SECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549

---

# 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, 2004
| | -----------------------------------------------

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

|One Mid America Plaza, Suite 403, Oakbrook Terrace, Ill                           | 60181
|--------------------------------------------------------------------------------- | -----
|Former name, former address and former fiscal year, if changed since last report.

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  X    No

Indicate
 by check mark  whether  the  registrant  is an  accelerated  filer (as  defined in Rule
12b-2  under the  Securities Exchange Act of 1934).  Yes      No  X

APPLICABLE
 ONLY TO CORPORATE  ISSUERS:  Indicate the number of shares  outstanding of each of the
issuer's  classes of common stock, as of August 12, 2004: 20,162,893 shares of common
stock, $.001 par value per share.

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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, 2004,   
|(unaudited) and December 31, 2003 (unaudited)                
|Condensed Consolidated Statements of Operations for the three
|months ended June 30, 2004 and 2003 (unaudited)              
|Condensed Consolidated Statements of Cash Flows for the three
|months ended June 30, 2004 and 2003 (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 2.  Unregistered Sales of Equity Securities             
|and Use of Proceeds                                          
|Item 6.  Exhibits and Reports on Form 8-K                    
|SIGNATURES                                                   
|CERTIFICATIONS                                               

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# PART 1. FINANCIAL
INFORMATION

# ITEM 1.    CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.

# WIDEPOINT CORPORATION
AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                | June 30,
2004 | December 31,
2003
|--------------------------------------------------------------- | ------------- | -----------------
|
|Current assets:                                                 |               |                  
|Cash and cash equivalents                                       |               |                  
|Accounts receivable,                                            |               |                  
|net of allowance of $0 and 18,819, respectively                 |               |                  
|Prepaid expenses and other assets                               |               |                  
|                                                                |               |                  
|Total current assets                                            |               |                  
|Property and equipment, net                                     |               |                  
|Goodwill and other intangibles                                  |               |                  
|Other assets                                                    |               |                  
|                                                                |               |                  
|Total assets                                                    |               |                  
|                                                                |               |                  
|                                                                |              
|Current liabilities:                                            |               |                  
|Accounts payable                                                |               |                  
|Accrued expenses                                                |               |                  
|                                                                |               |                  
|Total current liabilities                                       |               |                  
|Long-term portion of deferred rent                              |               |                  
|                                                                |               |                  
|Total Liabilities                                               |               |                  
|Shareholders' equity                                            |               |                  
|Preferred stock, $0.001 par value, 10,000,000 shares authorized |               |                  
|None issued and outstanding                                     |               |                  
|Common stock, $0.001 par value, 50,000,000 shares authorized,   |               |                  
|20,162,893 and 15,579,913 shares issued and outstanding         |               |                  
|as of June 30, 2004 and December 31, 2003, respectively         |               |                  
|Related party notes receivable                                  |               |                  
|Additional paid-in capital                                      |               |                  
|Accumulated deficit                                             |               |                  
|                                                                |               |                  
|Total shareholders' equity                                      |               |                  
|                                                                |               |                  
|Total liabilities & shareholders' equity                        |               |                  
|                                                                |               |                  

The accompanying notes
are an integral part of these statements.

1

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# WIDEPOINT CORPORATION
AND SUBSIDIARIES

# CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS

|                                                      | Three Months Ended
June 30, | Six Months Ended
June 30,
|----------------------------------------------------- | --------------------------- | -------------------------
|
|
|Revenues, net                                         |                             |                          
|Operating expenses:                                   |                             |                          
|Cost of sales                                         |                             |                          
|Sales and marketing                                   |                             |                          
|General & administrative                              |                             |                          
|Depreciation & amortization                           |                             |                          
|                                                      |                             |                          
|Loss from operations                                  |                             |                          
|Interest income (expenses), 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 statements.

2

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# WIDEPOINT CORPORATION
AND SUBSIDIARIES

# CONDENSED 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 |                             |                          
|Depreciation and amortization expense         |                             |                          
|Stock compensation expense                    |                             |                          
|Changes in assets and liabilities             |                             |                          
|Accounts receivable                           |                             |                          
|Prepaid expenses                              |                             |                          
|Other assets                                  |                             |                          
|Accounts payable and accrued expenses         |                             |                          
|                                              |                             |                          
|Net cash used in operating activities         |                             |                          
|                                              |                             |                          
|Cashflows from investing activities:          |                             |                          
|Purchase of property and equipment            |                             |                          
|                                              |                             |                          
|Net cash used in investing activities         |                             |                          
|                                              |                             |                          
|Cashflows from financing activities           |                             |                          
|Net borrowings on notes payable               |                             |                          
|Net payments on long-term obligations         |                             |                          
|                                              |                             |                          
|Net cash provided                             |                             |                          
|by financing activities                       |                             |                          
|                                              |                             |                          
|Net decrease in cash                          |                             |                          
|                                              |                             |                          
|Cash, beginning of period                     |                             |                          
|                                              |                             |                          
|Cash, end of period                           |                             |                          
|                                              |                             |                          

The accompanying notes
are an integral part of these statements.

3

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# WIDEPOINT CORPORATION
AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The accompanying unaudited financial
statements have been prepared in accordance with Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by
accounting principles generally accepted in the United States of America (US
GAAP) for complete financial statements. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, considered necessary for a
fair presentation have been included. These financial statements should be read in
conjunction with the financial statements of WidePoint Corporation, as of December 31,
2003, and the notes thereto included in the Annual Report on Form 10-K filed by the
Company. The results of operations for the three and six months ended June 30, 2004, are
not necessarily indicative of the results that may be expected for the year ending
December 31, 2004.

WidePoint Corporation is a consulting
services firm specializing in planning, managing and implementing Information Technology
(IT) solutions. Its staff consists of business and technical specialists that
help customers augment and expand their technical capabilities, drive new technical
innovations and help maintain a competitive edge in todays rapidly changing
technological environment. The Company through a concerted mergers and acquisition
strategy is focused on expanding its IT public market segment and has acquired one
enterprise. The Company has entered into letters of intent to acquire several other
enterprises for which the Company is presently completing its financing and due diligence
efforts.

During 2003, the Company witnessed a
negative economic environment within the commercial IT sector due to constrained business
investment and an excessive supply of IT Consultants which as a result reduced gross
margins and decreased demand for the IT services that the Company provided to its
customers.

In its efforts to expand its revenue
streams, the Company continued to implement and refine a strategic plan that has included:
the launch of a federal business initiative in 2003, the continued development of new
technologies and capabilities focused within wireless technologies, the development of
various other practice areas, the initiation and expansion of several alliances to expand
the Companys ability to provide expanded services and reach to a wider group of new
customers, and an expansion of both management talent and reach through its focused
efforts to acquire additional business assets and revenues streams through targeted merger
and acquisition activities in 2004.

On March 24, 2004 the Company
entered into a merger agreement to acquire the stock of Chesapeake Government
Technologies, Inc. (CGT), a Delaware Corporation. The Company closed on the
transaction on April 30, 2004 through a reverse triangular merger between Chesapeake
Acquisition Corporation, Chesapeake Government Technologies, Inc. and WidePoint
Corporation with Chesapeake Government Technologies, Inc. becoming a wholly owned
subsidiary of WidePoint Corporation. The consideration included the issuance of an
aggregate of 4,082,980 shares of stock, of which 3,266,384 shares were deposited into
escrow, and the assumption of approximately $30,000 of debt as further described within a
Form 8-K filed on May 14, 2004. The executive management expertise of the Company was
greatly expanded through this transaction and further augmented the reach and expertise
of the Company. CGT additionally brings to WidePoint several additional alliances,
relationships, and targeted companies that CGT is in various phases of discussion in
regards to merger and acquisition opportunities with CGT and WidePoint. The Company
continues its efforts to expand the operations of WidePoint through mergers and
acquisitions. The Company has entered into several letters of intent to acquire companies
that if consummated will materially expand the public sector segment of the Company.

4

---

Most of the Companys current
costs consist primarily of the salaries and benefits paid to the Companys technical,
marketing and administrative personnel. As a result of its plan to expand its operations
through new internal initiatives and merger and acquisition related activities, the
Company expects these costs to increase. The Companys profitability depends upon
both the volume of services performed and the Companys ability to manage costs.
Because a significant portion of the Companys cost structure is labor related, the
Company must effectively manage these costs to achieve profitability. To date, the Company
has attempted to maximize its operating margins through efficiencies achieved by the use
of the Companys proprietary methodologies and by offsetting increases in consultant
salaries with increases in consultant fees received from clients. The current business
environment has witnessed an increase in the competitive environment for the
Companys services. The Company anticipates that this trend may continue until an
economic recovery is further underway.

# 2.  Significant Accounting
Policies:

Principles of
Consolidation

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

Use of Estimates

The preparation of consolidated
financial statements in conformity with accounting principles generally accepted in the
United States of America 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
condensed consolidated financial statements. The Company maintains cash and cash
equivalents with various major financial institutions. At June 30, 2004 and December 31,
2003, cash and cash equivalents included $250,815 and $250,144, respectively, on
investments in interest bearing accounts. At times, cash balances held at financial
institutions were in excess of federally insured limits. The Company places its temporary
cash investments with high-credit, quality financial institutions, and as a result, the
Company believes that no significant concentration of credit risk exists with respect to
these cash investments.

5

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Accounts Receivable

The majority of the Companys
accounts receivable are due from established companies in the following industries:
manufacturing, consumer product goods, direct marketing, healthcare and other service
companies.

Credit is extended based on
evaluation of a customers financial condition and, generally, collateral is not
required. Accounts receivable are due within 30 to 45 days and are stated at amounts due
from customers net of an allowance for doubtful accounts. Accounts outstanding longer than
the contractual payment terms are considered past due. 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. The following table sets forth the rolling forward
balances of the Allowance for doubtful accounts of the Company.

|Description                                     | Balance at
Beginning of
Period | Additions
Charged to
Costs and
Expenses | Deductions | Balance 
at End of
Period
|----------------------------------------------- | ------------------------------ | --------------------------------------- | ---------- | -------------------------
|For the quarter ended December, 2003, Allowance |                                |                                         |            |                          
|for doubtful accounts                           |                                |                                         | $          | 1,800                    
|For the quarter ended June 30, 2004,            |                                |                                        
|Allowance for doubtful accounts                 |                                |                                         | $          | 18,819                   

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. Unbilled accounts receivable totaled $8,190 and $6,207 at June 30, 2004 and
December 31, 2003, respectively.

Concentrations of Credit
Risk

Financial instruments that
potentially subject the Company to credit risk consist of cash and cash equivalents and
accounts receivable. As of June 30, 2004, two customers represented 26% and 11% percent of
accounts receivable, respectively. As of December 31, 2003, three customers individually
represented 26%, 11%, and 10% of accounts receivable.

Fair Value of Financial
Instruments

WidePoint financial  instruments
consist of cash, accounts receivable,  accounts payable and accrued expenses.  The fair
value of these financial instruments approximates their carrying value as of June 30,
2004, due to their short-term nature.

6

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Revenue Recognition

Revenue on time-and-materials
contracts is recognized based upon hours incurred at contract rates plus direct costs.
Revenue on fixed-price contracts is recognized on the percentage-of-completion method
based on costs incurred in relation to total estimated costs. Anticipated losses are
recognized as soon as they become known. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Out of pocket
expenses for billable work are recognized as revenues and such out of pocket expenses are
expensed in Cost of Revenues.

Significant Customers

During the second quarter of 2004,
four customers individually represented 20%, 14%, 10%, and 10% percent of revenue. During
the second quarter of 2003, six customers individually represented 18%, 15%, 12%, 11%,
11%, and 11% percent of revenue.

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
continues to reduce its net deferred taxes by a 100% valuation allowance.

Stock-based compensation

The Company accounts for stock-based
employee compensation arrangements using the intrinsic value method in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees, and complies with the disclosure provisions of SFAS No. 123
Accounting for Stock-Based Compensation. Under APB Opinion No. 25,
compensation cost is generally recognized based on the difference, if any, on the date of
grant between the fair value of the Companys common stock and the amount an employee
must pay to acquire the stock. The following table illustrates the effect on net income
and earnings per share if the Company had applied the fair value recognition provisions of
FASB Statement 123, Accounting for Stock-Based Compensation, using the
assumptions described below, to its stock-based employee plans.

7

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|                                          
|------------------------------------------
|
|Net loss, as reported                     
|Deduct: Total stock-based employee        
|compensation expense determined under fair
|value based method for awards granted,    
|modified, or settled, net of related tax  
|effects                                   
|                                          
|Pro forma net loss                        
|Earnings per share:                       
|Basic and diluted - as reported           
|Basic and diluted - pro forma             

The pro forma disclosure is not
likely to be indicative of pro forma results which may be expected in future years because
of the fact that options vest over several years, pro forma compensation expense is
recognized as the options vest and additional awards may also be granted.

For purposes of determining the
effect of these options, the fair value of each option is estimated on the date of grant
based on the Black-Scholes single-option pricing model assuming the following for the
three and six months ended June 30, 2004 and 2003:

|                           
|---------------------------
|Dividend yield             
|Risk-free interest rate (%)
|Volatility factor (%)      
|Expected life in years     

Stock Based Performance
Warrants

The Company has entered into several
stock performance incentive arrangements utilizing warrants with members of the
Companys management team. These warrants are accounted for as variable plans under
APB 25 because vesting of the warrants are tied to specific performance parameters which
cannot be determined until such performance has been achieved. Presently, no warrants have
satisfied any performance requirements.

Basic and Diluted Net
Loss Per Share

Basic income or loss per share
includes no dilution and is computed by dividing net income or loss by the
weighted-average number of common shares outstanding for the period. Diluted income 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 options and warrants to purchase 2,112,000 and 1,816,000 shares
of common stock outstanding at June 30, 2004 and 2003, 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 all periods presented
are identical.

8

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Goodwill and other
intangibles

Goodwill represents costs in excess
of fair values assigned to the underlying net assets acquired. The Company has adopted
the provisions of Statement of Financial Accounting Standards (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 an annual review is required
for testing whether an impairment exists. 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 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 is currently in the process of identifying such
intangible assets acquired.

Reclassifications

Certain amounts in prior years
financial statements have been reclassified to conform with the current year presentation.

# 3.  Promissory Notes:

Promissory Notes

Pursuant to stock purchase agreements
entered into on July 8, 2002, between the Company and each of Steve L. Komar, James T.
McCubbin and Mark M. Mirabile, the Company privately sold 865,000 shares of its common
stock to each such person without registration under the Securities Act of 1933, pursuant
to the private offering exemption under Section 4(2) thereof, in consideration of a three
(3) year full-recourse, five percent (5%) interest bearing promissory note with equal
annual principal payments due, issued by each such person to the Company in the principal
amount of $60,550, or $181,650 in the aggregate (which equals $0.07 per share, being the
closing price of the Companys common stock on July 8, 2002). The individuals have
repaid to date $21,500 individually, or $64,500 in aggregate to the Company.

9

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# 4.  Commitments and
Contingencies:

Litigation

The Company is periodically a party to
disputes arising from normal business activities. In the opinion of management, resolution
of these matters will not have a material adverse effect upon the financial position or
future operating results of the Company and adequate provision for any potential losses
has been made in the accompanying consolidated financial statements.

10

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# 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, 2003.

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 is a consulting
services firm specializing in planning, managing and implementing Information Technology
(IT) solutions. Its staff consists of business and technical specialists that
help customers augment and expand their technical capabilities, drive new technical
innovations and help maintain a competitive edge in todays rapidly changing
technological environment.

The WidePoint approach is to apply a
structured delivery methodology based on industry standard best practices, enhanced with a
set of deliverable templates that increase productivity and effectiveness. WidePoint
focuses on providing end results with significant, tangible business benefits. Our
consultants possess recognized industry-standard certifications and years of successful
project experience.

Since 1996, WidePoint has focused on
leveraging leading edge technologies, methodologies and consultants to help clients
improve their business performance. This focus continues to tie together the
Companys service offerings and future direction. WidePoints clients are
increasingly looking to harness the power of the Internet and leading IT technologies by
integrating these technologies with their existing systems as they transition, expand, and
refine their business environments.

During 2003, the Company witnessed a
negative economic environment within the commercial IT sector due to constrained business
investment and an excessive supply of IT Consultants which as a result reduced gross
margins and decreased demand for the IT services that the Company provided to its
customers.

In its efforts to expand its revenue
streams, the Company continued in 2004 to implement and refine a strategic plan which has
included: the launch of a federal business initiative in 2003, the continued development
of new technologies and capabilities focused within wireless technologies, the development
of various other practice areas, the initiation and expansion of several alliances to
expand the Companys ability to provide expanded services and reach to a wider group
of new customers, and an expansion of both management talent and reach through its focused
efforts to acquire additional business assets and revenues streams through targeted merger
and acquisition activities in 2004.

11

---

On March 24, 2004 the Company entered
into a merger agreement to acquire the stock of Chesapeake Government Technologies, Inc.
(CGT), a Delaware Corporation. The Company closed on the transaction on April
30, 2004 through a reverse triangular merger between Chesapeake Acquisition Corporation,
Chesapeake Government Technologies, Inc. and WidePoint Corporation with Chesapeake
Government Technologies, Inc. becoming a wholly owned subsidiary of WidePoint Corporation.
The consideration included the issuance of stock and the assumption of debt as further
described within a Form 8-K filed on May 14, 2004. The executive management expertise of
the Company was greatly expanded through this transaction and further augmented the reach
and expertise of the Company. CGT additionally brings to WidePoint several additional
alliances, relationships, and targeted companies that CGT is in various phases of
discussion in regards to merger and acquisition opportunities with CGT and WidePoint.

The Company continues it efforts to
expand the operations of WidePoint through merger and acquisitions. On April 19, 2004,
WidePoint entered into a non-binding letter of intent to acquire all of the stock of
Knowledge Workers, Inc., (KWI) a Colorado based corporation, for the
consideration of the issuance of WidePoint common stock and the assumption of debt. KWIs
business expertise resides in the improved utilization of Human Capital services through
the use of its proprietary software and solutions with clients in both the commercial and
government marketplace. Although a definitive agreement has not been entered into and
consummation of the potential acquisition cannot be characterized as probable at this
time, the Company is working towards a closing of this transaction no later than the
third quarter of 2004. The Company further entered into a non-binding letter of intent to
acquire all of the stock of Operational Research Consultants, Inc., (ORC) a
Virginia based corporation on July 7, 2004. ORC business expertise resides in specialized
IT based software and services predominately within the federal marketplace. The Company
is also presently attempting to negotiate several other transactions that will further
expand the public sector segment of the Company.

For the three months ended June 30,
2004, revenue was approximately $841,000 as compared to revenue of approximately $815,000
for the quarterly period ended June 30, 2003. For the six months ended June 30, 2004,
revenue was approximately $1,564,000, as compared to revenue of approximately $1,738,000
for the six-month period ended June 30, 2003. The increase in revenues in the three months
ended June 30, 2004, was attributable to an increase in additional hours billed as a
result of a higher win rate associated with the Companys sales and marketing
efforts. The decrease in revenues for the six months ended June 30, 2004, was attributable
to fewer hours billed and a lower average bill rate for the comparative first quarters.
The Company has witnessed a stabilization and slight increase in billable hours worked
during the second quarter of 2004 while pricing pressures within the industry continued to
place pressure on average billable rates as compared to the second quarter of 2003, but
presently the Company has witnesses a stabilization of these pricing pressures. The
instability within the IT marketplace continues to create an increase in competitiveness
that creates a more difficult environment to expand revenues internally for the Company.
The Company anticipates these trends may continue into the second half of 2004 with a
modest pickup in revenue not associated with merger and acquisition activity possible
during this period. The Company further anticipates that if it is successful in executing
its business strategy to expand into the government marketplace through mergers and
acquisitions that revenue growth can be expected to expand materially in the second half
of 2004.

12

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Most of the Companys current
costs consist primarily of the salaries and benefits paid to the Companys technical,
marketing and administrative personnel. Consistent with the development of a new focused strategic direction, the
Company expects to expand its operations through internal growth and by potential
acquisition of new personnel and assets. Therefore, the Company anticipates these costs
will increase.

The Companys profitability
depends upon both the volume of services performed and the Companys ability to
manage costs. Because a significant portion of the Companys cost structure is labor
related, the Company must effectively manage these costs to achieve profitability. To
date, the Company has attempted to manage its operating margins by offsetting increases in
consultant salaries with increases in consultant fees received from clients and by
effectively managing general overhead costs. During the economic slowdown within the IT
marketplace the Company has witnessed a degradation of its operating margins and continues
to experience margin pressures for the services that the Company offers. To be successful
the Company must continue to win new business, expand its revenues, and manage its
operating margins along with its general overhead costs to mitigate the Companys
losses and restore positive cashflow and earnings growth.

# Results of Operations

Three Months Ended June
30, 2004 as Compared to Three Months Ended June 30, 2003

Revenue. Revenue
for the three month period ended June 30, 2004 was approximately           $841,000 as
compared to approximately $815,000 for the three month period ended           June 30,
2003. The revenue increase was attributable to an increase in billable           hours
for its consultants in the Quarter ending June 30, 2004 as a result of
          improvements in results from the Companys sales and marketing efforts in
          this period as compared to the Quarter ended June 30, 2003.

Gross
profit.Gross profit for the three month period ended June 30, 2004, was approximately
$223,000, or 27% of revenues, an increase of approximately $4,000 from gross profit of
approximately $219,000, or 27% of revenues, for the three month period ended June 30,
2003. The increase in gross profit was materially attributable to greater revenues as a
direct result of an increase in billable hours and a stabilization in gross margins
associated with these revenues.

Sales
and marketing. Sales and marketing expenses for the three month period ended June 30,
2004, were approximately $128,000, or 15% of revenues, an increase of approximately
$16,000, as compared to approximately $112,000, or 14% of revenues, for the three month
period ended June 30, 2003. The increase was materially attributable to an increase in
sales payroll for sales and marketing efforts instituted by the Company.

General
and administrative. General and administrative expenses for the three month period
ended June 30, 2004, were approximately $278,000, or 33% of revenues, an increase of
approximately $115,000, as compared to approximately $163,000, or 20% of revenues,
incurred by the Company for the three month period ended June 30, 2003. The increase in
general and administrative expenses for the three months ended June 30, 2004, was
primarily attributable to the issuance of stock and monthly expenses associated with the
mergers and acquisitions efforts currently underway. Approximately $72,000 of this expense
was non-recurring and associated with a stock issuance for services associated with the
Companys mergers and acquisitions efforts.

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Depreciation
and amortization. Depreciation and amortization expenses for the three month period
ended June 30, 2004, was $650, or less than 1% of revenues, a decrease of $2,809, as
compared to $3,459 of such expenses, or 1% of revenues, incurred by the Company for the
three month period ended June 30, 2003. The decrease in depreciation and amortization
expenses for the three month period ended June 30, 2004, was primarily attributable to a
lesser amount of depreciable assets as a result of the reduced equipments requirements of
a smaller consultant base.

Other
income (expense). Interest income (expense), net for the three month period ended June
30, 2004, was $1,837, or less than 1% of revenues, a decrease of $1,446 as compared to
$3,283, or less than 1% of revenues, for the three month period ended June 30, 2003. The
decrease in interest income for the three month period ended June 30, 2004, was primarily
attributable to lesser amounts of cash and cash equivalents along with lower short term
interest rates that were available to the Company on investments in overnight sweep
accounts.

Net
loss.As a result of the above, the net loss for the three month period ended June 30,
2004, was approximately $182,000 as compared to the net loss of approximately $56,000 for
the three months ended June 30, 2003.

Six Months Ended June 30,
2004 as Compared to Six Months Ended June 30, 2003

Revenue. Revenue
for the six month period ended June 30, 2003 was approximately           $1,564,000 as
compared to approximately $1,738,000 for the six month period           ended June 30,
2003. The revenue decrease was attributable to a lower average           bill rate by
consultants and fewer billable hours in the six months ending June           30, 2004 as
compared to the six months ended June 30, 2003. This decrease in           Revenue was
materially due to lower levels of billable hours in the first           quarter of 2004
as compared to the same period in 2003.

Gross
profit.Gross profit for the six month period ended June 30, 2004, was approximately
$380,000, or 24% of revenues, a decrease of approximately $85,000 from gross profit of
approximately $465,000, or 27% of revenues, for the six month period ended June 30, 2003.
The decline of gross profit was materially attributable to a reduction in gross margin as
a result of negative pricing pressures that were present within the current IT marketplace
for the Companys services within the first quarter comparative periods.

Sales
and marketing. Sales and marketing expenses for the six month period ended June 30,
2004, were approximately $230,000, or 15% of revenues, a decrease of approximately $8,000,
as compared to approximately $238,000, or 14% of revenues, for the six month period ended
June 30, 2003. The decrease was materially attributable to a reduction in expenses related
to the preparation and one time cost associated with preparing our GSA Scheldule in the
first half of 2003.

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General
and administrative. General and administrative expenses for the six month period ended
June 30, 2004, were approximately $428,000, or 27% of revenues, an increase of
approximately $81,000, as compared to approximately $347,000, or 20% of revenues, incurred
by the Company for the six month period ended June 30, 2003. The increase in general and
administrative expenses for the six months ended June 30, 2004, was primarily attributable
to the one time issuance of stock for services associated with the Companys mergers
and acquisitions activities.

Depreciation
and amortization. Depreciation and amortization expenses for the six month period
ended June 30, 2004, was $2,439, or less than 1% of revenues, a decrease of $4,200, as
compared to $6,639 of such expenses, or less than 1% of revenues, incurred by the Company
for the six month period ended June 30, 2003. The decrease in depreciation and
amortization expenses for the six month period ended June 30, 2004, was primarily
attributable to a lesser amount of depreciable assets as a result of the reduced
equipments requirements of a smaller consultant base.

Other
income (expense). Interest income (expense), net for the six month period ended June
30, 2004, was $3,583, or less than 1% of revenues, a decrease of $2,847 as compared to
$6,430, or less than 1% of revenues, for the six month period ended June 30, 2003. The
decrease in interest income (expense), net for the six month period ended June 30, 2004,
was primarily attributable to lesser amounts of cash and cash equivalents along with lower
short term interest rates that were available to the Company on investments in
interest-bearing accounts.

Net
loss.As a result of the above, the net loss for the six month period ended June 30,
2004, was approximately $277,000 as compared to the net loss of approximately $120,000 for
the six months ended June 30, 2003.

# Liquidity and Capital
Resources

The Company has, since inception,
financed its operations and capital expenditures through the sale of stock, seller notes,
convertible notes, convertible exchangeable debentures and the proceeds from the exchange
offer and exercise of the warrants related to a convertible exchangeable debenture. During
2004 and 2003 the Company has materially financed its operations with its working capital.

Cash used in operating activities for
the quarter ended June 30, 2004, was approximately $202,000 as compared to cash used in
operating activities of approximately $111,000 for the quarter ended June 30, 2003. The
increase in cash used by operations during the second quarter of 2004 as compared to the
second quarter ending 2003 was primarily a result of consulting expenses paid in the form
of stock compensation and an increase in days sales outstanding in accounts receivable.
There was no material amount of capital expenditures on property for the quarters ended
June 30, 2004 and 2003.

As of June 30, 2004, the Company had
net working capital of approximately $0.9 million. The Companys primary source of
liquidity consists of approximately $0.8 million in cash and cash equivalents and
approximately $0.5 million of accounts receivable. The Companys current liabilities
include approximately $0.4 million in accounts payable and accrued expenses.

15

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The market for the Companys
services is experiencing an environment of constrained technology investment as a result
of an economic slowdown that has reduced new technology initiatives. As a result of this
negative environment, the demand for IT consultants ranging from software programmers to
network engineers has been negatively effected. This has reduced demand for the
Companys consultants as well has created an increase in competition from both
domestic and foreign firms for the diminished amount of new and ongoing IT initiatives.
The Company anticipates in the future a reversal of these negative events as economic
growth is restored, the constrained environment in new technology initiatives ebb, and the
Company executes it current mergers and acquisitions strategy. Therefore, the
Companys business environment is characterized by rapid technological changes,
experiences times of high growth and contraction, and material events such as mergers and
acquisitions can materially change the profile of the Company.

Since 2002, the Company has embarked
upon several new initiatives to counter the current negative 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. The
Company currently has no commitments for capital expenditures. The Companys 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.

The Company believes that its
current cash position is sufficient to meet its capital expenditure and working capital
requirements for the near term, however, the growth and technological change of the
market make it difficult for the Company 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 would
occur with the acquisition of a major new subsidiary, might also require external
financing that could include additional debt or capital. The Company is currently in
discussions with financing sources to obtain the appropriate amounts of capital necessary
to acquire companies that are being considered by the Company.  There can be no assurance
that any such financing, if required, will be available on acceptable terms, if at all.

# Other

Inflation has not had a significant
effect on the Companys operations, as increased costs to the Company have generally
been offset by increased prices of services sold.

The preparation of financial
statements in conformity with US GAAP 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.

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This report contains forward-looking
statements setting forth the Companys beliefs or expectations relating to future
revenues, profitability, and performance. Statements that contain words such as
believes, expects, anticipates, intends,
estimates, or similar expressions are forward-looking statements.
Forward-looking statements involve risks and uncertainties that could cause actual results
to differ materially from those expressed or implied by such forward-looking statements.
Actual results may differ materially from projected or expected results due to changes in
the demand for the Companys products and services, uncertainties relating to the
results of operations, dependence on its major customers, risks associated with rapid
technological change and the emerging services market, potential fluctuations in quarterly
results, its dependence on key employees, its ability to successfully effect acquisitions
of and mergers with other companies, and other risks and uncertainties affecting the
technology industry generally. The Company disclaims any intent or obligation to up-date
publicly these forward-looking statements, whether as a result of new information, future
events or otherwise.

# ITEM 3.  QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

# ITEM 4.  CONTROLS AND
PROCEDURES

An evaluation was carried out under
the supervision and with the participation of the Companys management, including our
Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities
Exchange Act of 1934) as of June 30, 2004. As a result of their evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that the Companys
disclosure controls and procedures are effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms. There were no changes in the
Companys internal control over financial reporting that occurred during the quarter
ended June 30, 2004, that has materially affected and is reasonably likely to materially
affect, the Companys internal control over financial reporting.

17

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# PART II.

# OTHER INFORMATION

# ITEM 2.  UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

|(a) | The
Company issued shares of its equity securities, without registration under the Securities
Act of 1933 pursuant to the private offering exemption under Section 4(2) thereof, in the
closing on April 30, 2004 of the acquisition of Chesapeake Government Technologies, Inc.,
all as described in a Form 8-K filed on May 14, 2004.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 30, 2004, the Company issued, without registration under the Securities Act of 1933
pursuant to the private offering exemption under Section 4(2) thereof, warrants to three
members of its management to purchase an aggregate of  up to 4,000,000 shares of its
equity securities at a price of $0.235 per share, with the exercisability of such
warrants being subject to such persons achieving performance goals set by the Board of
Directors of the Company.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# ITEM 6.  EXHIBITS AND
REPORTS ON FORM 8-K.

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

| | 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.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Reports
on Form 8-K
|--- | -------------------

The
Company filed a Form 8-K on May 14, 2004 describing the acquisition of Chesapeake
Government Technologies, Inc.

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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 12, 2004 | /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               

19