Quarterly report pursuant to Section 13 or 15(d)

COMMON STOCK OPTIONS

v2.4.0.6
COMMON STOCK OPTIONS
 9 Months Ended
Jun. 30, 2012
Common Stock Options  
COMMON STOCK OPTIONS
NOTE 9 – 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, $0.40-0.65; expected term of five years, exercise price of $0.50-0.57, a risk free interest rate of 0.83-2.60 percent, a dividend yield of 0 percent and volatility of 192-277 percent.
 
On April 12, 2010 the Company granted 1,000,000 options to employees as part of its 2009 stock option plan.  The Company calculated a fair value of $0.40 per option. Of the 1,000,000 options issued, 520,000 vested upon issuance and the remaining 480,000 vest over the five year life of the options.  As of June 30, 2012, 760,000 options have vested resulting in compensation expense of $303,366.  In the nine month periods ended June 30, 2012 and 2011, 90,000 shares vested, resulting in compensation expense in each period of $35,925.
 
On March 9, 2012, the Company agreed to grant 1,700,000 options to board members and executives. The Company calculated a fair value of $0.63 per option. Of the 1,700,000 options issued, 425,000 vested upon issuance and the remaining 1,275,000 vest in 25 percent tranches on each anniversary.  As of June 30, 2012, 425,000 options have vested resulting in compensation expense of $317,847. 
 
Below is a table summarizing the options issued and outstanding as of June 30, 2012.

Date
  
Number
  
Exercise
  
Contractual
  
Expiration
  
Value if
  
Issued
  
Outstanding
  
Price
  
Life (Years)
  
Date
  
Exercised
  
Prior 10/1/2008
  
-
  
$
-
  
-
  
-
  
$
-
  
04/09/09
  
579,141
    
0.65
  
5
  
04/09/13
    
376,442
  
Balance 09/30/2009
  
579,141
    
0.65
  
-
  
-
    
376,442
  
04/12/10
  
1,000,000
    
0.50
  
5
  
04/12/15
    
500,000
  
Expired
  
(32,176)
    
0.65
  
-
  
-
    
(20,914)
  
Balance 9/30/2010
  
1,546,965
  
$
0.55
  
-
  
-
  
$
855,528
  
Issued
  
-
    
-
  
-
  
-
    
-
  
Expired
  
-
    
-
  
-
  
-
    
-
  
Balance 9/30/2011
  
1,546,965
  
$
0.55
  
-
  
-
  
$
855,528
  
03/09/12
  
1,700,000
    
0.57
  
-
  
-
    
969,000
  
Expired
  
-
    
-
  
-
  
-
    
-
  
Balance 6/30/12
  
3,246,965
  
$
0.56
  
-
  
-
  
$
1,824,528