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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

11. Fair Value Measurements

The following tables summarize the fair values and levels within the fair value hierarchy in which the fair value measurements fall for assets and liabilities measured on a recurring basis as of:

June 30, 2023

Description	Level 1		Level 2		Level 3		Total

Liabilities:
Common stock warrants	$	-	$	-	$	158,698	$	158,698
Total	$	-	$	-	$	158,698	$	158,698

December 31, 2022

Description	Level 1		Level 2		Level 3		Total

Liabilities:
Common stock warrants	$	-	$	-	$	70,283	$	70,283
2022 Convertible Notes		-		-		5,600,000		5,600,000
Total	$	-	$	-	$	5,670,283	$	5,670,283

The following table presents the changes in Level 3 instruments measured on a recurring basis for the period ended June 30, 2023:


Balance at December 31, 2022	$	5,670,283
Change in fair value of warrants		(5,621	)
Change in fair value of 2022 Convertible Notes		800,000
Balance at March 31, 2023	$	6,464,662
Change in fair value of warrants		94,036
Change in fair value of 2022 Convertible Notes		2,830,100
Conversion of 2022 Convertible Notes		(9,230,100	)
Balance at June 30, 2023	$	158,698

Fluctuation in the fair value of the Company’s Common stock is the primary driver for the change in the Common Stock Warrant liability valuation during each year. As the fair value of the Common stock increases the value to the holder of the instrument generally increases.

Fluctuations in the various inputs, including the enterprise value, time to liquidity, volatility, and discount rate are the primary drivers for the changes in valuation of the 2022 Convertible Notes each reporting period. As the fair value of the enterprise value, estimated time to liquidity, volatility, and discount rate increase, the value to the holder of the 2022 Convertible Notes generally increases.

AZITRA, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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