Stock Options and Award Programs

9 Months Ended

Sep. 30, 2011

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

7. Stock Options and Award Programs

The Company’s stock incentive plan is administered by the Compensation Committee and authorizes the grant or award of incentive stock options, non-qualified stock options, restricted stock awards, stock appreciation rights, dividend equivalent rights, performance unit awards and phantom shares. The Company issues new shares of common stock upon the exercise of stock options. Any shares associated with options forfeited during the reporting period were added back to the number of shares that underlie stock options to be granted under the stock incentive plan. There have been no changes to the Company’s stock option and award programs since December 31, 2010.

A summary of the stock option and restricted stock award activity under our plans during the nine months ended September 30, 2011 and 2010, respectively, is presented below:

NON-VESTED

	# of Shares			Weighted average grant date fair value per share
Non-vested at January 1, 2011		976,253		$	0.44
Granted		250,000		$	1.08
Vested		(151,253	)	$	0.13
Forfeited		(235,000	) )	$	0.38
Non-vested at September 30, 2011		840,000		$	0.70
Non-vested at January 1, 2010		1,215,004		$	0.39
Granted		75,000			0.41
Vested		(170,001	)	$	0.16
Forfeited		-			-
Non-vested at September 30, 2010		1,120,003		$	0.43

OUTSTANDING AND EXERCISABLE

	# of Shares			Weighted average exercise price per share
Total outstanding at January 1, 2011		3,587,000		$	0.62
Issued		250,000		$	1.30
Cancelled		(235,000	)	$	0.83
Exercised		(240,000	)	$	0.88
Total outstanding at September 30, 2011		3,362,000		$	0.64
Total exercisable September 30, 2011		2,522,000		$	0.50
Total outstanding at January 1, 2010		4,517,411		$	0.54
Issued		75,000			0.65
Cancelled		(10,611	)	$	0.70
Exercised		(4,800	)		0.45
Total outstanding at September 30, 2010		4,577,000		$	0.54
Total exercisable at September 30, 2010		3,456,997		$	0.44

The aggregate remaining contractual lives in years for the options outstanding and exercisable on September 30, 2011 were 3.32 and 2.56, respectively. In comparison, the aggregate remaining contractual lives in years for the options outstanding and exercisable on September 30, 2010, were 3.93 and 3.18, respectively.

Aggregate intrinsic value represents total pretax intrinsic value (the difference between WidePoint’s closing stock price on September 30, 2011, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2011. The intrinsic value will change based on the fair market value of WidePoint’s stock. The total intrinsic values of options outstanding and exercisable as of September 30, 2011, were $691,310 and $691,310, respectively. The total intrinsic value of options exercised for the nine month period ending September 30, 2011 was approximately $93,000.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option pricing model, which uses the assumptions of no dividend yield, risk free interest rates and expected life of approximately 3 years. The option awards are for the period from 1999 through 2010. Expected volatilities are based on the historical volatility of our common stock. The expected term of options granted is based on analyses of historical employee termination rates and option exercises. The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant.

The amount of compensation expense recognized under ASC 718-10 during the three and nine month periods ended September 30, 2011 and 2010, respectively, under our plans was $48,134, $30,007, $44,499, and $86,752, respectively.

The benefit realized in stock options based compensation in the three and nine month periods ended September 30, 2011, respectively, was the result of forfeitures of granted unvested stock options that were cancelled during the period.  The resulting benefit occurred as the value attributed to the forfeited shares which were greater than the sum of the stock options based compensation recognized during the respective periods.  Share base compensation represents both stock options based expense and stock grant expense.  During the quarter and nine months ended September 30, 2011 we recognized stock grant expense of $21,786 and $65,358, respectively.  We recognized no stock grant expense for the quarter and nine months ended September 30, 2010.

No tax benefit has been associated with the exercise of stock options for the three months ended September 30, 2011 and 2010, respectively, because of the existence of net operating loss carryforwards. There will be no credit to additional paid in capital for such until the associated benefit is realized through a reduction of income taxes payable.

At September 30, 2011, the Company had approximately $329,000 of total unamortized compensation expense, net of estimated forfeitures, related to stock option plans that will be recognized over the weighted average remaining period of 3.32 years.