Business Combinations (Tables)

9 Months Ended

Sep. 30, 2014

Business Acquisition Cost Of Acquired Entity Purchase Price [Table Text Block]

Purchase Consideration

The following table sets forth the provisional fair value of consideration paid in connection with acquisition of SCL as of May 1, 2014 (unaudited):

Cash consideration	$	5,000,000	(1)
Contingent subordinated unsecured loan note payable consideration		1,000,000	(2)

Fair value of consideration paid	$	6,000,000	(3)

(1) The Company used operating cash on hand of $5.0 million, of which $4.35 million was released to the seller upon closing of the transaction and the remainder was delivered into escrow. Under the terms of the escrow agreement, the funds shall be released (subject to satisfaction of the terms of the escrow agreement) in two amounts with the first release of $0.15 million on or about May 1, 2015 and the second release of $0.5 million on or about August 1, 2015. The release of funds held in escrow may be subject to adjustment based on final net working capital as described in (3) below.

(2) The Company issued a subordinated unsecured loan Note in the principal amount of $1.0 million to satisfy the remainder of the purchase price. This is a US dollar denominated obligation. The Note accrues interest at the annual rate of 3% and provides for a lump sum payment of principal and interest on May 31, 2015; provided however that in the event that SCL fails to generate gross revenue for the three (3) months ending April 30, 2015 that is at least equal to 75% of the gross revenue generated by SCL for the three (3) months immediately preceding the acquisition of SCL, then the full face value of the Note shall be abrogated and all obligations of WGS under the Note shall be cancelled and waived. The principal amount may be subject to adjustment based on final net working capital as described in (3) below.

(3) On October 21, 2014, a final determination of net working capital resulted in a deficiency of €26,670 ($34,055 USD/EURO rate of $1.2769) which will result in a decrease in total purchase consideration upon receipt of the proceeds from SHL.

Schedule of Purchase Price Allocation [Table Text Block]

Fair value of identifiable assets acquired and liabilities assumed:

Cash	$	920,372
Trade receivables		1,294,573
Other current assets		248,026
Property and equipment		333,650
Intangibles		984,923
Other assets		2,437
Accounts payable and accrued expenses		(1,937,627)
Capital lease obligation		(66,814)

Total identifiable net assets acquired	$	1,779,540

Goodwill		4,220,460

Total purchase price	$	6,000,000

Business Acquisition, Pro Forma Information [Table Text Block]

The following unaudited pro forma condensed consolidated statements of operations of WidePoint for each of the three and nine month periods ended September 30, 2014 and 2013 have been prepared as if the acquisition of SCL had occurred at January 1, 2013 (unaudited):

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2014			2013			2014			2013
	(a)			(a)			(a)			(a)

	(Unaudited)
Revenues, net	$	14,556,000		$	13,670,000		$	38,487,000		$	39,782,000
Net (loss) income	$	(5,901,000)	(b)	$	372,000	(b)	$	(7,627,000)	(b)	$	647,000	(b)
Basic (loss) earnings per share	$	(0.081)		$	0.006		$	(0.107)		$	0.010
Diluted (loss) earnings per share	$	(0.081)		$	0.006		$	(0.107)		$	0.010

(a) To reflect on a pro forma basis unaudited consolidated financial information for the three and nine month periods ended September 30, 2014 and 2013 for WidePoint. SCL’s most recently completed fiscal year end was April 30, 2014 which differs from WidePoint’s December 31 year end. The unaudited financial information presented herein were derived from historical internally prepared financial statements for SCL and WidePoint’s Form 10-Q quarterly unaudited financial statements. SCL’s financial statements are prepared in accordance with Irish GAAP, as such additional adjustments were made to convert SCL Irish GAAP presentation to a US GAAP presentation to align with WidePoint’s accounting policies. SCL’s reporting currency unit is the Euro. SCL’s US GAAP unaudited historical statement of operations for the three and nine month periods ended September 30, 2014 and 2013 were translated into WidePoint’s reporting currency using an average USD/EURO rate of $1.3266, $1.3241, $1.3560 and $1.3168, respectively.

(b) As more fully described above under “purchase consideration”, in conjunction with the share sale and purchase agreement with SCL, WidePoint issued a subordinated unsecured loan Note in the principal amount of $1.0 million. Pro forma interest expense was calculated for this Note under the assumption that the probability of failing to generate adequate gross revenues is considered remote at this time based on projection available at the time of the transaction. Pro forma interest expense adjustments included for each of the three and nine month periods ended September 30, 2014 and 2013 was approximately $0 and $10,000, respectively.