Note 13.

Warrants

Warrants Issued to 12.5% Senior Secured Noteholders

Warrants were issued in conjunction with the First Supplemental Indenture to Noteholders as part of the 2020 Additional Notes described above expire on June 30, 2025 and entitle the Lenders to purchase 143,000 shares of the Company’s common stock at $0.001 per share and include specified registration rights. Management estimated the fair value of the Warrants to be $735, assisted by the an independent third-party appraiser.

Warrants were issued in conjunction with the Initial Notes described above expire on June 30, 2025 and entitle the Lenders to purchase 2,000,000 shares of the Company’s common stock at $0.001 per share and include specified registration rights. Management estimated the fair value of the Warrants to be $6,800, assisted by an independent third-party appraiser.

The fair value of these respective Warrants is treated as a debt discount, amortizable over the term of the Warrants, with the unamortized loan portion applied to reduce the face amount of the loan in the Company’s balance sheet. Additionally, since the Warrants issued do not provide warrant redemption or put rights within the control of the holders that could require the Company to make a payment of cash or other assets to satisfy the obligations under the Warrants, except in the case of a “cash change in control”, the fair value attributed to the Warrants is presented in additional-paid in capital in the accompanying Consolidated Balance Sheets. There were no Warrants exercised by either the holders of the 2020 Additional Notes nor the Initial Noteholders during the year ended December 31, 2020.

Certain 12.5% Noteholders exercised warrants for the purchase of 428,571 shares of common stock, and proceeds totaling $1,821 were received on December 16, 2019.