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COMMON STOCK PURCHASE WARRANTS | 9 Months Ended
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Sep. 30, 2024
Common Stock Purchase Warrants |
COMMON STOCK PURCHASE WARRANTS | NOTE 11. COMMON STOCK PURCHASE WARRANTS 2023 Purchase Warrants On April 5, 2023, the Company issued warrants to purchase a total of 1,125,000 shares of Common Stock. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances. As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the consolidated statements of operations as the change in fair value of warrant derivative liabilities. Furthermore, the Company re-values the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability transitioned to change in fair value of warrant derivative liabilities through the consolidated statement of operations. The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the warrant derivative liability relative to the 2023 Purchase Warrants as of their date of issuance and as of September 30, 2024: SCHEDULE OF WARRANT MODIFICATION
|  | Issuance date assumptions |  |  | September 30, 2024 assumptions |
Volatility – range |  |  | 106.0 | % |  |  | 106.6 | %
Risk-free rate |  |  | 3.36 | % |  |  | 3.58 | %
Dividend |  |  | 0 | % |  |  | 0 | %
Remaining contractual term |  |  | 5.0 years |  |  |  | 3.5 years |
Exercise price |  | $ | 5.50 – 7.50 |  |  | $ | 5.50 – 7.50 |
Common stock issuable under the warrants |  |  | 1,125,000 |  |  |  | 1,125,000 |
2024 Purchase Warrants On June 25, 2024, the Company issued Series A and prefunded warrants to purchase a total of 1,768,227 shares of Common Stock along with the sale of common stock. The Company also issued Series B Warrants that will be exercisable at any time or times on or after the date Stockholder Approval is obtained. Both the Series A and Series B warrants have reset provisions that are activated upon the date Stockholder Approval is obtained. See NOTE 16. SUBSEQUENT EVENTS for further information on such reset provisions. The warrant terms provide for net cash settlement outside the control of the Company under certain circumstances. As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the consolidated statements of operations as the change in fair value of warrant derivative liabilities. Furthermore, the Company re-values the fair value of warrant derivative liability as of the date the warrant is exercised with the resulting warrant derivative liability transitioned to change in fair value of warrant derivative liabilities through the consolidated statement of operations. During the three and nine months ended September 30, 2024, the prefunded warrants to purchase 573,008 shares of common stock were fully exercised. The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated fair value of the derivative liability relative to the 2024 Purchase Warrants as of their date of issuance and as of September 30, 2024:
|  | Issuance date assumptions |  |  | September 30, 2024 assumptions |
Volatility – range |  |  | 72.1 - 101.1% |  |  |  | 106.6 | %
Risk-free rate |  |  | 4.25 – 5.46% |  |  |  | 3.58 | %
Dividend |  |  | 0 | % |  |  | 0 | %
Remaining contractual term |  |  | 0.1 - 5.0 years |  |  |  | 4.7 years |
Exercise price |  | $ | 2.51 |  |  | $ | 2.51 |
Common stock issuable under the warrants |  |  | 1,768,227 |  |  |  | 1,195,219 |
The following table summarizes information about shares issuable under all warrants outstanding during the nine months ended September 30, 2024: SCHEDULE OF WARRANT ACTIVITY
|  | Warrants |  |  | Weighted average exercise price |
Vested Balance, December 31, 2023 |  |  | 1,125,000 |  |  | $ | 6.50 |
Granted |  |  | 1,768,227 |  |  |  | 2.51 |
Exercised |  |  | (573,008 | ) |  |  | (2.51 | )
Forfeited/cancelled |  |  | — |  |  |  | — |
Vested Balance, September 30, 2024 |  |  | 2,320,219 |  |  | $ | 4.44 |
The total intrinsic value of all outstanding warrants aggregated $-0- as of September 30, 2024. The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable warrants to purchase shares of common stock as of September 30, 2024: SCHEDULE OF RANGE OF EXERCISE PRICES AND WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE OF WARRANTS
|  |  |  | Outstanding and exercisable warrants |
Exercise price |  |  | Number of warrants |  |  | Weighted average remaining contractual life |
$ | 5.50 |  |  |  | 375,000 |  |  |  | 3.5 years |
$ | 6.50 |  |  |  | 375,000 |  |  |  | 3.5 years |
$ | 7.50 |  |  |  | 375,000 |  |  |  | 3.5 years |
$ | 2.51 |  |  |  | 1,195,219 |  |  |  | 4.7 years |
|  |  |  |  | 2,320,219 |  |  |  | 4.1 years |

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