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COMMON STOCK PURCHASE WARRANTS | 9 Months Ended
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Sep. 30, 2021
Common Stock Purchase Warrants |
COMMON STOCK PURCHASE WARRANTS | NOTE 12. 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 September 30, 2021. The warrants expire from December 30, 2021 through September 18, 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. On August 19, 2021, the Company entered into a Warrant Exchange Agreement (the “Exchange Agreement”) with the Investors cancelling February Warrants exercisable for an aggregate of 7,681,540 shares of Common Stock in consideration for its issuance of (i) new warrants (the “Exchange Warrants”) to the Investors exercisable for an aggregate of up to 7,681,540 shares of Common Stock. The Company also issued warrants (the “Replacement Original Warrants”) replacing the February Warrants for the remaining shares of Common Stock exercisable thereunder, representing an aggregate of 6,618,460 shares of Common Stock, and extended the expiration date of the February Warrants to September 18, 2026. The Exchange Warrants provide for an initial exercise price of $3.25 per share, subject to customary adjustments thereunder, and are immediately exercisable upon issuance for cash and on a cashless basis. 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 September 30, 2021: SCHEDULE OF FAIR VALUE OF THE WARRANT DERIVATIVE LIABILITIES
|  | Issuance date assumptions |  |  | September 30, 2021 assumptions |
Volatility - range |  |  | 106.6 – 166.6 | % |  |  | 105.2 | %
Risk-free rate |  |  | 0.08 - 0.49 | % |  |  | 0.98 | %
Dividend |  |  | 0 | % |  |  | 0 | %
Remaining contractual term |  |  | 0.01 - 5 years |  |  |  | 4.3 - 5 years |
Exercise price |  | $ | 2.80 - 3.25 |  |  | $ | 3.25 |
Common stock issuable under the warrants |  |  | 42,550,000 |  |  |  | 24,300,000 |
During the nine months ended September 30, 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 nine months ended September 30, 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 nine months ended September 30, 2021: SUMMARY OF WARRANT ACTIVITY
|  | 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 |
Cancelled |  |  | (879,766 | ) |  |  | 13.43 |
Vested Balance, September 30, 2021 |  |  | 26,808,598 |  |  | $ | 3.29 |
The total intrinsic value of all outstanding warrants aggregated $-0- as of September 30, 2021 and the weighted average remaining term is 52.2 months. The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants to purchase common shares as of September 30, 2021: SUMMARY OF RANGE OF EXERCISE PRICES AND WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE OF WARRANTS
|  |  | Outstanding and exercisable warrants |
Exercise price |  |  | Number of warrants |  |  | Weighted average remaining contractual life |
$ | 2.60 |  |  |  | 465,712 |  |  |  | 1.8 years |
$ | 3.00 |  |  |  | 316,800 |  |  |  | 1.5 years |
$ | 3.25 |  |  |  | 24,300,000 |  |  |  | 4.7 years |
$ | 3.36 |  |  |  | 733,333 |  |  |  | 1.2 years |
$ | 3.65 |  |  |  | 167,000 |  |  |  | 0.7 years |
$ | 3.75 |  |  |  | 25,753 |  |  |  | 0.9 years |
$ | 5.00 |  |  |  | 800,000 |  |  |  | 0.2 years |
|  |  |  |  | 26,808,598 |  |  |  | 4.4 years |

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