Quarterly report pursuant to Section 13 or 15(d)

Derivative Financial Instruments

Derivative Financial Instruments
6 Months Ended
Jun. 30, 2015
Notes to Financial Statements  
Note 10 - Derivative Financial Instruments

The balance sheet caption derivative liability consisted of derivative features embedded in exercisable warrants which had a ratchet provision within their agreements. The balance at June 30, 2015 and December 31, 2014 was $nil and $1,577,640, respectively.


The valuation of the derivative liability is determined using a Black-Scholes Model because that model embodies all of the relevant assumptions that address the features underlying these instruments. Significant assumptions used in the Black-Scholes model at June 30, 2015 and December 31, 2014 include the following:


June 30, 2015         December 31, 2014      
Risk-free interest rate   0%     Risk-free interest rate   1.65%  
Estimated volatility   0%     Estimated volatility   232.6%  
Dividend rate   None     Dividend rate   None  
Estimated term in years   0     Estimated term in years   4