11 WARRANTS

6 Months Ended

Jun. 30, 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, has an exercise price of $1.80 and expires on May 26, 2020 (the "Original Warrant"). The Original 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 Original Warrant was $1,078,523 and the expense for each of March 31, 2016 and March 31, 2015 was determined to be $0. As of June 30, 2016, the Company had outstanding warrants for the purchase of 1,666,666 shares of its common stock.

On May 10, 2016, the Company issued a warrant for the purchase of 7,000 shares of common stock. This warrant grant vests over 3 years at an exercise price of $7.00 and expire on May 10, 2021. The warrant is valued using the Black-Scholes pricing model. Significant assumptions used in the valuation include expected term of 4 years, expected volatility of 50%, date of issue risk free interest rate of 0.52%, and expected dividend yield of 0%. The value on the grant date of the warrant was $19,078 and the warrant expense for June 31, 2016 and 2015 was determined to be $889 and $0, respectively. As of June 30, 2016, no options have been exercised.

On May 13, 2016, Lone Star Value completed an early partial exercise of its 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 Lone Star Value was issued 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, 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 June 30, 2016:

					Weighted Avg.
	Number of		Weighted Avg.		Remaining		Intrinsic
	Shares		Exercise Price		Term		Value
Outstanding at December 31, 2015		2,777,777		1.80		4.41	$	13,333,330
Granted		1,007,000		6.00		—		—
Exercised		1,111,111		1.80		—
Outstanding at June 30, 2016		2,673,666		1.8		3.76	$	7,849,997

For the six months ended June 30, 2016 and June 30, 2015, the Company incurred $889 and $-0- warrants based expense.