|3 Months Ended|
Jun. 30, 2020
NOTE 7 – WARRANT LIABILITIES
In 2004, the Company issued warrants to various investors and brokers for the purchase of Series C preferred stock in connection with a private placement (the “Series C Warrants”). The Series C Warrants were subsequently extended and, upon closing of the reverse recapitalization transaction with Ritter, exchanged for warrants to purchase common stock of the Company, pursuant to the Series C Warrant terms as adjusted. The Series C Warrants were classified as liabilities, but had minimal fair value prior to the merger with Ritter.
In exchange for the Series C Warrants, upon closing of the merger with Ritter, the holders received warrants to purchase an aggregate of 4,713,490 shares of the Company’s common stock at $0.72 per share, subject to adjustment. As of June 30, 2020, the warrants have remaining terms ranging from 3.1 to 5.3 years. The warrants were determined to be liability-classified pursuant to the guidance in ASC 480 and ASC 815-40, resulting from inclusion of a leveraged ratchet provision for subsequent dilutive issuances.
The following table summarizes the warrant activity for the year ended June 30, 2020:
The following table summarizes the warrant activity for the year ended June 30, 2019:
The following table presents the Company’s fair value hierarchy for its warrant liabilities measured at fair value on a recurring basis as of June 30, 2020:
The following table is a reconciliation for those items measured at fair value on a recurring basis using Level 3 inputs during the three months ended June 30, 2020:
The value of the warrant liabilities based on a valuation received from an independent valuation firm was determined using a Monte-Carlo simulation.
The value as of the dates set forth in the table above, was based on upon following assumptions: