Company: KNRX
Filing Date: 2025-08-21
Form Type: F-1/A
Source: 0001641172-25-025066
Chunk: 204

Company: KNOREX LTD.
Filing Date: 2025-08-21
Form: F-1/A
Chunk 204
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 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Class A and Class B Ordinary Shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. Warrants that do not meet all the criteria for equity classification are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter. The Company determined that upon the warrant agreements, the Company concluded that its warrants qualify for equity accounting treatment.

For issued warrants that meet all of the criteria for equity classification and issued with debt instruments, the proceeds from the sale of the debt instruments are allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portion of the proceeds allocated to the warrants is accounted for as paid-in capital. The remainder of the proceeds is allocated to the debt instrument portion of the transaction at a discount and accreted over the term of the debt instrument using the effective interest rate method.

| F-12 |

For issued warrants that meet all of the criteria for equity classification and issued with preferred equity instruments, the portion of the proceeds so allocated to the warrants based on the relative fair values of the equity instrument without the warrants and of the warrants themselves at time of issuance are accounted for as paid-in capital altogether. The remainder of the proceeds is allocated to the equity instrument portion of the transaction at discount as a deemed dividend, which adjusts retained earnings (or in the absence of retained earnings, additional paid-in capital).

Convertible notes

Upon adoption of ASU 2020-06 on January 1, 2021, the elimination of the beneficial conversion feature (“BCF”) and cash conversion models in ASC 470-20 that requires separate accounting for embedded conversion features in convertible instruments results in the convertible debt instruments being recorded as a single liability (i.e., there is no separation of the conversion feature, and all proceeds are allocated to the convertible debt instruments as a single unit of account). Unless conversion features