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Common Stock Purchase Warrants

3 Months Ended

Mar. 31, 2021

NOTE 10. COMMON STOCK PURCHASE WARRANTS

The Company has issued common stock purchase warrants in conjunction with various debt and equity issuances. The warrants are either immediately exercisable, or have a delayed initial exercise date, no more than six months from their respective issue date and allow the holders to purchase up to 26,808,598 shares of common stock at $2.60 to $5.00 per share as of March 31, 2021. The warrants expire from December 30, 2021 through February 1, 2026 and under certain circumstances allow for cashless exercise.

On January 14, 2021 and February 1, 2021, the Company issued warrants to purchase a total of 42,550,000 shares of Common Stock. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances in the event of tender offers. As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the consolidated statements of operations as the change in fair value of warrant derivative liabilities. Furthermore, the Company revalues the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability transitioned to equity.

The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the warrant derivative liabilities as of their date of issuance and as of March 31, 2021:

	Issuance date assumptions			March 31, 2021 assumptions
Volatility - range		106.6 – 166.6	%		106.7	%
Risk-free rate		0.08 - 0.49	%		0.92	%
Dividend		0	%		0	%
Remaining contractual term		0.01 - 5 years			4.8 years
Exercise price	$	2.80 - 3.25		$	3.25
Common stock issuable under the warrants		42,550,000			24,300,000

During the three months ended March 31, 2021, holders of pre-funded warrants exercised a total of 18,250,000 warrants which were fair valued at $1,817,549 at their date of issuance and recorded as a derivative warrant liability. On the date of exercise such pre-funded warrants were fair valued at zero, which was transitioned to permanent equity during the three months ended March 31, 2021. The Company reported the $1,817,549 change in fair value from their issuance date to their exercise date in the condensed statements of operations as the change in fair value of warrant derivative liabilities.

The following table summarizes information about shares issuable under warrants outstanding during the three months ended March 31, 2021:

	Warrants			Weighted average exercise price
Vested Balance, January 1, 2021		3,388,364		$	6.24
Granted		42,550,000			3.11
Exercised		(18,250,000	)		2.92
Forfeited/cancelled		(879,766	)		13.43
Vested Balance, March 31, 2021		26,808,598		$	3.29

The total intrinsic value of all outstanding warrants aggregated $-0- as of March 31, 2021 and the weighted average remaining term is 54.2 months.

The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants to purchase shares of common stock as of March 31, 2021:

		Outstanding and exercisable warrants
Exercise price		Number of warrants		Weighted average remaining contractual life
$	2.60		465,712	2.3 years
$	3.00		316,800	2.0 years
$	3.25		24,300,000	4.8 years
$	3.36		733,333	1.7 years
$	3.65		167,000	1.3 years
$	3.75		25,753	1.4 years
$	5.00		800,000	0.8 years

			26,808,598	4.5 years