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WARRANTS
 3 Months Ended
Mar. 31, 2025
Warrants  
WARRANTS

Note 14. WARRANTS

 

The Company’s outstanding Common Stock warrants are equity classified. As of March 31, 2025, and December 31, 2024, the Company had 12,873,602 and 12,298,124 warrants outstanding to purchase one share of the Company’s Common Stock for each warrant at a weighted average exercise price of $2.74 and expire at various dates through February 2030. During the three months ended March 31, 2025, a total number of 2,438,473 warrants were exercised into an equivalent number of shares of Common Stock as compared to no warrants being exercised during the three months ended March 31, 2024. The proceeds of the exercised warrants for the three months ended March 31, 2025, was $1,414,314, compared to no proceeds during the three months ended March 31, 2024.

 

On February 25, 2025, the Company entered into a warrant inducement agreement (the “February Inducement Agreement”) with certain holders (the “Holders”) of the Company’s warrants to purchase shares of the Company’s common stock, issued in a private placement offering that closed on October 21, 2024 (the “October Warrants”), and a private placement offering that closed on August 5, 2024 (the “August Warrants” and, together with the October Warrants, collectively, the “Existing Warrants”). Pursuant to the February Inducement Agreement, the Holders of the Existing Warrants agreed to exercise for cash (i) October Warrants to purchase an aggregate of up to 1,136,391 shares of Common Stock (the “October Warrant Shares”), at the reduced exercise price of $0.58 per share and August Warrants to purchase an aggregate of up to 1,302,082 shares of Common Stock (the “August Warrant Shares” and, together with the October Warrant Shares, the “Existing Warrant Shares”), at the reduced exercise price of $0.58 per share. The transactions contemplated by the Inducement Agreement (the “Warrant Inducement”) were consummated on February 26, 2025.

 

In consideration of the Holders’ immediate exercise of the Existing Warrants in accordance with the February Inducement Agreement, the Company issued unregistered Common Stock Purchase Warrants (the “New Warrants”) to purchase an aggregate of up to 2,926,166 shares of Common Stock (the “New Warrant Shares”) to the Holders of the Existing Warrants, with an exercise price of $0.85.

 

In addition, designees of the placement agent for the Offering were granted warrants to purchase an aggregate of up to 87,785 shares of Common Stock, with an exercise price of $0.85.

 

The following table summarizes the calculated aggregate fair values for the warrant derivative liability using the Black-Scholes method based on the following assumptions for the Offering:

 

Exercise price per share of warrant  $0.85 
Fair market closing price per share of Common Stock  $0.58 
Volatility   83%
Expected term (years)   5 
Risk-free interest rate   4.12%
Dividend yield   0%

 

The fair value of the New Warrants using the assumptions above was $601,752 for the warrants, $104,153 for the change in fair value related to the change in exercise price, and $31,422 for the placement agent warrants. The fair value of the above warrants was recorded in Additional paid-in capital.

 

As of March 31, 2025, there were tradeable warrants to purchase up to an aggregate of 1,601,259 shares of Common Stock outstanding and non-tradeable warrants to purchase an aggregate of up to 3,269,791 shares of Common Stock outstanding.

 

   Number of
warrants issued		  

Weighted-

average
exercise price

   Number of
warrants exercised		   Number of
warrants outstanding		 
Pre-IPO convertible notes   2,900,904   $5.31    —    2,900,904 
IPO tradeable   2,326,835    3.06    (725,580)   1,601,255 
IPO non-tradeable   3,015,464    3.06    (311,006)   2,704,458 
Direct offering March 8, 2024   1,600,000    1.64    (1,066,667)   533,333 
Placement agent direct offering March 8, 2024   32,000    1.64    —    32,000 
Inducement/direct offering August 5, 2024   1,752,082    1.50    (1,302,082)   450,000 
Placement agent direct offering August 5, 2024   49,862    1.50    —    49,862 
Direct offering October 21, 2024   2,662,782    1.50    (1,136,391)   1,526,391 
Placement agent direct offering October 21, 2024   61,448    1.50    —    61,448 
Warrant inducement February 25, 2025   2,926,166    0.85    —    2.926.166 
Placement agent warrant inducement February 25, 2025   87,785    0.85    —    87,785 
Balance at March 31, 2025   17,415,328   $2.74    (4,541,726)   12,873,602