Warrant activity. We have accounted for warrants as equity instruments in accordance with EITF 00-19 (ASC 815-40) Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, and as such, will be classified in stockholders’ equity as they meet the definition of “…indexed to the issuer’s stock” in EITF 01-06 (ASC 815-40) The Meaning of Indexed to a Company’s Own Stock. In prior years, we estimated the fair value of the warrants using the Black-Scholes option pricing model based on assumptions at the time of issuance.

A summary of current warrant activity is as follows:

Stock options. For the three months ended March 31, 2014, we issued 27,083 stock options at an exercise price equal to the closing price of our common stock on the last trading day prior of the quarter ($0.34). The stock options granted were calculated to have a fair value of $6,237 using the Black-Scholes option pricing model with the following assumptions:

The cost of all options issued have been classified as share based compensation for the three months ended March 31, 2014 and 2013, respectively.

A summary of stock option activity is as follows: