WidePoint Corp. (WYY, Financial) filed Quarterly Report for the period ended 2009-09-30.
WidePoint is a technology-based provider of products and 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/integration. ORC has earned four major U.S. federal government certifications offering the highest levels of assurance for transactions over the Internet. WidePoint's profile 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. Widepoint Corp. has a market cap of $53.4 million; its shares were traded at around $0.88 with and P/S ratio of 1.51.
Depreciation. Depreciation expense for the three month period ended September 30, 2009, was approximately $47,000 (or less than 1% of revenues), as compared to approximately $41,000 of such expenses (or less than 1% of revenues) recorded by the Company for the three month period ended September 30, 2008. This increase in depreciation expense over those for the three month period ended September 30, 2008, was primarily attributable to greater amounts of 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 raise our depreciation expenses.
Cost of sales. Cost of sales for the nine month period ended September 30, 2009, was approximately $24,987,000 (or 78% of revenues), as compared to cost of sales of approximately $21,075,000 (or 83% of revenues), for the nine month period ended September 30, 2008. 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 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 nine month period. 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.
Depreciation expense. Depreciation expense for the nine month period ended September 30, 2009, was approximately $131,000 (or less than 1% of revenues), as compared to approximately $117,000 (or less than 1% of revenues), recorded by the Company for the nine month period ended September 30, 2008. This increase in depreciation expenses for the nine month period ended September 30, 2009, was primarily attributable to the greater amounts of depreciable assets.
Net cash provided by operating activities for the nine months ended September 30, 2009, was approximately $1.7 million, as compared to cash provided by operating activities of $4.7 million for the nine months ended September 30, 2008. This decrease in cash generated from operating activities for the nine months ended September 30, 2009 was primarily a result of a decrease in unbilled accounts receivable, a reduction in stock compensation expense, decreases in accounts payable and accrued expenses, offset by improvements to net income from a net loss. Net cash used in investing activities for the nine months ended September 30, 2009, was approximately $0.2 million, as compared to $5.0 million used in investing activities for the nine months ended September 30, 2008. The decrease in net cash used in investing activities was primarily attributable to no acquisition activity during the period as compared to the prior period in which we had purchased iSYS. Net cash used in financing activities amounted to approximately $2.6 million in the nine months ended September 30, 2009, as compared to net cash provided by financing activities of approximately $5.5 million in the nine months ended September 30, 2008. This increase in net cash used in financing activities primarily related to the reduction of acquisition indebtedness and our Cardinal Bank loans. 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 September 30, 2009, the Company had a net working capital of approximately $4.2 million. The Company s primary source of liquidity consists of approximately $3.3 million in cash and cash equivalents and approximately $7.9 million of accounts receivable and unbilled accounts receivable. Current liabilities include approximately $5.8 million in accounts payable and accrued expenses. The reduction in Current liabilities for the nine months ended September 30, 2009 was predominately associated with the payment of seller s notes.
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WidePoint is a technology-based provider of products and 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/integration. ORC has earned four major U.S. federal government certifications offering the highest levels of assurance for transactions over the Internet. WidePoint's profile 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. Widepoint Corp. has a market cap of $53.4 million; its shares were traded at around $0.88 with and P/S ratio of 1.51.
Highlight of Business Operations:
Cost of sales. Cost of sales for the three month period ended September 30, 2009, was approximately $8,704,000 (or 76% of revenues), as compared to cost of sales of approximately $7,382,000 (or 83% of revenues), for the three month period ended September 30, 2008. 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.Depreciation. Depreciation expense for the three month period ended September 30, 2009, was approximately $47,000 (or less than 1% of revenues), as compared to approximately $41,000 of such expenses (or less than 1% of revenues) recorded by the Company for the three month period ended September 30, 2008. This increase in depreciation expense over those for the three month period ended September 30, 2008, was primarily attributable to greater amounts of 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 raise our depreciation expenses.
Cost of sales. Cost of sales for the nine month period ended September 30, 2009, was approximately $24,987,000 (or 78% of revenues), as compared to cost of sales of approximately $21,075,000 (or 83% of revenues), for the nine month period ended September 30, 2008. 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 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 nine month period. 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.
Depreciation expense. Depreciation expense for the nine month period ended September 30, 2009, was approximately $131,000 (or less than 1% of revenues), as compared to approximately $117,000 (or less than 1% of revenues), recorded by the Company for the nine month period ended September 30, 2008. This increase in depreciation expenses for the nine month period ended September 30, 2009, was primarily attributable to the greater amounts of depreciable assets.
Net cash provided by operating activities for the nine months ended September 30, 2009, was approximately $1.7 million, as compared to cash provided by operating activities of $4.7 million for the nine months ended September 30, 2008. This decrease in cash generated from operating activities for the nine months ended September 30, 2009 was primarily a result of a decrease in unbilled accounts receivable, a reduction in stock compensation expense, decreases in accounts payable and accrued expenses, offset by improvements to net income from a net loss. Net cash used in investing activities for the nine months ended September 30, 2009, was approximately $0.2 million, as compared to $5.0 million used in investing activities for the nine months ended September 30, 2008. The decrease in net cash used in investing activities was primarily attributable to no acquisition activity during the period as compared to the prior period in which we had purchased iSYS. Net cash used in financing activities amounted to approximately $2.6 million in the nine months ended September 30, 2009, as compared to net cash provided by financing activities of approximately $5.5 million in the nine months ended September 30, 2008. This increase in net cash used in financing activities primarily related to the reduction of acquisition indebtedness and our Cardinal Bank loans. 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 September 30, 2009, the Company had a net working capital of approximately $4.2 million. The Company s primary source of liquidity consists of approximately $3.3 million in cash and cash equivalents and approximately $7.9 million of accounts receivable and unbilled accounts receivable. Current liabilities include approximately $5.8 million in accounts payable and accrued expenses. The reduction in Current liabilities for the nine months ended September 30, 2009 was predominately associated with the payment of seller s notes.
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