WARRANTS

6 Months Ended

Dec. 31, 2025

NOTE 15 – WARRANTS

On February 28, 2025, the Company entered into a securities purchase agreement with a single institutional investor pursuant to which the company offered and sold 153,403.40 shares of the Company’s common stock, $0.0001 par value per share, pre-funded warrants to purchase up to 129,226.50 shares of common stock, and warrants to purchase up to an aggregate of 423,944.85 shares of common stock. The purchase price for each share and the exercise price for each common stock warrant to purchase one share of common stock was $17.10 per share, and the purchase price for each pre-funded warrant to purchase one share of common stock was $17.099. The common stock warrants consist of Series A common stock warrants and Series B common stock warrants. The Series A common stock warrants to purchase up to 141,314.95 shares of common stock are exercisable following the six-month anniversary of the closing date of the offering and expire 18 months from the date of issuance. The Series B common stock warrants to purchase up to 282,629.90 shares of common stock are exercisable following the six-month anniversary of the closing date of the offering and expire five years from the date of issuance.

The gross proceeds to the Company from this offering were $2.62 million from the sale of the common stock and $2.62 million from the sale of the pre-funded warrants. Because the Series A and B warrants were issued in conjunction with the sale of the common stock and the pre-funded warrants, the total gross proceeds of $4.80 million from the sale of the common stock and pre-funded warrants were proportionally allocated between the common stock, prefunded warrants, and the Series A and B warrants based on the estimated fair values of the stock and the warrants at the time of the issuance in accordance with ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity. The total fair value allocation was: $2.30 million to common stock, $1.94 million to the pre-funded warrants, $0.38 million to Series A warrants and $0.22 million to Series B warrants.

As of December 31, 2025, there were 141,314.95 and 282,629.90 in Series A common stock warrants and Series B common stock warrants, respectively, issued and outstanding. The exercise price for the Series A and B warrants is $17.10 per share. All 129,226.50 prefunded warrants were exercised at an exercise price of $0.001 per share in July and August 2025.

The Company evaluated the terms of the warrants under ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, and determined that they qualify for equity classification. This conclusion was based on the fact that:

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The warrants are indexed to the Company’s own stock;

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The contracts require physical or net share settlement;

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The Company has sufficient authorized and unissued shares to settle the contracts;

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There are no settlement provisions requiring cash payment by the Company;

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There are no variables or conditions that could cause the warrants to be reclassified as liabilities.

Accordingly, the warrants are classified as a component of stockholders’ equity, and no subsequent remeasurement is required. The proceeds from the issuance of the warrants were allocated to additional paid-in capital upon issuance.

The following table summarizes warrant activity for the six months ended December 31, 2025:

	Number of Warrants										Weighted average
Description	Prefunded			Series A		Series B		Total			Weighted average
Outstanding as of July 1, 2025		129,226.50			141,314.95		282,629.90		553,171.35			17.10
Issued during the period		-			-		-		-			-
Exercised during the period		(129,226.50	)		-		-		(129,226.50	)		17.10
Expired during the period		-			-		-		-			-
Oustanding as of December 31, 2025		-			141,314.95		282,629.90		423,944.85			17.10

All Series A and Series B common stock warrants became exercisable on September 3, 2025, and remained exercisable as of December 31, 2025.

MacKenzie Realty Capital, Inc. 10-Q