Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 08, 2023 | |
Cover [Abstract] | ||
Entity Registrant Name | WidePoint Corporation | |
Entity Central Index Key | 0001034760 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2023 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Entity Common Stock Shares Outstanding | 8,785,616 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-33035 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 52-2040275 | |
Entity Address Address Line 1 | 11250 Waples Mill Road | |
Entity Address Address Line 2 | South Tower 210 | |
Entity Address City Or Town | Fairfax | |
Entity Address State Or Province | VA | |
Entity Address Postal Zip Code | 22030 | |
City Area Code | 703 | |
Local Phone Number | 349-2577 | |
Security 12b Title | Common Stock, $0.001 par value per share | |
Trading Symbol | WYY | |
Security Exchange Name | NYSE | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||
REVENUES | $ 25,273,681 | $ 22,436,427 |
COST OF REVENUES (including amortization and depreciation of $502,560 and $287,518, respectively) | 21,463,741 | 18,539,702 |
GROSS PROFIT | 3,809,940 | 3,896,725 |
OPERATING EXPENSES | ||
Sales and marketing | 521,678 | 575,169 |
General and administrative expenses (including share-based compensation of $140,116 and $179,741, respectively) | 3,910,820 | 3,745,229 |
Depreciation and amortization | 265,843 | 264,361 |
Total operating expenses | 4,698,341 | 4,584,759 |
LOSS FROM OPERATIONS | (888,401) | (688,034) |
OTHER INCOME (EXPENSE) | ||
Interest income | 2,196 | 6,570 |
Interest expense | (58,778) | (63,521) |
Other (expense) income, net | (194) | 301,013 |
Total other income (expense), net | (56,776) | 244,062 |
LOSS BEFORE INCOME TAX PROVISION (BENEFIT) | (945,177) | (443,972) |
INCOME TAX PROVISION (BENEFIT) | 6,302 | (51,075) |
NET LOSS | $ (951,479) | $ (392,897) |
EARNINGS PER SHARE, BASIC AND DILUTED | $ (0.11) | $ (0.04) |
WEIGHTED-AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED | 8,739,317 | 8,782,452 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||
COST OF REVENUES , Depreciation and Amortization | $ 502,560 | $ 287,518 |
Share-Based Compensation Expense | $ 140,116 | $ 179,741 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) | ||
NET LOSS | $ (951,479) | $ (392,897) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments, net of tax | 37,248 | (4,835) |
Other comprehensive income (loss) | 37,248 | (4,835) |
COMPREHENSIVE LOSS | $ (914,231) | $ (397,732) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
CURRENT ASSETS | ||
Cash | $ 4,577,963 | $ 7,530,864 |
Accounts receivable, net of allowance for credit losses of $72,271 and $51,666 in 2023 and 2022, respectively | 10,202,272 | 9,277,109 |
Unbilled accounts receivable | 11,843,638 | 10,244,101 |
Other current assets | 939,187 | 935,978 |
Total current assets | 27,563,060 | 27,988,052 |
NONCURRENT ASSETS | ||
Property and equipment, net | 978,633 | 978,218 |
Lease right of use asset, net | 4,556,571 | 4,723,899 |
Intangible assets, net | 7,179,206 | 7,398,160 |
Goodwill | 5,811,578 | 5,811,578 |
Deferred tax assets, net | 88,360 | 86,909 |
Other long-term assets | 2,211,695 | 2,025,845 |
Total assets | 48,389,103 | 49,012,661 |
CURRENT LIABILITIES | ||
Accounts payable | 13,584,437 | 12,515,081 |
Accrued expenses | 10,652,753 | 11,327,269 |
Deferred revenue | 1,579,040 | 1,704,933 |
Current portion of lease liabilities | 606,055 | 596,529 |
Total current liabilities | 26,422,285 | 26,143,812 |
NONCURRENT LIABILITIES | ||
Lease liabilities, net of current portion | 4,610,296 | 4,745,909 |
Contingent consideration | 6,900 | 6,900 |
Deferred revenue, net of current portion | 376,162 | 364,837 |
Total liabilities | 31,415,643 | 31,261,458 |
Commitments and contingencies (Note 16) | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 2,045,714 shares issued and none outstanding | 0 | 0 |
Common stock, $0.001 par value; 30,000,000 shares authorized; 8,739,317 and 8,725,476 shares issued and outstanding, respectively | 8,740 | 8,726 |
Additional paid-in capital | 101,330,659 | 101,194,185 |
Accumulated other comprehensive loss | (312,986) | (350,234) |
Accumulated deficit | (84,052,953) | (83,101,474) |
Total stockholders' equity | 16,973,460 | 17,751,203 |
Total liabilities and stockholders' equity | $ 48,389,103 | $ 49,012,661 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts receivable | $ 72,271 | $ 51,666 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 2,045,714 | 2,045,714 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 8,739,317 | 8,725,476 |
Common stock, shares outstanding | 8,739,317 | 8,725,476 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (951,479) | $ (392,897) |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation expense | 267,309 | 265,185 |
(Recovery) provision for credit losses | 35,858 | 0 |
Amortization of intangibles | 501,094 | 286,653 |
Share-based compensation expense | 140,116 | 179,741 |
Warrants expense | 0 | 108,000 |
Change in fair value of contingent consideration | 0 | (301,000) |
Changes in assets and liabilities: | ||
Accounts receivable and unbilled receivables | (2,528,761) | 4,413,557 |
Inventories | (17,294) | 104,365 |
Other current assets | 15,790 | 311,218 |
Other assets | 0 | 1,112 |
Accounts payable and accrued expenses | 113,869 | (1,509,330) |
Income tax payable | 55,703 | 7,111 |
Deferred revenue and other liabilities | (121,253) | (369,633) |
Other liabilities | 0 | (278,655) |
Net cash (used in) provided by operating activities | (2,489,048) | 2,825,427 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (96,721) | (203,274) |
Capitalized hardware and software development costs | (262,549) | (780,599) |
Net cash used in investing activities | (359,270) | (983,873) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Advances on bank line of credit | 4,313,007 | 0 |
Repayments of bank line of credit advances | (4,313,007) | 0 |
Principal repayments under finance lease obligations | (125,568) | (147,405) |
Withholding taxes paid on behalf of employees on net settled restricted stock awards | (3,628) | (49,224) |
Common stock repurchased | 0 | (818,211) |
Net cash used in financing activities | (129,196) | (1,014,840) |
Net effect of exchange rate on cash | 24,613 | (38,950) |
NET (DECREASE) INCREASE IN CASH | (2,952,901) | 787,764 |
CASH, beginning of period | 7,530,864 | 6,479,980 |
CASH, end of period | 4,577,963 | 7,267,744 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid for interest | 55,979 | 63,521 |
Cash paid for income taxes | 0 | 27,559 |
NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Capitalized hardware and software development costs in accounts payable | 190,773 | 213,770 |
Leased assets and lease liabilities terminated | $ 0 | $ 876,281 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Total | Additional Paid-In Capital | Common Stock | Accumulated other comprehensive loss | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2021 | 8,842,026 | ||||
Balance, amount at Dec. 31, 2021 | $ 41,675,995 | $ 101,424,922 | $ 8,842 | $ (241,586) | $ (59,516,183) |
Common stock repurchased, shares | (196,586) | ||||
Common stock repurchased, amount | (818,211) | (818,014) | $ (197) | 0 | 0 |
restricted, shares | 50,345 | ||||
restricted, amount | (49,224) | (49,275) | $ 51 | 0 | 0 |
Issuance of warrants in acquisition of IT Authorities, Inc. | 108,000 | 108,000 | 0 | 0 | 0 |
Issuance of common stock - restricted | 179,741 | 179,741 | 0 | 0 | 0 |
Foreign currency translation - gain (loss) | (4,835) | 0 | 0 | (4,835) | 0 |
Net loss | (392,897) | 0 | $ 0 | 0 | (392,897) |
Balance, shares at Mar. 31, 2022 | 8,695,785 | ||||
Balance, amount at Mar. 31, 2022 | 40,698,569 | 100,845,374 | $ 8,696 | (246,421) | (59,909,080) |
Balance, amount at Dec. 31, 2022 | 17,751,203 | 101,194,185 | $ 8,726 | (350,234) | (83,101,474) |
restricted, shares | 13,841 | ||||
Issuance of common stock - restricted | 140,116 | 140,116 | $ 0 | 0 | 0 |
Net loss | (951,479) | 0 | 0 | 0 | (951,479) |
restricted, amount | (3,628) | (3,642) | 14 | 0 | 0 |
Foreign currency translation - gain (loss) | 37,248 | 0 | $ 0 | 37,248 | 0 |
Balance, shares at Mar. 31, 2023 | 8,725,476 | ||||
Balance, amount at Mar. 31, 2023 | $ 16,973,460 | $ 101,330,659 | $ 8,740 | $ (312,986) | $ (84,052,953) |
Organization and Nature of Oper
Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2023 | |
Organization and Nature of Operations | |
Organization and Nature of Operations | 1. Organization and Nature of Operations Organization WidePoint Corporation (“WidePoint” or the “Company”) was incorporated in Delaware on May 30, 1997 and conducts operations through its wholly-owned operating subsidiaries throughout the continental United States, Ireland, the Netherlands and the United Kingdom. The Company’s principal executive and administrative headquarters is located in Fairfax, Virginia. Nature of Operations The Company is a leading provider of Technology Management as a Service (TMaaS). The Company’s TMaaS platform and service solutions enable its customers to efficiently secure, manage and analyze the entire lifecycle of their mobile communications assets through its federally compliant platform Intelligent Technology Management System (ITMS™). The Company’s ITMS platform is SSAE 18 compliant and was granted an Authority to Operate by the U.S. Department of Homeland Security. Additionally, the Company was granted an Authority to Operate by the General Services Administration with regard to its identity credentialing component of its TMaaS platform. The Company’s TMaaS platform is internally hosted and accessible on-demand through a secure customer portal that is specially configured for each customer. The Company can deliver these solutions in a number of configurations ranging from utilizing the platform as a service to a full-service solution that includes full lifecycle support for all end users and the organization. A significant portion of the Company’s expenses, such as personnel and facilities costs, are fixed in the short term and may not be easily modified to manage through changes in the Company’s market place that may create pressure on pricing and/or costs to deliver its services. The Company has periodic capital expense requirements to maintain and upgrade its internal technology infrastructure tied to its hosted solutions and other such costs may be significant when incurred in any given quarter. |
Basis of Presentation and Accou
Basis of Presentation and Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Basis of Presentation and Accounting Policies | |
Basis of Presentation and Accounting Policies | 2. Basis of Presentation and Accounting Policies Basis of Presentation The unaudited condensed consolidated financial statements as of March 31, 2023 and for each of the three month periods ended March 31, 2023 and 2022, included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to such regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. It is the opinion of management that all adjustments (which include normal recurring adjustments) necessary for a fair statement of financial results are reflected in the financial statements for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the three month period ended March 31, 2023 are not necessarily indicative of the operating results for the full year. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and acquired entities since their respective dates of acquisition. All significant inter-company amounts were eliminated in consolidation. Foreign Currency Assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon exchange rates prevailing at the end of each reporting period. The resulting translation adjustments, along with any related tax effects, are included in accumulated other comprehensive income, a component of stockholders’ equity. Translation adjustments are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations. Revenues and expenses are translated at the average month-end exchange rates during the year. Gains and losses related to transactions in a currency other than the functional currency, including operations outside the U.S. where the functional currency is the U.S. dollar, are reported net in the Company’s condensed consolidated statements of operations, depending on the nature of the activity. Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring use of estimates and judgment relate to revenue recognition, allowance for credit losses, ability to realize intangible assets and goodwill, ability to realize deferred income tax assets, fair value of certain financial instruments and the evaluation of contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. There were no significant changes in accounting estimates used by management during the quarter. Segment Reporting The Company’s TMaaS offerings are substantially managed service driven solutions that use our proprietary technology platform to deliver our services and reported on that basis to its Chief Operating Decision Maker who evaluates its business as a single segment. See Note 15 for detailed information regarding the composition of revenues. Significant Accounting Policies There were no significant changes in the Company’s significant accounting policies during the first three months of 2023 from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 31, 2023. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements The following tables present information about the Company’s liabilities measured at fair value on a recurring basis in the condensed consolidated balance sheets: MARCH 31, Quoted Prices in Active Markets Significant Other Observable Inputs Unobservable Inputs Description 2023 (Level 1) (Level 2) (Level 3) Liabilities: (Unaudited) Contingent consideration - cash settled $ 6,500 - - $ 6,500 Contingent consideration - warrants 400 - - 400 Total liabilities measured and recorded at fair value $ 6,900 $ - $ - $ 6,900 DECEMBER 31, Quoted Prices in Active Markets Significant Other Observable Inputs Unobservable Inputs Description 2022 (Level 1) (Level 2) (Level 3) Liabilities: Contingent consideration - cash settled $ 6,500 - - $ 6,500 Contingent consideration - warrants 400 - - 400 Total liabilities measured and recorded at fair value $ 6,900 $ - $ - $ 6,900 The Company’s contingent consideration is categorized as Level 3 within the fair value hierarchy. The contingent consideration has been recorded at their fair value using a Monte Carlo simulation model. This model incorporates probability of achievement of certain milestones, risk-free rates and volatility. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist. Management estimates the fair value of the contingent consideration liability based on financial projections of IT Authorities, Inc.’s (ITA) business and forecasted results, including revenue growth rates, costs and expenses, volatility, and discount rates. The Company evaluates, on a routine, periodic basis, the estimated fair value of the contingent consideration and quarterly changes in estimated fair value are reflected in other income in the consolidated statements of operations. Changes in the fair value of contingent consideration obligations may result from changes in changes of any of the key assumptions that are used. Changes in the estimated fair value of contingent consideration liability may have a material impact on the Company’s operating results. There was no change in fair value of contingent consideration for the three months ended March 31, 2023. |
Accounts Receivable and Signifi
Accounts Receivable and Significant Concentrations | 3 Months Ended |
Mar. 31, 2023 | |
Accounts Receivable and Significant Concentrations | |
Accounts Receivable and Significant Concentrations | 4. Accounts Receivable and Significant Concentrations A significant portion of the Company’s receivables are billed under firm fixed price contracts with agencies of the U.S. federal government and similar pricing structures with several corporations. Accounts receivable consist of the following by customer type in the table below as of the periods presented: MARCH 31, DECEMBER 31, 2023 2022 (Unaudited) U.S. Federal, State, and Local Government (1) $ 7,952,334 $ 7,272,993 Commercial (2) 2,322,209 2,055,782 Gross accounts receivable 10,274,543 9,328,775 Less: allowances for credit losses (3) 72,271 51,666 Accounts receivable, net $ 10,202,272 $ 9,277,109 (1) Government contracts are generally firm fixed price not to exceed arrangements with a term of five (5) years, which consists of a base year and four (4) annual option year renewals. Government receivables are billed under a single consolidated monthly invoice and are billed approximately thirty (30) to sixty (60) days in arrears from the date of service and payment is generally due within thirty (30) days of the invoice date. Government accounts receivable payments could be delayed due to administrative processing delays by the government agency, continuing budget resolutions that may delay availability of contract funding, and/or administrative only invoice correction requests by contracting officers that may delay payment processing by our government customers. (2) Commercial contracts are generally fixed price arrangements with contract terms ranging from two (2) to three (3) years. Commercial accounts receivables are billed based on the underlying contract terms and conditions which generally have repayment terms that range from thirty (30) to ninety (90) days. Commercial receivables are stated at amounts due from customers net of an allowance for credit losses if deemed necessary. (3) For the three month period ended March 31, 2023, the Company did not recognize any material provisions of recoveries of existing provision for credit losses. The Company has not historically maintained an allowance for credit losses for its government customers as it has not experienced material or recurring credit losses and the nature and size of the contracts has not necessitated the Company’s establishment of such an allowance for credit losses. Significant Concentrations The following table presents revenue by customer for each of the periods presented: THREE MONTHS ENDED MARCH 31, Customer Type 2023 2022 (Unaudited) U.S. Federal Government (1) 80.0 % 77.7 % (1) Sales to the U.S. federal government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government. Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash on deposit with financial institutions, the balances of which frequently exceed federally insured limits. If the financial institution with whom we do business were to be placed into receivership, we may be unable to access to the cash we have on deposit with such institutions. If we are unable to access our cash and cash equivalents as needed, our financial position and ability to operate our business could be adversely affected. |
Unbilled Accounts Receivable
Unbilled Accounts Receivable | 3 Months Ended |
Mar. 31, 2023 | |
Accounts Receivable and Significant Concentrations | |
Unbilled Accounts Receivable | 5. Unbilled Accounts Receivable Unbilled accounts receivable represent revenues earned but not invoiced to the customer at the balance sheet date due to either timing of invoice processing or delays due to fixed contractual billing schedules. A significant portion of our unbilled accounts receivable consist of carrier services and hardware and software products delivered but not invoiced at the end of the reporting period. The following table presents customers that represent ten (10) percent or more of consolidated unbilled accounts receivable as of the dates presented below: MARCH 31, DECEMBER 31, 2023 2022 As a % of As a % of Customer Type Receivables Receivables (Unaudited) U.S. Federal Government 96 % 97 % |
Other Current Assets and Accrue
Other Current Assets and Accrued Expenses | 3 Months Ended |
Mar. 31, 2023 | |
Other Current Assets and Accrued Expenses | |
Other Current Assets and Other Long Term Assets | 6. Other Current Assets and Accrued Expenses Other current assets consisted of the following as of the dates presented below: MARCH 31, DECEMBER 31, 2023 2022 (Unaudited) Inventories $ 239,658 $ 222,279 Prepaid insurance and other assets 699,529 713,699 Total other current assets $ 939,187 $ 935,978 Accrued expenses consisted of the following as of the dates presented below: MARCH 31, DECEMBER 31, 2023 2022 (Unaudited) Carrier service costs $ 8,159,230 $ 8,402,770 Salaries and payroll taxes 1,609,058 1,637,628 Inventory purchases, consultants and other costs 746,113 1,205,209 U.S. Income tax payable 61,490 61,490 Other 76,862 20,172 $ 10,652,753 $ 11,327,269 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2023 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Major classes of property and equipment consisted of the following as of the dates presented below: MARCH 31, DECEMBER 31, 2023 2022 (Unaudited) Computer hardware and software $ 3,268,634 $ 3,158,428 Furniture and fixtures 501,973 502,391 Leasehold improvements 288,215 284,321 Automobiles 125,664 122,524 Gross property and equipment 4,184,486 4,067,664 Less: accumulated depreciation and amortization 3,205,853 3,089,446 Property and equipment, net $ 978,633 $ 978,218 During the three month periods ended March 31, 2023 and 2022, property and equipment depreciation expense was approximately $116,400 and $93,700, respectively. During the three month periods ended March 31, 2023 and 2022, there were no material disposals of owned property and equipment. There were no changes in the estimated useful lives used to depreciate property and equipment during the three month periods ended March 31, 2023 and 2022. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Leases | 8. Leases On January 1, 2022, the Company entered into an amendment to its lease agreement for its Tampa office to amend the term and the extension option. The amendment updated the term of the lease from sixty (60) calendar months ending December 31, 2026 to the Company’s ability to terminate the lease on June 30, 2022. As a result of the amendment, the Company removed the lease right of use asset and lease liability for its Tampa office from its condensed consolidated balance sheet. The Company accounted for the lease as month to month and recorded the monthly rent expense in its condensed consolidated statement of operations. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 9. Goodwill and Intangible Assets Goodwill consisted of the following: The Company has recorded goodwill of $5,811,578 as of March 31, 2023. There were no changes in the carrying amount of goodwill during the three month period ended March 31, 2023 Intangible assets consists of the following: MARCH 31, 2023 Gross Carrying Accumulated Net Book Amount Amortization Value (Unaudited) Customer Relationships $ 2,392,000 $ (358,800 ) $ 2,033,200 Channel Relationships 2,628,080 (1,562,248 ) 1,065,832 Internally Developed Software 5,948,518 (2,922,146 ) 3,026,372 Trade Name and Trademarks 1,330,472 (276,670 ) 1,053,802 $ 12,299,070 $ (5,119,864 ) $ 7,179,206 DECEMBER 31, 2022 Gross Carrying Accumulated Net Book Amount Amortization Value Customer Relationships $ 2,392,000 $ (299,000 ) $ 2,093,000 Channel Relationships 2,628,080 (1,518,446 ) 1,109,634 Internally Developed Software 5,665,957 (2,546,407 ) 3,119,550 Trade Name and Trademarks 1,330,472 (254,496 ) 1,075,976 $ 12,016,509 $ (4,618,349 ) $ 7,398,160 For the three month period ended March 31, 2023, the Company capitalized $453,300 of internally developed software costs, primarily associated with upgrading our ITMS™ (Intelligent Technology Management System), secure identity management technology and secure network operations center of which $280,220 was transferred from capital work in progress to internally developed software during the period. Capital work in progress is included in other long-term assets in the consolidated balance sheet. For the three month period ended March 31, 2022, the Company capitalized $820,000 of internally developed software costs, primarily associated with upgrading our ITMS™ (Intelligent Telecommunications Management System), secure identity management technology and network operations center of which $243,500 was transferred from capital work in progress to internally developed software and $316,900 was transferred from capital work in progress to property and equipment during the period. There were no disposals of intangible assets during the three month period ended March 31, 2023. The aggregate amortization expense recorded for the three month periods ended March 31, 2023 and 2022 were approximately $501,100 and $286,700, respectively. As of March 31, 2023, estimated annual amortization for our intangible assets is approximately: Remainder of 2023 $ 1,497,301 2024 1,797,411 2025 1,123,850 2026 526,714 2027 511,170 Thereafter 1,722,760 Total $ 7,179,206 |
Line of Credit
Line of Credit | 3 Months Ended |
Mar. 31, 2023 | |
Line of Credit | |
Line of Credit | 10. Line of Credit Since June 15, 2017, the Company had a Loan and Security Agreement with Atlantic Union Bank (formerly known as Access National Bank) (the “Loan Agreement”). In June 2022, the Company entered into a seventh and eighth modification agreement (“Modification Agreement”) with Atlantic Union Bank to amend the existing Loan Agreement. The Modification Agreement (i) extended the maturity date of the facility from June 15, 2022 through June 15, 2023, (ii) removed the current ratio and interest coverage ratio financial covenants, (iii) increased the tangible net worth covenant from $2,000,000 to $6,500,000 measured quarterly, (iv) added a minimum EBITDA covenant that requires that the Company’s Adjusted EBITDA to not be less than $1,000,000 on a trailing 12-month basis as of the last day of each quarter and (v) modified the definition of Borrowing Base and increased the maximum amount from $5.0 million to $7.0 million. The available amount under the working capital line of credit is subject to a borrowing base, which is equal to the lesser of (i) $7.0 million or (ii) sum of 90% of the net unpaid balance of the Company’s eligible government accounts receivable and 80% of the net unpaid balance of the Company’s eligible commercial accounts receivable. The facility is secured by a first lien security interest on all of the Company’s personal property, including its accounts receivable, general intangibles, inventory and equipment maintained in the United States. As of March 31, 2023, there was no outstanding balance under the line of credit. At December 31, 2022 and March 31, 2023, the Company was not in compliance with the tangible net worth covenant as its tangible net worth did not equal at least approximately $6,500,000. Atlantic Union Bank provided a waiver of the December 31, 2022 violation. As a result of the maturity date of June 15, 2023 and the potential that Atlantic Union Bank would not renew the line of credit, the Company secured an additional financing arrangement. The Company does not plan to renew its Loan and Security Agreement with Atlantic Union Bank. On April 28, 2023, the Company entered into an Accounts Receivable Purchase Agreement (the “Agreement”) with Republic Capital Access, LLC (the “Buyer”) for the non-recourse sale of eligible trade receivables. Pursuant to the Agreement, the Company may from time to time offer and sell eligible accounts receivable to the Buyer at an initial purchase price equal to 90% of the receivable (85% if the account receivable debtor is not a government entity), subject to increase based on, among other things, the total amount collected and the discount factor applicable to the receivable. The facility is limited to a total of $4 million outstanding at any time, with an available increase to $10 million, subject to adequate receivables. The Agreement contains customary fees, covenants and representations. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | 11. Income Taxes The Company’s effective tax rate was (0.7)% and 11.5% for the three month periods ended March 31, 2023 and 2022, respectively. The difference in the effective tax rate and the U.S. federal statutory rate was primarily due to the full valuation allowance the Company maintains against its deferred tax assets and state minimum taxes in the United States. The effective tax rate is calculated by dividing the Provision (benefit) for income taxes by the Loss before provision (benefit) for income taxes. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Under existing income tax accounting standards such objective evidence is more heavily weighted in comparison to other subjective evidence such as our projections for future growth, tax planning and other tax strategies. The Company increased its valuation allowance approximately $238,000 during the three month period ended March 31, 2023. In the future, changes in the Company’s valuation allowance may result from, among other things, additional pretax operating losses resulting in increases in its valuation allowance or pretax operating income resulting in decreases in its valuation allowance |
Stockholders Equity
Stockholders Equity | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders Equity | |
Stockholders' Equity | 12. Stockholders’ Equity Common Stock The Company is authorized to issue 30,000,000 shares of common stock, $.001 par value per share. As of March 31, 2023, there were 8,741,310 shares issued and outstanding. During the three month period ended March 31, 2023, there were 15,837 shares of common stock vested in accordance with the vesting terms of the RSAs. Two employees received less than the shares vested because they elected to have a total of 1,993 shares withheld in satisfaction of the employees corresponding tax liability of approximately $3,600. The Company’s payment of this tax liability was recorded as a cash flow from financing activity on the consolidated statement of cash flows. During the three-month period ended March 31, 2022, there were 50,345 shares of common stock vested in accordance with the vesting terms of the RSAs. Three employees received less than the shares vested because they elected to have a total of 11,280 shares withheld in satisfaction of the employees corresponding tax liability of approximately $49,300. The Company’s payment of this tax liability was recorded as a cash flow from financing activity on the consolidated statement of cash flows. There were no stock option exercises during the three month periods ended March 31, 2023 and 2022. Contingent Warrants Liability-classified warrants consist of warrants to acquire common stock at an exercise price of $5.33 per share as part of the consideration for the acquisition of ITA in 2021, during the earn-out period from 2021 to 2024. Based on our consideration of the ASC 815-40 guidance, we account for these contingent warrants as a liability. The estimated fair value of outstanding contingent warrants accounted for as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the consolidated statement of operations as other income (expense). Refer to Note 3 for more information about the warrants. Warrants Issued On March 31, 2022, the Company issued a warrant to purchase 75,000 shares of common stock as part of the contingent consideration earned by ITA for 2021 EBITDA achievement. The warrant contains a strike price of $5.33 and has a four-year contractual term. The warrant is classified within stockholders’ equity at its fair value. The fair value of the warrant was determined to be $108,000 utilizing the Black-Scholes-Merton option-pricing model at the time of issuance. Following such issuance, the Company has outstanding warrants to acquire 150,000 shares of common stock at a strike price of $5.33 that expire at terms through October 1, 2025. Stock Repurchase Program On October 7, 2019, the Company announced that its Board of Directors approved a stock repurchase plan (the “Repurchase Plan”) to purchase up to $2.5 million of the Company’s common stock. Any repurchases will be made in compliance with the SEC’s Rule 10b-18 if applicable, and may be made in the open market or in privately negotiated transactions, including the entry into derivatives transactions. During November 2021, the Board increased the size of the Repurchase Plan to up to $5.0 million of the Company’s common stock, increasing the amount available for future purchases under the Repurchase Plan to $4.6 million. During the three-month period ended March 31, 2022, we repurchased 196,586 shares of our common stock for a total of $818,200 and subsequently in March of 2022, the Board suspended the repurchase plan in order to use the company’s excess funds to invest into the business. The Company retired all common stock it repurchased. At The Market Offering Agreement On August 18, 2020, the Company entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”). The Company did not sell any shares during the three month period ended March 31, 2023. Effective March 27, 2023, the Company provided notice to the sales agents under its At the Market Sales Agreement that it was terminating the agreement. Accordingly, no additional sales of shares of common stock will be made pursuant to such agreement. |
Sharebased Compensation
Sharebased Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders Equity | |
Share-based Compensation | 13. Share-based Compensation Share-based compensation (including restricted stock awards) represents both stock option based expense and stock grant expense. The following table sets forth the composition of stock compensation expense included in general and administrative expense for the periods then ended: THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) Restricted share-based compensation expense $ 140,116 $ 179,741 Total share-based compensation before taxes $ 140,116 $ 179,741 The Company’s stock incentive plan is administered by the Compensation Committee of the Board of Directors and authorizes the grant or award of incentive stock options, nonqualified stock options (NQSO), restricted stock awards (RSA), restricted stock units, stock appreciation rights, dividend equivalent rights, performance unit awards and phantom shares. The Company issues new shares of common stock upon the exercise of stock options. Restricted Stock The Company records the fair value of all restricted stock shares based on the grant date fair value and amortizes stock compensation on a straight-line basis over the vesting period. Restricted stock shares are issued when vested and included in the total number of common shares issued and outstanding. There were no RSAs granted during the three month periods ended March 31, 2023 and 2022. At March 31, 2023, the Company had approximately $140,300 of total unrecognized share-based compensation expense, net of estimated forfeitures, related to share-based compensation that will be recognized over the weighted average remaining period of 1.0 years. |
Earnings Per Common Share (EPS)
Earnings Per Common Share (EPS) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Common Share (EPS) | |
Earnings Per Common Share (EPS) | 14. Earnings Per Common Share (EPS) The computations of basic and diluted earnings per share were as follows for the periods presented below: THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) Basic Earnings Per Share Computation: Net loss $ (951,479 ) $ (392,897 ) Weighted average number of common shares 8,739,317 8,782,452 Basic Loss Per Share $ (0.11 ) $ (0.04 ) Diluted Earnings Per Share Computation: Net loss $ (951,479 ) $ (392,897 ) Weighted average number of common shares 8,739,317 8,782,452 Incremental shares from assumed conversions of dilutive securities - - Adjusted weighted average number of common shares 8,739,317 8,782,452 Diluted Loss Per Share $ (0.11 ) $ (0.04 ) For the three months ended March 31, 2023 and 2022, the Company had unexercised stock options and RSAs of 34,682 and 30,513, respectively, and warrants to purchase 150,000 and 150,000 shares of common stock, outstanding, that were anti-dilutive. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | 15. Revenue from Contracts with Customers The following table was prepared to provide additional information about the composition of revenues from contracts with customers for the periods presented: THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) Carrier Services $ 13,597,701 $ 12,932,055 Managed Services 11,675,980 9,504,372 $ 25,273,681 $ 22,436,427 The Company recognized revenues from contracts with customers for the following customer types as set forth below: THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) U.S. Federal Government $ 20,230,576 $ 17,433,723 U.S. State and Local Governments 91,023 126,142 Foreign Governments 16,557 32,407 Commercial Enterprises 4,935,525 4,844,155 $ 25,273,681 $ 22,436,427 The Company recognized revenues from contracts with customers in the following geographic regions: THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) North America $ 24,209,410 $ 21,434,634 Europe 1,064,271 1,001,793 $ 25,273,681 $ 22,436,427 During the three months ended March 31, 2023 and 2022, the Company recognized approximately $709,400 and $1,079,900, respectively, of revenue related to amounts that were included in deferred revenue as of December 31, 2022 and 2021, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 16. Commitments and Contingencies Employment Agreements The Company has employment agreements with certain executives that set forth compensation levels and provide for severance payments in certain instances. Litigation The Company is not involved in any material legal proceedings. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events | |
Subsequent Events | 17. Subsequent Events As described in Note 11, effective April 28, 2023, the Company has entered into an Accounts Receivable Purchase Agreement (the Receivables Facility) with Republic Capital Access, LLC for the non-recourse sale of eligible trade receivables. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Basis of Presentation and Accounting Policies | |
Basis of Presentation | The unaudited condensed consolidated financial statements as of March 31, 2023 and for each of the three month periods ended March 31, 2023 and 2022, included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to such regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. It is the opinion of management that all adjustments (which include normal recurring adjustments) necessary for a fair statement of financial results are reflected in the financial statements for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the three month period ended March 31, 2023 are not necessarily indicative of the operating results for the full year. |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and acquired entities since their respective dates of acquisition. All significant inter-company amounts were eliminated in consolidation. |
Foreign Currency | Assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon exchange rates prevailing at the end of each reporting period. The resulting translation adjustments, along with any related tax effects, are included in accumulated other comprehensive income, a component of stockholders’ equity. Translation adjustments are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations. Revenues and expenses are translated at the average month-end exchange rates during the year. Gains and losses related to transactions in a currency other than the functional currency, including operations outside the U.S. where the functional currency is the U.S. dollar, are reported net in the Company’s condensed consolidated statements of operations, depending on the nature of the activity. |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring use of estimates and judgment relate to revenue recognition, allowance for credit losses, ability to realize intangible assets and goodwill, ability to realize deferred income tax assets, fair value of certain financial instruments and the evaluation of contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. There were no significant changes in accounting estimates used by management during the quarter. |
Segment Reporting | The Company’s TMaaS offerings are substantially managed service driven solutions that use our proprietary technology platform to deliver our services and reported on that basis to its Chief Operating Decision Maker who evaluates its business as a single segment. See Note 15 for detailed information regarding the composition of revenues. |
Significant Accounting Policies | There were no significant changes in the Company’s significant accounting policies during the first three months of 2023 from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 31, 2023. |
Recently Adopted Accounting Standards | In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Schedule of liabilities measured at fair value on a recurring basis | MARCH 31, Quoted Prices in Active Markets Significant Other Observable Inputs Unobservable Inputs Description 2023 (Level 1) (Level 2) (Level 3) Liabilities: (Unaudited) Contingent consideration - cash settled $ 6,500 - - $ 6,500 Contingent consideration - warrants 400 - - 400 Total liabilities measured and recorded at fair value $ 6,900 $ - $ - $ 6,900 DECEMBER 31, Quoted Prices in Active Markets Significant Other Observable Inputs Unobservable Inputs Description 2022 (Level 1) (Level 2) (Level 3) Liabilities: Contingent consideration - cash settled $ 6,500 - - $ 6,500 Contingent consideration - warrants 400 - - 400 Total liabilities measured and recorded at fair value $ 6,900 $ - $ - $ 6,900 |
Accounts Receivable and Signi_2
Accounts Receivable and Significant Concentrations (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounts Receivable and Significant Concentrations | |
Schedule of accounts receivable | MARCH 31, DECEMBER 31, 2023 2022 (Unaudited) U.S. Federal, State, and Local Government (1) $ 7,952,334 $ 7,272,993 Commercial (2) 2,322,209 2,055,782 Gross accounts receivable 10,274,543 9,328,775 Less: allowances for credit losses (3) 72,271 51,666 Accounts receivable, net $ 10,202,272 $ 9,277,109 |
Schedule of presents revenue by customer | THREE MONTHS ENDED MARCH 31, Customer Type 2023 2022 (Unaudited) U.S. Federal Government (1) 80.0 % 77.7 % |
Unbilled Accounts Receivable (T
Unbilled Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounts Receivable and Significant Concentrations | |
Schedule of concentration of risk | MARCH 31, DECEMBER 31, 2023 2022 As a % of As a % of Customer Type Receivables Receivables (Unaudited) U.S. Federal Government 96 % 97 % |
Other Current Assets and Accr_2
Other Current Assets and Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Other Current Assets and Accrued Expenses | |
Schedule of Other current assets | MARCH 31, DECEMBER 31, 2023 2022 (Unaudited) Inventories $ 239,658 $ 222,279 Prepaid insurance and other assets 699,529 713,699 Total other current assets $ 939,187 $ 935,978 |
Schedule of Accrued Expenses | MARCH 31, DECEMBER 31, 2023 2022 (Unaudited) Carrier service costs $ 8,159,230 $ 8,402,770 Salaries and payroll taxes 1,609,058 1,637,628 Inventory purchases, consultants and other costs 746,113 1,205,209 U.S. Income tax payable 61,490 61,490 Other 76,862 20,172 $ 10,652,753 $ 11,327,269 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property and Equipment | |
Property, plant and equipment | MARCH 31, DECEMBER 31, 2023 2022 (Unaudited) Computer hardware and software $ 3,268,634 $ 3,158,428 Furniture and fixtures 501,973 502,391 Leasehold improvements 288,215 284,321 Automobiles 125,664 122,524 Gross property and equipment 4,184,486 4,067,664 Less: accumulated depreciation and amortization 3,205,853 3,089,446 Property and equipment, net $ 978,633 $ 978,218 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets | |
Schedule of Intangible assets | MARCH 31, 2023 Gross Carrying Accumulated Net Book Amount Amortization Value (Unaudited) Customer Relationships $ 2,392,000 $ (358,800 ) $ 2,033,200 Channel Relationships 2,628,080 (1,562,248 ) 1,065,832 Internally Developed Software 5,948,518 (2,922,146 ) 3,026,372 Trade Name and Trademarks 1,330,472 (276,670 ) 1,053,802 $ 12,299,070 $ (5,119,864 ) $ 7,179,206 DECEMBER 31, 2022 Gross Carrying Accumulated Net Book Amount Amortization Value Customer Relationships $ 2,392,000 $ (299,000 ) $ 2,093,000 Channel Relationships 2,628,080 (1,518,446 ) 1,109,634 Internally Developed Software 5,665,957 (2,546,407 ) 3,119,550 Trade Name and Trademarks 1,330,472 (254,496 ) 1,075,976 $ 12,016,509 $ (4,618,349 ) $ 7,398,160 |
Schedule of Estimated annual amortization of Intangible assets | Remainder of 2023 $ 1,497,301 2024 1,797,411 2025 1,123,850 2026 526,714 2027 511,170 Thereafter 1,722,760 Total $ 7,179,206 |
Sharebased Compensation (Tables
Sharebased Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders Equity | |
Share-based Compensation | THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) Restricted share-based compensation expense $ 140,116 $ 179,741 Total share-based compensation before taxes $ 140,116 $ 179,741 |
Earnings Per Common Share (EP_2
Earnings Per Common Share (EPS) (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Common Share (EPS) | |
Schedule of earnings per share, basic and diluted | THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) Basic Earnings Per Share Computation: Net loss $ (951,479 ) $ (392,897 ) Weighted average number of common shares 8,739,317 8,782,452 Basic Loss Per Share $ (0.11 ) $ (0.04 ) Diluted Earnings Per Share Computation: Net loss $ (951,479 ) $ (392,897 ) Weighted average number of common shares 8,739,317 8,782,452 Incremental shares from assumed conversions of dilutive securities - - Adjusted weighted average number of common shares 8,739,317 8,782,452 Diluted Loss Per Share $ (0.11 ) $ (0.04 ) |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contracts with Customers | |
Schedule of composition of revenues from contracts with customers | THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) Carrier Services $ 13,597,701 $ 12,932,055 Managed Services 11,675,980 9,504,372 $ 25,273,681 $ 22,436,427 |
Revenue from external customers by customers type | THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) U.S. Federal Government $ 20,230,576 $ 17,433,723 U.S. State and Local Governments 91,023 126,142 Foreign Governments 16,557 32,407 Commercial Enterprises 4,935,525 4,844,155 $ 25,273,681 $ 22,436,427 |
Revenue from external customers by geographic areas | THREE MONTHS ENDED MARCH 31, 2023 2022 (Unaudited) North America $ 24,209,410 $ 21,434,634 Europe 1,064,271 1,001,793 $ 25,273,681 $ 22,436,427 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Contingent consideration - cash settled | $ 6,500 | $ 6,500 |
Contingent consideration - warrants | 400 | 400 |
Total liabilities measured and recorded at fair value | 6,900 | 6,900 |
Fair Value, Inputs, Level 3 [Member] | ||
Contingent consideration - cash settled | 6,500 | 6,500 |
Contingent consideration - warrants | 400 | 400 |
Total liabilities measured and recorded at fair value | 6,900 | 6,900 |
Fair Value, Inputs, Level 2 [Member] | ||
Contingent consideration - cash settled | 0 | 0 |
Contingent consideration - warrants | 0 | 0 |
Total liabilities measured and recorded at fair value | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | ||
Contingent consideration - cash settled | 0 | 0 |
Contingent consideration - warrants | 0 | 0 |
Total liabilities measured and recorded at fair value | $ 0 | $ 0 |
Accounts Receivable and Signi_3
Accounts Receivable and Significant Concentrations (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Accounts Receivable Gross | $ 10,274,543 | $ 9,328,775 |
Less: allowances for doubtful accounts | 72,271 | 51,666 |
Accounts receivable, net | 10,202,272 | 9,277,109 |
Government | ||
Accounts Receivable Gross | 7,952,334 | 7,272,993 |
Commercial | ||
Accounts Receivable Gross | $ 2,322,209 | $ 2,055,782 |
Accounts Receivable and Signi_4
Accounts Receivable and Significant Concentrations (Details 1) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
U.S Federal Government | ||
Concentration risk | 80% | 77.70% |
Unbilled Accounts Receivable (D
Unbilled Accounts Receivable (Details) | Mar. 31, 2023 | Dec. 31, 2022 |
U.S Federal Government | ||
Concentration Risk of receivable | 96% | 97% |
Other Current Assets and Accr_3
Other Current Assets and Accrued Expenses (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Other Current Assets | ||
Inventories | $ 239,658 | $ 222,279 |
Prepaid insurance and other assets | 699,529 | 713,699 |
Other current assets | $ 939,187 | $ 935,978 |
Other Current Assets and Accr_4
Other Current Assets and Accrued Expenses (Details 1) - USD ($) | Mar. 31, 2023 | Mar. 31, 2022 |
Other Current Assets and Accrued Expenses | ||
Carrier service costs | $ 8,159,230 | $ 8,402,770 |
Salaries and payroll taxes | 1,609,058 | 1,637,628 |
Inventory purchases, consultants and other costs | 746,113 | 1,205,209 |
U.S. Income tax payable | 61,490 | 61,490 |
Other | 76,862 | 20,172 |
Accrued expenses | $ 10,652,753 | $ 11,327,269 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Less: accumulated depreciation and amortization | $ 3,205,853 | $ 3,089,446 |
Property and equipment, net | 978,633 | 978,218 |
Gross property and equipment | 4,184,486 | 4,067,664 |
Computer Hardware Software | ||
Gross property and equipment | 3,268,634 | 3,158,428 |
Furniture and Fixtures | ||
Gross property and equipment | 501,973 | 502,391 |
Leasehold Improvements | ||
Gross property and equipment | 288,215 | 284,321 |
Automobiles | ||
Gross property and equipment | $ 125,664 | $ 122,524 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property and Equipment | ||
Property and equipment depreciation expense | $ 116,400 | $ 93,700 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Gross carrying amount | $ 12,299,070 | $ 12,016,509 | |
Accumulated amortization | (5,119,864) | (4,618,349) | |
Net book value | $ 7,179,206 | 7,179,206 | 7,398,160 |
Trademarks and Trade Names | |||
Gross carrying amount | 1,330,472 | 1,330,472 | |
Accumulated amortization | (276,670) | (254,496) | |
Net book value | 1,053,802 | 1,075,976 | |
Customer Relationships | |||
Gross carrying amount | 2,392,000 | 2,392,000 | |
Accumulated amortization | (358,800) | (299,000) | |
Net book value | 2,033,200 | 2,093,000 | |
Channel Relationships | |||
Gross carrying amount | 2,628,080 | 2,628,080 | |
Accumulated amortization | (1,562,248) | (1,518,446) | |
Net book value | 1,065,832 | 1,109,634 | |
Internally Developed Software | |||
Gross carrying amount | 5,948,518 | 5,665,957 | |
Accumulated amortization | (2,922,146) | (2,546,407) | |
Net book value | $ 3,026,372 | $ 3,119,550 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - USD ($) | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets | |||
2023 | $ 1,497,301 | ||
2024 | 1,797,411 | ||
2025 | 1,123,850 | ||
2026 | 526,714 | ||
2027 | 511,170 | ||
Thereafter | 1,722,760 | ||
Total | $ 7,179,206 | $ 7,179,206 | $ 7,398,160 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Aggregate amortization expense | $ 501,100 | $ 286,700 | |
Goodwill | 5,811,578 | $ 5,811,578 | |
Capitalized Software Development Costs | 453,300 | 820,000 | |
Property, Plant and Equipment [Member] | |||
Capitalized Software Development Costs | 316,900 | ||
Internally Developed Software | |||
Capitalized Software Development Costs | $ 280,220 | $ 243,500 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended |
Jun. 15, 2022 | Mar. 31, 2023 | |
Net paid percentage | 90% | |
Line of credit description | The facility is limited to a total of $4 million outstanding at any time, with an available increase to $10 million, subject to adequate receivables | |
Loan Agreement | ||
Borrowing base amount | $ 1,000,000 | |
Working capital revolving line of credit | $ 6,500,000 | |
Line of credit borrowing capacity | $ 7,000,000 | |
Borrowing term | 12 months | |
Description of date of maturity extention | The Modification Agreement (i) extended the maturity date of the facility from June 15, 2022 through June 15, 2023 | |
Quarterly minimum tangible net worth | $ 200,000,000,000 | |
Percentage of unpaid balance of eligible accounts receivable | 80% | |
Loan Agreement | Maximum | ||
Working capital revolving line of credit | $ 650,000,000,000 | $ 7,000,000 |
Loan Agreement | Minimum | ||
Working capital revolving line of credit | $ 5,000,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Taxes | ||
Valuation allowance | $ 23,800 | |
Income tax rate | (0.70%) | 11.50% |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Gross proceeds for issuance of common stock for stock option exercises | $ 40 | |
Gross proceeds | $ 74,310 | |
Preferred stock, par value | $ 0.001 | |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Share-Based Payment Arrangement, Decrease for Tax Withholding Obligation | $ 49,300 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares issued | 8,741,310 | 50,345 |
Sold of common stock | 100,687 | |
Offering costs | $ 62,700 | |
Gross proceeds from sale of common stock | $ 110,000 | |
Repurchase Plan | ||
Stock repurchase plan of common stock | $ 150,000 | |
Stock repurchase shares | 196,586 | |
Stock repurchase Amount | $ 818,200 | |
Warrants | ||
Issued warrants to purchase | 75,000 | |
Strike price | $ 5.33 | |
Warrants Fair Value | $ 108,000 | |
Warrants Term | 5.33 | |
Number of securities called by warrants | 75,000 | |
Restricted Stock Units (RSUs) [Member] | ||
common stock vested sharaes | 15,837 | |
Share-Based Payment Arrangement, Decrease for Tax Withholding Obligation | $ 3,600 | |
Share-Based Payment Arrangement, Shares Withheld for Tax Withholding Obligation | 11,280 |
Share-based Compensation (Detai
Share-based Compensation (Details) - Employee Stock Option - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Restricted stock compensation expense | $ 140,116 | $ 179,741 |
Total share-based compensation before taxes | $ 140,116 | $ 179,741 |
Share-based Compensation (Det_2
Share-based Compensation (Details Narrative) | 3 Months Ended |
Mar. 31, 2023 shares | |
Share-based Compensation (Details) | |
Restricted stock awards granted | 140,300 |
Weighted average remaining | 1 year |
Earnings Per Common Share (EP_3
Earnings Per Common Share (EPS) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Basic EPS Computation: | ||
Net loss | $ (951,479) | $ (392,897) |
Weighted average number of common shares | 8,739,317 | 8,782,452 |
Basic EPS | $ (0.11) | $ (0.04) |
Diluted EPS Computation: | ||
Net loss | $ (951,479) | $ (392,897) |
Weighted average number of common shares | 8,739,317 | 8,782,452 |
Incremental shares from assumed conversions of stock options | 0 | 0 |
Adjusted weighted average number of common shares | 8,739,317 | 8,782,452 |
Diluted EPS | $ (0.11) | $ (0.04) |
Earnings Per Common Share (EP_4
Earnings Per Common Share (EPS) (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Common Share (EPS) | ||
Stock options | 34,682 | 30,513 |
Warrants to purchase | 150,000 | 150,000 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues, net | $ 25,273,681 | $ 22,436,427 |
Carrier Services [Member] | ||
Revenues, net | 13,597,701 | 12,932,055 |
Management Services [Member] | ||
Revenues, net | $ 11,675,980 | $ 9,504,372 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue, net | $ 25,273,681 | $ 22,436,427 |
U.S. State and Local Governments | ||
Revenue, net | 91,023 | 126,142 |
Foreign Governments | ||
Revenue, net | 16,557 | 32,407 |
Commercial Enterprises | ||
Revenue, net | 4,935,525 | 4,844,155 |
U.S Federal Government | ||
Revenue, net | $ 20,230,576 | $ 17,433,723 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers (Details 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue, net | $ 25,273,681 | $ 22,436,427 |
North America | ||
Revenue, net | 24,209,410 | 21,434,634 |
Europe | ||
Revenue, net | $ 1,064,271 | $ 1,001,793 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue from Contracts with Customers | ||
Revenue Related Approximately | $ 709,400 | $ 1,079,900 |