Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
9 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION

NOTE 7– STOCK-BASED COMPENSATION

 

On January 1, 2017, 1.25 million restricted shares, which had vested in September 2016, were issued to an employee.

 

On January 1, 2017, 33.5 million stock options were granted to 6 employees and 2 directors of the Company. The CEO was not included in the award. The stock options vested 50% on January 1, 2017 and the remaining 50% will vest on January 1, 2018, provided that the option holder continues to serve as an employee or director on the vesting date. The stock options are exercisable for seven years from the original grant date of January 1, 2017, until January 1, 2024.

 

The fair value of the stock-options were determined using the Black Scholes valuation model with the following key assumptions:

 

    January 1, 2017  
Number of  Stock Options Awarded     33,500,000  
Stock Price:   $ 0.0278  
Exercise Price:   $ 0.0278  
Term:     4 years  
Risk Free Rate:     1.71 %
Volatility:     127 %

 

The Company used the historical volatility of its stock for the period March 21, 2013 (the date the exploration activities began) through January 1, 2017 for the Black Scholes computation. The Company has no historical data regarding the expected life of the options and therefore used the simplified method of calculating the expected life. The risk free rate was calculated using the U.S. Treasury constant maturity rates similar to the expected life of the options, as published by the Federal Reserve. The Company has no plans to declare any future dividends.

 

Stock-based compensation cost is measured at the grant date, using the estimated fair value of the award, and is recognized over the required vesting period. The Company recognized $93,381 and $560,287 in stock-based compensation during the three and nine months ended June 30, 2017, and $174,650 and $582,694 in stock-based compensation during the three and nine months ended June 30, 2016, respectively. A portion of these costs, $27,875 and $99,050, were capitalized to unproved properties and the remainder were recorded as general and administrative expenses for the three months ended June 30, 2017 and 2016, respectively. For the nine months ended June 30, 2017 and 2016, $167,250 and $324,797, respectively, were capitalized to unproved properties. 

 

The following table summarizes the Company’s stock option activity during the nine months ended June 30, 2017:

 

    Number of Options       Weighted Average Exercise Price     Weighted Average Remaining Contractual Term   
Outstanding at September 30, 2016   2,000,000     0.12      
Granted   33,500,000     $ .0278      
Exercised              —  
Cancelled              —  
Outstanding at June 30, 2017   35,500,000     $ .0330       3.4 years  
Vested and expected to vest   18,750,000     $ .0330       3.4 years  
Exercisable at June 30, 2017   18,750,000       .0330        

 

As of June 30, 2017, remaining expense to be recognized related to outstanding options was $186,763.

 

As of June 30, 2017 there was zero intrinsic value for stock options outstanding as of June 30, 2017.