MindXpansion Helps Companies Comply with New Federal Regulations

New rules put into effect by the Financial Accounting Standards Board (FASB), require that companies expense options properly at their fair value, starting in fiscal year 2006. MindXpansion is helping companies comply with these new regulations by calculating fair value for the options granted by the companies. They calculate the fair value of options using option pricing models such as the Black-Scholes or Black-Scholes-Merton model, or various lattice models such as the Binomial model, to meet the new requirements of FAS 123R. SFAS 123 provides guidance for estimating the Fair value of option grants to its employees and/or contractors in exchange for their services and/or goods.

In the past, accounting rules allowed that no compensation expense was recorded if a company granted stock options with the exercise price equal to or above the stock price at the time of grant. This gave companies who grant stock options a significant advantage because some of the compensation provided by the company was not recorded as an expense, thus inflating the reported profits of the companies.

FASB clearly states in their regulation, "For stock options, fair value is determined using an option-pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock and the expected dividends on it, and the risk-free interest rate over the expected life of the option." MindXpansion uses all of these parameters in their valuation services.

FASB, is the designated organization in the private sector for establishing and improving standards of financial accounting and reporting in the United States, which govern the preparation of financial reports.

In order to lessen the burden of this new regulation, MindXpansion launched new low-priced services to value the options granted by companies so that they can be properly expensed to comply with the new regulations. "Our goal was to provide the lowest prices in the industry to address this need, so that companies could use our services at a much lower cost than doing it themselves" stated Dr. Tim Larson of MindXpansion. "We take the complexity out of it, so that they don’t have to learn new, complicated software programs - we do the work and provide simple answers for them to use. It is the most cost-effective and easiest solution to meet the fair value standards of the FASB."

A reasonable and supportable option valuation requires careful consideration of the inputs to the valuation model, based on economically sound analysis and professional expertise.

Options have been granted by many hi-tech companies such as Google Inc. (Nasdaq: GOOG), Texas Instruments Inc (NYSE: TXN), and Intel Corp (Nasdaq: INTC). Other hi-tech companies that previously granted many stock options such as Microsoft Corp. (Nasdaq: MSFT) and Applied Materials Inc. (Nasdaq: AMAT) have started relying more on stock grants rather than option grants.

MindXpansion has been operating since 1995. They have been addressing option valuation needs for companies and employees as well as option traders. In addition to fair value calculation, they do what-if analyses to help their customers make the right, legitimate choices to reach their option valuation goals.

For additional information: http://www.mindxpansion.com/company-options or
Contact: marketing@mindxpansion.com; Phone: 801-829-4172