Management has valued warrants at their date of issue utilizing the Black-Scholes option pricing model. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the warrants depending on the date of the issue and their expected life. The expected life of warrants used was based on the term of the warrant. The Company determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future. The following weighted-average assumptions were utilized in the fair value calculations for warrants granted:

	Nine Months Ended			Nine Months Ended
	September 30, 2012			September 30, 2011
Expected dividend yield		0	%		0	%
Expected stock price volatility		97-98	%		95-98	%
Risk-free interest rate		2.06-3.03	%		2.91-4.24	%
Expected life of warrants	7.6-9.9 years			8.8-9.9 years

	Number of Shares Remaining Warrants		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		1,651,250	$	5.61
Warrants granted during 2012		553,000	$	2.59
Warrants expired/cancelled during 2012		0
Outstanding at September 30,2012		2,204,250	$	4.85		8.47	$	0
Exercisable at September 30, 2012		1,950,500	$	4.18		8.37	$	0

The weighted average fair value of warrants issued during nine months ended September 30, 2012 and 2011, respectively was $2.59 and $10.00. During the nine months ended September 30, 2012 and 2011, no warrants vested, none expired or were cancelled. No warrants have been exercised for the nine months ended September 30, 2012 and 2011.