6. Stock options and warrants
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Sep. 30, 2011
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Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] |
6. Stock
options and warrants
The
Company periodically issues stock options and warrants to
employees and non-employees in capital raising transactions,
for services and for financing costs. Stock-based
compensation is measured at the grant date, based on the fair
value of the award, and is recognized as expense over the
requisite service period. Options vest and expire
according to terms established at the grant date.
Options
The
Company currently issues stock options to employees,
directors and consultants under the 2004 Stock Option Plan
(the Plan). The Company could issue options under the Plan to
acquire up to 5,000,000 shares of common stock. In
February 2006, the board approved an amendment to the Plan
(approved by the Shareholders in May 2006), increasing the
authorized shares by 2,000,000 shares to
7,000,000 shares. At September 30, 2011,
2,672,108 were available to be granted under the Plan.
Prior to 2004, the Company granted 3,250,000 options outside
the Plan to officers of the Company of which 250,000 are
still outstanding.
Employee
options vest according to the terms of the specific grant and
expire from 5 to 10 years from date of grant.
Non-employee option grants to date are vested upon issuance.
The weighted-average, remaining contractual life of employee
options outstanding at September 30, 2011
was 8.6 years. Stock option activity for the period
January 1, 2011 to September 30, 2011, was as follows:
The
weighted average exercise prices, remaining contractual lives
for options granted, exercisable, and expected to vest under
the Plan as of September 30, 2011 were as follows:
On
January 29, 2011, the Company issued 17,600,000 options to
Cecil Bond Kyte, its chairman and chief executive officer.
The options have an exercise price of $0.25 per share, vest
over a five year period, and expire ten years from date of
grant. Twenty percent of the options shall vest on
each of the first five anniversary dates. In the event
of a change of control of the Company, all unvested options
shall vest on the date of the change of control. During
the nine months ended September 30, 2011, the Company
amortized $919,289 of compensation cost based on the vesting
of the options. Future unamortized compensation expense
on the outstanding options at September 30, 2011 is
$5,923,000.
Black-Scholes-Merton
value of options
During
the nine months ended September 30, 2011 and 2010, the
Company valued options at the grant date using the
Black-Scholes-Merton pricing model with the following average
assumptions:
The
weighted average fair value for options granted in 2010 was
$0.53. The weighted average fair value for options
granted during the nine months ended September 30, 2011 was
$0.39.
Warrants
The
following table summarizes certain information about the
Company’s stock purchase warrants from January 1, 2011
to September 30, 2011:
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