5. Stockholders Deficit

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements

NOTE 5 - Stockholders' Deficit

On March 28, 2012, the Company’s Board of Directors approved and adopted the Spartan Gold Ltd. 2012 Equity Incentive Plan (the “Plan”) and reserved 4,750,000 shares of the Company’s common stock for issuance under the Plan to the Company’s directors, officers, consultants and other service providers.  The Plan allows for two types of grants: 1) options and 2) stock awards and stock purchase offers.  As of June 30, 2012, no options or stock awards have been granted.

Common Stock

As of June 30, 2012, the Company has issued 50,000 shares of common stock to the Chief Financial Officer of the Company pursuant to an employment agreement. The fair value of these shares, totaling $25,000, was expensed and recorded in general and administrative expenses.

Warrants

On March 1, 2012, the Company issued warrants to purchase 750,000 shares of the Company’s common stock to a consultant for services to be rendered (See Note 7 – Commitments and Contingencies).  These warrants have contractual lives of three years and were valued at a grant date fair value of $0.13 per warrant, or $97,500, using a Black-Scholes option pricing model with the following assumptions:

Stock price	$0.50
Contractual term	3 years
Expected volatility	77.7%
Risk free interest rate	0.43%
Dividend yield	0

The fair value of these warrants was expensed and recorded in general and administrative expenses.

The volatility was based on comparable volatility of other companies since the Company had no significant historical volatility. The risk free interest rate was based on the three year treasury rates, as applicable to the contract term. The dividend yield was assumed to be zero.

On March 8, 2012, the Company issued warrants to purchase 150,000 shares of the Company’s common stock to a consultant for services to be rendered (See Note 7 – Commitments and Contingencies).  These warrants have contractual lives of three years and were valued at a grant date fair value of $0.13 per warrant, or $19,500, using a Black-Scholes option pricing model with the following assumptions:

Stock price	$0.51
Contractual term	3 years
Expected volatility	77.7%
Risk free interest rate	0.44%
Dividend yield	0

Of the total fair value, $12,082 was expensed and recorded in general and administrative expenses. At June 30, 2012, $7,418 remains in prepaid expenses (December 31, 2011 – $nil). The volatility was based on comparable volatility of other companies since the Company had no significant historical volatility. The risk free interest rate was based on the three year treasury rates, as applicable to the contract term. The dividend yield was assumed to be zero.

The following table summarizes warrant transactions for the year ended December 31, 2011 and the six months ended June 30, 2012:

	Number of warrants		Weighted average exercise price		Weighted average remaining contracted term (years)		Aggregate intrinsic value
Outstanding at December 31, 2010			$	–
Granted		1,599,975	$	5.94
Outstanding at December 31, 2011		1,599,975	$	5.94		4.59	$	–
Granted		900,000	$	1.40
Outstanding at June 30, 2012		2,499,975	$	4.30		3.58	$	–
Exercisable at June 30, 2012		2,499,975	$	4.30		3.58	$	–
Weighted Average Grant Date Fair Value			$	2.09