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14. STOCK OPTIONS | 9 Months Ended | 12 Months Ended
--- | --- | ---
Jun. 30, 2012 | Sep. 30, 2011
Notes to Financial Statements |  |
14. STOCK OPTIONS | Description of Stock Option Plan On April 29, 2011, the 2011 Stock Incentive Plan was approved at the Annual Stockholder Meeting. The Company has 6,600,000 options to purchase common stock available to issue under the 2011 Stock Incentive Plan. Determining Fair Value Under ASC 505 The Company records compensation expense associated with stock options and other equity-based compensation using the Black-Scholes-Merton option valuation model for estimating fair value of stock options granted under our plan. The Company amortizes the fair value of stock options on a ratable basis over the requisite service periods, which are generally the vesting periods. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company estimates the volatility of our common stock based on the historical volatility of its own common stock over the most recent period corresponding with the estimated expected life of the award. The Company bases the risk-free interest rate used in the Black-Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. The Company has not paid any cash dividends on our common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model and adjusts share-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed. Stock Option Activity On November 9, 2011, Bradley E. Sparks forfeited a grant to purchase 1,000,000 shares of common stock at $0.75 per share. On November 29, 2011, Jeff Kruse and Steve Waddle, employees of TransTech, were each granted an option to purchase 100,000 shares of common stock at $0.12 per share. The grants vest quarterly over three years and expire November 28, 2014. On February 15, 2012, Marco Hegyi forfeited a grant to purchase 2,000,000 shares of common stock at $0.50 per share. On February 24, 2012, the Company issued 400,000 shares of common stock to five directors for services provided during 2011. The shares were issued under the 2011 Stock Incentive Plan. On February 24, 2012, Marco Hegyi, our Chairman of the Board, was granted an option to purchase 1,900,000 shares of common stock at $0.10 per share. The grant vests 750,000 shares on February 24, 2012 and 250,000 shares per quarter. The grant vests upon a change in control and expires February 23, 2022. On May 11, 2012, the Company issued a stock option grant for 100,000 shares of common stock to a consultant at $0.15 per share. The stock option grant vested immediately. On May 11, 2012, a consultant forfeited a stock option grant for 100,000 shares of common stock at $.15 per share. On June 6, 2012, the Company issued, subject to shareholder approval at the 2012 annual shareholder meeting of an increase in the number of shares available under the Company’s Stock Incentive Plan, stock option grants totaling 3,000,000 shares of common stock to five directors for services provided during 2012. The shares were issued under the 2011 Stock Incentive Plan. There are currently 9,020,000 options to purchase common stock at $0.131 per share outstanding at June 30, 2012 under the 2011 Stock Incentive Plan, assuming the shareholder approval at the 2012 annual shareholder meeting. The Company recorded $232,567 and $50,727 of compensation expense, net of related tax effects, relative to stock options for the nine months ended June 30, 2012 and 2011 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00). | Description of Stock Option Plan On April 29, 2011, the 2011 Stock Incentive Plan was approved at the Annual Stockholder Meeting. The Company reserved 7,000,000 shares of Common Stock for issuance under the 2011 Stock Incentive Plan. In 2005, our Board of Directors adopted a combined incentive and nonqualified stock option plan for employees, consultants, suppliers and directors (“2005 Stock Option Plan”). On October 9, 2006 the Board of Directors authorized an increase in shares available for grant from 2 million to 4 million, subject to stockholder approval. The 2005 Stock Option Plan has never been approved by the shareholders and stock option grants are considered non-statutory. Determining Fair Value Under ASC 505 The Company records compensation expense associated with stock options and other equity-based compensation using the Black-Scholes-Merton option valuation model for estimating fair value of stock options granted under our plan. The Company amortizes the fair value of stock options on a ratable basis over the requisite service periods, which are generally the vesting periods. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company estimates the volatility of our common stock based on the historical volatility of its own common stock over the most recent period corresponding with the estimated expected life of the award. The Company bases the risk-free interest rate used in the Black-Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. The Company has not paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model and adjust share-based compensation for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed. Stock Option Activity On November 17, 2010, the Board of Directors authorized to TransTech employees, the grant of non-qualified options to purchase 220,000 shares of the Company’s common stock at $0.24 per share. The non- qualified stock option grants vest quarterly over three years and expire in five (5) years. On May 9, 2011, the Board of Directors authorized to Marco Hegyi, our Chairman of the Board, the grant of qualified and non-qualified options to purchase 2,000,000 shares of the Company’s common stock at $0.50 per share. The stock option grants vest quarterly over two years and expire in five (5) years. On May 18, 2011, the Board of Directors authorized to Lance Gima, a consultant, the grant of qualified options to purchase 100,000 shares of the Company’s common stock at $0.52 per share. The stock option grants vest quarterly over one year and expire in five (5) years. On June 15, 2011, two directors forfeited 135,000 shares from stock option grants granted at $.75 per share that expired June 15, 2011. There are currently 6,920,000 options to purchase common stock at $.296 per share outstanding at September 30, 2011 under the 2011 Stock Incentive Plan. The Company recorded $151,008 and $152,053 of compensation expense, net of related tax effects, relative to stock options for the year ended September 30, 2011 and 2010 in accordance with ASC 505. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00). As of September, 2011, there is approximately $591,166 of total unrecognized costs related to employee granted stock options that are not vested. These costs are expected to be recognized over a period of approximately two years. On November 9, 2011, Mr. Bradley Sparks forfeited 1,000,000 options to purchase common stock. Stock option activity for the years ended September 30, 2011, 2010 and 2009 are summarized as follows:
|  |  |  |  | Weighted Average |
|  | Options |  |  | Exercise Price |  |  | $ |
Outstanding as of September 30, 2008 |  |  | 1,485,000 |  |  |  | 0.602 |  |  |  | 894,250 |
Granted |  |  | 75,000 |  |  |  | 0.150 |  |  |  | 11,250 |
Exercised |  |  | - |  |  |  | - |  |  |  | - |
Forfeitures |  |  | (250,000 | ) |  |  | 0.100 |  |  |  | (25,000 | )
Outstanding as of September 30, 2009 |  |  | 1,310,000 |  |  |  | 0.672 |  |  |  | 880,500 |
Granted |  |  | 3,500,000 |  |  |  | 0.141 |  |  |  | 495,000 |
Exercised |  |  | - |  |  |  | - |  |  |  | - |
Forfeitures |  |  | (75,000 | ) |  |  | (0.150 | ) |  |  | (11,250 | )
Outstanding as of September 30, 2010 |  |  | 4,735,000 |  |  | $ | 0.288 |  |  |  | 1,364,250 |
Granted |  |  | 2,320,000 |  |  |  | 0.339 |  |  |  | 785,800 |
Exercised |  |  | - |  |  |  | - |  |  |  | - |
Forfeitures |  |  | (135,000 | ) |  |  | (0.750 | ) |  |  | (101,250 | )
Outstanding as of September 30, 2011 |  |  | 6,920,000 |  |  | $ | 0.296 |  |  |  | 2,048,800 |
The following table summarizes information about stock options outstanding and exercisable at September 30, 2011:
|  |  |  |  | Weighted |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  |  | Average |  | Average |  |  |  |  |  | Average |
Range of |  |  | Number |  | Remaining Life |  | Exercise Price |  |  | Number |  |  | Exercise Price |
Exercise Prices |  |  | Outstanding |  | In Years |  | Exerciseable |  |  | Exerciseable |  |  | Exerciseable |
0.09 |  |  |  | 500,000 |  | 8.75 years |  | $ | 0.090 |  |  |  | 125,000 |  |  | $ | 0.090 |
0.15 |  |  |  | 3,000,000 |  | 8.75 years |  |  | 0.150 |  |  |  | 1,875,000 |  |  |  | 0.150 |
0.18 |  |  |  | 100,000 |  | .5 years |  |  | 0.180 |  |  |  | 90,000 |  |  |  | 0.180 |
0.24 |  |  |  | 220,000 |  | 4.25 years |  |  | 0.240 |  |  |  | 55,000 |  |  |  | 0.240 |
0.35 |  |  |  | 2,100,000 |  | 4.75 years |  |  | 0.350 |  |  |  | 275,000 |  |  |  | 0.350 |
0.75 |  |  |  | 1,000,000 |  | 0.0 years |  |  | 0.750 |  |  |  | 1,000,000 |  |  |  | 0.750 |
|  |  |  | 6,920,000 |  | 7.53 years |  | $ | 0.296 |  |  |  | 3,420,000 |  |  | $ | 0.553 |
There is no aggregate intrinsic value of the exercisable options as of September 30, 2011.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 + Details
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