Warrants

12 Months Ended

Dec. 31, 2013

10. WARRANTS:

In March, 2007, the Company’s placement agent was issued warrants to purchase 1,342,500 shares of the Company’s common stock. These warrants were due to expire on January 31, 2013, but were extended on the condition that each warrant holder accept a new exercise price of $1.35 per share. Currently, these warrants are scheduled to expire on January 31, 2018 and are currently exercisable at the original price of $1.10 per share. The following information was input into BSM to compute a per warrant price of $.023:

Exercise price	$	1.10
Term	7 years
Volatility		40%
Dividends		0	%
Discount rate		.05	%

For the year ended December 31, 2013, the Company recorded compensation expense of $1,916 related to the issuance of these warrants.

On December 7, 2009, the Company received gross proceeds of $500,002 from the sale of 500,002 shares of common stock and ten year warrants to purchase 2,000,004 shares of common stock exercisable at $1.00 per share. BSM was used to compute the fair value of the warrants.

The following table summarizes information about stock warrants as of December 31, 2013:

				Weighted Average
Exercise		Number		Remaining	Number
Price		Outstanding		Contractual Life	Exercisable

$	1.10		1,342,500	1 Month		1,342,500
$	1.00		2,000,004	7 years		2,000,004