UNITED STATESSECURITIES
AND EXCHANGE COMMISSION  Washington, D.C. 20549

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# FORM 10-Q

(Mark One)

|[X] | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                    OF 1934          For the quarterly period ended
                      June 30, 2007
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

OR

|[_] | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                    OF 1934          For the transition period from
  ________________________ to ________________________
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commission file number
000-23967

|WIDEPOINT CORPORATION                                 
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)

|Delaware                                                                       | 52-2040275                       
|------------------------------------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of                                                | (IRS Employer Identification No.)
|incorporation or organization)                                                
|One Lincoln Centre, 18W140 Butterfield Road, Suite 1100, Oakbrook Terrace, Ill | 60181                            
|(Address of principal executive offices)                                       | (Zip Code)                       

Registrants telephone number,
including area code:  (630) 629-0003

Indicate
by check whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes NoX

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer (as defined in Rule 12b-2 under the Securities Exchange Act of
1934).

Large accelerated filer
[   ]      Accelerated filer  [X]   Non-accelerated filer  [   ]

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes         No X

As of August 7, 2007, 52,558,699
shares of common stock, $.001 par value per share, were outstanding.

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WIDEPOINT CORPORATION

INDEX

|                                       |                                                                      
|-------------------------------------- | ---------------------------------------------------------------------
|                                       |                                                                      
|Part I.          FINANCIAL INFORMATION |                                                                      
|Item 1.                                | Condensed Consolidated Financial Statements                          
|                                       | Condensed Consolidated Balance Sheets as of June 30, 2007            
|                                       | (unaudited) and December 31, 2006 (unaudited)                        
|                                       | Condensed Consolidated Statements of Operations for the three and six
|                                       | months ended June 30, 2007 and 2006 (unaudited)                      
|                                       | Condensed Consolidated Statements of Cash Flows for the three and six
|                                       | months ended June 30, 2007 and 2006 (unaudited)                      
|                                       | Notes to Condensed Consolidated Financial Statements                 
|Item 2.                                | Managements Discussion and Analysis of Financial                    
|                                       | Condition and Results of Operations                                  
|Item 3.                                | Quantitative and Qualitative Disclosures About Market Risk           
|Item 4.                                | Controls and Procedures                                              
|Part II.          OTHER INFORMATION   
|Item 1A.                               | Risk Factors                                                         
|Item 4.                                | Submission of Matters to a Vote of Security Holders                  
|Item 6.                                | Exhibits                                                             
|SIGNATURES                             | 28                                                                   
|CERTIFICATIONS                        

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# PART 1. FINANCIAL
INFORMATION

# ITEM 1. CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.

# WIDEPOINT CORPORATION
AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

|Consolidated Balance Sheets                                                   | June 30,    | December 31,
|----------------------------------------------------------------------------- | ----------- | ------------
|
|Assets                                                                        | (unaudited)
|Current assets:                                                               |             |             
|Cash and cash equivalents                                                     |             |             
|Accounts receivable                                                           |             |             
|Prepaid expenses and other assets                                             |             |             
|                                                                              |             |             
|Total current assets                                                          |             |             
|                                                                              |             |             
|Property and equipment, net                                                   |             |             
|Goodwill                                                                      |             |             
|Intangibles, net                                                              |             |             
|Other assets                                                                  |             |             
|                                                                              |             |             
|Total assets                                                                  |             |             
|                                                                              |             |             
|Liabilities and stockholders equity                                          |             |             
|Current liabilities:                                                          |             |             
|Accounts payable                                                              |             |             
|Accrued expenses                                                              |             |             
|Deferred revenue                                                              |             |             
|Short-term portion of deferred rent                                           |             |             
|Short-term portion of capital lease obligation                                |             |             
|                                                                              |             |             
|Total current liabilities                                                     |             |             
|                                                                              |             |             
|Long-term portion of deferred rent                                            |             |             
|Capital lease obligation, net of current portion                              |             |             
|                                                                              |             |             
|Total liabilities                                                             |             |             
|Stockholders equity:                                                         |             |             
|Preferred stock, $0.001 par value; 10,000,000 shares                          |             |             
|authorized; 0 and 195,214 shares issued and outstanding,                      |             |             
|respectively, liquidation value $3,416,245                                    |             |             
|Common stock, $0.001 par value; 110,000,000 shares authorized; 52,558,699 and |             |             
|50,494,759 shares issued and outstanding, respectively                        |             |             
|Stock warrants                                                                |             |             
|Additional paid-in capital                                                    |             |             
|Accumulated deficit                                                           |             |             
|                                                                              |             |             
|Total stockholders equity                                                    |             |             
|                                                                              |             |             
|Total liabilities and stockholders equity                                    |             |             
|                                                                              |             |             

The accompanying notes
are an integral part of these consolidated statements.

1

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# WIDEPOINT CORPORATION
AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                       | Three Months Ended
June 30, | Six Months Ended
June 30,
|------------------------------------------------------ | --------------------------- | -------------------------
|
|
|Revenues, net                                          |                             |                          
|Cost of sales (including amortization and depreciation |                             |                          
|of $110,069, $102,126, $220,118, and $203,963,         |                             |                          
|respectively)                                          |                             |                          
|                                                       |                             |                          
|Gross profit                                           |                             |                          
|Sales and marketing                                    |                             |                          
|General & administrative                               |                             |                          
|Depreciation expense                                   |                             |                          
|                                                       |                             |                          
|Loss from operations                                   |                             |                          
|Interest income                                        |                             |                          
|Interest expense                                       |                             |                          
|                                                       |                             |                          
|Net loss before income tax                             |                             |                          
|Income tax benefit, net                                |                             |                          
|                                                       |                             |                          
|Net loss                                               |                             |                          
|                                                       |                             |                          
|Basic and diluted net loss per share                   |                             |                          
|                                                       |                             |                          
|Basic and diluted weighted average shares outstanding  |                             |                          

The accompanying notes
are an integral part of these consolidated statements.

2

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# WIDEPOINT CORPORATION
AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                  | Three Months
Ended June 30, | Six Months
Ended June 30,
|------------------------------------------------- | --------------------------- | -------------------------
|
|
|Cash flows from operating activities:             |                             |                          
|Net loss                                          |                             |                          
|Adjustments to reconcile net loss to net cash     |                             |                          
|provided by operating activities:                 |                             |                          
|Depreciation expense                              |                             |                          
|Amortization expense                              |                             |                          
|Stock compensation expense                        |                             |                          
|Stock options expense                             |                             |                          
|Changes in assets and liabilities                 |                             |                          
|Accounts receivable                               |                             |                          
|Prepaid expenses and other current assets         |                             |                          
|Other assets                                      |                             |                          
|Accounts payable and accrued expenses             |                             |                          
|                                                  |                             |                          
|Net cash provided by operating activities         |                             |                          
|                                                  |                             |                          
|Cashflows from investing activities:              |                             |                          
|Purchase of property and equipment                |                             |                          
|Software development costs                        |                             |                          
|                                                  |                             |                          
|Net cash used in investing activities             |                             |                          
|                                                  |                             |                          
|Cashflows from financing activities:              |                             |                          
|Principal payments under capital  lease           |                             |                          
|obligation                                        |                             |                          
|Costs related to registration statement           |                             |                          
|Proceeds from exercise of stock options           |                             |                          
|Proceeds from exercise of warrants                |                             |                          
|Costs related to warrant exercise                 |                             |                          
|                                                  |                             |                          
|Net cash used in financing activities             |                             |                          
|                                                  |                             |                          
|Net increase (decrease) in cash                   |                             |                          
|                                                  |                             |                          
|Cash and cash equivalents, beginning of period    |                             |                          
|                                                  |                             |                          
|Cash and cash equivalents, end of period          |                             |                          
|                                                  |                             |                          
|Supplementary Information:                        |                             |                          
|Liabilities incurred but not yet paid relating to |                             |                          
|Registration statement                            |                             |                          
|Noncash investing and financing activity -        |                             |                          
|capital leases for acquisition of                 |                             |                          
|property and equipment                            |                             |                          
|Cash paid for interest                            |                             |                          

The accompanying notes
are an integral part of these consolidated statements.

3

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WIDEPOINT CORPORATION
AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

# 1. Basis of
Presentation, Organization and Nature of Operations

The consolidated balance sheet as of
June 30, 2007, the consolidated statements of operations for the three and six months
ended June 30, 2007 and June 30, 2006, and the consolidated statements of cash flows for
the six months ended June 30, 2007 and June 30, 2006 have been prepared by the Company and
are unaudited. The consolidated balance sheet as of December 31, 2006 was derived from the
audited consolidated financial statements included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2006.

The unaudited condensed consolidated
financial statements included herein have been prepared by the Company, pursuant to the
rules and regulations of the Securities and Exchange Commission (the SEC).
Pursuant to such regulations, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is the opinion of management that all
adjustments (which include normal recurring adjustments) necessary for a fair statement of
financial results are reflected in the interim periods presented. Accordingly, these
consolidated financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2006. The results of operations for the three
and six months ended June 30, 2007 are not indicative of the operating results for the
full year.

WidePoint Corporation
(WidePoint or the Company) is a technology-based provider of
products and services to both the government sector and commercial markets. We specialize
in providing systems engineering, information technology services and information
assurance in the form of identity management services. Our subsidiary, Operational
Research Consultants, Inc. (ORC), is a leading provider of E-Authentication federal
credential and federal compliant Public Key Infrastructure (PKI) managed services to the
federal government. We intend to grow over the next few years through a combination of
organic growth, the acquiring of selective strategic assets or acquisitions, and by
operational efficiencies among our subsidiaries.

WidePoint was incorporated in
Delaware on May 30, 1997. Our staff consists of business and computer specialists who help
our government and civilian customers augment and expand their resident technologic skills
and competencies, drive technical innovation, and help develop and maintain a competitive
edge in todays rapidly changing technological environment in business. Our
organization emphasizes an intense commitment to our people, our customers, and the
quality of our solutions offerings. As a services organization, our customers are our
primary focus. We have developed thorough, comprehensive policies, procedures and controls
to mitigate the threat, or potential threat, of intentional, unintentional, physical,
natural or electronic compromise or disruption of any portion of our systems or services.
The talent and technology are available, and the resident expertise is well-versed in
working together, to ensure goals are achieved quickly and seamlessly. Contract agreements
are already in place and a substantive reference base with an assortment of federal
agencies is available.

On October 25, 2004, we completed
the acquisition of ORC. ORC specializes in IT integration and secure authentication
processes and software, and providing services to the United States Government. ORC has
been at the forefront of implementing PKI technologies.  Based on asymmetric key
cryptography, PKI technology uses a class of algorithms in which a user can receive two
electronic keys, consisting of a public key and a private key, to encrypt any information
and/or communication being transmitted to or from the user within a computer network and
between different computer networks. The user provides his or her public key to any and
all desired persons or entities. The user does not share the private key with anyone
else. The public key will encrypt all information and/or communication from any sender
and the private key will allow only the holder of the private key to unlock and decrypt
such information and/or communication. Thus, the algorithms used in PKI technologies help
to achieve authentication of users and information, integrity of all data and
communications, non-repudiation or rejection of data and communications, and support
confidentiality of data and communications. PKI also speeds up and simplifies the
delivery of products and services by providing electronic approaches to processes that
historically have been paper based. These electronic solutions depend on PKI for
identification and authentication; data integrity; confidentiality of information and
transactions; and non-repudiation to facilitate mission-related transactions internal to
an organization and with external organizations. ORC is authorized to issue all
permissible certificate types and services in accordance with Defense Information Systems
Agency and National Security Agency standards, necessary for the interoperable, secure
exchange of information between U.S. Governmental agencies, contractors, and
international allies such as members of NATO.

4

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In 2005 and 2006, WidePoint focused
on the consolidation of its recent acquisition of ORC, accelerating the rollout of the ORC
E-Authentication and PKI identity management initiatives, and continuing to implement our
project based enterprise strategy, emphasizing our industry-wide best practices
disciplines. With the addition of the customer base and the increase in revenues
attributable to the ORC acquisition, WidePoints opportunity to leverage and expand
further into the federal marketplace has improved dramatically. ORCs past client
successes, top facility security clearances, security personnel expertise, and additional
breadth of management talent have expanded our reach into markets that previously were not
accessible to WidePoint. We intend to continue to market and sell our technical
capabilities into the governmental and commercial marketplace. Further, we are continuing
to actively search out new synergistic acquisitions that we believe may further enhance
our present base of business and service offerings, which has already been augmented by
our acquisition of ORC and our internal growth initiatives.

The Company has physical locations in
Oakbrook Terrace, Illinois; Fairfax, Virginia; Alexandria, Virginia; and Chesapeake,
Virginia. The Companys employees work at various client locations throughout the
upper Midwest, Texas, and Mid Atlantic areas of the United States.

# 2. Significant
Accounting Policies

Principles of
Consolidation

The accompanying consolidated
financial statements include the accounts of acquired entities since their respective
dates of acquisition. All significant inter-company amounts have been eliminated.

Use of Estimates

The preparation of consolidated
financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.

Cash and Cash Equivalents

Investments purchased with original
maturities of three months or less are considered cash equivalents for purposes of these
consolidated financial statements. The Company maintains cash and cash equivalents with
various major financial institutions. Included in the June 30, 2007 cash balances was
$2,470,653 in interest bearing balances in one bank, mostly in excess of federally insured
amounts, as compared to $1,924,324 in interest bearing balances in one bank for December
31, 2006. The Company places its temporary cash investments with high credit-quality
financial institutions, and as a result, the Company believes that no significant credit
risk exists with respect to these cash investments.

Accounts Receivable

The majority of the Companys
accounts receivable are due from either United States governmental agencies or established
companies in the following industries: manufacturing, healthcare, financial services and
United States Federal government contractors. Credit is extended based on evaluation of a
customers financial condition and, generally, collateral is not required. Accounts
receivable are due within 30 to 60 days and are stated at amounts due from customers net
of an allowance for doubtful accounts if deemed necessary. Accounts outstanding longer
than the contractual payment terms are reviewed for collectability and after 90 days are
considered past due.

5

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The Company determines its allowance
by considering a number of factors, including the length of time trade accounts receivable
are past due, the Companys previous loss history, the customers current
ability to pay its obligation to the Company, and the condition of the general economy and
the industry as a whole. The Company writes off accounts receivable when they become
uncollectible, and payments subsequently received on such receivables are credited to the
allowance for doubtful accounts.

|Description                          | Balance at
Beginning of
Period | Additions
Charged to
Costs and
Expenses | Deductions | Balance at
End of
Period
|------------------------------------ | ------------------------------ | --------------------------------------- | ---------- | ------------------------
|For the quarter ended June 30, 2006, |                                |                                         |            |                         
|Allowance for doubtful accounts      |                                |                                         | $          | --                      
|For the quarter ended June 30, 2007, |                                |                                        
|Allowance for doubtful accounts      |                                |                                         | $          | --                      

Unbilled accounts receivable on
time-and-materials contracts represent costs incurred and gross profit recognized near the
period-end but not billed until the following period. Unbilled accounts receivable on
fixed-price contracts consist of amounts incurred that are not yet billable under contract
terms. At June 30, 2007 and December 31, 2006, unbilled accounts receivable totaled
$479,994 and $354,123, respectively.

Revenue Recognition

The majority of the Companys
revenues are derived from cost-plus, or time-and-materials contracts. Under cost-plus
contracts, revenues are recognized as costs are incurred and include an estimate of
applicable fees earned. For time-and-material contracts, revenues are computed by
multiplying the number of direct labor-hours expended in the performance of the contract
by the contract billing rates and adding other billable direct costs. In the event of a
termination of a contract, all billed and unbilled amounts associated with those task
orders where work has been performed would be billed and collected. The termination
provisions of the contract would be accounted for at the time of termination. Any deferred
and/or amortization cost would either be billed or expensed depending upon the termination
provisions of the contract. Further, the Company has had no material history of losses nor
has it identified any material specific risk of loss at June 30, 2007 or on December 31,
2006 due to termination provisions and thus has not recorded provisions for such events.

The Companys other revenues are
derived from the delivery of non-customized software. In such cases revenue is recognized
when there is persuasive evidence that an arrangement exists (generally a purchase order
has been received or contract signed), delivery has occurred, the charge for the software
is fixed or determinable, and collectibility is probable.

Significant Customers

For the quarter ended June 30, 2007,
two customers, the United Space Alliance and XTEC Incorporated, represented approximately
29% and 13% of revenues, respectively. Due to the nature of our business and the relative
size of certain contracts, which are entered into in the ordinary course of business, the
loss of any single significant customer could have a material adverse effect on results.
For the quarter ended June 30, 2006, one customer, Headquarters Cryptologic Systems Group
(HQ CPSG), individually represented approximately 37% of revenues.

Fair value of
financial instruments

The Companys financial
instruments include cash equivalents, accounts receivable, accounts payable, and
short-term debt, capital leases and other financial instruments associated with the
issuance of the common stock warrants attributable to the preferred stock capital
investment in the Company in October of 2004. The carrying values of cash equivalents,
accounts receivable and accounts payable approximate their fair value because of the
short maturity of these instruments. The carrying amounts of the Companys capital
leases and bank borrowings under its credit facility approximate fair value because the
interest rates are reset periodically to reflect current market rates.

6

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Concentrations of Credit
Risk

Financial instruments potentially
subject the Company to credit risk, which consist of cash and cash equivalents and
accounts receivable. As of June 30, 2007, two customers, United Space Alliance and XTEC
Incorporated, accounted for approximately 34% and 14% of accounts receivable,
respectively. As of December 31, 2006, one customer, Headquarters Cryptologic Systems
Group (HQ CPSG), represented 54% of accounts receivable.

Income Taxes

The Company accounts for income taxes
in accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, Accounting for Income Taxes. Under SFAS No.109, deferred tax
assets and liabilities are computed based on the difference between the financial
statement and income tax bases of assets and liabilities using the enacted marginal tax
rate. SFAS No. 109 requires that the net deferred tax asset be reduced by a valuation
allowance if, based on the weight of available evidence, it is more likely than not that
some portion or all of the net deferred tax asset will not be realized. The Company has
also adopted the provisions of Interpretation No. 48 (FIN 48), Accounting for
Uncertainty in Income Taxes  An interpretation of FASB Statement No. 109.

Property and Equipment

Property and equipment are stated at
cost, net of accumulated depreciation and amortization. Property and equipment consisted
of the following:

|                                                | June 30,
2007 | December 31,
2006
|----------------------------------------------- | ------------- | -----------------
|Automobiles, computers, equipment and software  |               |                  
|Less- Accumulated depreciation and amortization |               |                  
|                                                |               |                  
|                                                |               |                  
|                                                |               |                  

Depreciation expense is computed
using the straight-line method over the estimated useful lives of three years.

In accordance with the American
Institute of Certified Public Accountants Statement of Position 98-1 Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use, the Company
capitalizes costs related to software and implementation in connection with its internal
use software systems.

Software Development Costs

WidePoint accounts for software
development costs related to software products for sale, lease or otherwise marketed in
accordance with SFAS No. 86, Accounting for the Costs of Computer Software to be
Sold, Leased, or Otherwise Marketed. For projects fully funded by the Company,
significant development costs are capitalized from the point of demonstrated technological
feasibility until the point in time that the product is available for general release to
customers. Once the product is available for general release, capitalized costs are
amortized based on units sold, or on a straight-line basis over a six-year period or other
such shorter period as may be required. WidePoint recorded approximately $14,000 of
amortization expense for PKI-I and $31,000 for PKI-II for the three month period ended
June 30, 2007. WidePoint recorded approximately $92,000 of amortization expense for PKI-I
and PKI-II for the six months ended June 30, 2006. Capitalized software costs included in
Other Intangibles at June 30, 2007 and December 31, 2006 were approximately $0.7 million
and $0.7 million, respectively. The Company also initiated PKI-III to attain an Authority
to Operate (ATO) under the guidelines associated with our ACES certificates.
WidePoint recorded approximately $64,000 in accumulated costs for the three month period
ended June 30, 2007. We estimate that we will record approximately another $40,000 prior
to issuance of the ATO during the third quarter of 2007 at which time we will commence to
amortize the ATO over an approximate three year life.

7

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Goodwill, Other
Intangible Assets, and Long-Lived Assets

Goodwill represents costs in excess
of fair values assigned to the underlying net assets acquired. The Company has adopted the
provisions of SFAS No. 141, Business Combinations, and SFAS No. 142,
Goodwill and Other Intangible Assets. These standards require the use
of the purchase method of accounting for business combinations, set forth the accounting
for the initial recognition of acquired intangible assets and goodwill and describe the
accounting for intangible assets and goodwill subsequent to initial recognition. Under the
provisions of these standards, goodwill is not subject to amortization and annual review
is required for impairment. The impairment test under SFAS No. 142 is based on a two-step
process involving (i) comparing the estimated fair value of the related reporting unit to
its net book value and (ii) comparing the estimated implied fair value of goodwill to its
carrying value. Impairment losses are recognized whenever the implied fair value of
goodwill is less than its carrying value. The Companys annual impairment testing
date is December 31.

The Company recognizes an acquired
intangible apart from goodwill whenever the intangible arises from contractual or other
legal rights, or when it can be separated or divided from the acquired entity and sold,
transferred, licensed, rented or exchanged, either individually or in combination with a
related contract, asset or liability. Such intangibles are amortized over their useful
lives. Impairment losses are recognized if the carrying amount of an intangible subject to
amortization is not recoverable from expected future cash flows and its carrying amount
exceeds its fair value.

The Company reviews its long-lived
assets, including property and equipment, identifiable intangibles, and goodwill annually
or whenever events or changes in circumstances indicate that the carrying amount of the
assets may not be fully recoverable. To determine recoverability of its long-lived assets,
the Company evaluates the probability that future undiscounted net cash flows will be less
than the carrying amount of the assets.

Basic and Diluted Net
Earnings (Loss) Per Share

Basic earnings or loss per share
includes no dilution and is computed by dividing net earnings or loss by the
weighted-average number of common shares outstanding for the period. Diluted earnings or
loss per share includes the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock. The
treasury stock effect of the conversion of preferred stock to common stock, options and
warrants to purchase 5,376,476 and 13,212,770 shares of common stock outstanding for the
three months ended June 30, 2007 and 2006, respectively, has not been included in the
calculation of the net loss per share as such effect would have been anti-dilutive. The
treasury stock effect of the conversion of preferred stock to common stock, options and
warrants to purchase 5,724,123 and 15,665,382 shares of common stock outstanding for the
six months ended June 30, 2007 and 2006, respectively, has not been included in the
calculation of the net loss per share as such effect would have been anti-dilutive. As a
result of these items, the basic and diluted loss per share for the three and six month
periods ended June 30, 2007 and 2006, respectively, are presented as identical.

Stock-based compensation

In December 2004, the Financial
Accounting Standards Board issued SFAS No. 123 (revised 2004), Share-Based
Payment, (SFAS No. 123R). This statement requires that the costs of
employee share-based payments be measured at fair value on the awards grant date and
recognized in the financial statements over the requisite service period.

Effective January 1, 2006, the
Company adopted the provisions of SFAS No. 123R using the modified prospective application
transition method. Under this method, compensation cost for the portion of awards for
which the requisite service has not yet been rendered that are outstanding as of the
adoption date is recognized over the remaining service period. The compensation cost for
that portion of awards is based on the grant-date fair value of those awards as calculated
for pro forma disclosures under SFAS No. 123, as originally issued. All new awards that
are modified, repurchased, or cancelled after the adoption date are accounted for under
provisions of SFAS No. 123R. Prior periods have not been restated under this transition
method. The Company recognizes share-based compensation ratably using the straight-line
attribution method over the requisite service period. In addition, pursuant to SFAS No.
123R, the Company is required to estimate the amount of expected forfeitures when
calculating share-based compensation, instead of accounting for forfeitures as they occur,
which was the Companys practice prior to the adoption of SFAS 123R. As of January 1,
2006, the cumulative effect of adopting the estimated forfeiture method was not material.

8

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The amount of compensation expense
recognized under SFAS 123(R) during the three and six month periods ended June 30, 2007
and 2006, respectively, under our plans was comprised of the following:

|                                               
|-----------------------------------------------
|2007                                           
|General and administrative expense             
|Share-based compensation before taxes          
|Share-based compensation expense               
|Net share-based compensation expenses per basic
|and diluted common share                       

Since we have cumulative operating
losses as of June 30, 2007 for which a valuation allowance has been established, we
recorded no income tax benefits for share-based compensation arrangements. 
Additionally, no incremental tax benefits were recognized from stock options exercised
during the quarter ended June 30, 2007, which would have resulted in a reclassification to
reduce net cash provided by operating activities with an offsetting increase in net cash
provided by financing activities.

The fair value of each option award
is estimated on the date of grant using a Black-Scholes option pricing model
(Black-Scholes model) that uses the assumptions noted in the following table.
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.  Share-based compensation expense recognized during the period is based
on the value of the portion of share-based payment awards that is ultimately expected to
vest during the period.  The estimated forfeiture rates are based on analyses of
historical data, taking into account patterns of involuntary termination and other
factors.  A summary of the option activity under our plans during the three and six
month periods ended June 30, 2007 is presented below:

|                             
|-----------------------------
|NON -VESTED                  
|Non-vested at January 1, 2007
|Granted                      
|Vested                       
|Forfeited                    
|Non-vested at March 31, 2007 
|Granted                      
|Vested                       
|Non-vested at June 30, 2007  

9

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|                                     |  |  |  |           |  |  |       | 
|------------------------------------ |  |  |  | --------- |  |  | ----- | 
|OUTSTANDING AND EXERCISABLE          |  | 
|Total outstanding at January 1, 2007 |  |  |  | 7,103,261 |  |  | $0.36 | 
|Issued                               |  |  |  | --        |  |  | --    | 
|Cancelled                            |  |  |  | 30,250    |  |  | $0.48 | 
|Exercised                            |  |  |  | 75,800    |  |  | $0.34 | 
|Total outstanding at March 31, 2007  |  |  |  | 6,997,211 |  |  | $0.36 | 
|Total exercisable at March 31, 2007  |  |  |  | 6,596,167 |  |  | $0.32 | 
|Issued                               |  |  |  | --        |  |  | --    | 
|Cancelled                            |  |  |  | --        |  |  | --    | 
|Exercised                            |  |  |  | 36,000    |  |  | $0.24 | 
|Total outstanding at June 30, 2007   |  |  |  | 6,961,211 |  |  | $0.36 | 
|Total exercisable at June 30, 2007   |  |  |  | 6,560,167 |  |  | $0.32 | 

The aggregate remaining contractual
lives in years for the options outstanding and exercisable on June 30, 2007 was 3.78 and
3.51, respectively.

Aggregate intrinsic value represents
total pretax intrinsic value (the difference between WidePoints closing stock price
on June 30, 2007 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, 2007. This amount changes based on the fair market value of
WidePoints stock. The total intrinsic value of options outstanding as of June 30,
2007 was $4,595,802. The total intrinsic value of options exercisable on June 30, 2007 was
$4,566,629. The total intrinsic value of options exercised for the second quarter of
fiscal 2007 was $26,680. The Company issues new shares of common stock upon the exercise
of stock options.

At June 30, 2007, 4,884,738 shares
were available for future grants under the Companys 1997 Stock Compensation Plans.
This includes options for 1,012,150 shares previously issued and cancelled under the
Companys 1997 Stock Compensation Plans. This does not include 3,999,999 warrants
granted and vested to members of the senior management team that were not issued under the
Companys 1997 Stock Compensation Plans.

At June 30, 2007, the Company had
approximately $277,000 of total unamortized compensation expense, net of estimated
forfeitures, related to stock option plans that will be recognized over the weighted
average period of 3.78 years.

Recent Accounting
Pronouncements

In June 2006, the Emerging Issues
Task Force (EITF) reached a consensus on EITF Issue No. 06-03 (EITF
06-03), How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net
Presentation). EITF 06-03 provides that the presentation of taxes assessed by a
governmental authority that is directly imposed on a revenue-producing transaction between
a seller and a customer on either a gross basis (included in revenues and costs) or on a
net basis (excluded from revenues) is an accounting policy decision that should be
disclosed. The provisions of EITF 06-03 became effective as of December 31, 2006. Our
adoption of ETIF 06-03 has not and is not expected to have a material effect on our
consolidated financial position or results of operations.

In September 2006, the FASB issued
SFAS No. 157, Fair Value Measurements(SFAS 157), which provides guidance on how to
measure assets and liabilities that use fair value. SFAS 157 will apply whenever another
US GAAP standard requires (or permits) assets or liabilities to be measured at fair value
but does not expand the use of fair value to any new circumstances. This standard also
will require additional disclosures in both annual and quarterly reports. SFAS 157 will be
effective for fiscal 2009. We are currently evaluating the potential impact this standard
may have on its financial position and results of operations.

10

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On February 15, 2007, the FASB issued
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
(SFAS No. 159). Under this Standard, we may elect to report financial instruments and
certain other items at fair value on a contract-by-contract basis with changes in value
reported in earnings. This election is irrevocable. SFAS No. 159 provides an opportunity
to mitigate volatility in reported earnings that is caused by measuring hedged assets and
liabilities that were previously required to use a different accounting method than the
related hedging contracts when the complex provisions of SFAS No. 133 hedge accounting are
not met. SFAS No. 159 is effective for years beginning after November 15, 2007. Early
adoption within 120 days of the beginning of the companys 2008 fiscal year is
permissible, provided the company has not yet issued interim financial statements for 2008
and has adopted SFAS No. 157. Management is currently evaluating the potential impact of
adopting this Standard.

# 3. Debt

The Companys senior lending
agreement with RBC-Centura Bank expired on June 1, 2006. The senior lending agreement was
executed on October 25, 2004 and had a maturity date of October 25, 2005, which was
extended until June 1, 2006 at which time it expired. The Agreement provided for a $2.5
million revolving credit facility. Borrowings under the Agreement were collateralized by
the Companys eligible contract receivables, inventory, all of its stock in certain
of our subsidiaries and certain property and equipment, and bear interest at the prime
rate.

# 4. Goodwill and
Intangible Assets

Effective January 1, 2002, WidePoint
adopted SFAS No. 142, Goodwill and Other Intangible Assets. SFAS 142 requires,
among other things, the discontinuance of goodwill amortization. Under SFAS 142, goodwill
is to be reviewed at least annually for impairment; the Company has elected to perform
this review annually on December 31st of each calendar year. These reviews have
resulted in no adjustments in goodwill.

During 2004, WidePoint completed the
acquisition of Operational Research Consultants, Inc (ORC). The Company has
also capitalized software development costs associated with its PKI initiative,
established the purchase price allocation of the assets acquired and allocated the
purchase price of the components and software capitalization of goodwill and other
intangibles as follows:

11

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|                           
|---------------------------
|Amortized Intangible Assets
|                           
|                           
|(1)                        
|                           
|                           
|                           
|                           
|(2)                        
|                           
|                           
|(3)                        
|                           
|                           
|(4)                        
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           

| | (1) | The
ORC intangible is made up of the purchase accounting
                    associated with the valuation assigned by the Company to ORCs
customer                     relationships and PKI business opportunity. The PKI business
opportunity                     intangible has an estimated life of 6 years and ORCs
customer                     relationships have an estimated life of 5 years. The PKI
business opportunity                     was estimated based upon the contractual life
assigned to the authority to issue                     PKI certificates by the federal
government. The fair value of the PKI business                     opportunity was
estimated using the expected present value of future cash flows
                    estimated by the Company for ORCs PKI business opportunity. ORCs
                    customer relationship intangible was estimated based upon an analysis
of the                     historic life of ORCs present customer relationships and
their present                     contract opportunities. A fair value was estimated
using the expected present                     value of the estimated future cash flows
generated from those relationships. The                     weighted average life of this
intangible asset class is 3.5 years.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The
PKI-I intangible is related to internally generated software that was
                    associated with ORCs PKI-I development of its phase 1 software
offerings.                     ORC commenced sales of its PKI-I service in August of
2004. It has a weighted                     average life of 3.5 years and is based upon
the contractual life assigned to the                     authority to issue PKI
certificates by the federal government.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The
PKI-II intangible is related to a secondary PKI software development effort
                    by ORC. ORC commenced sales of its PKI-II service in August of 2005.
It has a                     weighted average life of 3.5 years and is based upon the
contractual life                     assigned to the authority to issue PKI certificates
by the federal government.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | The
PKI-III intangible is related to an additional PKI software development by
                    ORC to attain an Authority To Operate (ATO) under the
guidelines                     associated with ACES certificates that will be issued
under a General Service                     Administration (GSA)
credential program. It is estimated that we                     will accumulate
approximately $100,000 in cost through August of 2007 prior to                     the
issuance by the GSA of an ATO to ORC allowing them to issue ACES
                    certificates for a 3 year period. Upon issuance of the ATO, ORC will
amortize                     the accumulated costs over a weighted average life of 3
years to operate under                     the new ATO to issue ACES Certificates.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The total weighted average life of
all of the intangibles is approximately 3.5 years.

There were no amounts of research and
development assets acquired during the quarter ended June 30, 2007 nor any written-off in
the period.

There were no changes in the carrying
amount of goodwill for the quarter ended June 30, 2007.

12

---

The goodwill acquired is associated
with the acquisition of ORC in October of 2004. No impairment was required as of June 30,
2007.

# 5. Income Taxes

The Company accounts for income taxes
in accordance with SFAS No. 109, Accounting for Income Taxes. Under SFAS
No.109, deferred tax assets and liabilities are computed based on the difference between
the financial statement and income tax bases of assets and liabilities using the enacted
marginal tax rate. SFAS No. 109 requires that the net deferred tax asset be reduced
by a valuation allowance if, based on the weight of available evidence, it is more likely
than not that some portion or all of the net deferred tax asset will not be realized. The
Company has further adopted the provisions of Interpretation No. 48 (FIN 48),
Accounting for Uncertainty in Income Taxes  An interpretation of FASB
Statement No. 109. As required by FIN 48, the Company recognizes the financial statement
benefit of a tax position only after determining that the relevant tax authority would
more likely than not sustain the position following an audit. For tax positions meeting
the more-likely-than-not threshold, the amount recognized in the financial statements is
the largest benefit that has a greater than 50 percent likelihood of being realized upon
ultimate settlement with the relevant tax authority.

The Company has determined that its
net deferred tax asset did not satisfy the recognition criteria set forth in SFAS
No. 109 and, accordingly, established a valuation allowance for 100 percent of
the net deferred tax asset, less the deferred liability related to the Section 481(a)
adjustment.

As of June 30, 2007, the
Company had net operating loss carry forwards of approximately $21 million to offset
future taxable income. These carry forwards expire between 2010 and 2026. Under the
provision of the Tax Reform Act of 1986, when there has been a change in an entitys
ownership of 50 percent or greater, utilization of net operating loss carry forwards
may be limited. As a result of WidePoints equity transactions, the Companys
net operating losses will be subject to such limitations and may not be available to
offset future income for tax purposes. Upon review and analysis by the Company we have
concluded that there are no significant uncertain tax positions requiring recognition in
our financial statements or adjustments to our deferred tax assets and related valuation
allowance and our tax position has not materially changed since December 31, 2006. There
was no cumulative effect adjustment for the adoption of FIN 48.

The Company recognizes interest and
penalties related to uncertain tax positions as part of income tax expense. For the six
months ended June 30, 2007, the Company did not accrue any interest or penalties in
income tax expense.

The tax years 2000 through 2006
remain open to examination by the major federal and state taxing jurisdictions to which
the Company is subject.

# 6. Stockholders
Equity

The Company is authorized to issue
110,000,000 shares of common stock, $.001 par value per share. During the quarter ended
June 30, 2007 36,000 shares of common stock were issued as the result of the exercise of
employee stock options for 36,000 shares. As of June 30, 2007 there were 52,558,699 shares
of common stock outstanding.

Preferred Stock

Our certificate of incorporation
authorizes the Company to issue up to 10,000,000 shares of preferred stock, $0.001 par
value per share, of which no shares and 195,214 shares were outstanding at June 30, 2007
and December 31, 2006, respectively. Preferred stock of 195,214 shares were converted
during the quarter ended March 31, 2007 into 1,952,140 shares of Common Stock.

Common Stock

On October 25, 2004, WidePoint
completed the acquisition of Operational Research Consultants, Inc., or ORC, a privately
held IT and engineering firm providing mission-critical sensitive and strategic
information security solutions to the United States Government. Pursuant to the terms of a
Purchase Agreement entered into on October 25, 2004, between the Company and the ORC
shareholders, the Company issued 5,555,556 common shares of the Companys stock and
placed it into an escrow to be released to the ORC shareholders in the event they attained
certain performance parameters in 2004 and 2005. As of December 31, 2005, no common shares
were earned and the 5,555,556 shares were returned to the Company and cancelled during the
second quarter of 2006.

13

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On April 30, 2004, the Company closed
upon the acquisition of all the issued and outstanding shares of Chesapeake Government
Technologies, Inc. (Chesapeake), pursuant to the terms of an Agreement and
Plan of Merger, dated as of March 24, 2004. This transaction was accounted for as a
consulting arrangement because Chesapeake did not meet the definition of a business under
FAS 141. WidePoint issued 4,082,980 shares of its common stock to stockholders of
Chesapeake in consideration for all of the issued and outstanding shares of Chesapeake
owned by them. In conjunction with this closing, the Chesapeake stockholders also entered
into an escrow agreement and deposited 3,266,384 shares of the 4,082,980 newly issued
shares of WidePoint common stock into escrow. The 3,266,384 shares of common stock placed
into escrow were not recorded in equity at the time of the acquisition and were only to be
released to the Chesapeake shareholders in the event of the satisfaction of certain
conditions set forth in the merger agreement, which provided that during the period
commencing after the closing of the merger and ending on December 31, 2005, the
3,266,384 shares of common stock would be released to the Chesapeake shareholders in a
ratio based on the amount of revenues actually received by the Company from the business
acquired as a result of activities originated and consummated by Chesapeake. The December
31, 2005 escrow expiration date could have been extended for one additional year in the
event that it was determined that Chesapeake had achieved certain performance levels in
the latter part of 2005, which did not occur. All shares earned were charged to expense
through December 31, 2006. Of the 3,266,384 shares of common stock held in escrow, 816,596
and 1,905,390 were released in 2005 and 2006, respectively, with the 544,398 remaining
shares cancelled in 2006.

Stock Warrants

On November 1, 2005, the Company
issued a warrant to purchase 54,878 shares of common stock at a price of $0.80 per share
to Hawk Associates as part of a consulting agreement in which Hawk Associates agreed to
act as the Companys investor relations representative. The warrant has a term of 5
years. We are accounting for this award in accordance with EITF 96-18.

On October 27, 2004 and November 22,
2004, the Company issued two warrants to purchase 30,612 shares and 5,556 shares of common
stock at a price of $0.49 and $0.45 per share, respectively, to Liberty Capitol as part of
a consulting agreement in which Liberty Capitol assisted the Company in arranging its
senior debt financing with RBC-Centura Bank. The warrants have a term of 5 years. The
Company used a fair-value option pricing model to value these stock warrants at
approximately $14,291. This value has been reflected as part of stock warrants in the
stockholders equity section of the consolidated balance sheet.

# 7. Segment reporting

Segments are defined by SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, as
components of a company in which separate financial information is available and is
evaluated by the chief operating decision maker, or a decision making group, in deciding
how to allocate resources and in assessing performance.

During 1998, the Company adopted SFAS
No. 131 and until December 31, 2005 the Company was comprised of a single segment, which
was comprised of our consulting services segment within our Commercial and Federal
Government Marketplaces. As of January 1, 2006, the Company added a second segment, which
consists of PKI credentialing and managed services. The PKI credentialing and managed
services segment provides PKI credentialing and managed services to United States federal
agencies and federal contractors as a result of regulatory compliance requirements.

Segment operating income consists of
the revenues generated by a segment, less the direct costs of revenue and selling, general
and administrative costs that are incurred directly by the segment. Unallocated corporate
costs include costs related to administrative functions that are performed in a
centralized manner that are not attributable to a particular segment. These administrative
function costs include costs for corporate office support, all office facility costs,
costs relating to accounting and finance, human resources, legal, marketing, information
technology and company-wide business development functions, as well as costs related to
overall corporate management.

The following table presents
information about reported segments along with the items necessary to reconcile the
segment information to the totals reported in the accompanying consolidated financial
statements:

14

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|                                                                  | Three Months Ended
June 30
|----------------------------------------------------------------- | --------------------------
|
|Consulting services:                                              |                           
|Revenues                                                          |                           
|Operating (loss)/income                                           |                           
|Total assets                                                      |                           
|PKI Credentialing and Managed Services                            |                           
|Revenues                                                          |                           
|Operating income/(loss) (includes amortization expense of $45,838 |                           
|and $45,838, respectively)                                        |                           
|Total assets                                                      |                           
|Total Company                                                     |                           
|Revenues                                                          |                           
|Operating (loss)/income                                           |                           
|Depreciation expense                                              |                           
|Interest income (expense), net                                    |                           
|Income tax benefit                                                |                           
|Net loss                                                          |                           

|                       | June 30
|---------------------- | -------
|
|Total Corporate assets |        
|Total assets           |        

(1)           Includes $55,270 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments and includes $279,360           in unallocated
corporate costs in general and administrative expense.

(2)              Includes
$55,270 in amortization expense in cost of sales associated with the           purchase
of ORC, which is not allocated among the segments and includes $262,952           in
unallocated corporate costs in general and administrative expense.

15

---

|                                                           | Six Months Ended
June 30
|---------------------------------------------------------- | ------------------------
|
|Consulting services:                                       |                         
|Revenues                                                   |                         
|Operating (loss)/income                                    |                         
|Total assets                                               |                         
|PKI Credentialing and Managed Services                     |                         
|Revenues                                                   |                         
|Operating income (includes amortization expense of $91,675 |                         
|and $91,675, respectively)                                 |                         
|Total assets                                               |                         
|Total Company                                              |                         
|Revenues                                                   |                         
|Operating loss                                             |                         
|Depreciation expense                                       |                         
|Interest income, net                                       |                         
|Income tax benefit                                         |                         
|Net loss                                                   |                         

|                       | June 30
|---------------------- | -------
|
|Total Corporate assets |        
|Total assets           |        

(1)           Includes $110,539 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments and includes $536,414           in unallocated
corporate costs in general and administrative expense.

(2)           Includes $110,539 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments and includes $471,401           in unallocated
corporate costs in general and administrative expense.

10.           Litigation

The Company is not involved in any
material legal proceedings.

# 11. Subsequent Events

On July 25, 2007 the Company entered
in to an amendment to Mr. Turissinis employment agreement extending the period of
performance for an additional 2 years from October 2007 until October 2009 in
consideration for which the Company prepaid $25,000 per each additional year of
performance by Mr. Turissini.

16

---

ITEM 2.  MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis
of the financial condition and results of operations of the Company should be read in
conjunction with the financial statements and the notes thereto which appear elsewhere in
this quarterly report and the Companys Annual Report on Form 10-K for the year ended
December 31, 2006.

The information set forth below
includes forward-looking statements. Certain factors that could cause results to differ
materially from those projected in the forward-looking statements are set forth below.
Readers are cautioned not to put undue reliance on forward-looking statements. The Company
disclaims any intent or obligation to update publicly these forward-looking statements,
whether as a result of new information, future events or otherwise.

# Overview

WidePoint Corporation
(WidePoint or the Company) is a technology-based provider
of products and services to both the government sector and commercial markets. We
specialize in providing systems engineering, information technology services and
information assurance in the form of identity management services. Our subsidiary,
Operational Research Consultants, Inc. (ORC), is the leading provider of
E-Authentication federal credentialing and federal compliant Public Key Infrastructure
(PKI) managed services to the federal government. We intend to grow over the
next few years through a combination of organic growth, the acquiring of selective
strategic assets and by operational efficiencies among our subsidiaries.

On October 25, 2004, we completed the
acquisition of ORC. ORC specializes in IT integration and secure authentication processes
and software, and providing services to the United States Government. ORC has been at the
forefront of implementing Public Key Infrastructure (PKI) technologies.
PKI technology is rapidly becoming the technology of choice to enable security services
within and between different computer systems utilized by various agencies and departments
of the U.S. Government. Based on asymmetric key cryptography, PKI technology uses a class
of algorithms in which a user can receive two electronic keys, consisting of a public key
and a private key, to encrypt any information and/or communication being transmitted to or
from the user within a computer network and between different computer networks. The user
provides his or her public key to any and all desired persons or entities. The user does
not share the private key with anyone else. The public key will encrypt all information
and/or communication from any sender and the private key will allow only the holder of the
private key to unlock and decrypt such information and/or communication. Thus, the
algorithms used in PKI technologies help to achieve authentication of users and
information, integrity of all data and communications, non-repudiation or rejection of
data and communications, and support confidentiality of data and communications. PKI also
speeds up and simplifies the delivery of products and services by providing electronic
approaches to processes that historically have been paper based. These electronic
solutions depend on PKI for identification and authentication; data integrity;
confidentiality of information and transactions; and non-repudiation to facilitate
mission-related transactions internal to an organization and with external organizations.
ORC is currently one of only a few organizations that has been designated by the United
States Government as fully compliant to issue certificates for the U.S. Government. As
such, ORC is authorized to issue all permissible certificate types and services in
accordance with Defense Information Systems Agency and National Security Agency standards,
necessary for the interoperable, secure exchange of information between U.S. Governmental
agencies, contractors, and international allies such as members of NATO.

With the addition of the customer
base and the increase in revenues attributable from the ORC acquisition, WidePoints
opportunity to leverage and expand further into the federal marketplace has improved
dramatically. ORCs past client successes, top security clearances in their
facilities and with their personnel, and additional breadth of management talent have
expanded the Companys reach into markets that previously were not accessible to
WidePoint. WidePoint intends to continue to leverage the synergies between the newly
acquired operating subsidiaries and cross sell those technical capabilities into each
separate marketplace serviced by its respective subsidiaries. Further, WidePoint is
continuing to actively search out new synergistic acquisitions that we believe will
further enhance the present base of business, which has already been augmented by our
recent acquisitions activity and internal growth initiatives.

17

---

WidePoints total revenues
decreased by approximately $1.4 million from $7.5 million for the six months ended June
30, 2006 to $6.1 million for the six months ended June 30, 2007. WidePoints total
revenues decreased by approximately $1.5 million from $4.8 million for the three months
ended June 30, 2006 to $3.3 million for the three months ended June 30, 2007. The material
cause in the reduction in revenues during the three and six month periods ending June 30,
2007 as compared to the same three and six month periods ending June 30, 2006 was a result
of the non-recurrence of a one time software resale of approximately $1.5 million that
occurred during the 2nd quarter of 2006, along with a reduction in consulting
services driven by difficulties in sourcing appropriately skilled candidates for open
positions within our consulting services segment, all partially offset by increased growth
within our PKI managed services segment.

Our PKI credentialing and managed
services segment experienced revenue growth of approximately 252% with revenues increasing
approximately $1,072,000 from approximately $424,000 for the six months ended June 30,
2006, to approximately $1,496,000 for the six months ended June 30, 2007, as a result of
continuing adoption of the Federal Governments various mandates to roll out
credential programs to various agencies and contractors For the three months ended June
30, 2007, our PKI credentialing and managed services segment experienced revenue growth of
approximately 488% with revenues increasing approximately $985,000 from approximately
$201,000 for the quarter ended June 30, 2006, to approximately $1,186,000 for the quarter
ended June 30, 2007. We anticipate that credential sales and managed services sales should
continue to increase in the medium to long-term time horizons as we continue to fulfill
contract wins and we witness the adoption of the External Certificate Authority
(ECA) program by the Department of Defense, the HSPD-12 program is
increasingly adopted by the Federal Government agencies and departments, and other groups
commence the pilot programs and rollout associated with the expansion of various programs
which are being mandated by the Federal Government. During the short-term time horizon we
believe that sales associated with our PKI managed services segment could be erratic as
they may be driven by delivery timeframes controlled by external Company partners and
clients which maybe outside of the control of the Company.

Our consulting services segment
experienced decreasing revenues of approximately $2,455,000 from approximately $7,101,000
for the six months ended June 30, 2006 as compared to approximately $4,646,000 for the six
months ended June 30, 2007. Our consulting services segment experienced decreasing
revenues of approximately $2,536,000 from approximately $4,640,000 for the quarter ended
June 30, 2006 as compared to approximately $2,104,000 for the quarter ended June 30, 2007.
The decrease in revenues for the six months ended June 30, 2007 as compared to the six
months ended June 30, 2006 was materially the result of the non-recurrence and replacement
associated with the resale of software in support of the Department of Defenses
(DOD) preparation for their widescale launch of the ECA program during the
third quarter of 2006 along with a reduction in consulting services driven by difficulties
in sourcing appropriately skilled candidates for open positions. The decrease in revenues
for the quarter ended June 30, 2007 as compared to the quarter ended June 30, 2006 was
materially the result of the same causative factors that occurred within the six month
period ended June 30, 2007.

Based upon estimates provided by
independent analyst and U.S. government estimates, management believes there is a base of
5 million to 15 million users for the Companys PKI credentials that is comprised of
U.S. Federal Government agencies employees and their contractors. The Company further
believes that there is a developing market place for PKI credentials within the state and
local governments and other national programs that extend beyond the U.S. Federal
Government agencies employees and their contractors. These other opportunities relate to
the requirements underlying the mandates for the HSPD-12 program that effect state and
local governments as well as other national programs. The Companys PKI credentials
are currently priced from approximately $27.50 to $150.00 per user on government pricing
schedules depending upon the quantity purchased and the level of managed services and
support selected by the customer. Pricing of the Companys PKI credentials by user
are driven by a competitive marketplace and may change at any time. The Company believes
it is well-positioned to effectively compete within this market segment as a result of its
past successes and experience within the PKI field.

A number of factors, including the
progress of contracts, revenues earned on contracts, the number of billable days in a
quarter, the timing of the pass-through of other direct costs, the commencement and
completion of contracts during any particular quarter, the schedule of the government
agencies for awarding contracts, the term of each contract that we have been awarded and
general economic conditions may subject our revenues and operating results to significant
variation from quarter to quarter. Because a significant portion of our expenses, such as
personnel and facilities costs, are fixed in the short term, successful contract
performance and variation in the volume of activity as well as in the number of contracts
commenced or completed during any quarter may cause significant variations in operating
results from quarter to quarter.

18

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With our recent acquisition of ORC we
rely upon a larger portion of our revenues from the Federal Government directly or as a
subcontractor. The Federal Governments fiscal year ends September 30. If a budget
for the next fiscal year has not been approved by that date, our clients may have to
suspend engagements that we are working on until a budget has been approved. Such
suspensions may cause us to realize lower revenues in the fourth quarter and/or first
quarter of the year. Further, a change in presidential administrations and in senior
government officials may negatively affect the rate at which the Federal Government
purchases the services that we offer.

As a result of the factors above,
period-to-period comparisons of our revenues and operating results may not be meaningful.
You should not rely on these comparisons as indicators of future performance as no
assurances can be given that quarterly results will not fluctuate, causing a possible
material adverse effect on our operating results and financial condition.

In addition, most of WidePoints
current costs consist primarily of the salaries and benefits paid to WidePoints
technical, marketing and administrative personnel. As a result of our plan to expand
WidePoints operations through a combination of internal growth initiatives and
merger and acquisition opportunities, WidePoint expects such costs to
increase.  WidePoints profitability also depends upon both the volume of
services performed and the Companys ability to manage costs.  As a
significant portion of the Companys cost is labor related, WidePoint must
effectively manage these costs to achieve and grow its profitability.  To date, the
Company has attempted to maximize its operating margins through efficiencies achieved by
the use of its proprietary methodologies, and by offsetting increases in consultant
salaries with increases in consultant fees received from its clients. The uncertainties
relating to the ability to achieve and maintain profitability, obtain additional funding
to partially fund the Companys growth strategy and provide the necessary investment
to continue to upgrade its management reporting systems to meet the continuing demands of
the present regulatory changes affect the comparability of the information reflected in
the financial information presented above.

# Results of Operations

Three Months Ended June
30, 2007 as Compared to Three Months Ended June 30, 2006

Revenues, net.Revenues for
the three month period ended June 30, 2007 were approximately $3,289,000 as compared to
approximately $4,842,000 for the three month period ended June 30, 2006. The decrease in
revenues was primarily attributable to the non-recurrence of a one time software resale of
approximately $1.5 million that occurred during the 2nd quarter of 2006, along
with a reduction in consulting services driven by difficulties in sourcing appropriately
skilled candidates for open positions within our consulting services segment, all
partially offset by increased growth within our PKI managed services segment.Our
PKI credentialing and managed services segment experienced revenue growth of approximately
488% with revenues increasing approximately $985,000 from $201,000 for the three month
period ended June 30, 2006 to $1,186,000 for the three month period ended June 30, 2007 as
a result of various mandates to roll out credential programs to various agencies and
contractors. Our consulting services segment experienced decreasing revenue of
approximately 55% with revenues decreasing approximately $2,536,000 from $4,640,000 for
the three month period ended June 30, 2006 as compared to $2,104,000 for the three month
period ended June 30, 2007 as a result of difficulties associated with sourcing candidates
for open positions which led to decreases in providing contracting services and the
non-recurrence of software reselling in support of the DODs widescale launch of its
ECA program.

Cost of sales.Cost of sales
for the three month period ended June 30, 2007, was approximately $2,192,000, or 67% of
revenues, a decrease of approximately $1,836,000 from cost of sales of approximately
$4,028,000, or 83% of revenues, for the three month period ended June 30, 2006. The
decrease in cost of sales was primarily attributable to greater profit margins associated
with the Companys PKI managed services segment.

Gross profit. As a result of
the higher sales mix for PKI, gross profit for the three month period ended June 30, 2007,
was approximately $1,097,000, or 33% of revenues, an increase of approximately $283,000
over gross profit of approximately $814,000, or 17% of revenues, for the three month
period ended June 30, 2006.

19

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Sales and marketing. Sales and
marketing expense for the three month period ended June 30, 2007, was approximately
$243,000, or 7% of revenues, an increase of approximately $34,000, as compared to
approximately $209,000, or 4% of revenues, for the three month period ended June 30, 2006.
The increase was materially attributable to increased bid and proposal costs and an
increase in new business development costs as we expanded our sales staff.

General and administrative.
General and administrative expenses for the three month period ended June 30, 2007, were
approximately $861,000, or 26% of revenues, an increase of approximately $13,000, as
compared to approximately $848,000, or 18% of revenues, recorded by the Company for the
three month period ended June 30, 2006. The increase in general and administrative
expenses for the three months ended June 30, 2007, was primarily attributable increased
legal expenses, administrative expenses associated with our Sarbanes Oxley compliance
costs, and employee bonus expenses, partially offset by a decrease in our costs associated
with FAS 123R.

Depreciation.           Depreciation
expense for the three month period ended June 30, 2007, was           approximately
$21,600, or less than 1% of revenues, an increase of approximately           $14,900, as
compared to approximately $6,700 of such expenses, or less than 1%           of revenues,
recorded by the Company for the three month period ended June 30,           2006. The
increase in depreciation expense for the three month period ended June           30,
2007, was primarily attributable to greater amounts of depreciable assets.

Interest income. Interest
income for the three month period ended June 30, 2007, was $30,160, or less than 1% of
revenues, an increase of $9,744 as compared to $20,416, or less than 1% of revenues, for
the three month period ended June 30, 2006. The increase in interest income for the three
month period ended June 30, 2006, was primarily attributable to greater amounts of cash
and cash equivalents along with higher short-term interest rates that were available to
the Company on investments in money market accounts.

Interest expense. Interest
expense for the three month period ended June 30, 2007, was $2,567, or less than 1% of
revenues, an increase of $2,192 as compared to $375, or less than 1% of revenues, for the
three month period ended June 30, 2006. The increase in interest expense for the three
month period ended June 30, 2007 was primarily attributable to greater expenses associated
with the increase in capital leases held by the Company.

Net loss.As a result of the
above, the net loss for the three month period ended June 30, 2007, was approximately
$1,000 as compared to the net loss of approximately $230,000 for the three months ended
June 30, 2006.

Six Months Ended June 30,
2007 as Compared to Six Months Ended June 30, 2006

Revenues, net.Revenues for
the six month period ended June 30, 2007 were approximately $6,141,000 as compared to
approximately $7,526,000 for the six month period ended June 30, 2006. The decrease in
revenues was primarily attributable to the non-recurrence of a one time software resale of
approximately $1.5 million that occurred during the 2nd quarter of 2006, along
with a reduction in consulting services driven by difficulties in sourcing appropriately
skilled candidates for open positions within our consulting services segment.  Our PKI
credentialing and managed services segment experienced revenue growth of approximately
252% with revenues increasing approximately $1,072,000 from $424,000 for the six month
period ended June 30, 2006 to $1,496,000 for the six month period ended June 30, 2007 as a
result of various mandates to roll out credential programs to various agencies and
contractors. Our consulting services segment experienced decreasing revenue of
approximately 35% with revenues decreasing approximately $2,456,000 from $7,101,000 for
the six month period ended June 30, 2006 as compared to $4,646,000 for the six month
period ended June 30, 2007 as a result of difficulties associated with sourcing candidates
for open positions which led to decreases in providing contracting services and the
non-recurrence of software reselling in support of the DODs widescale launch of its
ECA program.

Cost of sales.Cost of sales
for the six month period ended June 30, 2007, was approximately $4,389,000, or 71% of
revenues, a decrease of approximately $1,606,000 from cost of sales of approximately
$5,995,000, or 80% of revenues, for the six month period ended June 30, 2006. The
decrease in cost of sales was materially attributable to greater margins generated from
the Companys PKI managed services segment.

20

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Gross profit. As a result of
the higher sales mix in PKI, gross profit for the six month period ended June 30, 2007,
was approximately $1,753,000, or 29% of revenues, an increase of approximately $222,000
over gross profit of approximately $1,531,000, or 20% of revenues, for the six month
period ended June 30, 2006.

Sales and marketing. Sales
and marketing expense for the six month period ended June 30, 2007, was approximately
$447,000, or 7% of revenues, an increase of approximately $33,000, as compared to
approximately $413,000, or 5% of revenues, for the six month period ended June 30, 2006.
The increase was materially attributable to our expansion of our sales efforts.

General and administrative. General
and administrative expenses for the six month period ended June 30, 2007, were
approximately $1,702,000, or 28% of revenues, an increase of approximately $74,000, as
compared to approximately $1,628,000, or 22% of revenues, recorded by the Company for the
six month period ended June 30, 2006. The increase in general and administrative expenses
for the six months ended June 30, 2007, was primarily attributable to increased legal
expenses, Sarbanes Oxley compliance expenses, and employee bonus expenses, partially
offset by a decrease in FAS 123R expenses.

Depreciation expense. Depreciation
expense for the six month period ended June 30, 2007, was approximately $37,000, or less
than 1% of revenues, an increase of $23,000, as compared to approximately $14,000 of such
expenses, or less than 1% of revenues, recorded by the Company for the six month period
ended June 30, 2006. The increase in depreciation expenses for the six month period ended
June 30, 2007, was primarily attributable to the increased pool of depreciable assets.

Interest income. Interest
income for the six month period ended June 30, 2007, was $61,998, or less than 1% of
revenues, an increase of $23,233 as compared to $38,765, or less than 1% of revenues, for
the six month period ended June 30, 2006. The increase in interest income for the six
month period ended June 30, 2007, was primarily attributable to greater amounts of cash
and cash equivalents available to the company over this time period.

Interest expense. Interest
expense for the six month period ended June 30, 2007, was $5,872, or less than 1% of
revenues, an increase of $3,901 as compared to $1,971, or less than 1% of revenues, for
the six month period ended June 30, 2006. The increase in interest expense for the six
month period ended June 30, 2007 was primarily attributable to increased interest
expenses associated with greater costs associated with an increase in capital leases by
the Company.

Net loss.As a result of the
above, the net loss for the six month period ended June 30, 2007, was approximately
$377,000 as compared to the net loss of approximately $488,000 for the six months ended
June 30, 2006.

The following table sets forth
selected segment and consolidated operating results and other operating data for the
periods indicated. Segment operating income consists of the revenues generated by a
segment, less the direct costs of revenue and selling, general and administrative costs
that are incurred directly by the segment. Unallocated corporate costs include costs
related to administrative functions that are performed in a centralized manner that are
not attributable to a particular segment.

21

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|                                                                  | Three Months Ended
June 30
|----------------------------------------------------------------- | --------------------------
|
|Consulting services:                                              |                           
|Revenues                                                          |                           
|Operating (loss)/income                                           |                           
|Total assets                                                      |                           
|PKI Credentialing and Managed Services                            |                           
|Revenues                                                          |                           
|Operating income/(loss) (includes amortization expense of $45,838 |                           
|and $45,838, respectively)                                        |                           
|Total assets                                                      |                           
|Total Company                                                     |                           
|Revenues                                                          |                           
|Operating (loss)/income                                           |                           
|Depreciation expense                                              |                           
|Interest income (expense), net                                    |                           
|Income tax benefit                                                |                           
|Net loss                                                          |                           

|                       | June 30
|---------------------- | -------
|
|Total Corporate assets |        
|Total assets           |        

(1)           Includes $55,270 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments and includes $279,360           in unallocated
corporate costs in general and administrative expense.

(2)           Includes $55,270 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments and includes $262,952           in unallocated
corporate costs in general and administrative expense.

22

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|                                                           | Six Months Ended
June 30
|---------------------------------------------------------- | ------------------------
|
|Consulting services:                                       |                         
|Revenues                                                   |                         
|Operating (loss)/income                                    |                         
|Total assets                                               |                         
|PKI Credentialing and Managed Services                     |                         
|Revenues                                                   |                         
|Operating income (includes amortization expense of $91,675 |                         
|and $91,675, respectively)                                 |                         
|Total assets                                               |                         
|Total Company                                              |                         
|Revenues                                                   |                         
|Operating loss                                             |                         
|Depreciation expense                                       |                         
|Interest income, net                                       |                         
|Income tax benefit                                         |                         
|Net loss                                                   |                         

|                       | June 30
|---------------------- | -------
|
|Total Corporate assets |        
|Total assets           |        

(1)       Includes
$110,539 in amortization expense in cost of sales associated with the           purchase
of ORC, which is not allocated among the segments and includes $536,414           in
unallocated corporate costs in general and administrative expense.

(2)           Includes
$110,539 in amortization expense in cost of sales associated with the           purchase
of ORC, which is not allocated among the segments and includes $471,401           in
unallocated corporate costs in general and administrative expense.

# Liquidity and Capital
Resources

The Company has, since inception,
financed its operations and capital expenditures through the sale of preferred and common
stock, seller notes, convertible notes, convertible exchangeable debentures, senior
secured loans and the proceeds from the exercise of the warrants related to a convertible
exchangeable debenture. During 2006 and through the period ended June 30, 2007, operations
were materially financed with working capital, and the proceeds from a convertible
preferred stock issuance which occurred in October 2004.

Net cash provided by operating
activities for the quarter ended June 30, 2007, was approximately $730,000 as compared to
cash provided by operating activities of approximately $454,000 for the quarter ended
June 30, 2006. The increase in cash generated from operating activities for the quarter
ended June 30, 2007, was primarily a result of an improvement in the collection of
accounts receivable partially offset by a decrease in our accounts payable. Net cash used
in investing activities for the quarter ended June 30, 2007, was approximately $170,000
as compared to $5,000 used in investing activities in the quarter ended June 30, 2006.
The increase in net cash used in investing activities resulted from increased
expenditures in property and equipment and software development costs associated with
securing an Authority to Operate under the GSAs ACES credential program. Capital
expenditures in property and equipment were approximately $106,000 for the quarter ended
June 30, 2007, as compared to capital expenditures in property and equipment of
approximately $5,000 for the quarter ended June 30, 2006. The increase in capital
expenditures for the quarter ended June 30, 2007, as compared to the quarter ended June
30, 2006, was primarily related to the purchase of additional equipment and software
development efforts in connection with the Companys PKI business segment. Net cash
used in financing activities amounted to approximately $7,000 in the quarter ended June
30, 2007, as compared to approximately $31,000 of net cash used in financing activities
in the quarter ended June 30, 2006. The change primarily resulted from a decrease in
costs related to our registration and a warrant exercise, partially offset by a decrease
in proceeds related to the exercise of stock options and an increase in principal
payments made under our capital lease obligations during the quarter ended June 30, 2007.

As of June 30, 2007, the Company had
a net working capital of approximately $3.5 million. WidePoints primary source of
liquidity consists of approximately $3.3 million in cash and cash equivalents and
approximately $2.8 million of accounts receivable. The decrease in accounts receivable was
primarily the result of a decrease in days sales outstanding of accounts receivable
and the collection attributable to a material sale that occurred at the end of the fourth
quarter of 2006. Current liabilities include approximately $2.5 million in accounts
payable and accrued expenses. The substantial decrease in current liabilities is
predominately the result of the payoff of the account payable attributable to the material
sale referenced in this paragraph.

23

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The Companys business
environment is characterized by rapid technological change, experiences times of high
growth and contraction and is influenced by material events such as mergers and
acquisitions that can substantially change the Companys outlook.

Since 2002, WidePoint has embarked
upon several new initiatives to counter the current negative business environment within
our industry and expand our capacity to restore revenue growth. The Company requires
substantial working capital to fund the future growth of its business, particularly to
finance accounts receivable, sales and marketing efforts, and capital expenditures.

There are currently approximately
$150,000 in commitments for capital expenditures and software development costs. Future
capital requirements will depend on many factors, including the rate of revenue growth, if
any, the timing and extent of spending for new product and service development,
technological changes and market acceptance of the Companys services.

On October 25 and 29, 2004,
WidePoint completed financings with Barron Partners LP (Barron), a private
equity fund that engages in investing primarily in private investments in publicly traded
entities, for an aggregate amount of $3,580,000, under a preferred stock purchase
agreement and related agreements. Net proceeds from the financing after costs and
expenses, including fees of finders and agents, were approximately $3,030,000. WidePoint
issued an aggregate of 2,045,714 shares of its Series A Convertible Preferred Stock that
were convertible into an aggregate of 20,457,143 shares of its Common Stock at a
conversion rate equal to $0.175 per share. In addition, WidePoint issued to Barron a
warrant to purchase up to an additional 10,228,571 shares of its Common Stock at an
exercise price of $0.40 per common share. As of June 30, 2007, all of the Barron Series A
Convertible Preferred Stock had been converted into common stock and its warrant had been
fully exercised. Barrons conversion of its Series A Convertible Preferred Stock and
its warrant exercises were subject to contractual restrictions which restrict the ability
of Barron and its affiliates to acquire shares of Common Stock which equal no more than
4.99% of the outstanding shares of WidePoints Common Stock at any time. This
contractual restriction could have been removed upon 61 days notice to WidePoint from
Barron, but in the event Barron elects to remove this restriction, then Barron and its
affiliates agreed that Barron and its affiliates could only vote the shares of Common
Stock held by Barron and its affiliates which result in Barron and its affiliates having
no more than 22% of the total voting power of all outstanding shares of WidePoints
Common Stock at any time. As a result of the Barron financing transaction, WidePoint
issued warrants to Westcap Securities, Inc., a registered broker-dealer
(Westcap) and WidePoints placement agent in such transaction, to
purchase 511,428 shares of Common Stock at an exercise price of $0.40 per share, which
warrants expire in October 2009. As of June 30, 2007 all of the Westcap warrants had been
exercised.

Pursuant to the registration rights
agreement between Barron and WidePoint related to the stock issuances described in the
preceding paragraph, WidePoint filed a registration statement on January 5, 2005, covering
the resale of the shares of Common Stock issuable upon conversion and/or exercise of the
Series A Convertible Preferred Stock and the warrants issued to Barron. Under the
agreement, if the registration statement was not declared effective by April 23, 2005 and
thereafter kept effective through October 20, 2007, subject to permissible blackout
periods and registration maintenance periods, then WidePoint would be required to pay
Barron a maximum penalty of up to $20,000 for each month the registration statement was
not effective. Barron waived this penalty provision through February 9, 2006, when the
registration statement was declared effective by the SEC.

WidePoint believes that its current
cash position is sufficient to meet capital expenditure and working capital requirements
for the near term. However, the growth and technological change of the market make it
difficult to predict future liquidity requirements with certainty. Over the longer term,
the Company must successfully execute its plans to increase revenue and income streams
that will generate significant positive cash flows if it is to sustain adequate liquidity
without impairing growth or requiring the infusion of additional funds from external
sources. Additionally, a major expansion, such as occurred with the acquisition of ORC or
any other major new subsidiaries, might require external financing that could include
additional debt or equity capital. The Company raised approximately $3.6 million dollars
in connection with the aforementioned equity investments by Barron Partners LP, that were
used in the acquisition of ORC. Further, the Company raised approximately $4.1 million
dollars in connection with the attached warrants associated with the aforementioned equity
investments by Barron Partners LP during the year ended 2005. There can be no assurance
that additional financing, if required, will be available on acceptable terms, if at all,
for future acquisitions and/or growth initiatives.

24

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# Off-Balance Sheet
Arrangements

The Company has no existing
off-balance sheet arrangements as defined under SEC regulations.

# ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not exposed to market risks
related to changes in interest rates and changes in the market value of our investments as
we have no borrowings outstanding under a bank credit agreement as of June 30, 2007 and we
only invest our excess cash in marketable securities in a money market account which due
to the short maturity and our availability to withdraw those securities at any time does
not present any material market exposure.

# ITEM 4. CONTROLS AND
PROCEDURES

# Conclusions regarding
disclosure controls and procedures

The Companys disclosure
controls and procedures are designed to provide reasonable assurance that information
required to be disclosed by it in its periodic reports filed with the Securities and
Exchange Commission is recorded, processed, summarized and reported, within the time
periods specified in the Commissions rules and forms. Our principal executive
officer and principal financial officer, after evaluating the effectiveness of our
disclosure controls and procedures (as defined in Securities Exchange Act
Rule 13a-15(e)) as of the end of the period covered by this report, have concluded
that, based on the evaluation of these controls and procedures required by paragraph (b)
of Securities Exchange Act Rule 13a-15, our disclosure controls and procedures were
effective.

# Managements
 Annual Report on Internal  Control Over Financial  Reporting and Attestation  Report of
the Companys  Registered  Public Accounting Firm

SEC rules require that a company that
is an accelerated filer, as defined by Rule 12b-2 under the Securities
Exchange Act, must set forth in its annual report on Form 10-K a managements annual
report on internal control over financial reporting pursuant to Rule 13a-15(f). The
Company did not become an accelerated filer until December 31, 2006, based on the
calculation called for by paragraph (i) of the definition of that term under Rule 12b-2.
During 2006, prior to the Companys becoming an accelerated filer, the SEC extended
the deadline date for compliance with that requirement for non-accelerated filers until
the first fiscal year ending on or after December 15, 2007. At the time that the Company
filed its Annual Report on Form 10-K for the year ended December 31, 2006, the Company
believed that since it was a non-accelerated filer at the time of the SECs granting
of that extended compliance deadline, the Company was not required to set forth its
managements annual report on internal control over financial reporting and the
attestation report of the Companys registered public accounting firm in its Form
10-K for the year ended December 31, 2006. As a result of subsequent discussions with the
SEC, the Company now understands that it was not entitled to rely on the extended
compliance deadline as a result of the Company becoming an accelerated filer on December
31, 2006 and that the Company should have filed its managements annual report on
internal control over financial reporting and the attestation report of the Companys
registered public accounting firm in its Form 10-K for the year ended December 31, 2006.
In accordance with the Companys discussions with the SEC, the Company will set forth
such reports in its Form 10-K for the year ended December 31, 2007.

# Changes in internal
control over financial reporting

There were no changes in our internal
control over financial reporting identified in connection with the evaluation required by
paragraph (d) of Exchange Act Rule 13a-15 that occurred during our last fiscal
quarter that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. Subsequent to December 31, 2006, the Company
became aware of its obligation to file its annual report on internal control over
financial reporting and related auditor attestation report in the Form 10-K for the year
ended December 31, 2006, and the Company will include such reports in its Form 10-K for
the year ended December 31, 2007.

25

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# PART II.

# OTHER INFORMATION

# ITEM 1A. RISK FACTORS

Item 1A (Risk
Factors) of the Companys Annual Report on Form 10-K for the year ended
December 31, 2006 sets forth information relating to important risks and uncertainties
that could materially adversely affect the Companys business, financial condition or
operating results.  Those risk factors continue to be relevant to an understanding of
the Companys business, financial condition and operating results.  Certain of
those risk factors have been revised below to provide updated information. 
References to we, our and us in these risk
factors refer to the Company.

# We could issue
additional shares of common stock, which might dilute the book value of our common stock.

We have a total of 110,000,000
authorized shares of common stock, of which 52,558,699 shares were issued and outstanding
as of June 30, 2007. In addition, we had warrants and options outstanding as of that date
with respect to which 7,052,257 shares of common stock were reserved for issuance. Our
board of directors has the authority, without action or vote of our stockholders in most
cases, to issue all or a part of any authorized but unissued shares of our common stock.
Such stock issuances may be made at a price that reflects a discount from the then-current
trading price of our common stock. In addition, in order to raise capital for acquisitions
or other general corporate purposes that we may need at todays stock prices, we
would likely need to issue securities that are convertible into or exercisable for a
significant number of shares of our common stock. These issuances would dilute our
stockholders percentage ownership interest, which would have the effect of reducing our
stockholders influence on matters on which our stockholders vote, and might dilute
the book value of our common stock. You may incur additional dilution of net tangible book
value if holders of stock options or warrants, whether currently outstanding or
subsequently granted, exercise their options or warrants to purchase shares of our common
stock.

The sale of a large number of
shares of our common stock could depress our stock price.

As of June 30, 2007, we had reserved
7,052,257 shares of common stock for issuance upon exercise of stock options and warrants.
As of June 30, 2007, holders of warrants and options to purchase an aggregate of 6,651,213
shares of our common stock may exercise those securities and transfer the underlying
common stock at any time subject, in some cases, to Rule 144 of the Securities Act of
1933. The market price of our common stock could decline as a result of sales of a large
number of shares of our common stock in the market, or the perception that these sales
could occur. These sales might also make it more difficult for us to issue equity
securities in the future at a price that we think is appropriate, or at all.

26

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# ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS

The Companys Annual Meeting of
Stockholders was held on June 22, 2007.

The following two persons were
elected by the following votes to serve as Class I directors of the Board of Directors for
three years or until their resignation and/or their successors are elected and qualified:

|                 
|-----------------
|Morton S. Taubman
|Ronald S. Oxley  

Stockholders ratified the selection
of Moss Adams LLP as the independent accountants for the Company for the current fiscal
year. Such proposal was approved by a vote of 40,100,823 shares for and 1,166,359 against,
with 166,439 shares abstaining.

# ITEM 6. EXHIBITS.

|(a) | Exhibits
|--- | --------

| | 10.1 | Addendum
to Employment and Non-Compete Agreement, dated as of July 25, 2007, between Daniel
Turissini and the Registrant. (Incorporated herein by reference to Exhibit 10.1 to the
Form 8-K of WidePoint Corporation filed July 30, 2007.)
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.1 | Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------

| | 31.2 | Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------

| | 32 | Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the
 Sarbanes-Oxley  Act of                            2002.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

27

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# SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.

|                      |                                      
|--------------------- | -------------------------------------
|                      | WIDEPOINT CORPORATION                
|Date:  August 9, 2007 | /s/ STEVE L. KOMAR                   
|                      | Steve L. Komar                       
|                      | President and Chief Executive Officer
|                      | /s/ JAMES T. MCCUBBIN                
|                      | James T. McCubbin                    
|                      | Vice President - Principal Financial 
|                      | and Accounting Officer               

28