Annual report pursuant to Section 13 and 15(d)

Derivative Liability (Tables)

Derivative Liability (Tables)

12 Months Ended

Dec. 31, 2016

	At Issuance			December 31, 2016			December 31, 2015
Market value of stock on measurement date	$	0.55		$	0.42		$	0.25
Risk-free interest rate		1.12	%		1.20	%		1.31	%
Dividend yield		0	%		0	%		0	%
Volatility factor		55	%		68.8	%		61.0	%
Term		3 years			1.5 years			2.5 years

Schedule of derivative liability

Balance at December 31, 2015	$	27,266
Loss on change of fair value		81,543
Balance at December 31, 2016	$	108,809

Schedule of warrants outstanding

Total # of warrants issued and outstanding		1,055,916
Weighted-average exercise price	$	0.75
Remaining life (in years)		1.50

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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