Quarterly report pursuant to Section 13 or 15(d)


6 Months Ended
Jun. 30, 2018
Notes to Financial Statements  
Note 12 - Warrants

Unless sold and issued warrants are subject to the provisions of FASB ASC 815-10, the Company utilized a Black-Scholes options pricing model to value the warrants sold and issued. This model requires the input of highly subjective assumptions such as the expected stock price volatility and the expected period until the warrants are exercised. When calculating the value of warrants issued, the Company uses a volatility factor of 100%, a risk free interest rate and the life of the warrant for the exercise period. When sold and issued warrants were valued in accordance with FASB ASC 815-10, the fair value was determined using a Monte Carlo Simulation Model.


On June 15, 2018, the Company issued unsecured convertible notes and warrants to unaffiliated accredited investors totaling $560,000 in exchange for outstanding secured convertible notes payable. The notes are convertible into one share of common stock, with the initial conversion ratio equal to $0.50 per share. The investors received a total of 560,000 warrants to purchase one shares of common stock with an exercise price of $0.70 per share. These securities were sold in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act and the safe harbor of Rule 506 under Regulation D promulgated under the Securities Act, as well as under Section 3(a)(9) under the Securities Act. Using a Black-Sholes Valuation model these warrants had a value of $89,450 which was recorded as a discount on the notes payable and will be amortized over the life of the associated notes payable.


The following table summarizes information about common stock warrants outstanding at June 30, 2018:


Outstanding     Exercisable  
Exercise Price     Number Outstanding    

Weighted Average

Remaining Contractual

Life (years)


Weighted Average

Exercise Price

    Number Exercisable    

Weighted Average

Exercise Price

$ 1.25       13,950       0.50       1.25       13,950       1.25  
  0.87       1,303,300       1.11       0.87       1,303,300       0.87  
  0.75       683,415       0.55       0.65       683,415       0.65  
  0.65       515,000       0.58       0.65       515,000       0.50  
  0.50       560,000       4.96       0.50       560,000       0.50  
  0.45       150,000       2.67       0.45       150,000       0.45  
  0.35       4,572,098 *     1.19       0.35       4,572,098       0.35  
$ 0.50 - $3.30       7,797,763       1.35               7,797,763          


Note * 916,720 warrants exercisable at $0.35 contain dilution protections that increase the number of shares purchasable at exercise upon the issuance of securities at a price below the current exercise price.