DERIVATIVE LIABILITY

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITY

NOTE 8 –DERIVATIVE LIABILITY

Due to the potential adjustment in the conversion price associated with certain of the convertible debentures and the potential adjustment in the exercise price of certain of the warrants, the Company has determined that certain conversion features and warrants are derivative liabilities.

The fair values of the embedded conversion features and the warrants are estimated and recorded as derivative liabilities on the date of issuance, offset by a discount on the related convertible note payable up to the face amount of the note, with any excess fair value recorded as derivative expense on the date of issuance. The Company’s convertible debt is convertible into common stock at conversion rates that vary based on the trading prices of the Company’s common stock. Accordingly, the conversion feature is required to be presented at fair value on the dates of issuance, settlement, and at each reporting date. The Company also has warrants to purchase common stock outstanding that provide for adjustments to the exercise prices upon the future dilutive issuances. The Company utilizes Monte Carlo simulations and stochastic forecasting to estimate the fair value of the warrants and conversion options. The ranges of assumptions utilized in estimating the fair value of the warrants and conversion options during the six months ended June 30, 2016, are as follows:

Expected Volatility	66% to 87%
Expected Term	0.4 to 5.0 Years
Risk Free Rate	0.36% to 1.21%
Dividend Rate	0.00%
Triggering Capital Raise Probabilities	50% - 75%

A summary of derivative activity for the six months ended June 30, 2016 is as follows:

Balance at December 31, 2015	$	25,445,645
New issuances		648,836
Conversion feature reclassified to equity upon conversion of related notes payable		(692,850	)
Change in fair value		(17,677,252	)
Balance at June 30, 2016	$	7,724,379