Stock Options and Award Programs

12 Months Ended

Dec. 31, 2014

Stock Options and Award Programs [Abstract]

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

12. 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 are 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 upon the earlier to occur of (a) the seventh anniversary date of the grant, or (b) an acceleration event as determined on the date of grant by the Compensation Committee and set forth in the award agreement with respect to such grant. There were no changes in vesting requirements or activity related to restricted stock awards (RSA) during the years ended December 31, 2014, 2013 or 2012. At December 31, 2014, the Company had approximately $251,300 of total unamortized RSA compensation expense that will be recognized over the weighted average period of 2.9 years.

Stock Option Awards

During the year ended December 31, 2014, the Company granted stock options of 360,000 (of which 50,000 was granted to a non-employee consultant). The fair value of each this 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 rate of 0.35% to 2.21% and expected life in years of approximately 7 years (or 2 years for non-employee consultants). Expected volatilities used in determining the fair value of options granted based on historical volatility of our common stock of approximately 73.7% to 85.9%. 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. Stock option awards reflected in the tables below cover the period from 1999 through December 31, 2014.

A summary of stock option and RSA activity as of December 31, 2014, and changes during the year is set forth below:

	Restricted Stock Awards			Stock Options
		Weighted			Weighted
		Average			Average
NON-VESTED OPTIONS	Shares	Exercise Price		Shares	Exercise Price
Non-vested balances, January 1, 2014	277,381	$	1.22	1,900,000	$	0.36
Granted	-		—	360,000	$	1.03
Cancelled	-		—	(122,500)	$	0.35
Vested	(71,429)	$	1.22	(796,662)	$	0.31
Non-vested balances, December 31, 2014	205,952	$	1.22	1,340,838	$	0.57

	Restricted Stock Awards			Stock Options
		Weighted			Weighted
		Average			Average
OUTSTANDING AND EXERCISABLE	Shares	Exercise Price		Shares	Exercise Price
Options outstanding, January 1, 2014	222,619	$	1.22	3,336,500	$	0.72
Granted	-		—	360,000	$	1.45
Canceled	-		—	(144,500)	$	0.94
Exercised	-		—	(760,399)	$	0.61
Vested	71,429	$	1.22	-	$	0.00
Options outstanding, December 31, 2014	294,048	$	1.22	2,791,601	$	0.83
Options vested and expected to vest,  December 31, 2014	294,048	$	1.22	2,791,601	$	0.83
Options outstanding and exercisable,  December 31, 2014	-		—	1,450,763	$	0.77

The weighted-average remaining contractual life and the aggregate intrinsic value (the amount by which the fair value of the Company’s stock exceeds the exercise price of the option) of the stock options outstanding, exercisable, and vested and expected to vest as of December 31, 2014 are as follows:

		Vested and	Outstanding
		Expected to	and
	Outstanding	Vest	Exercisable
Weighted-average remaining contractual life (in years)	3.7	3.7	2.6
Aggregate intrinsic value	1,573,423	896,119	896,119

Aggregate intrinsic value represents total pretax intrinsic value (the difference between WidePoint’s closing stock price on December 31, 2014 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 December 31, 2014. The intrinsic value will change based on the fair market value of WidePoint’s stock. The total intrinsic value of options exercised were $741,200, $89,700 and $305,250 during the years ended December 31, 2014, 2013 and 2012, respectively.

The fair value of each option award is 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 and expected life as shown in the table below. 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. Significant option model assumptions were as follows for options granted during the years ended:

	DECEMBER 31
	2014	2013	2012
Expected dividend yield	0%	0%	0%
Expected volatility	73%-86%	67% - 70%	74%
Risk-free interest rate	0.4%-2.2%	0.38-0.42%	0.38-0.40%
Expected life - Employees options	7 years	7 years	7 years
Expected life - Non-employees options	2-3 years	2-3 years	n/a
Expected life - Board of directors options	n/a	n/a	n/a

The amount of compensation expense recognized under ASC 718-10 under the Company’s plans was comprised of the following during the years ended:

	DECEMBER 31,
	2014		2013		2012
General and administrative expense	$	324,281	$	227,035	$	217,611
Share-based compensation before taxes	$	324,281	$	227,035	$	217,611
Tot net share-based compensation expense	$	324,281	$	227,035	$	217,611
Net share-based compensation expenses per basic and diluted common share		nil		nil		nil

No tax benefit has been associated with the exercise of stock options for the years ended December 31, 2014, 2013 or 2012, 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 December 31, 2014, the Company had approximately $451,000 of total unamortized compensation expense, net of estimated forfeitures, related to stock option plans that will be recognized over the weighted average period of 2.0 years.