10.

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. The Company has issued restricted stock awards and non-qualified stock option awards as described below.

Restricted Stock Awards

On November 18, 2010, the Company's Compensation Committee granted Steve L. Komar and James T. McCubbin each an award of 250,000 shares of restricted stock of the Company, the vesting of which is based on achievement of future performance goals of the Company. There were no changes in vesting requirements or activity related to restricted stock awards during the six month period ended June 30, 2013.

Stock Option Awards

Stock option awards reflected in the table below cover the period from 1999 through the three months ended June 30, 2013. A summary of the stock option award activity under our plans during the six months ended June 30, 2013 is set forth below (unaudited):

				Weighted		Weighted
				Average Grant		Average
	# of			Date Fair Value		Remaining
NON-VESTED OPTIONS	Shares			per Share		Option Life
Non-vested balances, January 1, 2013		900,000		$	0.60
Granted		1,575,000		$	0.16
Canceled		(275,000	)	$	0.16
Non-vested balances, June 30, 2013		2,200,000		$	0.34		3.24

				Weighted		Weighted
				Average		Average
	# of			Exercise Price		Remaining
OUTSTANDING AND EXERCISABLE	Shares			per Share		Option Life
Options outstanding, January 1, 2013		3,212,000		$	0.74
Issued		1,575,000		$	0.51
Canceled		(275,000	)	$	0.54
Expired		(680,000	)	$	0.55
Options outstanding, June 30, 2013		3,832,000		$	0.69		4.27

Options outstanding and exercisable,
June 30, 2013		1,632,000		$	0.72		2.20

Aggregate intrinsic value represents total pretax intrinsic value (the difference between WidePoint's closing stock price on June 30, 2013, 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 June 30, 2013. The intrinsic value will change based on the fair market value of WidePoint's stock. The total intrinsic values of all options that were outstanding and exercisable as of June 30, 2013, were $767,600 and $296,100, respectively.

For the three month period ended June 30, 2013, the Company did not issue any stock options. For the six month period ended June 30, 2013, the Company issued 1,575,000 non-qualified stock options to certain employees. The fair value of each option award was estimated on the date of grant using a Black-Scholes option pricing model ("Black-Scholes model"), which uses the assumptions of no dividend yield, risk free interest rates of between 0.38% and 0.42% and expected life in years of approximately 3 years. Expected volatilities used in determining the fair value of options granted based on historical volatility of our common stock which ranged from 67% and 70%. 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.

Share-based compensation (including restricted stock awards) represents both stock options based expense and stock grant expense. For the three month periods ended June 30, 2013 and 2012 the Company recognized shared-based compensation expense of approximately $58,300 and $55,200, respectively. For the six month periods ended June 30, 2013 and 2012 the Company recognized shared-based compensation expense of approximately $112,300 and $110,300, respectively. For the six month period ended June 30, 2013 there were 680,000 fully vested stock options that expired unexercised and 275,000 unvested stock options that were cancelled as a result of employment terminations. Included in share-based compensation in the six month period ended June 30, 2013 was the benefit realized as a result of expired vested options and cancelled options. The resulting benefit occurred as the value attributed to the expired stock options were greater than the sum of the stock options based compensation recognized during the applicable periods.

At June 30, 2013, the Company had approximately $484,400 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 3.2 years.

See Note 8 for discussion about the tax benefit associated with the exercise of stock options.