Annual report pursuant to Section 13 and 15(d)

Private Placement (Tables)

Private Placement (Tables)

12 Months Ended

Dec. 31, 2015

The balance of Convertible Notes as of December 31, 2014 was as follows:

Face value of the Convertible Notes	$	6,000,000
Debt discount and value of embedded option, net of amortization		(909,411	)
Convertible Notes, net	$	5,090,589

Schedule of fair value of the convertible notes using the Monte Carlo simulation

Significant increases in either the probability or severity of default of the host instrument would result in a significantly lower fair value measurement.

	As of			As of
	October 31,			December 31,
	2014			2014
Fair value of stock price on valuation date	$	1.77		$	2.18
High collar	$	2.50		$	2.50
Low collar	$	1.67		$	1.67
Term (years)		0.75			0.58
Expected volatility		80	%		80	%
Weighted average risk-free interest rate		0.11	%		0.14	%
Trials		50,000			50,000
Aggregate fair value	$	212,155		$	1,108,955

Schedule of subsequent measurement of the fair values of the financing warrants

Provided below are the principal assumptions used in the initial and subsequent measurement of the fair values of the Financing Warrants:

	10/31/14			12/31/14			8/5/15
Fair market value of shares	$	1.77		$	2.18		$	5.00
Assumed exercise price	$	3.00		$	3.00		$	3.00
Term in years		5			4.84			4.25

Volatility		80	%		80	%		80	%
Annual rate of dividends		0	%		0	%		0	%
Discount rate		1.62	%		1.65	%		1.55	%
Call option value	$	0.88		$	1.14		$	3.51
Warrant shares issuable		220,268			220,268			251,187
Warrants fair value	$	212,155		$	275,827		$	881,359