NOTE 7: WARRANTS

Below is a table summarizing the Company’s outstanding warrants as of June 30, 2015 and December 31, 2014:

	Number of Warrants	Wtd Avg. Exercise Price		Wtd Avg. Remaining Term	Exercisable	Intrinsic Value of Exercisable Warrants
Outstanding at December 31, 2014	16,527,990	$	0.44	3.69	12,604,407	$	309,821

Exercised	109,855	0.40		—		—
Granted	3,353,125	0.20		—		—


Outstanding at June 30, 2015	19,771,260	$	0.40	3.46	16,327,737	$	—

The warrant grants during the six months ended June 30, 2015 were valued using the Black-Scholes pricing model. Significant assumptions used in the valuation include expected term of 1.50 to 3.26 years, expected volatility of 100%, risk free interest rate of 0.29% to 1.63%, and expected dividend yield of 0%.

On January 15, 2015, the Company sold an additional 812,500 units under the December 2014 Private Placement to one institutional investor for gross proceeds of $325,000 with no commission payable. Each unit in the December 2014 Private Placement consisted of one share of the Company’s common stock and warrants to purchase ¼ of a share for every common share purchased. The warrants consisted of warrants to purchase up to 203,125 shares of the Company’s common stock. The warrants have a term of five years and an exercise price of $0.60 per share. The fair value on the grant date of the warrants was $76,629 and the expense for the six months ended June 30, 2015 was determined to be $0. As of June 30, 2015, these warrants have not been exercised.

On January 29, 2015, the Company issued three-year fully-vested warrants to purchase 150,000 shares of the Company’s common stock with an exercise price of $0.40 per share. The fair value on the grant date of the warrants was $61,066 and the expense for the six months ended June 30, 2015 was determined to be $8,481. As of June 30, 2015, these warrants have not been exercised.

On June 2, 2015, the Company issued three-year fully-vested warrants to purchase 3,000,000 shares of the Company’s common stock with an exercise price of $0.160 per share. The fair value on the grant date of the warrants was $358,510 and the expense for the six months ended June 30, 2015 was determined to be $358,510. As of June 30, 2015, these warrants have not been exercised.

For the three and six months ended June 30, 2015 and 2014, the Company has incurred warrant-based expense of $415,445 and $13,302 and $470,187 and $387,504, respectively. For the three and six months ended June 30, 2015 and 2014, stock compensation expense related to the options, warrants and performance share units totaled $940,477 and $378,260 and $1,500,270 and $1,227,408, respectively. The total stock compensation expense related to the options, warrants and performance share units to be amortized through June 30, 2019 is $2,481,863 as of June 30, 2015.