NOTE 9 – WARRANTS

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

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 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 stock based compensation expense related to warrants for the three and nine-months ended September 30, 2017 and 2016, respectively.

Warrant exercise

During the three and nine-months ended September 30, 2017, the Company issued 233,217 shares of common stock in connection with the cashless exercise of warrants for 298,000 shares of common stock at $0.10per share with 64,783 shares of common stock withheld with an aggregate fair market value equal to the aggregate exercise price.

During the three and nine-months ended September 30, 2017, the Company issued 500,000 shares of common stock in connection with the exercise of warrants for 500,000 shares of common stock at $0.08 per share in exchange for $40,000.

Warrant expiration

During the three and nine-months ended September 30, 2017, warrants to purchase an aggregate of 101,883 and 391,028 shares of restricted common stock expired.