8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

CURRENT REPORT

FORM 8-K/A No. 6

Pursuant to Section 13 or 15(d) of the Securities Exchange Act

October 25, 2004
Date of Report
(Date of Earliest Event Reported)

WIDEPOINT CORPORATION
(Exact name of registrant as specified in its charter)

Delaware	000-23967	52-2040275
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Indentification No.)

One Lincoln Centre,
Oakbrook Terrace, Illinois 60181
(Address of principal executive offices (zip code))

630-629-0003
(Registrant’s telephone number, including area code)

        The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Current Report on Form 8-K, dated October 25, 2004, as previously amended by Amendment No. 5 filed on August 17, 2005, as set forth in the pages attached hereto:

        Item 9.01 (b) Financial Statements and Exhibits - Pro Forma Financial Information

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized.

WIDEPOINT CORPORATION
By:	/s/ James T. McCubbin                                 James T. McCubbin Vice President and Chief Financial Officer

Dated: January 19, 2006

Item 9.01:      Financial Statements and Exhibits

     (a)     Financial Statements of Business Acquired.
               The following financial statements are filed as exhibits hereto:

99.1 Audited Financial Statements of Operational Research Consultants, Inc. for the fiscal years ended December 31, 2002 and December 31, 2003

99.2 Unaudited Financial Statements of Operational Research Consultants, Inc. for the nine months ended September 30, 2004

     (b)     Pro Forma Financial Information.
               The following pro forma financial information is filed as an exhibit hereto:

99.3 Unaudited Proforma Financial information of Operational Research Consultants, Inc. and WidePoint Corporation for the fiscal year ended December 31, 2003, and the nine months ended September 30, 2004, respectively, related to the acquisition of Operational Research Consultants, Inc.

     (c)     Exhibits.

10.1 Preferred Stock Purchase Agreement Between WidePoint Corporation and Barron Partners LP*

10.2 Common Stock Purchase Warrant between WidePoint Corporation and Barron Partners LP*

10.3 Registration Rights Agreement between WidePoint Corporation and Barron Partners LP*

10.4 Certificate Of Designations, Rights And Preferences Of The Series A Convertible PreferredStock between WidePoint Corporation and Barron Partners LP*

10.5 Stock Purchase Agreement by and among WidePoint Corporation, Operational Research Consultants Inc. and the Shareholders of Operational Research Consultants, Inc.*

99.1 Audited Financial Statements of Operational Research Consultants, Inc. for the fiscal years ended December 31, 2002 and December 31, 2003**

99.2 Unaudited Financial Statements of Operational Research Consultants, Inc. for the nine months ended September 30, 2004**

99.3 Unaudited Proforma Financial information of Operational Research Consultants, Inc. and WidePoint Corporation for the fiscal year ended December 31, 2003, and the nine months ended September 30, 2004, respectively, related to the acquisition of Operational Research Consultants, Inc.***

* Previously filed on Form 8-K/A No. 1 dated October 25, 2004

** Previously filed on Form 8-K/A No. 3 filed May 3, 2005

*** Amended Pro Forma Financial Information filed herewith

EX-99

Exhibit 99.1

STEPHEN EARL EDWARDS
CERTIFIED PUBLIC ACCOUNTANT
5213 PLEASANT HALL DRIVE
VIRGINIA BEACH, VA 23464
757/467-2551

REPORT OF CERTIFIED PUBLIC ACCOUNTANT
The Officers and Directors
Operational Research Consultants, Inc. Chesapeake, VA
23320

I have audited the accompanying balance sheets of Operational Research Consultants, Inc. as of December 31, 2003 and 2002 and the related statements of income, retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Operational Research Consultants, Inc. as of December 31,2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

    /s/        Stephen Earl Edwards, CPA

May 16, 2004, January 4, 2005 and May 2, 2005

The accompanying notes are an integral part of these consolidated statements

OPERATIONAL RESEARCH CONSULTANTS, INC

BALANCE SHEETS
DECEMBER 31, 2003 AND 2002

	2003	2002
ASSETS
Current assets:
Cash in Banks	$     27,327	$       5,773
Accounts Receivable - Other	8,019	18,618
Receivables	1,870,713	4,608,891
Prepaid Expenses	88,596	66,322
Deferred Income Tax Benefit	19,763	0
Deposits - Utility and Rental	39,988	49,689
Total current assets	2,054,406	4,749,293
Properties:
Equipment	358,419	331,804
Less Accumulated Depreciation	247,949	165,286
Total properties	110,470	166,518
Other Assets - Intangible Asset - Net	11,806	25,139
Total assets	$2,176,682	$4,940,950
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Deferred Income Tax	$              0	$     91,094
Accrued Expenses	528,917	636,802
Accounts Payable	250,125	2,146,802
Note Payable - Current maturities	102,823	866,274
Taxes Payable	27,668	11,361
Total current liabilities	909,533	3,752,333
Long-term debt, net of current maturities	0	0
Total Liabilities	$   909,533	$3,752,333
Stockholders' equity:
Common stock, No par value,
Authorized 1,800 shares, issued
and outstanding 1,800 shares	1,800	1,800
Paid-in capital	53,620	53,620
Retained earnings	1,211,729	1,133,197
Total stockholders' equity	1,267,149	1,188,617
Total liabilities & shareholders' equity	$2,176,682	$4,940,950

The accompanying notes are an integral part of these consolidated statements

2

OPERATIONAL RESEARCH CONSULTANTS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS

For the Years Ended December 31, 2003 and 2002

	2003			2002
REVENUE:
Contract-8(a)	$	7,968,900		$	8,371,280
Contract-Other Government		4,320,476			5,369,095
Contract-Commercial		2,667,239			1,104,795
TOTAL	$	14,956,615		$	14,845,170
DIRECT COSTS:
Material		6,346,600			5,587,979
Labor		3,716,239			3,968,550
Overhead		315,277			591,829
TOTAL DIRECT COSTS	$	10,378,116		$	10,148,358
GROSS MARGIN	$	4,578,499		$	4,696,812
OPERATING EXPENSES:
Advertising		34,427			60,782
Auto expense		1,154			7,745
Depreciation and Amortization		95,996			59,638
Due and Subscriptions		10,814			11,104
Equipment Rental		88,606			90,424
Fringe Benefits		1,699,668			1,446,483
General and Miscellaneous		205,303			104,458
Insurance		55,985			27,297
Office Expense and Supplies		150,158			224,326
Professional Fees		87,292			42,843
Rent		540,092			504,109
Repairs		76,610			53,628
Salaries and Consultants		1,061,757			1,159,914
Taxes		106,758			82,350
Telephone		148,334			153,292
Travel		68,238			104,714
Utilities		10,442			6,373
TOTAL	$	4,441,634		$	4,139,480
INCOME FROM OPERATIONS	$	136,865		$	557,332
OTHER Expense, Net	$	(58,193	)	$	(8,967	)
NET INCOME BEFORE INCOME TAXES	$	78,672		$	548,365
INCOME TAXES		140			189,387
NET INCOME	$	78,532		$	358,978
RETAINED EARNINGS - Beginning		1,133,197			774,219
RETAINED EARNINGS - Ending	$	1,211,729		$	1,133,197

The accompanying notes are an integral part of the financial statements.

3

OPERATIONAL RESEARCH CONSULTANTS, INC.
STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2003 and 2002

	2003			2002
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net Income	$	78,532		$	358,978
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and Amortization	$	95,996		$	59,638
Book Value of assets disposed		--			2,090
Increase/ (Decrease) in receivables and deposits		2,758,478			(2,785,965	)
Decrease in prepaid expenses		(22,274	)		(53,960	)
Increase (Decrease) in deferred income taxes payable and		(110,857	)		33,450
Deferred income tax benefit
Increase (Decrease) in accrued expenses		(107,885	)		264,831
Increase (Decrease) in Accounts payable and taxes payable		(1,880,370	)		1,528,488
TOTAL ADJUSTMENTS	$	733,088		$	(951,428	)
NET CASH PROVIDED BY (TO) OPERATING ACTIVITIES	$	811,620		$	(592,450	)
CASH FLOWS TO INVESTING ACTIVITIES:
Capital Expenditures and Other Assets	$	(26,615	)	$	(88,558	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (Reductions) from Borrowings-Net	$	(763,451	)	$	666,858
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	$	21,554		$	(14,150	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		5,773			19,923
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	27,327		$	5,773

The accompanying notes are an integral part of the financial statements.

4

OPERATIONAL RESEARCH CONSULTANTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation, Organization and Nature of Operations:

ORC is a multi disciplinary firm offering a broad range of planning, management, acquisition, installation, test and evaluation, financial and engineering support services. ORC began business in 1991 and became 8(a) certified in 1993. ORC had four locations during 2003, but as of February 29, 2004 the Maryland office was closed. Its staff consists of business and technical specialists that provide technical support services that augment and expand ORC’s customers technical capabilities, drive new technical innovations and help maintain a competitive edge in today’s rapidly changing technological environment. ORC supports and assist federal agencies of the United States government, various systems integrators, and government contractor’s. ORC was acquired on October 25, 2004 in a subsequent event by WidePoint Corporation.

Most of ORC’s current costs consist primarily of the salaries and benefits paid to the Company’s technical, marketing and administrative personnel. ORC’s profitability depends upon both the volume of services performed and their ability to manage costs. Because a significant portion of ORC’s cost structure is labor related, they must effectively manage these costs to achieve profitability. To date, ORC has attempted to maximize its operating margins through efficiencies achieved by the use of the Company’s proprietary methodologies and expertise and by offsetting increases in consultant salaries with increases in consultant fees received from clients.

2. Significant Accounting Policies:

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates.

Cash and Cash Equivalents

Investments purchased with original maturities of three months or less are considered cash equivalents for purposes of these condensed consolidated financial statements. ORC maintains cash and cash equivalents with various major financial institutions. At December 31, 2003 and December 31, 2002, cash and cash equivalents included $27,327 and $5,773, respectively, in non-interest bearing accounts. ORC had no investments in interest bearing accounts. ORC places its temporary cash investments with high-credit, quality financial institutions, and as a result, ORC believes that no significant concentration of credit risk exists with respect to these cash investments.

Accounts Receivable

The majority of ORC’s accounts receivable are due from federal agencies of the United States Government or from established companies that sell to the United States federal government.

Credit is extended based on evaluation of a customers’ financial condition and, generally, collateral is not required. Accounts receivable are due within 30 to 45 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. ORC determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company and the condition of the general economy and the industry as a whole. ORC writes-off accounts receivable when they become uncollectible and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. ORC had no allowance for doubtful accounts for the years ending December 31, 2003 or 2002, respectively.

The accompanying notes are an integral part of the financial statements.

5

Fair Value of Financial Instruments

ORC’s financial instruments consist of cash, accounts receivable, accounts payable and accrued expenses. The fair value of these financial instruments approximates their carrying value as of September 30, 2004, due to their short-term nature.

Revenue Recognition

The majority of ORC’s revenues are derived from cost-plus, or time-and-materials contracts. Under cost-plus contracts, revenues are recognized as costs are incurred and include an estimate of applicable fees earned. For time-and-material contracts, revenues are computed by multiplying the number of direct labor-hours expended in the performance of the contract by the contract billing rates and adding other billable direct costs. In the event of a termination of a contract, all billed and unbilled amounts associated with those task orders where work has been performed would be billed and collected. The termination provisions of the contract would be accounted for at the time of termination. Any deferred and/or amortization cost would either be billed or expensed depending upon the termination provisions of the contract. Further, ORC has had no history of losses nor has it identified any specific risk of loss at December 31, 2003 or 2002, respectively, due to termination provisions and thus has not recorded provisions for such events.

Significant Customers

For the year ended December 31, 2003, two customers, DISA and Raytheon, respectively represented 50% and 10% of revenue. For the year ended December 31, 2002, two customers, DISA and CRANE, respectively represented 59% and 12% of revenue.

Concentrations of Credit Risk

Financial instruments that potentially subject ORC to credit risk consist of cash and cash equivalents and accounts receivable. As of December 31, 2003, 4 customers represented 19%, 13%, 12% and 10% of accounts receivable, respectively. As of December 31, 2002, 2 customers individually represented 68% and 34% of accounts receivable.

Note Payable

ORC maintains a line of credit with Wachovia Bank for which a loan is secured by Section 8 (a) receivables and requires a checking account be maintained at Wachovia Bank in which these receivables are deposited. The bank transfers money from ORC’s bank account to pay principal and interest of prime plus 0.50%. The loan is personally guaranteed by the CEO of ORC, and is secured by ORC’s equipment and software. ORC maximum loan limit is $2,000,000 and the Guarantor must continue to own at least 51% of the outstanding capital stock. The note expires on September 30, 2004. The note was extended on a month to month basis upon consummation of the acquisition of ORC by WidePoint Corporation on October 25, 2004 at which time the loan was retired and replaced by a new facility provided by WidePoint Corporation. The amount of the outstanding on the loan on December 31, 2003, and 2002, respectively, were 102,823 and 866,274.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” Under SFAS No.109, deferred tax assets and liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. SFAS No. 109 requires that the net deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized. The Company had no net deferred tax asset as of December 31, 2003. The Company presently utilizes the cash method to determine its taxable liability and has estimated and withheld for sufficient taxable liabilities.

The accompanying notes are an integral part of the financial statements.

6

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Property and equipment consisted of the following:

	December 31,
	2003	2002
Furniture, computers, equipment and software	$358,419	$331,804
Less- Accumulated depreciation and amortization	247,949	165,286
	$110,470	$166,518

Depreciation expense is computed using the straight-line method over the estimated useful lives of between three and seven years.

In accordance with the American Institute of Certified Accountants Statement of Position 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” ORC capitalizes costs related to software and implementation in connection with its internal use software systems.

Long-lived Assets

ORC reviews its long-lived assets, including property and equipment, identifiable intangibles, and goodwill whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, ORC evaluates the probability that future undiscounted net cash flows will be less that the carrying amount of the assets.

Basic and Diluted Net Income Per Share

Basic income per share includes no dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted income per share includes the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. There were no diluted securities issued and as a result, the basic and diluted income per share for all periods presented are identical.

Fair Value of Financial Instruments

ORC’s financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable. The fair value of these financial instruments approximates their carrying value as of December 2003, due to their short-term nature.

Reclassifications

Certain amounts in prior years’ financial statements have been reclassified to conform with the current year.

New accounting pronouncements

In April 2003, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 149, “Amendment on Statement 133 on Derivative Instruments and Hedging Activities,” which is effective for all contracts entered into or modified after June 30, 2003. SFAS No. 149 clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” ORC has determined that SFAS No. 149 has no impact on its financial statements.

The accompanying notes are an integral part of the financial statements.

7

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” which is effective for financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003. SFAS No. 150 requires that an issuer classify certain financial instruments as a liability (or an asset in some circumstances). ORC is not currently the issuer of any financial instruments that would qualify under SFAS No. 150. Therefore, ORC has determined that the adoption of this pronouncement did not have an impact on its financial statements.

3. Income Taxes.

The Company had no provision for income taxes for the year ended December 31, 2003 due to the application of ORC’s NOL’s and a provision for approximately $190,000 for the year ended December 31, 2002. ORC is a cash based filer.

4. Commitments and Contingencies.

Leases

The Company has entered into numerous leasing arrangements that run from March 1998 until May 2008. ORC’s lease obligations are as follows:

1 Premises-month to month leases in the amount of $40,813 per month for four locations; as of March 1, 2004 in the amount of $39,230 for three locations.

2 Equipment, 1 year, beginning March, 1998, $28.73 per month.

2.1 Copier, 5 years, beginning February, 1999, $326 per month.

2.2 Equipment, 5 years, beginning March, 2000, $2,356 per month.

2.3 Equipment, 3 years, beginning December, 2000, $2,330 per month.

2.4 Equipment and furniture, 3 years, beginning June 2001, $2,643 per month.

2.5 Vehicles., 4 years, beginning 2000, $ 1,314 per month.

2.6 Vehicles, 4 years, beginning 2001, $922 per month.

2.7 Copier, 3 years, beginning January, 2002, $194 per month.

2.8 Furniture, 3 years, beginning March, 2002, $1,045 per month.

2.9 Equipment, 3 years, beginning May, 2002, $1,214 per month.

2.10 Equipment, 3 years, beginning May, 2002, $910 per month.

2.11 Equipment, 3 years, beginning May, 2002, $713 per month.

2.12 Vehicle, 4 years, beginning July, 2002, $430 per month.

2.13 Vehicle, 3 years, beginning August, 2002, $737 per month.

2.14 Equipment, 4 years, beginning September, 2002, $1,367 per month.

2.15 Telephones, 3 years, beginning October, 2002, $200 per month.

2.16 Equipment, 1 year, beginning October, 2003, $1,664 per month.

2.17 Copier, 3 years, beginning November, 2003, $533 per month.

2.18 Copier, 5 years, beginning May, 2003, $383 per month

Related Party Transactions

Beginning in 2002, ORC began leasing furniture and equipment from RLC of VA, LLC. The members of this company are the wives of ORC’s stockholders. Rental expense for the year 2003 and 2002 was $110,348 and $48,792, respectively, which is comparative with other sources.

The accompanying notes are an integral part of the financial statements.

8

Pension Expense

ORC has a 401(k) pension plan in which full-time employees are eligible to participate after meeting certain minimum criteria. The full pension cost has been reflected in the financial statements and payments are made to the plan at the Principal Financial Group soon after each payday. ORC matched employee contributions up to a certain percentage. Pension expense for 2003 was $351,575 and for 2002 was $240,219, and is included in fringe benefits.

Cafeteria Plan

ORC has a Cafeteria Plan in which all full-time employees are eligible to participate after meeting certain criteria. The plan is under the meaning of Section 125 of the Internal Revenue Code of 1986, as amended.. Costs of medical and dental insurance premiums under a group medical plan are covered. The plan is operated in accordance with HIPAA.

Litigation

ORC is currently the defendant in a lawsuit entitled Fleuette v. ORC, C.A. No. 1:04-cv-1054, in the Eastern District of Virginia, in which Renee Fleuette Gallagher, a former employee of ORC, is alleging that her employment with ORC was wrongfully terminated by ORC. The plaintiff seeks an unspecified amount of damages from ORC. Prior administrative and judicial proceedings instituted by Ms. Gallagher against ORC have been dismissed or found to be without merit. ORC does not believe that it has committed any wrong against Ms. Gallagher and ORC intends to defend itself in the current lawsuit filed by Ms. Gallagher against ORC. As part of the agreements entered into between WidePoint, ORC and the former stockholders of ORC at the time of WidePoint’s acquisition of ORC, the former stockholders of ORC have agreed to indemnify WidePoint and ORC from any liability involving the claims by Ms. Gallagher against ORC, including the above-captioned lawsuit. The litigation was settled in January of 2005.

5. Subsequent events.

ORC was acquired by WidePoint Corporation on October 25, 2004 through a stock purchase. The consideration included the issuance of stock, the assumption of debt, and provision of cash as further described within a Form 8-K filed on October 29, 2004 by WidePoint Corporation.

6. Segment reporting.

ORC adopted SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” SFAS No. 131 requires a business enterprise, based upon a management approach, to disclose financial and descriptive information about its operating segments. Operating segments are components of an enterprise about which separate financial information is available and regularly evaluated by the chief operating decision maker(s) of an enterprise. Under this definition, the Company operated as a single segment for all periods presented.

The accompanying notes are an integral part of the financial statements.

9

EX-99

Exhibit 99.2

OPERATIONAL RESEARCH CONSULTANTS, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 2004

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,	December 31,
	2004	2003
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$     85,089	$     27,327
Accounts receivable	2,267,240	1,870,713
Prepaid expenses and other assets	63,474	156,366
Total current assets	2,415,803	2,054,406
Property and equipment, net	80,585	110,470
Development costs	496,613	--
Other assets	28,459	11,806
Total assets	$3,021,460	$2,176,682
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$   617,947	$   250,125
Accrued expenses	496,047	556,585
Note payable	429,115	102,823
Total current liabilities	1,543,109	909,533
Long-term liabilities	--	--
Total Liabilities	$1,543,109	$   909,533
Shareholders' equity
Common stock, no par value, 1,800 shares authorized,
Issued, and outstanding
as of September 30, 2004 and December 31, 2003, respectively	1, 800	1, 800
Additional paid-in capital	53,620	53,620
Retained earnings	1,422,931	1,211,729
Total shareholders' equity	1,478,351	1,267,149
Total liabilities & shareholders' equity	$3,021,460	$2,176,682

The accompanying notes are an integral part of the financial statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Nine Months Ended
	September 30,
	2004		2003
Revenues, net	$ 7,520,445		$ 12,147,136
Operating expenses:
Cost of sales	4,954,492		8,679,591
Sales, general & administrative	2,201,388		3,350,382
Depreciation & amortization	20,712		20,550
Income from operations	343,853		96,613
Other Interest income (expenses):
Interest income	--		--
Interest expenses	(45,860	)	(49,998	)
Other income	4,823		464
Net income before provision for income taxes	302,816		46,151
Income tax provision	91,614		3,336
Net income	$    211,202		$        42,815
Basic and diluted net income per share	$      117.33		$          23.79
Basic and diluted weighted average shares outstanding	1,800		1,800

The accompanying notes are an integral part of the financial statements.

2

OPERATIONAL RESEARCH CONSULTANTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months
	Ended September 30,
	2004			2003
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income	$	211,202		$	42,815
Adjustments to reconcile net loss to net cash:
Depreciation and amortization expense		20,712			20,550
Book value of assets disposed		21,882			--
Changes in assets and liabilities
Accounts receivable		(396,527	)		1,902,861
Prepaid expenses and other current		52,904			(17,299	)
Development costs		(496,613	)		--
Other assets		14,724			5,773
Accounts payable and accrued expenses		307,284			(1,586,065	)
Net cash provided by/(used in) operating Activities	$	(264,432	)	$	368,635
Cashflows from investing activities:
Purchase of property and equipment		(4,098	)		(19,208	)
Net cash used in investing activities	$	(4,098	)	$	(19,208	)
Cashflows from financing activities
Net borrowings/(payments) on notes Payable		326,292			(280,016	)
Net cash (used in) provided by financing activities	$	326,292		$	(280,016	)
Net increase in cash	$	57,762		$	69,411
Cash, beginning of period	$	27,327		$	5,773
Cash, end of period	$	85,089		$	75,184

The accompanying notes are an integral part of the financial statements.

3

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation, Organization and Nature of Operations:

The accompanying unaudited financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“US GAAP”) for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the financial statements of Operational Research Consultants, Inc. (“ORC”), as of December 31, 2003, and the notes thereto included in the Form S-1 filed by the Company. The results of operations for the nine months ended September 30, 2004, are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.

ORC is a multi disciplinary firm offering a broad range of planning, management, acquisition, installation, test and evaluation, financial and engineering support services. ORC began business in 1991 and became 8(a) certified in 1993. ORC had four location during 2003, but as of February 29, 2004 the Maryland office was closed. Its staff consists of business and technical specialists that provide technical support services that augment and expand ORC’s customers technical capabilities, drive new technical innovations and help maintain a competitive edge in today’s rapidly changing technological environment. ORC supports and assist federal agencies of the United States government, various systems integrators, and government contractor’s. ORC was acquired on October 25, 2004 in a subsequent event by WidePoint Corporation.

Most of ORC’s current costs consist primarily of the salaries and benefits paid to the Company’s technical, marketing and administrative personnel. ORC’s profitability depends upon both the volume of services performed and their ability to manage costs. Because a significant portion of ORC’s cost structure is labor related, they must effectively manage these costs to achieve profitability. To date, ORC has attempted to maximize its operating margins through efficiencies achieved by the use of the Company’s proprietary methodologies and expertise and by offsetting increases in consultant salaries with increases in consultant fees received from clients.

2. Significant Accounting Policies:

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates.

Cash and Cash Equivalents

Investments purchased with original maturities of three months or less are considered cash equivalents for purposes of these condensed consolidated financial statements. ORC maintains cash and cash equivalents with various major financial institutions. At September 30, 2004 and December 31, 2003, cash and cash equivalents included $85,089 and $27,327, respectively, on investments in interest bearing accounts. ORC places its temporary cash investments with high-credit, quality financial institutions, and as a result, ORC believes that no significant concentration of credit risk exists with respect to these cash investments.

Accounts Receivable

The majority of ORC’s accounts receivable are due from federal agencies of the United States Government or from established companies that sell to the United States federal government. Credit is extended based on evaluation of a customers’ financial condition and, generally, collateral is not required. Accounts receivable are due within 30 to 45 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. ORC determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company and the condition of the general economy and the industry as a whole. ORC writes-off accounts receivable when they become uncollectible and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. ORC had no allowance for doubtful accounts for the nine months ending September 30, 2004 or for the year ended December 31, 2003, respectively. For the nine months ended September 30 2004 and 2003, respectively, ORC charged off to costs and expenses $3,232 and $3,236.

The accompanying notes are an integral part of the financial statements.

4

Unbilled accounts receivable on time-and-materials contracts represent costs incurred and gross profit recognized near the period-end but not billed until the following period. Unbilled accounts receivable on fixed-price contracts consist of amounts incurred that are not yet billable under contract terms. Unbilled accounts receivable totaled $32,620 and $39,384 at September 30, 2004 and December 31, 2003, respectively.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. As of September 30, 2004, two customers represented 22% and 11% of accounts receivable, respectively. As of December 31, 2003, four customers individually represented 19%, 13%, 12%, and 10% of accounts receivable.

Note Payable

ORC maintains a line of credit with Wachovia Bank for which a loan is secured by Section 8 (a) receivables and requires a checking account be maintained at Wachovia Bank in which these receivables are deposited. The bank transfers money from ORC’s bank account to pay principal and interest of prime plus 0.50%. The loan is personally guaranteed by the CEO of ORC, and is secured by ORC’s equipment and software. ORC maximum loan limit is $2,000,000 and the Guarantor must continue to own at least 51% of the outstanding capital stock. The note expires on September 30, 2004. The note was extended on a month to month basis upon consummation of the acquisition of ORC by WidePoint Corporation on October 25, 2004 at which time the loan was retired and replaced by a new facility provided by WidePoint Corporation. The amount of the outstanding on the loan on September 30, 2003, and 2002, respectively, were 429,115 and 102,823.

Development Cost

For the period ending September 30, 2004, ORC initiated the development of certain proprietary development work associated with the rollout of a PKI certificate program estimated to be launched in April of 2005 in which ORC has accumulated the associated cost of development of this system. ORC followed the guidance in SFAS 86 to support the basis for capitalizing the development cost associated with the PKI certificate program.

Fair Value of Financial Instruments

ORC’s financial instruments consist of cash, accounts receivable, accounts payable and accrued expenses. The fair value of these financial instruments approximates their carrying value as of September 30, 2004, due to their short-term nature.

The accompanying notes are an integral part of the financial statements.

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Revenue Recognition

The majority of ORC’s revenues are derived from cost-plus, or time-and-materials contracts. Under cost-plus contracts, revenues are recognized as costs are incurred and include an estimate of applicable fees earned. For time-and-material contracts, revenues are computed by multiplying the number of direct labor-hours expended in the performance of the contract by the contract billing rates and adding other billable direct costs. In the event of a termination of a contract, all billed and unbilled amounts associated with those task orders where work has been performed would be billed and collected. The termination provisions of the contract would be accounted for at the time of termination. Any deferred and/or amortization cost would either be billed or expensed depending upon the termination provisions of the contract. Further, ORC has had no history of losses nor has it identified any specific risk of loss at September 31, 2004 or 2003, respectively, due to termination provisions and thus has not recorded provisions for such events.

Significant Customers

For the nine months ended September 30, 2004, two customers, The Department of Homeland Security and ARTEL, respectively represented 19% and 17% of revenue. For the nine months ended September 30, 2003, two customers, DISA and Raytheon, respectively represented 56% and 12% of revenue.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” Under SFAS No.109, deferred tax assets and liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. SFAS No. 109 requires that the net deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized. The Company had no net deferred tax asset. The Company presently utilizes the cash method to determine its taxable liability and has estimated and withheld for sufficient taxable liabilities.

Basic and Diluted Net Income Per Share

Basic income per share includes no dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted income per share includes the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. There were no diluted securities issued and as a result, the basic and diluted income per share for all periods presented are identical.

3. Subsequent Events:

On October 25, 2004, ORC was acquired by WidePoint Corporation in a stock purchase transaction which created a change in control of 100% of the shares of the outstanding shares being transferred to WidePoint Corporation.

4. Commitments and Contingencies:

Litigation

ORC is currently the defendant in a lawsuit entitled Fleuette v. ORC, C.A. No. 1:04-cv-1054, in the Eastern District of Virginia, in which Renee Fleuette Gallagher, a former employee of ORC, is alleging that her employment with ORC was wrongfully terminated by ORC. The plaintiff seeks an unspecified amount of damages from ORC. Prior administrative and judicial proceedings instituted by Ms. Gallagher against ORC have been dismissed or found to be without merit. ORC does not believe that it has committed any wrong against Ms. Gallagher and ORC intends to defend itself in the current lawsuit filed by Ms. Gallagher against ORC. As part of the agreements entered into between WidePoint, ORC and the former stockholders of ORC at the time of WidePoint’s acquisition of ORC, the former stockholders of ORC have agreed to indemnify WidePoint and ORC from any liability involving the claims by Ms. Gallagher against ORC, including the above-captioned lawsuit. The litigation was settled in January of 2005.

The accompanying notes are an integral part of the financial statements.

6

EX-99

Exhibit 99.3

PRO FORMA FINANCIAL INFORMATION
WIDEPOINT CORPORATION
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma condensed consolidated financial information has been prepared by WidePoint Corporation (“WidePoint”) and gives effect to the acquisition of Operational Research Consultants, Inc. (“ORC”) completed on October 25, 2004.

The unaudited pro forma condensed consolidated statement of operations for the twelve months ended December 31, 2003 has been prepared to give effect to the ORC acquisition as if it had occurred on January 1, 2003. The unaudited pro forma condensed consolidated statement of operations for the nine month period ended September 30, 2004 has been prepared to give effect to the ORC acquisition as if it had occurred on January 1, 2003. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2004 has been prepared to give effect to the ORC acquisition as if it has occurred on September 30, 2004.

The pro forma adjustments, which are based on available information and certain assumptions that WidePoint believes are reasonable under the circumstances, are applied to the historical financial statements of WidePoint and ORC. WidePoint’s preliminary allocation of the ORC purchase price is based upon preliminary estimates of the fair value of net assets acquired. Management believes that the preliminary allocation of the purchase price is reasonable, however, in some cases, the final allocation will be based upon an independent valuation that is not yet complete. As a result, the allocation is subject to revision as additional information becomes available, and such revised allocation could differ from the preliminary allocation.

The accompanying unaudited pro forma condensed consolidated financial information should be read in conjunction with the historical financial statements and the notes thereto for WidePoint and the ORC. The unaudited pro forma condensed consolidated financial information is provided for informational purposes only and does not purport to represent what WidePoint’s financial position or results of operations would actually have been had the acquisition occurred on such dates or to project WidePoint’s results of operations or financial position for any future period.

These pro forma financial statements contain certain costs, including expenses allocated to ORC, that WidePoint’s management does not expect will continue. As a result, actual results may differ significantly from the pro forma information presented herein.

The accompanying notes are an integral part of the financial statements.

WIDEPOINT CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Twelve months ended December 31, 2003

	Twelve Months Ended
	December 31, 2003
	Historical WidePoint (a)			Historical ORC (b)			Pro Forma Adjustments			Pro Forma WidePoint
Revenues, net	$	3,293,508		$	14,956,615		$	--		$	18,250,123
Operating expenses:
Cost of sales		2,460,281			10,378,116			--			12,838,397
Sales, general & administrative		1,123,285			4,345,638						5,468,923
Depreciation & amortization		12,777			95,996			331,101	(c)		439,874
(Loss) income from operations		(302,835	)		136,865						(497,071	)
Other income (expenses):
Interest income		11,551			--			--			11,551
Interest expenses		(1,304	)		(55,584	)		(167,000	)  (d)		(223,888	)
Other		1,500			(2,609	)		--			(1,109	)
Net income (loss) before
provision for income taxes		(291,088	)		78,672						(653,629	)
Income tax provision		--			140			--			140
Net (loss) income	$	(291,088	)	$	78,532		$	--		$	(653,769	)
Basic and diluted net	$	(0.02	)							$	(0.04	)
(loss) per share
Basic and diluted
weighted-average shares		15,579,913						972,500	(f)		16,552,413
outstanding

The accompanying notes are an integral part of the financial statements.

2

WIDEPOINT CORPORATION AND SUBSIDIARIESUNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Nine months ended September 30, 2004

	Nine Months Ended
	September 30, 2004
	As Restated Historical WidePoint (a)			Historical ORC (b)			Pro Forma Adjustments			Pro Forma WidePoint
Revenues, net	$	2,470,992		$	7,520,445		$	--		$	9,991,437
Operating expenses:
Cost of sales		1,850,528			4,954,492			--			6,805,020
Sales, general & administrative		1,433,160			2,185,332						3,618,492
Depreciation & amortization		3,322			36,768			248,326	(c)		288,416
(Loss) income from operations		(816,018	)		343,853						(472,165	)
Other income (expenses):
Interest income		5,006			--			--			5,006
Interest expenses		(608	)		(45,860	)		(129,000	)  (d)		(175,468	)
Other		--			4,823			--			4,823
Net income before provision for
Income taxes		(811,620	)		302,816						(508,804	)
Income tax provision		--			91,614			(91,614	)  (e)		--
Net (loss) income	$	(811,620	)	$	211,202					$	(600,418	)
Basic and diluted net (loss) per share	$	(0.05	)								($ 0.03	)
Basic and diluted weighted-average
shares outstanding		16,336,990						972,500	(f)		17,309,490

The accompanying notes are an integral part of the financial statements.

3

NOTES TO UNAUDITED PRO FORMACONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS

The following notes relate to the Unaudited Pro Forma Condensed Consolidated Statements of Operations:

a.         To reflect the reported historical operating results of WidePoint for the year ended December 31, 2003 and the unaudited operating results for the nine months ended September 30, 2004 which included its acquisition of Chesapeake.

b.         To reflect the historical results of operations of ORC for the twelve month period ended December 31, 2003, which is the same as WidePoint’s fiscal year. The unaudited quarterly statements of operations were derived from the historical results of operations of ORC for the nine month period ended September 30, 2004.

c.         To record estimated amortization expense related to the identifiable intangible assets associated with the acquisition of ORC. WidePoint will retain an outside firm to do an independent appraisal for the allocation of the purchase price related to the acquisition of ORC. As this appraisal has not yet been completed, the total allocation, the useful lives, and the method of amortization may change. Based upon the most current projections, WidePoint recorded an intangible asset associated with the PKI Certificate Service offered by ORC and applied a $240,792 value with an estimated useful life of six years in which WidePoint realized an amortization expense of $40,132 for the twelve month period ended December 31, 2003 and $30,099 for the nine month period ended September 30, 2004. WidePoint recorded an intangible asset associated with ORC’s client relationship and applied a $904,731 value with an estimated useful life of five years in which WidePoint realized an amortization expense of $180,946 for the twelve month period ended December 31, 2003 and $135,710 for the nine month period ended September 30, 2004. WidePoint recorded an intangible asset associated with the Chesapeake transaction and applied a $1,540,319 value with an estimated useful life of fourteen years in which WidePoint realized an amortization expense of $110,023 for the twelve month period ended December 31, 2003 and $82,517 for the nine month period ended September 30, 2004.

d.         In conjunction with the acquisition of ORC, WidePoint secured a $2,500,000, prime rate, secured line of credit of which WidePoint utilized approximately $1,200,000 towards the purchase price requirements of ORC. The line of credit was in the form of a term loan that expires in November of 2005. The adjustment records an incremental interest expense at a rate of 4.75% of $1,200,000 and additionally includes amortized costs associated with the loan that includes document preparation fees, legal fees, and various consulting fees.

e.         To reverse federal and state income taxes at ORC for the nine months ended September 31, 2004 as a result of the application of a net deferred tax asset and the application of associated losses at Historic WidePoint against gains at ORC which reduced the estimated taxes withheld during the nine months ended September 31, 2004.

f.         To reflect the issuance of 962,500 common shares of WidePoint’s stock as part of the purchase consideration of ORC.

The accompanying notes are an integral part of the financial statements.

4

WIDEPOINT CORPORATIONUNAUDITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of September 30, 2004

	September 30, 2004
	As Restated Historical WidePoint (a)			Historical ORC (b)		Pro Forma Adjustments			Pro Forma WidePoint
ASSETS
Current assets:
Cash and cash equivalents	$	598,111		$	85,089	$	(27,164	)  (c)	$	656,036
Accounts receivable		511,527			2,270,361		--			2,781,888
Prepaid expenses and other assets		42,361			60,353					102,714
Total current assets		1,151,999			2,415,803		--			3,540,638
Property and equipment, net		7,858			80,585		--			88,443
Goodwill		--			--		2,858,475	(d)		2,858,475
Intangibles		--			496,613		1,145,522	(d)		1,642,135
Other assets		71,867			28,459		--			100,326
Total assets	$	1,231,724		$	3,021,460				$	8,230,017
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	94,155		$	617,947	$	--		$	712,102
Accrued expenses		300,111			496,047		594,816	(e)		1,390,974
Short-term portion of deferred rent		2,407			--		--			2,407
Short-term borrowings		--			429,115		1,200,000	(f)		1,629,115
Financial instruments		--			--		3,577,954	(g)		3,577,954
Total current liabilities		396,673			1,543,109		5,372,770			7,312,552
Deferred income tax liability							222,939	(h)		222,939
Long-term portion of deferred rent		7,764			--					7,764
Total Liabilities	$	404,437			1,543,109		5,595,709			7,543,255
Shareholders' equity
Preferred stock		--			--		2,046	(i)		2,046
Common stock		16,897			--		963	(i)		17,860
Stock warrants		--			--		14,291	(j)		14,291
Related party notes receivable		(121,100	)		--		--			(121,100	)
Additional paid-in capital		42,566,865			--		(157,825	) (k)		42,409,040
Accumulated (deficit) income		(41,635,375	)		--		--			(41,635,375	)
Total shareholders' equity		827,287			--		(140,525	)		686,762
Total liabilities &	$	1,231,724		$	1,543,109	$	5,455,184		$	8,230,017
shareholders' equity

The accompanying notes are an integral part of the financial statements.

5

WIDEPOINT CORPORATIONNOTES
TO UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED BALANCE SHEET

The following notes relate to the Unaudited Pro Forma Condensed Consolidated Balance Sheet.

a.         To reflect the historical unaudited financial position of WidePoint including its acquisition of Chesapeake.

b.         To reflect the historical unaudited financial position of the ORC.

c.         To recognize the payment of net cash to acquire ORC and to pay fees for commissions to finders and broker dealers for WidePoint’s preferred equity issuance of $3,580,000. The Company paid to ORC $4,528,164 in cash proceeds and paid $279,000 in cash for commissions to finders and broker dealers in conjunction with its preferred stock issuance. The Company raised $3,580,000 in cash from its preferred equity issuance and utilized $1,200,000 from the Company’s short-term debt facility with RBC-Centura. As a result of the above the Company recognized a net reduction in cash of $27,164.

d.         The ORC acquisition has been accounted for as a stock purchase by WidePoint and pursuant to the provisions of Statement of Financial Accounting Standards No. 141, Business Combinations, the identifiable net tangible and separately identifiable intangible assets acquired and liabilities assumed were recognized at their estimated fair values as of the date of the acquisition. The pro forma adjustments herein are based on management’s preliminary estimates of fair value. The final allocation of the purchase price, when completed, may differ materially from the preliminary purchase price allocation herein. Management made estimates as to the average expected life of ORC’s client relationships and the expected performance of ORC’s PKI service offerings. In the event that these estimates are not accurate then the value of the intangibles and the associated life assigned may be adjusted. The total consideration paid for the acquisition of ORC was obtained through partial borrowings against a term loan and through a preferred equity capital issuance by the WidePoint.

The preliminary allocation of the purchase price assumed a net estimated fair value of assets purchased as of September 30, 2004 of approximately $538,000, approximately $1,642,000 in estimated intangible assets, and approximately $2,858,000 in goodwill. Two classes of intangible assets were identified and estimated. The PKI service offering was identified and an estimated expected useful life of six years was applied and the ORC contracts and client relationships were given an estimated life of five years. A value of approximately $241,000 was attributed to the PKI service offering and a value of approximately $905,000 was attributed to the contracts and client relationships. As of September 30, 2004 ORC had accumulated approximately $496,000 in intangible assets associated with its PKI service it is presently developing. The following schedule estimates purchase price as of September 30, 2004:

Current assets	$2,416,000
PP&E, net	80,000
Goodwill	2,858,000
Intangible assets	1,642,000
Other assets	28,000
Current liabilities	1,653,000
Deferred tax liability	333,000
Total	5,038,000

e.         To adjust for accrued expenses associated with the purchase of ORC which were not yet paid. These include legal, accounting, and other direct fees associated the capital raise of WidePoint’s preferred stock issuance of approximately $264,000, approximately $111,000 in legal and accounting cost associated with the ORC purchase, and approximately $220,000 in additional taxes payable for ORC which is attributable to a change in tax filing status.

The accompanying notes are an integral part of the financial statements.

6

f.         To adjust for the $1,200,000 in associated short-term debt utilized in the purchase of ORC by WidePoint. On October 25, 2004, the Company executed a senior lending agreement with RBC-Centura. The Agreement initially provides for a $2.5 million revolving credit facility. The maturity date of the credit facility is October 25, 2005. Borrowings under the Agreement are collateralized by the Company’s eligible contract receivables, inventory, all of its stock in certain of our subsidiaries and certain property and equipment, and bear interest at the Prime Rate. WidePoint’s credit facility requires that the Company maintain specified financial covenants relating to fixed charge coverage, interest coverage, and debt coverage, and maintain a certain level of consolidated net worth.

g.         In October of 2004, the Company issued warrants to purchase 10,228,571 shares of common stock to Barron Partners, LP and warrants to purchase 511,428 shares of common stock to Westcap Securities, Inc for a total of warrants to purchase 10,739,999 shares of common stock as part of a preferred stock financing. Such warrants have a term of 5 years and entitle the holder to purchase shares of the Company’s common stock for $0.40 per share. Barron Partners, LP is not entitled to exercise this warrant if and to the extent Barron Partners, LP and its affiliates would beneficially own more than 4.99% of the outstanding shares of the Company’s common stock on such date; provided, however, that Barron Partners, LP may revoke the restriction upon 61 days prior written notice to the Company, but in such event Barron Partners, LP has agreed that no person or entity (including but not limited to Barron Partners, LP and its affiliates) shall have any right to vote more than 22% of the shares of the Company’s common stock, including but not limited to all shares of common stock issued upon exercise of the warrant, then held by or at the direction of or for the benefit of Barron Partners, LP and/or its affiliates. The Company used a fair-value option pricing model to value this stock warrant. The value of these warrants has been reflected as a financial instrument in the short-term liabilities section of the consolidated balance sheet as a result of the issuance of a registration rights agreement that included a liquidated damages clause, which is linked to an effective registration of such securities. Accordingly, the Company applied EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock and accounted for the warrants as a liability.

h.         To adjust for a change in tax accounting recognition as a result of the purchase of ORC by WidePoint.

i.         The $2,046 adjustment relates to the issuance of the Company’s preferred stock, $0.001 par value per share, to Barron Partners, LP. The $963 adjustment relates to the issuance of the Company’s common stock, $0.001 par value per share, to the sellers of ORC.

        With respect to the $2,046 adjustment, in October 2004, the Company issued to Barron Partners, LP 2,045,714 preferred shares, which are convertible into common shares of the Company’s common stock at a ratio of 1 preferred share for 10 common shares as part of its preferred stock equity issuance, for approximately $3,580,000 or $0.175 per share of the Company’s common stock. Barron Partners, LP is not entitled to convert the preferred stock into shares of common stock that would result in beneficial ownership by Barron Partners, LP and its affiliates of more than 4.99% of the then outstanding number of shares of common stock on such date; provided, however, that Barron Partners, LP may revoke such restriction upon 61 days prior written notice to the Company, but in such event Barron Partners, LP hereby agrees that no person or entity (including but not limited to Barron Partners, LP and its affiliates) shall have any right to vote more than 22% of the shares of common stock, including but not limited to all shares of common stock issued upon conversion of the preferred shares, then held by or at the direction of or for the benefit of Barron Partners, LP and/or its affiliates.

        With respect to the $963 adjustment, the Company issued 962,500 restricted shares of common stock at a price per share of $0.40 as part of the consideration paid in October 2004 to the sellers of ORC for approximately $385,000.

j.         On October 27, 2004 and November 22, 2004, the Company issued warrants to purchase 30,612 and 5,556 shares of common stock, respectively, to Liberty Capitol as part of a consulting agreement in which Liberty Capitol assisted the Company in arranging its senior debt financing with RBC-Centura. The warrant has a term of 5 years. The Company used a fair-value option pricing model to value this stock warrant at approximately $14,000. This value has been reflected as part of stock warrants in the stockholders’ equity section of the consolidated balance sheet and are being amortized over the life of the debt as interest expense.

k.         The $157,825 reduction in additional paid-in-capital consists of (i) $543,000 of legal, accounting and consulting fees incurred in connection with the Company’s above-referenced October 2004 issuance of preferred stock and warrants to Barron Partners, LP minus (ii) the $385,000 proceeds from the Company’s above-referenced October 2004 sale of common stock to the sellers of ORC. Because the Company’s registration rights agreement with Barron Partners, LP contains a liquidated damages provision providing for payment in cash, EITF 00-19 (Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock by the Company) requires that the approximately $3,600,000 proceeds of the Company’s sale of preferred stock and warrants to Barron Partners, LP be classified as a “liability under financial instruments” as explained in note (g) above.

The accompanying notes are an integral part of the financial statements.

7