NOTE 15 – WARRANTS

In conjunction with the issuance of the $20M Debentures previously disclosed in Note 12 – Debentures Payable, in 2019 and 2018, the Company issued three-year warrants to purchase 850,000 and 324,675 shares of its common stock, respectively, at exercise prices of $3.00 to $5.00 per share and $3.50 to $5.50 per share, respectively. The fair value of these warrants at issuance approximated $1,148,000 in 2019 and $1,058,000 in 2018, with approximately $1,298,000 amortized to interest expense in 2019, approximately $91,000 in 2018, and the balance to be amortized over the remaining durations of the $20M Debentures.

As part of the $10M Note transaction previously disclosed in Note 11 – Debt, in 2019, the Company issued three-year warrants to purchase 375,000 shares of common stock at an exercise price of $4.50 per share. The fair value of these warrants at issuance approximated $601,000, with approximately $523,000 of this amount amortized to interest expense during the year, and the balance to be amortized by the initial January 2020 maturity date of the $10M Note.

In connection with $3M Note transaction previously disclosed in Note 11 – Debt, in 2018, the Company issued three-year warrants to purchase 750,000 shares of the Company’s common stock at an exercise price of $1.80 per share. The fair value of these warrants at issuance approximated $1,511,000, with approximately $882,000 amortized to interest expense during 2018, and the remaining $629,000 amortized during 2019.

In addition to the above warrants issued with the $20M Debentures, $10M Note, and $3M Note, in connection with promissory notes issued to individuals in 2019 and 2018, the Company issued warrants to purchase 10,000 and 237,500 shares of common stock, respectively, at an exercise price of $0.75 and $0.55 per share, respectively, expiring four years and three years, respectively, from issuance. The fair value of these warrants at issuance of approximately $5,000 in 2019 and $198,000 in 2018 were fully amortized to interest expense in the year of issuance.

In 2018, alongside the sale of common stock, the Company issued three-year and five-year warrants to purchase 6,098,962 shares of common stock at exercise prices ranging from $1.75 to 4.30 per share. The fair value of these warrants at issuance of approximately $11,146,000 was treated as a reduction to the value of the common stock and charged to Additional Paid-In Capital on the balance sheet. No warrants were issued alongside sales of common stock in 2019.

In 2019 and 2018, the Company issued stand-alone warrants to purchase 1,250,000 and 625,000 shares of common stock, respectively, at exercise prices of $0.80 to 1.71 per share in 2019, and $0.20 to $2.45 per share in 2018. The 2019 warrants expire three years from issuance and the 2018 options expire three and five years from issuance. The fair value of the warrant issuances of approximately $392,000 in 2019 and $1,815,000 in 2018 were charged to expense in the year of issuance.

During 2019 and 2018, warrants to purchase 686,104 and 2,300,237 shares of common stock, respectively, were exercised at exercise prices ranging from $0.12 to $1.75 per share in 2019 and $0.10 to $0.75 per share in 2018.

At December 31, 2019 and 2018, warrants to purchase 11,780,107 and 10,606,211 shares of common stock, respectively, were outstanding with exercise prices ranging from $0.15 to $5.50 per share in 2019 and $0.12 to $5.50 per share in 2018.