Stock Option Plan and Stock Based Compensation

3 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 9- STOCK OPTION PLAN AND STOCK BASED COMPENSATION

The Company has a stock option plan under which it may grant options to its directors, officers, employees and consultants for up to a maximum of 8,000,000 of its issued and outstanding common shares at market price at the date of grant for up to a maximum term of five years. Options are exercisable equally over the first three years of the term of the option.

	June 30, 2011
	Weighted average Exercise
	Price		Shares
Outstanding at beginning of period	$	0.50		5,405,000
Options granted		-
Options forfeited		0.45		(200,000	)
Outstanding at end of period		0.50		5,205,000
Exercisable at end of period	$	0.60		3,705,000

Significant option groups outstanding at June 30, 2011 and related weighted average price and life information as follow:

Range of Exercise Price		Number outstanding at June 30, 2011	Weighted Average remaining Contractual life		Weighted average Exercise Price		Exercisable Number outstanding at June 30, 2011		Exercisable Weighted average Exercise price
$	0.19-1.28	4,425,000		2.96	$	0.32		2,925,000	$	0.34
	1.29-2.28	680,000		0.34		1.41		680,000		1.41
	2.29-3.28	100,000		1.42		2.58		100,000		2.58
		5,205,000		2.61	$	0.50		3,705,000	$	0.60

Transactions involving options issued to employees are summarized as follows:

	Number of Shares			Weighted Average Price Per Share
Outstanding at December 31, 2009		6,060,000		$	0.57
Granted		300,000			0.19
Exercised		-
Canceled or expired		(955,000	)		0.85
Outstanding at December 31, 2010		5,405,000		$	0.50
Granted		-
Exercised		-
Canceled or expired		(200.000	)		0.45
Outstanding at June 30, 2011		5,205,000		$	0.50

Cougar Oil and Gas Canada Stock Option Plan

Cougar Oil and Gas Canada has a stock option plan under which it may grant options to its directors, officers, employees and consultants for up to a maximum of 10% of its issued and outstanding common shares at market price at the date of grant for up to a maximum term of five years. Options are exercisable equally over the first three years of the term of the option.

A summary of options granted and outstanding under the plan is as follows:

Outstanding						Exercisable
Number outstanding at June 30, 2011		Weighted Average remaining Contractual life		Weighted average Exercises Price (Cdn$)		Number outstanding at June 30 , 2011	Weighted average Exercise price
	3,262,500		2.54	$	0.144	2,175,000	$	0.144
	892,500		3.33	$	0.289	397,500		0.289
	35,000		3.75	$	2.02	-		-
	600,000		3.92	$	2.38	200,000		2.38
	50,000		4.29	$	1.40	-		-
	50,000		4.33	$	1.52	-		-
	45,000		4.42	$	1.83	-		-
	30,000		4.44	$	2.36	-		-
	450,000		4.46	$	2.92	-		-
	400,000		4.75	$	3.07
	5,815,000		3.17	$	0.87	2,772,500	$	0.33

Transactions involving options issued to employees are summarized as follows:

	Number of Shares			Weighted Average Price Per Share
Outstanding at December 31, 2009		-		$	-
Granted		1,260,000			2.47
Exercised		-			-
Canceled or expired		-
Outstanding at December 31, 2010		1,260,000			2.47
Granted		400,000			3.07
Transfers (see below)		4,455,000			0.18
Canceled or expired		(300,000	)		-
Outstanding at June 30, 2011		5,815,000		$	0.87

During the six months ended June 30, 2011, the Company granted 400,000 stock options with an exercise price of Cdn $3.07 per share expiring five years from issuance. The fair values were determined using the Black Scholes option pricing model with the following assumptions:

Dividend yield:	-0-	%
Volatility	81	%
Risk free rate:	2.71	%

On January 1, 2011, Cougar Energy, Inc. merged with its parent, Cougar Oil and Gas Canada Inc. Both of the companies are Alberta corporations and were merged in a statutory amalgamation under Alberta corporate law. Upon that merger, and after giving effect to the Cougar Oil and Gas Canada/Cougar Energy Inc. share exchange at 1:1.5 and the subsequent 3:1 split of Cougar Canada Oil and Gas Canada Inc. shares, the 725,000 and 265,000 outstanding Cougar Energy, Inc stock options exercisable at $0.65 and $1.30 per share respectively shown above became 3,262,500 and 1,192,500 outstanding Cougar Oil and Gas Canada stock options exercisable at Cdn $0.144 and Cdn $.289 per share, respectively.

Kodiak Energy Inc. Warrants

During each of the years ended December 31, 2006 and 2010, the Company, as part of certain private placement financings, issued warrants that are exercisable in common shares of the Company. A summary of such outstanding warrants follows:

	Exercise Price ($)		Expiry Date	Equivalent Shares Outstanding		Weighted Average Years to Expiry
Issued Nov 4, 2010	$	0.50	Aug 15/12		4,776,108		1.38
Issued Dec 9, 2010	$	0.50	Aug 15/12		4,500,000		1.38
Issued Jan 17, 2011	$	0.34	Jan 16/12		10,000,000		4.80
	$	0.42			19,276,108		2.90

Transactions involving Kodiak Energy Inc. are summarized as follows:

	Number of Shares			Weighted Average Price Per Share (Cdn$)
Outstanding at December 31, 2009		1,130,000		$	3.50
Issued		9,276,108			0.50
Exercised		-			-
Canceled or expired		-
Outstanding at December 31, 2010		10,406,108		$	0.83
Issued		10,000,000			0.34
Exercised		-			-
Canceled or expired		(1,130,000	)		(3.50	)
Outstanding at June 30, 2011		19,276,108		$	0.42

During the six months ended June 30, 2011, in connection with the sale of the Company's common stock, the Company issued 10,000,000 warrants to purchase the Company's common stock at $0.34 per share expiring five years from the date of issuance.

Cougar Oil and Gas Canada Warrants

Warrants

The following table summarizes warrants outstanding and related prices for the shares of the Company’s common stock issued to shareholders at June 30, 2011:

Transactions involving the Company’s warrant issuance are summarized as follows:

	Number of Shares			Weighted Average Price Per Share

Outstanding at December 31, 2009		-		$	-
Issued		6,223,506			0.33
Exercised		(2,014,848	)		0.29
Canceled or expired		-			-
Outstanding at December 31, 2010		4,208,658		$	0.35
Issued		-			-
Exercised		(3,840,501	)		(0.33	)
Canceled or expired		(368,157	)		(0.56 )
Outstanding at June 30, 2011		-		$	-

During the six months ended June 30, 2011, the Company received $1,275,951, net of costs, in connection with the exercise of 3,840,501 previously issued warrants to acquire the Company’s’ common stock.

- 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

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

+ Details

KODIAK ENERGY, INC. 10-Q