v3.26.1
DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS
 3 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS

NOTE 11. DERIVATIVE FINANCIAL INSTRUMENTS – WARRANTS

 

The Company evaluates and accounts for its freestanding instruments in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities.

 

The Company issued warrants, with a term of ten years, to affiliates in connection with an exchange agreement dated April 28, 2017. The warrants are exercisable from the date of issuance, commencing April 28, 2020.

 

The Company has 79,008,661 total warrants to purchase shares of Common Stock outstanding with a weighted average exercise price of $0.1521 as of June 30, 2026 and March 31, 2026.

 

As a result of the net cash settlement at the option of the holder, such warrants are classified as liabilities and measured initially and subsequently at fair value. The fair value of the Series J Warrants was calculated using a Black-Scholes model. The following assumptions were used in the Black-Scholes model to calculate the fair value of the Series J Warrants:

 

   June 30, 2026   March 31, 2026 
Fair value of the Company’s Common Stock  $0.3651   $0.3601 
Volatility   50.90%   63.96%
Initial exercise price  $0.1521   $0.1521 
Warrant term (in years)   0.8    1.1 
Risk free rate   3.47%   3.47%

 

The changes in warrants (Level 3 financial instruments) measured at fair value on a recurring basis were as follows for the periods ended three months ended June 30, 2026 and 2025:

 

Balance at March 31, 2025  $25,199,193 
Change in fair value of derivative financial instruments - warrants   22,109,537 
Balance at June 30, 2025  $47,308,730 
      
Balance at March 31, 2026   $ 17,343,586  
Change in fair value of derivative financial instruments - warrants     (94,247 )
Balance at June 30, 2026     17,249,339  

 

Measured on a Recurring Basis

 

The following table presents information about the Company’s liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell:

 

       Fair Value Measurement 
  

Amount at Fair Value

   Level 1   Level 2   Level 3 
Balance as of March 31, 2026  $17,343,586   $—   $—   $17,343,586 
Change in fair value of derivative financial instruments - warrants   (94,247)   —    —    (94,247)
Balance as of June 30, 2026  $17,249,339   $—   $—   $17,249,339 

 

       Fair Value Measurement 
  

Amount at Fair Value

   Level 1   Level 2   Level 3 
Balance as of March 31, 2025  $25,199,193   $—   $—   $25,199,193 
Change in fair value of derivative financial instruments - warrants   22,109,537    —    —    22,109,537 
Balance as of June 30, 2025  $47,308,730   $—   $—   $47,308,730 

 

 

ELITE PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)