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| 8-K - WIDEPOINT CORP | mtv1119091.htm |
| EX-99.2 - TRANSCRIPT - WIDEPOINT CORP | mtv1119091b.htm |
News Release
WidePoint Reports Fourth Consecutive Quarter of Net Income
Driven by Continued Revenue Growth and Margin Improvment
2009 Management Outlook Remains Positive; Conference Call Today at 4:30 p.m.
Washington D.C., – November 16, 2009 — WidePoint Corporation (NYSE AMEX: WYY), a leading provider of advanced information technology, identity assurance and protection and mobile telecom expense management services, announced today the financial results for the third quarter ended September 30, 2009.
Third Quarter 2009 Financial Highlights:
| • | Net income was approximately $515,000, an improvement of $850,000, over the loss of $335,000 in Q3 ‘08. This was the fourth consecutive quarter of positive net income and the third consecutive quarter of strong net income growth. |
| • | Q3 revenue increased 28% to $11.4 million vs. $8.9 million in Q3 ‘08. |
| • | Gross profit was approximately $2.7 million representing a 24% gross margin as compared to a 17% gross margin on gross profit of $1.5 million in Q3 ‘08. |
| • | Income from operations (excluding amortization, depreciation and stock compensation expense) was $896,000, an improvement of $835,000, vs. $61,000 in Q3’ 08. |
First Nine Months 2009 Financial Highlights:
| • | Net income was approximately $895,000, an improvement of $2.3 million over the net loss of $1.4 million in the first nine months of ‘08. |
| • | Revenue increased approximately 26% to $31.9 million vs. $25.3 million in the first nine months of ‘08. |
| • | Gross profit was approximately $6.9 million representing a 22% gross margin as compared to a 17% gross margin on a gross profit of $4.2 million during the comparable period in ‘08. |
| • | Income from operations (excluding amortization, depreciation and stock compensation expense) was $2.1 million, an improvement of $2.0 million, vs. the first nine months ‘08 of $0.1 million. |
| • | Working capital increased by $1.5 million, or approximately 55%, to $4.2 million in the first nine months of 2009. |
| • | Debt was reduced by approximately $2.6 million, or approximately 67%, to $1.3 million in the first nine months of 2009. |
| • | Equity increased approximately $1.0 million, or 8.1%, to approximately $13.7 million. |
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| WidePoint Corporation | Page 1 of 6 |
Management Comment
WidePoint CEO Steve Komar said, “We continue to see overall momentum improvement occurring throughout the enterprise, and our outlook for 2009 remains solidly positive. Double-digit growth in all three of our operating segments produced a fourth consecutive quarter of net income and three quarters of accelerating net income performance in 2009. The opportunities within our Mobile Telecom Managed Services segment continue to look promising in the federal sector and we are pleased with what we are witnessing in the early stage development of the state and local municipalities marketplace. The opportunities within our PKI Credentialing segment also look exciting, as we expect the programs and our affiliations with our partners to further support and widen our sales reach and long-term growth prospects in this segment.”
WidePoint CFO Jim McCubbin said, “The quarter produced positive results in virtually all of our company’s financial metrics. Revenue, operating income, net income and margins were all improved, as was our balance sheet, which showed gains in working capital, as well as debt reduction and improvement in shareholder equity. Our Mobile Telecom Managed Services segment was up 28% on revenue of nearly $6.8 million for the quarter. The PKI Credentialing and Managed Services segment recorded a 34% revenue increase to almost $1.6 million and our Consulting Services segment was up 26% to $3.0 million for the quarter. This was the result of both new contract awards and renewals along with expansion work. Our business model continues to benefit from the economies of scale we are realizing within our two managed services segments that are driving the growth in our margins and our net income.”
WidePoint will hold its third quarter conference today, November 16 at 4:30 p.m. EST, with CEO Steve Komar, CFO Jim McCubbin and Executive Vice President – Business Development Ron Oxley. The call will cover the company’s quarterly financial results.
To participate, call 1-888-846-5003 any time after 4:20 p.m. EST on November 16, 2009. International callers should dial 1-480-629-9856. At any time during the conference, if callers should experience any difficulty or require operator assistance, they can press the star followed by the zero button. This will call an operator to the line. Approximately one hour after the call an MP3 file of the call will be available at http://hawkassociates.com for approximately 90 days after the call.
About WidePoint
WidePoint is a leading provider of advanced information technology products and services including identity assurance and information management and protection services, forensic informatics and wireless technology services. WidePoint has several wholly owned subsidiaries holding major contracts, Operational Research Consultants, Inc. (ORC), iSYS, LLC, Protexx, and WidePoint IL. 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.
An investment profile about WidePoint may be found at http://www.hawkassociates.com/profile/wyy.cfm.
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| WidePoint Corporation | Page 2 of 6 |
For investor relations information regarding WidePoint, visit http://www.hawkassociates.com and http://www.americanmicrocaps.com, or contact Frank Hawkins, Hawk Associates, at 305-451-1888, e-mail: widepoint@hawkassociates.com. To receive notification of future releases via e-mail, subscribe at http://www.hawkassociates.com/about/alert/.
Safe-Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain 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” 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.
The Financial Statements are below.
| WidePoint Corporation | Page 3 of 6 |
WIDEPOINT CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, |
December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2009 |
2008 | |||||||
| Assets | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,300,508 | $ | 4,375,426 | ||||
| Accounts receivable, net allowance of $52,650 and $0, respectively | 6,590,753 | 5,282,192 | ||||||
| Unbilled accounts receivable | 1,339,235 | 2,301,893 | ||||||
| Prepaid expenses and other assets | 367,238 | 267,666 | ||||||
| Total current assets | 11,597,734 | 12,227,177 | ||||||
| Property and equipment, net | 444,375 | 431,189 | ||||||
| Goodwill | 8,562,254 | 8,575,881 | ||||||
| Intangibles, net | 1,576,439 | 2,236,563 | ||||||
| Other assets | 103,609 | 110,808 | ||||||
| Total assets | $ | 22,284,411 | $ | 23,581,618 | ||||
Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Related party note payable | $ | -- | $ | 2,140,000 | ||||
| Short term note payable | 29,176 | 97,158 | ||||||
| Accounts payable | 4,468,584 | 2,465,394 | ||||||
| Accrued expenses | 1,293,214 | 2,548,106 | ||||||
| Deferred revenue | 963,607 | 1,667,969 | ||||||
| Short-term portion of long-term debt | 512,077 | 486,707 | ||||||
| Short-term portion of capital lease obligation | 118,899 | 107,141 | ||||||
| Total current liabilities | 7,385,557 | 9,512,475 | ||||||
| Deferred income tax liability | 274,559 | 156,891 | ||||||
| Long-term debt, net of current portion | 735,735 | 1,117,230 | ||||||
| Deferred rent, net of current portion | 71,596 | -- | ||||||
| Capital lease obligation, net of current portion | 91,772 | 95,248 | ||||||
| Total liabilities | $ | 8,559,219 | $ | 10,881,844 | ||||
Stockholders’ equity: | ||||||||
| Common stock, $0.001 par value; 110,000,000 shares authorized; 60,684,823 and | ||||||||
| 58,275,514 shares issued and outstanding, respectively | 60,685 | 58,276 | ||||||
| Stock warrants | 38,666 | 38,666 | ||||||
| Additional paid-in capital | 67,322,809 | 67,194,788 | ||||||
| Accumulated deficit | (53,696,968 | ) | (54,591,956 | ) | ||||
| Total stockholders’ equity | 13,725,192 | 12,699,774 | ||||||
| Total liabilities and stockholders’ equity | $ | 22,284,411 | $ | 23,581,618 | ||||
| WidePoint Corporation | Page 4 of 6 |
WIDEPOINT CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2009 |
2008 |
2009 |
2008 | |||||||||||
| (unaudited) | ||||||||||||||
| Revenues, net | $ | 11,378,793 | $ | 8,878,431 | $ | 31,906,457 | $ | 25,293,069 | ||||||
| Cost of sales (including amortization and | ||||||||||||||
| depreciation of $245,876, $261,134, $731,767, and | 8,704,275 | 7,381,674 | 24,986,779 | 21,075,234 | ||||||||||
| $701,739, respectively) | ||||||||||||||
Gross profit | 2,674,518 | 1,496,757 | 6,919,678 | 4,217,835 | ||||||||||
Sales and marketing | 333,130 | 262,970 | 827,913 | 675,501 | ||||||||||
| General & administrative (including share-based | ||||||||||||||
| compensation expense of $20,093, $51,253, | ||||||||||||||
| $125,680 and $527,333, respectively) | 1,711,688 | 1,484,878 | 4,824,670 | 4,642,526 | ||||||||||
| Depreciation expense | 46,887 | 41,171 | 130,999 | 117,204 | ||||||||||
Income (loss) from operations | 582,813 | (292,262 | ) | 1,136,096 | (1,217,396 | ) | ||||||||
Interest income | 3,548 | 33,713 | 22,287 | 105,773 | ||||||||||
| Interest expense | (31,678 | ) | (76,019 | ) | (145,678 | ) | (262,146 | ) | ||||||
| Other expense | (49 | ) | -- | (49 | ) | (1,698 | ) | |||||||
Net income (loss) before income tax | $ | 554,634 | $ | (334,568 | ) | $ | 1,012,656 | $ | (1,375,467 | ) | ||||
| Deferred income tax expense | 39,223 | -- | 117,668 | -- | ||||||||||
Net income (loss) | $ | 515,411 | $ | (334,568 | ) | $ | 894,988 | $ | (1,375,467 | ) | ||||
Basic earnings (loss) per share | $ | 0.009 | $ | (0.006 | ) | $ | 0.015 | $ | (0.024 | ) | ||||
| Basic weighted average shares outstanding | 60,348,616 | 58,090,697 | 58,990,406 | 56,197,675 | ||||||||||
| Diluted earnings (loss) per share | $ | 0.008 | $ | (0.006 | ) | $ | 0.015 | $ | (0.024 | ) | ||||
| Diluted weighted average shares outstanding | 62,063,726 | 58,090,697 | 61,440,208 | 56,197,675 | ||||||||||
| WidePoint Corporation | Page 5 of 6 |
WIDEPOINT CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2009 |
2008 |
2009 |
2008 | |||||||||||
| (unaudited) | ||||||||||||||
| Cash flows from operating activities: | ||||||||||||||
Net income (loss) | $ | 515,411 | $ | (334,568 | ) | $ | 894,988 | $ | (1,375,467 | ) | ||||
| Adjustments to reconcile net income (loss) to net | ||||||||||||||
| cash provided by operating activities: | ||||||||||||||
| Deferred income tax expense | 39,223 | -- | 117,668 | -- | ||||||||||
| Depreciation expense | 63,879 | 55,421 | 176,112 | 158,085 | ||||||||||
| Amortization | 228,884 | 246,884 | 686,654 | 660,859 | ||||||||||
| Amortization of deferred financing costs | 2,912 | 2,143 | 6,665 | 6,429 | ||||||||||
| Share-based compensation expense | 20,093 | 51,253 | 126,680 | 527,333 | ||||||||||
| Loss (gain) on disposal of equipment | 49 | -- | 49 | (2,378 | ) | |||||||||
Changes in assets and liabilities (net of business | ||||||||||||||
| combinations): | ||||||||||||||
| Accounts receivable and unbilled accounts receivable | (477,688 | ) | 1,198,275 | (345,903 | ) | 3,262,334 | ||||||||
| Prepaid expenses and other current assets | (89,692 | ) | 259,656 | (99,752 | ) | 74,553 | ||||||||
| Other assets | (2,948 | ) | 6,885 | 12,534 | (43,838 | ) | ||||||||
| Accounts payable and accrued expenses | 618,603 | (946,744 | ) | 817,045 | (398,515 | ) | ||||||||
| Deferred revenue | (277,411 | ) | 1,817,380 | (704,362 | ) | 1,791,265 | ||||||||
| Net cash (used in) provided by operating | ||||||||||||||
| activities | 641,315 | 2,356,585 | 1,688,558 | 4,660,660 | ||||||||||
Cashflows from investing activities: | ||||||||||||||
| Purchase of asset/subsidiary, net of cash acquired | 17,109 | (5,878 | ) | 13,627 | (4,907,623 | ) | ||||||||
| Purchase of property and equipment | (111,549 | ) | (9,948 | ) | (189,347 | ) | (73,534 | ) | ||||||
| Software development costs | (14,078 | ) | -- | (26,530 | ) | -- | ||||||||
| Net cash used in investing activities | (108,518 | ) | (15,826 | ) | (202,250 | ) | (4,981,157 | ) | ||||||
Cashflows from financing activities: | ||||||||||||||
| Borrowings on notes payable | -- | -- | 400,737 | 3,800,000 | ||||||||||
| Principal payments on notes payable | (156,290 | ) | (123,358 | ) | (2,867,593 | ) | (2,168,298 | ) | ||||||
| Principal payments under capital lease | ||||||||||||||
| Obligation | (29,410 | ) | (29,842 | ) | (86,120 | ) | (87,823 | ) | ||||||
| Proceeds from exercise of stock options | -- | -- | 3,750 | 14,400 | ||||||||||
| Proceeds from issuance of stock | -- | -- | -- | 4,080,000 | ||||||||||
| Costs related to issuance of stock | -- | -- | -- | (140,298 | ) | |||||||||
| Costs related to renewal fee for line of credit | -- | -- | (12,000 | ) | -- | |||||||||
| Costs related to financing purchase of | ||||||||||||||
| Subsidiary | -- | -- | -- | (13,713 | ) | |||||||||
| Net cash (used in) provided by | ||||||||||||||
| financing activities | (185,700 | ) | (153,200 | ) | (2,561,226 | ) | 5,484,268 | |||||||
Net increase (decrease) in cash and cash equivalents | $ | 347,097 | $ | 2,187,559 | $ | (1,074,918 | ) | $ | 5,163,771 | |||||
Cash and cash equivalents, beginning of period | 2,953,411 | 4,808,203 | 4,375,426 | 1,831,991 | ||||||||||
Cash and cash equivalents, end of period | $ | 3,300,508 | $ | 6,995,762 | $ | 3,300,508 | $ | 6,995,762 | ||||||
Non-cash investing activities: | ||||||||||||||
| Capital leases for acquisition of property and | ||||||||||||||
| Equipment | $ | 94,402 | $ | -- | $ | 94,402 | $ | -- | ||||||
Non-cash financing activities: | ||||||||||||||
| Promissory Note issued for iSYS acquisition | ||||||||||||||
| $ | -- | $ | -- | $ | -- | $ | 2,000,000 | |||||||
| Liabilities incurred but not yet paid relating to | ||||||||||||||
| stock issuance | -- | -- | -- | 41,949 | ||||||||||
| Value of 1.5 million common shares issued as | ||||||||||||||
| consideration in the acquisition of iSYS | -- | -- | -- | 1,800,000 | ||||||||||
Supplemental cash flow information: | ||||||||||||||
| Cash paid for interest | $ | 29,523 | $ | 28,529 | $ | 293,498 | $ | 110,322 | ||||||
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