This excerpt taken from the UNCA 10-K filed Dec 19, 2005.
We historically have granted stock options at exercise prices that equaled the fair value of our common stock as estimated by our board of directors as of the date of grant. Prior to August 3, 2005, because there had been no public market for our common stock, the board determined the fair value of our common stock by considering a number of factors, including our operating and financial performance, the pricing of sales of convertible preferred stock to third parties, the rights and preferences of securities senior to common stock, and trends in the broad market for software and other technology stocks.
In calendar 2004 and 2005, we have granted stock options in January, April, July and October 2004 and January and August 2005. As described below, in connection with the initial public offering we retrospectively determined the fair value of our common stock with respect to the grants in April, July and October 2004.