Quarterly report pursuant to Section 13 or 15(d)

NOTE 7: EQUITY TRANSACTIONS

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NOTE 7: EQUITY TRANSACTIONS
9 Months Ended
Sep. 30, 2013
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
NOTE 7: EQUITY TRANSACTIONS

Common Stock

During the nine months ended September 30, 2013, the Company issued an aggregate of 14,160,000 common shares for services valued at $737,955, 10,235,125 common shares with related party debt with a relative fair value of $182,192 and 28,433,333 common shares for cash proceeds of $842,500.

Options

In August 2013, the Company terminated the 2012 Stock Option Plan, returning the balance of 16,000,000 reserved shares underlying ungranted options to authorized capital.

Total stock option expense was $798,923 for the nine months ended September 30, 2013. As of September 30, 2013, there was an aggregate of $342,942 that will be expensed over the remaining vesting period of the outstanding options through July 1, 2014.

On March 22, 2013, Clean Coal granted a consultant an aggregate of 1,000,000 common stock options which have a term of 3 years and the following exercise prices and vesting terms: 400,000 options are exercisable at $0.15 per share and vest on March 22, 2013, 300,000 options are exercisable at $0.25 per share and vest on July 1, 2013 and 300,000 options are exercisable at $0.35 per share and vest on July 1, 2013. The fair value of these options was determined to be $31,307 using the Black-Scholes Option Pricing Model. The significant assumptions used in the model include (1) discount rate of 0.39%, (2) expected term of 3 years (3) expected volatility of 126.53% and (4) zero expected dividends. The full $31,307 was expensed during the nine months ended September 30, 2013.

On May 9, 2013, the Company awarded two engineering consultants 1,000,000 common stock options each which have a term of 5 years, are exercisable at $0.05 per share and vest on December 31, 2013. The aggregate fair value of these options was determined to be $68,433 using the Black-Scholes Option Pricing Model. The significant assumptions used in the model include (1) discount rate of 0.75%, (2) expected term of 3.15 years (3) expected volatility of 125.16% and (4) zero expected dividends. $41,756 was expensed during the nine months ended September 30, 2013 and $26,677 will be expensed over the remaining vesting periods.

A summary of stock option activity for the nine months ended September 30, 2013 is as follows:

         
Weighted
 
         
Average
 
   
Options
   
Exercise Price
 
Outstanding - December 31, 2012
   
46,000,000
   
$
0.22
 
Granted
   
3,000,000
     
0.11
 
Forfeited/canceled
   
-
     
-
 
Exercised
   
-
     
-
 
Outstanding – September 30, 2013
   
49,000,000
   
$
0.22
 
Exercisable – September 30, 2013
   
29,000,000
   
$
0.14
 

The weighted average remaining life of the outstanding options as of September 30, 2013 was 5.58 years, the weighted average grant date fair value of the options granted during the nine months ended September 30, 2013 was $0.033 and the intrinsic value of the exercisable options as of September 30, 2013 was $88,000.