Quarterly report pursuant to Section 13 or 15(d)

WARRANTS

v2.4.0.6
WARRANTS
 3 Months Ended
Mar. 31, 2012
Notes to Financial Statements  
Note 11. WARRANTS

The Company has the following shares of common stock reserved for the warrants outstanding as of March 31, 2012:

  

    March 31, 2012  
    Shares     Weighted Average Exercise Price  
Warrants outstanding – beginning of year     6,188,400     $ 0.35  
Warrants exercised     -       -  
Warrants granted     150,000       0.46  
Warrants expired     -       -  
                 
Warrants outstanding – end of period     6,338,400     $ 0.35  

 

The weighted exercise price and weighted fair value of the warrants granted by the Company as of March 31, 2012, are as follows:

 

    March 31, 2012  
    Weighted Average Exercise Price     Weighted Average Fair Value  
Weighted average of warrants granted during the quarter whose exercise price exceeded fair market value at the date of grant   $ 0.33     $ 0.46  
                 
Weighted average of warrants granted during the quarter 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   30 Months   $ 0.33  
$ 0.46       600,000   41 Months   $ 0.46  
$ 0.46       150,000   46 Months   $ 0.46  
          6,338,400            

  

For the warrants issued in January 2012, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $2.00, exercise price of $2.75, volatility of 35.53%, years 4, treasury bond rate 3.5% and dividend rate of 0%.

 

The warrant expense of $15,000 was based on the Black Scholes calculation which was expensed during the three months ended March 31, 2012.