NOTE 5 – STOCK WARRANTS

The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at June 30, 2013:

	Exercise		Number		Number			Expiration
	Price		Outstanding		Vested			Date
$	8.00		406,875			406,875		December 2013
	12.00		456,009			450,609		December 2017 to January 2018
	20.00		15,288			15,288		January 2014 to January 2015
	25.00		354,228			354,228		January 2017 to March 2019
			1,232,400			1,227,000

On January 1, 2013, the Company issued warrants to non-employees to purchase 10,800 shares of the Company's common stock at an exercise price of $12.00 per share expiring five years from the date of issuance vesting ratably over twelve months beginning January 1, 2013 in connection with services.

On April 26, 2013, the Company issued an aggregate of 38,334 shares of its common stock exchange for warrants exercised at $8.00 per share.

The Company measures the fair value of the vested portion of the issued warrants based on a Binomial option pricing model using certain assumptions discussed in the following paragraph, and the closing market price of the Company's common stock on the date of the fair value determination.

The assumptions used in the valuation of warrants, which vested during the three months ended June 30, 2013, were as follows:

Risk-free interest rate			0.66	%
Life of warrant			4.5 years
Expected stock price volatility			96.30	%
Expected dividend yield		$	0.0

 

The risk-free interest rate is based on the yield of Daily U.S. Treasury Yield Curve Rates with terms equal to the life of the warrants as of the grant date. The expected stock price volatility is based on comparable companies’ historical stock price volatility since the Company does not have sufficient historical exercise data because its equity shares have been publicly traded for only a limited period of time.

Compensation of $13,638 and $24,073 related to vested warrants was recognized for the three and six month periods ended June 30, 2013, respectively.

As of June 30, 2013, unrecognized compensation related to unvested warrants based on the market price of the Company’s common stock on such date was $27,275.