Quarterly report pursuant to Section 13 or 15(d)

WARRANTS

v2.4.0.6
WARRANTS
6 Months Ended
Jun. 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 June 30, 2012:

 

    June 30, 2012  
          Weighted  
          Average  
          Exercise  
    Shares     Price  
Warrants outstanding – beginning of year     6,188,400     $ 0.35  
Warrants exercised     -       -  
Warrants granted     190,000       0.54  
Warrants expired     -       -  
                 
Warrants outstanding – end of period     6,378,400     $ 0.35  

   

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

 

    June 30, 2012  
    Weighted        
    Average     Weighted  
    Exercise     Average  
    Price     Fair Value  
Weighted average of warrants granted during the            
six months whose exercise price exceeded fair market            
value at the date of grant   $ 0.54     $ 0.26  
                 
Weighted average of warrants granted during the                
six 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     June 30,   Contractual   Average  
Prices     2012   Life   Exercise Price  
$ 0.33       5,588,400   27 Months   $ 0.33  
$ 0.46       600,000   38 Months   $ 0.46  
$ 0.46       150,000   43 Months   $ 0.46  
$ 0.85       40,000   34 Months   $ 0.85  
          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%.

 

The warrant expense of $15,400 was based on the Black Scholes calculation which was expensed during the six months ended June 30, 2012.