Annual report pursuant to section 13 and 15(d)

STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

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STOCK OPTION PLAN AND STOCK-BASED COMPENSATION
12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

 

5.           STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

 

During the year ended December 31, 2010, the Company adopted a stock option plan entitled “The 2010 Stock Plan” (2010 Plan) under which the Company may grant options to purchase up to 5,000,000 shares of common stock. As of December 31, 2011, there were 78,400 options outstanding under the 2010 Plan.

 

During the year ended December 31, 2011, the Company adopted a non-qualified stock option plan entitled “2011 Non-Qualified Stock Plan” (2011 Plan) under which the Company may grant options to purchase 2,100,000 shares of common stock.  As of December 31, 2011, there were 1,500,000 options outstanding under the 2011 Plan.

 

Under the terms of the stock plans, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically three to four years and the options expire ten years from the date of grant.

  

The following table summarizes the activity under the Stock Plans.

 

    Shares     Exercise Price Per Share    

Weighted 

Average Exercise Price

 
                   
Balance at December 31, 2009     -     $ -     $ -  
                         
Granted     78,400       1.85       1.85  
Exercised     -               -  
Options forfeited/cancelled     -       -       -  
Outstanding, December 31, 2010     78,400       1.85       1.85  
                         
Granted     1,921,237     0.10 to 0.25       0.13  
Exercised     -               -  
Options forfeited/cancelled     (421,237 )     0.25       0.25  
Outstanding, December 31, 2011     1,578,400     $ 0.10 to 1.85     $ 0.19  

 

The following table summarizes information about stock options that are vested or expected to vest at December 31, 2011:

 

         Vested or Expected to Vest     Exercisable Options  

Exercise

Price

   

Number of

Options

   

Weighted

Average

Exercise

Price Per

Share

   

Weighted

Average

Remaining

Contractual

Life (Years)

   

Aggregate

Intrinsic

Value

   

Number of

Shares

Exercisable

   

Weighted

Average

Exercise Price

Per Share

   

Weighted

Average

Remaining

Contractual

Life (Years)

   

Aggregate

Intrinsic

Value

 
$ 0.10       1,500,000       0.10       4.75     $ 219,900       656,250       0.10       4.75     $ 96,206  
  1.85       78,400       1.85       3.75       -       39,200       1.85       3.75       -  
                                                                     
$ 0.10– 1.85       1,578,400       0.19       4.70     $ 219,900       695,450       0.20       4.69     $ 96,206  

 

The weighted-average remaining contractual life for options exercisable at December 31, 2011 is 4.70 years. At December 31, 2011 the Company has 600,000 and 4,921,600 options available for grant under the 2011 Plan and 2010 Plan, respectively.

 

The intrinsic value for fully vested, exercisable options was $96,206 and $0 at December 31, 2011 and 2010, respectively.  No actual tax benefit was realized from stock option exercises during these periods.