XML 38 R24.htm IDEA: XBRL DOCUMENT
v3.19.1

Stock Options and Award Programs | 12 Months Ended
--- | ---
Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
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 (NQSO), restricted stock awards (RSA), 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. Valuation of Stock Awards The Company estimates the fair value of nonqualified stock awards using a Black-Scholes Option Pricing model (“Black-Scholes model”). The fair value of each stock award is estimated on the date of grant using a Black-Scholes option pricing model (“Black-Scholes model”), which requires an assumption of dividend yield, risk free interest rates, volatility, forfeiture rates and expected option life. 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. Expected volatilities are based on the historical volatility of our common stock over the expected option term. The expected term of options granted is based on analyses of historical employee termination rates and option exercises. Restricted Stock Awards A summary of RSA activity as of December 31, 2018 and 2017, and changes for the years then ended are set forth below:
|  | 2018 |  |  |  |  |  | 2017 |  |  |  |
NON-VESTED AWARDS |  |  |  |  |  |  |  |  |  |  |  |
Non-vested awards outstanding, January 1, |  |  | - |  |  |  |  |  |  | 250,000 |  |  |  |
Granted (+) |  |  | 980,851 |  | (1) |  |  | 300,000 |  | (2) |  |  |  |  |  |
Cancelled (-) |  |  | - |  |  |  |  | 150,000 |  | (3) |  |  |  |  |  |
Vested (-) |  |  | 680,851 |  | (1) |  |  | 400,000 |  | (3)(4)(5) |  |  |  |  |  |
Non-vested awards outstanding, December 31, |  |  | 300,000 |  |  |  |  |  |  |  | - |  |  |  |  |
Weighted-average remaining contractual life (in years) |  |  | 2.01 |  |  |  |  |  |  |  | - |  |  |  |  |
Unamortized RSA compensation expense |  | $ | 136,310 |  |  |  |  |  |  | $ | - |  |  |  |  |
Aggregate intrinsic value of RSAs non-vested, December 31 |  | $ | 126,000 |  |  |  |  |  |  | $ | - |  |  |  |  |
Aggregate intrinsic value of RSAs vested, December 31 |  | $ | 320,000 |  |  |  |  |  |  | $ | 244,000 |  |  |  |  |
(1) During the year ended December 31, 2018, the Company granted 980,851 RSAs, of which i) 300,000 of RSAs were awarded as part of additional compensation plan to align key employees with the Company’s long term financial goals, and ii) 680,851 were awarded to members of the Company’s board of directors as part of their annual board retainer fee and vested during the period. (2) During the year ended December 31, 2017, the Company granted 300,000 RSAs to its former Chief Executive Officer that had a grant date fair value of approximately $246,000. The vesting of these RSAs were tied to attainment of certain financial goals as outlined by the Company’s Compensation Committee of the Board of Directors. (3) In connection with the resignation of Jeff Nyweide (former Chief Executive Officer) on June 30, 2017, 150,000 shares immediately vested and the remaining 150,000 were cancelled. As a result of share withholdings to satisfy tax liabilities, the Company issued 102,525 shares of the Company’s common stock to Mr. Nyweide and recognized a non-cash stock based compensation expense of approximately $94,400 in conjunction with this acceleration event. The Company's payment of the tax liability associated with this accelerated vesting was recorded as a cash flow from financing activity on the consolidated statements of cash flows. (4) During the year ended December 31, 2017, 125,000 RSAs vested upon expiration of the employment agreement between Steve L. Komar (the former Chief Executive Officer) and the Company on January 3, 2017. On January 3, 2017, the Company issued 84,188 shares of the Company’s common stock. Mr. Komar received less than 125,000 shares vested because he elected to have 40,812 of such shares withheld in satisfaction of the corresponding tax liability of approximately $46,000. The Company's payment of this tax liability was recorded as a cash flow from financing activity on the consolidated statements of cash flows. (5) In connection with the resignation of James McCubbin (former Chief Financial Officer) on October 31, 2017, 125,000 shares immediately vested. As a result of share withholdings to satisfy tax liabilities, the Company issued 84,750 shares of the Company’s common stock to Mr. McCubbin and recognized a non-cash stock based compensation expense of approximately $1,100 in conjunction with this acceleration event. The Company's payment of the tax liability associated with this accelerated vesting was recorded as a cash flow from financing activity on the consolidated statements of cash flows. Non-Qualified Stock Option Awards Option pricing model assumptions for NQSO awards granted were valued using the following assumptions for the years then ended as set forth below:
|  |  | YEAR ENDED DECEMBER 31, 2018 |  | YEAR ENDED DECEMBER 31, 2017
|  |  | Non-Qualified Stock Option Awards |  | Non-Qualified Stock Option Awards
|  |  | Employees | Directors | Non-Employees | Total |  | Employees | Directors | Non-Employees | Total
Stock options granted |  |  | 100,000 | -- | 50,000 | 150,000 |  | 3,090,000 | 350,000 | 75,000 | 3,515,000
Expected dividend yield |  |  | 0% | -- | 0% | 0% |  | 0% | 0% | 0% | 0%
Expected volatility |  |  | 65.2%-66.7% | -- | 69.5% | 65.2%-6.95% |  | 68.2%-74.2% | 69.6% - 70.1% | 72.5% | 68.2%-72.5%
Risk-free interest rate |  |  | 2.72% - 2.73% | -- | 1.0% | 1.0%-2.73% |  | 1.8% - 2.1% | 1.7% - 2.0% | 1.7% | 1.7%-2.1%
Forfeiture rate |  |  | 4.43% - 4.81% | -- | 10.3% | 4.43%-10.3% |  | 4.6% - 6.8% | 4.2% - 5.9% | 6.6% | 4.2%-6.8%
Expected life |  |  | 5 years | -- | 3 years | 3-5 years |  | 5 years | 7 years | 3 years | 3-7 years
A summary of NQSO activity as of December 31, 2018 and 2017, and changes during the years then ended are set forth below:
|  | 2018 |  |  | 2017 |
|  |  |  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  | Weighted |
|  |  |  |  |  |  |  | Average |  |  |  |  |  |  |  |  | Average |
|  |  |  |  |  |  |  | Grant Date |  |  |  |  |  |  |  |  | Grant Date |
NON-VESTED AWARDS |  | Shares |  |  |  |  |  | Fair Value |  |  | Shares |  |  |  |  |  | Fair Value |
Non-vested balances, January 1, |  |  | 2,685,004 |  |  |  |  |  | $ | 0.35 |  |  |  | 920,000 |  |  |  |  |  | $ | 0.59 |
Granted (+) |  |  | 150,000 |  |  |  | (1 | ) |  | $ | 0.25 |  |  |  | 3,515,000 |  |  |  | (2 | ) |  | $ | 0.36 |
Cancelled (-) |  |  | 50,000 |  |  |  | (3 | ) |  | $ | 0.32 |  |  |  | 860,000 |  |  |  | (3 | ) |  | $ | 0.68 |
Vested/Excercised (-) |  |  | 717,501 |  |  |  |  |  |  | $ | 0.30 |  |  |  | 889,996 |  |  |  |  |  |  | $ | 0.36 |
Non-vested balances, December 31, |  |  | 2,067,503 |  |  |  |  |  |  | $ | 0.36 |  |  |  | 2,685,004 |  |  |  |  |  |  | $ | 0.35 |
|  | 2018 |  |  | 2017 |
|  |  |  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  | Weighted |
|  |  |  |  |  |  |  | Average |  |  |  |  |  |  |  |  | Average |
OUTSTANDING AND EXERCISABLE AWARDS |  | Shares |  |  |  |  |  | Exercise Price |  |  | Shares |  |  |  |  |  | Exercise Price |
Awards outstanding, January 1, |  |  | 4,173,334 |  |  |  |  |  | $ | 0.60 |  |  |  | 2,090,668 |  |  |  |  |  | $ | 0.86 |
Granted (+) |  |  | 150,000 |  |  |  | (1 | ) |  | $ | 0.50 |  |  |  | 3,515,000 |  |  |  | (2 | ) |  | $ | 0.59 |
Cancelled (-) |  |  | 210,000 |  |  |  | (3 | ) |  | $ | 0.83 |  |  |  | 1,402,334 |  |  |  | (3 | ) |  | $ | 0.97 |
Exercised (-) |  |  | 100,000 |  |  |  | (4 | ) |  | $ | 0.44 |  |  |  | 30,000 |  |  |  | (4 | ) |  | $ | 0.57 |
Awards outstanding, December 31, |  |  | 4,013,334 |  |  |  |  |  |  | $ | 0.58 |  |  |  | 4,173,334 |  |  |  |  |  |  | $ | 0.60 |
Awards vested and expected to vest, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, |  |  | 3,422,491 |  |  |  |  |  |  | $ | 0.58 |  |  |  | 3,577,089 |  |  |  |  |  |  | $ | 0.60 |
Awards outstanding and exercisable, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, |  |  | 1,945,831 |  |  |  |  |  |  | $ | 0.56 |  |  |  | 1,488,330 |  |  |  |  |  |  | $ | 0.61 |
(1) During the year ended December 31, 2018, there were non-qualified stock option grants of 150,000, as further described below:
● | Employees. The Company granted 100,000 non-qualified stock options as part of an additional compensation to align a key employee with the Company’s long term financial goals.
● | Non-Employees. The Company granted 50,000 non-qualified stock options as payment for a portion of the annual retainer paid to its public investor relations firm.
(2) During the year ended December 31, 2017, there were non-qualified stock option grants of 3,515,000, as further described below:
● | Director Grants. The Company granted 250,000 non-qualified stock options, of which 50,000 options were granted to each director as part of their annual board retainer fee.
● | Non-Director Grants. The Company granted 3,265,000 non-qualified stock options, of which i) 2,665,000 stock options were awarded as part of additional compensation plan to align key employees with the Company’s long term financial goals, and ii) 600,000 stock options were awarded to the Company’s former CEO.
(3) During the year ended December 31, 2018, there were 210,000 non-qualified stock options that were cancelled, of which 50,000 were cancelled to due to termination of employment and the reminder expired unexercised at the end of the option term. During the year ended December 31, 2018, there were 417,000 that were cancelled, of which 230,000 were cancelled due to termination of employment and the remainder expired unexercised at the end of the option term. (4) The total intrinsic value of stock options exercised during the years ended December 31, 2018 and 2017 was approximately $10,000 and $9,000, respectively There was no intrinsic value associated with options outstanding, exercisable and expected to vest as of December 31, 2018 as the stock price was below the lowest option exercise price. Aggregate intrinsic value represents total pretax intrinsic value (the difference between WidePoint’s closing stock price on December 31, 2018 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, 2018. The intrinsic value will change based on the fair market value of WidePoint’s stock. The weighted-average remaining contractual life of the non-qualified stock options outstanding, exercisable, and vested and expected to vest was 4.1 years, 3.9 years and 3.9 years, respectively, as of December 31, 2018. Stock Compensation Expense Share-based compensation recognized under ASC 718-10 (including restricted stock awards) represents both stock options based expense and stock grant expense. The Company recognized share-based compensation expense for the years then ended December 31 as set forth below:
|  | YEAR ENDED DECEMBER 31, 2018 |  |  | YEAR ENDED DECEMBER 31, 2017 |
|  | Shared-Based Compensation Expense |  |  | Shared-Based Compensation Expense |
|  | Employees |  |  | Directors |  |  | Non-Employees |  |  | Total |  |  | Employees |  |  | Directors |  |  | Non-Employees |  |  | Total |
Restricted stock compensation expense |  | $ | 67,690 |  |  | $ | 320,000 |  |  | $ | - |  |  | $ | 387,690 |  |  | $ | 157,857 |  |  | $ | - |  |  | $ | - |  |  | $ | 157,857 |
Non-qualified option stock compensation expense |  |  | 291,625 |  |  |  | - |  |  |  | 4,089 |  |  |  | 295,714 |  |  |  | 118,964 |  |  |  | 103,335 |  |  |  | 7,054 |  |  |  | 229,353 |
Total share-based compensation before taxes |  | $ | 359,315 |  |  | $ | 320,000 |  |  | $ | 4,089 |  |  | $ | 683,404 |  |  | $ | 276,821 |  |  | $ | 103,335 |  |  | $ | 7,054 |  |  | $ | 387,210 |
At December 31, 2018, the Company had approximately $613,800 of total unamortized compensation expense, net of estimated forfeitures, related to NQSOs that will be recognized over the weighted average period of 2.2 years.

X
- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration