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Note 6 - Stockholders' Equity
 12 Months Ended
Dec. 31, 2011
Stockholders' Equity Note Disclosure [Text Block]

Note 6 – Stockholders’ Equity


Warrants


In 2008, the Company issued warrants to purchase 250,000 and 50,000 unregistered shares of the Company’s common stock at exercise prices of $1.50 and $2.30 per share, respectively. The warrants expired on various dates through November 2011. At December 31, 2011, 218,500 of these warrants had expired and 81,500 were exercised.


During March through December 2010, the Company issued warrants to purchase 439,999 unregistered shares of the Company’s common stock at an exercise price of $0.75 per share in association with stock subscription agreements. These warrants expire on various dates through December 2013. As of December 31, 2011, none of these warrants were exercised or had expired.


During January through December 2011, the Company issued warrants to purchase 2,000,000 unregistered shares of the Company’s common stock at an exercise price of $0.75 per share in association with stock subscription agreements. These warrants expire on various dates through June 2014. As of December 31, 2011, none of these warrants were exercised or had expired.


The Company issued warrants on June 3, 2011 to various persons, including affiliates of the Company, for services provided to the Company. These warrants covered the purchase of 1,855,000 unregistered shares of the Company’s stock at an exercise price of $1.05 per share with a five-year term. These share-based payments have been accounted for in accordance with ASC 815-40 using the Black Scholes warrant pricing model to determine the fair value of each warrant.


Expenses related to warrants issued for services for the years ended December 31, 2011 and 2010 were $612,150 and $0, respectively.


A summary of warrants issued, exercised and expired during the year ended December 31, 2011 is as follows:


    Shares     Weighted Average Exercise Price  
                 
Balance at December 31, 2010     739,999       1.11  
Issued     3,855,000       .89  
Exercised     (81,500 )     1.50  
Expired     (218,500 )     1.68  
Balance at December 3, 2011     4,294,999       0.88  

The weighted average grant date fair value of warrants issued during the year ended December 31, 2011 amounted to $1.02 per warrant. The fair value of each warrant granted as compensation for services was determined using the Black-Scholes warrant pricing model and the following assumptions:


    December 31, 2011  
Risk free interest rate     1.59 %
Expected term     5.0 years  
Annualized volatility     131 %
Expected dividends     —  

The expected term of warrants granted is based on the contractural terms of the agreement and represents the period of time that warrants granted are expected to be outstanding.


The warrant shares referred to above are unregistered shares of the Company’s stock and are restricted from trading as defined under Rule 144 of the United States Securities Act of 1933.


Private Placement of Common Stock


During January through June 2011, the Company raised $1,500,000 through the private placement of 2,000,000 shares of its common stock to accredited investors at $0.75 per share. Each investor received a three-year warrant to purchase unregistered stock at $0.75 per share for a number of shares of common stock equal to the number of shares purchased by the investor in this offering. On January 31, 2011, the Company entered into a Binding Letter of Intent for European Distribution (the “BLOI”) with Newton Investments BV, a Dutch corporation based in Leeuwarden, Netherlands (“Newton”), as disclosed in Note 8, below. The $1,500,000 referred to above includes a $250,000 investment purchased by a Newton affiliate in conjunction with the Newton BLOI.


In February 2012, the Company raised gross proceeds of $500,000 through the private placement of 500,000 shares of its common stock to accredited investors at $1.00 per share. The private placement was undertaken pursuant to the Agreement between the Company and Newton, as disclosed in Note 8, below.


Treasury Shares


On April 7, 2011, 4,500,000 shares of the Company’s stock were surrendered to Treasury in exchange for a $200,000 interest-free note payable in April 2013. See Note 8 - Commitments. The note payable is reported as note payable to related party on the accompanying consolidated balance sheets. In accordance with GAAP, the Company has discounted this obligation at an imputed rate of 8%. The balance at December 31, 2011 was $180,988.


Preferred Shares


The Company has 50,000,000 shares of authorized, $0.0001 par value preferred stock. At December 31, 2011 and 2010, no shares had been issued.