30, 2026 increased by $801,100$0.7 million to $77,000$66,400 compared to net loss of $724,100$0.6 million for the three months ended MarchJune 31,30, 2025.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 Revenues. Revenues for the six months ended June 30, 2026 were $78.6 million, an increase of $7.8 million (or 11%) compared to $70.8 million in the same period in 2025. Our mix of revenues for the periods presented is set forth below:
Managed Service Revenues. Total managed services revenue was $28.7 million, an increase of $2.6 million compared with $26.2 million in the same period in 2025 as follows:
Carrier Service Revenues. Our carrier services revenue was $49.8 million, an increase of $5.2 million, as compared with the same period in 2025. 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 the second half of 2025 for our DHS customer.
Cost of Revenues. Our cost of revenues include employee labor, excluding fringe benefit costs, and subcontractors directly associated with satisfying customer performance obligations, cash back rewards received associated with vendor payments made on behalf of customers, 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 months ended June 30, 2026 were $67.1 million (or 85% of revenues) and was consistent cost of revenues in the same period in 2025. Included in cost of revenues is carrier costs paid on behalf of our federal government customers of approximately $48.4 million and $43.3 million for the six months ended June 30, 2026 and 2025, respectively.
Gross Profit. Gross profit for the six month period ended June 30, 2026 increased on a dollar basis by $1.5 million to $11.4 million (or 15% of revenues), compared to $9.9 million (or 14% of revenues) in the same period in 2025.
Gross profit attributable to carrier services revenue (excluding managed services), for the six-months ended June 30, 2026 was 3% compared to 3% in the same period last year, the gross profit reflected related to carrier services results from fees received from third party payment platforms associated with vendor payments made on behalf of customers. Gross profit as a percentage of managed services revenue (excluding carrier services) for the six months ended June 30, 2026 was 35% compared to 33% in the same period last year due to the increase in higher margin managed service fees of $1.8 million, compared to the same period last year.
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 to non-employee sales agents and partners, and costs associated with travel and trade shows. Sales and marketing expense for the six months ended June 30, 2026 was $1.3 million (or 2% of revenues) and remained relatively consistent compared to $1.3 million (or 2% of revenues) in 2025.
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 six months ended June 30, 2026 were $9.8 million (or 13% of revenues), and remained relatively consistent compared to $9.7 million (or 13% of revenues) in 2025. The increase was partially offset by approximately $1.3 million of internal IT labor costs that are typically reflected within general and administrative expenses but were reassigned during the current period to implementation activities associated with a long-term customer contract. These costs were deferred during the period in connection with implementation activities under the long-term customer contract. Because the implementation services do not represent a distinct performance obligation, the related revenue and costs are deferred and will be recognized over the contract term.
Excluding the impact of these deferred implementation costs, operating expenses would have increased more significantly period over period. Upon go-live, the deferred costs will be amortized to cost of sales over the contract term. To the extent internal IT personnel continue to perform billable customer work after go-live, related labor costs are expected to be classified as direct costs rather than general and administrative expenses.
Depreciation and Amortization. Depreciation and amortization expense for the six months ended June 30, 2026 was $409,400 which is consistent as compared to $456,800 in 2025.
Other Income (Expense), Net. Other income, net for the six months ended June 30, 2026 was $149,800 compared to other income, net of $35,800 in 2025 as a result of higher earnings on cash deposits and a gain on sale of property and equipment.
Income Taxes. Income tax benefit for the six months ended June 30, 2026 was $41,600 as compared to income tax benefit of $146,400 in 2025.
Net Income (Loss). As a result of the cumulative factors described above, net income for the six months ended June 30, 2026 increased by $1.4 million to $0.1 million compared to net loss of $1.3 million for the six months ended June 30, 2025.
At MarchJune 31,30, 2026, our net working capital was approximately $2.8 million compared to $2.3 million at December 31, 2025. In response to the DHS-specific partial government shutdown, the Company took prudent steps to preserve liquidity, including the temporary deferral of approximately $7 million of cumulative payments. We believe that our existing unrestricted cash balance of $10.9$10.0 million 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. The Company is working with Old Dominion National Bank to extend the maturity date under substantially the same terms as previous iterations of the line of credit.
On April 10, 2026, we entered into an At The Market Offering Agreement with H.C. Wainwright & Co., LLC (the “Sales Agent”) under which we may issue and sell in a registered offering shares of our common stock having an aggregate offering price of up to $15.5 million from time to time through or to the Sales Agent (the “ATM Offering”). We expect to use net proceeds, if any, from the ATM Offering over time as a source for general corporate purposes, including potentially expanding existing businesses, acquiring businesses and investing in other business opportunities. No sales of shares were made under the ATM Offering during the three months ended June 30, 2026 Cash Flows from Operating Activities For the six months ended June 30, 2026, net cash used in operations was approximately $1.0 million driven by increases in accounts receivables and is partially offset by temporary payable timing differences. In the same period in 2025, $0.1 million net cash was used in operations.
Cash Flows from Operating Activities
For the three months ended March 31, 2026, net cash used in operations was approximately $0.9 million driven by increases in accounts receivables and is partially offset by temporary payable timing differences. In the same period in 2025, $3.2 million net cash was used in operations.
For the threesix months ended MarchJune 31,30, 2026, cash used in investing activities was approximately $28,800$36,500 and consisted of purchases of property and equipment offset by proceeds received infrom disposal of property and equipment.
For the threesix months ended MarchJune 31,30, 2025, cash used in investing activities was approximately $27,600$0.1 million and consisted of purchases of property and equipment.
For the threesix months ended MarchJune 31,30, 2026, cash used in financing activities was approximately $0.2$0.6 million and reflects finance lease principal repayments of approximately $131,600 and$223,400, withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $106,900.$134,874 and withholding taxes paid on behalf of employees on net settled stock option exercises of approximately $280,400.
For the threesix months ended MarchJune 31,30, 2025, cash used in financing activities was approximately $0.2$0.4 million and reflects line of credit advances and payments of $2.8 million, finance lease principal repayments of approximately $120,000,$246,600, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $115,200.$130,700.
NetExpected Effect of Exchange Rate onFuture Cash and EquivalentsRequirements
The Company's capital expenditures have historically consisted primarily of investments in information technology infrastructure, software, equipment and other assets supporting customer programs and internal operations. Capital expenditures during the six months ended June 30, 2026 were less than $0.1 million.
Based on currently available information and anticipated business requirements, the Company presently expects capital expenditures during the second half of 2026 to approximate $0.4 million to $0.5 million. In addition, the Company currently anticipates capital expenditures during 2027 could exceed $1.0 million, primarily to support anticipated customer programs, technology infrastructure and other strategic initiatives.
These anticipated expenditures remain subject to the timing of customer requirements, contract awards, business conditions, procurement schedules and other factors and, accordingly, actual capital expenditures may differ materially from current expectations.
Management believes that existing cash balances, cash generated from operations and available sources of liquidity will be sufficient to fund these anticipated capital expenditures.
Expected Sarbanes-Oxley Compliance Costs. As a result of the Company's transition to accelerated filer status, the Company expects increased operating cash expenditures associated with compliance with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act during the remainder of 2026 and into 2027. These expenditures are expected to include higher external audit fees, consulting services, additional personnel and other compliance-related costs. Management believes these expenditures can be funded through existing cash balances and cash generated from operations.
Contingent Cash Requirement. As previously disclosed, the Company has been selected for award of the successor DHS Cellular Wireless Managed Services ("CWMS 3.0") contract. The award remains subject to a bid protest, and the timing and ultimate outcome of the protest process are uncertain. Upon final resolution of the protest process in the Company's favor and satisfaction of the applicable conditions, the Company would become obligated to pay up to approximately $0.6 million of cash incentive compensation under previously approved employee incentive arrangements. Management believes the Company has sufficient liquidity to satisfy this contingent obligation from existing cash balances and operating cash flows. Until the protest process is resolved, no liability has been recognized for these contingent payments Net Effect of Exchange Rate on Cash and Equivalents For the six months ended June 30, 2026, fluctuations in the Euro and U.S. dollar exchange rate increased the translated value of our foreign cash balances by $8,300. For the six months ended June 30, 2025 fluctuations in the in the Euro and U.S. dollar exchange rate decreased the translated value of our foreign cash balances by $43,960.
For the three months ended March 31, 2026 and 2025, respectively, fluctuations in the Euro and U.S. dollar exchange rate increased the translated value of our foreign cash balances by $5,845 as compared to last year.
WYY insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 9 filings (5 insiders, 8 trade dates, 429,934 shares, about $7.3M; 3 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -429,934 (purchases minus sales); net value about -$7.3M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-24 | Holloway Jason |
Shares withheld for tax | 3,844 | $9.05 | $34.8K |
| 2026-08-24 | Holloway Jason |
Option exercise | 9,714 | $1.82 | $17.7K |
| 2026-08-06 | Sparling Ian |
Shares withheld for tax | 1,649 | $10.72 | $17.7K |
| 2026-08-06 | Sparling Ian |
Option exercise | 9,714 | $1.82 | $17.7K |
| 2026-08-06 | George Robert J |
Shares withheld for tax | 4,292 | $10.72 | $46.0K |
| 2026-08-06 | George Robert J |
Option exercise | 9,714 | $1.82 | $17.7K |
| 2026-07-09 | Dzyak Todd |
Open-market sale | 5,000 | $12.75 | $63.8K |
| 2026-07-06 | Fitzgerald John J |
Open-market sale | 15,000 | $15.63 | $234.4K |
| 2026-06-29 | George Robert J |
Open-market sale | 12,882 | $15.98 | $205.9K |
| 2026-06-29 | George Robert J |
Open-market sale | 4,000 | $16.75 | $67.0K |
| 2026-06-26 | George Robert J |
Open-market sale | 11,901 | $17.78 | $211.6K |
| 2026-06-26 | George Robert J |
Open-market sale | 3,962 | $19.35 | $76.7K |
| 2026-06-26 | Sparling Ian |
Open-market sale | 34,923 | $17.52 | $611.9K |
| 2026-06-26 | Sparling Ian |
Open-market sale | 77,577 | $14.72 | $1.1M |
| 2026-06-26 | Sparling Ian |
Open-market sale | 42,949 | $19.50 | $837.5K |
| 2026-06-26 | Holloway Jason |
Open-market sale | 100,010 | $16.20 | $1.6M |
| 2026-06-26 | Holloway Jason |
Open-market sale | 109 | $19.52 | $2.1K |
| 2026-06-26 | Holloway Jason |
Open-market sale | 75,621 | $18.65 | $1.4M |
| 2026-06-26 | Holloway Jason |
Open-market sale | 6,000 | $17.20 | $103.2K |
| 2026-06-25 | Dzyak Todd |
Open-market sale |
10,000 | $24.00 | $240.0K |
| 2026-06-24 | Dzyak Todd |
Open-market sale |
10,000 | $17.50 | $175.0K |
| 2026-06-23 | Dzyak Todd |
Open-market sale |
10,000 | $15.00 | $150.0K |
| 2026-06-01 | Holloway Jason |
Shares withheld for tax | 812 | $10.30 | $8.4K |
| 2026-06-01 | George Robert J |
Shares withheld for tax | 1,906 | $10.30 | $19.6K |
| 2026-05-29 | George Robert J |
Open-market sale | 10,000 | $10.59 | $105.9K |
| 2026-04-20 | Sparling Ian |
Grant/award | 2,904 | — | — |
| 2026-04-20 | Kang Jin |
Grant/award | 2,904 | — | — |
| 2026-04-20 | Holloway Jason |
Grant/award | 2,904 | — | — |
| 2026-04-20 | George Robert J |
Grant/award | 2,904 | — | — |
| 2026-04-20 | Dzyak Todd |
Grant/award | 2,904 | — | — |
Well-known investors holding WYY (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 120,321 | $2.1M | 0.0% | Reduced 3% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 96,924 | $1.7M | 0.0% | Added 180% |