UNITED STATESSECURITIES
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
                       September 30, 2008
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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)                      
|18W100 22nd Street, Suite 104, 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 X No

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting
company in Rule 12b-2 of the Exchange Act.

Large
accelerated filer [   ]      Accelerated filer [   ]    Non-accelerated filer [   ]    Smaller
reporting company [X]

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 November 12, 2008, 58,090,697
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 September 30, 2008        
|                                        | (unaudited) and December 31, 2007 (unaudited)                         
|                                        | Condensed Consolidated Statements of Operations for the three and nine
|                                        | months ended September 30, 2008 and 2007 (unaudited)                  
|                                        | Condensed Consolidated Statements of Cash Flows for the three and nine
|                                        | months ended September 30, 2008 and 2007 (unaudited)                  
|                                        | Notes to Condensed Consolidated Financial Statements                  
|Item 2.                                 | Managements Discussion and Analysis of Financial                     
|                                        | Condition and Results of Operations                                   
|Item 4T.                                | Controls and Procedures                                               
|Part II.           OTHER INFORMATION   
|Item 6.                                 | Exhibits                                                              
|SIGNATURES                              | 31                                                                    
|CERTIFICATIONS                         

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# PART I. FINANCIAL
INFORMATION

# ITEM 1. CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.

# WIDEPOINT CORPORATION
AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS

|September 30,
2008                                                            | December 31,
2007
|----------------------------------------------------------------------------- | -----------------
|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:                                                          |                  
|Short-term borrowings                                                         |                  
|Accounts payable                                                              |                  
|Accrued expenses                                                              |                  
|Deferred revenue                                                              |                  
|Short-term portion of capital lease obligation                                |                  
|                                                                              |                  
|Total current liabilities                                                     |                  
|                                                                              |                  
|Long-term debt, net of current portion                                        |                  
|Capital lease obligation, net of current portion                              |                  
|                                                                              |                  
|Total liabilities                                                             |                  
|                                                                              |                  
|Stockholders equity:                                                         |                  
|Common stock, $0.001 par value; 110,000,000 shares authorized; 58,090,697 and |                  
|52,558,697 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 SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS

|                                                        | Three Months Ended
September 30, | Nine Months Ended
September 30,
|------------------------------------------------------- | -------------------------------- | -------------------------------
|
|
|Revenues, net                                           |                                  |                                
|Cost of sales (including amortization and depreciation  |                                  |                                
|of $261,134, $112,749, $701,739, and $332,867,          |                                  |                                
|respectively)                                           |                                  |                                
|                                                        |                                  |                                
|Gross profit                                            |                                  |                                
|Sales and marketing                                     |                                  |                                
|General & administrative (including SFAS123 (R) stock   |                                  |                                
|compensation expense of $51,253, $31,090, $527,333, and |                                  |                                
|$117,753, respectively)                                 |                                  |                                
|Depreciation expense                                    |                                  |                                
|                                                        |                                  |                                
|(Loss) Income from operations                           |                                  |                                
|Interest income                                         |                                  |                                
|Interest expense                                        |                                  |                                
|Other expense                                           |                                  |                                
|                                                        |                                  |                                
|Net (loss) income before income tax                     |                                  |                                
|Income tax benefit, net                                 |                                  |                                
|                                                        |                                  |                                
|Net (loss) income                                       |                                  |                                
|                                                        |                                  |                                
|Basic net (loss) income per share                       |                                  |                                
|                                                        |                                  |                                
|Basic weighted average shares outstanding               |                                  |                                
|                                                        |                                  |                                
|Diluted net (loss) income per share                     |                                  |                                
|                                                        |                                  |                                
|Diluted weighted average shares outstanding             |                                  |                                
|                                                        |                                  |                                

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

2

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# WIDEPOINT CORPORATION
AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS

|                                                     | Three Months
Ended September 30, | Nine Months
Ended September 30,
|---------------------------------------------------- | -------------------------------- | -------------------------------
|
|
|Cash flows from operating activities:                |                                  |                                
|Net (loss) income                                    |                                  |                                
|Adjustments to reconcile net (loss) income to        |                                  |                                
|net cash provided by (used in) operating activities: |                                  |                                
|Depreciation expense                                 |                                  |                                
|Amortization expense                                 |                                  |                                
|Amortization of deferred financing costs             |                                  |                                
|Stock options expense                                |                                  |                                
|Gain on disposal of equipment                        |                                  |                                
|Changes in assets and liabilities                    |                                  |                                
|Accounts receivable                                  |                                  |                                
|Prepaid expenses and other current assets            |                                  |                                
|Other assets                                         |                                  |                                
|Accounts payable and accrued expenses                |                                  |                                
|                                                     |                                  |                                
|Net cash provided by (used in)                       |                                  |                                
|operating activities                                 |                                  |                                
|                                                     |                                  |                                
|Cashflows from investing activities:                 |                                  |                                
|Purchase of asset/subsidiary, net of cash            |                                  |                                
|acquired                                             |                                  |                                
|Purchase of property and equipment                   |                                  |                                
|Software development costs                           |                                  |                                
|                                                     |                                  |                                
|Net cash used in investing activities                |                                  |                                
|                                                     |                                  |                                
|Cashflows from financing activities:                 |                                  |                                
|Borrowings on notes payable                          |                                  |                                
|Principal payments on notes payable                  |                                  |                                
|Principal payments under capital  lease              |                                  |                                
|obligation                                           |                                  |                                
|Costs related to registration statement              |                                  |                                
|Proceeds from exercise of stock options              |                                  |                                
|Proceeds from issuance of stock                      |                                  |                                
|Costs related to issuance of stock                   |                                  |                                
|Costs related to financing purchase of               |                                  |                                
|subsidiary                                           |                                  |                                
|                                                     |                                  |                                
|Net cash (used in) provided by                       |                                  |                                
|financing activities                                 |                                  |                                
|                                                     |                                  |                                
|Net increase (decrease) in cash                      |                                  |                                
|                                                     |                                  |                                
|Cash and cash equivalents, beginning of period       |                                  |                                
|                                                     |                                  |                                
|Cash and cash equivalents, end of period             |                                  |                                
|                                                     |                                  |                                
|Supplementary Information:                           |                                  |                                
|Promissory Note issued for iSYS acquisition          |                                  |                                
|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 condensed consolidated balance
sheet as of September 30, 2008, the condensed consolidated statements of operations for
the three and nine months ended September 30, 2008 and 2007, and the condensed
consolidated statements of cash flows for the three and nine months ended September 30,
2008 and 2007 have been prepared by WidePoint Corporation (WidePoint or the
Company) and are unaudited. The condensed consolidated balance sheet as of
December 31, 2007 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, 2007.

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
condensed 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, 2007. The results of operations for
the three and nine months ended September 30, 2008 are not indicative of the operating
results for the full year.

WidePoint is a leading provider of
advanced information technology products and services, including identity assurance and
information protection management services, forensic informatics and wireless technology
services. WidePoint has four operational entities: Operational Research Consultants, Inc.
(ORC), iSYS, LLC (iSYS), Protexx Acquisition Corp., and WidePoint IL, Inc. WidePoint
enables organizations to deploy fully compliant IT services in accordance with
government-mandated regulations and advanced system requirements. In January 2008, we
completed the acquisition of iSYS. iSYS specializes in mobile telecommunications expense
management services, forensic informatics, and information assurance services 
predominately to the United States Government. 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 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. 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. In July 2008, our wholly-owned
subsidiary Protexx Acquisition Corp. acquired the assets and certain liabilities of
Protexx, Incorporated, a Delaware corporation (Protexx). Protexx provides
identity assurance and data encryption services.

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.

We intend to continue to market and
sell our technical capabilities into the governmental and commercial marketplaces.
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, iSYS, and Protexx, and our internal
growth initiatives.

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

4

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# 2. Significant
Accounting Policies

Principles of
Consolidation

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

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.

Reclassifications

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

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 September 30, 2008 cash balances was
approximately $7.0 million in interest bearing balances in one bank, mostly in excess of
federally insured amounts, as compared to approximately $1.6 million in interest bearing
balances in one bank at December 31, 2007.

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: healthcare, financial services and U.S. 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.

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 Company has not historically
maintained a bad debt reserve for our federal government or commercial customers as we
have not witnessed any material or recurring bad debt charges and the nature and size of
the contracts has not necessitated such bad debt reserve.

|Description                               | Balance at
Beginning of
Period | Additions
Charged to
Costs and
Expenses | Deductions | Balance at
End of
Period
|----------------------------------------- | ------------------------------ | --------------------------------------- | ---------- | ------------------------
|For the quarter ended September 30, 2007, |                                |                                         |            |                         
|Allowance for doubtful accounts           |                                |                                         | $          | --                      
|For the quarter ended September 30, 2008, |                                |                                        
|Allowance for doubtful accounts           |                                |                                         | $          | --                      

5

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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 September 30, 2008 and December 31, 2007, unbilled accounts receivable
totaled $1,234,895 and $371,435, respectively.

Revenue Recognition

A portion 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 September 30, 2008 or on December
31, 2007 due to termination provisions and thus has not recorded provisions for such
events.

Additionally, 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 collectability is probable.

Revenue from our mobile telecom
expense management services (MTEMS) is recognized upon delivery of services as
they are rendered. Arrangements with customers on MTEMS related contracts are recognized
ratably over a period of performance.

Revenue from the sale of PKI
credentials is recognized when delivery occurs. Arrangements with customers on PKI related
contracts may involve multiple deliverable elements. In these cases, the Company applies
the principles prescribed in Emerging Issues Task Force Abstract (EITF) 00-21
Revenue Arrangements with Multiple Deliverables. The Company analyzes various factors,
including a review of the nature of the contract or product sold, the terms of each
specific transaction, the relative fair values of the elements required by EITF 00-21, any
contingencies that may be present, its historical experience with like transactions or
with like products, the creditworthiness of the customer, and other current market and
economic conditions.

Should the sale of product or
software involve an arrangement with multiple elements (for example, the sale of PKI
Credential Seats along with the sale of maintenance, hosting and support to be delivered
over the contract period), the Company allocates revenue to each component of the
arrangement using the residual value method based on the fair value of the undelivered
elements. The Company defers revenue from the arrangement equivalent to the fair value of
the undelivered elements and recognizes the remaining amount at the time of the delivery
of the product or when all other revenue recognition criteria have been met.

Significant Customers

For the quarter ended September 30,
2008, three customers, the Transportation Security Administration (TSA), the
U.S. Department of Homeland Security (DHS), and the Washington Headquarters
Services (WHS), an agency of the U.S. Department of Defense (DoD)
that provides services for many DoD agencies and organizations, represented approximately
27%, 21%, and 12% 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 September 30, 2007, two customers, the U.S. Government
Services Administration (GSA) Aces eOffers Program and Lockheed Martin
represented approximately 12% and 11% of revenues, respectively. For the nine-month period
ended September 30, 2008, three customers, the TSA, DHS, and WHS represented approximately
26%, 19%, and 12% of revenues, respectively. For the nine-month period ended September 30,
2007, no customers represented over 10% of revenues.

6

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Fair value of
financial instruments

The Companys financial
instruments include cash equivalents, accounts receivable, accounts payable, short-term
debt, and capital leases. 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.

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 September 30, 2008, two customers, the TSA and the DHS,
accounted for approximately 21% and 17% of accounts receivable, respectively. As of
December 31, 2007, two clients, Headquarters Cryptologic Systems Group (HQ CPSG) and
United Space Alliance, represented 24% and 14% of accounts receivable, respectively.

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:

|                                                | September 30, | December 31,
|----------------------------------------------- | ------------- | ------------
|
|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 between two and five
years depending upon the classification of the property and/or equipment.

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, $31,000 for PKI-II, and $18,000 for PKI-III for the three
month period ended September 30, 2008. WidePoint was awarded an Authority to Operate
(ATO) under the guidelines associated with our PKI certificates in April 2008
and initiated amortizing the expense for PKI-III in May 2008 over an approximate three
year life. Capitalized software costs, net, included in Intangibles, net, at September 30,
2008 and December 31, 2007 were approximately $0.5 million and $0.7 million, respectively.

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.

Outstanding options and warrants to
purchase 8,619,457 for the quarter ended September 30, 2008 have been excluded from the
calculation of the diluted net loss per share as such effect would have been
anti-dilutive. Outstanding options and warrants to purchase 4,911,366 for the quarter
ended September 30, 2007 have been included in the calculation of net income per share.

Outstanding options and warrants to
purchase 8,619,457 and 7,176,257 for the nine months ended September 30, 2008 and 2007,
respectively, have 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 net loss per share for the quarter ended September 30, 2008 and for the nine
months ended September 30, 2008 and 2007 are presented as identical.

8

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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.

The amount of compensation expense
recognized under SFAS 123(R) during the three and nine month periods ended September 30,
2008 and 2007, respectively, under our plans was comprised of the following:

|                                                | Three Months ended September 30, | Nine Months ended
September 30,
|----------------------------------------------- | -------------------------------- | -------------------------------
|
|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 September 30, 2008 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 three
and nine months ended September 30, 2008, 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 of no dividend yield, risk
free interest rates of between 2.61% and 4.83%, volatility of between 156% to 57%, and
expected life in years of approximately 4 years. 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 nine month periods ended September
30, 2008 and September 30, 2007 is presented below:

9

---

|                                        | # of Shares | Weighted average
Grant date fair value
per share
|--------------------------------------- | ----------- | ------------------------------------------------
|OUTSTANDING AND NON -VESTED             |             |                                                 
|Non-vested at January 1, 2008           |             |                                                 
|Granted                                 |             |                                                 
|Vested                                  |             |                                                 
|Forfeited                               |             |                                                 
|Non-vested at March 31, 2008            |             |                                                 
|Granted                                 |             |                                                 
|Vested                                  |             |                                                 
|Forfeited                               |             |                                                 
|Non-vested at June 30, 2008             |             |                                                 
|Granted                                 |             |                                                 
|Vested                                  |             |                                                 
|Non-vested at September 30, 2008        |             |                                                 
|Non-vested at January 1, 2007           |             |                                                 
|Granted                                 |             |                                                 
|Vested                                  |             |                                                 
|Forfeited                               |             |                                                 
|Non-vested at March 31, 2007            |             |                                                 
|Granted                                 |             |                                                 
|Vested                                  |             |                                                 
|Non-vested at June 30, 2007             |             |                                                 
|Granted                                 |             |                                                 
|Vested                                  |             |                                                 
|Non-vested at September 30, 2007        |             |                                                 
|OUTSTANDING AND EXERCISABLE             |             |                                                 
|Total outstanding at January 1, 2008    |             |                                                 
|Issued                                  |             |                                                 
|Cancelled                               |             |                                                 
|Exercised                               |             |                                                 
|Total outstanding at March 31, 2008     |             |                                                 
|Total exercisable at March 31, 2008     |             |                                                 
|Issued                                  |             |                                                 
|Cancelled                               |             |                                                 
|Exercised                               |             |                                                 
|Total outstanding at June 30, 2008      |             |                                                 
|Total exercisable at June 30, 2008      |             |                                                 
|Issued                                  |             |                                                 
|Cancelled                               |             |                                                 
|Exercised                               |             |                                                 
|Total outstanding at September 30, 2008 |             |                                                 

10

---

|                                        |  |  |  |           |  |   |      | 
|--------------------------------------- |  |  |  | --------- |  | - | ---- | 
|Total exercisable at September 30, 2008 |  |  |  | 7,214,411 |  | $ | 0.37 | 
|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 | 
|Issued                                  |  |  |  | 124,000   |  | $ | 0.58 | 
|Cancelled                               |  |  |  | --        |  |   | --   | 
|Exercised                               |  |  |  | --        |  |   | --   | 
|Total outstanding at September 30, 2007 |  |  |  | 7,085,211 |  | $ | 0.37 | 
|Total exercisable at September 30, 2007 |  |  |  | 6,628,167 |  | $ | 0.32 | 

The aggregate remaining contractual
lives in years for the options outstanding and exercisable on September 30, 2008 were 3.51
and 2.76, respectively.

Aggregate intrinsic value represents
total pretax intrinsic value (the difference between WidePoints closing stock price
on September 30, 2008 and the exercise price, multiplied by the number of in-the-money
options) that would have been received by the option holders had all option holders
exercised their options on September 30, 2008. This amount changes based on the fair
market value of WidePoints stock. The total intrinsic value of options outstanding
as of September 30, 2008 was $1,057,150. The total intrinsic value of options exercisable
on September 30, 2008 was $1,057,150. The total intrinsic value of options exercised for
the third quarter of 2008 was $0. The Company issues new shares of common stock upon the
exercise of stock options.

At September 30, 2008, there were
4,535,438 shares available for future grants under the Companys Stock Incentive Plans.

At September 30, 2008, the Company
had approximately $412,000 of total unamortized compensation expense, net of estimated
forfeitures, related to stock option plans that will be recognized over the weighted
average period of 3.51 years.

Recent Accounting
Pronouncements

SFAS 157. In
September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 157,Fair Value
Measurements (SFAS 157), which defines fair value, establishes a framework
for measuring fair value under generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS 157 applies to other existing accounting
pronouncements that require or permit fair value measurements, the FASB having previously
concluded in those accounting pronouncements that fair value is the relevant measurement
attribute. While SFAS 157 does not require any new fair value measurements, its
application may change the current practice for fair value measurements. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. On February 8,
2008, the FASB issued FSP FAS 157-2,Effective Date of FASB Statement
No. 157 , which delays the effective date of SFAS 157 for nonfinancial
assets and liabilities to fiscal years beginning after November 15, 2008. The
adoption of SFAS 157 for financial assets and liabilities in the first quarter of 2008 had
no impact on our consolidated financial statements. We are currently evaluating the impact
of SFAS 157 for non-financial assets and liabilities.

11

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SFAS 159. In February 2007,
the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities (SFAS 159) which permits entities to choose to
measure many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value. SFAS 159 is effective for the
Companys current fiscal year ending December 31, 2008. The adoption of this
statement did not have an impact on the Companys consolidated financial position,
results of operations or cash flows.

SFAS 141(R). In December 2007,
the FASB issued SFAS No. 141(R), Business Combinations(FAS
141(R)), to replace FAS 141, Business Combinations. FAS 141(R)
requires use of the acquisition method of accounting, defines the acquirer, establishes
the acquisition date and broadens the scope to all transactions and other events in which
one entity obtains control over one or more other businesses. This statement is effective
for financial statements issued for fiscal years beginning on or after December 15, 2008
with earlier adoption prohibited. While the Company does not expect that the adoption of
FAS 141(R) will have a material impact on its consolidated financial statements for
transactions completed prior to December 31, 2008, the impact of the accounting change
could be material for business combinations which may be consummated subsequent thereto.

SFAS 160. In December 2007,
the FASB issued Statement of FAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51 (FAS 160). FAS
160 establishes accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the retained interest and gain or loss when a subsidiary is
deconsolidated. This statement is effective for financial statements issued for fiscal
years beginning on or after December 15, 2008 with earlier adoption prohibited. The
Company currently does not have any noncontrolling interests or deconsolidated
subsidiaries and therefore FAS 160 will not have any impact on its consolidated financial
statements.

# 3. Debt

On January 2, 2008, WidePoint entered
into a Commercial Loan Agreement with Cardinal Bank relating to a $5,000,000 revolving
credit facility and a $2,000,000 term loan. Advances under the revolving credit facility
bear interest at a variable rate equal to the prime rate plus 0.25% with such variable
rate dropping to the prime rate or the prime rate minus 0.25% depending upon the Company
meeting certain performance conditions, with the repayment date for such facility being
April 30, 2009. This new revolving credit facility replaces the Companys prior
$2,000,000 revolving credit facility with Cardinal Bank. The term loan bears interest at
7.5% annually and the repayment date of such term loan is January 1, 2012. The balances
for the revolving credit facility and the term loan were approximately $0 and $1.8
million, respectively, at September 30, 2008.

# 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.

The following summarizes the
Companys acquisition activity since 2004:

| |  | In
July 2008, WidePoint purchased the assets and certain liabilities of Protexx,
Incorporated (Protexx) (See Note 10). Protexx was a development stage company with no
material revenues. We applied the costs in excess of assets and assumed liabilities
associated with the asset purchase to a proprietary software intangible asset that
Protexx has developed with an estimated three year life for the proprietary software that
Protexx has developed.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

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| |  | In
January 2008, WidePoint completed the acquisition of iSYS, LLC. (iSYS). The
purchase price allocation for the Companys acquisition of iSYS at this time is
still preliminary and subject to final adjustments. The Company has engaged a consultant
to assist it in its final purchase price allocation. As a result of a requirement in the
purchase agreement between WidePoint and iSYS to measure iSYSs working capital and
adjust it subsequent to the closing and after an audit had been performed, we determined
that the minimum working capital of $2,000,000 was met and that an excess of
approximately $143,000 existed with such $143,000 being paid out during the second
quarter of 2008 to the former sole member of iSYS. The excess working capital will be
adjusted against the purchase price.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | During
2004, WidePoint completed the acquisition of Operational Research Consultants, Inc. (ORC).
The Company also has capitalized software development costs associated with its PKI
initiative, established and/or has estimated 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:
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           
|---------------------------
|Amortized Intangible Assets
|Gross Carrying
Amount      
|                           
|(1)                        
|                           
|                           
|                           
|                           
|                           
|(2)                        
|                           
|                           
|                           
|(3)                        
|                           
|                           
|                           
|(4)                        
|                           
|                           
|                           
|(5)                        
|                           
|                           
|(6)                        
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           

13

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| | (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 2.0 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 2.0 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 2.0 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 PKI certificates to be issued under a General Service
          Administration (GSA) credential program. ORC was issued its ATO
          by the GSA in April of 2008. It has a weighted average life of 2.5 years as
          based upon the contractual life assigned by its authority to operate and issue
          PKI certificates by the federal government.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | The
iSYS intangible is made up of the preliminary estimated purchase accounting
          allocations associated with the valuation assigned by the Company to iSYSs
          customer relationships and mobile telecom expense management           (MTEM)
software. The MTEM software intangible has an estimated           life of 5 years and iSYSs
customer relationships have an estimated life of           5 years. The MTEM software was
estimated based upon a preliminary estimate           attributed to the most recent life
attributable to the contractual life assigned           to iSYSs most recent
contract awards and terms. The preliminary estimated           fair value of the MTEM
software was estimated using the expected present value           of future cash flows
estimated by the Company for iSYSs software.           iSYSs customer
relationship intangible was estimated based upon an           analysis of the historic
life of iSYSs present customer relationships and           their present contract
opportunities. A preliminary 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 5.0
years. The Company has retained an outside consultant to conduct an           independent
analysis to determine the appropriate valuation of the intangibles           and both the
estimated life and value may change upon the completion of such           independent
analysis
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | The
Protexx intangible is made up of acquired technology that was purchased in           July
2008. In July 2008, WidePoint purchased the assets and certain liabilities           of
Protexx. Protexx was a development stage company with no material revenues.           We
applied the costs in excess of assets and assumed liabilities associated with
          the asset purchase to a proprietary software intangible asset that Protexx has
          developed with an estimated 3 year life for the proprietary software.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The total weighted average life of
all of the intangibles is approximately 3.0 years.

There were no amounts of research and
development assets acquired during the quarter and nine months ended September 30, 2008,
nor any written-off in the period.

The changes in the carrying amount of
goodwill for the nine months ended September 30, 2008 and 2007 were as follows:

|                                  | Total
|--------------------------------- | -----
|Balance as of January 1, 2007     |      
|Goodwill adjusted                 |      
|Balance as of September 30, 2007  |      
|Balance as of January 1, 2008     |      
|Goodwill acquired                 |      
|Balance as of  September 30, 2008 |      

14

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The goodwill acquired is associated
with the acquisition of iSYS in January 2008. Management believes that the carrying value
was not impaired as of September 30, 2008.

# 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 September 30, 2008, 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
provisions 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 no FIN 48 effects are present as of September 30, 2008 and our tax position
has not materially changed since December 31, 2007.

# 6. Stockholders
Equity

The Company is authorized to issue
110,000,000 shares of common stock, $.001 par value per share. During the nine month
period ended September 30, 2008, 32,000 shares of common stock were issued as the result
of the exercise of employee stock options. As of September 30, 2008, there were 58,090,697
shares of common stock outstanding.

Common Stock

On July 31, 2008, pursuant to the
terms of the Purchase Agreement between the Company, Protexx Acquisition Corporation, a
Delaware corporation, Protexx Incorporated, a Delaware corporation
(Protexx), and Peter Letizia, Charles B. Manuel, Jr. and William Tabor,
the Company issued 2.5 million shares of its common stock in the name of Protexx and
delivered such shares to the parties escrow agent to be held in escrow pending the
possible release of such shares as part of the potential earnout to which Protexx may be
entitled under the Purchase Agreement for calendar year 2008. For calendar year 2009,
Protexx shall have the opportunity to earn an additional Two Million Two Hundred Fifty
Thousand Dollars ($2,250,000.00) worth of privately issued shares of WidePoint common
stock as part of the earnout for that calendar year. The maximum number of whole shares of
WidePoint common stock that Protexx shall have the opportunity to earn for calendar year
2009 shall be equal to the number of whole shares of WidePoint common stock that results
from Two Million Two Hundred Fifty Thousand Dollars ($2,250,000.00) divided by the greater
of (x) One Dollar and Twenty-Five Cents ($1.25) or (y) the average closing sale price of
the WidePoint common stock as quoted on the AMEX for the twenty (20) trading days
immediately preceding December 31, 2009 (See Note 10).

15

---

On April 29, 2008, the Company
entered into a Common Stock Purchase Agreement (Purchase Agreement) with
Deutsche Bank AG, London Branch (Deutsche Bank), and related agreements, as
part of a private equity financing to raise additional funds for working capital. Under
the Purchase Agreement, Deutsche Bank agreed to purchase 2,500,000 shares of WidePoint
common stock for a total purchase price of $2,550,000, or $1.02 per share. Pursuant to the
Purchase Agreement, the Company issued 2,500,000 shares of its common stock to Deutsche
Bank on May 2, 2008. The offer and sale of the shares were not registered under the
Securities Act of 1933, as amended, in reliance on the private offering
exemption provided under Section 4(2) thereof.

On May 16, 2008, the Company entered
into two Common Stock Purchase Agreements (collectively, the Endurance Purchase
Agreements) with Endurance Partners, L.P. and Endurance Partners (Q.P), L.P., and
related agreements, as part of a private equity financing to raise additional funds for
working capital. Under the Endurance Purchase Agreements, Endurance Partners, L.P. agreed
to purchase 428,954 shares of WidePoint common stock for a total purchase price of
$437,533.08, or $1.02 per share, and Endurance Partners (Q.P.), L.P. agreed to purchase
1,071,046 shares of WidePoint common stock for a total purchase price of $1,092,466.92, or
$1.02 per share. Pursuant to the Endurance Purchase Agreements, on May 19, 2008, the
Company issued 428,954 shares of its common stock to Endurance Partners, L.P. and
1,071,046 shares of its common stock to Endurance Partners (Q.P.), L.P. The offer and sale
of the shares were not registered under the Securities Act of 1933, as amended, in
reliance on the private offering exemption provided under Section 4(2)
thereof.

As a result of the equity
transactions to raise additional capital that we entered into during the second quarter of
2008, the Company issued a combined cumulative total of 4,000,000 common shares of the
Company which provided gross proceeds of $4,080,000 and net proceeds after various legal
and other expenses of approximately $3,940,000.

Pursuant to the terms of a Membership
Interest Purchase Agreement between the Company, iSYS, LLC and Jin Kang, the Company
issued 1,500,000 shares of Company common stock on January 8,,2008 at a stock
price of $1.20 per common share for a value of $1,800,000. The Company also issued an
additional 3,000,000 shares of Company common stock on January 8, 2008, which shares were
delivered into escrow to be held subject to the satisfaction of certain earnout provisions
under the Membership Interest Purchase Agreement, and which shares are subject to return
to the Company in the event such earnout provisions are not achieved under the terms of
the Membership Interest Purchase Agreement. Under the Membership Interest Purchase
Agreement the initial $1.4 million in earnings before interest, taxes, depreciation and
amortization (EBITDA) from iSYS is excluded from the earnout for the initial 3
years, with 66% of the value in excess of such initial $1.4 million being paid to the
former owner of iSYS, with 50% of the amount being paid in cash and 50% being valued and
released in escrow shares. In the fourth year the value in excess of 50% is used instead
of 66%, with the total earnout capped at $6 million, with $3 million payable in cash and
$3 million payable in the release of earnout shares. Performance of the earnout is
measured annually and awarded within 30 days following the end of the Companys
fiscal year and filing of the Companys Form 10-K for that year. The value of the
1,500,000 shares of unregistered common stock issued was $1,800,000 and was determined
based on the closing market price of the Companys common shares on January 8, 2008
of $1.20 per common share.

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 Emerging Issues Task Force
(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.

16

---

# 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 operated in 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. As of January 4, 2008, the Company
added a third segment upon the acquisition of iSYS, LLC for mobile telecom expense
management.

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:

|                                               | Three Months Ended
September 30, | Nine Months Ended
September 30,
|---------------------------------------------- | -------------------------------- | -------------------------------
|
|Mobile Telecom Managed Services:               |                                  |                                
|Revenues                                       |                                  |                                
|Operating income                               |                                  |                                
|Total assets                                   |                                  |                                
|PKI Credentialing and Managed Services:        |                                  |                                
|Revenues                                       |                                  |                                
|Operating (loss) income (includes amortization |                                  |                                
|expense of $63,477, $45,838, $166,913, and     |                                  |                                
|$137,514, respectively)                        |                                  |                                
|Total assets                                   |                                  |                                
|Consulting services:                           |                                  |                                
|Revenues                                       |                                  |                                
|Operating income                               |                                  |                                
|Total assets                                   |                                  |                                
|Total Company                                  |                                  |                                
|Revenues                                       |                                  |                                
|Operating (loss) income before depreciation    |                                  |                                
|expense                                        |                                  |                                
|Depreciation expense                           |                                  |                                
|Interest (expense) income, net                 |                                  |                                
|Net (loss) income                              |                                  |                                
|Total Corporate assets                         |                                  |                                
|Total assets                                   |                                  |                                

17

---

(1)           Includes $55,269 in
amortization expense in cost of sales associated with the           purchase of ORC,
$100,000 in amortization expense in cost of sales associated           with the purchase
of iSYS, and $28,137 in amortization expense in cost of sales           associated with
the purchase of the assets of Protexx, which are not allocated           among the
segments, and $411,121 in unallocated corporate costs in general and
          administrative expense of which $51,253 is comprised of stock options expense.

(2)           Includes $55,269 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments, and $195,929 in           unallocated
corporate costs in general and administrative expense.

(3)           Includes $165,808 in
amortization expense in cost of sales associated with the           purchase of ORC,
$300,000 in amortization expense in cost of sales associated           with the purchase
of iSYS, and $28,137 in amortization expense in cost of sales           associated with
the purchase of the assets of Protexx, which are not allocated           among the
segments. and $1,370,967 in unallocated corporate costs in general and
          administrative expense of which $527,333 is comprised of stock options expense.

(4)           Includes $165,809 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments, and $732,343 in           unallocated
corporate costs in general and administrative expense.

8.           Litigation

The Company is not involved in any
material legal proceedings.

# 9. iSYS Acquisition

Pursuant to the terms of the
Membership Interest Purchase Agreement discussed in Note 6 above, the Company paid the
following consideration at the closing of the iSYS acquisition: (i) $5,000,000 in cash,
(ii) $2,000,000 principal amount in an Installment Cash Promissory Note, which bears
simple annual interest at the initial rate of 7% through December 31, 2008, and thereafter
the simple interest rate will increase to 10% from January 1, 2009 through the date of
maturity, which will be on the earlier of either April 1, 2009 or the filing by the
Company of its Annual Report on Form 10-K for the year ending December 31, 2008, and (iii)
the issuance of 1,500,000 shares of Company common stock issued at a stock price of $1.20
per share for a value of $1,800,000. The Company also issued an additional 3,000,000
shares of Company common stock, which shares were delivered into escrow to be held subject
to the satisfaction of certain earnout provisions under the Membership Interest Purchase
Agreement, and which shares are subject to return to the Company in the event such earnout
provisions are not achieved under the terms of the Membership Interest Purchase Agreement.
The aggregate purchase price was $9,046,132, including $102,722 of acquisition costs and
without consideration for the contingent issuance of the 3,000,000 earnout shares. The
value of the 1,500,000 unregistered shares of common stock issued was $1,800,000 and was
determined based on the closing market price of the Companys common shares on
January 8, 2008 of $1.20 per common share. Subsequent to the closing and as a requirement
of the purchase agreement between WidePoint and iSYS, an audit of the working capital of
iSYS was performed to determine if the minimum requirement of $2,000,000 in working
capital existed at the time of the closing of the purchase. It was determined that an
excess of approximately $143,000 existed. The excess working capital was therefore
adjusted and paid to the former sole member of iSYS and the purchase price has been
subsequently adjusted.

The Company has not yet finalized the
allocation of the purchase price. The following table summarizes the estimated fair values
of the assets acquired and liabilities assumed based on the latest available information
on iSYS, at January 8, 2008. The allocation of the purchase price was based upon
managements estimates and assumptions:

18

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|                                   | iSYS
at January 8, 2008
|---------------------------------- | -----------------------
|Current assets                     |                        
|Property, plant and equipment, net |                        
|Intellectual property              |                        
|Goodwill                           |                        
|Other non current assets           |                        
|                                   |                        
|Total assets acquired              |                        
|                                   |                        
|Current liabilities                |                        
|                                   |                        
|Total liabilities assumed          |                        
|                                   |                        
|Net                                |                        

The operations of iSYS were included
in the Companys results of operations beginning on January 4, 2008, the acquisition
date. The factors resulting in goodwill were iSYSs name, reputation, and established
key personnel. None of the goodwill will be deductible for tax purposes.

# 10. Protexx, Inc. Asset
Purchase

On July 31, 2008, the Company
entered into an Asset Purchase Agreement (the Purchase Agreement), by and
among the Company, Protexx Acquisition Corporation, Protexx, Incorporated (Protexx),
Peter Letizia, Charles B. Manuel, Jr. and William Tabor, pursuant to which Protexx
Acquisition Corporation, a wholly-owned subsidiary of the Company, purchased certain of
the assets of Protexx, a provider of software-based authentication and encryption
solutions to government, military, first responder and commercial enterprises. Protexx
Acquisition Corporation acquired such assets in exchange for the payment of $1.00 and the
assumption of approximately $506,000, net, of assumed assets, liabilities and direct costs
associated with the asset purchase. At the time of the asset purchase Protexx was a
development stage company that did not have an established customer base and/or an
assembled workforce. Therefore the asset purchase price will be allocated to other
intangible assets. Protexx may be entitled to receive earnout payments under the Purchase
Agreement in the event that the business conducted with the assets purchased from Protexx
exceeds specified earnings targets in calendar years 2008 and 2009. Half of any such
earnout payment earned shall be paid in cash, with the remainder to be paid in Company
common stock.

For calendar year 2008, the Protexx
 business  acquired by Protexx  Acquisition  Corporation  must achieve earnings before
interest, taxes,  depreciation and amortization,  excluding any amortization expenses
from any software  development costs  (EBITDA),  of greater than forty percent (40%) of
revenues realized for the calendar year (the Minimum EBITDA) in order to qualify for
any earnout amount.

19

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For calendar year 2008, if the
Protexx business  acquired by Protexx  Acquisition  Corporation  recognizes revenues for
that calendar year of at least Three Million Dollars  ($3,000,000.00)  and up to Five
Million Dollars  ($5,000,000.00),  and the Minimum  EBITDA is also achieved for that
calendar  year,  then Protexx shall earn One Million One Hundred  Twenty-Five  Thousand
 Dollars  ($1,125,000.00)  of the earnout amount (which is equal to 25% of
 $4,500,000.00).  For calendar  year 2008, if the Protexx  business  acquired by Protexx
 Acquisition  Corporation  recognizes revenues for that calendar year of greater than
Five Million Dollars  ($5,000,000.00) and up to Seven Million Dollars  ($7,000,000.00),
 and the Minimum EBITDA is also achieved for that calendar year,  then Protexx shall earn
Two Million Two Hundred Fifty  Thousand  Dollars ($2,250,000.00)  of the earnout amount
(which is equal to 50% of  $4,500,000.00).  For calendar year 2008, if the  Protexx
 business  acquired  by  Protexx  Acquisition  Corporation  recognizes  revenues  for
that calendar  year of greater than Seven  Million  Dollars  ($7,000,000.00)  and up to
Eight  Million  Dollars ($8,000,000.00),  and the Minimum EBITDA is also achieved for
that calendar year,  then Protexx shall earn Three Million Three Hundred  Seventy-Five
 Thousand Dollars  ($3,375,000.00)  of the earnout amount (which is equal to 75% of
 $4,500,000.00).  For calendar year 2008, if the Protexx  business  acquired by Protexx
Acquisition  Corporation  recognizes revenues for that calendar year of greater than
Eight Million Dollars ($8,000,000.00)  and up to Fourteen  Million  Dollars
 ($14,000,000.00),  and the  Minimum  EBITDA is also achieved for that  calendar  year,
 then Protexx  shall earn Four  Million Five Hundred  Thousand  Dollars ($4,500,000.00)
 of the  earnout  amount  (which is equal to 100% of  $4,500,000.00).  For  calendar
 year 2008, if the Protexx business acquired by Protexx  Acquisition  Corporation
 recognizes  revenues for that calendar year of greater than Fourteen  Million  Dollars
 ($14,000,000.00)  and up to Twenty-Nine  Million Dollars  ($29,000,000.00),  and the
Minimum EBITDA is also achieved for that calendar  year,  then Protexx shall earn Five
Million Six Hundred  Twenty-Five  Thousand Dollars  ($5,625,000.00) of the earnout
amount. For calendar year 2008, if the Protexx business  acquired by Protexx  Acquisition
 Corporation  recognizes revenues for that calendar year of greater than  Twenty-Nine
 Million Dollars  ($29,000,000.00)  and up to Thirty-Eight Million Dollars
 ($38,000,000.00),  and the Minimum EBITDA is also achieved for that calendar year,  then
Protexx shall earn Six Million Seven Hundred Fifty  Thousand  Dollars  ($6,750,000.00)
 of the earnout  amount.  For  calendar  year 2008,  if the  Protexx  business  acquired
 by  Protexx  Acquisition Corporation  recognizes  revenues for that  calendar  year of
greater than Thirty  Eight  Million  Dollars ($38,000,000.00)  and up to Forty-Two
 Million  Dollars  ($42,000,000.00),  and the Minimum EBITDA is also achieved for that
 calendar  year,  then  Protexx  shall earn Seven  Million  Eight  Hundred  Seventy-Five
Thousand Dollars  ($7,875,000.00)  of the earnout amount.  For calendar year 2008, if the
Protexx business acquired by Protexx  Acquisition  Corporation  recognizes  revenues for
that calendar year of greater than Forty-Two  Million  Dollars  ($42,000,000.00),  and
the Minimum  EBITDA is also achieved for that calendar year, then Protexx shall earn the
maximum earnout amount of Nine Million Dollars ($9,000,000.00).

In the event the  maximum  earnout
 amount of  $9,000,000.00  is not earned by Protexx for  calendar  year 2008,  then
Protexx  shall have the  opportunity  to earn for calendar  year 2009 the lesser of
either (x) $4,500,000.00  or (y) the  difference  between  $9,000,000  and the actual
 amount  earned by Protexx  for calendar  year 2008.  If Protexx  earns more than
 $4,500,000.00  of the earnout  amount for calendar year 2008,  then the maximum  portion
of the earnout amount that Protexx will have the  opportunity to earn for calendar year
2009 shall be equal to the  difference  between (i)  $4,500,000.00  (the maximum  portion
of the  earnout  amount for 2009) minus (ii) the amount of earnout  earned by Protexx for
2008 which  exceeds $4,500,000.  For calendar year 2009,  the Protexx  business  acquired
by Protexx  Acquisition  Corporation must have the Minimum EBITDA in order to qualify for
any earnout amount.

For calendar year 2009, if the
Protexx business acquired by Protexx Acquisition Corporation recognizes revenues for that
calendar year of at least Six Million Dollars ($6,000,000.00) and up to Fifteen Million
Dollars ($15,000,000.00), and the Minimum EBITDA is also achieved for that calendar year,
then Protexx shall earn One Million One Hundred Twenty-Five Thousand Dollars
($1,125,000.00) of the earnout amount (which is equal to 25% of $4,500,000.00).  For
calendar year 2009, if the Protexx business acquired by Protexx Acquisition Corporation
recognizes revenues for that calendar year of greater than Fifteen Million Dollars
($15,000,000.00) and up to Twenty-Four Million Dollars ($24,000,000.00), and the Minimum
EBITDA is also achieved for that calendar year, then Protexx shall earn Two Million Two
Hundred Fifty Thousand Dollars ($2,250,000.00) of the earnout amount (which is equal to
50% of $4,500,000.00). For calendar year 2009, if the Protexx business acquired by
Protexx Acquisition Corporation recognizes revenues for that calendar year of greater
than Twenty-Four Million Dollars ($24,000,000.00) and up to Twenty-Eight Million Dollars
($28,000,000.00), and the Minimum EBITDA is also achieved for that calendar year, then
Protexx shall earn Three Million Three Hundred Seventy-Five Thousand Dollars
($3,375,000.00) of the earnout amount (which is equal to 75% of $4,500,000.00).  For
calendar year 2009, if the Protexx business acquired by Protexx Acquisition Corporation
recognizes revenues for that calendar year of greater than Twenty-Eight Million Dollars
($28,000,000.00), and the Minimum EBITDA is also achieved for that calendar year, then
Protexx shall earn Four Million Five Hundred Thousand Dollars ($4,500,000.00) of the
earnout amount (which is equal to 100% of $4,500,000.00).

The operations of Protexx were
included in the Companys results of operations beginning on August 1, 2008.

20

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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, 2007.

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 leading provider of advanced
information technology products and services, including identity assurance and information
protection management services, forensic informatics and mobile and wireless technology
services. WidePoint has three material operational entities, Operational Research
Consultants, Inc. (ORC), iSYS, LLC (iSYS), and WidePoint IL, Inc., along with a
development stage company, Protexx. The Company enables organizations to deploy fully
compliant Information Technology (IT) services in accordance with
government-mandated regulations and advanced system requirements. In July 2008, we
completed an asset purchase of Protexx. Protexx specializes in identity assurance and
mobile and wireless data protection services. In January 2008, we completed the
acquisition of iSYS. iSYS specializes in mobile telecommunications expense management
services and forensic informatics, and information assurance services predominately to the
United States Government. 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 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. 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.

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 acquisitions of ORC and iSYS, our asset purchase of Protexx, and our
internal growth initiatives.

With the addition of the customer
base and the increase in revenues attributable from both the iSYS and ORC acquisitions,
WidePoints opportunity to leverage and expand further into the federal marketplace
has improved dramatically. Both companies 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 fully 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.

WidePoints total revenues
increased by approximately 122%, or $4.9 million, from $4.0 million for the three months
ended September 30, 2007, to $8.9 million for the three months ended September 30, 2008.
The increase in revenues during the three month period ending September 30, 2008 as
compared to the same three month period ending September 30, 2007 was primarily a result
of the acquisition of iSYS. While we anticipate sequential gains for the 2008 calendar
year throughout our three segments, we believe those gains may at times be erratic as we
experience slight delays in project phases on a quarter by quarter basis that may be
outside of the control of the Company.

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.

21

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With our acquisitions of iSYS and 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.
These comparisons are not indicators of future performance and 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 well as costs associated with our
vendor related offerings for our Mobile Telecom Managed Services. 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.  The Company must also manage our airtime plans and other vendor
related offerings under our bands of minutes program to our customers as they also
represent a significant portion of our costs. 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
September 30, 2008 as Compared to Three Months Ended September 30, 2007

Revenues, net.Revenues for
the three month period ended September 30, 2008 were approximately $8,878,000 as compared
to approximately $4,005,000 for the three month period ended September 30, 2007. The
increase in revenues was primarily attributable to our acquisition of iSYS.

| |  | Our
Mobile Telecom Managed Services segment experienced revenue growth of approximately 51%
from approximately $3,500,000 for the three months ended September 30, 2007 (prior to
acquisition by WidePoint), to approximately $5,284,000 for the three months ended
September 30, 2008. We anticipate that this segment should continue to increase as
federal agencies continue to adopt the Companys services under the recent contract
award associated with the federal strategic savings initiative, or FSSI, by the General
Services Administration. Given recent contract awards, contract expansions over the past
several months, and a continuing pipeline of new opportunities, we anticipate that our
Mobile Telecom Managed Services segment is poised to continue its positive revenue trend
for both the fourth quarter of 2008 and for calendar year 2009. Our Mobile
Telecom Managed Services segment provides a range of services that allow our customers to
better manage all of their mobile devices through a proprietary application that allows
real time inventory tracking, life cycle devise management, and billing auditing and
optimization that provides for savings of up to 65% of their current telecommunication
bills. We anticipate that revenues in this segment should continue to increase as the
federal agencies continue to adopt the Companys services under the recent contract
award associated with the FSSI by the General Services Administration. The FSSI contract
will provide a purchasing vehicle for all federal agencies to purchase our Mobile Telecom
Managed Services. We believe that there are presently approximately six federal agencies
or departments utilizing these managed services with materially all of those agencies
being supported by our wholly-owned subsidiary iSYS. We believe there are more than 40
federal agencies that can benefit from our services with approximately 14 of those
federal agencies presently actively engaged through the General Services Administration
in reviewing and showing near term interest in procuring such managed service. We are
also performing work for various state and local governments and various other
organizations.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22

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| |  | Our
PKI credentialing and managed services segment experienced a decrease in comparative
quarter to quarter revenues, with revenues decreasing approximately 12%, or $154,000,
from $1,315,000 for the quarter ended September 30, 2007, as compared to $1,161,000 for
the quarter ended September 30, 2008. We anticipate that credential sales and managed
services sales should increase in the medium to long-term time horizons as we continue to
fulfill contract wins and we witness the expansion and adoption of the Federation for
Identity and Cross-Credentialing Systems (FiXs) and External Certificate Authority (ECA)
program by the Department of Defense, the HSPD-12 program by the federal government
agencies and departments, and other groups commencing 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 that may be outside of the
control of the Company. As a result of several recent programs that have been awarded and
initiated in the past two quarters of 2008, we believe that the adoption of PKI
credentialing will continue to expand into 2009. We anticipate that credential sales and
managed services sales should increase in the medium to long-term time horizons as we
continue to fulfill contract wins and we witness the expansion and adoption of the FiXs
and ECA program by the Department of Defense, the HSPD-12 program by the federal
government agencies and departments, and other groups commencing the pilot programs and
rollout associated with the expansion of various programs which are being mandated by the
federal government.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Based
upon 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Our
Consulting Services segment experienced a decrease in comparative quarter to quarter
revenues with revenues decreasing approximately 10%, or $258,000, from $2,691,000 for the
quarter ended September 30, 2007 to $2,433,000 for the quarter ended September 30, 2008.
The declines in consulting services revenues are materially attributable to negative
economic conditions that have caused delays in new contract awards and a reduction in
consulting services work within our commercial operations. We anticipate that our
consulting services segment revenues while variable will flatten and rebound as we
witness increases in federal government consulting services as we expand our reach into
new agencies and departments and as the economic environment improves in calendar year
2009. The declines in consulting services revenues are materially attributable to
negative economic conditions that have caused delays in new contract awards and a
reduction in consulting services work within our commercial operations. We anticipate
that our consulting services segment revenues, while variable, will flatten and rebound
as we witness increases in federal government consulting services as we expand our reach
into new agencies and departments and as the economic environment improves.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

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Cost of sales.Cost of sales
for the three month period ended September 30, 2008, was approximately $7,382,000, or 83%
of revenues, an increase of approximately $4,566,000 over cost of sales of approximately
$2,816,000, or 70% of revenues, for the three month period ended September 30, 2007. The
increase in cost of sales was materially attributable to the acquisition of iSYS. The
higher percentage margin of cost of sales for the nine month period ended September 30,
2008 as compared to the same period in 2007 was materially due to lower margins associated
with our Mobile Telecom Managed Services segment as compared to those within our PKI
credentialing and managed services segment. We believe that the Mobile Telecom Managed
Services segment margins will continue to have lower margins as compared to those of the
PKI credentialing and managed services segment and that overall margin should increase as
the PKI credentialing and managed services segment increases as a percentage of the total
revenue mix, along with increases in margin growth we anticipate as we witness greater
economies of scale related to both segments.

Gross profit. Gross profit for
the three month period ended September 30, 2008, was approximately $1,496,000, or 17% of
revenues, an increase of approximately $306,000 over gross profit of approximately
$1,190,000, or 30% of revenues, for the three month period ended September 30, 2007. The
percentage decrease in gross profit is primarily attributable to lower margins associated
with our mobile telecom managed services segment that we acquired in January 2008 as part
of our acquisition of iSYS that was not part of our revenue mix for the three month period
ending September 30, 2007.

Sales and marketing. Sales and
marketing expense for the three month period ended September 30, 2008 was approximately
$263,000, or 3% of revenues, an increase of approximately $55,000, as compared to
approximately $208,000, or 5% of revenues, for the three month period ended September 30,
2007. The increase was materially attributable to the expansion of our sales and marketing
workforce.

General and administrative.
General and administrative expenses for the three month period ended September 30, 2008,
were approximately $1,485,000, or 17% of revenues, an increase of approximately $685,000,
as compared to approximately $800,000, or 20% of revenues, recorded by the Company for the
three month period ended September 30, 2007. The increase in general and administrative
expenses for the three months ended September 30, 2008, was primarily attributable to our
acquisition of iSYS, as well as to expanded business development expenditures in mobile
telecom and PKI business segments.

Depreciation.          Depreciation
expense for the three month period ended September 30, 2008, was           approximately
$41,200, or less than 1% of revenues, an increase of approximately           $18,600, as
compared to approximately $22,600 of such expenses, or less than 1%           of
revenues, recorded by the Company for the three month period ended September
          30, 2007. The increase in depreciation expense for the three month period ended
          September 30, 2008, was primarily attributable to greater amounts of
depreciable           assets as a result of our acquisition of iSYS.

Interest income. Interest
income for the three month period ended September 30, 2008, was $33,713, or less than 1%
of revenues, an increase of $11,769 as compared to $21,944, or less than 1% of revenues,
for the three month period ended September 30, 2007. The increase in interest income for
the three month period ended September 30, 2008, was primarily attributable to greater
amounts of invested cash and cash equivalents, partially offset by lower 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 September 30, 2008, was $76,019, or less than 1%
of revenues, an increase of $73,315, as compared to $2,704, or less than 1% of revenues,
for the three month period ended September 30, 2007. The increase in interest expense for
the three month period ended September 30, 2008 was primarily attributable to greater
expenses associated with the debt instruments issued by the Company.

Net (loss) income.As a result
of the above, the net loss for the three month period ended September 30, 2008, was
approximately $335,000, as compared to net income of approximately $178,000 for the three
months ended September 30, 2007.

Nine Months Ended
September 30, 2008 as Compared to Nine Months Ended September 30, 2007

Revenues, net.Revenues for
the nine month period ended September 30, 2008 were approximately $25,293,000 as compared
to approximately $10,147,000 for the nine month period ended September 30, 2007. The
increase in revenues was primarily attributable to our acquisition of iSYS.

24

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| |  | Our
Mobile Telecom Managed Services segment experienced revenue growth of approximately 54%
from approximately $9,439,000 for the nine months ended September 30, 2007 (prior to
acquisition by WidePoint), to approximately $14,579,000 for the nine months ended
September 30, 2008. We anticipate that revenues in this segment should continue to
increase as federal agencies continue to adopt the Companys services under the
recent contract award associated with the federal strategic savings initiative, or FSSI,
by the General Services Administration.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Our
PKI credentialing and managed services segment experienced revenue growth of
approximately 5% with revenues increasing approximately $135,000 from $2,810,000 for the
nine month period ended September 30, 2007 to $2,945,000 for the nine month period ended
September 30, 2008 as a result of various mandates to roll out credential programs to
various agencies and contractors.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Our
consulting services segment experienced revenue growth of approximately 6% with revenues
increasing approximately $433,000 from $7,336,000 for the nine month period ended
September 30, 2007 as compared to $7,769,000 for the nine month period ended September
30, 2008 as a result of the acquisition of iSYS.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Cost of sales.Cost of sales
for the nine month period ended September 30, 2008, was approximately $21,075,000, or 83%
of revenues, an increase of approximately $13,998,000 over cost of sales of approximately
$7,077,000, or 70% of revenues, for the nine month period ended September 30, 2007. The
increase in cost of sales was materially attributable to the acquisition of iSYS. The
higher percentage margin of cost of sales for the nine month period ended September 30,
2008 as compared to September 30, 2007 was due to lower margins associated with our Mobile
Telecom Managed Services segment as compared to those within our PKI credentialing and
managed services segment. We believe that the Mobile Telecom Managed Services segment
margins will continue to have lower margins as compared to those of the PKI credentialing
and managed services segment and that overall margin should increase as the PKI
credentialing and managed services segment increases as a percentage of the total revenue
mix along with increases in margin growth we anticipate as we witness greater economies of
scale related to both segments.

Gross profit. As a result of
the acquisition of iSYS, gross profit for the nine month period ended September 30, 2008,
was approximately $4,218,000, or 17% of revenues, an increase of approximately $1,148,000
over gross profit of approximately $3,070,000, or 30% of revenues, for the nine month
period ended September 30, 2007. The percentage decrease in gross profit is primarily
attributable to lower margins associated with our Mobile Telecom Managed Services segment
that we acquired in January 2008 as part of our acquisition of iSYS, that was not part of
our revenue mix for the nine month period ending September 30, 2007.

Sales and marketing. Sales and
marketing expense for the nine month period ended September 30, 2008, was approximately
$676,000, or 3% of revenues, an increase of approximately $67,000, as compared to
approximately $609,000, or 6% of revenues, for the nine month period ended September 30,
2007. The increase was materially attributable to the expansion of our sales and marketing
workforce.

General and administrative.
General and administrative expenses for the nine month period ended September 30, 2008,
were approximately $4,643,000, or 18% of revenues, an increase of approximately
$1,968,000, as compared to approximately $2,675,000, or 26% of revenues, recorded by the
Company for the nine month period ended September 30, 2007. The increase in general and
administrative expenses for the nine months ended September 30, 2008 reflects an increase
of approximately $409,000 in stock compensation expense for SFAS 123R options materially
as a result of the issuance of options to key iSYS personnel in conjunction with our
acquisition of iSYS; as well as an increase in expenditures related to new business
development and infrastructure to support our mobile telecom and PKI business segments.

Depreciation expense.
Depreciation expense for the nine month period ended September 30, 2008, was approximately
$117,000, or less than 1% of revenues, an increase of $57,000, as compared to
approximately $60,000 of such expenses, or less than 1% of revenues, recorded by the
Company for the nine month period ended September 30, 2007. The increase in depreciation
expenses for the nine month period ended September 30, 2008, was primarily attributable to
the increased pool of depreciable assets.

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Interest income. Interest
income for the nine month period ended September 30, 2008, was $105,773, or less than 1%
of revenues, an increase of $21,831, as compared to $83,942, or less than 1% of revenues,
for the nine month period ended September 30, 2007. The increase in interest income for
the nine month period ended September 30, 2008, 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 nine month period ended September 30, 2008, was $262,146, or 1% of
revenues, an increase of $253,570, as compared to $8,576, or less than 1% of revenues, for
the nine month period ended September 30, 2007. The increase in interest expense for the
nine month period ended September 30, 2008 was primarily attributable greater expenses
associated with the debt instruments issued by the Company.

Net loss.As a result of the
above, the net loss for the nine month period ended September 30, 2008, was approximately
$1,375,000 as compared to a net loss of approximately $199,000 for the nine months ended
September 30, 2007.

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.

|                                               | Three Months Ended
September 30, | Nine Months Ended
September 30,
|---------------------------------------------- | -------------------------------- | -------------------------------
|
|Mobile Telecom Managed Services:               |                                  |                                
|Revenues                                       |                                  |                                
|Operating income                               |                                  |                                
|Total assets                                   |                                  |                                
|PKI Credentialing and Managed Services:        |                                  |                                
|Revenues                                       |                                  |                                
|Operating (loss) income (includes amortization |                                  |                                
|expense of $63,477, $45,838, $166,913, and     |                                  |                                
|$137,514, respectively)                        |                                  |                                
|Total assets                                   |                                  |                                
|Consulting services:                           |                                  |                                
|Revenues                                       |                                  |                                
|Operating income                               |                                  |                                
|Total assets                                   |                                  |                                
|Total Company                                  |                                  |                                
|Revenues                                       |                                  |                                
|Operating (loss) income before depreciation    |                                  |                                
|expense                                        |                                  |                                
|Depreciation expense                           |                                  |                                
|Interest (expense) income, net                 |                                  |                                
|Net (loss) income                              |                                  |                                
|Total Corporate assets                         |                                  |                                
|Total assets                                   |                                  |                                

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(1)           Includes $55,269 in
amortization expense in cost of sales associated with the           purchase of ORC,
$100,000 in amortization expense in cost of sales associated           with the purchase
of iSYS, and $28,137 in amortization expense in cost of sales           associated with
the purchase of the assets of Protexx, which are not allocated           among the
segments, and $411,121 in unallocated corporate costs in general and
          administrative expense of which $51,253 is comprised of stock options expense.

(2)           Includes $55,269 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments, and $195,929 in           unallocated
corporate costs in general and administrative expense.

(3)           Includes $165,808 in
amortization expense in cost of sales associated with the           purchase of ORC,
$300,000 in amortization expense in cost of sales associated           with the purchase
of iSYS, and $28,137 in amortization expense in cost of sales           associated with
the purchase of the assets of Protexx, which are not allocated           among the
segments, and $1,370,967 in unallocated corporate costs in general and
          administrative expense of which $527,333 is comprised of stock options expense.

(4)           Includes $165,809 in
amortization expense in cost of sales associated with the           purchase of ORC,
which is not allocated among the segments, and $732,343 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 2007 and through the period ended September 30, 2008,
operations were materially financed with working capital, borrowings against the
Companys credit facilities with Cardinal Bank and equity financing through the
issuance of common stock. During the second quarter of 2008, the Company raised
approximately $4,000,000 dollars in additional equity financing through the sale of common
stock to three institutional investors. During the first quarter of 2008 the Company
modified its senior lending facility with Cardinal Bank for up to $5,000,000 through April
1, 2009 at a rate of prime plus 25 basis points. We have no outstanding balances on our
line of credit and approximately $1.8 million outstanding on our 4 year installment note
at September 30, 2008 with Cardinal Bank.

Net cash provided by operating
activities for the quarter ended September 30, 2008, was approximately $2,357,000, as
compared to cash used in operating activities of approximately $413,000 for the quarter
ended September 30, 2007. The increase in cash generated from operating activities for the
quarter ended September 30, 2008, was primarily a result of decreases in accounts
receivable and other assets along with increases attributable to prepayments on
contractual future work and the receipt of a large service provider fee which was not paid
as of the end of the quarter. Net cash used in investing activities for the quarter ended
September 30, 2008, was approximately $16,000, as compared to $7,000 used in investing
activities in the quarter ended September 30, 2007. The increase in net cash used in
investing primarily reflects the net cash paid by the Company for the
acquisition of the assets of Protexx on July 31, 2008. Net cash used in
financing activities amounted to approximately $153,000 in the quarter ended September 30,
2008, as compared to approximately $13,000 of net cash used in financing activities in the
quarter ended September 30, 2007. The change primarily resulted from the repayment of
approximately $123,000 in notes payable.

As of September 30, 2008, the
Company had a net working capital of approximately $2.7 million. WidePoints primary
source of liquidity consists of approximately $7.0 million in cash and cash equivalents
invested in overnight interest bearing sweep accounts that are collateralized by government insured securities
along with approximately $5.8 million of accounts receivable. Current liabilities include
approximately $5.7 million in accounts payable and accrued expenses.

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

The Company has embarked upon several
new initiatives to expand revenue growth that have included a combination of organic
growth and strategic merger and acquisition opportunities. 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.

Currently there are no material
commitments for capital expenditures and software development costs. Future capital
requirements will depend on many factors, including the rate of revenue growth, the timing
and extent of spending for new product and service development, technological changes and
market acceptance of the Companys services.

Management 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 iSYS or
any other potential new revenue source, might require external financing that could
include additional debt or equity capital. The Company recently added to its working
capital by selling shares of its common stock in private transactions. The approximately
$4.0 million in proceeds during the second quarter of 2008 has bolstered the
Companys ability to finance working capital requirements and pay down debt, allowing
for the Company to integrate and expand our services offerings. 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.

# Off-Balance Sheet
Arrangements

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

# ITEM 4T. CONTROLS AND
PROCEDURES

# Disclosure Controls and
Procedures

We maintain disclosure controls and
procedures designed to provide reasonable assurance that material information required to
be disclosed by us in the reports we file or submit under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods specified in
the SECs rules and forms, and that the information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure. We performed an
evaluation, under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as of the end of the period
covered by this report. Based on the existence of the material weaknesses in our internal
control over financial reporting discussed below, our management, including our Chief
Executive Officer and Chief Financial Officer, concluded that our disclosure controls and
procedures were not effective at the reasonable assurance level as of the end of the
period covered by this report.

We do not expect that our disclosure
controls and procedures will prevent all errors and all instances of fraud. Disclosure
controls and procedures, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the disclosure controls and
procedures are met. Further, the design of disclosure controls and procedures must reflect
the fact that there are resource constraints, and the benefits must be considered relative
to their costs. Because of the inherent limitations in all disclosure controls and
procedures, no evaluation of disclosure controls and procedures can provide absolute
assurance that we have detected all our control deficiencies and instances of fraud, if
any. The design of disclosure controls and procedures also is based partly on certain
assumptions about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions.

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# Changes in Internal
Control Over Financial Reporting

In our Managements Report on
Internal Control Over Financial Reporting included in the Companys Form 10-K for the
year ended December 31, 2007, management concluded that our internal control over
financial reporting was not effective due to the existence of the material weaknesses as
of December 31, 2007, discussed below. A material weakness is a control deficiency, or a
combination of control deficiencies, that results in more than a remote likelihood that a
material misstatement of the annual or interim financial statements will not be prevented
or detected.

 Inadequate segregation of
duties within a significant account or process.We did not have appropriate
segregation of duties within our internal controls that would ensure the consistent
application of procedures in our financial reporting process by existing personnel. This
control deficiency could result in a misstatement to substantially all of our financial
statement accounts and disclosures that would result in a material misstatement to the
annual or interim financial statements that would not be prevented or detected.
Accordingly, management has concluded that this control deficiency constitutes a material
weakness.

 Inadequate documentation of
the components of internal control.We did not maintain documented policies and
evidence of compliance with our internal controls that would ensure the consistent
application of procedures in our financial reporting process by existing personnel. This
control deficiency could result in a misstatement to substantially all of our financial
statement accounts and disclosures that would result in a material misstatement to the
annual or interim financial statements that would not be prevented or detected.
Accordingly, management has concluded that this control deficiency constitutes a material
weakness.

The material weaknesses described
above comprise control deficiencies that we discovered in the fourth quarter of 2007 and
in the financial close process for 2007.

Beginning during the fourth quarter
of 2007 and in the first quarter of 2008, we formulated a remediation plan and initiated
remedial action to address those material weaknesses. We continue to work on the
implementation phase of remedial actions addressing those material weaknesses. The
elements of the remediation plan are as follows:

 Inadequate segregation of
duties within a significant account or process.We commenced a thorough review of our
accounting staffs duties and where necessary we have been segregating such duties
with other personnel.

 Inadequate documentation of
the components of internal control. We commenced a thorough review of our
documentation and where necessary we are putting into place policies and procedures to
document such evidence to comply with our internal control requirements. We have also
retained a financial consultant to assist us in further reviewing and improving our
internal control processes.

We believe that these measures, if
effectively implemented and maintained, will remediate the material weaknesses discussed
above.

The above remedial measures initiated
during the fourth quarter of 2007 and continued during the nine months ended September 30,
2008, have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

29

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# PART II  OTHER
INFORMATION

# ITEM 6. EXHIBITS.

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

30

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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: November 14, 2008 | /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               

31