Company: GEDC
Filing Date: 2025-04-02
Form Type: 10-K
Source: 0001641172-25-002190
Chunk: 453

Company: CalEthos, Inc.
Filing Date: 2025-04-02
Form: 10-K
Item: Item 3
Chunk 453
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 amortized over the Extension period of three months. As of December 31, 2024, the Company had amortized approximately
$853,000 of the value of the Extension Warrant.

On
the Extension Maturity date, the holder of the Promissory Note agreed to extend the Extension Maturity to December 31, 2024 (“Additional
Extension”). As consideration for the Additional Extension date, the Company issued to the holder a warrant to purchase 300,000
shares of the Company’s common stock with an initial exercise price of $3.80 per share (“Additional Extension Warrant”).

The
Additional Extension Warrant was valued using the Black Scholes option pricing model for a total fair value of approximately $921,000
based on a 2.5-year term, volatility of 162%, a risk-free equivalent yield of 3.8%, and a stock price of $3.80. The fair value of $921,000
was recorded as a debt discount to be amortized over the Additional Extension period of four months. As of December 31, 2024, the Company
had amortized approximately $921,000 of the value of the Extension Warrant. 

On
December 15, 2024 (“Exchange Date”), the Company entered into an exchange agreement (“Exchange Agreement”)
to settle the Promissory Note based on the Exchange Agreement, the Promissory Note was extinguished, as of the Exchange Date and the
Extension Warrant and Additional Extension Warrants (collectively “The Extension Warrants”) were cancelled. In
exchange the Company (i) made a payment of $100,000 for the accrued and unpaid interest, (ii) issued 500,000 shares of the
Company’s common stock with a fair value of $1.75
per share (based on the Company’s closing on the Exchange Date) (“Exchange Shares”), and issued a warrant to purchase 2,258,877
shares of the Company’s common stock as a price of $2.00
per share for a period of five
years (“Exchange Warrant’). On the Exchange Date the Exchange Warrant had a fair value of $3,196,000
calculated using the Black Scholes fair value option-pricing model with key input variables provided by management: volatility of 166%,
the fair value of common stock $1.75,
estimated life range 2.5
years, risk-free rate of 4.25%
and