Warrants and Stock Options

12 Months Ended

Dec. 31, 2013

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

Warrants and Stock Options

NOTE 7 - WARRANTS AND STOCK OPTIONS

Class A Warrants.

Class A Warrants. The following table summarizes the stock purchase warrants outstanding at December 31, 2013. All figures are after the reverse stock split which occurred on February 22, 2013:

		Warrants Outstanding						Warrants Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.40		152,500		3.80	$	0.40		152,500	$	0.40
	1.00		900,000		4.80		1.00		900,000		1.00
	Totals or average		1,052,500		4.00	$	1.00		1,052,500	$	0.91

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

	Number of Shares		Weighted Average Price Per Share
Outstanding at December 31, 2011		152,500		0.40
Granted or exchanged		8,500		1.00
Exercised		-		-
Canceled or expired		(8,500		(1.00	)
Outstanding at December 31, 2012		152,500	$	0.40
Granted		900,000		1.00
Exercised		-		-
Canceled or Expired		-		-
Outstanding at December 31, 2013		1,052,500	$	0.91

For the year ended December 31, 2013 the Company issued 900,000 warrants (on a post reverse split basis) which were fully vested at December 31, 2013. The warrants were issued in conjunction with a common stock offerings and no warrant expense was recorded in 2013 or 2012 for these warrants. During the year ended December 31, 2012, a total of 8,500 warrants expired unexercised. The warrants had $0 intrinsic value at December 31, 2013.

Stock options.

No stock options were exercised during the year ended December 31, 2013.

All stock options and warrants issued previously were valued using the Black-Scholes option-pricing model. Variables used in the Black-Scholes pricing model for options issued during the year ended December 31, 2011 include (1) discount rate range of 2.21% to 3.03%, (2) option life of 5 years, (3) expected volatility of 63% to 108% and (4) zero expected dividends.

Fair value expense of $0 and $28,740 was recorded for the twelve months ending December 31, 2013 and 2012 respectively using the Black-Scholes method of option-pricing model for vested options.

In October, 2012 the Company agreed to reduce the price of the outstanding options to $0.40 per share as compensation for services rendered by its Board of Directors who have served the past four years and 9 months without any director fees.

Stock options.

The following table summarizes the balances of stock options issued to officers and directors outstanding at December 31, 2012. All figures below are after the 1 for 20 reverse stock split which occurred on February 22, 2013.

Exercise Prices	Number of options Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Actual Number Exercisable		Weighted Average Exercise Price
0.40		115,000		3.80		0.40		115,000		0.40
		115,000		3.80	$	0.40		115,000	$	0.40

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

	Number of Shares			Weighted Average Price Per Share
Outstanding at December 31, 2011		332,500		$	1.40
Granted		267,500			0.80
Exercised		-			-
Canceled or expired		(332,500	)		-
Outstanding at December 31, 2012		267,500		$	0.40
Granted		-			-
Cancelled or expired		(152,500	)		(0.40	)
Outstanding at December 31, 2013		115,000		$	0.40