Quarterly report pursuant to Section 13 or 15(d)

Warrants

v3.3.0.814
Warrants
 9 Months Ended
Sep. 30, 2015
Warrants  
Warrants

NOTE 9 – 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     $ 0.45       5.28     $ -  
Exercisable January 1, 2014     3,395,833     $ 0.45       5.28     $ -  
Canceled     (3,395,833 )                        
Granted     28,435,782                          
Exercised     -                          
Forfeited     -                          
Outstanding December 31, 2014     28,435,782     $ 0.64       4.07     $ -  
Exercisable December 31, 2014     28,435,782     $ 0.64       4.07     $ -  
Canceled     -                          
Granted     13,435,342                          
Exercised     -                          
Forfeited     -                          
Outstanding September 30, 2015     41,871,124     $ 0.47       3.70     $ 4,988,991  
Exercisable September 30, 2015     41,871,124     $ 0.47       3.70     $ 4,988,991  

 

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 September 30, 2015 and December 31, 2014, were as follows:

 

    September 30, 2015     December 31, 2014  
    (Unaudited)        
Dividend yield     0.0%       0.0%  
Risk-free rate     0.12% - 0.86%       0.12% - 0.66%  
Expected volatility     102% - 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.

 

The Company recognized $0 and $4,000 in stock based compensation expense related to warrants for the three and nine-months ended September 30, 2015, respectively. The Company recognized $0 and $5,229,589, in stock based compensation expense related to warrants during the three and nine-months ended September 30, 2014, respectively.