Quarterly report pursuant to Section 13 or 15(d)

COMMON STOCK WARRANTS

v2.4.0.8
COMMON STOCK WARRANTS
 9 Months Ended
Jun. 30, 2013
Common Stock Warrants  
COMMON STOCK WARRANTS

NOTE 5 – COMMON STOCK WARRANTS

 

For all warrants included within permanent equity, the Company has determined the estimated value of the warrants granted to non-employees in exchange for services and financing expenses using the Black-Scholes pricing model and the following assumptions: stock price at valuation, $0.63-$4.32; expected term of 3-5 years, exercise price of $1.50-$4.32, a risk free interest rate of 0.21-2.90 percent, a dividend yield of 0 percent and volatility of 114-276 percent. All warrants accounted for as a derivative liability have been valued using a Lattice Model as described in Note 2.

 

On October 30, 2012, the Company agreed to extend the term of the 3,995,122 common stock warrants issued to investors which were scheduled to expire on October 31, 2012 to April 30, 2013. The warrants were also amended to remove the cashless exercise provision and provided for the early termination of the extension period, at the sole discretion of the Company, in the event that the Company's common stock trades at or above $4.50 for 5 consecutive days. The warrants are exercisable at $3.57.

 

On March 21, 2013, the Company issued a total of 56,667 warrants with a fair market value of $232,374 for services yet to be rendered to the Company. 40,000 warrants vest equally over the next four quarters from the date of issuance. 16,667 warrants vest equally over the next two quarters from the date of issuance. As of June 30, 2013, the Company has recorded $71,514 in consulting expense related to the portion of warrants that has vested to date. The warrants are exercisable at $4.32 and are scheduled to expire in 3 to 5 years.

 

On April 18, 2013, the Company converted 2,253,531 series B warrants to amended series B warrants in connection with the exercising of 1,414,995 warrants into common stock. 326,597 Series B warrants expired. The amended series B warrants issued have the exercise price raised to $2.25 per share, and the expiration date has been extended to September 30, 2014.

 

Below is a table summarizing the warrants issued and outstanding as of June 30, 2013:

 

Date     Number     Exercise     Contractual     Expiration  
Issued     Outstanding     Price     Life (Years)     Date  
Balance 10/1/08       4,503,286       3.54       5       Various  
03/20/09       1,666,667       1.50       5       03/31/14  
06/03/09       3,722,224       0.54       5       06/03/14  
09/30/09       50,000       1.20       5       06/30/14  
Expired       —       —       —       —  
Balance 9/30/09       9,942,177       2.06       —       —  
10/09/09       29,333       1.50       5       10/29/14  
11/09/09       6,000       1.50       5       11/09/14  
12/04/09       43,333       1.80       2       12/04/11  
12/15/09       (1,861,112 )     0.54       —       —  
01/15/10       1,861,112       1.65       5       01/15/15  
01/15/10       (1,861,112 )     0.54       —       —  
04/09/10       3,333       1.65       5       4/9/2015  
07/23/10       31,000       1.50       5       07/23/15  
Expired       —       —       —       —  
Balance 9/30/10       8,194,064       2.66       —       —  
12/30/10       840,000       1.65       5       12/30/15  
05/12/11       18,333       1.50       5       05/12/16  
06/13/11       100,000       1.50       2       06/13/13  
07/15/11       33,333       1.62       5       07/15/16  
07/15/11       40,000       1.62       5       07/15/16  
08/23/11       16,667       2.01       3       08/23/14  
Expired       (363,523 )     3.57       —       —  
Balance 9/30/11       8,878,874       2.50       —       —  
12/16/11       305,559       1.95       5       12/16/16  
12/21/12       1,042       1.95       5       12/21/12  
03/03/12       116,667       1.95       5       03/03/17  
04/10/12       (14,464 )     1.80       —       —  
04/12/12       5,000       2.70       3       4/12/2015  
05/18/12       116,667       2.85       3       5/18/2015  
06/28/12       (1,766,334 )     1.65       —       —  
06/28/12       1,059,803       3.60       5       06/28/17  
07/11/12       16,667       2.85       3       07/11/15  
07/17/12       (10,000 )     1.50       —       —  
09/07/12       25,000       3.00       5       09/07/17  
Expired       (206,843 )     2.37       —       —  
Balance 9/30/12       8,527,638       2.80       —       —  
10/24/2012       (66,667 )     1.50       —       —  
3/7/2013       (6,996 )     3.57       —       —  
3/11/2013       (1,679 )     3.57       —       —  
3/21/2013       40,000       4.32       5       3/21/2018  
3/21/2013       16,667       4.32       3       3/21/2018  
3/22/2013       (3,704 )     1.65       —       —  
3/27/2013       (840,000 )     1.65       —       —  
4/18/2013       (1,406,320 )     3.57       —       —  
6/7/2013       (6,519 )     1.65       —       —  
6/14/2013       (1,000 )     1.50       —       —  
Expired       (326,597 )     3.57       —       —  
6/30/2013       5,924,823       2.26       —       —  

 

The outstanding warrants as of June 30, 2013 have an intrinsic value of approximately $31 million. For the nine months ended June 30, 2013, the Company has expensed $260,942 related to the fair value of warrants issued for services.