NOTE 14 — WARRANTS:

In connection with entering into the Credit Agreement, on September 3, 2019, the Company issued to the Lender a seven-year warrant (the “Warrant”) to purchase up to 550,000 shares of the Company’s common stock at a per-share exercise price of $5.22. The Warrant is exercisable for cash or on a net, or “cashless,” basis, and the exercise price of the Warrant is subject to price-based, weighted-average antidilution adjustments for one year after issuance.

The Warrant was evaluated by the Company and classified to stockholder’s equity. Its fair value was estimated using a Black-Scholes option-pricing model using the assumptions below.


Stock price on issuance date	$	5.40
Strike Price	$	5.22
Risk-free interest rate		1.45	%
Volatility		43.65	%
Expected life	7 years

The fair value of the Warrant was determined to be approximately $1.4 million at $2.49 per share.

As of December 31, 2019, the balance recorded in the Company’s Stockholders’ Equity for the Warrants, net of allocated issuance costs, was $1.2 million.

As of December 31, 2019, no warrants were exercised and no warrants have expired.