SOURCE: WidePoint Corporation

August 09, 2007 14:00 ET

WidePoint Reports Second Quarter '07 Results

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

FAIRFAX, VA--(Marketwire - August 9, 2007) - WidePoint Corporation (AMEX: WYY), a leading provider of information technology assurance and identity management services, today announced financial results for the second quarter ended June 30, 2007.

The company reported total revenue of $3,289,000 for the second quarter of 2007, including revenue from the Public Key Infrastructure (PKI) credentialing and managed services segment, which increased 488% for the quarter, from $201,000 in second quarter of 2006 to $1,186,000 for the second quarter of 2007. Second quarter total revenue of $3,289,000 compared to revenue of $4,842,000 million in the year ago period. The consulting services segment witnessed a decrease in revenues from $4,640,000 in the second quarter of 2006 to $2,104,000 in the second quarter of 2007 due primarily to a non-recurring software resale of approximately $1.5 million that occurred during the comparable year ago period.

Gross profit margins for the quarter increased to 33% from 17% in the comparable period, due primarily to greater margins associated with the company's PKI and managed services segment. Net loss for the quarter was approximately $1,000, or $0.00 per share, compared with a net loss of $230,000, or $0.01 per share, in the year ago period.

Second quarter 2007 highlights include:

--  The 488% increase in PKI revenues represented an absolute increase of
    $985,000 over the comparable period, driving an improvement in segment
    operating income from a loss of $103,000 in the second quarter of 2006 to
    an operating gain of $366,000 in the current period.  Assets in the PKI
    segment grew 81% on a year over year basis, from $1,001,000 to $1,817,000.
    
--  Growth margin expansion from 16.8% a year ago to 33.4% for the current
    quarter represented an increase in gross profit of $283,000 and included
    depreciation and amortization expense in the company's cost of goods sold.
    Adjusted for those non-cash expenses, gross margins improved from 18.9% a
    year ago to 36.7%, or $291,000 total, in the second quarter of 2007.
    
--  WidePoint realized cash from operating activities for the quarter of
    $730,000 and increased its total net total cash flow for the quarter to
    $553,000. The company ended the period with working capital of
    approximately $3.5 million and cash and equivalents of approximately $3.3
    million.
    
--  The company self-funded investments of $170,000 for internal equipment
    purchases and software development cost during the quarter allowing for a
    pending approval for an additional three-year Authorization to Operate
    (ATO) for the General Service Administration's ACES (Access Certificates
    for Electronic Services) program and expansion of its core PKI
    capabilities.
    
--  United Space Alliance, LLC, selected WidePoint subsidiary ORC's
    PIVotal ID© solution to implement an enterprise-wide Smart ID Badge
    solution. The scope includes a cradle-to-grave turnkey solution from card
    request to card termination. The chosen solution complies with Homeland
    Security Presidential Directive(HSPD-12), Federal Information Processing
    Standards Publication Series 201 (FIPS 201) and Personal Identification
    Verification (PIV II) requirements and regulations.
    

Steve Komar, CEO of WidePoint, stated, "During the quarter we expanded our PKI managed service business with the addition of the United Space Alliance contract and the expansion of work with several of our existing business partners. Through these relationships we continue to leverage our historical expertise and fully compliant solution designation to issue certificates for the U.S. Government. The expansion of our credentialing and managed services business remains among our highest growth priorities over the next few years."

WidePoint CFO Jim McCubbin said, "We were pleased with our revenue growth in the PKI and managed services segment and we are actively pursuing several initiatives which should continue to accelerate our growth within the identity management and information assurance markets."

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

To participate, call (866) 328-4270 any time after 4:20 p.m. Eastern Time on August 9. International callers should dial (480) 629-9561. 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

Consolidated Balance Sheets                       June 30,    December 31,
                                                    2007          2006
Assets                                          (unaudited)
Current assets:
   Cash and cash equivalents                    $  3,294,696  $  2,774,813
   Accounts receivable                             2,813,371     6,220,444
   Prepaid expenses and other assets                 460,386       463,369
                                                ------------  ------------
         Total current assets                      6,568,453     9,458,626
                                                ------------  ------------
Property and equipment, net                          295,170       205,231
Goodwill                                           2,526,110     2,526,110
Intangibles, net.                                  1,219,806     1,358,212
Other assets                                          57,411        56,192
                                                ------------  ------------
         Total assets                           $ 10,666,950  $ 13,604,371
                                                ============  ============

Liabilities and stockholders' equity
Current liabilities:
   Accounts payable                             $  1,600,277  $  4,364,747
   Accrued expenses                                  975,036       786,842
   Deferred revenue.                                 471,833       564,594
   Short-term portion of deferred rent                   452         3,057
   Short-term portion of capital lease
    obligation                                        52,178        45,020
                                                ------------  ------------
         Total current liabilities                 3,099,776     5,764,260
                                                ------------  ------------
Long-term portion of deferred
 rent                                                      -             -
Capital lease obligation, net of current
 portion                                              51,926        67,851
                                                ------------  ------------
        Total liabilities                          3,151,702     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,
    liquidation value $3,416,245                           -           195
   Common stock, $0.001 par value; 110,000,000
    shares authorized; 52,558,699 shares and
    50,494,759 shares issued and outstanding,
    respectively                                      52,559        50,495
   Stock warrants                                     38,666        38,666
   Additional paid-in capital                     60,785,220    60,667,229
   Accumulated deficit                           (53,361,197)  (52,984,325)
                                                ------------  ------------
         Total stockholders' equity                7,515,248     7,772,260
                                                ------------  ------------
         Total liabilities, temporary equity
          and stockholders' equity              $ 10,666,950  $ 13,604,371
                                                ============  ============


                  WIDEPOINT CORPORATION AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                           Three Months Ended         Six Months Ended
                                June 30,                  June 30,
                        ------------------------  ------------------------
                            2007         2006         2007         2006
                        -----------  -----------  -----------  -----------
                                            (unaudited)
Revenues, net           $ 3,289,109  $ 4,841,860  $ 6,141,479  $ 7,525,766
Cost of sales
 (including
 amortization and
 depreciation of
 $110,069, $102,126,
 $220,118, and
 $203,963,
 respectively)            2,191,798    4,027,975    4,388,633    5,994,956
                        -----------  -----------  -----------  -----------

  Gross profit            1,097,311      813,885    1,752,846    1,530,810

Sales and marketing         243,166      208,963      446,609      413,391
General &
 administrative             860,886      847,898    1,702,061    1,628,352
Depreciation expense         21,624        6,749       37,174       13,725
                        -----------  -----------  -----------  -----------

  Loss from
   operations               (28,365)    (249,725)    (432,998)    (524,658)

Interest income              30,160       20,416       61,998       38,765
Interest expense             (2,567)        (375)      (5,872)      (1,971)
                        -----------  -----------  -----------  -----------

Net loss before
 income tax             $      (772) $  (229,684) $  (376,872) $  (487,864)
Income tax benefit, net           -          (83)           -          (83)
                        -----------  -----------  -----------  -----------

Net loss                $      (772) $  (229,601) $  (376,872) $  (487,781)
                        ===========  ===========  ===========  ===========

Basic and diluted net
 loss per share         $     (0.00) $     (0.01) $     (0.01) $     (0.01)
                        ===========  ===========  ===========  ===========
Basic and diluted
 weighted average
 shares outstanding      52,543,028   44,850,655   52,242,109   42,385,968
                        ===========  ===========  ===========  ===========


                  WIDEPOINT CORPORATION AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Net loss                $      (772) $  (229,601) $  (376,872) $  (487,781)
Adjustments to
 reconcile net loss to
 net cash provided by
 operating activities:
  Depreciation expense       30,586        7,768       55,077       15,474
  Amortization expense      101,108      101,107      202,215      202,214
  Stock compensation
   expense                        -       17,844            -       23,469
  Stock options expense      22,687       92,329       86,663      153,392

Changes in assets and
 liabilities
  Accounts receivable       479,775   (1,417,917)   3,407,073     (716,055)
  Prepaid expenses and
   other current assets      92,998     (125,088)       2,983      (78,433)
  Other assets               (1,219)         169       (1,219)      35,753
  Accounts payable and
   accrued expenses           4,581    2,007,739   (2,643,435)     981,771
                        -----------  -----------  -----------  -----------
    Net cash provided
     by operating
     activities         $   729,744  $   454,350  $   732,485  $   129,804
                        -----------  -----------  -----------  -----------

Cash flows from
 investing activities:
  Purchase of property
   and equipment           (106,241)      (4,622)    (128,630)     (15,197)
  Software development
   costs                    (63,809)           -      (63,809)           -
                        -----------  -----------  -----------  -----------
    Net cash used in
     investing
     activities         $  (170,050) $    (4,622) $  (192,439) $   (15,197)
                        -----------  -----------  -----------  -----------

Cash flows from
 financing activities:
  Principal payments
   under capital lease
   obligation               (13,677)           -      (25,153)           -
  Costs related to
   registration
   statement                 (1,513)    (118,054)     (29,720)    (331,747)
  Proceeds from exercise
   of stock options           8,600       62,550       34,710      144,043
  Proceeds from exercise
   of warrants                    -       24,571            -       44,571
  Costs related to
   warrant exercise               -            -            -     (166,600)
                        -----------  -----------  -----------  -----------
    Net cash used in
     financing
     activities         $    (6,590) $   (30,933) $   (20,163) $  (309,733)
                        -----------  -----------  -----------  -----------

Net increase (decrease)
 in cash                $   553,104  $   418,795  $   519,883  $  (195,126)
                        -----------  -----------  -----------  -----------

Cash and cash
 equivalents, beginning
 of period              $ 2,741,592  $ 1,912,714  $ 2,774,813  $ 2,526,635
                        -----------  -----------  -----------  -----------

Cash and cash
 equivalents, end of
 period                 $ 3,294,696  $ 2,331,509  $ 3,294,696  $ 2,331,509
                        ===========  ===========  ===========  ===========

Supplementary
 Information:
  Liabilities incurred
   but not yet paid
   relating to
   Registration
   statement            $         -  $    52,755  $         -  $    84,438
  Non-cash investing
   and financing
   activity -
  capital leases for
   acquisition of
   property and
   equipment                 16,386            -       16,386            -
Cash paid for interest  $     2,567  $         -  $     5,872  $         -

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