BIO BRIDGE SCIENCE INC - FORM 10-Q - XML - IDEA: XBRL DOCUMENT - November 21, 2011
DERIVATIVE LIABILITY | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Text Block] | NOTE 8 – DERIVATIVE LIABILITY
The strike price of options and warrants issued by the Company, and the conversion feature in the Company’s preferred stock previously outstanding, are denominated in US dollars, a currency other than the Company’s functional currency, RMB. Under authoritative guidance issued by the FASB these instruments are not considered indexed to the Company’s own stock and therefore the fair value of certain of the Company’s options and warrants, and the conversion feature of the preferred stock previously outstanding, are characterized as derivative liabilities. The FASB’s guidance requires the fair value of these liabilities be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
At September 30, 2011, the Company had 2,659,000 options and 9,251,609 warrants outstanding. The Company determined that, among the outstanding options and warrants, 100,000 of the options and 163,333 of the warrants were subject to the liability accounting.
At September 30, 2011 and December 31, 2010, the derivative liabilities were valued using the Black-Scholes-Merton valuation technique with the following assumptions:
The risk-free interest rate is based on the yield available on U.S. Treasury securities. The Company estimates volatility based on the historical volatility if its common stock. The expected life of the options and warrants and conversion feature are based on the expiration date of the related options and warrants and convertible preferred stock. The expected dividend yield was based on the fact that the Company has not paid dividends to common shareholders in the past and does not expect to pay dividends to common shareholders in the future.
During the nine months ended September 30, 2011, 163,333 warrants to purchase the Company’s common stock at $0.75 per share expired; the warrants were previously classified as derivative liabilities and valued at $38,106 at March 31, 2011; the expiration of the warrants was recorded as contribution to capital. During the nine months ended September 30, 2011, an option to purchase 20,000 shares of the Company’s common stock at $0.001 per share was exercised; the option was previously classified as derivative liabilities and valued at $14,708 at March 31, 2011; the exercise of the option was also recorded as a contribution to capital.
For the three and nine months ended September 30, 2011, $6,985 gain and $43,437 loss, respectively, were recorded on change in fair value of derivative liability. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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