2. Summary of Significant Accounting Policies: Equity-based Compensation Expense (Policies)

6 Months Ended

Jun. 30, 2014

Policies

Equity-based Compensation Expense

Equity-based Compensation Expense

The Company recognizes all forms of equity-based payments, including stock option grants, warrants, and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest.

Equity-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Equity-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the equity-based payment, whichever is more readily determinable. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period.

When computing fair value of equity-based compensation, the Company considers the following variables:

·         The expected option term is computed using the “simplified” method.

·         The expected volatility is based on the historical volatility of its common stock using the daily quoted closing trading prices.

·         The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant.

·         The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on our common stock in the foreseeable future.

·         The forfeiture rate is based on the historical forfeiture rate for its unvested stock options.