11 WARRANTS

3 Months Ended

Mar. 31, 2016

Temporary Equity Disclosure [Abstract]

WARRANTS

NOTE 11.      WARRANTS

On May 26, 2015, the Company issued a warrant for the purchase of 2,777,777 shares of its common stock to Lone Star Value, which vested immediately, hasan exercise price of $1.80 and expires on May 26, 2020. The warrant is valued using the Black-Scholes pricing model. Significant assumptions used in the valuation include stock price on the measurement date of $1.50, expected term of 2.5 years, expected volatility of 50%, risk free interest rate of 1.53%, and expected dividend yield of 0%. The value on the grant date of the warrant was $1,078,523 and the expense for each of March 31, 2016 and March 31, 2015 was determined to be $0.

On May 13, 2016, Lone Star Value completed an early partial exercise of its 2015 warrant (the "Original Warrant") for 1,111,111 shares the Company's common stock at a price of $1.80 per share, for total consideration to the Company of $2,000,000 and a replacement warrant for the remaining 1,166,666 shares under the Original Warrant on the same terms as the Original Warrant.  Lone Star Value also agreed to an amendment of its 5% Convertible Note, issued by the Company on May 26, 2015 (the "Note"), to extend the maturity of the Note for two years in exchange for (i) the right to request that the Board of Directors of the Company (the "Board") expand the size of the Board to nine directors from the current eight, with Lone Star Value having the right to designate up to four of the nine directors, and (ii) the issuance of a new five-year warrant (the "New Warrant") for the purchase of 1,000,000 shares of the Company's common stock at a price of $6.00 per share, on substantively the same terms as the Original Warrant, except the New Warrant may only be exercised for cash.  Lone Star Value's Registration Rights Agreement, dated May 26, 2015, with us was also amended and restated to include the shares of common stock issuable under the New Warrant.   

There was no warrant activity in 2015. Below is a table summarizing the Company's outstanding warrants as of December 31, 2015 and March 31, 2016:

					Weighted Avg.
	Number of		Weighted Avg.		Remaining		Intrinsic
	Shares		Exercise Price		Term		Value
Outstanding at December 31, 2015		2,777,777		1.8		4.41	$	13,333,330
Granted		—		—		—
Outstanding at March 31, 2016		2,777,777		1.8		4.15		$13,333,330

For the three months ended March 31, 2016 and March 31, 2015, the Company  incurred no warrants based expense.