Good afternoon. Welcome to WidePoint's third quarter 2026 earnings conference call. My name is Tom, and I will be your operator for today's call. Joining us for today's presentation are WidePoint's President and CEO, Jin Kang, Chief Operating Officer, Todd Dzyak, and Chief Financial Officer, Robert George. Following their remarks, We will open up the call for questions from WidePoints publishing analysts and major investors. If your questions were not taken today and you would like additional information, please contact WidePoints investor relations team at wyy at gateway-grp.com. Before we begin the call, I would like to provide WidePoint's safe harbor statement that includes cautions regarding forward-looking statements made during this call. The matters discussed in this conference call may include forward-looking statements regarding future events and the future performance of WidePoint Corporation that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-Q filed with the Securities and Exchange Commission. Finally, I would like to remind everyone that this call will be made available for replay via a link in the investor relations section of the company's website at www.widepoint.com. Now, I would like to turn the call over to WidePoint's president and CEO, Mr. Jin Kang. Sir, please proceed.

Thank you, operator, and good afternoon, everyone. Thank you for joining us today to review our financial and operational results for the third quarter end of September 30, 2026. Before I turn to the details, I want to acknowledge that the last few months have presented challenges and outcomes that fell short of what we had envisioned for our DHS program. As you know, the Government Accountability Office or the GAO's decision to sustain the protests filed regarding the pending CWMS 3.0 award, while not unprecedented, was still an unexpected setback. We recognize the near-term disruption it has created, but we believe this is temporary. With respect to the pending CWMS 3.0 procurement, DHS has requested revised proposals and YPoint has submitted a revised proposal for evaluation by DHS. We await DHS's announcement of the result of its evaluation and the resulting award decision. We will have no further comment on the status of the CWMS 3.0 procurement at this time. As it currently stands, Y-Point continues to serve DHS without interruption under the CWMS 2.0 and 2.5 bridge contracts. In the third quarter alone, we were awarded 40 new and replacement task orders valued at approximately $33.7 million. And roughly a month and a half into the fourth quarter, we are continuing to receive additional work under the bridge contract. While delays and setbacks are frustrating, we are well positioned to withstand near-term headwinds as we await a decision from DHS. As we have previously stated, we have task orders under the CWMS 2.0 contract that extends into 2027. And CWMS 2.5 gives DHS the authority to issue new task orders and modify existing ones during this interim period. Additionally, we're continuing to remain resilient on the financial performance front. Even with headwinds with increased audit costs related to being an accelerated filer, increased healthcare costs, increased capital expense related to post-quantum cryptography or PQC, increased costs associated with inflationary environment, and continued delays in the CWMS 3.0. We have judiciously managed our costs increased revenues, and ended nearly EPS neutral for the first nine months of 2026. Bob will provide the additional details later in the call. Now I will turn the call over to Todd Dzyak, our COO, who will provide insight into some of our other developing initiatives as we close out the year. Todd?

Thanks, Jen, and good afternoon, everyone. Before I provide an update around some of our developing initiatives with Jason's upcoming retirement, Both Jin and I have temporarily taken over some of the CRO duties. Jin is taking over the marketing duties and I am assuming the sales responsibilities. We are currently reviewing both internal and external candidates to fill the CRO position on a permanent basis. We will provide updates as they become available. I have been working closely with Jason to ensure a smooth transition of the many key relationships that Jason has cultivated over the past 10 years. While our work with DHS and the pending award remains top of mind for many, our business development efforts have not stopped. Our team continues to expand our partnership with CDW. CDW's device as a service DAS offering features WidePoint's ITMS platform as the asset management tool for all deployed devices and WidePoint personnel to support all break-fix and other hardware issues for CDW's customers. We recently executed a teaming agreement with CDW to support CDW's work as the official IT equipment and solutions provider for the LA 28 Olympics and Paralympic Games and Team USA. And we are in negotiations crafting the official subcontract agreement. We're excited about the opportunity ahead and remain committed to supporting CDW before and throughout the games when called upon. Additionally, as we mentioned in last quarter's call, several smaller-scale commercial DAS deals were nearing close. Best and final offers have been submitted, and we are awaiting the customers' award decisions and signatures. We are eager to close as we begin converting DAS pipeline opportunities into signed contracts. The White Point team is also working with CDWG, the government arm of CDW, to develop new DAS opportunities in the federal market. In particular, Census 2030 is approaching, and we anticipate the official RFP to be released here in Q4. The timeline for Census 2030 is tracking very closely with the timeline we experienced for Census 2020. The ATB contract remains on target for launch in Q4. Our implementation team continues to adjust appropriately as the requirements expand beyond the initial contract scope that was executed last fall. returning to NASA's SUP6. The ordering period for the contract officially began at the start of this month. As previously disclosed, we expect meaningful activity to pick up in the new year. In preparation, we recently hired a seasoned professional with extensive experience in federal government IDIQ contracts and acquisition process to help us maximize our growth potential under SUP6. We are also implementing a PMO model one that is similar to our DHS PMO model to ensure task orders and RFQs are well supported. We've used SUP6 as especially valuable because it serves as overflow for potential work that is otherwise out of scope under CWMS and our other contract vehicles. While some of the progress and developments this year have not had an immediate revenue generating impact on our financial results, we remain hopeful and excited that the work being done now has positioned YPoint to begin delivering through 2027 and beyond. With that, I will now turn the call over to Bob to discuss our financial results. Bob?

Thanks, Todd, and thanks, everyone, for joining us today. I'll now walk through our financial results for the third quarter ending September 30th, 2026. Total revenue for the quarter increased 27% to $45.1 million from $35.5 million in the same period last year. Total revenue for the nine-month period increased 16% to $123.6 million from $106.3 million in the same period last year. Now, I'll provide a further breakdown of our revenues. Our carrier services revenue for the quarter was $26.3 million, an increase of $5.9 million from $20.4 million in the same period last year. Carrier services revenue for the nine-month period was $76.2 million, an increase of $11.2 million from $65 million in the same period last year. The increase during both periods was a result of growth in the number of phone lines under management during the fourth quarter of 2025 for our DHS customer. Managed service fees for the quarter were 10.9 million, an increase of 1.4 million from 9.5 million last year. Managed service fees for the nine-month period were 29.9 million, a 3.2 million increase from 26.7 million in the same period last year. The increase during both periods was primarily due to the additional task order with U.S. Customs and Border Protection awarded in September 2025 to manage 30,000 additional phone lines. Billable services fees for the quarter were $1.2 million compared to $1.3 million in the same period last year, remaining relatively consistent year over year. Billable service fees for the nine-month period were 3.7 million compared to 4.4 million in the same period last year. The decrease during the nine-month period was primarily due to the partial shutdown of DHS beginning in February 2026, which reduced billable activity on certain DHS contracts. Reselling and other services for the quarter were 6.7 million, an increase of 2.4 million from 4.3 million in the same period last year. Reselling and other services for the nine-month period were $13.9 million, an increase of $3.6 million from $10.3 million in the same period last year. The increase during both periods was primarily driven by the sale of deployable communications kits, which the U.S. Coast Guard refers to as digital sea bags. Gross profit for the quarter increased by $900,000 to $6.2 million or 14% of revenues from $5.3 million or 15% of revenues in the same period last year. Gross profit for the nine-month period increased $2.4 million to $17.6 million or 14% of revenues from from 15.2 million and 14% of revenues in the same period last year. The more significant metric of gross profit percentage excluding carrier services was 30% during Q3 compared to 29% in the same period last year. For the nine-month period, gross profit percentage excluding carrier services was 33%. compared with 34% in the same period last year, reflecting in part a higher mix of reselling revenues which carry a lower margin than our other managed services. Our gross profit percentage will vary from period to period based on our revenue mix. Moving to operating expenses, sales and marketing expenses during the quarter were $647,000 or 1% of revenues. and remained relatively consistent compared to $678,000 in the same period last year. Sales and marketing expenses for the nine-month period were $1.9 million or 2% of revenues and were also relatively consistent compared with $2 million in the same period last year. General administrative expenses during the quarter were $5.6 million or 12% of revenues compared to $4.8 million or 14% of revenues in the same period last year. General administrative expenses for the nine-month period were $15.4 million or 12% of revenues compared to $14.5 million or 14% of revenues in the same period last year. General administrative expenses for the third quarter and nine-month periods benefited from the deferral of approximately $600,000 and $1.7 million respectively of internal IT labor costs associated with implementation activities under the ATV contract. Because the implementation services do not represent a distinct performance obligation, the related revenue costs are deferred and will be recognized as a remaining contract term. Excluding the impact of these deferred implementation costs, operating expenses would have increased more significantly compared to the prior year periods. upon the ATV contract going live, the deferred implementation costs will be amortized to cost of sales of the remaining contract term. To the extent internal IT personnel continue to perform billable customer work after go-live, related labor costs are expected to be classified as direct costs rather than general administrative expenses. As our business grows, we expect general administrative expenses to increase in absolute dollars. However, we expect those costs remain relatively consistent or lower as a percentage of revenue. Depreciation and amortization expense for the quarter was $171,000 compared to $226,000 in the same period last year. Depreciation and amortization expense for the nine-month period was $581,000 compared to $683,000 in the same period last year. The decreases in both periods are a result of previously capitalized projects coming to the end of their assigned depreciation or amortization periods. Adjusted EBITDA, which is a non-GAAP measure for the quarter, was $338,000 compared to $344,000 in the same period last year. adjusted EBITDA for the nine-month period was $1.7 million compared with $620,000 in the same period last year. Free cash flow, which we define as adjusted EBITDA minus capital investments, was $338,000 during the third quarter compared with $324,000 in the same period last year. Free cash flow for the nine-month period increased to $1.6 million compared with $479,000 in the same period last year. Net loss for the quarter was $192,000, or a loss of $0.02 per share, compared to a net loss of $559,000, or a loss of $0.06 per share in the same period last year. Net loss for the nine-month period was $49,000, or approximately break-even on a per-share basis, compared with a net loss of $1.9 million, or a loss of $0.20 per share in the same period last year. Also, federal funded and unfunded backlog totaled approximately $209 million as of September 30, 2026. Moving to the balance sheet, we ended the quarter with $10.1 million in unrestricted cash and no bank debt. Our $4 million revolving line of credit, which matures in May 2027, remains undrawn and available to us subject to maintaining compliance with our covenants. We also maintain an at-the-market or ATM stock offering facility, although we haven't used the ATM since it was put in place. Looking ahead, we expect to incur additional costs as WidePoint transitions to an accelerated SEC filer, which we estimate these incremental costs to total approximately $800,000 in the second half of 2026. Beginning in 2027, assuming the current regulatory requirements remain in effect, we expect the annual impact to be slightly below the amount incurred in the second half of 2026 and to be spread across four quarters, moderating the effect on quarterly operating expenses. Further, under current market conditions, we also expect higher health insurance costs, rising labor costs, increased technology and infrastructure expenses and other inflationary pressures to weigh on our operating expense profile. We also may incur a one-time compensation expense under employee incentive arrangements that are contingent upon the final resolution of the CWMS 3.0 protest if in YPoint's favor. These arrangements include up to $600,000 of cash incentive compensation payable upon satisfaction of the applicable performance condition and up to approximately $400,000 of stock-based compensation, which would be recognized over the applicable requisite service periods following the satisfaction of the performance condition. Thank you for joining us. primarily to enhance the security and capabilities of our identity management solutions, including upgrades to support post-quantum cryptography. We currently expect capital expenditures of approximately $400,000 for the remainder of 2026 and approximately $2 million in 2027, which we plan to fund primarily through available cash and, where appropriate, equipment financing. While these investments will result in elevated capital expenditures in the near term, we believe they'll position the company to improve margins and profitability over time as we scale existing programs, execute under key contract awards, including the ATV contract, and continue to expand our customer base and pipeline. This completes my financial summary. For a more detailed analysis of financial results, please refer to our Form 10-Q, which was filed prior to this call. Before I turn the call back over to Jen, I'd like to briefly address my upcoming departure from WidePoint. As disclosed under Form 8-K filed last month, I have made the decision to step down from my role as Chief Financial Officer to devote more time to personal and family priorities. This was not an easy decision, particularly after four and a half years with the company. Since joining WidePoint in March 2022, I've had the opportunity to work along many dedicated and talented colleagues, and I am proud of the progress we have made in strengthening the company's financial reporting, its processes, and infrastructure. Following the filing of our third quarter Form 10-Q, I expect to continue assisting the company in a non-officer capacity to help facilitate an orderly transition of my responsibilities. The company is evaluating both internal and external candidates for my successor, and I look forward to supporting the transition as the company moves forward with that process. I want to express my sincere appreciation to my colleagues, the board of directors, and our shareholders for their support and opportunity to serve YPoint over the last four and a half years. With that, now I'll hand the call back over to Jen.

Thank you, Bob, and thank you, Todd. And Bob, as you head into your next chapter, we want to thank you for everything you've given YPoint. Since joining us, you've strengthened our finance and accounting departments, brought steady judgment to every challenge, and helped position the company for the road ahead. You leave YPoint in a better place than you found it. And that legacy will carry forward long after your last day. We're thankful that you'll remain available to lend your insight and we know that the team you built is ready for what comes next. Most of all, we wish you and your family the very best in your future endeavors. Now to address some recent developments in Washington. As many of you are aware, the recent midterm election shifted the balance of power with Democrats taking the majority in the both the House and the Senate. We do not expect this change to alter demands for wide point services, which are essential, durable and bipartisan in nature. Democrats have generally favored funding most DHS agencies, though a Democratic Congress may push to restrict immigration enforcement and bring added scrutiny to DHS spending, which could slow procurement decisions. Even so, we expect little to no disruption on YPoint's operation and day-to-day business. Additionally, Congress has not yet finalized full-year funding for fiscal year 2027 budgets. Thank you for joining us. Thank you for joining us today. ATV implementation and go-live schedules remain on track, and we should start to see its impact throughout 2027 results. Finally, we remain cautiously optimistic about favorable activities across our device-as-a-service pipeline and potential SOUP6 activities in 2027. This concludes our prepared remarks. We will now take questions from our analysts and our major shareholders. Operator, will you please open the call for questions?

Certainly, and thank you. At this time, the floor is open for questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speakerphone this afternoon that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one on your telephone keypad at this time if you wish to join queue to ask a question. please hold a moment while we poll for questions. And our first question will come from Barry Sine from Litchfield Hill Research. Barry, your line is live, please go ahead.

Hey, good afternoon gentlemen. I'm on an Amtrak train with bad reception, so let me throw out my three questions and then the operator can mute me. Number one, maybe you could speak a little bit more about the SOOP6 opportunity. You gave some information starting next year. And correct me if I'm wrong, but I believe that's also a government-wide procurement vehicle, so other agencies can also procure under that. Number two, I didn't hear much today on Spiral 4. At one point, that seemed like a huge opportunity. What's the update there? And then lastly, in the 10-Q, on your to-do list, you talked about improving the EPS metric. Maybe you could expand a little bit more on that. Thank you.

Great. Thank you, Barry. We didn't hear any background noise, so you must be in the executive cabin. Anyways, in terms of the SuP6, it is definitely a government-wide acquisition vehicle, and it is available for any government agency to utilize. anything that we see out there that we cannot put under our currently existing contract, we will bring to the SUP6 contract. And so the SUP6 is a fairly broad IT contract, and the ordering period started in November 1. We haven't seen a lot of activity there in terms of RFQs yet, but we should see some coming in here soon. There's a few administrative things that we have to do in terms of getting certain certifications and such, fairly routine administrative items, and we'll start fielding RFQs and putting in proposals for those. Todd, you're closest to that. I know we talked a little bit about PMO. Is there anything else you want to mention about SOUP6?

Yeah, I think there are going to be a lot of opportunities. Our business development folks are currently grooming a couple opportunities for Q1 and Q2 next year, trying to align with the client's budgets. for those particular pieces. But I think we're a little bit too early to really provide any real metrics on size or quantity of opportunities. We do know that our customers and potential customers do like the fact that there is another way to reach us. And we look forward to getting this thing fully ramped up and moving along.

Sounds good. Thank you, Todd. The other question was about Spiral 4. Where's the status of that? We're continuing to work on and responding to RFQs that are coming out under Spiral 4. As you know, the last we spoke of, we had something like $23 million of contracts under Spiral 4, and we plan to capture additional work under there. and we are continuing to respond to RFQs that are coming out of that contract vehicle. In terms of improving our EPS metric, we're continuing to work on that. For the first nine months of this year, we have been EPS neutral. Even with the headwinds that have been presented to us by becoming an accelerated filer, also increases in inflation and increasing our healthcare costs. And so as we look towards Q4 and in 2027, we're looking at improving our EPS metric. Hopefully we're beyond the ATV and we are beyond the CWMS 3.0 decisions and those programs will come online and we will be EPS positive in 2027. Anything else to say to that, Bob?

No, no.

Okay. I think that those were the three questions from Barry. Were there other questions from our analysts and large investors?

Yes, there will be further questions. And just as a reminder to the audience, if you wish to join the queue at this time to ask a question, you can press star 1 on your keypad. Once again, that will be star 1 to join the queue to ask a question at this time. Your next question is coming from Robert Maltby from Singular Research. Robert, your line is live. Please go ahead.

Thank you and glad to be on the call team and pleased to be providing coverage in a very interesting situation. I have to take a breath. These have been very challenging and interesting times across the board. It's a development and a news item in minutes. So pardon me while I try to assimilate and catch up a little bit. Take a breath. Just a few questions here initially. I hope to catch up with you later with more in-depth follow-ups. Regarding the the U.S. border systems, the reselling product. It looked like you experienced a good amount of growth there. And I didn't quite get that. They call it digital what? CBITs? Is that what it is?

CBITs. And that's U.S. Coast Guard. And we had then the Third and fourth quarter, we expect to deliver about 8,000 of them. So it's, you know, from a gross margin dollars perspective, it's impactful. And, you know, we expect to see that in more so in Q4. It could spill into Q1 next year.

Is that more or less a procurement activity? And could you speak to gross margins?

So the CBAG is a solution that we are providing for the Coast Guard. This includes various pieces of equipment. And Todd, our COO can be very detailed on that. Todd, you want to take that in terms of the solution?

Todd Dzyak Yeah. Actually, I think your question is, is this a one-time procurement or is this going to be a recurring revenue? It's actually both. So it is a procurement of the equipment and services and we're providing our managed services around the connectivity of the deployment of these sea bags. So we will continue to see revenue across the board on this. and as to the gross margins, this should be in line with our typical gross margins. Jin, I think what we've been saying is roughly currently about 35%, but as we expand our various services, we look to increase that.

Yeah, and so as Todd said, it is a solution-based, and some of that also includes our managed services. And our managed services gross margin, as Todd pointed out, is in the mid-30s. And then there's a procurement piece, the acquisition piece of it as well. And although that is a finite item, there's a fairly large tail that goes into 2027.

Two other quick questions, team. XCWMS 2.5, what were revenues year-over-year and growth rate and margins?

The 2.5 is very similar margins as the 2.0. So the 2.5 is a bridge contract. So it's a continuation of the 2.0.

Oh, I'm sorry. I maybe misspoke. I mean, X that piece of business, trying to look at the rest of the business.

Oh, you mean if you take out the CWMS contract, What is the rest of the business, the balance of the business?

Yeah, in terms of revenue and growth rates and margins, gross margins, if you break that out.

Yeah, our managed services revenue, gross margins are very similar in profile, and so it's in the mid-30s, both commercial and government-wide. The percentage of work, CWMS has the lion's share of that work If you're including all the carrier services and the managed services altogether, it's probably running somewhere around 80%, 85% of all the revenues. But if you look at the managed services revenue, it's probably somewhere around 70% of all of the revenues. But the margin profile is very similar.

Yeah, there's some disclosures in the queue of the exact... percentages of the CWMS contract, both gross margin and revenues for the quarter and for the nine months.

Okay, that's helpful. I'm sorry?

Go ahead.

Okay. Should I ask my third final question at the moment?

Yes.

Okay, give others a chance. Yeah, so regarding your backlog, I think you defined it as a federal backlog of $209 million. What is the source, and is that the CMS 2.5 predominantly?

Yeah, so a large portion of the $209 million in contract backlogs are from our federal government customers. and these are, you know, and of course a lion's share of that goes to the CWMS, you know, the 2.0 and the 2.5. As we continue to work through this, you know, that contract backlog will, you know, go down and then of course once we get these contracts underneath the 2.5 and then presumably under the 3.0, that contract backlog would tick back up, right? And so the $209 million includes both federal and commercial contract backlogs. Bob is shaking his head.

There's commercial backlog as long as it's serving a federal customer. For example, we have some organizations or private companies where they could have a large federal contractor that we're on contract that we're a subcontractor on. We consider that backlog.

Does that answer your question?

Sure does. Thank you very much, gentlemen. I'll go back in the queue.

Thank you. Thank you, Rob.

Thank you. Your next question is coming from Casey Ryan with Amorex. Casey, your line is live. Please go ahead.

Thank you. So great quarter, great update. I was wondering if we could get a handle on the 2.5. It says it's for six months and just sort of the start and end date of that. And I guess Is there a possibility that there's a 2.75 for some reason?

Well, I suppose there could be a 2.6 or a 2.75. We're hoping that there isn't. The contract, as it stands, they can issue task orders underneath it that can go 12 months beyond the end of the 2.5 contract vehicle. Right now, that's scheduled to end, I believe, if all options are exercised. is in the February timeframe, 2027. And they can continue to issue task orders underneath it. And as we've seen it, most of them are 12-month in duration, but some of them actually have option periods associated with them. And so they'll have a task order that has a base period of 12 months, and then they have multiple options that could potentially take it out five years total, right? And so we've seen both of those under the current, I think we said 33.7 million in total contract value. And so most of them are 12 months in nature, 12 months in nature, but one or two of them have 60 months if all options are exercised.

I see, okay. And then, so, So let's just say, you know, 113, which is the number you cited in the press release, minus 33 is 80. But that number is kind of an annualized 12-month potential number, basically, which makes sense.

Say that again?

Well, so it's sort of interesting. So in the press release, you guys pulled out, I think, $113 million.

Oh, the ceiling, the contract ceiling, yeah. Yeah, yeah.

And so... but we can kind of think of that as like a 12-month number roughly.

Yes, so if we run up against $113 million for the 2.5 contract delegated procurement authority, they'll probably will have to modify it to raise that amount. So far, we have signed up $33.7 million. Right. I see.

sort of just like 1.13 would be the point where we would comically move to a 2.6 or 2.7 or some other kind of authorization.

Yeah, potentially. Or if the CWMS 3.0 gets delayed further, then they may potentially put another bridge contract in there, 2.6 or 2.75. Right. Okay.

So just a small item to wrap it up for me. I didn't hear much about digital anchor or any of the fiber opportunities. Is that still progressing? You guys still happy with where that's going? And I'd love to hear about any progress there.

Yeah, yeah, mobile anchor, definitely continuing to move on. And, you know, that is our next, you know, iteration of our, you know, multi factor authentication. We're putting the the most secure multi factor authentication onto these mobile devices. and we are gaining some traction there. And it's a long process, but it takes time to get some of these things under our belts. In terms of our device as a service, Todd spoke a little bit about that and our support of CDW and the LA28 Olympics. And so that is moving along and we should see some revenue from those projects probably starting in towards the end of this year, beginning of next year.

Okay, good. Well, those are my key questions, but I thought it was a really terrific quarter in the face of challenges, but I thought a really good quarter despite all the challenges. So, thank you.

Yes. Thank you, Barry. I mean, thank you.

Thank you. This concludes our question and answer session. If your question was not taken, please contact WidePoint's IR team at and WYY at gateway-grp.com. I'd now like to turn the call back over to Mr. Jin Kang for his closing remarks.

Thank you, Operator. We appreciate everyone taking the time to join us today. As the Operator mentioned, if there were any questions we did not address today, please contact our IR team. You can find their full contact information at the bottom of today's earnings release. Thank you again and have a great evening.

Thank you for joining us today for WidePoint's third quarter 2026 conference call. You may now disconnect.