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Warrants | 9 Months Ended
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Sep. 30, 2021
Warrants |
Warrants | Note 19: Warrants The Company has warrants outstanding to purchase up to 45,511,965 shares as of September 30, 2021 and December 31, 2020. On January 22, 2020, the Company entered into a private transaction (the “Private Transaction”) pursuant to a Warrant Exercise Agreement (the “Agreement”) with the holder of the Company’s existing warrants (the “Original Warrants”). The Original Warrants were originally issued on October 3, 2017, to purchase an aggregate of 500,000 shares of common stock, at an exercise price of $3.90 per share and were to expire in October 2022. Pursuant to the Agreement, the holder of the Original Warrants and the Company agreed that such Original Warrant holder would exercise its Original Warrants in full and the Company would amend the Original Warrants to reduce the exercise price thereof to $0.34 (the average closing price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Agreement) (the “Amended Exercise Price”). The Company received approximately $170,000 from the exercise of the Original Warrants. The placement agent received warrants to purchase 50,000 shares at an exercise price of $0.34 per share. Pursuant to the SPA described in Note 11, the Company issued to the note holders warrants to purchase 65,476,191 shares of common stock, exercisable for a period of 5five years at an initial exercise price of $0.26 per share. The placement agent received warrants to purchase 6,547,619 shares at an exercise price of $0.26 per share. The fair values of derivative warrants attached to the 2020 Convertible Notes and Notes conversion option were determined using the Black-Scholes-Merton option pricing model with standard valuation inputs. The valuation inputs as of March 17, 2020 included expected volatility of 89%, and annual interest rate of 0.66%. The warrants were determined to be liability classified and adjusted to fair value as of each reporting period. As of September 30, 2021, warrants to purchase 892,857 shares were outstanding and re-valued at $1,094,023, resulting in a net decrease in liability of $103,046, as compared to December 31, 2020. The change in value is recorded in the Warrant Revaluation Gain (Loss) line item within Net Other Income (Expense) on the consolidated statement of operations. The valuation inputs as of September 30, 2021 included expected volatility of 107%, and annual interest rate of 0.64%. On January 28, 2021, the Company entered into letter agreements (the “Letter Agreements”) with certain existing institutional and accredited investors to exercise certain outstanding warrants (the “Existing Warrants”) to purchase up to an aggregate of 39,740,500 shares of the Company’s common stock at their original exercise price of $1.55 per share (the “Exercise”). The Company received approximately $61.6 million in gross proceeds. The Special Equities Group, a division of Bradley Woods & Co. Ltd., acted as warrant solicitation agent and received a cash fee of $4,286,844. In consideration for the exercise of the Existing Warrants for cash, the exercising holders received new unregistered warrants to purchase up to an aggregate of 39,740,500 shares of common stock (the “New Warrants”) at an exercise price of $2.37 per share, exercisable immediately, with an exercise period of five years from the initial issuance date. Pursuant to the Letter Agreements, the New Warrants are substantially in the form of the Existing Warrants (except for customary legends and other language typical for an unregistered warrant, including the ability for the holder of the New Warrant to make a cashless exercise if no resale registration statement covering the common stock underlying the New Warrants is effective after six months). The Company registered the resale of the shares of common stock issuable upon exercise of the New Warrants. The fair value of these warrants was determined to be $69,138,527 using the Black-Scholes option pricing model and was recorded as Warrant Incentive Expense within Net Other Income (Expense) on the condensed consolidated statement of operations, based on the following assumptions:
Schedule of assumptions for warrant activity |  |  |  |
Exercise Price |  | $ | 2.37 |
Dividend Yield |  |  | 0% |
Volatility |  |  | 144% |
Risk-free interest rate |  |  | 0.42% |
Expected life of options |  |  | 5.0 years |
The following table summarizes the changes in the Company’s outstanding warrants during the nine months ended September 30, 2021:
Schedule of warrant activity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Warrants Outstanding Number of Shares |  |  | Exercise Prices Per Share |  |  | Weighted Average Remaining Contractual Life |  |  | Weighted Average Exercise Price Per Share |
Balance at December 31, 2020 |  |  | 45,511,965 |  |  | $ | 0.21 - 5.30 |  |  |  | 5.19 years |  |  | $ | 1.55 |
Warrants Granted |  |  | 39,740,500 |  |  | $ | 2.37 |  |  |  | 4.58 years |  |  | $ | 2.37 |
Warrants Exercised |  |  | (39,740,500 | ) |  | $ | 1.55 |  |  |  | 4.76 years |  |  | $ | 1.55 |
Warrants Expired |  |  | – |  |  | $ | – |  |  |  | – |  |  | $ | – |
Balance at September 30, 2021 |  |  | 45,511,965 |  |  | $ | 0.21 - 5.30 |  |  |  | 4.91 years |  |  | $ | 2.27 |
Exercisable December 31, 2020 |  |  | 7,176,620 |  |  | $ | 0.76 - 6.00 |  |  |  | 3.77 years |  |  | $ | 2.52 |
Exercisable September 30, 2021 |  |  | 44,511,965 |  |  | $ | 0.21 - 5.30 |  |  |  | 4.77 years |  |  | $ | 2.29 |

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