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| WARRANT LIABILITIES | NOTE 8 – WARRANT LIABILITIES The Company accounts for its outstanding September 2024 Series A Warrants as liabilities on the balance sheet due to their derivative characteristics. These warrants are measured at fair value upon issuance and are subsequently remeasured at each reporting date, with changes in fair value recognized in the statement of operations. The fair value of the warrant liability is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. As of December 31, 2025, the fair value of the warrant liabilities was $333,657, which is presented as a current liability on the balance sheet. The September 2024 Series A Warrants are set to expire on March 20, 2028. Private Placement – 2024 On September 18, 2024, the Company completed a private placement with twelve investors, issuing a total of 3,112 units at an offering price of $787.50 per unit, for total gross proceeds of approximately $2.45 million (the “Offering 2024”). Each unit consists of one ordinary share of the Company, par value $0.875 per share (the “Ordinary Share”), one Series A warrant (the “September 2024 Series A Warrant”), and one Series B warrant (the “September 2024 Series B Warrant”). The September 2024 Series A Warrant entitles the holder to purchase one Ordinary Share at an exercise price of $1,181.25 per share, subject to downward adjustment to match the latest issuance price in the event of a dilutive issuance. The September 2024 Series B Warrant is a compensatory warrant, designed to protect investors against potential share price declines. If the Company’s share price falls below the offering price, the September 2024 Series B Warrant allows the investor to receive additional Ordinary Shares such that the total number of shares issued is equal to the original investment amount divided by the lower of: (i) 90% of the lowest trading price during any ten-day period, or (ii) a floor price of $189.00 per share (collectively, the “Purchaser Warrants”). The Purchaser Warrants are immediately exercisable upon issuance and expire three years and six months from the issuance date. Classification of September 2024 Series A Warrants and September 2024 Series B Warrants as Liabilities According to ASC 815-40-25, a financial instrument is classified as equity if it meets the following criteria: 1. Settlement in Issuer’s Own Shares: The instrument must be settled solely by delivering a fixed number of shares; and. 2.Fixed-for-Fixed Rule: The instrument must have a fixed exercise price and entitles the holder to a fixed number of shares. September 2024 Series A Warrants have the following key characteristics:
Therefore, the September 2024 Series A Warrants likely fail to meet the fixed-for-fixed criterion under ASC 815-40 and should be classified as liabilities rather than equity. Additionally, September 2024 Series A Warrants with downward pricing adjustments linked to future events are treated as derivatives. September 2024 Series B Warrants have the following key characteristics:
Therefore, the September 2024 Series B Warrants likely fail to meet the fixed-for-fixed criterion under ASC 815-40 and should be classified as liabilities rather than equity. Additionally, September 2024 Series B Warrants with downward pricing adjustments linked to future events are treated as derivatives. Fair Value Measurements of Warrant Liabilities Both September 2024 Series A Warrants and September 2024 Series B Warrants are classified as liabilities or derivatives and must be measured at fair value in accordance with ASC 815-10-45. The fair value measurement process involves the following steps:
The Company utilized the Black-Scholes option pricing model to estimate the fair value of the warrants. The significant assumptions and inputs applied in the remeasurement as of December 31, 2025 are summarized below:
These inputs are critical in determining the fair value of the warrants and are reassessed at each reporting date to ensure accuracy and compliance with ASC 815 requirements. The following table provides a summary of the assessment for September 2024 Series A Warrants and September 2024 Series B Warrants. Exercise of September 2024 Series A Warrants – 2025 In February 2025, investors exercised 1,715 September 2024 Series A Warrants at an exercise price of $189.00 per warrant. The Company received cash proceeds of $324,000, which were recorded in equity. In connection with the exercise, the warrant liability was reduced by $126,180, with a corresponding increase to , based on a fair market value of $73.61 per warrant. Summary of September 2024 Series A Warrants
The remeasurement of the September 2024 Series A Warrants resulted in a gain of $965,095 for the year ended December 31, 2025, and a loss of $50,282 for the year ended December 31, 2024. Such gain or loss was recognized in the consolidated statements of operations and comprehensive income (loss). Summary of September 2024 Series B Warrants The September 2024 Series B Warrants were exercised in full in 2024.
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