NOTE 16 – WARRANTS

During 2020, in conjunction with the $21M Debentures previously disclosed in Note 12 – Debentures Payable, the Company issued three-year warrants to purchase up to 180,000 shares of common stock at an exercise price of $0.75 per share. The fair value of these warrants on the issuance date approximated $1,148,000, of which approximately $24,000 was amortized to interest expense in 2020 and the remainder to be amortized over the term of the respective debenture.

Also during 2020, as previously disclosed in Note 11 – Debt, (i) as part of the $8.8M Note transaction, the Company issued three-year warrants to purchase up to 750,000 shares of common stock at an exercise price of $0.50 per share, and (ii) in consideration of the Second Extension Agreement, the Company issued four-year warrants to purchase up to 5,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share. The fair value of these warrants on their issuance dates approximated $639,000, with approximately $90,000 of this amount amortized to interest expense in 2020 and the remainder to be amortized by the maturity dates of the respective promissory notes.

During 2019, also in conjunction with the $21M Debentures, the Company issued three-year warrants to purchase up to 850,000 shares of common stock at exercise prices of $3.00 and $5.00 per share. The fair value of these warrants on the issuance dates approximated $1,148,000, of which approximately $576,000 and $331,000 was amortized to interest expense in 2020 and 2019, respectively, and the remainder to be amortized over the term of the respective debentures.

Also during 2019, as part of the $10M Note transaction previously disclosed in Note 11 – Debt, the Company issued three-year warrants to purchase up to 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 2019, and the balance amortized in 2020. Also during 2019, the Company issued four-year warrants to purchase up to 10,000 shares of common stock in conjunction with the issuance of $100,000 of the Third Party Notes discussed in Note 11 – Debt. These warrants are exercisable at a price of $0.75 per share. The fair value of these warrants at issuance of approximately $5,000 was amortized to interest expense during 2019.

The Company also issued, in 2020 and 2019, stand-alone warrants, expiring three years from issuance, to purchase up to 25,000 and 625,000 shares of common stock, respectively. at an exercise price of $0.50 in 2020, and exercise prices ranging from $0.80 to $1.71 per share in 2019. The aggregate fair values of these warrants of approximately $2,000 in 2020 and $392,000 in 2019 were charged to compensation expense in the year of issuance.

In November 2020, in accordance with the terms of the warrant agreement, the Company adjusted the exercise price from $1.80 per share to $0.11 per share of warrants to purchase up to 750,000 share of common stock previously issued in September 2018 as part of the $3M Note discussed in Note 11 – Debt. No other change was made to terms of these warrants. The Company recorded a charge of approximately $69,000 in 2020 representing the fair value of these warrants on the adjustment date. No other warrant adjustments were made by the Company.

During 2019, warrants to purchase 686,104 shares of common stock were exercised at exercise prices ranging from $0.12 to $1.75 per share, resulting in aggregate proceeds to the Company of approximately $612,000. No warrants were exercised during 2020.

During 2020, warrants to purchase 817,939 shares of common stock with exercise prices ranging from $0.40 to $2.25 per share were forfeited. No warrants were forfeited in 2019.

At December 31, 2020 and 2019, warrants to purchase up to 16,917,168 and 11,780,107 shares of common stock, respectively, were outstanding at exercise prices ranging from $0.15 to $5.50 per share in both years.