Warrants | Note 7. Warrants Warrants Issued in FY 2024 As discussed in Note 7, as part of the Q1 2024 SPA, the Company issued on January 26, 2024 the following warrants to purchase the Company's common stock: • Pre-Funded Warrants - warrants to purchase 4,536,216 shares of common stock with an exercise price of $ 0.0001 . The Pre-Funded Warrants had no expiration date and were exercisable commencing on the date of issuance and at any time until all of the Pre-Funded Warrants are exercised in full. The Pre-Funded Warrants were exercised in full during the first quarter-ended March 31, 2024 • Series A and Series B Warrants - in a concurrent private placement, Series A Common Warrants to purchase 10,840,761 shares of Common Stock and Series B Common Warrants to purchase 5,420,381 shares of common stock each with an exercise price of $ 0.8302 . • Investor E Warrants will be exercisable commencing on the effective date of stockholder approval for the issuance of the shares of common stock issuable upon exercise of the Investor E Warrants. The Series A Common Warrants will expire on the fifth anniversary of the Stockholder Approval Date and the Series B Common Warrants will expire on the 12-month anniversary of the Stockholder Approval Date. Maxim Group LLC acted as the placement agent in connection with the Transactions pursuant to the Placement Agency Agreement, dated January 26, 2024, by and between the Company and the Placement Agent. The Placement Agent will receive warrants to purchase common stock covering a number of shares equal to 5 % of the total number of shares of common stock sold in the Transactions. The PA Warrants will be exercisable commencing six months after the Closing and will expire five years after such date. The PA Warrants are exercisable at a price equal to 110.0 % of the offering price in connection with the placement. In accordance with ASC 815-40, Derivatives and Hedging-Contracts in Entity’s own Equity , the Company determined the Investor E and PA Warrants meet the conditions for equity classification, and should be carried on the consolidated balance sheets as a component of stockholders equity (deficit). The initial fair value of the convertible note warrants was determined using a Black-Scholes option pricing model, which considers variables such as estimated volatility, time to maturity, and the risk-free interest rate. The risk-free interest rate is the U.S. Treasury rate at the date of issuance, and the time to maturity is based on the contractual life at the date of issuance, which is five years. The Company had the following warrants outstanding at March 31, 2024 and December 31, 2023: March 31, December 31, Liability Classified Warrants Investor D Warrants 3,158,086 6,368,289 Private Placement Warrants 5,738,000 5,738,000 PIPE Investor Warrants 500,000 500,000 Subtotal 9,396,086 12,606,289 Equity Classified Warrants Investor E Warrants 16,261,142 — Placement agent Warrants 542,038 — Public Stockholders' Warrants 10,550,000 10,550,000 Legacy Warrants 48,914 48,914 Subtotal 27,402,094 10,598,914 Grand Total 36,798,180 23,205,203 The following tables provides the weighted-average strike price and time to maturity for each warrant tranche as of March 31, 2024 and December 31, 2023: March 31, 2024 Warrant Share Equivalents Weighted-Average Strike Price Weighted-Average Time to Maturity Liability Classified Warrants Investor D Warrants 3,158,086 $ 0.50 4.40 Private Placement Warrants 5,738,000 $ 11.50 3.57 PIPE Investor Warrants 500,000 $ 11.50 3.57 Equity Classified Warrants Investor E Warrants 16,261,142 $ 0.83 4.45 Placement Agent Warrants 542,038 $ 0.91 5.25 Public Stockholders' Warrants 10,550,000 $ 11.50 3.57 Legacy SeaStar Inc. Warrants 48,914 $ 10.00 2.13 December 31, 2023 Warrant Share Equivalents Weighted-Average Strike Price Weighted-Average Time to Maturity Liability Classified Warrants Investor D Warrants 6,368,289 $ 0.50 4.65 Private Placement Warrants 5,738,000 $ 11.50 3.82 PIPE Investor Warrants 500,000 $ 11.50 3.82 Equity Classified Warrants Public Stockholders' Warrants 10,550,000 $ 11.50 3.82 Legacy SeaStar Inc. Warrants 48,914 $ 10.00 2.38 Below is the warrant activity for the period ended March, 31, 2024: Investor D Warrants Investor E Warrants Placement Agent Warrants Private Placement Warrants PIPE Investor Warrants Public Stockholders' Warrants Legacy Warrants Outstanding as of December 31, 2023 6,368,289 — - 5,738,000 500,000 10,550,000 48,914 Issuance 1,055,416 20,797,358 542,038 — — — — Exercised ( 4,265,619 ) ( 4,536,216 ) — — — — — Forfeited / cancelled — — — — — — — Outstanding as of March 31, 2024 3,158,086 16,261,142 542,038 5,738,000 500,000 10,550,000 48,914 During the quarter-ended March 31, 2024, the Company incurred $ 1.6 million from losses on exercises of certain Investor D Warrants, and a loss of approximately $ 1.2 million from the mark-to-market adjustment for all remaining liability classified warrants; which are required to be remeasured at fair value at each reporting period, including March 31, 2024. ` |