WARRANT LIABILITY |
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| WARRANT LIABILITY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WARRANT LIABILITY | 8.WARRANT LIABILITY On February 24, 2026, in connection with the PIPE financing (Note 9), the Company issued warrants to an accredited investor to purchase an aggregate of 2,500,000 shares of common stock of the Company at an exercise price of $12.00 per share, in addition to 29,700 shares of Series A Cumulative Convertible Preferred Stock. The fair value of warrants upon issuance was $4,174,276. These warrants were determined to meet the definition of a derivative liability and recorded at fair value. As such, the warrants are recognized initially at fair value and subsequently remeasured at fair value through earnings, reported as change in fair value of warrant liability in the unaudited condensed consolidated interim statements of operations. The warrant liability is classified within Level 3 of the fair value hierarchy, as the valuation technique uses significant unobservable inputs, including expected volatility and, at issuance, a discount for lack of marketability. The following is a continuity of the Company’s warrant liabilities:
The fair value of the warrant liability arising from 2,500,000 warrants issued with the PIPE financing was calculated using the Monte Carlo model. The key inputs used in the Monte Carlo model were as follows:
A Monte Carlo model is utilized due to the existence of an exercise price reset mechanism attached to these warrants, that could be triggered on the twenty-first trading day following the date that is six months after the Effective Date of the Registration Statement, the VWAP of the Company’s common stock for the 20 trading days preceding such date (the “Measurement Price”) is less than the exercise price then in effect (initially $12.00 per share), the exercise price will be reduced to the greater of the Measurement Price and $7.50. As of August 31, 2026, a discount for lack of marketability for warrant liability valuation has been reduced from 64.9% at issuance to nil, as a resale Registration Statement covering the underlying shares became effective on April 24, 2026, permitting holders to publicly resell those shares pursuant to the Registration Statement. A discount for lack of marketability of 64.9% was selected as of February 24, 2026 to calibrate the valuation model to the transaction price of the PIPE Financing, in line with the AICPA’s Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies guide. Expected volatility was estimated based on the median observed historical share price volatility of a set of comparable publicly traded exploration stage uranium companies that have similar risk considerations as the Company, due to the Company’s limited trading history. |
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