Note

Warrants

We have certain warrants outstanding to purchase our common stock, at various prices, as described in the following table:

						Weighted a verage		Aggregate
	Warrants		Exercise			p rice per		intrinsic
As of March 31, 2019 :	o utstanding		p rice per share			share		value (1)
Balance, December 31, 2018		26,872,430	$0.25	–	1.00	$	0.42
Issued		3,861,041	0.16	–	0.25		0.24
Balance, March 31, 2019		30,733,471	$0.16	–	1.00	$	0.40	$	—

As of March 31, 2020 :
Balance, December 31, 2019	43,231,161		$0.16	–	1.00	$	0.35
Issued	791,260				0.13		0.13
Expired	(266,000	)			0.30		0.30
Balance, March 31, 2020	43,756,421		$0.16	–	1.00	$	0.35	$	131,000

(

) – Aggregate intrinsic value based on closing common stock price of

$0.16

March 31, 2020.

Warrants Issued to One-Year Noteholders

In conjunction with

two

investments of

one

-year convertible notes, we issued warrants in

July 2017

to purchase an aggregate

400,000

shares to

two

investors at an exercise price of

$0.65

per share. Each of these warrants contained provisions that required a reduction to the exercise price and increase to the number of warrant shares in the event that we sold our common stock at a lower price than the exercise price (subject to some exceptions). During the

three

months ended

March 31, 2020,

we adjusted downward the warrant exercise price to

$0.13,

resulting in an increase of

791,260

warrants available for exercise. The increase in warrants resulted in a fair value totaling

$100,000,

recorded as a deemed dividend in our consolidated statement of stockholders’ equity.

Fair Value – Interest Expense

To determine interest expense related to our outstanding warrants issued in conjunction with debt offerings, the fair value of each award grant is estimated on the date of grant using the Black-Scholes option pricing model and the relative fair values are amortized over the life of the warrant. For the determination of expense of warrants issued for services, extinguishment of debt and settlement management also uses the option-pricing model. The principal assumptions we used in applying this model were as follows:

	March 31, 2019			March 31, 2020
Risk free interest rate	2.18	–	2.62%		0.23	%
Expected volatility	86	–	110%		112	%
Expected dividend yield		—			—
Forfeiture rate		—			—
Expected life in years	2	—	5		2

The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are based on historical volatility of our common stock. The expected life in years is based on the contract term of the warrant.