BATAVIA, Ill. - High Wire Networks Inc. (OTCQB: HWNI) has announced the sale of its technology enablement services business to ServicePoint for $11.2 million in cash. This strategic move is part of the company's efforts to concentrate solely on its managed cybersecurity division, Overwatch. The deal will also see High Wire reduce its debt by approximately $5 million and improve its net shareholders' equity to over $6 million on a pro forma basis.
In a related development, the company's board has approved the sale of its subsidiary, Secure Voice Corporation, which is expected to be finalized before the end of the third quarter. High Wire CEO, Mark Porter, expressed optimism about the company's transition to a "singular, pure play managed cybersecurity company," which is anticipated to improve operational efficiency and market valuation.
The company's Overwatch division has seen a significant increase in total contract value (TCV), reaching a record $10.4 million in the first quarter of 2024, marking a 104% increase from the previous year.
This growth is attributed to the division's long-term, renewing contracts, which provide a stable and predictable revenue stream. High Wire COO, Stephen LaMarche, indicated that the company is on track to achieve breakeven in the latter half of the year, thanks to anticipated revenue growth and reduced corporate overhead.
High Wire's managed cybersecurity services are delivered through a global network of over 230 managed service providers (MSPs) and managed security service providers (MSSPs). The company's proprietary SOAR technology, which is embedded with AI, plays a crucial role in consolidating alerts and enhancing threat response.
Recently, High Wire secured a major contract to provide Overwatch OT/IoT Security™ for a U.S. health system with more than 25 hospitals and clinics.
The company is also focusing on scaling its managed cybersecurity services and has begun providing Firewall as a Service (FWaaS) through a partnership with a global OEM founded by a well-known tech giant. Edward Vasko, CISSP, has been appointed as a strategic advisor to further accelerate the growth of Overwatch.
Investors and interested parties can find additional details about the transaction in a Form 8-K filed by High Wire, accessible on the SEC's website. This report is based on a press release statement.
InvestingPro Insights
As High Wire Networks Inc. (OTCQB: HWNI) shifts its focus to its Overwatch cybersecurity division, recent financial metrics and market behavior offer a mixed picture of the company's performance and potential challenges. With a market capitalization of $14.2 million, High Wire is positioning itself within the competitive cybersecurity market.
Despite a significant return over the last week of 36.62%, an InvestingPro Tip highlights that the company is quickly burning through cash, which is a critical factor for investors to consider as the company transitions to a pure-play managed cybersecurity firm.
InvestingPro Data underscores the volatility of High Wire's stock price movements, which aligns with another InvestingPro Tip pointing out the stock's general trading pattern characterized by high volatility.
Furthermore, the company's revenue has declined by 22.58% over the last twelve months as of Q1 2024, which may raise concerns about its financial trajectory amidst its operational pivot. Moreover, the gross profit margin stands at a concerning -0.44%, indicating struggles in maintaining profitability within its operations.
While the company's recent strategic sales and a focus on managed cybersecurity services suggest potential for future growth, these financial indicators suggest that investors should monitor the company's cash flow and profitability closely.
For those looking to conduct a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/HWNI, offering more comprehensive insights. Readers can also take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes a total of 9 InvestingPro Tips for High Wire Networks Inc., providing a fuller understanding of the company's financial health and market position.
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