General form of registration statement for all companies including face-amount certificate companies

WARRANTS

v2.4.0.8
WARRANTS
 9 Months Ended 12 Months Ended
Sep. 30, 2013
Dec. 31, 2012
Notes to Financial Statements    
Note 12. WARRANTS

The Company has the following shares of common stock reserved for the warrants outstanding as of September 30, 2013:

 

    September 30, 2013  
    Shares    

Weighted

Average

Exercise 

Price

  
Warrants outstanding – beginning of year     6,711,733     $ 0.35  
Warrants exercised     -       -  
Warrants granted     2,028,137       0.19  
Warrants expired     -       -  
                 
Warrants outstanding – end of period     8,739,870     $ 0.32  

 

The weighted exercise price and weighted fair value of the warrants granted by the Company as of September 30, 2013, are as follows:

 

    September 30, 2013  
    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      $ 0.32     $ 0.46  
                 
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   Weighted  
Range of     Outstanding at   Remaining   Average  

Exercise

Prices

    

September 30,

2013

  

Contractual

Life

  

Exercise

Price

  
                 
$ 0.33       5,588,400   15 Months   $ 0.33  
$ 0.46       600,000   26 Months   $ 0.46  
$ 0.46       150,000   31 Months   $ 0.46  
$ 0.85       40,000   29 Months   $ 0.85  
$ 0.40       333,333   29 Months   $ 0.40  
$ 0.33       515,637   55 Months   $ 0.33  
$ 0.16       875,000   57 Months   $ 0.16  
$ 0.11       637,500   58 Months   $ 0.11  
          8,739,870            

 

For the warrants issued in January 2013, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.46, exercise price of $0.33, volatility of 106.26%, years 5, treasury bond rate 2.5% and dividend rate of 0%.

 

For the warrants issued in April 2013, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.19, exercise price of $0.16, volatility of 115.70%, years 5, treasury bond rate 2.5% and dividend rate of 0%.

 

For the warrants issued in May 2013, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.11, exercise price of $0.11, volatility of 114.54%, years 5, treasury bond rate 2.5% and dividend rate of 0%.

 

The warrant expense of $383,005 was based on the Black Scholes calculation which was expensed during the nine months ended September 30, 2013.

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

 

     December 31, 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 December 31, 2012, are as follows:

 

    December 31, 2012  
   

Weighted

Average

Exercise

Price

   

Weighted

Average

Fair Value

  
             
Weighted average of warrants granted during the twelve months whose exercise price exceeded fair market value at the date of grant   $ 0.45     $ 0.26  
           
Weighted average of warrants granted during the twelve 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     September 30,     Contractual     Average  
Prices     2012     Life     Exercise Price  
$0.33       5,588,400     21 Months     $0.33  
$0.46       600,000     32 Months     $0.46  
$0.46       150,000     37 Months     $0.46  
$0.85       40,000     28 Months     $0.85  
$0.40       333,333     32 Months     $0.40  
        6,711,733              

 

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 twelve months ended December 31, 2012.