11. Stock Award Programs

Stock Incentive Plan

The Company adopted the 2008 Stock Incentive Plan (the “2008 Plan”) on December 18, 2008. The 2008 Plan was amended and restated on December 15, 2009. The 2008 Plan will terminate on December 17, 2017. The 2008 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.

Under the 2008 Plan, 6,578,049 shares were reserved for issuance under equity incentive awards to be issued pursuant to the 2008 Plan. As of September 30, 2016, there were 3,402,211 shares available to be issued under the 2008 Plan. A summary of restricted stock and non-qualified stock option award activity during the three and nine months ended September 30, 2016 and 2015 is described in more detail 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 set forth in the award agreement with respect to such grant.

A summary of RSA activity as of September 30, 2016, and changes during nine month period ended September 30, 2016 is set forth below:

	2016			2015
NON-VESTED AWARDS	Shares			Shares
	(Unaudited)
Non-vested balances, January 1		500,000			500,000
Less: vested shares		250,000	⁽¹⁾		—
Non-vested balances, September 30		250,000			500,000

(1)

The Company issued 209,438 shares of the Company’s common stock in connection with this accelerated vesting event, of which Mr. Komar received 125,000 shares and Mr. McCubbin received 84,438 shares. Mr. McCubbin received less than 125,000 shares because he elected to have 40,562 of such shares withheld in satisfaction of the corresponding tax liability of approximately $32,300. The Company's payment of this tax liability was recorded as a cash flow from financing activity on the Condensed Consolidated Statements of Cashflows.

At September 30, 2016, the Company had approximately $50,800 of total unamortized RSA compensation expense, related to the remaining 250,000 unvested RSAs that will be recognized over the weighted average remaining period of 1.2 years. The total intrinsic value of RSAs vested during the nine month period ended September 30, 2016 was approximately $185,000. The intrinsic value of outstanding RSAs as of September 30, 2016 was approximately $107,500.

Stock Option Awards

The Company granted 650,000 stock options during the nine month period ended September 30, 2016. The Company granted 180,000 stock options during the nine month period ended September 30, 2015. A summary of stock option activity as of September 30, 2016 and 2015, and changes during nine month periods ended September 30, 2016 and 2015 is set forth below:

	2016				2015
			Weighted				Weighted
			Average				Average
			Grant Date				Grant Date
NON-VESTED AWARDS	Shares		Fair Value		Shares		Fair Value
	(Unaudited)
Non-vested balances, January 1,		841,672	$	0.80		1,340,838	$	0.57
Granted (+)		650,000	$	0.40		180,000	$	0.70
Cancelled (-)		25,000	$	0.72		250,000	$	0.39
Vested (-)		534,172	$	0.69		416,666	$	0.27
Non-vested balances, September 30,		932,500	$	0.59		854,172	$	0.80

	2016				2015
			Weighted				Weighted
			Average				Average
OUTSTANDING AND EXERCISABLE AWARDS	Shares		Exercise Price		Shares		Exercise Price
	(Unaudited)
Awards outstanding, January 1,		1,857,668	$	0.91		2,791,601	$	0.83
Granted (+)		650,000	$	0.70		180,000	$	1.45
Cancelled (-)		392,000	$	0.62		250,000	$	0.74
Exercised (-)		-		-		863,933	$	0.81
Awards outstanding, September 30,		2,115,668	$	0.87		1,857,668	$	0.91

Awards vested and expected to vest, September 30,		1,989,739	$	0.88		1,857,668	$	0.91

Awards outstanding and exercisable, September 30,		1,183,168	$	0.82		1,003,496	$	0.67

During the nine month period ended September 30, 2016, there were stock options of 392,000 that were cancelled, of which 205,000 were cancelled due to termination of employment and the remainder expired unexercised at the end of the option term.

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, 2016 are as follows:

			Vested and		Outstanding
			Expected to		and
	Outstanding		Vest		Exercisable
	(Unaudited)
Weighted-average remaining contractual life (in years)		3.4		2.6		2.6
Aggregate intrinsic value	$	-	$	-	$	-

Aggregate intrinsic value represents total pretax intrinsic value (the difference between WidePoint’s closing stock price on September 30, 2016 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, 2016. There was no intrinsic value associated with options outstanding, exercisable and expected to vest as of September 30, 2016 as the stock price was below the lowest option exercise price. 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 was approximately $713,400.

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, 2016 and 2015, the Company recognized share-based compensation expense of approximately $68,100 and $89,200, $204,400 and $208,100, respectively. At September 30, 2016, the Company had approximately $320,700 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 2.2 years.