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8. Stockholders’ Equity (Deficit)
Blue Calypso Holdings, Inc. is authorized to issue 685,000,000 shares of capital stock: 680,000,000 shares of common stock with voting rights at a par value of $.0001 and 5,000,000 shares of Series A Convertible Preferred Stock, also at $.0001 par value per share. There were 125,295,526 shares of common stock issued and outstanding as of September 30, 2011. No shares of preferred stock were issued and outstanding as of September 30, 2011. The Company did not make or declare any distributions to shareholders during the three and nine months ended September 30, 2011.
Long-Term Incentive Plan
The stockholders approved the Blue Calypso, Inc. 2011 Long-Term Incentive Plan (the “Plan”) on September 9, 2011. The Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards which may be granted singly, in combination, or in tandem, and which may be paid in cash or shares of common stock. Subject to certain adjustments, the maximum number of shares of common stock that may be delivered pursuant to awards under the Plan is 35,000,000 shares.
Stock Options
During the three months ended September 30, 2011 the Company granted options to purchase 2,420,000 shares of the Company’s common stock to non-employee board members and other consultants under the Plan. The options vest pro rata quarterly over two years. No options were granted to employees during the three months ended September 30, 2010.
The fair value for the Company’s options were estimated at the date of grant using the Black-Scholes option pricing model with the weighted average assumptions as noted in the following table. The Black-Scholes option valuation model incorporate ranges of assumptions for inputs, and those ranges are disclosed below. Expected volatilities are based on similar industry-sector indices. The expected life of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate assumption is based on market yield on U.S. Treasury securities at 2-year constant maturity, quoted on investment basis determined at the date of grant.
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Assumptions used for employee stock options: |
|
|
|
|
Risk-free interest rate |
|
0.25% |
|
|
Stock price volatility |
|
20% - 37% |
|
|
Expected life |
|
2 years |
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Using the valuation assumptions noted above, the Company estimated the value of stock options granted during the three months ended September 30, 2011 to be approximately $33,910. The value of these options is being amortized to stock-based compensation expense quarterly over their two year vesting period. The stock-based compensation expense recorded during the three and nine months ended September 30, 2011 as well as the three and nine months ended September 30, 2010 were $0 respectively.
The following table summarizes the stock option activity as of September 30, 2011:
|
|
|
Outstanding
Options |
|
Weighted
Average
Exercise
Price |
|
|
Balance, December 31, 2010 |
|
320,825 |
|
0.001 |
|
|
Granted |
|
2,420,000 |
|
0.0679 |
|
|
Exercised |
|
0 |
|
0 |
|
|
Cancelled |
|
320,825 |
|
0.001 |
|
|
Balance, September 30, 2011 |
|
2,420,000 |
|
$ |
0.0679 |
|
|
Exercisable at 9/30/2011 |
|
0 |
|
$ |
0.0679 |
|
|
|
|
|
|
|
|
|
Non-vested at 9/30/2011 |
|
2,420,000 |
|
$ |
0.0679 |
|
Restricted Stock
The restricted stock granted prior to the reverse merger transaction, have been retroactively restated as capital stock shares reflecting the exchange ratio in the Merger.
The following table summarizes the restricted stock activity for the period ended September 30, 2011:
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Restricted shares issued as of December 31, 2010 |
|
6,737,322 |
|
|
Granted prior to Reverse Merger |
|
2,566,599 |
|
|
Granted subsequent to Reverse Merger |
|
320,825 |
|
|
Expired and forfeited |
|
2,887,424 |
|
|
Converted as part of the Reverse Merger |
|
6,416,497 |
|
|
Vested |
|
80,207 |
|
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Unvested restricted shares as of September 30, 2011 |
|
240,618 |
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The unvested restricted shares will vest pro rata annually over three years from the date of grant. The total deferred compensation expense of $21,784 will be recognized over the vesting period. The share based compensation expense for the three and nine months ended September 30, 2011 was $5,446. The share based compensation expense was $0 for the three and nine months ending Sep 30, 2010. |