11.

Stock Options and 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 June 30, 2016, there were 3,327,211 shares available to be issued under the 2008 Plan. As of June 30, 2016, the Company awarded restricted stock and non-qualified stock option awards of 500,000 and 2,750,838, respectively. A summary of restricted stock and non-qualified stock option award activity during the three and six months ended June 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, including the acceleration of fifty (50) percent of such awards upon the Company reporting annual consolidated revenue in excess of $70 million. Accordingly, each of the executives had 125,000 shares vest in March 2016.

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

		2016			2015
NON-VESTED AWARDS		Shares			Shares
	(Unaudited)
Non-vested balances, January 1			500,000			500,000
Vested			(250,000)	(1)		—
Non-vested balances, June 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. Mr. McCubbin elected to have 40,562 of such shares withheld in satisfaction of the corresponding tax liability of approximately $32,300.

At June 30, 2016, the Company had approximately $61,700 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 1.5 years. The total intrinsic value of RSAs vested during the six month period ended June 30, 2016 was approximately $185,000. The intrinsic value of outstanding RSAs as of June 30, 2016 was approximately $147,500.

Stock Option Awards

The Company granted 650,000 stock options during the six month period ended June 30, 2016. The Company granted 180,000 stock options during the six month period ended June 30, 2015. A summary of stock option activity as of June 30, 2016 and 2015, and changes during six month periods ended June 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, June 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		(317,000)	$	0.80		(250,000)	$	0.74
Exercised		—		—		(825,029)	$	0.81
Awards outstanding, June 30,		2,190,668	$	0.86		1,896,572	$	0.91

Awards vested and expected to vest, June 30,		2,064,739	$	0.87		1,896,572	$	0.91

Awards outstanding and exercisable, June 30,		1,258,168	$	0.82		1,042,400	$	0.68

During the six month period ended June 30, 2016, there were stock options of 317,000 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 June 30, 2016 are as follows:

			Vested and		Outstanding
			Expected to		and
	Outstanding		Vest		Exercisable

	(Unaudited)
Weighted-average remaining contractual life (in years)		3.5		2.7		2.7
Aggregate intrinsic value	$	26,433	$	26,433	$	26,433

Aggregate intrinsic value represents total pretax intrinsic value (the difference between WidePoint’s closing stock price on June 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 June 30, 2016. The intrinsic value will change based on the fair market value of WidePoint’s stock. The total intrinsic value of options exercised during the six months ended June 30, 2015 was approximately $670,200.

Share-based compensation (including restricted stock awards) represents both stock options based expense and stock grant expense. For the three and six month periods ended June 30, 2016 and 2015, the Company recognized share-based compensation expense of approximately $48,400 and $81,400, $136,300 and $118,900, respectively. At June 30, 2016, the Company had approximately $367,000 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 2.47 years.