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COMMON STOCK PURCHASE WARRANTS | 12 Months Ended
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Dec. 31, 2024
Common Stock Purchase Warrants |
COMMON STOCK PURCHASE WARRANTS | NOTE 17. COMMON STOCK PURCHASE WARRANTS 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 issuable and exercisable at any time or times on or after the date Stockholder Approval is obtained in addition to the Series A warrants that are not included in outstanding warrants until such time as 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. 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 year ended December 31, 2024, prefunded warrants to purchase 573,008 shares of common stock were fully exercised. The Series B warrants issued in this transaction became issuable and exercisable on the date Stockholder Approval is obtained. Stockholder approval was obtained on December 17, 2024 which activated the Series B warrants. Both the Series A and Series B warrants also contain price and warrant reset provisions that were activated upon the date of Stockholder Approval. The reset provisions increased the number of common shares issuable under the Series A warrant from 1,195,219 to 5,976,095 shares and the exercise price per Series A warrant was reduced from $2.51 to $0.50 per share effective December 17, 2024. In addition, the Series B warrants became effective and exercisable upon Stockholder Approval on December 17, 2024 which resulted in 4,766,777 common shares issuable under the Series B warrants with an exercise price of $0.001 per share effective December 17, 2024. The Company recognized the full Series B warrant derivative liability value of $2,865,727 as of the date of Stockholder Approval when it became effective and exercisable of which $454,150 was recorded in equity and $2,411,577 was charged as a loss in the statement of operations for the year ended December 31, 2024. The following are the assumptions used in calculating the estimated fair value of the detachable Series B warrants to purchase common stock which became effective and exercisable upon Stockholder Approval on December 17, 2024 and on December 31, 2024: SCHEDULE OF WARRANT MODIFICATION
|  | Series B issuance date - December 17, 2024 assumptions |  |  |  | Series B - December 31, 2024 assumptions |
Volatility – range |  |  | 105.5 | % |  |  | 105.7 | %
Risk-free rate |  |  | 4.26 | % |  |  | 4.38 | %
Dividend |  |  | — | % |  |  | — | %
Remaining contractual term |  |  | 4.5 years |  |  |  | 4.48 years |
Exercise price |  | $ | 0.001 |  |  | $ | 0.001 |
Common stock issuable under the warrants |  |  | 4,766,777 |  |  |  | 3,793,777 |
During the year ended December 31, 2024, Series B warrants to purchase 973,000 shares of common stock were fully exercised. In conjunction with the exercise of the Series B warrants, the Company transitioned the related warrant derivative liability totaling $584,955 to equity as of their exercise date. The warrant derivative liability related to the Series B warrants was $1,989,806 as of December 31, 2024. The change in fair value of the Series B warrant derivative liability from their issuance date through December 31, 2024 totaled $290,965 which was included as a loss in the statement of operations for the year ended December 31, 2024. 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 prefunded warrants and Series A warrants as of their date of issuance and as of December 31, 2024:
|  | Issuance date assumptions |  |  | December 31, 2024 assumptions |
Volatility – range |  |  | 72.1 - 101.1 | % |  |  | 105.7 | %
Risk-free rate |  |  | 4.25 – 5.46 | % |  |  | 4.38 | %
Dividend |  |  | — | % |  |  | — | %
Remaining contractual term |  |  | 0.1 - 5.0 years |  |  |  | 4.5 years |
Exercise price |  | $ | 2.51 |  |  | $ | 0.502 |
Common stock issuable under the warrants |  |  | 1,768,227 |  |  |  | 5,976,872 |
The Company recognized the fair value of the Series A warrants of $1,998,074 as a warrant derivative liability as of the date of issuance. During the year ended December 31, 2024, there were no Series A warrants exercised. The fair value of the warrant derivative liability related to the Series A warrants was $2,408,598 as of December 31, 2024. The change in fair value of the Series A warrant derivative liability from their issuance date through December 31, 2024 totaled $410,524 which was included as a loss in the statement of operations for the year ended December 31, 2024. 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 liabilities as of their date of issuance and as of December 31, 2024:
|  | Issuance date assumptions |  |  | December 31, 2024 assumptions |
Volatility - range |  |  | 106.0 | % |  | $ | 109.5 | %
Risk-free rate |  |  | 3.36 | % |  |  | 4.38 | %
Dividend |  |  | — | % |  |  | — | %
Remaining contractual term |  |  | 5.0 years |  |  |  | 3.3 years |
Exercise price |  |  | 5.50 – 7.50 |  |  |  | 5.50 – 7.50 |
Common stock issuable under the warrants |  |  | 1,125,000 |  |  |  | 1,125,000 |
The following table summarizes information about shares issuable under warrants outstanding during the years ended December 31, 2024 and 2023: SCHEDULE OF WARRANT ACTIVITY
|  | Warrants |  |  | Weighted average exercise price |
Balance, January 1, 2024 |  |  | 1,125,000 |  |  | $ | 6.50 |
Issuance – Series A and Prefunded Warrants |  |  | 1,768,227 |  |  |  | 2.51 |
Issuance - Series B warrants |  |  | 4,766,777 |  |  |  | 0.001 |
Series A warrant reset provisions |  |  | 4,780,876 |  |  |  | 0.502 |
Issued |  |  | 1,125,000 |  |  |  | 6.50 |
Exercised |  |  | (1,546,008 | ) |  |  | (0.93 | )
Terminated/Cancelled |  |  | — |  |  |  | — |
Balance, December 31, 2024 |  |  | 10,894,872 |  |  | $ | 0.95 |
|  | Warrants |  |  | Weighted average exercise price |
Balance, January 1, 2023 |  |  | 67,459 |  |  | $ | 60.26 |
Issued |  |  | 1,125,000 |  |  |  | 6.50 |
Exercised |  |  | — |  |  |  | — |
Terminated/Cancelled |  |  | (67,459 | ) |  |  | (60.26 | )
Balance, December 31, 2023 |  |  | 1,125,000 |  |  | $ | 6.50 |
The total intrinsic value of all outstanding warrants aggregated $2,128,320 and $-0- as of December 31, 2024 and 2023, respectively and the weighted average remaining term was 52.3 and 51.2 months as of December 31, 2024 and 2023, respectively. 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 December 31, 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
$ | 0.001 |  |  |  | 3,793,777 |  |  | 4.5 years
$ | 0.502 |  |  |  | 5,976,095 |  |  | 4.5 years
$ | 5.50 |  |  |  | 375,000 |  |  | 3.3 years
$ | 6.50 |  |  |  | 375,000 |  |  | 3.3 years
$ | 7.50 |  |  |  | 375,000 |  |  | 3.3 years
|  |  |  |  | 10,894,872 |  |  | 4.4 years

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