NOTE 6 – COMMON STOCK WARRANTS

For all warrants included within permanent equity, the Company has determined the estimated value of the warrants granted to non-employees in exchange for services and financing expenses using the Black-Scholes pricing model and the following assumptions: stock price at valuation, $7.85-$7.96; expected term of 2-5 years, exercise price of $7.88-$7.96, a risk free interest rate of 0.38-1.72 percent, a dividend yield of 0 percent and volatility of 98-163 percent.

On October 1, 2013, the Company issued a total of 100,000 warrants with a fair market value of $481,724 for services rendered to the Company. The warrants vested immediately, have an exercise price of $7.96 per share and a term of 3 years.

On October 31, 2013, the Company received a notice of exercise for 55,556 Series A Warrants with an exercise price of $3.60. Accordingly, the Company issued 55,556 common shares for proceeds of $200,001.

On December 30, 2013, the Company issued a total of 26,667 warrants with a fair market value of $65,748 for services rendered to the Company.  The warrants vested immediately, have an exercise price of $7.94 per share and a term of 2 years..

On January 2, 2014, the Company issued 20,550 warrants with a fair market value of $150,665 to a consultant for services rendered to the Company. The warrants vested immediately, have an exercise price of $7.88 per common share and a term of 5 years.

On January 7, 2014, the Company issued 100,000 warrants with a fair market value of $390,852 to a consultant for services to be rendered to the Company. 25,000 warrants vested immediately, with the remainder vesting over the next three quarterly periods, have an exercise price of $7.94 per common share and a term of 3 years.

On March 26, 2014, the Company received a notice of exercise for 500 Warrants with an exercise price of $1.50. Accordingly, the Company issued 500 common shares for proceeds of $750.

On June 25, 2014, the Company received a notice of exercise for 50,000 Warrants with an exercise price of $1.20. Accordingly, the Company issued 50,000 common shares for proceeds of $60,000.

During the nine months ended June 30, 2014, the Company received 28 notices of cashless exercise for 2,208,411 Warrants. Accordingly, the Company issued 1,847,237 common shares and 361,764 warrants were surrendered and cancelled in accordance with the cashless exercise option.

As of June 30, 2014, the Company has recorded $1,078,669 in consulting expense related to the warrants that have vested to date including warrants granted in prior years.

Below is a table summarizing the warrants issued and outstanding as of June 30, 2014:

The outstanding warrants as of June 30, 2014 have an intrinsic value of approximately $23.9 million.