WARRANTS (Tables)

12 Months Ended

Dec. 31, 2013

The following table sets forth information regarding the warrants issued during 2012:

		No. of
		underlying		Price per		Fair value		Exercisable	Total
	Issue date	shares		share		per warrant		period	fair value

Tranch 1	May 11, 2012		120,000,000	$	0.1485	$	0.0372	One year from May 11, 2012	$	4,470,000

Tranch 2	May 11, 2012		40,000,000		0.1485		0.0681	Three years fromcommercial launch		2,723,000

Tranch 3	May 11, 2012		40,000,000		0.1485		0.0837	Three years from commercial launch		3,346,000

Tranch 4	August 2, 2012		40,000,000		0.1985		0.0537	One year fromcommercial launch		2,148,000

Tranch 5	August 28, 2012		40,000,000	$	0.1750	$	0.0550	One year from commercial launch		2,202,000
Total			280,000,000						$	14,889,000

Fair Value of Warrants, Assumptions Used

The fair value of the warrants issued during 2012 was determined by the Company using Binomial Option Pricing Model with the following assumptions:

	Tranch 1			Tranch 2			Tranch 3			Tranch 4			Tranch 5

Risk-fee rate of return		0.952	%		1.674	%		1.916	%		1.185	%		1.186	%
Expected remaining contractual lives of the warrants		1 year			4 years			5 years			1.8 years			2.1 years
Volatility		63.2	%		58.5	%		66.6	%		56.6	%		54.5	%
Expected dividend yield		-			-			-			-			-

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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