Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2016
Notes to Financial Statements  

The Company issued warrants in conjunction with the issuance of certain convertible debentures. These warrants contain certain reset provisions. Therefore, in accordance with ASC 815-40, the Company reclassified the fair value of the warrant from equity to a liability at the date of issuance. Subsequent to the initial issuance date, the Company is required to adjust to fair value the warrant as an adjustment to current period operations.


At September 30, 2016, the fair value of the 1,155,000 warrants containing certain reset provisions were determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 171.16%, (3) weighted average risk-free interest rate of 0.77%, (4) expected life of 1.51 years, and (5) estimated fair value of the Company's common stock of $0.039 per share.


The Company recorded a loss from change in fair value of warrant liability of debt derivatives of $15,391 and $13,352 for the three and nine months ended September 30, 2016, respectively.


At September 30, 2016, the warrant liability valued at $36,097, the Company believes an event under the contract that would create an obligation to settle in cash or other current assets is remote and has classified the obligation as a long term liability.