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Warrants

6 Months Ended

Jun. 30, 2023

9. Warrants

The Company issued warrants to purchase 6,745 shares of common stock in 2018 in conjunction with convertible debt financing that have a redemption provision providing the holder the right to have the Company redeem all or any portion of the warrant (or shares it has converted into) at a purchase price equal to the fair market value of the shares as determined by the board of directors or an independent appraiser. As a result of this redemption provision, the warrants have been classified as a liability in the financial statements based on ASC 480 – Distinguishing Liabilities from Equity. These warrants have an exercise price of $0.48 per share and a term of 10 years. The warrants are marked to market each reporting period. The fair value is $158,994 and $70,283 at June 30, 2023 and December 31, 2022, respectively. At June 30, 2023, the Company estimated the fair value of the warrants using the Black-Scholes option pricing model with the following assumptions: Underlying common stock value of $3.64; Expected term of 4.8 years; Expected Volatility of 82.5%; Risk Free Interest Rate of 3.01%; and Dividend Yield of 0%. At December 31, 2022, the Company estimated the fair value of the warrants using the Black-Scholes option pricing model with the following assumptions: Underlying common stock value of $12.09; Expected term of 5 years; Expected Volatility of 86.0%; Risk Free Interest Rate of 3.01%; and Dividend Yield of 0%.

The Company also issued warrants in 2016 and 2019 which did not meet the criteria under ASC 480 to be classified as a liability, and instead meet equity classification criteria. The 11,466 warrants issued in 2016 expired upon the initial public offering in June 2023.

AZITRA, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Three and Six Months Ended June 30, 2023 and 2022

The following table summarizes information about warrants outstanding at June 30, 2023:

			Warrants Outstanding					Warrants Exercisable
Year Granted	Exercise Price		Number of Warrants at 6/30/2023		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Warrants at 6/30/2023		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price

2018	$	0.48		47,887	4.8 years	$	0.48		47,887	4.8 years	$	0.48
2019	$	5.28		215,846	2.6 years	$	5.28		215,846	2.6 years	$	5.28
2023	$	6.25		60,000	5.0 years	$	6.25		60,000	5.0 years	$	6.25
				323,733		$	4.75		323,733		$	4.75