Quarterly report pursuant to Section 13 or 15(d)

Warrants

Warrants

3 Months Ended

Mar. 31, 2016

NOTE 8 – 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, 2015		28,435,782		$	0.64		4.07	$	-
Exercisable January 1, 2015		28,435,782		$	0.64		4.07	$	-
Canceled		-
Granted		18,009,430
Exercised		-
Forfeited		-
Outstanding December 31, 2015		46,445,212		$	0.46		3.48	$	2,517,337
Exercisable December 31, 2015		46,445,212		$	0.46		3.48	$	2,517,337
Canceled		-
Granted		-
Exercised		-
Forfeited		(31,838	)
Outstanding March 31, 2016		46,413,374		$	0.46		3.23	$	2,517,337
Exercisable March 31, 2016		46,413,374		$	0.46		3.23	$	2,517,337

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 were as follows:

	March 31, 2016			December 31, 2015
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 timeframe. The expected warrant term is the life of the warrant.

The Company recognized no stock based compensation expense related to warrants for the three-months ended March 31, 2016 and 2015.

Warrant expiration

During the three-months ended March 31, 2016 and 2015, warrants to purchase an aggregate of 31,838 shares and 0 shares of restricted common stock expired, respectively.