Warrants

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Warrants

13. Warrants

At December 31, 2011 and 2010, 3,096,476 and 4,558,975 shares, respectively, of common stock have been reserved for issuance under outstanding warrants. All of the warrants are fully vested and have expiration dates ranging from March 24, 2013 to July 31, 2016. Information concerning the Company’s warrant activity is as follows:

	2011					2010
	Weighted Average Exercise					Weighted Average Exercise
	Warrants			Price		Warrants			Price
Outstanding, at the beginning of year		4,558,975		$	.97		4,426,025		$	.99
Granted		92,791			.50		232,950			.50
Exercised		(83,504	)		.17		—			—
Expired		(471,786	)		1.25		(100,000	)		.95
Outstanding, at the end of year		3,096,476		$	.73		4,558,975		$	.97

In consideration of the stockholder loan agreement (Item 12), the Company has granted the stockholder a total of 475,000 common stock purchase warrants at an exercise price equal to the closing market price of the Company’s stock on the dates of grant. On March 28, 2002, the Company recorded a deferred charge of $318,000. On March 14, 2003, the Company recorded a deferred charge of $212,500. The deferred charges were initially amortized over the commitment period and subsequently revised to include the repayment period, as amended. During the years ended December 31, 2011 and 2010, the Company had amortized $1,007 and $2,013, respectively, of such costs, which are included in interest expense in the accompanying consolidated statements of operations.

During 2011, the Company received cash proceeds of $107,500 from three investors for the purchase of 499,406 shares of common stock at prices ranging from $.167 to $.267. As part of the offering, the Company awarded 39,219 warrants to purchase one share of common stock at an exercise price of $.50 on or prior to various dates ranging from January 10, 2016 through February 1, 2016.

The Company received a note receivable from a warrant holder, issued in December 2011, in connection with an exercise of previously issued warrants. Subsequent to year end, but prior to the issuance of these financial statements, the full amount of the note was received on January 27, 2012, in the amount of $34,535. In accordance with ASC 505-10-45-2, the Company has included the note receivable in Notes receivable from stockholders in the Stockholders’ deficit section on the balance sheet.