Quarterly report pursuant to Section 13 or 15(d)

Warrants

v3.22.1
Warrants
3 Months Ended
Mar. 31, 2022
Warrants and Rights Note Disclosure [Abstract]  
Warrants

NOTE 9 – WARRANTS

Warrants issued and outstanding consisted of the following:

 

Balance Sheet Classification

 

March 31, 2022

 

 

December 31, 2021

 

Public Warrants

Liability

 

 

9,994,635

 

 

 

9,994,635

 

Private Placement Warrants

Liability

 

 

9,172,782

 

 

 

9,172,782

 

Series A Warrants

Liability

 

 

6,666,662

 

 

 

6,222,218

 

Term C Loan Warrants

Equity

 

 

14,999,999

 

 

 

-

 

RDO Investor Warrants

Equity

 

 

14,180,375

 

 

 

-

 

Placement Agent Warrants

Equity

 

 

992,626

 

 

 

-

 

Public Warrants and Private Placement Warrants

The Company issued public and private warrants in connection with its initial public offering in November 2018 (the "Public Warrants" and "Private Placement Warrants"). As of March 31, 2022, the outstanding Public Warrants and Private Placement Warrants were exercisable for an aggregate of 2,738,203 shares of Class A common stock. Each Public Warrant and Private Placement Warrant entitles its holder to purchase one-seventh of a share of our Class A common stock at an exercise price of $5.75 per warrant ($40.25 per full share equivalent), to be exercised only for a whole number of shares of Class A common stock. The Public Warrants and Private Placement Warrants expire on November 9, 2023 or earlier upon redemption or liquidation. The Public Warrants and Private Placement Warrants are recognized as warrant liabilities in the condensed consolidated balance sheet.

Series A Warrants

The Company issued warrants to certain institutional investors in connection with the Company’s private placement of Series A preferred stock on May 24, 2019 (the “Series A Warrants”). The Company issued additional warrants to the purchasers in quarterly installments beginning nine months after May 24, 2019 and ending on March 31, 2022.

During the three months ended March 31, 2022 and 2021, the Company issued 444,444 additional Series A Warrants to the purchasers of Series A preferred stock in accordance with the Series A preferred stock purchase agreement.

As of March 31, 2022, the outstanding Series A Warrants were exercisable for 1,904,761 shares of Class A common stock. The Series A Warrants entitle their holders to purchase two-sevenths of a share of Class A common stock at an exercise price of $7.66 per warrant ($26.81 per full share equivalent), to be exercised only for a whole number of shares of Class A common stock. The Series A Warrants expire on November 25, 2025. The Series A Warrants are recognized as warrant liabilities in the condensed consolidated balance sheet.

Term C Loan Warrants

On February 28, 2022, in connection with the entry into the Term C Loan, the Company issued 13,953,488 warrants to certain of the Term C Loan Lenders (the “February 2022 Warrants”) exercisable to purchase an equivalent number of shares of Class A common stock at an exercise price of $1.10 per share, subject to adjustment, and expiring on February 28, 2028.

On March 1, 2022, in connection with the entry into the Term C Loan, the Company issued 1,046,511 warrants to certain of the Term C Loan Lenders (the “March 2022 Warrants” and, together with the February 2022 Warrants, the “Term C Loan Warrants”) exercisable to purchase an equivalent number of shares of Class A common stock at an exercise price of $1.29, subject to adjustment, and expiring on March 1, 2028.

The Term C Loan Warrants were offered in a private offering that is exempt from registration under the Securities Act, and may not be offered or sold in the United States absent such registration or an exemption from the registration requirements of the Securities Act.

The Term C Loan Warrants are recognized as equity in the condensed consolidated balance sheet. See “Note 11 - Debt” for additional disclosure on the accounting for the Term C Loan and Term C Loan Warrants.

RDO Investor Warrants and Placement Agent Warrants

On March 11, 2022, the Company completed a registered direct offering for 14,180,375 shares of Class A common stock and in a concurrent private placement, the Company also issued 14,180,375 warrants to the purchasers of the shares of Class A common stock in the registered direct offering (the “RDO Investor Warrants”).

The RDO Investor Warrants are exercisable to purchase an equivalent number of shares of Class A common stock at an initial exercise price of $1.763 per share. The RDO Investor Warrants are exercisable immediately, subject to certain ownership limitations and will expire three and one-half years following the date of issuance.

The Company also issued 992,626 warrants to the placement agent as partial compensation for its services in connection with the registered direct offering (the “Placement Agent Warrants”) on March 11, 2022. The Placement Agent Warrants are exercisable to purchase an equivalent number of shares of Class A common stock at an initial exercise price of $2.2038 per share. The Placement Agent Warrants are exercisable immediately, subject to certain ownership limitations and will expire three and one-half years following the date of issuance.

The RDO Investor Warrants and Placement Agent Warrants are recognized as equity in the condensed consolidated balance sheet. See “Note 14 - Stockholders’ Equity” for additional disclosure on the accounting for the RDO Investor Warrants and Placement Agent Warrants.

Fair Value Measurement

The Company’s Public Warrants, Private Placement Warrants and Series A Warrants are accounted for as liabilities measured at fair value upon issuance, with subsequent changes in fair value reported in the Company’s condensed consolidated statements of operations each reporting period.

The following tables present the Company's fair value hierarchy for liabilities measured at fair value on a recurring basis:

 

 

Quoted Prices in Active Markets
(Level 1)

 

 

Other Observable Inputs
(Level 2)

 

 

Unobservable Inputs
(Level 3)

 

 

Total

 

As of March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Public Warrants

 

$

1,100

 

 

$

-

 

 

$

-

 

 

$

1,100

 

Private Placement Warrants

 

 

-

 

 

 

1,202

 

 

 

-

 

 

 

1,202

 

Series A Warrants

 

 

-

 

 

 

2,005

 

 

 

-

 

 

 

2,005

 

 

 

$

1,100

 

 

$

3,207

 

 

$

-

 

 

$

4,307

 

As of December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Public Warrants

 

$

752

 

 

$

-

 

 

$

-

 

 

$

752

 

Private Placement Warrants

 

 

-

 

 

 

871

 

 

 

-

 

 

 

871

 

Series A Warrants

 

 

-

 

 

 

1,934

 

 

 

-

 

 

 

1,934

 

 

 

$

752

 

 

$

2,805

 

 

$

-

 

 

$

3,557

 

Public Warrants. The fair value of the Public Warrants are classified as Level 1 in the fair value hierarchy and is valued using quoted market prices, as they are traded in active markets.

Private Placement Warrants. The fair value of the Private Placement Warrants are classified as Level 2 in the fair value hierarchy and is determined using a Monte Carlo simulation model.

Series A Warrants. The fair value of the Series A Warrants are classified as Level 2 in the fair value hierarchy and is determined using the Black-Scholes option pricing model.

The following assumptions were used to calculate the fair value for the Private Placement Warrants and Series A Warrants:

 

 

Private Placement Warrants

 

Series A Warrants

As of March 31, 2022

 

 

 

 

Expected remaining life

 

1.6 years

 

3.7 years

Volatility rate

 

329.0%

 

329.0%

Risk-free interest rate

 

2.0%

 

2.4%

Expected dividend rate

 

0%

 

0%

 

 

 

 

 

As of December 31, 2021

 

 

 

 

Expected remaining life

 

1.9 years

 

3.9 years

Volatility rate

 

227.5%

 

227.5%

Risk-free interest rate

 

0.7%

 

1.1%

Expected dividend rate

 

0%

 

0%