XML 27 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Note 7 - Stock Options
 12 Months Ended
Dec. 31, 2011
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 7 – Stock Options


On January 1, 2011, the Company entered into a nonqualified stock option agreement with an employee, granting the employee a 10-year option to purchase 1,350,000 shares of the Company’s common stock at a price of $0.59 per share, of which one-fourth of the option shares, i.e. , 337,500 shares, vested as of the date of the nonqualified stock option agreement, and the balance vests in equal installments every six months thereafter until fully vested, provided that the employee is still employed by the Company at the time.


On June 15, 2011 the Company entered into nonqualified stock option agreements with three employees, granting the employees 10-year options to purchase a total of 600,000 shares of the Company’s common stock consisting of 300,000 shares of the Company’s common stock at a price of $1.23 per share and 300,000 shares of the Company’s common stock at a price of $2.00 per share. In each case, one-fourth of the option shares vested as of the date of each employee’s respective nonqualified stock option agreement, and the balance vests in equal installments every six months thereafter until fully vested, provided that the relevant employee is still employed by the Company at the time. In October 2011, one of the three employees left the Company and forfeited his one-third share of these options. See “Note 8 Commitments.”


The fair value of each stock option granted was determined using the Black-Scholes stock option pricing model and the following weighted average assumptions:


    December 31, 2011  
Risk free interest rate     1.54 %
Expected term     5.75 years  
Annualized volatility     131 %
Expected dividends     —  

The expected term of options granted is based on the simplified method in accordance with SAB 107 issued by the U.S. Securities and Exchange Commission and represents the period of time that options granted are expected to be outstanding.


Stock option activity for the year ended December 31, 2011, is summarized as follows:


    Shares     Weighted
Average
Exercise
Price 		    Weighted
Average
Remaining
Contractual
Life (Years) 		 
Options outstanding at December 31, 2010     —     $ —          
Granted     1,950,000     $ 0.91          
Expired or forfeited     (200,000 )     —          
Options outstanding at December 31, 2011     1,750,000     $ 0.91       10.00  
Options exercisable at December 31, 2011     875,000     $ 0.91       10.00  
Options vested or expected to vest at December 31, 2011     875,000     $ 0.91       10.00  

Total stock option compensation for the year ended December 31, 2011 and 2010 was $466,908 and $0, respectively. Remaining stock option compensation of $466,907 will be recognized ratably over 18 months from the grant date.