Quarterly report pursuant to Section 13 or 15(d)

Warrants

Warrants

6 Months Ended

Jun. 30, 2017

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, 2016		47,00 3,962		$	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		11,247,079
Exercised		-
Forfeited		(289,145	)
Outstanding June 30, 2017		99,322,970		$	0.28		3.20	$	5,580,549
Exercisable June 30, 2017		99,322,970		$	0.28		3.20	$	5,580,549

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 six-months ended June 30, 2017 and 2016, respectively.

Warrant expiration

During the six-months ended June 30, 2017, warrants to purchase an aggregate of 289,145 shares of restricted common stock expired.