SOURCE: WidePoint Corporation

November 12, 2007 09:13 ET

WidePoint Announces Financial Results for Q3

Conference Call Scheduled for 4:30 p.m. EST Today

FAIRFAX, VA--(Marketwire - November 12, 2007) - WidePoint Corporation (AMEX: WYY), a leading provider of information technology assurance and identity management services, today announced financial results for the third quarter ended September 30, 2007.

The company reported total revenue of $4,005,000 for the quarter, an increase of 24.8% from revenue of $3,208,000 in the third quarter of 2006. Revenue in the company's Public Key Infrastructure (PKI) credentialing and managed services segment increased 437% from $245,000 in Q3 '06 to $1,315,000 in Q3 '07. For the nine months ending September 30, 2007, PKI and managed services segment revenue increased 320% to $2,810,000 from $669,000 in the year ago period primarily as a result of federal mandates to roll out credential programs to various agencies and contractors.

Third quarter 2007 highlights include:

--  WidePoint recorded its first profitable quarter during the period,
    earning $178,000 or $0.003 per diluted share, compared with a net loss of
    $192,000 a year ago.
    
--  The 437% increase in PKI revenues represented an absolute increase of
    $2,141,000 over the prior year  period, driving an improvement in total
    operating income from a loss of $221,000 in the third quarter of 2006 to an
    operating gain of $159,000 in the current period. Excluding depreciation
    and amortization expenses, operating income for the current quarter was
    $294,000.
    
--  The company realized strong sequential growth from the second to third
    quarter of 2007.  Although the consulting services segment realized a
    slight decline in the top line during the quarter on a year over year basis
    due to delays in sourcing qualified personnel, revenues for the segment
    increased 28% from the prior quarter.  The PKI and managed services segment
    realized 11% growth versus the prior quarter.
    
--  Potential backlog for the quarter increased by more than $28 million.
    WidePoint was awarded a number of multi-year contracts during the quarter,
    including agreements with Lockheed Martin and the Department of Commerce.
    The company also began offering its identity management and information
    assurance solutions to the State of California, won two federal follow-on
    awards and secured seven contract extension options.
    
--  WidePoint ended the period with working capital of approximately $3.7
    million and cash and equivalents of approximately $2.9 million.
    

Steve Komar, CEO of WidePoint, stated, "We continued to execute well in our PKI and managed services business during the third quarter. Our backlog expanded as we secured several new contracts, including a contract with Lockheed Martin and its Transportation Worker's team utilizing ORC's core technology. We continue to pursue numerous high-profile identity management and information assurance initiatives in the federal sector and we are laying the strategic groundwork to expand our core capabilities into several emerging state and commercial opportunities."

WidePoint CFO Jim McCubbin said, "We are pleased to report that during the quarter we witnessed continuing growth in our PKI and managed services business. This growth led to the improvements we realized in increases in our gross margins and our profitability, along with the expansion of our working capital and backlog. As we continue to grow our operations, while making the necessary capital investments in our business, we believe we can chart a course that will both secure and expand a leadership role for WidePoint within our early stage industry."

WidePoint will hold a conference call with CEO Steve Komar and senior members of the management team today at 4:30 p.m. Eastern Standard Time. The call will cover the company's third quarter results. Komar will open the call and a question-and-answer session will follow.

To participate, call (866) 225-8754 any time after 4:20 p.m. Eastern Time on November 12. International callers should dial (480) 629-9564. While in conference, if callers should experience any difficulty or require operator assistance, they can press the (*) followed by the (0) button. This will call an operator to the line.

About WidePoint

WidePoint is a leading provider of information technology assurance and identity management services to the government sector and commercial markets. WidePoint specializes in providing systems engineering, integration and information technology services. WidePoint's wholly owned subsidiary, ORC, is at the forefront of implementing government-compliant eAuthentication identity management managed services and associated systems engineering and integration. ORC has earned four major U.S. federal government certifications offering the highest levels of assurance for transactions over the Internet.

WidePoint's portfolio of customers encompasses U.S. Federal Government agencies, including the Department of Defense, the Department of Homeland Security and the Department of Justice as well as major U.S. defense contractors and several major pharmaceutical companies. For more information, visit http://www.widepoint.com.

An investment profile about WidePoint may be found at http://www.hawkassociates.com/wyyprofile.aspx.

For investor relations information regarding WidePoint, visit http://www.hawkassociates.com and http://www.americanmicrocaps.com, or contact Frank Hawkins or Cale Smith, Hawk Associates, at (305) 451-1888, e-mail: info@hawkassociates.com. To receive these releases via e-mail, subscribe at http://www.hawkassociates.com/email.aspx.

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.

                  WIDEPOINT CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS


                                                 Sep 30,         Dec 31,
                                                  2007            2006
                                                ------------  ------------
Assets                                                 (unaudited)
Current assets:
  Cash and cash equivalents                    $  2,861,982  $  2,774,813
  Accounts receivable                             3,682,709     6,220,444
  Prepaid expenses and other assets                 323,591       463,369
                                                ------------  ------------
    Total current assets                           6,868,282     9,458,626
                                                ------------  ------------
Property and equipment, net                          267,728       205,231
Goodwill                                           2,526,110     2,526,110
Intangibles, net                                   1,118,699     1,358,212
Other assets                                         106,947        56,192
                                                ------------  ------------
    Total assets                                $ 10,887,766  $ 13,604,371
                                                ============  ============

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                              $  1,987,008  $  4,364,747
  Accrued expenses                                   909,348       786,842
  Deferred revenue                                   175,730       564,594
  Short-term portion of deferred rent                      -         3,057
  Short-term portion of capital lease
   obligation                                         52,725        45,020
                                                ------------  ------------
    Total current liabilities                      3,124,811     5,764,260
                                                ------------  ------------
Long-term portion of deferred
 rent                                                      -             -
Capital lease obligation, net of current
 portion                                              38,360        67,851
                                                ------------  ------------
    Total liabilities                              3,163,171     5,832,111

Stockholders' equity:

  Preferred stock, $0.001 par value;
   10,000,000 shares authorized; 0 and
   195,214 shares issued and outstanding,
   respectively                                            -           195
  Common stock, $0.001 par value; 110,000,000
   shares authorized; 52,558,699 and
   50,494,759 shares issued and outstanding,
   respectively                                       52,559        50,495
  Stock warrants                                      38,666        38,666
  Additional paid-in capital                      60,816,310    60,667,229
  Accumulated deficit                            (53,182,940)  (52,984,325)
                                                ------------  ------------
    Total stockholders' equity                     7,724,595     7,772,260
                                                ------------  ------------
    Total liabilities and stockholders'
     equity                                     $ 10,887,766  $ 13,604,371
                                                ============  ============




                  WIDEPOINT CORPORATION AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                       Three Months Ended          Nine Months Ended
                          September 30,               September 30,
                    --------------------------  --------------------------
                        2007          2006          2007          2006
                    ------------  ------------  ------------  ------------
                                          (unaudited)
Revenues, net       $  4,005,463  $  3,208,261  $ 10,146,942  $ 10,734,027
Cost of sales
 (including
 amortization and
 depreciation of
 $112,749,
 $102,127,
 $332,867, and
 $306,090,
 respectively)         2,873,643     2,327,930     7,262,276     8,322,886
                    ------------  ------------  ------------  ------------

 Gross profit          1,131,820       880,331     2,884,666     2,411,141

Sales and marketing      239,248       248,730       685,857       662,121
General &
 administrative          710,956       845,311     2,413,017     2,473,663
Depreciation
 expense                  22,599         7,202        59,773        20,927
                    ------------  ------------  ------------  ------------

  Gain (Loss) from
   operations            159,017      (220,912)     (273,981)     (745,570)

Interest income           21,944        29,122        83,942        67,887
Interest expense          (2,704)         (573)       (8,576)       (2,544)
                    ------------  ------------  ------------  ------------

Net gain (loss)
 before income tax  $    178,257  $   (192,363) $   (198,615) $   (680,227)
Income tax benefit,
 net                           -             -             -            83
                    ------------  ------------  ------------  ------------

Net gain (loss)     $    178,257  $   (192,363) $   (198,615) $   (680,144)
                    ============  ============  ============  ============

Basic net gain
 (loss) per share   $      0.003  $     (0.004) $     (0.004) $     (0.015)
                    ============  ============  ============  ============
Basic weighted
 average shares
 outstanding          52,558,699    47,442,123    52,348,799    44,089,874
                    ============  ============  ============  ============
Diluted net gain
 (loss) per share   $      0.003  $     (0.004) $     (0.004) $     (0.015)
                    ============  ============  ============  ============
Diluted weighted
 average shares
 outstanding          57,470,064    47,442,123    52,348,799    44,089,874
                    ============  ============  ============  ============


                  WIDEPOINT CORPORATION AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Three Months Ended      Nine Months Ended
                                September 30,           September 30,
                            ----------------------  ----------------------
                               2007        2006        2007        2006
                            ----------  ----------  ----------  ----------
                                              (unaudited)
Cash flows from operating
 activities:

  Net gain (loss)           $  178,257  $ (192,363) $ (198,615) $ (680,144)
  Adjustments to
   reconcile net loss to
   net cash provided by
   operating activities:
    Depreciation expense        34,241       8,221      89,318      23,695
    Amortization expense       101,107     101,108     303,322     303,322
    Stock compensation
     expense                         -       5,625           -      29,094
    Stock options expense       31,090     112,236     117,753     265,628

  Changes in assets and
   liabilities
    Accounts receivable       (869,338)  1,732,571   2,537,735   1,016,516
    Prepaid expenses
     and other current
     assets                    136,795      67,966     139,778     (10,467)
    Other assets               (49,536)      2,274     (50,755)     38,027
    Accounts payable and
     accrued expenses           24,488  (1,649,235) (2,618,947)   (667,464)
                            ----------  ----------  ----------  ----------
      Net cash provided by
       operating activities $ (412,896) $  188,403  $  319,589  $  318,207
                            ----------  ----------  ----------  ----------

  Cashflows from investing
   activities:
    Purchase of property
     and equipment              (6,799)    (20,665)   (135,429)    (35,862)
    Software development
     costs                           -           -     (63,809)          -
                            ----------  ----------  ----------  ----------
      Net cash used in
       investing activities $   (6,799) $  (20,665) $ (199,238) $  (35,862)
                            ----------  ----------  ----------  ----------

  Cashflows from financing
   activities:
    Principal payments
     under capital lease
     obligation                (13,019)          -     (38,172)          -
    Costs related to
     registration statement          -     (40,786)    (29,720)   (372,533)
    Proceeds from exercise
     of stock options                -      36,288      34,710     180,331
    Proceeds from exercise
     of warrants                     -     160,000           -     204,571
    Costs related to
     warrant exercise                -           -           -    (166,600)
                            ----------  ----------  ----------  ----------
      Net cash (used
       in) provided by
       financing
       activities           $  (13,019) $  155,502  $  (33,182) $ (154,231)
                            ----------  ----------  ----------  ----------

  Net increase (decrease)
   in cash                  $ (432,714) $  323,240  $   87,169  $  128,114
                            ----------  ----------  ----------  ----------

  Cash and cash
   equivalents, beginning
   of period                $3,294,696  $2,331,509  $2,774,813  $2,526,635
                            ----------  ----------  ----------  ----------

  Cash and cash
   equivalents, end of
   period                   $2,861,982  $2,654,749  $2,861,982  $2,654,749
                            ==========  ==========  ==========  ==========

Supplementary Information:
  Liabilities incurred
   but not yet paid
   relating to Registration
   statement                $        -  $   15,570  $        -  $   59,222
  Noncash investing and
   financing activity -
   capital leases for
   acquisition of property
   and equipment                     -           -      16,386           -
  Cash paid for interest    $    2,704  $        -  $    8,576  $        -

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