Company: GEDC
Filing Date: 2025-04-02
Form Type: 10-K
Source: 0001641172-25-002190
Chunk: 68

Company: CalEthos, Inc.
Filing Date: 2025-04-02
Form: 10-K
Item: Item 1
Chunk 68
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 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 dividend rate of nil.

The
Company accounted for the Exchange agreement in accordance with ASC 470 – Debt. Therefore, the Company incurred a $2,317,000
loss on extinguishment, which was the difference between the fair value of The Extension Warrants compared to the aggregate fair
value of the Exchange Warrants and Exchange
Shares. The loss on  extinguishment of note payable – related party was
calculated as follows:

SCHEDULE
OF LOSS ON EXTINGUISHMENT OF NOTE PAYABLE RELATED PARTY

    Loan - principal balance 
    $1,000,000 

    Value The Extension Warrants - cancelled 
     755,000 
  
    Total Consideration 
     1,755,000 

    Share received 
     500,000 
  
    Stock price 
     1.75 
  
    Common stock value 
     875,000 
  
    Value of Exchange Warrant 
     3,197,000 
  
    Value received 
     4,072,000 
  
    Loss on extinguishment of note payable – related party 
    $2,317,000 

    F-13

On
the Exchange Date the 600,000  Extension Warrants had a fair value of $755,000
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