WARRANT AGREEMENTS

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Note 10 - Warrant Agreements

On January 3, 2017, the Company issued 1,300,000 warrants in connection with commissions earned in relation to the Company’s Private Label Exclusive Distribution and License agreement with Red Barn Pet Products, LLC.

From May 11, 2017 to September 30, 2017, the Company issued 260,000 warrants in connection with the issuance of $1,300,000 convertible promissory notes.

Warrants that vest at the end of a one-year period are amortized over the vesting period using the straight-line method.

The Company’s warrant activity was as follows:

	Warrants		Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2016		4,392,107		1.97		6.17
Granted		1,560,000		2.83		0.67
Exercised		-		-		-
Forfeited/Expired		-		-		-
Outstanding, September 30, 2017		5,952,107		2.19		4.18
Exercisable at September 30, 2017		3,750,665		2.34		2.70

The change in warrant value for the three and nine months ended September 30, 2017 was ($157,013) and $2,560,607, respectively. The change in warrant expense for the three and nine months ended September 30, 2016 was $0.

Range of Exercise Price	Number of Warrants		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Warrants Exercisable		Weighted Average Exercise Price
$1.00 - $7.00		5,952,107		4.18	$	2.19		3,750,665	$	2.34
		5,952,107		4.18	$	2.19		3,750,665	$	2.34

The weighted-average fair value of warrants granted to during the three months ended September 30, 2017 and year ended December 31, 2016, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	September 30, 2017			December 31, 2016
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		1.92	%		1.83	%
Expected stock price volatility		84.43	%		84.42	%
Expected dividend payout		-			-
Expected option life (in years)		3			3
Expected forfeiture rate		0	%		0	%