Quarterly report pursuant to Section 13 or 15(d)

WARRANTS

v2.4.0.6
WARRANTS
 9 Months Ended
Sep. 30, 2012
Notes to Financial Statements  
Note 11. WARRANTS

The Company has the following shares of common stock reserved for the warrants outstanding as of September 30, 2012:

 

    September 30, 2012  
    Shares    

Weighted

Average

Exercise

Price

  
Warrants outstanding – beginning of year     6,188,400     $ 0.35  
Warrants exercised     -       -  
Warrants granted     523,333       0.45  
    Warrants expired     -       -  
    Warrants outstanding – end of period     6,711,733     $ 0.35  

 

The weighted exercise price and weighted fair value of the warrants granted by the Company as of September 30, 2012, are as follows:

 

    September 30, 2012  
   

Weighted

Average

Exercise

Price

    

Weighted

Average

 Fair Value

  
                 
Weighted average of warrants granted during the nine months whose exercise price exceeded fair market value at the date of grant   $ 0.45      $ 0.26  
                 
Weighted average of warrants granted during the nine months whose exercise price was equal or lower than fair market value at the date of grant   $ -     $ -  

 

The following table summarizes information about fixed-price warrants outstanding:

 

      Number    Average      
Range of     Outstanding at   Remaining   Weighted  
Exercise     March 31,   Contractual   Average  
Prices     2012   Life   Exercise Price  
$ 0.33     5,588,400   24 Months   $ 0.33  
$ 0.46     600,000   35 Months   $ 0.46  
$ 0.46     150,000   40 Months   $ 0.46  
$ 0.85     40,000   31 Months   $ 0.85  
$ 0.40     333,333   35 Months   $ 0.40  
        6,378,400            

 

For the warrants issued in January 2012, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.33, exercise price of $0.46, volatility of 35.53%, years 4, treasury bond rate 3.5% and dividend rate of 0%.

 

For the warrants issued in May 2012, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.33, exercise price of $0.85, volatility of 32.77%, years 3, treasury bond rate 3.5% and dividend rate of 0%.

 

For the warrants issued in August 2012, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.54, exercise price of $0.40, volatility of 100.43%, years 3, treasury bond rate 3.5% and dividend rate of 0%.

 

The warrant expense of $135,400 was based on the Black Scholes calculation which was expensed during the nine months ended September 30, 2012.