Quarterly report pursuant to Section 13 or 15(d)

COMMON STOCK OPTIONS

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COMMON STOCK OPTIONS
 6 Months Ended
Mar. 31, 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 March 31, 2012, 730,000 options have vested resulting in compensation expense of $291,391.  In the six month periods ended March 31, 2012 and 2011, 60,000 shares vested, resulting in compensation expense in each period of $23,950.

 

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 March 31, 2012, 425,000 options have vested resulting in compensation expense of $280,998. 

 

Below is a table summarizing the options issued and outstanding as of March 31, 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 09/30/09     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     —       —       —       —       —  
03/31/12     3,246,965     $ 0.56       —       —     $ 1,824,528