NOTE 13 – WARRANTS

In June 2018, 3,000,000 warrant shares were issued in connection with the sale of private placement offering. The fair value of the warrants were calculated based on the Black-Scholes model. See Note 5. The warrants are through private placement as the timing of the issuance of the warrants, as there was not a true public market of the three months ended July 31, 2018. The value would be accounted for to and from paid in capital, and therefore there is no financial statement impact as of July 31, 2018. The warrants will expire in 4 years as of the issuance date. The warrants have not been exercised.

For the Black Scholes model calculation, we calculated a volatility rate averaging 74.8% based on other companies that with similar operations and size. Historical volatility was computed using daily pricing observations for recent periods. The Company believed this method produced an estimate that was representative of the Company’s expectations of future volatility over the expected term. The risk-free rate was based on the U.S. Treasury rate that corresponded to the expected term of the common stock equivalents. As of July 31, 2018, the fair value of these warrants was $3,333,621.

The following table summarizes the assumptions used to estimate the fair value of warrants granted during the three months ended July 31, 2018:

	As of July 31, 2018

Expected dividend yield		0	%
Weighted-average expected volatility		74.8	%
Weighted-average risk-free interest rate		2.77-2.85	%
Expected life of warrants	4 years

The Company’s outstanding and exercisable warrants as of July 31, 2018 and December 31, 2017 are presented below:

	Number Outstanding		Weighted Average Exercise Price		Contractual Life in Years		Fair Value

Warrants Outstanding and Exercisable as of December 31, 2017		-	$	-		-	$	-

Warrants granted (June 2018)		3,000,000	$	0.30		4.00	$	1,748,920

Warrants Forfeited		-	$	-		-	$	-

Warrants Exercised		-	$	-		-	$	-

Warrants Outstanding and Exercisable as of July 31, 2018		3,000,000	$	0.30		4.00	$	3,333,621