Service Condition Stock Options

6 Months Ended

Nov. 30, 2014

Service Condition Stock Options [Abstract]

Note 12 – Service Condition Stock Options

The Company has initiated a stock option agreement with one of its vendors (See Note 7). Compensation cost is recognized on a graded basis.

The fair market value of the stock options is estimated using the Black-Scholes-Merton valuation model and the Company uses the following methods to determine its underlying assumptions: expected volatilities are based on implied volatilities of the monthly closing price of the Company's common stock; the expected term of options granted is based on the SAB 107 simplified method of using the mid-pint between the vesting term and the original contractual term; the risk-free interest rate is based on the U.S. Treasury bonds issued with similar life terms to the expected life of the grant; and the expected dividend yield is based on dividend trends. Forfeitures are estimated at the time of the grant and adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rate is based on historical experience.

The following key assumptions were used in the valuation model to value stock option grants for the respective period.

	Period Ended
	November 30,
	2014

Expected volatility		91.43	%
Weighted-average volatility		81.83	%
Expected dividends		-
Expected term (in years)		10.00
Weighted-average risk-free interest rate		2.18	%
Expected Forfeiture rate		-

Stock option transactions under the Company's plans for the period ending November 30, 2014 are summarized as follows:

					Weighted-
			Weighted-		Average
			Average		Remaining
			Exercise		Contractual
Options	Shares		Price		Term (years)
Balance, beginning of period		-	$	-
Granted		51,532		6.00		9.00
Exercised		-
Forfeited		-
Outstanding at November 30, 2014		51,532		6.00		9.00
Exercisable at November 30, 2014		47,234	$	6.00		9.00

During the period ending November 30, 2014, the company recorded stock based professional fees of $25,600.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References+ Details

Sealand Natural Resources Inc 10-Q/A