Company: MIRA
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001183
Chunk: 1450

Company: MIRA PHARMACEUTICALS, INC.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 12
Chunk 1450
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 to Value Underwriter Warrants

    Expected
    price volatility 
     127.11%
  
    Risk-free
    interest rate 
     4.52%
  
    Fair
    Market Value of underlying Common Stock 
    $2.95 
  
    Expected
    Term in years 
     5
                                            years 
  
    Dividend
    yield 
     - 

    F-19

MIRA PHARMACEUTICALS, INC.

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

Bay
Shore Trust warrants

In
consideration of the line of credit provided by the Bay Shore Trust, the Company issued to the Bay Shore Trust a common stock purchase
warrant on April 28, 2023 giving the Bay Shore Trust the right to purchase up to 1,000,000 shares of common stock at an exercise price
of $5.00 per share. This warrant will expire five years after the date of grant. There are 1,000,000 warrants outstanding at December
31, 2023.

The
fair value of the warrants were estimated on the grant date using the Black-Scholes valuation model and level 3 inputs based on assumptions
for expected volatility, expected dividends, expected term, and the risk-free interest rate, which resulted in $3.5 million of deferred
financing costs. This cost was recorded as deferred financing costs and additional paid in capital on the accompanying balance sheet
and is amortized straight-line over the term of the line of credit (which is 24 months). Associated amortization of deferred finance
costs is recorded to interest expense on the 2023 condensed income statement of operations.

Subsequent
to the IPO, the Bay Shore Trust line of credit was paid in full early, resulting in $2.8 million remaining in deferred financing costs.
These costs were recorded as interest expense on the accompanying statement of operations with the offsetting entry clearing the balance
of amortization in deferred finance costs.

Key
assumptions used to value warrants in April 2023 are as follows

Schedule
of Key Assumptions Used to Value Underwriter Warrants

    Expected
    price volatility 
     88.01%
  
    Risk-free
    interest rate 
     3.51%
  
    Fair
    Market Value of underlying Common Stock 
    $1.00 
  
    Expected
    Term in years