WidePoint Corp. (WYY, Financial) filed Quarterly Report for the period ended 2010-03-31.
Widepoint Corp. has a market cap of $56.44 million; its shares were traded at around $0.93 with a P/E ratio of 46.5 and P/S ratio of 1.3.
Gross profit. Gross profit for the three month period ended March 31, 2010 was approximately $2.6 million (or 23% of revenues), as compared to gross profit of approximately $2.0 million (or 20% of revenues), for the three month period ended March 31, 2009. The percentage of gross profit was higher in the first quarter of 2010 as compared to the first quarter of 2009 as a result of higher margins associated with improved economies of scale in our MTEM and PKI segments and a greater mix of higher margin direct consulting services as compared to lower margin software reselling in our consulting services segment. We anticipate gross profit as a percentage of revenues should increase as cost of sales as a percentage of revenues decreases due to a greater mix of higher margin services. We believe as revenues expand in the future there will be periods of variability in margin growth associated with changes in our product mix.
General and administrative. General and administrative expenses for the three month period ended March 31, 2010, were approximately $1.8 million (or 16% of revenues), as compared to approximately $1.5 million (or 15% of revenues) recorded by the Company for the three month period ended March 31, 2009. This increase in general and administrative expenses over those for the three months ended March 31, 2009, was primarily attributable to increases in general and administrative costs as we added a new subsidiary Advanced Response Concepts that added to our general and administrative expense base, along with a one time increase in legal expenses associated with the purchase of the assets of the government business of Vuance, Inc., which we are operating as Advanced Response Concepts. We anticipate that our general and administrative costs in absolute dollars may rise slightly in the future as our support costs rise to facilitate our expectations of a greater revenue base as we continue our efforts to comply with pending additional financial compliance requirements. We believe that our general and administrative costs on a percentage of revenue basis will level out or decrease in future financial reporting periods.
Depreciation. Depreciation expense for the three month period ended March 31, 2010, was approximately $50,000 (or less than 1% of revenues), as compared to approximately $43,000 of such expenses (or less than 1% of revenues) recorded by the Company for the three month period ended March 31, 2009. This increase in depreciation expense over those for the three month period ended March 31, 2009, was primarily attributable to recent acquisitions of additional depreciable assets. We do not anticipate any material changes within depreciation expense in the short-term. However, as our revenue base increases within our MTEM and PKI segments, there may be a need from time to time to increase the purchase of equipment in support of new revenue streams that may then raise our depreciation expenses.
Net cash used in operating activities for the three months ended March 31, 2010, was approximately $2.3 million, as compared to cash provided by operating activities of $2.2 million for the three months ended March 31, 2009. This decrease in cash generated and increase in cash used in from operating activities for the three months ended March 31, 2010 was primarily a result of a decrease in accounts payable and accrued expenses as a result of an acceleration of vendor payments during the first quarter of 2010. Net cash used in investing activities for the three months ended March 31, 2010, was approximately $395,000, as compared to $19,000 in cash used in investing activities for the three months ended March 31, 2009. The increase in net cash used in investing activities was primarily attributable to the asset acquisition of the government business assets of Vuance, Inc. by the Company. Net cash used in financing activities amounted to approximately $203,000 in the three months ended March 31, 2010, as compared to net cash used in financing activities of approximately $2.2 million in the three months ended March 31, 2009. This decrease in net cash used in financing activities primarily related to the reduction of acquisition indebtedness during the first quarter ended March 31, 2010 as compared to the first quarter of March 31, 2009 in which we paid down the remaining amounts of the Sellers Note issued to Jin Kang, a related party of the Company and the former owner and current officer of iSYS, LLC, in connection with our acquisition of iSYS, LLC. As a result of the Company s capital raising in 2008 and profitability in 2009, the Company has had excess liquidity to absorb the pay-down of short-term and long-term debt, while still maintaining sufficient levels of capital resources to fund operations.
As of March 31, 2010, the Company had a net working capital of approximately $3.7 million. The Company s primary source of liquidity consists of approximately $3.3 million in cash and cash equivalents and approximately $8.5 million of accounts receivable and unbilled accounts receivable. Current liabilities include approximately $7.2 million in accounts payable and accrued expenses. The reduction in current liabilities for the three months ended March 31, 2010 was predominately associated with the reduction of accounts payable and accrued liabilities as a result of the acceleration of vendor invoices during the first quarter of 2010.
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Widepoint Corp. has a market cap of $56.44 million; its shares were traded at around $0.93 with a P/E ratio of 46.5 and P/S ratio of 1.3.
Highlight of Business Operations:
Cost of sales. Cost of sales for the three month period ended March 31, 2010, was approximately $8.6 million (or 77% of revenues), as compared to cost of sales of approximately $8.1 million (or 80% of revenues), for the three month period ended March 31, 2009. This absolute increase in cost of sales was primarily attributable to an increase in revenues. The decrease in our cost of sales as a percentage of revenues was primarily attributable to margin improvements in all three of our segments. Our MTEM and PKI segments realized greater margins from the benefit of economies of scale with our direct costs centers realizing greater efficiencies. Our consulting services segment realized greater margins as a result of a larger mix of higher margin consulting services, versus a lesser amount of lower margin software reselling that was realized during the quarter. We anticipate improvements in our costs of sales on a percentage basis as our MTEM and PKI segments add economies of scale, which may be partially offset at times by the fluctuation in our consulting services segment revenue mix.Gross profit. Gross profit for the three month period ended March 31, 2010 was approximately $2.6 million (or 23% of revenues), as compared to gross profit of approximately $2.0 million (or 20% of revenues), for the three month period ended March 31, 2009. The percentage of gross profit was higher in the first quarter of 2010 as compared to the first quarter of 2009 as a result of higher margins associated with improved economies of scale in our MTEM and PKI segments and a greater mix of higher margin direct consulting services as compared to lower margin software reselling in our consulting services segment. We anticipate gross profit as a percentage of revenues should increase as cost of sales as a percentage of revenues decreases due to a greater mix of higher margin services. We believe as revenues expand in the future there will be periods of variability in margin growth associated with changes in our product mix.
General and administrative. General and administrative expenses for the three month period ended March 31, 2010, were approximately $1.8 million (or 16% of revenues), as compared to approximately $1.5 million (or 15% of revenues) recorded by the Company for the three month period ended March 31, 2009. This increase in general and administrative expenses over those for the three months ended March 31, 2009, was primarily attributable to increases in general and administrative costs as we added a new subsidiary Advanced Response Concepts that added to our general and administrative expense base, along with a one time increase in legal expenses associated with the purchase of the assets of the government business of Vuance, Inc., which we are operating as Advanced Response Concepts. We anticipate that our general and administrative costs in absolute dollars may rise slightly in the future as our support costs rise to facilitate our expectations of a greater revenue base as we continue our efforts to comply with pending additional financial compliance requirements. We believe that our general and administrative costs on a percentage of revenue basis will level out or decrease in future financial reporting periods.
Depreciation. Depreciation expense for the three month period ended March 31, 2010, was approximately $50,000 (or less than 1% of revenues), as compared to approximately $43,000 of such expenses (or less than 1% of revenues) recorded by the Company for the three month period ended March 31, 2009. This increase in depreciation expense over those for the three month period ended March 31, 2009, was primarily attributable to recent acquisitions of additional depreciable assets. We do not anticipate any material changes within depreciation expense in the short-term. However, as our revenue base increases within our MTEM and PKI segments, there may be a need from time to time to increase the purchase of equipment in support of new revenue streams that may then raise our depreciation expenses.
Net cash used in operating activities for the three months ended March 31, 2010, was approximately $2.3 million, as compared to cash provided by operating activities of $2.2 million for the three months ended March 31, 2009. This decrease in cash generated and increase in cash used in from operating activities for the three months ended March 31, 2010 was primarily a result of a decrease in accounts payable and accrued expenses as a result of an acceleration of vendor payments during the first quarter of 2010. Net cash used in investing activities for the three months ended March 31, 2010, was approximately $395,000, as compared to $19,000 in cash used in investing activities for the three months ended March 31, 2009. The increase in net cash used in investing activities was primarily attributable to the asset acquisition of the government business assets of Vuance, Inc. by the Company. Net cash used in financing activities amounted to approximately $203,000 in the three months ended March 31, 2010, as compared to net cash used in financing activities of approximately $2.2 million in the three months ended March 31, 2009. This decrease in net cash used in financing activities primarily related to the reduction of acquisition indebtedness during the first quarter ended March 31, 2010 as compared to the first quarter of March 31, 2009 in which we paid down the remaining amounts of the Sellers Note issued to Jin Kang, a related party of the Company and the former owner and current officer of iSYS, LLC, in connection with our acquisition of iSYS, LLC. As a result of the Company s capital raising in 2008 and profitability in 2009, the Company has had excess liquidity to absorb the pay-down of short-term and long-term debt, while still maintaining sufficient levels of capital resources to fund operations.
As of March 31, 2010, the Company had a net working capital of approximately $3.7 million. The Company s primary source of liquidity consists of approximately $3.3 million in cash and cash equivalents and approximately $8.5 million of accounts receivable and unbilled accounts receivable. Current liabilities include approximately $7.2 million in accounts payable and accrued expenses. The reduction in current liabilities for the three months ended March 31, 2010 was predominately associated with the reduction of accounts payable and accrued liabilities as a result of the acceleration of vendor invoices during the first quarter of 2010.
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