Quarterly report pursuant to Section 13 or 15(d)

Warrants

v2.4.1.9
Warrants
 3 Months Ended
Mar. 31, 2015
Warrants  
Warrants

NOTE 10 – WARRANTS

 

The following is a summary of the Company’s warrant activity:

 

    Warrants     Weighted
average
exercise price 		    Weighted
average
remaining
contractual
term in years 		    Aggregate
intrinsic
value 		 
Outstanding January 1, 2014     3,395,833     $ 0.450       5.28     $ -  
Exercisable January 1, 2014     3,395,833     $ 0.450       5.28     $ -  
Canceled     (3,395,833 )                        
Granted     28,435,782                          
Exercised     -                          
Forfeited     -                          
Outstanding December 31, 2014     28,435,782     $ 0.643       4.07     $ -  
Exercisable December 31, 2014     28,435,782     $ 0.643       4.07     $ -  
Canceled     -                          
Granted     3,345,828     $ 0.118       5.00          
Exercised     -                          
Forfeited     -                          
Outstanding March 31, 2015     31,781,610     $ 0.588       3.95     $ 675,218  
Exercisable March 31, 2015     31,781,610     $ 0.588       3.95     $ 675,218  

 

Under ASC No. 718, the Company estimates the fair value of warrants granted on each grant date using the Black-Scholes option valuation model. The fair value of warrants issued with debt is recorded as a debt discount and amortized over the life of the debt. The range of fair value assumptions related to warrants outstanding as of March 31, 2015 and December 31, 2014, were as follows:

 

    March 31, 2015     December 31, 2014  
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.12% - 0.66 %     0.12% - 0.66 %
Expected volatility     112% - 159 %     112% - 159 %
Expected term      1.0 - 2.5 years        1.0 - 2.5 years  

 

The expected volatility was calculated based on the historical volatilities of publicly traded peer companies, determined by the Company. The risk free interest rate used was based on the U.S. Treasury constant maturity rate in effect at the time of grant for the expected term of the warrants to be valued. The expected dividend yield was zero, as the Company does not anticipate paying a dividend within the relevant time frame. The expected warrant term is the life of the warrant.

 

On November 10, 2014, the Company issued a warrant to purchase 30,000 shares of common stock and modified the terms of a warrant to purchase 300,000 shares of common stock.