Note 8 – Warrants

Warrants Granted (2014)

On October 24, 2014, the Company issued warrants to purchase 10,000 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $13,500. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On October 20, 2014, the Company issued warrants to purchase 3,365 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $4,542. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On October 20, 2014, the Company issued warrants to purchase 37,038 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $50,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On October 16, 2014, the Company issued warrants to purchase 10,000 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $13,500. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On September 29, 2014, the Company issued warrants to purchase 1,852 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $2,500. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On September 23, 2014, the Company issued warrants to purchase 1,000 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $1,350. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On September 23, 2014, the Company issued warrants to purchase 67,145 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $90,646. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On September 23, 2014, the Company issued warrants to purchase 67,145 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $90,645. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On September 5, 2014, the Company issued warrants to purchase 6,747 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $9,108. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On September 5, 2014, the Company issued warrants to purchase 6,747 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $9,107. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On August 19, 2014, the Company issued warrants to purchase 11,111 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $15,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On August 18, 2014, the Company issued warrants to purchase 11,111 shares of common stock, exercisable at $0.75 per share over a thirty six month period pursuant to a unit offering in exchange for proceeds of $15,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

The relative fair value of the warrants attached to the common stock issued in 2014 was estimated at the date of grant using the Black-Scholes Options Pricing Model. The relative fair value of the warrants attached to the common stock issued in 2014 is $59,311 and the relative fair value of the common stock is $255,587 as of the grant date. The Black-Sholes Options Pricing Model assumptions used are as follows: expected dividend yield of 0%; risk-free interest rate of 0.76-1.06%; expected volatility of 217-226%, and warrant term of 3 years.

Warrants Granted (2013)

During the year ended December 31, 2013, the Company granted 651,582 common shares to investors for proceeds of $423,713. The common stock granted included: 325,799 Series A-100 warrants to purchase 325,799 shares of common stock at $0.65 per share, exercisable over thirty six months from the date of grant; 162,892 Series A-200 warrants to purchase 162,892 shares of common stock at $1.25 per share, exercisable over thirty six months from the date of grant; and 162,892 Series A-300 warrants to purchase 162,892 shares of common stock at $1.75 per share, exercisable over forty eight months from the date of grant.

On December 6, 2013, the Company issued a total of 1,100,000 shares of the Company’s common stock and warrants to purchase up to 1,100,000 shares of common stock at $0.75 per share, exercisable over sixty months from the date of grant.

The relative fair value of the warrants attached to the common stock issued in 2013 was estimated at the date of grant using the Black-Scholes Options Pricing Model. The relative fair value of the warrants attached to the common stock issued in 2013 is $383,829 and the relative fair value of the common stock is $699,694 as of the grant date. The Black-Scholes Options Pricing Model assumptions used are as follows: expected dividend yield of 0%; risk-free interest rate of 0.38-1.51%; expected volatility of 273-1,003%, and warrant term of 3-5 years.

Warrants Expired

A total of 7,500 and -0- warrants expired during the years ended December 31, 2014 or 2013, respectively. The expired warrants during the year ended December 31, 2014, carried weighted average exercise prices of $0.85 per share.

Warrants Exercised

No warrants were exercised during the years ended December 31, 2014 or 2013.

The following is a summary of activity of outstanding common stock warrants:

							Weighted
				Weighted			Average
				Average			Remaining
	Number			Exercise			Contractual
	of Shares			Price			Life

Balance, December 31, 2012		1,188,041		$	1.12			1.06
Warrants granted		1,751,583			0.87			2.98
Warrants expired		-			-			-
Warrants cancelled		-			-			-
Warrants exercised		-			-			-

Balance, December 31, 2013		2,939,624			1.12			4.04
Warrants granted		233,261			0.75			2.74
Warrants expired		(7,500	)		(0.32	)		-
Warrants cancelled		-			-			-
Warrants exercised		-			-			-

Balance, December 31, 2014		3,165,385		$	0.96			2.15

Exercisable, December 31, 2014		3,165,385		$	0.96			2.15