Quarterly report pursuant to Section 13 or 15(d)

Warrants

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Warrants
9 Months Ended
Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Warrants

NOTE 16 – WARRANTS

 

Fair value of warrants is generally based on independent sources such as quoted market prices or dealer price quotations. To the extent certain financial instruments trade infrequently or are non-marketable securities, they may not have readily determinable fair values. The Company estimated the fair value of the warrants using a Black-Scholes option pricing model and available information that management deems most relevant. The stock price is the closing price of the Company’s stock on the valuation date; the risk free interest rate is based on the U.S. Government Securities average rate for 1 and 2 year maturities on the date of issuance; the volatility is a statistical measure (standard deviation) of the tendency of the Company’s stock price to change over time; the exercise price is the price at which the warrants can be purchased by exercising prior to its expiration; the dividend yield is not applicable due to the Company not intending to declare dividends; the contractual life is based on the average exercise period of the warrants; and the fair market value is value of the warrants based on the Black-Scholes model on the valuation date.

 

In April 2015, a convertible debt holder notified the Company of their intention to exercise their warrant exercisable into 199,396 at a price determined by a formula which resulted in the Company issuing 3,647,023 shares of the Company’s common stock to the convertible debt holder.

 

On September 18, 2015, a convertible debt holder notified the Company of their intention to exercise their warrant for 71,342 exercise shares as defined in the warrant at a price determined by a formula defined in the warrant which resulted in the Company issuing 20,800,157 shares of the Company’s common stock to the Lender.

 

In connection with the various agreements with an investment advisor (See Note 18) and in settlement of various disputes between the Company and the investment advisor, between May 1, and May 12, 2015, the Company issued warrants to purchase 522,983 shares of the Company’s common stock at a price of $0.40 per share with a term of five years from the date of the original investments by investors which came to the Company through this investment advisor in August through October 2014. The warrants were made effective as of those dates of investments. None of the warrants have been exercised at September 30, 2015.

 

The following represents a summary of the warrants outstanding at September 30, 2015 and December 31, 2014 and changes during the periods then ended:

 

    Warrants     Weighted
Average Exercise
Price
 
Outstanding, December 31, 2013     9,106,000     $ 0.42  
Granted     722,472       0.65  
Warrants exchanged for common stock     (135,932 )     (0.05 )
Outstanding, December 31, 2014     9,692,540     $ 0.44  
Granted     522,983       0.04  
Warrants exchanged for common stock     (199,396 )     (0.40 )
Outstanding, June 30, 2015     10,016,127     $ 0.45  
Warrants exchanged for common stock     (71,342 )     (0.40 )
Outstanding, September 30, 2015     9,944,785     $ 0.45