11.

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 forfeited awards are added back to the number of shares 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 nine month period ended September 30, 2015. At September 30, 2015, the Company had approximately $185,900 of total unamortized RSA compensation expense, related to RSA plans that will be recognized over the weighted average remaining period of 2.2 years.

Stock Option Awards

There were no stock options granted during the three month period ended September 30, 2015. The Company granted 180,000 stock options during the nine month period ended September 30, 2015. A summary of stock option and RSA activity as of September 30, 2015, and changes during nine month period ended September 30, 2015 is set forth below:

	Restricted Stock				Stock Options
			Grant				Weighted
			Date				Average
NON-VESTED AWARDS	Shares		Fair Value		Shares		Exercise Price
	(Unaudited)
Non-vested balances, January 1, 2015		500,000	$	1.22		1,340,838	$	0.57
Granted		-		—		180,000	$	0.70
Cancelled		-		—		(250,000)	$	0.39
Vested		-		—		(416,666)	$	0.27
Non-vested balances, September 30, 2015		500,000	$	1.22		854,172	$	0.80

	Restricted Stock				Stock Options
			Grant				Weighted
			Date				Average
OUTSTANDING AND EXERCISABLE AWARDS	Shares		Fair Value		Shares		Exercise Price
	(Unaudited)
Awards outstanding, January 1, 2015		-		—		2,791,601	$	0.83
Granted		-		—		180,000	$	1.45
Canceled		-		—		(250,000)	$	0.74
Exercised		-		—		(863,933)	$	0.81
Awards outstanding, September 30, 2015		-		—		1,857,668	$	0.91

Awards vested and expected to vest, September 30, 2015		-		—		1,857,668	$	0.91

Awards outstanding and exercisable, September 30, 2015		-		—		1,003,496	$	0.67

A summary of stock option and RSA activity as of September 30, 2014, and changes during nine month period ended September 30, 2014 is set forth below:

	Restricted Stock				Stock Options
			Grant				Weighted
			Date				Average
NON-VESTED AWARDS	Shares		Fair Value		Shares		Exercise Price
	(Unaudited)
Non-vested balances, January 1, 2014		500,000	$	1.22		1,900,000	$	0.36
Granted		-		—		360,000	$	1.03
Vested		-		—		(900,412)	$	0.32
Non-vested balances, September 30, 2014		500,000	$	1.22		1,359,588	$	0.57

	Restricted Stock				Stock Options
			Grant				Weighted
			Date				Average
OUTSTANDING AND EXERCISABLE AWARDS	Shares		Fair Value		Shares		Exercise Price
	(Unaudited)
Awards outstanding, January 1, 2014		-		—		3,336,500	$	0.72
Granted		-		—		360,000	$	1.45
Canceled		-		—		(122,500)	$	0.79
Exercised		-		—		(459,999)	$	0.61
Awards outstanding, September 30, 2014		-		—		3,114,001	$	0.82

Awards vested and expected to vest, September 30, 2014		-		—		3,114,001	$	0.82

Awards outstanding and exercisable, September 30, 2014		-		—		1,754,413	$	0.76

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 September 30, 2015 are as follows:

			Vested and		Outstanding
			Expected to		and
	Outstanding		Vest		Exercisable
	(Unaudited)
Weighted-average remaining contractual life (in years)		3.6		3.6		3.3
Aggregate intrinsic value	$	350,267	$	350,267	$	283,099

Aggregate intrinsic value represents total pretax intrinsic value (the difference between WidePoint’s closing stock price on September 30, 2015 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, 2015. The intrinsic value will change based on the fair market value of WidePoint’s stock. The total intrinsic value of options exercised during the nine months ended September 30, 2015 and 2014 were approximately $713,400 and $2.8 million, respectively.

Share-based compensation (including restricted stock awards) represents both stock options based expense and stock grant expense. For the three and nine month periods ended September 30, 2015 and 2014, the Company recognized share-based compensation expense of approximately $89,200, $70,400, $208,100 and $237,100, respectively. During the three month period ended September 30, 2015, there were no fully vested stock options that expired unexercised and/or were cancelled as a result of employment terminations. During the nine month period ended September 30, 2015, there were stock options of 250,000 that expired unexercised that were cancelled as a result of employment terminations.

At September 30, 2015, the Company had approximately $335,900 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 1.4 years.