Stock Options and Warrants

6 Months Ended

Jun. 30, 2013

Stock Options and Warrants [Abstract]

Stock Options and Warrants

9. Stock Options and Warrants

Stock Option - In April of 2013, the Company made a stock option grant to purchase 25,000 shares of the Company’s common stock for service as a director of the Company. Terms of the stock option grant require, among other things, that the individual continues to provide services over the vesting period of the option, which is one year from the date of grant for the director service stock option. The exercise price of the option is $0.54 a share, which was the closing price of the common stock at the date of grant being approved. The Company determined the fair value of the stock option granted using the Black Scholes model and expenses this value monthly based upon the vesting schedule of the stock option award. For purposes of determining fair value, the Company used an average annual volatility of one hundred seventy five percent (175%), which was calculated based on the closing price of the Company’s stock over the preceding five years. The risk free rate of interest used in the model was taken from a table of the market rate of interest for U. S. Government Securities for the date of the stock option award and the effective term. The Company used the simplified method to determine the expected term of the options due to the lack of historical data. The total fair value of the stock option granted was determined using this methodology to be $12,975, which is being expensed following the date of grant based on the stock option vesting schedule.

The stock option grant in April of 2013 was not for current management of the Company and there were no other stock option awards during the quarter ending June 30, 2013. Total stock option expense for the quarter ending June 30, 2013 was $13,538.

Warrant -  There were no warrants for services granted during the quarter ending June 30, 2013.