• Filing Date: 2012-11-19
  • Form Type: 10-Q/A
  • Description: Quarterly report (Amendment)
v2.4.0.6
6. STOCK OPTION PLAN
9 Months Ended
Sep. 30, 2012
Stock Option Plan  
Note 6. STOCK OPTION PLAN

 

 

During Fiscal 2005, the Company established, and the stockholders approved, an Employee Benefit and Consulting Services Compensation Plan (the "2005 Plan") for the granting of up to 2,000,000 non-statutory and incentive stock options and stock awards to directors, officers, consultants and key employees of the Company. On June 9, 2005, the Board of Directors amended the Plan to increase the number of stock options and awards to be granted under the Plan to 4,000,000.  In October 2009, the Company established and the stockholders approved a 2009 Employee Benefit and Consulting Services Compensation Plan (the "2009 Plan") for granting up to 4,000,000 non-statutory and incentive stock options and awards to directors, officers, consultants and employees of the Company. (The 2005 Plan and the 2005 Plan are collectively referred to as the "Plans".)

 

All stock options under the Plans are granted at or above the fair market value of the common stock at the grant date. Employee and non-employee stock options vest over varying periods and generally expire either 5 or 10 years from the grant date.

 

The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The fair values of these restricted stock awards are equal to the market value of the Company’s stock on the date of grant, after taking into certain discounts. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. Previously, such assumptions were determined based on historical data.

   

 

The weighted average assumptions made in calculating the fair values of options granted during the three and nine months ended September 30, 2012 and 2011 are as follows:

   

    Three Months Ended
September 30
    Nine Months Ended
September 30
 
    2012     2011     2012     2011  
                         
Expected volatility      – %     187.04 %     456.70 %     108.97 %
Expected dividend yield                        
Risk-free interest rate     %     92.0 %     184.70 %     3.01 %
Expected term (in years)           7.73       6.24       7.73  

 

  

    Share     Weighted
Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Term
    Aggregate
Intrinsic
Value
 
                                 
Outstanding, January 1, 2012     3,505,000       .84       4.50     $ 0  
Granted     370,000       .69       9.50       0  
Exercised                              
Cancelled & Expired     50,000                          
                                 
Outstanding, September 30, 2012     3,825,000       .82       4.66     $ 77,250  
                                 
Options exercisable, September 30, 2012     3,825,000       .82       4.66     $ 77,250  

 

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2012 and 2011 was $.69 and $0.33, respectively.

 

The aggregate intrinsic value of options outstanding and options exercisable at September 30, 2012 is calculated as the difference between the exercise price of the underlying options and the market price of the Company's common stock for the shares that had exercise prices, that were lower than the $0.45 closing price of the Company's common stock on September 30, 2012.

 

As of September 30, 2012, the fair value of unamortized compensation cost related to unvested stock option awards was zero.

   

  

 

The weighted average assumptions made in calculating the fair value of warrants granted during the three and nine months ended September 30, 2012 and 2011 are as follows:

 

   

Three Months Ended

September 30

   

 Nine Months Ended

September 30

 
    2012     2011      2012     2011  
                                 
Expected volatility     52.88%       56.83%       52.88%       56.83%  
Expected dividend yield     -       -       -       -  
Risk-free interest rate     .3%       1.07%       .3%       1.07%  
Expected term (in years)     3.5       3       3.5       3  

 

  

    Share    

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining

Contractual

Term

   

Aggregate

Intrinsic

Value

 
                         
Outstanding, January 1, 2012     12,570,642     $ .48       1.84     $ 1,790,733   
Granted     1,730,556     $ .60       3.59          
Exercised     -       -                  
Cancelled     (2,524,877     -                  
Outstanding, September 30, 2012     11,776,321     $ .45       1.71       925,250   
                                 
Warrants exercisable, September 30, 2012     11,776,321     $ .45       1.71     $ 925,250