Quarterly report pursuant to Section 13 or 15(d)

Warrants

v3.5.0.2
Warrants
9 Months Ended
Sep. 30, 2016
Warrants [Abstract]  
WARRANTS
10.   WARRANTS

 

On October 29, 2015, a 1:40 reverse split of the Company stock occurred and the effect has been applied retroactively for disclosure purposes. 

 

On April 27, 2016, under the 2015 Equity Plan, the Company issued warrants to purchase 60,000 shares of the Company's common stock to four consultants for services provided. These warrants immediately vested and were granted with an exercise price of $2.91, which was the closing price of the Company’s common stock on the grant date, and expiration date of April 27, 2019. 

 

The Company used the Black-Scholes warrant pricing model to estimate the fair value on the vesting date of the 60,000 warrants granted during the nine months ended September 30, 2016.

 

The following table summarizes the assumptions used to estimate the fair value of the 60,000 warrants granted during the nine month ended September 30, 2016 on the date of vesting.

 

      2016  
         
  Expected dividend yield     0 %
  Expected volatility     108 %
  Risk-free interest rate     0.99 %
  Expected life of warrants     3.0 years  

  

Under the Black-Scholes warrant pricing model, fair value of the 60,000 warrants granted during the nine months ended September 30, 2016 is estimated at $114,779 on the date of vesting. During the nine months ended September 30, 2016, $114,779 compensation expense was recognized on these 60,000 warrants.

 

For the year 2015, 52,500 common stock purchase warrants were granted to two consultants and a vendor for service provided. One consultant was granted 25,000 warrants with exercise price of $10.00, vesting over two years and the expiration date is June 16, 2018. The other consultant was granted 12,500 warrants with exercise price of $10.00, vesting over one year and the expiration date is June 25, 2018. These same two consultants and the vendor each received 5,000 warrants with an exercise price of $5.00, immediately vested and an expiration date of December 10, 2018.

 

The Company used the Black-Scholes warrant pricing model to estimate the fair value on the re-measurement dates of the 30,000 warrants that continue to vest during the nine months ended September 30, 2016.

 

The following table summarizes the assumptions used to estimate the fair value of the 30,000 warrants granted during 2015 as of re-measurement dates:

 

      2016  
         
  Expected dividend yield     0 %
  Expected volatility     105 - 108 %
  Risk-free interest rate     0.73 %
  Expected life of warrants     1.69 – 2.04 years  

  

Under the Black-Scholes warrant pricing model, fair value of the 30,000 warrants granted during 2015 is estimated at $25,108 as of re-measurement dates. During the nine months ended September 30, 2016, $4,985 compensation expense was recognized on these 30,000 warrants. 

 

The following table represents warrant activity as of and for the period ended September 30, 2016:

 

      Number of Warrants     Weighted
Average
Exercise
Price per
Share
    Weighted
Average
Contractual
Life in
Years
    Aggregate
Intrinsic
Value
 
  Outstanding – December 31, 2015     134,209     $ 23.87       3.66          
  Exercisable – December 31, 2015     104,209     $ 27.87       4.01     $ 0  
  Granted     60,000     $ 2.91                  
  Forfeited or Expired     (80 )   $ 404.49                  
  Outstanding – September 30, 2016     194,129     $ 17.24       2.81     $ 0  
  Exercisable – September 30, 2016     181,629     $ 17.73       2.89     $ 28,800