Warrants

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Warrants

NOTE 10 – WARRANTS

As part of the 8% Senior Secured Convertible Promissory Note issuance, the Company issued warrants to acquire up to an aggregate 344,029 shares of the Company’s common stock at an exercise price of $0.51 per share. These warrants were fair valued using the Black Scholes Model with the following inputs: stock price on November 21, 2018, date of issuance, $0.57, strike price $0.51, time to expiration, five years, five year Treasury constant maturity rate, 2.33%, volatility 253% and no dividend yield. The result was a fair value of $0.5676 per warrant or $195,271 in aggregate. This fair value was reduced with the relative fair value method when including the BCF of the convertible note (See Note 6, “8% Senior Secured Convertible Promissory Note”) to $171,121. The warrant relative fair value was added to additional paid in capital – common stock.

In the second tranche, the Company issued warrants to acquire up to an aggregate 421,656 shares of the Company’s common stock at an exercise price of $0.40 per share. These warrants were fair valued using the Black Scholes Model with the following inputs: stock price on February 12, 2019, date of issuance, $0.33, strike price $0.40, time to expiration, five years, five year Treasury constant maturity rate, 2.34%, volatility 173% and no dividend yield. The result was a fair value of $0.35 per warrant or $147,580 in aggregate. This fair value was reduced with the relative fair value method when including the BCF of the convertible note (See Note 6, “8% Senior Secured Convertible Promissory Note”) to $121,320. The warrant relative fair value was added to additional paid in capital – common stock.

A summary of the warrant activity follows:

	Warrants Outstanding		Exercise Price per Share		Price Per Share on Date of Issuance
Balance, December 31, 2018		13,674,029		0.51 – 0.75		0.57 – 1.00
Granted - Convertible Promissory Note		421,656		0.40		0.33
Expired		—		—		—
Balance, March 31, 2019		14,095,685		0.40 – 0.75		0.33 – 1.00
Balance, December 31, 2019		14,095,685		0.40 – 0.75		0.33 – 1.00
Granted		—		—		—
Expired		—		—		—
Balance, March 31, 2020		14,095,685		0.40 - 0.75		0.33 - 1.00