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Note 6 - Warrants

9 Months Ended

Sep. 30, 2021

Note 6. Warrants

We issued warrants to purchase our common stock, at various prices for the nine months ended September 30, 2021 and 2020, is as follows:

								Weighted
								average		Aggregate
	*Warrants*			*Exercise*				*price per*		*Intrinsic*
	*outstanding*			*price per share*				*share*		value⁽¹⁾

Balance, December 31, 2020		32,980,989			$0.16	–	1.00	$	0.29
Issued		7,865,872			0.14	–	0.26		0.20
Exercised		(416,667	)			$0.14			0.14
Expired		(2,743,406	)		0.12	–	0.70		0.59
Balance, September 30, 2021		37,686,788			$0.12	–	1.00	$	0.27	$	140,000

Balance, December 31, 2019		43,231,161			$0.16	–	1.00	$	0.35
Issued		5,427,648			0.13	-	0.24		0.20
Expired		(14,272,820	)		0.40	-	0.49		0.46
Balance, September 30, 2020		34,385,989			$0.16	–	1.00	$	0.29

(1)

Aggregate intrinsic value based on closing common stock price of $0.19 at September 30, 2021

Warrants issued in 2020 Unit Offering

During the nine months ended September 30, 2021, pursuant to our 2020 Unit Offering (see Note 3), we issued six-month stock purchase warrants to purchase an aggregate 3,820,436 shares of our common stock at exercise prices between $0.14 – 0.22 per share, and five-year stock purchase warrants to purchase an aggregate 3,820,436 shares of our common stock at exercise prices between $0.18 – 0.27 per share.

On August 6, 2021 a holder of a six-month stock purchase warrant exercised the warrant and we received $60,000 and issued 416,667 shares of our common stock.

Warrant issued in conjunction with amendment to note payable

On March 1, 2021, we and the holder of a $50,000 note payable modified the note (see Note 4). In lieu of interest during the extended period of the note, we issued the investor a warrant to purchase 225,000 shares of our common stock at $0.16 per share for a period of five years. The fair value of these warrants totaled $35,000 and is recorded as a debt discount on our consolidated balance sheets, of which amount will be amortized to interest expense over the two-year term of the debt.

Fair Value – Interest Expense

To determine interest expense related to our outstanding warrants issued in conjunction with debt offerings, the fair value of each award grant is estimated on the date of grant using the Black-Scholes option pricing model and the relative fair values are amortized over the life of the warrant. For the determination of expense of warrants issued for services, extinguishment of debt and settlement, management also uses the option-pricing model. The principal assumptions we used in applying this model were as follows:

	September 30, 2021				September 30, 2020
Risk free interest rate			0.71%			0.15	-	0.23%
Expected volatility			100%			100	-	112%
Expected dividend yield			—				—
Forfeiture rate			—				—
Expected life in years		.5	–	5		0.33	–	5

The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are based on historical volatility of our common stock. The expected life in years is based on the contract term of the warrant.