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Warrants
 6 Months Ended 12 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Warrants [Abstract]    
WARRANTS

19. WARRANTS

 

On April 29, 2020, the Company issued a warrant to purchase 158,730 shares of the Company’s common stock. The warrant was issued in conjunction with the sale of the Company’s 12.5% OID Convertible Note. The warrant has an exercise price of $0.99 per share and an expiration date of April 29, 2025. In connection with this transaction and as a placement fee to an unrelated third party, the Company also issued a warrant to purchase 27,778 shares of the Company’s common stock. The warrant has an exercise price of $0.99 per share and an expiration date of April 29, 2025. None of these warrants were exercised during the six months ended June 30, 2020. No warrants were granted by the Company during the period January 10, 2019 (inception) to June 30, 2019.

 

On September 24, 2019, ComSovereign Corp. issued a warrant to purchase 150,000 shares of ComSovereign’s common stock, which was converted into the ability to purchase 283,530 shares of the Company’s common stock as a result of the ComSovereign Merger. The warrant was issued in conjunction with the sale of ComSovereign’s 10% Senior Convertible Debentures. The warrant had an exercise price of $0.01 per share and an expiration date of December 31, 2021. No warrants were exercised during fiscal 2019. On April 21, 2020, these warrants were exercised and exchanged for 283,530 shares of the Company’s common stock.

 

The following table summarizes the assumptions used to estimate the fair value of warrants granted during the six months ended June 30, 2020:

 

   2020 
Expected dividend yield   0%
Expected volatility   29.29%
Risk-free interest rate   0.36%
Expected life of warrants   5.0 years 

 

The following table represents warrant activity for the six months ended June 30, 2020 and the period January 10, 2019 (Inception) to June 30, 2019:

 

   Number of
Warrants		   Weighted-
Average
Exercise
Price		   Weighted-
Average
Remaining
Contractual
Life in
Years		   Aggregate
Intrinsic
Value		 
Outstanding – December 31, 2019   503,523   $0.95    1.96   $258,328 
Exercisable – December 31, 2019   503,523   $0.95    1.96   $258,328 
Granted   186,508    0.99    5.00    - 
Exercised   (283,530)   0.01    1.50    - 
Forfeited or Expired   -    -    -    - 
Outstanding – June 30, 2020   406,501   $1.62    2.98   $43,690 
Exercisable – June 30, 2020   406,501   $1.62    2.98   $43,690 

 

   Number of
Warrants		   Weighted-
Average
Exercise
Price		   Weighted-
Average
Remaining
Contractual
Life in
Years		   Aggregate
Intrinsic
Value		 
Outstanding – January 10, 2019   2,280,000   $0.72    3.44   $— 
Exercisable – January 10, 2019   2,280,000   $0.72    3.44   $— 
Granted   —    —    —    — 
Exercised   —    —    —    — 
Forfeited or Expired   (60,000)   2.91    —    — 
Outstanding – June 30, 2019   2,220,000   $0.66    3.03   $838,450 
Exercisable – June 30, 2019   2,220,000   $0.66    3.03   $838,450 

15. WARRANTS

  

The following warrants were issued by the Company prior to the ComSovereign Acquisition with the attributes described below to purchase the Company’s common stock (amounts in US$’s, except share data):

 

Issuance Date   Warrants Issued     Exercise Price     Full Vesting Date   Expiration Date
November 20, 2015     70,000     $ 5.00     November 20, 2015   November 20, 2020
April 27, 2016     60,000     $ 2.91     April 27, 2016   April 27, 2019
August 3, 2017     30,000     $ 0.50     August 3, 2017   August 3, 2021
August 3, 2017     2,000,000     $ 0.50     August 3, 2017   August 3, 2022
November 9, 2017     20,000     $ 0.50     November 9, 2017   November 9, 2021
September 26, 2018     100,000     $ 1.00     September 26, 2018   September 26, 2022

 

During the third quarter of 2019, ComSovereign issued eight warrants to purchase an aggregate of 100,000 shares of ComSovereign’s common stock. The warrants were issued in conjunction with the sale of the ComSovereign’s 9% Senior Convertible Debentures. The warrants had an exercise price of $5.00 per share and an expiration date of December 31, 2021. Prior to conversion of the related debentures, ComSovereign cancelled warrants to purchase 80,000 shares of common stock at $5.00 per share, and reissued warrants to purchase 112,500 shares of common stock at $1.50 per share. ComSovereign valued the new warrants at $250,835 using the Black-Scholes pricing model, which is included in interest expense on the Consolidated Statement of Operations. Warrants to purchase all 132,500 shares of common stock were exercised in November 2019 prior to the ComSovereign Acquisition.

 

On September 24, 2019, ComSovereign issued a warrant to purchase 150,000 shares of the ComSovereign’s common stock, which was converted into the ability to purchase 283,530 shares of the Company’s common stock as a result of the ComSovereign Merger. The warrant was issued in conjunction with the sale of ComSovereign’s 10% Senior Convertible Debentures. The warrant has an exercise price of $0.01 per share and an expiration date of December 31, 2021. No warrants were exercised during fiscal 2019. On April 21, 2020, these warrants were exercised and exchanged for 283,530 shares of the Company’s common stock.

 

During September 2019, ComSovereign issued two warrants to purchase 2,000,000 shares of ComSovereign’s common stock. The warrants were issued in conjunction with the sale by ComSovereign of a promissory note. The warrants had an exercise price of $0.01 per share and an expiration date of December 31, 2021. Warrants to purchase the full 2,000,000 shares of ComSovereign’s common stock were exercised in November 2019 prior to the ComSovereign Acquisition.

 

On October 15, 2019, ComSovereign issued a warrant to purchase 442,500 shares of ComSovereign’s common stock. The warrant was issued in conjunction with the sale by ComSovereign of a promissory note. The warrant had an exercise price of $0.01 per share and an expiration date of December 31, 2021. Warrants to purchase the full 442,500 shares of ComSovereign’s common stock were exercised in November 2019 prior to the ComSovereign Acquisition.

 

On November 26, 2019, ComSovereign issued warrants to purchase 930,000 shares of ComSovereign’s common stock to non-employees for consulting services in connection with the ComSovereign Acquisition. The warrants had an exercise price of $0.01 per share and an expiration date of November 26, 2024. Warrants to purchase the full 930,000 shares of ComSovereign’s common stock were exercised on November 27, 2019.

 

The following table summarizes the assumptions used to estimate the fair value of the warrants granted during fiscal 2019:

 

Expected dividend yield   0%
Expected volatility    32-33%
Risk-free interest rate    1.38-1.82%
Expected life of warrants    2.27-3.0 years

 

Under the Black-Scholes option pricing model, the fair value of the warrants issued was estimated at $3,138,667 on the date of grant, which was recognized as interest expense in the Consolidated Statement of Operations. As of December 31, 2019, there was no unrecognized expense related to the warrants as all of the warrants were fully vested.

 

The following table represents warrant activity of ComSovereign and the Company as of and for fiscal 2019:

 

   Number of Warrants   Weighted-Average Exercise
Price		   Weighted-Average Remaining Contractual Life in Years   Aggregate Intrinsic Value 
Outstanding – January 10, 2019   2,280,000   $0.72    3.44   $— 
Exercisable – January 10, 2019   2,280,000   $0.72    3.44   $— 
Granted   3,868,523    0.18           
Exercised   (5,472,500)   0.23           
Forfeited or Expired   (172,500)   3.61           
Outstanding – December 31, 2019   503,523   $0.95    1.96   $258,328 
Exercisable – December 31, 2019   503,523   $0.95    1.96   $258,328