NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS A summary of the status of the Company’s stock-based compensation plans as of December 31, 2013 and  2012, and changes during the years ended on those dates is presented below: 2013 2012 Options  Weighted  Average  Exercise Price  ($) Options  Weighted  Average  Exercise Price  ($) Options outstanding at January 1   442,000   10.22   341,500  10.01 Options granted  108,500   13.81   102,500   10.86  Options exercised (54,200) 9.94  (2,000)  8.41 Options expired (49,300) 9.94  -   -  Options outstanding at December 31  447,000  11.67  442,000   10.22 Options exercisable at December 31 240,100  10.48   217,200  10.04 2013 2012 Vesting  Period  (Years) Exercise  Price ($) Number  Outstanding Remaining  Contractual Life (years) Number  Exercisable Number  Outstanding Remaining  Contractual Life (years) Number  Exercisable 3 9.94  - -  - 12,000 0.2  12,000 5 9.94  - -  - 24,000 0.2  24,000 8 9.94  - -  - 44,000 0.2  44,000 5 9.87  150,000 6.2  120,000 157,500 7.2  94,500 3 10.32 6,000 7.2  6,000 6,000 8.2  3,000 6 10.32  91,000 7.2  54,600 96,000 8.2  19,200 5 10.86  97,500 8.2  39,000 102,500 9.2  20,500 5 13.81 102,500 9.7 20,500 Weighted Average  Contractual Life 6.3  6.6  The Company recorded $293,000 in compensation expense for the year ended December 31, 2013 (2012 -  $302,000) as well as corresponding changes to contributed surplus related to stock options. Compensation  expense was determined using the Binomial Model based on the following assumptions: 2013 2012 Risk free interest rate 2.18% 1.49% Expected volatility 33.7% 34.9% Dividends yield rate 3.40% 2.60% Option life 5.4 years 4.5 years Weighted average share price  $ 13.81   $ 10.86  Forfeiture rate 0.00% 0.00% Fair value of options  $ 3.50  $ 2.74 56 AKITA DRILLING LTD.  ANNUAL REPORT The following table summarizes outstanding stock options at December 31: 