Note 14. WARRANTS

The Company’s outstanding Common Stock warrants are a combination of equity and liability classified. As of June 30, 2025, and December 31, 2024, the Company had 28,193,118 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 $1.44 and expire at various dates through May 2030. During the six months ended June 30, 2025, a total number of 4,870,010 warrants were exercised into an equivalent number of shares of Common Stock as compared to 48 warrants being exercised during the six months ended June 30, 2024. The proceeds of the exercised warrants for the six months ended June 30, 2025 were approximately $2.4 million, compared to proceeds of $294 during the six months ended June 30, 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”). 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.

On May 7, 2025 the Company completed a public offering (the “Offering”) of 7,784,904 shares of our Common Stock, pre-funded warrants to purchase 2,371,346 shares of our Common Stock, together with warrants to initially purchase up to 15,234,375 shares of Common Stock (the “May 2025 Warrants”). Each share and accompanying warrant was sold at a combined public offering price of $0.32 per share, and each pre-funded warrant and accompanying warrant was sold at a combined public offering price of $0.313 per share.

The May 2025 Warrants have an initial exercise price of $0.352 per share. and are exercisable for a term of five years on a date that is five years after the later of receiving the shareholder The number of shares of our Common Stock issuable upon exercise of the May 2025 Warrant Shares is subject to the following adjustments: (i) a 30% increase in the number of shares of Common Stock that would be issuable upon exercise of the May 2025 Warrants if a reverse stock split is effected prior to the expiration of the May 2025 Warrants (the “Reverse Stock Split Adjustment”), and (ii) subject to Warrant Stockholder Approval (as defined below), a decrease of the exercise price of the May 2025 Warrants, if in a subsequent offering of the Company’s securities the price paid for Common Stock, the exercise price of any options or warrants or the conversion price of any convertible securities issued in such subsequent offering is less than the exercise price immediately prior to such subsequent offering, to an exercise price that is equal to the lowest of the price paid for Common Stock, the exercise price of any options or warrants or the conversion price of any convertible securities issued in such subsequent offering (subject to a floor of $0.10 per share) and an increase in the number of shares of Common Stock underlying the May 2025 Warrants upon such exercise price reset so that the reset exercise price multiplied by the increased number of shares equals the aggregate proceeds that would have resulted from the full exercise of the May 2025 Warrants immediately prior to the reset (the “Anti-Dilution Adjustment”). The May 2025 Warrants will be immediately exercisable, except that the issuance of shares of Common Stock upon exercise of the May 2025 Warrants pursuant to the Anti-Dilution Adjustment will be subject to the filing of an amendment to the Company’s certificate of incorporation, as amended (the “Certificate of Incorporation”), with the Secretary of State of the State of Delaware to increase the Company’s authorized number of shares of Common Stock to 350,000,000 shares (the “Certificate of Amendment”) and the date of stockholder approval of the Anti-Dilution Adjustment (collectively, the “Warrant Stockholder Approval”). The May 2025 Warrants will expire on the five-year anniversary of the later of the date that the Company files a Current Report on Form 8-K giving public notice of the Warrant Stockholder Approval (the “Stockholder Approval Notice Date”) and the effective date of the filing of the Certificate of Amendment..

The Company agreed not to consummate a subsequent offering of its securities at a price less than the exercise price of the May 2025 Warrants immediately prior to such subsequent offering (a “Dilutive Issuance”) until the earlier of (i) eight months from the closing date of the Offering; and (ii) later of: (a) the filing of a registration statement registering certain shares of Common Stock issuable as a result of the Anti-Dilution Adjustment; (b) the Stockholder Approval Notice Date; and (c) the effective date of the filing of the Certificate of Amendment. Based on an initial exercise price of $0.352 per share (equal to 110% of the combined offering price per Share and accompanying May 2025 Warrant), if a reverse stock split is effected an additional 4,570,312 shares of Common Stock (on a pre-reverse stock split basis which number shall be adjusted based on the reverse stock split ratio) will be issuable upon exercise of the May 2025 Warrants and then, subject to obtaining Warrant Stockholder Approval, if a Dilutive Issuance is consummated, an additional 49,907,811 shares of Common Stock (on a pre-reverse stock split basis which number shall be adjusted based on the reverse stock split ratio) would be issuable upon exercise of the May 2025 Warrants.

The exercise price of the May 2025 Warrants and number of shares of Common Stock issuable upon exercise thereof will also adjust in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events.

The pre-funded warrants may be exercised on a cashless basis at any time at an exercise price of $0.007 per share. The May 2025 Warrants may be exercised on a cashless basis if at the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for, the issuance of the May 2025 Warrant Shares to the holder, provided however that those purchasers who do not enter into the Purchase Agreement and do not provide the Company with information required for registration of the resale of shares of Common Stock shall not have any of their shares issuable as a result of an Anti-Dilution Adjustment included in the registration statement the Company will file covering shares issuable as a result of an Anti-Dilution Adjustment and will not be able to effect a cashless exercise with respect to such shares.

As of June 30, 2025, all pre-funded warrants had been exercised and the Company received proceeds $12,855 and issued 2,361,224 shares. In addition, designees of the placement agent for the Offering were issued warrants to purchase an aggregate of up to 304,687 shares of Common Stock, with an exercise price of $0.352 per share and are exercisable for five years.

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:

SUMMARY OF AGGREGATE FAIR VALUES FOR THE WARRANT DERIVATIVE LIABILITY 

The fair value of the above warrants was recorded as a warrant liability for the Offering, with the residual proceeds recorded in additional paid-in capital. The fair value of the Offering using the assumptions above was approximately $2.9 million for the warrant liability and approximately $0.2 million to equity.

During the six months ended June 30, 2025, 70,313 warrants were exercised resulting in reclassification to additional paid-in capital in the amount of approximately $46,000. Due to fair value changes since the transaction through June 30, 2025, the Company recorded a loss on the remeasurement of its warrant liabilities of approximately $1.0 million.

As of June 30, 2025, there were tradeable warrants to purchase up to an aggregate of 1,601,255 shares of Common Stock outstanding and non-tradeable warrants to purchase an aggregate of up to 2,704,458 shares of Common Stock outstanding.

SCHEDULE OF CLASS OF WARRANT