Warrants for Stock

12 Months Ended

Dec. 31, 2012

Warrants For Stock

Warrants for Stock

At December 31, 2012 and 2011 warrants outstanding for common stock of the Company were as follows:

	Number of Shares Underlying Warrants		Weighted Average Exercise Price
Balance at January 1, 2012		603,145	$	3.26
Granted		2,044,591		0.52
Exercised		(20,300)		0.25
Cancelled		(3,150)		0.50
Balance at December 31, 2012		2,624,286	$	1.15

	Number of Shares Underlying Warrants		Weighted Average Exercise Price
Balance at January 1, 2011 (Restated for 1:50 stock split)		336,745	$	5.40
Granted		266,400		0.55
Exercised		-		-
Cancelled		-		-
Balance at December 31, 2011		603,145	$	3.26

The following table summarizes information about underlying outstanding warrants for common stock of the Company outstanding and exercisable as of December 31, 2012:

		Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices		Number of Shares Underlying Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Number of Shares Underlying Warrants		Weighted Average Exercise Price
$	12.50 – $17.50		125,245	$	13.03		8.6		125,245	$	13.03
$	0.25 - $2.50		2,499,041	$	0.56		4.2		2,499,041	$	0.56
			2,624,286						2,624,286

The following table summarizes information about underlying outstanding warrants for common stock of the Company outstanding and exercisable as of December 31, 2011:

		Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices		Number of Shares Underlying Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Number of Shares Underlying Warrants		Weighted Average Exercise Price
$	12.50 – $17.50		125,245	$	13.03		9.6		125,245	$	13.03
$	0.25 - $2.50		477,900	$	0.69		3.8		477,900	$	0.69
			603,145						603,145

All future changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised or expire. These common stock purchase warrants do not trade in an active securities market, and as such, we estimate the fair value of these warrants using the Black-Scholes Option Pricing Model using the following assumptions:

	2012			2011
Risk free interest rates		.62% - 1.04	%		.81% - 2.40	%
Expected life	5 years			5 years
Estimated volatility		514.9% - 577.0	%		673.3% - 693.6	%
Dividend yield		0	%		0	%

Expected volatility is based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods that correspond to the remaining life of the warrants. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants. We currently have no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on U.S. Treasury securities.

At December 31, 2012 and 2011 the aggregate intrinsic value of the warrants outstanding and exercisable was $43,515 and $417,060, respectively. The intrinsic value of a warrant is the amount by which the market value of the underlying warrant exercise price exceeds the market price of the stock at December 31 of each year.