Stock Compensation

3 Months Ended

May 31, 2012

NOTE 9 - STOCK COMPENSATION

On February 3, 2012, the Company adopted a 2012 Incentive Compensation Plan. The Plan allows for a total of 4,700,000 options to be granted.

The Company recognizes the fair value of share-based payments over the service or vesting periods of the awards. Compensation expense related to options granted totaled $383,070 and $0 for the three months ended May 31, 2012 and 2011, respectively, and $383,070 for the period from October 5, 2005 (inception) through May 31, 2012. Measured, but unrecognized stock-based compensation expense at May 31, 2012 was $1,125,004 which is expected to be recognized as expense by June 30, 2015.

Stock option activity and related information for the three months ended May 31, 2012 is as follows:

	Number of Options	Weighted Average Exercise Price	Aggregate Intrinsic Value
Outstanding at February, 2012	-	$ -	$ -
Granted	4,100,000	0.37
Exercised	-	-
Forfeited	-	-
Outstanding at May 31, 2012	4,100,000	0.37	-

Vested at May 31, 2012	750,000	0.37

Outstanding options had $0 intrinsic value at May 31, 2012 due to the exercise price being greater than the value of the Company’s common stock at such date.

Varca Ventures, Inc. 10-Q