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6. Outstanding Warrants

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

6. Outstanding Warrants

6. Outstanding Warrants

For the three and nine months ended September 30, 2012, the Company issued 0 and 1,370,000 common stock warrants, respectively, which have the potential to enhance returns for accredited investors who enter additional Notes and Warrant Purchase Agreements with accredited investors and a related party. The accredited investors received 5-year warrants exercisable at $0.001 per share.

For the three and nine months ended September 30, 2012, Note investors exercised 833,333 and 1,236,667 warrant shares, respectively, both groups of exercised shares had a weighted average exercise price of $0.001 per share.

For the three and nine months ended September 30, 2012, 6,125 and 392,479 warrants for Series B Preferred stock expired, respectively, both groups of expired shares had a weighted average exercise price of $3.00 per share.

A summary of warrant activity for the nine months ended September 30, 2012 is as follows:

Preferred Stock		Warrants Issued & Outstanding				Weighted - Average Exercise Price				Warrants Issued & Exercisable				Average Remaining Term in Years
Outstanding December 31, 2011			392,479			$	3.000				392,479				0.25
Expired			(363,282	)			3.000				(363,282	)			—
Outstanding March 31, 2012			29,197				3.000				29,197				0.27
Expired			(23,072	)			3.000				(23,072	)			—
Outstanding June 30, 2012			6,125				3.000				6,125				0.13
Expired			(6,125	)			3.000				(6,125	)			—
Outstanding September 30, 2012			—			$	—				—				—


Common Stock			Warrants Issued & Outstanding				Weighted - Average Exercise Price				Warrants Issued & Exercisable				Average Remaining Term in Years
Outstanding December 31, 2011			1,428,590			$	0.790				1,428,590				3.34
Expired			(5,000	)			3.000				(5,000	)			—
Granted			1,000,000				0.001				1,000,000				—
Exercised			(166,667	)			0.001				(166,667	)			—
Outstanding March 31, 2012			2,256,923				0.220				2,256,923				3.56
Granted			370,000				0.001				370,000				—
Exercised			(236,667	)			0.001				(236,667	)			—
Outstanding June 30, 2012			2,390,256				0.200				2,390,256				3.40
Exercised			(833,333	)			0.001				(833,333	)			—
Outstanding September 30, 2012			1,556,923			$	0.310				1,556,923				2.80

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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