7. Warrants

For the three months ended March 31, 2013, the Company issued warrants to purchase 2,000,000 shares of common stock in connection with 550,000 of the 1,375,000 shares common stock for services provided to the company. Of the 2,000,000 warrants issued1,000,000 had an exercise price of $0.40 per share with a two year expiration and immediate vesting, and 1,000,000 had an exercise price of $0.20 per share with a one year expiration and immediate vesting. As of March 31, 2013 no warrants have been exercised. The warrants were valued using the Black-Scholes option pricing model.

A summary of warrant activity for the three months ended March 31, 2013 is presented below:


	Warrants		Weighted Average Exercise Price	Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding, December 31, 2012	1,095,000	$	0.41	2.71	$	-
Granted	2,000,000	$	0.30	1.26		-
Expired/Cancelled	-	$	-	-		-
Exercised	-	$	-	-		-
Outstanding, March 31, 2013	3,095,000	$	0.34	1.33	$	-
Exercisable, March 31, 2013	3,095,000	$	0.34	1.33	$	-

The year-end intrinsic values are based on a March 28, 2013 closing price of $0.09 per share.