Stock Purchase Warrants

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

Stock Purchase Warrants

Common Stock Warrants

In May 2011, the Company entered into a consulting agreement with a financial advisory firm to provide services to the Company for an initial term of eighteen (18) months at a rate of $12,000 per month. Under the terms of the agreement, the Company may defer the monthly payment, in exchange for the issuance of 200,000 common stock purchase warrants. The warrants have a five (5) year term and an exercise price of $0.20 per share or 105% on the date of issuance. As of December 31, 2011, the Company has issued 1,600,000 warrants under this agreement, valued at $119,094.

In June 2011, the Company extended the exercise period for one year on 956,873 warrants to purchase common stock in the Company that had an original termination date of July 31, 2011.

In the fourth quarter of 2009, warrants to purchase 1,750,000 shares of common stock (fair value of $295,050) were granted in settlement of $195,000 in outstanding accounts payable and a six-month financial advisory services contract with the Company’s financial advisory firm, which warrants were allocated to principals of the firm (“Advisory Warrants”). The Advisory Warrants have an exercise price of $0.55 and a term of five years. Of the $100,050 allocated to the financial advisory services contract, $16,675 was expensed as consulting expense in 2009, and as of December 31, 2009, $83,375 was recorded as prepaid consulting.

In May 2011, the Company exchanged the Advisory Warrants together with warrants to purchase 319,000 shares of common stock held by principals of the Company’s financial advisory firm for 2,069,000 shares of common stock in consideration for $100,000 of debt financing.

In consideration for the management and other executive services provided by Drs. Shalom Hirschman and William Fleming, the Company issued 500,000 restricted shares of the Company's common stock to each of Drs. Hirschman and Fleming. The shares are subject to certain vesting requirements and are subject to forfeiture under certain circumstances. Drs. Hirschman and Fleming serve as the Company's Principal Executive Officer and Principal Accounting Officer, and President and Chief Science Officer, respectively.

The following is a summary of all common stock warrant activity during the two years ended December 31, 2012:

	Number of Shares Under Warrants		Exercise Price Per Share	Weighted Average Exercise Price
Warrants issued and exercisable at December 31, 2010		11,716,346	$0.31 - $ 2.00	$	0.80
Warrants granted		1,600,000	$0.20 - $0.55	$	0.26
Warrants expired		(8,002,375)	$0.42 - $2.00	$	0.88
Warrants exercised		-
Warrants issued and exercisable at December 31, 2011		5,632,971	$0.20 - $ 1.50	$	0.51
Warrants granted		1,400,000	$0.20		0.20
Warrants expired		(4,552,971)	$0.20 - $1.50	$	0.34
Warrants exercised		-
Warrants issued and exercisable at December 31, 2012		2,480,000	$0.31 - $1.25	$	0.66

The following represents additional information related to common stock warrants outstanding and exercisable at December 31, 2012:

Exercise Price		Number of Shares Under Warrants		Weighted Average Remaining Contract Life in Years		Weighted Average Exercise Price
$	0.31		210,000		1.04	$	0.31
$	0.40		25,000		1.88	$	0.40
$	0.50		350,000		1.46	$	0.50
$	0.55		1,176,750		0.91	$	0.55
$	0.85		205,000		0.60	$	0.85
$	1.00		325,750		1.07	$	1.00
$	1.10		10,000		0.10	$	1.10
$	1.25		177,500		1.16	$	1.25
			2,480,000		1.02	$	0.66

The Company used the Black-Scholes option price calculation to value the warrants granted in 2012 and 2011 using the following assumptions: an average risk-free rate of 3.08% and 3.22%; volatility of 2.6and 03.0; actual term and exercise price of warrants granted. See Note 3, Summary of Significant Accounting Policies, “Accounting for Share-Based Payments.”