| Note 10. WARRANTS |
The Company uses valuation methods and assumptions
that consider among other factors the fair value of the underlying stock, risk-free interest rate, volatility, expected life and
dividend rates in estimating fair value for the warrants considered to be derivative instruments. The following assumptions
were utilized by the Company:
| |
|
2011 |
|
|
2010 |
|
| Risk-free interest rate |
|
|
3.36% -3.75 |
% |
|
|
2.58% -3.71 |
% |
| Expected dividend yield |
|
|
— |
|
|
|
— |
|
| Expected term (contractual term) |
|
2 years |
|
|
2 - 5 years |
|
| Forfeiture rate |
|
|
0 |
% |
|
|
0 |
% |
| Expected volatility |
|
|
142 |
% |
|
|
141% - 150 |
% |
Expected volatilities are based on historical
volatility of the Common Stock using historical periods consistent with the expected term of the warrant. The risk-free rate is
based on the yield of a U.S. Treasury security with a term consistent with the warrant.
In the years ended December 31, 2011 and 2010,
the Company issued warrants with a fair value of approximately $11,191,000 and $617,000, respectively. Included in the
warrant fair value are warrants with a fair value of approximately $41,000 and $469,000 recorded as a debit and credit to additional
paid-in capital as stock issuance costs related to the 2011 and 2010 financings, respectively (see Note 8). The warrants
issued in the years ended December 31, 2011 and 2010 generally have a term of 2 to 5 years, a non-redeemable feature, and a cashless
exercise provision. Certain warrants have a standard weighted average anti-dilution protection and piggy back registration rights.
At December 31, 2011,
the Company had the following outstanding warrants:
| |
|
Number of |
|
|
|
|
|
| |
|
Shares |
|
|
Exercise |
|
Date of |
| |
|
Exercisable |
|
|
Price |
|
Expiration |
| Outstanding warrants accounted for as derivative warrant liability: |
|
|
|
|
|
|
|
| Granted to investors and placement agent in private placement |
|
|
320,703 |
|
|
$ |
1.28 |
|
6/15-7/16/2012 |
| Granted to financial investment advisor |
|
|
3,000 |
|
|
$ |
1.38 |
|
7/25/2012 |
| Granted to financial advisor in connection with an acquisition |
|
|
61,625 |
|
|
$ |
1.75 |
|
9/14/2012 |
| Granted to financial investment advisor |
|
|
7,500 |
|
|
$ |
1.30 |
|
2/11/2013 |
| Granted to investors in private placement |
|
|
154,990 |
|
|
$ |
0.50 |
|
2/11/2013 |
| Granted to investors in private placement |
|
|
177,324 |
|
|
$ |
1.50 |
|
3/24/2013 |
| Total outstanding warrants accounted for as derivative warrant liability |
|
|
725,142 |
|
|
|
|
|
|
| Weighted average exercise price |
|
|
|
|
|
$ |
1.21 |
|
|
| Weighted average time to expiration in years |
|
|
|
|
|
|
|
|
0.84 years |
|
Outstanding warrants accounted for as equity: |
|
|
|
|
|
|
|
|
|
| Granted to investors in private placement of preferred stock |
|
|
32,249 |
|
|
$ |
1.00 |
|
9/30/2013 |
| Granted to investors in private placement of preferred stock |
|
|
198,333 |
|
|
$ |
1.50 |
|
10/28/2013 |
| Granted to investors in private placement of preferred stock |
|
|
70,000 |
|
|
$ |
0.75 |
|
10/31/2013 |
| Granted to investors in private placement of preferred stock |
|
|
390,000 |
|
|
$ |
0.75 |
|
2/28/2014 |
| Granted to vendor |
|
|
50,000 |
|
|
$ |
0.70 |
|
3/2/2012 |
| Granted to vendor |
|
|
60,000 |
|
|
$ |
0.60 |
|
3/15/2014 |
| Granted to investors in private placement |
|
|
400,000 |
|
|
$ |
1.59 |
|
6/30/2014 |
| Granted to investors in private placement |
|
|
768,000 |
|
|
$ |
2.00 |
|
11/13/2014 |
| Granted to placement agent in private placement |
|
|
256,906 |
|
|
$ |
1.50 |
|
11/13/2014 |
| Granted to vendor |
|
|
50,000 |
|
|
$ |
2.00 |
|
12/1/2012 |
| Granted to investors in private placement |
|
|
63,000 |
|
|
$ |
2.00 |
|
12/3/2014 |
| Granted to investors in private placement |
|
|
341,325 |
|
|
$ |
2.25 |
|
2/9/2015 |
| Granted to placement agents in private placement |
|
|
28,500 |
|
|
$ |
2.25 |
|
2/9/2015 |
| Granted to investor in private placement |
|
|
6,375 |
|
|
$ |
2.25 |
|
3/18/2015 |
| Granted to financial investment advisor |
|
|
100,000 |
|
|
$ |
1.50 |
|
2/10/2013 |
| Granted to financial investment advisor |
|
|
10,367 |
|
|
$ |
2.00 |
|
3/3/2013 |
| Granted to investors in private placement |
|
|
187,500 |
|
|
$ |
1.50 |
|
11/5/2012 |
| Granted to investors in private placement |
|
|
187,500 |
|
|
$ |
2.50 |
|
11/5/2012 |
| Granted to placement agent in private placement |
|
|
5,000 |
|
|
$ |
1.50 |
|
11/5/2012 |
| Granted to placement agent in private placement |
|
|
5,000 |
|
|
$ |
2.50 |
|
11/5/2012 |
| Granted to investors in private placement |
|
|
35,000 |
|
|
$ |
1.50 |
|
11/26/2012 |
| Granted to investors in private placement |
|
|
35,000 |
|
|
$ |
2.50 |
|
11/26/2012 |
| Granted to investors in private placement |
|
|
495,000 |
|
|
$ |
1.50 |
|
12/29/2012 |
| Granted to investors in private placement |
|
|
512,500 |
|
|
$ |
2.50 |
|
12/29/2012 |
| Granted to placement agent in private placement |
|
|
30,000 |
|
|
$ |
1.50 |
|
12/29/2012 |
| Granted to placement agent in private placement |
|
|
30,000 |
|
|
$ |
2.50 |
|
12/29/2012 |
| Granted to investors in private placement |
|
|
245,750 |
|
|
$ |
1.50 |
|
1/4/2013 |
| Granted to investors in private placement |
|
|
245,750 |
|
|
$ |
2.50 |
|
1/4/2013 |
| Granted to placement agent in private placement |
|
|
18,125 |
|
|
$ |
1.50 |
|
1/4/2013 |
| Granted to placement agent in private placement |
|
|
18,125 |
|
|
$ |
2.50 |
|
1/4/2013 |
| Granted to investors in private placement |
|
|
255,000 |
|
|
$ |
1.50 |
|
2/3/2013 |
| Granted to investors in private placement |
|
|
280,000 |
|
|
$ |
2.50 |
|
2/3/2013 |
| Granted to placement agent in private placement |
|
|
1,250 |
|
|
$ |
1.50 |
|
2/3/2013 |
| Granted to placement agent in private placement |
|
|
1,250 |
|
|
$ |
2.50 |
|
2/3/2013 |
| Granted to investors in private placement |
|
|
250,000 |
|
|
$ |
1.50 |
|
2/8/2013 |
| Granted to investors in private placement |
|
|
250,000 |
|
|
$ |
2.50 |
|
2/8/2013 |
| Granted to investors in private placement |
|
|
959,582 |
|
|
$ |
3.00 |
|
12/7/2014 |
| Total outstanding warrants accounted for as equity |
|
|
6,802,387 |
|
|
|
|
|
|
| Weighted average exercise price |
|
|
|
|
|
$ |
1.99 |
|
|
| Weighted average time to expiration in years |
|
|
|
|
|
|
|
|
1.22 years |
| |
|
|
|
|
|
|
|
|
|
| Totals for all warrants outstanding: |
|
|
|
|
|
|
|
|
|
| Total |
|
|
7,527,529 |
|
|
|
|
|
|
| Weighted average exercise price |
|
|
|
|
|
$ |
1.92 |
|
|
| Weighted average time to expiration in years |
|
|
|
|
|
|
|
|
1.19 years |
A summary of warrant activity in the year ended
December 31, 2011 is as follows:
|
Warrants |
|
Shares |
|
|
Weighted-
Average
Exercise Price |
|
| Outstanding at January 1, 2011 |
|
|
10,336,292 |
|
|
$ |
1.82 |
|
| Granted |
|
|
5,702,835 |
|
|
$ |
2.17 |
|
| Exercised |
|
|
(8,034,768 |
) |
|
$ |
1.16 |
|
| Forfeited or expired |
|
|
(476,830 |
) |
|
$ |
5.80 |
|
| Outstanding at December 31, 2011 |
|
|
7,527,529 |
|
|
$ |
1.92 |
|
|