Warrants

3 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Note 9 - Warrants

Warrants granted to investors and to former CEO, Al Pietrangelo, under terms of the asset purchase and change of control are summarized as follows:

Warrants	Exercise Price	Date Issued	Term
1,600,000	$0.15	Apr - Jun 2013	2 Years

    Total:  1,600,000*

·   This total does not include the 12,500,000 warrants issued to Al Pietrangelo in the acquisition agreement with Fonon Technologies as the warrants are only issued upon the effective date of the intended reverse stock split. Those warrants have an exercise price of $0.001 and have an exercise period of two years.

The warrants do not meet conditions for equity classification and are required to be carried as a derivative liability, at fair value.  Management estimated the fair value of the warrants on March 30, 2015, as this is the date the warrants were reclassified to liability classification, and subsequently at each reporting period, using the Lattice option-pricing model, adjusted for dilution, because that technique embodies all assumptions (including volatility, expected terms, dilution and risk free rates) that are necessary to determine the fair value of freestanding warrants. This valuation resulted in a derivative liability on the balance sheet in the amount of $0 at March 30, 2015 (initial classification) and March 31, 2015 (end of reporting period), respectively. Significant inputs in calculating this valuation using the Lattice option-pricing model are as follows:

	March 31, 2015	March 30, 2015
Expected volatility	677%	677%
Expected term	.25 Years	0.25 Years
Risk-free interest rate	0.04%	0.04%
Expected dividend yield	0%	0%