Annual report pursuant to Section 13 and 15(d)

COMMON STOCK OPTIONS

v2.4.0.8
COMMON STOCK OPTIONS
 12 Months Ended
Sep. 30, 2013
Common Stock Options  
COMMON STOCK OPTIONS

NOTE 8 – COMMON STOCK OPTIONS

 

The Company has determined the estimated value of the options granted to employees and non-employees in exchange for services and financing expenses using the Black-Scholes pricing model and the following assumptions: stock price at valuation, $1.20-4.71; expected term of five years, exercise price of $1.50-4.74, a risk free interest rate of 0.68-2.60 percent, a dividend yield of 0 percent and volatility of 191-277 percent.

 

On April 12, 2010 the Company granted 333,334 options to employees as part of its 2009 stock option plan.  The Company calculated a fair value of $1.20 per option. Of the 333,334 options issued, 173,334 vested upon issuance and the remaining 160,000 vest over the five year life of the options.  For the years ended September 30, 2013 and 2012, 40,000 and 40,000 options have vested, resulting in compensation expense in each year of $47,900, respectively.

 

On March 9, 2012, the Company granted 566,667 options to board members and executives. The Company calculated a fair value of $1.89 per option. Of the 566,667 options issued, 141,667 vested upon issuance and the remaining 425,000 vest in 25 percent tranches on each anniversary.  For the years ended September 30, 2013 and 2012, 283,333 and 141,667 options have vested, respectively, resulting in compensation expense of $328,354 and $358,367, respectively. 

  

On April 30, 2013, the Company granted 116,667 options to a board member. The Company calculated a fair value of $4.59 per option. Of the 116,667 options issued, 29,167 vested upon issuance and the remaining 87,500 vest in 33 percent tranches on the next three anniversary dates. As of September 30, 2013, 29,167 options have vested resulting in compensation expense of $189,852.

 

On May 17, 2013, the Company granted 116,667 options to a board member. The Company calculated a fair value of $4.50 per option. Of the 116,667 options issued, 29,167 vested upon issuance and the remaining 87,500 vest in 33 percent tranches on the next three anniversary dates. As of September 30, 2013, 29,167 options have vested resulting in compensation expense of $180,156.

 

During the year ended September 30, 2013, the Company recognized $746,262 of expense related to vested options that were granted in prior years. Unamortized option expense as of September 30, 2013 for all options outstanding amounted to approximately $1,112,000

 

Below is a table summarizing the options issued and outstanding as of September 30, 2013:

 

 

Date
Issued 		  Number
Outstanding		     Exercise
Price		     Contractual
Life (Years)		     Expiration
Date		  
  Prior 10/1/2008     —     $ —       —       —  
  04/09/09     193,047       1.95       5       04/09/13  
  Balance 09/30/2009     193,047       1.95       —       —  
  04/12/10     333,334       1.50       5       04/12/15  
  Expired     (10,725 )     1.95       —       —  
  Balance 9/30/2010     515,656     $ 1.66       —       —  
  Issued     —       —       —       —  
  Expired     —       —       —       —  
  Balance 9/30/2011     515,656     $ 1.66       —       —  
  03/09/12     566,667       1.71       —       3/9/2017  
  Expired     —       —       —       —  
  Balance 9/30/2012     1,082,323     $ 1.69       —       —  
  Exercised - 11/30/12     (53,624 )     1.78       —       —  
  Exercised - 03/27/13     (128,698 )     1.65       —       —  
  Issued - 04/30/13     116,667       4.74       5       4/30/2018  
  Issued - 05/17/13     116,667       4.68       5       5/17/2018  
  Expired     —       —       —       —  
  09/30/13     1,133,335     $ 2.31       —       —  

 

As of September 30, 2013, the outstanding options have an intrinsic value of approximately $6.62 million.