Annual report pursuant to Section 13 and 15(d)

Warrants

v3.21.1
Warrants
 12 Months Ended
Dec. 31, 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     349,358                          
Exercised     -                          
Expired     (85,171 )                        
Outstanding December 31, 2020     780,935     $ 15.47       3.53     $ -  
Exercisable December 31, 2020     780,935     $ 15.47       3.53     $ -  

 

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 years ended December 31:

 

    2020     2019  
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.13% – 1.55 %     1.34% – 2.37 %
Volatility     143% – 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 year ended December 31, 2020, warrants to purchase 230,670 shares of common stock at $4.50 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 ($4.27 as adjusted upon dilutive issuance) 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 $421,399 and $125,545 during the years ended December 31, 2020 and 2019, respectively.

 

Director warrant grants

 

During the year ended December 31, 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  
September 30, 2020     25,952     $ 3.00  
December 31, 2020     45,732     $ 1.70  

 

These warrants were immediately vested and expire in ten years. During the year ended December 31, 2020, the Company recognized stock-based compensation expense related to these warrants in the aggregate amount of $300,000.

 

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

 

Warrant expiration

 

During the year ended December 31, 2020, warrants to purchase an aggregate of 85,171 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.