Quarterly report pursuant to sections 13 or 15(d)

NOTE 10 - STOCK OPTIONS

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NOTE 10 - STOCK OPTIONS
6 Months Ended
Jun. 30, 2012
Shareholders' Equity and Share-based Payments [Text Block]
NOTE 10 – STOCK OPTIONS

ASC 718 requires the measurement of stock-based compensation based on the fair value of the award on the date of grant.    The Company issued approximately 2,875,000 common stock options with a weighted average exercise price of $0.16 and an expected life of 5 years.  Approximately, 2,257,000 of the common stock options vest immediately. The remaining 618,000 options shall vest at 50% with the balance vested ratably over a three-year period.

The Company estimated the value of the options at approximately $460,000 using the Black Scholes option-pricing model.  Compensation cost is recognized on a straight-line basis over the vesting period and, as such, the Company recorded compensation expense of approximately $408,000 for the three and six months ended June 30, 2012.

The weighted average inputs into the Black Scholes were as follows:

1.  
Expected dividend yield of 0.0%,

2.  
Risk-free interest rate of 0.86%

3.  
Expected Volatility at 298%

4.  
Expected term of 5 years

5.  
Exercise price of $0.16