Quarterly report pursuant to Section 13 or 15(d)

Warrants

v3.20.2
Warrants
 6 Months Ended
Jun. 30, 2020
Warrants and Rights Note Disclosure [Abstract]  
Warrants

NOTE 14 – WARRANTS

 

The following is a summary of the Company’s warrant activity:

 

    Warrants     Weighted
average
exercise price		     Weighted
average
remaining
contractual
term in years		     Aggregate
intrinsic value		  
Outstanding January 1, 2019     590,340     $ 40.65       2.32     $ 7,846,743  
Exercisable January 1, 2019     590,340     $ 40.65       2.32     $ 7,846,743  
Canceled     -                          
Granted     20,985                          
Exercised     -                          
Expired     (94,577 )                        
Outstanding December 31, 2019     516,748     $ 24.60       1.86     $ -  
Exercisable December 31, 2019     516,748     $ 24.60       1.86     $ -  
Canceled     -                          
Granted     47,604                          
Exercised     -                          
Expired     (83,604 )                        
Outstanding June 30, 2020     480,748     $ 22.08       2.48     $ -  
Exercisable June 30, 2020     480,748     $ 22.08       2.48     $ -  

 

Warrant valuation

 

The Company estimates the fair value of warrants granted on each grant date using the Black-Scholes valuation model. The range of fair value assumptions related to warrants issued were as follows for the:

 

    Six-months ended
June 30, 2020		     Year ended
December 31, 2019		  
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.29% – 1.55 %     1.34% – 2.37 %
Volatility     152% – 207 %     145% – 168 %
Expected term     2 – 5 years       2 – 2.5 years  

 

The expected dividend yield is zero, because the Company does not anticipate paying a dividend within the relevant timeframe. The risk-free interest rate used is based on the U.S. Treasury constant maturity rate in effect at the time of grant for the expected term of the warrants to be valued. The expected volatility is calculated based on the historical volatility of the Company. Due to a lack of historical information needed to estimate the Company’s expected term, it is estimated using the simplified method allowed.

 

Convertible note warrants

 

During the six-months ended June 30, 2020, warrants to purchase 600 shares of common stock at $7.50 to $10.00 per share were issued in connection with the issuance of convertible notes. During the year ended December 31, 2019, warrants to purchase 16,900 shares of common stock at $14 to $40 per share were issued in connection with the issuance of convertible notes. These warrants were immediately vested and expire in five years. The value of the warrants was recorded as a discount on the convertible notes in the aggregate amount of $69,498 and $125,545 during the six-months ended June 30, 2020, and the year ended December 31, 2019, respectively.

 

Director warrant grants

 

During the six-months ended June 30, 2020, the Company granted its independent directors warrants as follows:

 

Date of Grant   Warrants     Exercise Price  
March 31, 2020     12,756     $ 6.00  
June 30, 2020     34,248     $ 2.25  

 

These warrants were immediately vested and expire in ten years. During the six-months ended June 30, 2020, the Company recognized stock-based compensation expense related to these warrants in the aggregate amount of $150,000.

 

During the year ended December 31, 2019, the Company did not recognize any stock-based compensation expense related to warrants.

 

Warrant expiration

 

During the six-months ended June 30, 2020, warrants to purchase an aggregate of 83,604 shares of common stock expired. During the year ended December 31, 2019, warrants to purchase an aggregate of 94,577 shares of common stock expired.