STOCK PURCHASE WARRANTS

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements

Note 6. STOCK PURCHASE WARRANTS

Common Stock Warrants

There were no warrants issued in the six months ended June 30, 2013.  All issuances of common stock warrants during the year ended December 31, 2012 were related to equity financing or compensation to non-employees for services.

The following is a summary of all common stock warrant activity through June 30, 2013:

	Number of Shares		Exercise Price Share		Weighted Average
	Under Warrants		Per Share		Exercise Price
Warrants issued and exercisable at December 31, 2012		7,404,562	$	0.50 - $2.00	$	1.08
Warrants Granted		-	$	-	$	-
Warrants Expired		(86,250)	$	0.95	$	0.95
Warrants issued and exercisable at June 30, 2013		7,318,312	$	0.50 - $2.00	$	1.08

During the year ended December 31, 2012, the Company issued an aggregate of 320,000 common stock warrants to non-employees for consulting services.  The fair value of the warrants, determined using a Black-Scholes option pricing model, was approximately $134,000 and is included in general and administrative expenses in the accompanying consolidated statements of operations for the year ended December 31, 2012.

In June 2012, the Company exchanged 277,500 common stock options for 277,500 common stock warrants with the same terms resulting in no incremental fair value to be recorded by the Company.

In connection with the 2012 Private Placement, the Company issued 1,819,119 common stock warrants to investors and 181,912 common stock warrants to the placement agent.

The following represents additional information related to common stock warrants outstanding and exercisable at June 30, 2013:

Exercise Price		Number of Shares Under Warrants		Weighted Average Remaining Contract Life in Years		Weighted Average Exercise Price
$	0.50		277,500		0.80	$	0.50
$	0.83		1,041,028		2.16	$	0.83
$	0.84		20,000		3.09	$	0.84
$	0.85		281,912		4.07	$	0.85
$	0.90		1,819,119		0.39	$	0.90
$	0.95		20,000		3.26	$	0.95
$	1.00		426,417		5.85	$	1.00
$	1.33		3,432,336		2.01	$	1.33
			7,318,312		1.89	$	1.08

The Company used the Black-Scholes option price calculation to value the warrants granted in 2012 using the following assumptions: risk-free rate of 2.42, volatility ranging from 62.2%; actual term and exercise price of warrants granted. See Note 1, Summary of Significant Accounting Policies, “Accounting for Share Based Payments.”