K2 Warrant and Amendment Warrant

9 Months Ended

Sep. 30, 2024

K2 Warrant and Amendment Warrant

K2 Warrant

8. K2 Warrant and Amendment Warrant

In connection with the Loan Agreement (see Note 7), the Company issued a warrant to purchase 339,725 shares of the Company’s common stock with an exercise price of $1.3246 (the “K2 Warrant”). In connection with the Loan Agreement Amendment executed March 2024 (see Note 7), the Company issued an additional warrant to purchase 55,249 shares of the Company’s common stock, with an exercise price per warrant of $2.7150 (the “Amendment Warrant”). Additionally,

pursuant to the Conversion Election, the Lenders may receive the Conversion Warrant (see Note 7). K2HV may from time to time exercise the K2 Warrant, Amendment Warrant, or Conversion Warrant (after the Conversion Election), in whole or in part, by delivering to the Company the original copy of the respective warrant, together with a duly executed notice of exercise.

The Company also granted registration rights to the Lenders with respect to shares issuable upon exercise of the K2 Warrant, Amendment Warrant, and Conversion Warrant (after the Conversion Election).

All 394,974 shares subject to the K2 Warrant and Amendment Warrant are outstanding as of September 30, 2024.

	Shares	Initial Recognition Date	Exercise Price		Expiration Date
K2 Warrant	339,725	July 27, 2022	$	1.3246	July 27, 2032
Amendment Warrant	55,249	March 1, 2024		2.7150	March 1, 2034
Total warrants outstanding	394,974

The allocated fair value upon issuance of the K2 Warrant and Amendment Warrant was estimated to be approximately $0.4 million and $0.3 million, respectively, and was recorded as additional paid-in capital on the Company’s condensed consolidated balance sheets. The fair value of the K2 Warrant and Amendment Warrant was estimated using a Black-Scholes option-pricing model with the following assumptions:

	K2 Warrant	Amendment Warrant
Stock price	$1.41	$5.01
Strike price	$1.32	$2.72
Volatility (annual)	75.30%	105.00%
Risk-free rate	2.74%	4.10%
Estimated time to expiration (years)	10	10
Dividend yield	—%	—%