Annual report pursuant to Section 13 and 15(d)

Common Stock warrants

v3.24.1
Common Stock warrants
12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Common Stock warrants

Note 12 – Common Stock warrants

 

On August 21, 1998, the Company filed for voluntary reorganization with the United States Bankruptcy Court for the Northern District of California, and on January 11, 2000, the Company’s Plan of Reorganization was approved. Among other things, the Company’s Plan of Reorganization allowed creditors and claimants to receive new Series A, B, C, and D warrants in settlement of their prior claims. The warrants expire on May 11, 2038.

 

All Series A, B, C, and D warrants have been called, and as of December 31, 2023, all Series A, B, and C warrants have been exercised. The Company intends to allow warrant holders or Company designees, in place of original holders, additional time as needed to exercise the remaining Series D warrants. The Company may lower the exercise price of all or part of a warrant series at any time. Similarly, the Company could reverse split the stock to raise the stock price above the warrant exercise price. The warrants are specifically not affected and do not split with the shares in the event of a reverse split. If the called warrants are not exercised, the Company has the right to designate the warrants to a new holder in return for a $0.10 per share redemption fee payable to the original warrant holders. All such changes in the exercise price of warrants were provided for by the court in the Plan of Reorganization to provide a mechanism for all debtors to receive value even if they could not or did not exercise their warrants. Therefore, management believes that the act of lowering the exercise price is not a change from the original warrant grants, and the Company did not record an accounting impact as the result of such a change in exercise prices.

 

All Series A and Series C warrants were exercised by December 31, 2014. All Series B warrants were exercised on January 11, 2022. Exercise prices in effect from January 1, 2015 through December 31, 2022 for Series D warrants were $1.60. On October 14, 2023, the Board of Directors of the Company authorized a reset of the Series D warrants strike price to $0.02 plus a $0.10 per warrant redemption fee, if applicable.

 

In 2009, the Company entered into an Investment Banking agreement with Network 1 Financial Securities, Inc. and a related Strategic Advisory Agreement with Lenox Hill Partners, LLC, with regard to a potential merger with a cancer development company. In conjunction with those related agreements, the Company issued 689,159 Series H ($7) Warrants with a 30-year life. On November 14, 2022, the 275,647 Series H Warrants issued to Lenox Hill Partners, LLC were canceled pursuant to a Settlement Agreement. As of December 31, 2023, there were 413,512 Series H ($7) Warrants outstanding. The warrants are subject to cashless exercise based upon the ten-day trailing closing bid price preceding the exercise as interpreted by the Company.

 

As of December 31, 2023, and 2022, the weighted average contractual life for all Mentor warrants was 14.5 years and 15.5 years, respectively, and the weighted average outstanding warrant exercise price was $0.64 and $1.94 per share, respectively.

 

During the years ended December 31, 2023 and 2022, 2,000,000 and 90,410 warrants were exercised, and no warrants were issued. The intrinsic value of outstanding warrants at December 31, 2023 and 2022 was $180,200 and $0, respectively.

 

The following table summarizes Series B and Series D common stock warrants as of each period:

 

    Series B     Series D     B and D Total  
Outstanding at December 31, 2021     87,456       6,252,954       6,340,410  
Issued     -       -       -  
Exercised     87,456       2,954       90,410  
Outstanding at December 31, 2022     -       6,250,000       6,250,000  
Issued     -       -       -  
Exercised     -       2,000,000       2,000,000  
Outstanding at December 31, 2023     -       4,250,000       4,250,000  

 

 

Mentor Capital, Inc.

Notes to Consolidated Financial Statements

December 31, 2023 and 2022

 

Series E, F, G, and H warrants were issued for investment banking and advisory services during 2009. Series E, F, and G warrants were exercised in 2014. On November 14, 2022, the 275,647 Series H Warrants of Lenox Hill Partners, LLC were canceled pursuant to a Settlement Agreement. As of December 31, 2023, there were 413,512 Series H ($7) Warrants outstanding. The following table summarizes Series H ($7) warrants as of each period:

 

   

Series H

$7.00

exercise

price

 
Outstanding at December 31, 2021     689,159  
Issued     -  
Canceled     275,647  
Exercised     -  
Outstanding at December 31, 2022     413,512  
Issued     -  
Canceled     -  
Exercised     -  
Outstanding at December 31, 2023     413,512  

 

On February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and the Company’s Third Amended Plan of Reorganization, the Company announced a minimum 30-day partial redemption of up to 1% of the already outstanding Series D warrants to provide for the court specified redemption mechanism for warrants not exercised timely by the original holder or their estates. Company designees that applied during the 30 days paid 10 cents per warrant to redeem the warrant and then exercised the Series D warrant to purchase a share of the Company’s Common stock at the court-specified formula of not more than one-half of the closing bid price on the day preceding the 30-day exercise period. In successive months, the authorized partial warrant redemption amount was recalculated, and the redemption offer was repeated according to the court formula. In the Company’s October 7, 2016 press release, Mentor stated that the 1% redemptions, which were formerly priced on a calendar month schedule, would subsequently be initiated and priced on a random date schedule after the prior 1% redemption was completed to prevent potential third-party manipulation of share prices at month-end. The periodic partial redemptions could continue to be recalculated and repeated until such unexercised warrants are exhausted or the partial redemption is otherwise paused or truncated by the Company. For the years ended December 31, 2023 and 2022, no warrants were redeemed.