Note 9 - Warrants

6 Months Ended

Jun. 30, 2012

Stockholders' Equity Note Disclosure [Text Block]

Note 9.  Warrants

Warrants Issued to Investors

The fair value of the warrants was determined using the Black-Scholes-Merton option-pricing model and the following weighted average assumptions were used:

	June 30, 2012			June 30, 2011
Stock Price	$	0.52		$	0.86
Exercise Price	$	2.56		$	2.56
Expected Volatility		110	%		96	%
Expected Dividend Yield	None			None
Expected Term (in years)		4.3			5.3
Risk-free Interest Rate		0.39	%		1.84	%

As of June 30, 2012, the value of the warrant liability was $475,000 and the change in fair value during the six months ended June 30, 2012 was a gain of $179,000. The gain was recorded as other income in the statement of operations.

Warrant activity for the six months ended June 30, 2012 and 2011 is summarized as follows:

	2012				2011
	Warrants		Weighted Average Exercise Price		Warrants		Weighted Average Exercise Price
Outstanding at January 1,		2,476,654	$	2.49		1,757,115	$	4.61
Issued						1,800,000		2.56
Expired
Warrant redemption
Exercised
Outstanding at June 30,		2,476,654	$	2.49		3,557,115	$	3.23
Currently exercisable		2,476,654	$	2.49		1,757,115	$	4.61

The following table summarizes information about warrants outstanding at June 30, 2012:

						Warrants Outstanding and Exercisable
Range of Exercise Prices						Warrants		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
	$	1.00	to	$	2.30		676,654		3.8	$	2.30
	$	2.31	to	$	4.00		1,800,000		4.3		2.56
							2,476,654		4.1	$	2.49