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Capital Structure – Common Stock and Stock Purchase Warrants
9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Capital Structure – Common Stock and Stock Purchase Warrants

5. Capital Structure – Common Stock and Stock Purchase Warrants

 

Each holder of common stock is entitled to vote on all matters and is entitled to one vote for each share held. No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock or any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.

 

 

Stock Warrants

 

Warrant holders exercised 17,225,000 common stock warrants during the nine-month period ended September 30, 2022. An additional 2,283,850 warrants were forfeited or cancelled during the nine-month period ended September 30, 2022. During the nine months ended September 30, 2021, no warrants were issued or exercised.

 

The following is a summary of outstanding common stock warrants as of September 30, 2022.

 

Expiration Date  Number of
Shares
  

Exercise

Price

   Remaining
Life (years)
            
Fourth Quarter 2022   9,811   $80 - 290   0.25
First Quarter 2023   4,000   $30 - 40   0.50
Second Quarter 2023   1,000   $200   0.75
Third Quarter 2023   501,500   $0.05-100   1.00
Third Quarter 2028   3,000   $70   6.00
Second Quarter 2032   28,995   $10 - 70   9.75
    548,306   $0.05 - 290    

 

Following is a summary of stock warrant activity for the nine months ended September 30 2022:

 

  

Number of

Shares

   Exercise
Price
  

Weighted

Average Price

 
Warrants as of December 31, 2021   20,057,156   $ 2 - 290   $5.21 
Issued   -   $-   $- 
Expired and forfeited   (2,283,850)  $0.05 - 200   $126.76 
Exercised   (17,225,000)  $0.05   $0.05 
Warrants as of September 30, 2022   548,306   $.05 - 70   $8.39 

 

On June 29, 2022, the Company’s board of directors approved a resolution to clarify the anti-dilution protection granted to certain note and warrant holders. In connection with this board action, the Company recognized a non-cash charge of $1,605,913 in the Statement of Operations for the nine-month period ended September 30, 2022. The fair value of the re-measured warrants was determined using the Black Scholes model and used the following assumptions:

 

Expected term (years)   0.63 
Risk free rate   2.04%
Volatility   436%
Dividend yield   - 

 

The average risk-free interest rate is based on the U.S. Treasury security rate in effect on June 29, 2022. We determined expected volatility using the historical closing stock price. The expected life was determined using the simplified method as we do not believe we have sufficient historical warrant exercise experiences on which to base the expected term.