WARRANTS

3 Months Ended

Mar. 31, 2024

Warrants

WARRANTS

Note 10     WARRANTS

On April 1, 2021, the Company entered into a securities purchase agreement with certain investors for an aggregate of 80,000 shares of its preferred stock at a per share purchase price of $2.50. As part of the transaction, the investors received one Class C warrant and one Class D warrant for the subscription of each preferred share. The Class C warrants consist of the right to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $2.50 per share exercisable for 36 months from the date of inception. The Class D warrants consist of the right to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $5.00 per share exercisable for 36 months from the date of inception. The subscription was completed on August 10, 2021.

On September 27, 2021, the Company entered into another securities purchase agreement with the same investors, pursuant to which the Company issued in a registered direct offering, an aggregate of 48,000 shares of common stock of the Company at a per share purchase price of $2.50. In addition, the investors also received one Class C warrant and one Class D warrant for the subscription of each preferred share. The Class C warrants consist of the right to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $2.50 per share exercisable for 36 months from the date of inception. The Class D warrants consist of the right to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $5.00 per share exercisable for 36 months from the date of inception.

Public Offering

In connection with a firm commitment underwritten public offering (the “Public Offering”) pursuant to a registration statement on Form S-1, amended (File No. 333-264059), originally filed with the SEC on April 1, 2022, and declared effective by the SEC on August 10, 2022, the Company sold an aggregate of 1,880,000 units (the “Units”). Each Unit consisted of one share of common stock and a warrant to purchase two shares of common stock. Each warrant underlying the Units was exercisable from the date of issuance until the fifth anniversary of the issuance date for $3.85 per share of Common Stock (110% of the public offering price per Unit), subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the common stock as described in the warrants. The Public Offering closed on August 15, 2022, and the Company received total gross proceeds of $6.58 million. After deducting the underwriting commissions, discounts, and offering expenses, the Company received net proceeds of approximately $5.3 million.

In connection with the Public Offering and pursuant to the underwriting agreement between us and the underwriters named therein, we granted the underwriters a 45-day option to purchase up to 282,000 additional shares of common stock and warrants, equivalent to 15% of the Units sold in the Public Offering, at the public offering price per Unit, less underwriting discounts and commissions, to cover over-allotments, if any. On September 23, 2022, the underwriters exercised their option to purchase an additional 282,000 warrants from us for gross proceeds of $2,820. The warrants were issued to the underwriters on September 26, 2022.

On November 14, 2022, the exercise price of the warrants was decreased to $1.925. Under the terms of the warrants, the exercise price was to be decreased to the greater of (i) $1.925, which represented 50% of the original exercise price; and (ii) 100% of the last volume weighted average price immediately preceding the 90^th calendar day following the initial issuance date (the “Reset Exercise Price”) if, on the date that is 90 calendar days immediately following the initial issuance date, the Reset Exercise Price is less than the original $3.85 exercise price on that date.

The Reset Exercise Price remains subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Common Stock as described in the Warrants.

Reverse Split

In connection with the Public Offering, on August 11, 2022, the Company effected a 2:3 reverse stock split for each share of common stock issued and outstanding. As a result of reverse stock split, the shares of common stock issuable upon the conversion of Class C warrant decreased from 80,000 shares to 53,334 shares for $3.75 per share and Class D warrant decreased from 80,000 shares to 53,334 shares for $7.50 per share.

Appraisal Date (Inception Date)	C Warrant August 10, 2021		D Warrant August 10, 2021
(Unaudited)
	$		$
Market price per share (USD/share)		1.47		0.66
Exercise price (USD/price)		2.50		5.00
Risk free rate		0.14%		0.14%
Dividend yield		0.00%		0.00%
Expected term/ Contractual life (years)		1.39		1.39
Expected volatility		56.36%		56.36%

Appraisal Date (Inception Date)	C Warrant September 27, 2021		D Warrant September 27, 2021
(Unaudited)
	$		$
Market price per share (USD/share)		1.71		0.73
Exercise price (USD/price)		2.50		5.00
Risk free rate		0.15%		0.15%
Dividend yield		0.00%		0.00%
Expected term/ Contractual life (years)		1.26		1.26
Expected volatility		52.93%		52.93%

The following is a reconciliation of the beginning and ending balances of warrants liability measured at fair value on a recurring basis using Level 3 inputs:

	March 31, 2024		December 31, 2023
	(Unaudited)		(Audited)
	$		$
Balance at the beginning of period		1,179,768		1,179,768
Warrants issued to investors		–		–
Warrants redeemed		–		–
Fair value change of warrants included in earnings		–		–
Total		1,179,768		1,179,768

The following is a summary of the warrant activity:

	Number of Warrants		Average Exercise Price		Weighted Average Remaining Contractual Term in Years
Outstanding at January 1, 2024		2,255,146		2.14		3.65
Exercisable at January 1, 2024		2,255,146		2.14		3.65
Granted		–		–		–
Exercised / surrendered		–		–		–
Expired		–		–		–
Outstanding at March 31, 2024		2,255,146		2.14		3.65
Exercisable at March 31, 2024		2,255,146		2.14		3.65