Quarterly report pursuant to Section 13 or 15(d)

Warrants

v3.7.0.1
Warrants
 3 Months Ended
Mar. 31, 2017
Warrants  
Warrants

NOTE 9 – WARRANTS

 

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

 

                Weighted average        
         

Weighted

average

     remaining contractual    

Aggregate

intrinsic

  
    Warrants     exercise price     term in years     value  
Outstanding January 1, 2016     47,003,962     $ 0.46       3.49     $ 2,579,541  
Exercisable January 1, 2016     47,003,962     $ 0.46       3.49     $ 2,579,541  
Canceled     -                          
Granted     42,037,500                          
Exercised     -                          
Forfeited     (676,426 )                        
Outstanding December 31, 2016     88,365,036     $ 0.30       3.50     $ 543,770  
Exercisable December 31, 2016     88,365,036     $ 0.30       3.50     $ 543,770  
Canceled     -                          
Granted     7,129,166                          
Exercised     -                          
Forfeited     (289,145 )                        
Outstanding March 31, 2017     95,205,057     $ 0.28       3.38     $ 4,329,366  
Exercisable March 31, 2017     95,205,057     $ 0.28       3.38     $ 4,329,366  

 

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 as of:

 

    March 31, 2017     December 31, 2016  
    (Unaudited)        
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.12% - 0.86 %     0.12% - 0.86 %
Expected volatility     102% - 159 %     102% - 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 did not recognize any in stock based compensation expense related to warrants for the three-months ended March 31, 2017 and 2016, respectively.

 

Warrant expiration

 

During the three-months ended March 31, 2017, warrants to purchase an aggregate of 289,145 shares of restricted common stock expired.