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WidePoint Corporation Reports Second Quarter 2011 Results

August 15, 2011

WASHINGTON, Aug. 15, 2011 /PRNewswire/ — WidePoint Corporation (NYSE Amex: WYY), a specialist in wireless mobility management and cybersecurity solutions, today announced financial results for the three months ending June 30, 2011.

Second Quarter 2011 Highlights

  • Net revenue for the quarter ended June 30, 2011 decreased approximately 20% to $10.0 million from $12.5 million in last year’s comparable period as Consulting Segment revenues were negatively impacted by federal government budget delays and debt ceiling debates. Overall Outlook for the second half of 2011 improves with budget delays and debt ceiling debate issues resolved for FYE 2011.
  • Wireless Mobility Management revenue increased 9.8% to $6.2 million for the second quarter of 2011 from $5.6 million in the first quarter of 2011, but decreased 10.6% year-over-year compared to $6.9 million in the second quarter of last year as a result of lower resale’s of billable calling minutes that were not fully offset by increases in higher margin wireless management recurring service fees. Outlook for second half of 2011 improves with growing pipeline of opportunities, recent awards, and renewals.
  • Cybersecurity segment revenue increased 82.7% to $2.3 million in the second quarter of 2011 from $1.3 million in the first quarter of this year, but decreased 7.7% year-over-year compared to $2.5 million in the second quarter of last year, also as a result of delays that occurred due to federal government budget funding concerns, policy issues, and debt ceiling debates. Outlook for second half of 2011 improves as the federal government implements new security guidelines and phase out the use of user names and passwords from certain federal government systems.
  • Gross margin increased by 55% to 27.1% in the second quarter of this year as compared to 17.5% in the first quarter of 2011, and increased by 15% year-over-year compared to 23.5% in the second quarter of last year, due to more favorable revenue mix of higher margin services.
  • The Company returned to profitability, with income from operations of approximately $384,000 for the second quarter of 2011 as compared to income from operations of approximately $511,000 in last year’s comparable period.
  • Net income was approximately $214,000 for the second quarter of 2011 as compared to net income of approximately $413,000 in last year’s comparable period.

Steve Komar, CEO, WidePoint, commented, “WidePoint was able to return to profitability in the second quarter, despite the short-term hurdles that impacted our business during much of the first half of the year. The timing of product delivery and product mix, primarily due to the delay in passing an approved 2011 federal budget and the ensuing debt ceiling debates, again had an impact on revenues in the second quarter, much as it did in the first quarter. However, as expected, we experienced an increase in both Wireless Mobility Management and Cybersecurity segment revenues over the first quarter of 2011, though these increases were offset by decreases in our Consulting segment related to the confusion that accompanied federal government funding for the past several months. We remain committed to re-establishing our growth and earnings trajectory in the second half of 2011, notwithstanding some of the short-term risk issues tied to federal governmental budgeting impasses and spending cuts.”

Mr. Komar continued, “We have established ourselves as a credible and trustworthy partner to expanded government and commercial markets, and the position we have built in the government sector is driving demand as federal agencies increasingly require vendors and contractors to comply with enhanced security as well as uniform credentialing initiatives. This is driving additional business to WidePoint’s subsidiaries with a large part of this new business generated from non-government funded revenue. We believe that our Cybersecurity initiatives will be our primary driver for growth as governmental agencies work to prevent terrorism and promote national security; prevent cybercrime and identity theft; defend federal infrastructure from invasive attack and information theft; and promote efficient use of cost-effective technology such as our products and solutions.”

WidePoint CFO Jim McCubbin commented, “This quarter we benefitted from a greater percentage of higher margin business from our Cybersecurity segment that had a corresponding positive impact on gross profit and gross margins. Despite the challenges which have impacted our revenues in the first half of 2011, we returned our business to profitability in the quarter. We expect the second half of 2011 to show overall financial improvements compared to the first half, as the budget and debt discussions related to fiscal year 2011 begin to be finalized, and we remain extremely optimistic about our opportunities in 2012 and beyond.”

Conference Call Information

A conference call and live webcast will take place at 4:30 p.m. Eastern Time, on Monday, August 15, 2011. Anyone interested in participating should call 1-888-846-5003 if calling within the United States or 1-480-629-9856 if calling internationally. There will be a playback available until August 22, 2011. To listen to the playback, please call 1-877-870-5176 if calling within the United States or 1-858-384-5517 if calling internationally. Please use pin number 4463135 for the replay. The call will also be accompanied live by webcast over the Internet and accessible at http://viavid.net/dce.aspx?sid=00008AF0.

About WidePoint

WidePoint is a specialist in providing Wireless Mobility Management and Cybersecurity Solutions utilizing its advanced information technology products and services. WidePoint has several wholly owned subsidiaries holding major government and commercial contracts including Operational Research Consultants, Inc., iSYS, LLC, Advanced Response Concepts Corporation, and WidePoint IL, Inc. WidePoint enables organizations to deploy fully compliant IT services in accordance with government-mandated regulations and advanced system requirements. For more information, visit http://www.widepoint.com.

Safe-Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company’s financing plans; (ii) trends affecting the company’s financial condition or results of operations; (iii) the company’s growth strategy and operating strategy; (iv) the declaration and payment of dividends; and (v) the risk factors disclosed in the Company’s periodic reports filed with the SEC. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend,” “outlook” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk factors disclosed in the Company’s Forms 10-K and 10-Q filed with the SEC.


    For More Information:

    Jim McCubbin, EVP & CFO                    Brett Maas or Dave Fore
    WidePoint Corporation                      Hayden IR
    7926 Jones Branch Drive, Suite 520         (646) 536-7331
    McLean, VA 22102                           brett@haydenir.com
    (703) 349-2577
    jmccubbin@widepoint.com

-tables follow-

                 WIDEPOINT CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                   December
      Assets                                        June 30,          31,
       Current assets:                              --------      ---------
                                                          2011           2010
                                                          ----           ----
                                                          (unaudited)
         Cash and cash equivalents                  $5,394,273     $5,816,303
         Accounts receivable                         4,733,151      7,794,913
         Unbilled accounts receivable                1,319,227      3,059,665
         Prepaid expenses and other assets             464,577        473,320
         Current deferred income tax asset             492,385        412,801
                                                       -------        -------
            Total current assets                    12,403,613     17,557,002
      Property and equipment, net                    1,303,325      1,241,510
      Goodwill                                      11,329,917     11,329,917
      Other Intangibles, net                         1,086,084      1,104,551
      Noncurrent deferred income tax asset           3,116,705      3,116,705
      Other assets                                      55,598         46,455
                                                        ------         ------
            Total assets                           $29,295,242    $34,396,140
                                                   ===========    ===========
      Liabilities and stockholders' equity
      Current liabilities:
         Short term note payable                       $59,344        $94,809
         Accounts payable                            4,303,476      7,725,727
         Accrued expenses                            1,491,634      2,643,613
         Income taxes payable                                -        143,450
         Deferred revenue                              107,008        294,541
         Current portion of long-term debt             350,603        572,943
         Current portion of deferred rent               30,406         20,835
         Current portion of capital lease
          obligation                                    38,590         44,724
                                                        ------         ------
            Total current liabilities                6,381,061     11,540,642
      Long-term debt, net of current
       portion                                         506,532        564,490
      Fair value of earnout liability                  153,000        153,000
      Deferred rent, net of current portion             84,205         98,702
      Capital lease obligation,                          5,838         22,908
                                                         -----         ------
       net of current portion
            Total liabilities                       $7,130,636    $12,379,742
                                                    ----------    -----------
      Stockholders' equity:
       Common stock, $0.001 par value;
        110,000,000 shares authorized;
        62,930,873 and 62,690,873 shares
        issued and outstanding, respectively            62,931         62,691
         Additional paid-in capital                 69,005,250     68,754,353
         Accumulated deficit                       (46,903,575)   (46,800,646)
                                                   -----------    -----------
            Total stockholders' equity              22,164,606     22,016,398
                                                    ----------     ----------
            Total liabilities and stockholders'
             equity                                $29,295,242    $34,396,140
                                                   ===========    ===========

                        WIDEPOINT CORPORATION AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                   Three Months
                                                  Ended June 30,
                                                    2011         2010
                                                    ----         ----
                                             (unaudited)
    Revenues, net                             $9,965,878  $12,452,120
    Cost of sales (including amortization
     and depreciation of $171,161,
     $243,277, $354,801, and $469,562,
     respectively)                             7,261,227    9,521,361
                                               ---------    ---------

              Gross profit                     2,704,651    2,930,759

    Sales and marketing                          385,100      487,996
    General and administrative (including
     shared-based compensation
     (benefit)/expense of $(10,039),
     $27,565, $(3,635), and $56,745
     respectively)                             1,877,145    1,882,721
    Depreciation expense                          58,777       48,743
                                                  ------       ------

              Income/(loss) from operations      383,629      511,299

    Interest income                                2,481        2,231
    Interest expense                             (19,304)     (22,793)
    Other expense                                      -            -
                                                     ---          ---

    Net income/(loss) before income tax
     expense                                    $366,806     $490,737

    Income tax expense/(benefit)                 152,375       78,055
                                                 -------       ------

    Net income/(loss)                           $214,431     $412,682
                                                ========     ========

    Basic earnings per share                       $0.00        $0.01
                                                   =====        =====
    Basic weighted average shares
     outstanding                              62,916,422   61,375,333
                                              ==========   ==========
    Diluted earnings per share                     $0.00        $0.01
                                                   =====        =====
    Diluted weighted average shares
     outstanding                              64,142,707   63,299,155


                                                    Six Months
                                                  Ended June 30,
                                                    2011         2010
                                                    ----         ----
                                             (unaudited)
    Revenues, net                            $20,495,003  $23,615,176
    Cost of sales (including amortization
     and depreciation of $171,161,
     $243,277, $354,801, and $469,562,
     respectively)                            15,950,697   18,160,582
                                              ----------   ----------

              Gross profit                     4,544,306    5,454,594

    Sales and marketing                          815,283      831,003
    General and administrative (including
     shared-based compensation
     (benefit)/expense of $(10,039),
     $27,565, $(3,635), and $56,745
     respectively)                             3,743,951    3,714,532
    Depreciation expense                         106,371       98,477
                                                 -------       ------

              Income/(loss) from operations     (121,299)     810,582

    Interest income                                6,673        8,845
    Interest expense                             (39,859)     (50,170)
    Other expense                                  1,143            -
                                                   -----          ---

    Net income/(loss) before income tax
     expense                                   $(153,342)    $769,257

    Income tax expense/(benefit)                 (50,413)     117,257
                                                 -------      -------

    Net income/(loss)                          $(102,929)    $651,980
                                               =========     ========

    Basic earnings per share                      $(0.00)       $0.01
                                                  ======        =====
    Basic weighted average shares
     outstanding                              62,857,309   61,375,333
                                              ==========   ==========
    Diluted earnings per share                    $(0.00)       $0.01
                                                  ======        =====
    Diluted weighted average shares
     outstanding                              62,857,309   63,163,824

SOURCE WidePoint Corporation


Source: newswire