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12. Shareholders' Deficit (Tables)
 6 Months Ended
Jun. 30, 2012
Shareholders Deficit Tables  
Stock Options- Assumptions

 The following assumptions were used for the Black Scholes calculation to determine this expense:

 

Estimated fair value of underlying common stock     $0.35  
Remaining life     5.0  
Risk-free interest rate     0.69%  
Expected volatility     80%  
Dividend yield     –  

 

 
Stock Options - Activity

The following table sets forth the activity of our stock options:

 

      Options Outstanding        Options Exercisable 
      Options Outstanding       Range of Exercise Prices       Weighted Average Remaining Life in Years       Weighted Average Exercise Price       Options Exercisable       Weighted Average Remaining Life in Years       Weighted Average Exercise Price  
As of December 31, 2010     10,269,852       $0.14 - $3.50       2.4     $ 0.94       8,512,684       2.0     $ 0.94  
Cancelled     (3,110,000 )     –       –     $ 0.43       (3,110,000 )     –     $ 0.00  
Exercised                                                        
Granted     5,010,000       $0.54       5.0     $ 0.54       3,355,000       5.0     $ 0.54  
As of December 31, 2011     12,169,852       $0.14 - $1.50       3.2     $ 0.49       8,757,684       3.2     $ 0.40  
Cancelled     (7,376,329 )     –       –       –       (4,660,994 )     –       –  
Exercised     –       –       –       –       –       –       –  
Granted     2,300,000       $0.35       5.0     $ 0.35       –       –       –  
As of June 30, 2012     7,093,523        $0.35 -$0.54       3.7     $ 0.47       4,096,690       2.8     $ 0.52  

 

 
Warrants -Assumptions

The following assumptions were used for the Black Scholes calculation to determine this expense:

 

Estimated fair value of underlying common stock     $0.55  
Remaining life     5.0  
Risk-free interest rate     0.74%  
Expected volatility     84%  
Dividend yield     –  

 

 
Warrants - Summary

A summary of the warrants:

 

       Warrants Outstanding         Warrants Exercisable 
      Warrants Outstanding       Range of Exercise Prices       Weighted Average Remaining Life in Years       Weighted Average Exercise Price       Warrants Exercisable       Weighted Average Remaining Life in Years       Weighted Average Exercise Price  
As of December 31, 2010     2,472,676       $1.00 - $2.00       4.4     $ 1.37       2,472,676       4.4     $ 1.37  
Exercised     –       –       –       –       –       –       –  
Granted     57,057,569       $0.65 - $1.00       4.5     $ 0.75       57,057,569       4.5     $ 0.75  
As of December 31, 2011     59,530,245       $0.65 - $2.00       3.5     $ 2.00       59,530,245       3.5     $ 2.00  
Exercised     –       –       –       –       –       –       –  
Ratchet-down impact     56,991,667       $0.30       –     $ 0.30       56,991,667       –     $ 0.30  
Granted     3,833,330       $0.30 - $0.40       4.9     $ 0.32       3,000,000       4.9     $ 0.32  
As of June 30, 2012     120,355,242       $0.30 - $2.00       3.9     $ 0.40       119,521,912       3.9     $ 0.40

  

 
Calculations of the ratchet-down impact

Calculations of the ratchet-down impact:

 

       Original    After Ratchet Down  
      Shares  x       Strike  =      

Aggregate Exercise

Price

       Shares  x       Strike  =       Aggregate Exercise
Price		  
                                                 
Series A warrants     21,750,000     $ 0.65     $ 14,137,500       47,125,000     $ 0.30     $ 14,137,500  
Series B warrants     10,875,000     $ 1.00     $ 10,875,000       36,250,000     $ 0.30     $ 10,875,000  
Placement agent warrant     3,600,000     $ 0.65     $ 2,340,000       7,800,000     $ 0.30     $ 2,340,000  
Broker-dealer warrant     1,000,000     $ 0.65     $ 650,000       2,166,667     $ 0.30     $ 650,000  
Advisory warrant     750,000     $ 0.65     $ 487,500       1,625,000     $ 0.30     $ 487,500  
      37,975,000                       94,966,667                  
                                                 
 Additional warrants from ratchet-down         56,991,667