Annual report pursuant to Section 13 and 15(d)

STOCKHOLDERS' DEFICIT (Tables)

v3.21.1
STOCKHOLDERS' DEFICIT (Tables)
12 Months Ended
Dec. 31, 2020
Schedule of fair value based upon assumptions

The fair values as of October 16, 2020 and December 31, 2020 were based upon following assumptions:

 

 

 

 

December 31, 2020

 

 

At Issuance

 

Principal outstanding (South Korean won)

 

KRW 30 billion

 

 

KRW 30 billion

 

Stock price

 

KRW 6,060

 

 

KRW 7,210

 

Expected life (in years)

 

 

9.79

 

 

 

10.00

 

Selected yield

 

 

10.50

%

 

 

13.00

%

Expected volatility (Telcon common stock)

 

 

85.80

%

 

 

86.90

%

Risk-free interest rate (South Korea government bond)

 

 

1.72

%

 

 

1.50

%

Expected dividend yield

 

 

0.00

%

 

 

0.00

%

Conversion price

 

KRW 6,028

 

 

KRW 9,232

 

Summary of outstanding warrants

A summary of the Company’s warrants activity for the years ended December 31, 2020 and 2019 is presented below:

 

 

December 31, 2020

 

 

December 31, 2019

 

 

Warrants outstanding, beginning of period

 

4,931,099

 

 

 

3,436,431

 

 

Assumed as part of Merger

 

 

 

 

1,044,939

 

 

Deemed Granted

 

3,625,000

 

 

 

500,729

 

(a)

Exercised

 

 

 

 

(51,000

)

 

Cancelled, forfeited and expired

 

(116,619

)

 

 

 

 

Warrants outstanding, end of period

 

8,439,480

 

 

 

4,931,099

 

 

 

(a)

Represents warrant shares issuable upon the Merger by reason of antidilution adjustments under former EMI warrants.

 

A summary of outstanding warrants by year issued and exercise price as of December 31, 2020 is presented below.

 

 

 

 

 

Outstanding

 

 

Exercisable

 

Year issued

Exercise Price

 

Number of

Warrants

Issued

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

 

Weighted

Average

Exercise

Price

 

 

Total

 

 

Weighted

Average

Exercise

Price

 

Prior to January 1, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$4.29-$10.28

 

 

3,439,007

 

 

 

1.66

 

 

$

4.38

 

 

 

3,439,007

 

 

$

4.38

 

 

Total

 

 

3,439,007

 

 

 

 

 

 

 

 

 

 

 

3,439,007

 

 

 

 

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

6.12

 

 

32,391

 

 

 

4.41

 

 

$

6.12

 

 

 

32,391

 

 

$

6.12

 

 

$

12.00

 

 

76,575

 

 

 

3.73

 

 

$

12.00

 

 

 

76,575

 

 

$

12.00

 

 

$

14.04

 

 

174,999

 

 

 

3.24

 

 

$

14.04

 

 

 

174,999

 

 

$

14.04

 

 

$

31.50

 

 

737,975

 

 

 

2.57

 

 

$

31.50

 

 

 

737,975

 

 

$

31.50

 

 

$

36.24

 

 

22,333

 

 

 

2.57

 

 

$

36.24

 

 

 

22,333

 

 

$

36.24

 

 

$

5.87

 

 

256,200

 

 

 

3.83

 

 

$

5.87

 

 

 

256,200

 

 

$

5.87

 

 

$

7.68

 

 

75,000

 

 

 

4.55

 

 

$

7.68

 

 

 

75,000

 

 

$

7.68

 

 

2019 Total

 

 

1,375,473

 

 

 

 

 

 

 

 

 

 

 

1,375,473

 

 

 

 

 

At December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2.10

 

 

75,000

 

 

 

4.73

 

 

$

2.10

 

 

 

75,000

 

 

$

4.70

 

 

$

2.05

 

 

1,250,000

 

 

 

4.46

 

 

$

2.05

 

 

 

 

 

$

 

 

$

2.00

 

 

2,300,000

 

 

 

4.70

 

 

$

2.00

 

 

 

2,300,000

 

 

$

4.70

 

 

2020 Total

 

 

3,625,000

 

 

 

 

 

 

 

 

 

 

 

2,375,000

 

 

 

 

 

 

Grand Total

 

 

8,439,480

 

 

 

 

 

 

 

 

 

 

 

7,189,480

 

 

 

 

 

  

Schedule of valuation assumptions

Management has valued stock options at their date of grant utilizing the Black‑Scholes‑Merton Option pricing model. The fair value of the underlying shares was determined by the market value of stock of similar companies and recent arm’s length transactions involving the sale of the Company’s common stock. Prior the Merger, the Company lacked company-specific historical and implied volatility information for its common stock. Therefore, the expected volatility was calculated using the historical volatility of a comparative public traded companies. The following table presents the assumptions used on recent dates on which options were granted by the Company.

 

 

 

June 29, 2020

 

 

June 19, 2019

 

Stock Price

 

$

1.67

 

 

$

10.30

 

Exercise Price

 

$

2.05

 

 

$

10.30

 

Term

 

5.5-6 years

 

 

6 years

 

Risk-Free Rate

 

0.28% - 0.38%

 

 

1.83%

 

Dividend Yield

 

 

 

 

Volatility

 

78.91%-80.49%

 

 

 

67.16

%

 

 

Summary of stock option activity

A summary of the Company’s stock option activity for the years ended December 31, 2020 and 2019 is presented below:

 

 

December 31, 2020

 

 

December 31, 2019

 

 

 

Number of

Options

 

 

Weighted‑

Average

Exercise

Price

 

 

Number of

Options

 

 

Weighted‑

Average

Exercise

Price

 

Options outstanding, beginning of period

 

 

7,245,350

 

 

$

4.68

 

 

 

6,642,200

 

 

$

4.40

 

Granted or deemed issued

 

 

90,000

 

 

$

2.05

 

 

 

636,683

 

(a)

$

10.10

 

Exercised

 

 

 

 

 

 

 

 

(167

)

 

$

5.00

 

Cancelled, forfeited and expired

 

 

(225,325

)

 

$

5.08

 

 

 

(33,366

)

 

$

11.29

 

Options outstanding, end of period

 

 

7,110,025

 

 

$

4.63

 

 

 

7,245,350

 

 

$

4.68

 

Options exercisable at end of year

 

 

6,986,268

 

 

$

4.47

 

 

 

7,001,680

 

 

$

4.47

 

Options available for future grant

 

 

2,302,475

 

 

 

 

 

 

 

2,167,150

 

 

 

 

 

 

(a)

Upon the Merger, the exercise prices of outstanding EMI options were adjusted and additional options were deemed issued based upon the exchange ratio in the Merger.

Senior Secured Convertible Debentures [Member]  
Schedule of fair value of conversion feature liabilities

The following table presents the change in fair value of the warrants as of December 31, 2020 (in thousands):

Warrant liability—Wealth Threshold

 

December 31, 2020

 

Balance, beginning of period

 

$

 

Fair value at issuance date

 

 

1,425

 

Change in fair value included in the statement of comprehensive income (loss)

 

 

(437

)

Balance, end of period

 

$

988

 

Schedule of fair value based upon assumptions

The fair value of the warrant derivative liabilities was determined using the Black-Scholes Merton model and was based upon following assumptions:

 

 

December 31, 2020

 

 

At Issuance

 

Exercise price

 

$

2.05

 

 

$

2.05

 

Stock price

 

$

1.68

 

 

$

1.23

 

Risk‑free interest rate

 

 

0.31

%

 

 

0.33

%

Expected volatility (peer group)

 

 

101.00

%

 

 

94.00

%

Expected life (in years)

 

 

4.46

 

 

 

5.00

 

Expected dividend yield

 

 

 

 

Number outstanding

 

 

1,250,000

 

 

 

1,250,000

 

GPB Debt Holdings II, LLC [Member]  
Schedule of fair value of conversion feature liabilities

The following table sets forth the fair values of the warrants as of December 31, 2020 and 2019 (in thousands):

 

Warrant liability—GPB

 

December 31, 2020

 

 

December 31, 2019

 

Balance, beginning of period

 

$

38

 

 

$

1,399

 

Change in fair value included in the statement of operations

 

 

45

 

 

 

(1,361

)

Balance, end of period

 

$

83

 

 

$

38

 

Schedule of fair value based upon assumptions

The value as of the dates set forth the in the table below, were based on upon following assumptions:

 

 

 

December 31, 2020

 

 

December 31, 2019

 

Stock price

 

$

1.23

 

 

$

1.97

 

Risk‑free interest rate

 

 

0.15

%

 

 

1.64

%

Expected volatility (peer group)

 

 

120.00

%

 

 

60.00

%

Expected life (in years)

 

 

2.50

 

 

 

3.50

 

Expected dividend yield

 

 

 

 

 

 

Number outstanding

 

 

252,802

 

 

 

252,802