NOTE 12 - OPTIONS AND WARRANTS
 9 Months Ended
Sep. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
NOTE 12 - OPTIONS AND WARRANTS

NOTE 12 - OPTIONS AND WARRANTS

 

The Company has adopted FASB ASC 718, “Share-Based Payments” (“ASC 718”) to account for its stock options. The Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our experience. Compensation expense is recognized only for those options expect to vest, with forfeitures estimated at the date of grant based on our historical experience and future expectations.

The following table summarizes the changes in options outstanding issued to employees of the Company:

 

   Number of Shares   

Weighted Average

Exercise Price

 Outstanding as of January 1, 2013   70,000   $0.01 
 Granted   300,000    1.65 
 Exercised   —      —   
 Cancelled   —      —   
 Outstanding at September 30, 2013   370,000   $1.34 

 

Common stock options outstanding and exercisable as of September 30, 2013 are:

 

   Options Outstanding  Options Exercisable
Expiration
Date		  Exercise Price  Number shares outstanding  Weighted Average Contractual Life (Years)  Number Exercisable  Weighted Average Exercise Price
                
October 1, 2018  $0.01    70,000    5.00    56,653   $0.01 
January 2, 2019   1.65    300,000    5.25    124,726    1.65 
Total        370,000         181,379      

 

During the nine months ended September 30, 2013, the Company granted 300,000 stock options with an exercise price of $1.65 out of which 75,000 were immediately vested and balance vesting over three years and expiring six years from issuance date.

 

The fair value of the vested portion of $34,784 and $214,860 was charged to expenses and additional paid in capital during the three and nine months ended September 30, 2013, respectively.

 

The fair value of these stock options granted and the significant assumptions used to determine those fair values, using a Black-Scholes option-pricing model are as follows:

 

 Significant assumptions:      
        Risk-free interest rate at grant date     1.04%-0.89 %
        Expected stock price volatility     199.38%-344.22 %
        Expected dividend payout     —  
        Expected option life-years     6