Derivative Liabilities

6 Months Ended

12 Months Ended

Jun. 30, 2025

Dec. 31, 2024

Derivative Liabilities [Line Items]

Derivative liabilities

10. Derivative liabilities

On July 15, 2022, the Company issued 167 common stock purchase warrants with an exercise price of $2,817 as part of the conversion of promissory notes.

On November 21, 2023, the Company completed its Initial Public Offering (“IPO”) and issued 54 warrants (the “IPO warrants”). The IPO warrants are exercisable into one share of common stock of the Company at $5,600 per share and expire on November 21, 2028.

We analyzed the common stock purchase warrants issued as partial settlement of the promissory notes payable and the IPO warrants against the requirements of ASC 480, Distinguishing Liabilities from Equity, and determined that the warrants should be classified as financial liabilities.

ASC 815, Derivatives and Hedging, requires that the warrants be accounted for as derivative liabilities with initial and subsequent measurement at fair value with changes in fair value recorded as other income (expense).

A continuity of the Company’s common stock purchase derivative liability warrants is as follows:

	Derivative liabilities
Outstanding, December 31, 2023	$	369,158
Change in fair value of derivative liabilities		(369,158	)
Outstanding, December 31, 2024	$	-
Change in fair value of derivative liabilities		-
Outstanding, June 30, 2025	$	-

We determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes Option Pricing Model to calculate the fair value as of initial recognition and at subsequent period ends through December 31, 2024. Given the exercise price of these warrants compared to the fair market value of the Company’s shares, the value is deemed to be $nil.

As of June 30, 2025, the following warrants were outstanding:

Outstanding		Expiry date	Weighted average exercise price ($)
	167	April 27, 2027		2,817
	54	November 21, 2028		5,600
	221			3,497

As of June 30, 2025, and December 31, 2024, the weighted average life of derivative liability warrants outstanding was 2.21 and 2.71 years, respectively.

10. Derivative liabilities

On July 15, 2022, the Company issued 167 common stock purchase warrants with an exercise price of $2,817 as part of the conversion of promissory notes.

On November 21, 2023, the Company completed its Initial Public Offering (“IPO”) and issued 54 warrants (the “IPO warrants”). Each IPO warrant is exercisable into one share of common stock of the Company at $5,600 per share and expire on November 21, 2028.

We analyzed the common stock purchase warrants issued as partial settlement of the promissory notes payable and the IPO warrants against the requirements of ASC 480, Distinguishing Liabilities from Equity, and determined that the warrants should be classified as financial liabilities.

ASC 815, Derivatives and Hedging, requires that the warrants be accounted for as derivative liabilities with initial and subsequent measurement at fair value with changes in fair value recorded as other income (expense).

A continuity of the Company’s common stock purchase derivative liability warrants is as follows:

	Derivative liabilities
Outstanding, December 31, 2022	$	68,455
Addition of new derivatives during IPO		229,437
Change in fair value of derivative liabilities		71,266
Outstanding, December 31, 2023	$	369,158
Change in fair value of derivative liabilities		(369,158	)
Outstanding, December 31, 2024	$	-

We determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes Option Pricing Model to calculate the fair value as of initial recognition and at subsequent period ends. The Black-Scholes Option Pricing Model requires six basic data inputs: the exercise or strike price, expected time to expiration or exercise, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement.

The following assumptions were used in the Black-Scholes option pricing model:

	December 31, 2024		December 31, 2023		November 21, 2023		December 31, 2022		July 15, 2022
Risk-free interest rate		4.25% - 4.27%		3.84 - 4.01%		4.41%		4.73%		3.12%
Expected life 1		2.32 – 3.90 years		3.32 – 4.90 years		5 years		0.75 years		0.6 years
Expected dividend rate		0.00%		0.00%		0.00%		0.00%		0.00%
Expected volatility		100%		100%		100%		100%		100.00%

As of December 31, 2024, the following warrants were outstanding:

Outstanding		Expiry date1		Weighted average exercise price ($)
	167		April 27, 2027		2,817
	54		November 21, 2028		5,600
	221				3,497

As of December 31, 2024 and December 31, 2023, the weighted average life of derivative liability warrants outstanding was 2.71 and 3.71 years, respectively.

¹ On April 28, 2023, the Company amended the warrant agreements for the 167 derivative liability warrants outstanding. The amendment removed the clause to automatically convert warrants to shares on IPO date and all warrants were given an expiry date of April 27, 2027. This led to an increase in the expected life input in the Black-Scholes model as of December 31, 2023 compared to December 31, 2022, when the Company used the expected IPO date to calculate the expected life of the warrants.