Note 11:  Warrants

The Company has warrants outstanding to purchase up to 5,768,452 and 5,852,060 shares of our common stock at June 30, 2013 and December 31, 2012, respectively.

In connection with the sale of shares of its common stock in 2010 the Company issued warrants to purchase a total of 471,108 shares of its common stock at $0.40 per share exercisable for a three-year period. As of June 30, 2013, 83,608 of these warrants have expired.

 Warrants to purchase up to 5,380,952 shares of common stock were issued on June 27, 2012 to various holders as part of the debenture disclosed on the Form 8-K filed by the Company on July 3, 2012. These warrants have an exercise price of $0.33 and will expire on June 27, 2017.  All common stock underlying the warrants will be restricted when issued. See Note 4: Notes Payable for additional information regarding the issuance of these warrants.

Either the exercise price or the number of shares purchasable under the warrant may be adjusted in the event of any split of the common stock, reclassification, capital reorganization or change in the outstanding common stock, or declaration of a common stock dividend.  In the event of any such adjustment, the Company will notify the holders of the warrants of the exercise price and number of shares purchasable under the warrant following adjustment, the facts requiring the adjustment and the method of calculation of any increase or decrease in price or purchasable shares. No adjustment will be required, however, unless the adjustment would require an increase or decrease in the exercise price of at least 1%.

The following schedule summarizes the changes in the Company’s warrants during the six months ended June 30, 2013:

The following schedule summarizes the outstanding warrants at June 30, 2013: