Stock Based Compensation

3 Months Ended

Mar. 31, 2014

Notes

Stock Based Compensation

4. STOCK BASED COMPENSATION

The following table summarizes the Company’s employee stock option activity for the three months ended March 31, 2014:

Schedule of Employee Stock Option Activity
					Weighted
			Weighted		average	Aggregate
			average		remaining	intrinsic
	Options		exercise price		contractual life (yrs)	value
Options outstanding, December 31, 2013	3,202,882		$.030		9.10
Options exercisable, December 31, 2013	1,755,882		$.027		8.75	$ 42,261
Options granted during the period	3,000		.050
Options outstanding, March 31, 2014		3,205,882		$.030	8.85
Options exercisable, March 31, 2014		1,756,882		$.027	8.50		$ 15,838

During the three months ended March 31, 2014, 3,000 nonqualified employee stock options were granted with an exercise price of $.05.  The stock options shall vest one-third each year starting from February 11, 2015, and shall expire on February 11, 2024.  

Stock-based compensation expense for the three months ended March 31, 2014 was $5,692. 

Stock-based compensation is measured at the grant date, based on the calculated fair value of the option, and is recognized as an expense on a straight-line basis over the requisite employee service period (generally the vesting period of the grant).    

The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the three months ended March 31, 2014:

Risk-free interest rate 1.7%

Expected option life 5 years

Expected volatility 234%

Expected dividend yield 0%