Quarterly report pursuant to Section 13 or 15(d)

Common Stock Warrants

v3.19.2
Common Stock Warrants
6 Months Ended
Jun. 30, 2019
Equity [Abstract]  
Common Stock Warrants

Note 12 - Common Stock Warrants

 

Fair value measurement valuation techniques, to the extent possible, should maximize the use of observable inputs and minimize the use of unobservable inputs. The Company’s fair value measurements of all warrants are designated as Level 1 since all of the significant inputs are observable and quoted prices used for volatility were available in an active market.

 

A summary of the Company’s warrant issuance activity and related information for the six months ended June 30, 2019 is as follows:

 

    Shares     Weighted
Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Life
 
Assumed as of the January 8, 2019 merger     12,108,743     $ 1.38       2.6  
                         
Issued     18,000,000     $ 0.75       2.59  
Outstanding and exercisable at June 30, 2019     30,108,743     $ 0.95 (1)(2)     2.38  

 

The fair value of all warrants issued are determined by using the Black-Scholes valuation technique and were assigned based on the relative fair value of both the common stock and the warrants issued.

 

The inputs used in the Black-Scholes valuation technique to value each of the warrants issued at June 30, 2019 as of their respective issue dates are as follows:

 

Event
Description
  Date     H-CYTE
Stock Price
    Exercise Price of Warrant     Grant Date Fair Value     Life
of Warrant
    Risk Free Rate of Return (%)     Annualized Volatility Rate (%)  
Private placement     1/8/2019     $ 0.40     $ 0.75     $ 0.24     3 years     2.57       115.08  
Private placement     1/18/2019     $ 0.40     $ 0.75     $ 0.23     3 years     2.60       114.07  
Private placement     1/25/2019     $ 0.59     $ 0.75     $ 0.38     3 years     2.43       113.72  
Private placement     1/31/2019     $ 0.54     $ 0.75     $ 0.34     3 years     2.43       113.47  
Private placement     2/7/2019     $ 0.57     $ 0.75     $ 0.36     3 years     2.46       113.23  
Private placement     2/22/2019     $ 0.49     $ 0.75     $ 0.30     3 years     2.46       113.34  
Private placement     3/1/2019     $ 0.52     $ 0.75     $ 0.33     3 years     2.54       113.42  
Private placement     3/8/2019     $ 0.59     $ 0.75     $ 0.38     3 years     2.43       113.53  
Private placement     3/11/2019     $ 0.61     $ 0.75     $ 0.40     3 years     2.45       113.62  
Private placement     3/26/2019     $ 0.51     $ 0.75     $ 0.32     3 years     2.18       113.12  
Private placement     3/28/2019     $ 0.51     $ 0.75     $ 0.31     3 years     2.18       112.79  
Private placement     3/29/2019     $ 0.51     $ 0.75     $ 0.31     3 years     2.21       112.79  
Private placement     4/4/2019     $ 0.48     $ 0.75     $ 0.29     3 years     2.29       112.77  

 

(1)Warrants issued with the May 2018 private placement and debt conversion had an initial exercise price of $0.75 and contain a contingent feature which would adjust the exercise price of the warrant in the event the Company issues any shares of common stock or common stock equivalents in a private placement of equity or debt securities at a price less than $0.75 per share. On August 8, 2018, the Company completed the issuance of convertible debt at an initial conversion price of $0.40. Accordingly, the exercise price on these warrants was adjusted downward to $0.40.

 

(2)Warrants issued with the August 8, 2018 and September 28, 2018 convertible notes had an initial exercise price of $0.75 and contain a contingent feature which would adjust the exercise price of the warrants in the event the Company issued any shares of common stock or common stock equivalents in a private placement of equity or debt securities to 90% of the issuance price if it is less than $0.75.

 

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.