Stock Options and Warrants
|3 Months Ended|
Sep. 30, 2011
|Stock Options and Warrants|
|Schedule of Stockholders' Equity Note, Warrants or Rights||
Note 9 Stock Options and Warrants
Stock Options and Compensation-Based Warrants
The Company has three incentive stock option plans wherein 44,000,000 shares of the Companys common stock are reserved for issuance there under. The Company granted stock options during the year ended December 31, 2010 to acquire 12,000,000 shares of the Companys common stock to the Companys Chief Executive Officer. During the year ended December 31, 2010, the Company also issued compensation-based stock warrants to an investment banking firm to acquire 7,700,000 shares of the Companys common stock at $0.0325 per share, and compensation-based warrants to purchase 250,000 shares of common stock to a law firm. Effective April 1, 2010, the Company appointed Martin Wenzel to its board of directors. Mr. Wenzel was granted an option to purchase 500,000 shares of the Companys common stock at an exercise price of $0.01 per share. The option vests over ten equal monthly installments commencing May 1, 2010 and expires on April 1, 2015.
On July 19, 2010, the stockholders approved the 2010 Stock Incentive Plan. The granting of options and other stock awards is an important incentive tool for the Companys employees, officers and directors. The 2010 Plan provides a means by which employees, directors and consultants of the Company may be given an opportunity to benefit from increases in the value of our common stock, and to attract and retain the services of such persons. All of our employees, directors and consultants are eligible to participate in the 2010 Plan. The total number of shares of common stock which may be offered, or issued as restricted stock or on the exercise of options or Stock Appreciation Rights (SARs) under the Plan shall not exceed twenty million (20,000,000) shares of common stock. The shares subject to an option or SAR granted under the Plan that expire, terminate or are cancelled unexercised shall become available again for grants under this Plan. If shares of restricted stock awarded under the Plan are forfeited to the Company or repurchased by the Company, the number of shares forfeited or repurchased shall again be available under the Plan. Where the exercise price of an option is paid by means of the optionees surrender of previously owned shares of common stock or the Companys withholding of shares otherwise issuable upon exercise of the option as may be permitted herein, only the net number of shares issued and which remain outstanding in connection with such exercise shall be deemed issued and no longer available for issuance under this Plan. No eligible person shall be granted options or other awards during any twelve-month period covering more than Five Hundred Thousand (500,000) shares of common stock.
No income tax benefit has been recognized for share-based compensation arrangements. The Company has recognized plantation development costs totaling $124,565 related to a liability that was satisfied by the issuance of warrants in 2008. Otherwise, no share-based compensation cost has been capitalized in the condensed consolidated balance sheet.
A summary of the status of options and compensation-based warrants at September 30, 2011, and changes during the nine months then ended is presented in the following table:
At September 30, 2011, options to acquire 80,000 shares of common stock have no stated contractual life. The fair value of other stock option grants and compensation-based warrants is estimated on the date of grant or issuance using the Black-Scholes option pricing model. 1,350,000 options were issued in the nine-month period ended September 30, 2011 and 13,650,000 options and 1,890,000 warrants were issued in the nine-month period ended September 30, 2010. The weighted-average assumptions used for the stock options granted and compensation-based warrants issued during the nine months ended September 30, 2011 were risk-free interest rate of 1.20%, volatility of 170%, expected life of 5.0 years, and dividend yield of zero. The assumptions employed in the Black-Scholes option pricing model include the following; the expected life of stock options represents the period of time that the stock options granted are expected to be outstanding prior to exercise; the expected volatility is based on the historical price volatility of the Companys common stock; the risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related stock options; the dividend yield represents anticipated cash dividends to be paid over the expected life of the stock options; the intrinsic values are based on a September 30, 2011 closing price of $0.04 per share.
Share-based compensation from all sources recorded during the nine months ended September 30, 2011 and 2010 was $69,858 and $95,642, respectively, and is reported as general and administrative expense in the accompanying condensed consolidated statements of operations. As of September 30, 2011, there is approximately $39,595 of unrecognized compensation cost related to stock-based payments that will be recognized over a weighted average period of approximately 1.23 years.
A summary of the status of the warrants outstanding at September 30, 2011, and changes during the three months then ended is presented in the following table:
Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.
Reference 1: http://www.xbrl.org/2003/role/presentationRef