Warrants to Purchase Common Stock

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Warrants to Purchase Common Stock

Note 9 – Warrants to Purchase Common Stock

Warrants Issued

As of December 31, 2019, the Company had outstanding warrants, in connection with the issuance of debentures in 2017, to purchase 828,221 shares of the Company’s Common Stock at an exercise price of $1.51 with an expiration date on August 2, 2024.

On December 27, 2018, the Company issued 2,000 shares of Preferred Stock and a warrant (the “Warrant”) to purchase 3,703,703 shares of the Company’s Common Stock for $2,000,000 in gross proceeds. The shares of Common Stock underlying the Warrant are referred to as the “Warrant Shares.” The Company also entered into a registration rights agreement (the “Registration Rights Agreement”) granting registration rights to the Purchaser with respect to the Warrant Shares.

The Warrant is exercisable for a period of five years through December 26, 2023 at an exercise price equal to $0.54 per share; and is subject to customary adjustments for stock splits dividend, rights offerings, pro rata distributions and fundamental transactions. In addition, in the event the Company undertakes a subsequent equity financing or financings at an effective price per share that is less than $0.54, the exercise price of the Warrant shall be reduced to the lower price.

The Warrant provides that the Warrant holder shall have a “Beneficial Ownership Limitation” equal to 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Warrant holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation, as provided for in the Warrant.

All warrants outstanding as of December 31, 2019 are scheduled to expire between December 26, 2023 and October 21, 2024. 

A summary of activity related to warrants for the year ended December 31, 2019 follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at January 1, 2019		4,531,924	$	0.72		5.05
Outstanding at December 31, 2019		4,531,924	$	0.72		5.05
Exercisable at December 31, 2019		4,531,924	$	0.72		4.05

A summary of activity related to warrants for the twelve months ended December 31, 2018 follows:

	Shares		Weighted- Average Exercise Price ($)		Weighted-Average Remaining Contractual Term
Outstanding at January 1, 2017		828,221	$	1.51		5.34
Granted		3,703,703	$	0.54		4.99
Outstanding at December 31, 2018		4,531,924	$	0.72		5.05
Exercisable at December 31, 2018		4,531,924	$	0.72		5.05