NOTE 9. COMMON STOCK WARRANTS AND WARRANT LIABILITIES

Summary of Outstanding Common Stock Warrants and Related Activity (after giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026)

Total net proceeds from warrant exercises during the years ended December 31, 2025 and 2024 was $852 thousand and $247 thousand, respectively.

October 2025 Pre-Funded Warrants

In October 2025, the Company issued and sold pre-funded warrants (the “October 2025 Pre-Funded Warrants”) to purchase an aggregate of 1,081,082 shares of Common Stock, to R01 and Framework for aggregate net proceeds of approximately $5.9 million The purchase price was $5.50 per October 2025 Pre-Funded Warrant, representing 110% of the closing price of the Common Stock on the day before the issuance, less the $0.05 exercise price for each such October 2025 Pre-Funded Warrant. The October 2025 Pre-Funded Warrants are exercisable for shares of Common Stock at any time after January 1, 2026, subject to receipt of stockholder approval which occurred subsequent to December 31, 2025, on March 12, 2026.

In accordance with ASC 815, the October 2025 Pre-Funded Warrants were initially classified as a liability from the date of issuance and remained classified as liability as of the year ended December 31, 2025 as shareholder approval is required before they may be exercised. The liability was recorded on each date based on the intrinsic value of the October 2025 Pre-Funded Warrants.

July 2024 Pre-Funded Warrants

In July 2024, in conjunction with the 2024 Public Offering, the Company issued 408,362 July 2024 Pre-Funded Warrants (in lieu of shares of common stock (see additional discussion in Note 7, “Financing Activities”). The July 2024 Pre-Funded Warrants were classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, were immediately exercisable, did not embody an obligation for us to repurchase our shares, and permitted the holders to receive a fixed number of shares of common stock upon exercise.

Series F Warrants

In July 2024, in conjunction with the 2024 Public Offering, the Company issued new July 2024 Warrants.

The July 2024 Warrants were classified as a component of permanent equity. The July 2024 Warrants down round feature adjustment was triggered on September 27, 2024, resulting in a reduced exercise price of $3.30 per share. As a result of the reduced exercise price, a deemed dividend of $1.0 million was recognized in accordance with a Black Scholes valuation model. See Note 3, “Fair Value Measurements,” subheading “Black Scholes Valuation Models and Assumptions.”

In March 2025, the Company entered into three (3) separate confidential settlement and release agreements (collectively, the “Settlement Agreements”) with each of Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”), Bigger Capital Fund, LP (“Bigger”) and District 2 Capital Fund LP (“District 2,” and together with Sabby and Bigger, the “Warrant Holders”) to settle certain disputed matters relating to the July 2024 Warrants held by each of the Warrant Holders. In connection with the Settlement Agreements, Series F-3 Warrants were exercised for 105,557 shares of common stock. Additionally, in conjunction with the Settlement Agreements, Series F-1 Warrants and Series F-3 Warrants exercisable for 254,545 and 148,988 shares of common stock, respectively, were repurchased by the Company for $1.8 million. The repurchase of these warrants was recorded as a reduction of additional paid-in capital in the Company’s unaudited condensed consolidated balance sheet.

The Settlement Agreements include a “most favored nations” provision for each of the Warrant Holders that would increase the amount paid to the Warrant Holders if any other holder of the Company’s common stock receives a higher amount per underlying warrant, as well as a mutual release of all claims by the Company and the Warrant Holders against each other, without any admission of liability by either party.

During the year ended December 31, 2025, the Company repurchased additional Series F-1 Warrants exercisable for 42,480 shares of common stock and Series F-3 Warrants exercisable for 42,480 shares of common stock for $0.2 million.

On August 19, 2025, Series F-1 Warrants exercisable for 381,818 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 7, “Financing Activities”).

June 2024 Warrants

In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company issued new common stock purchase warrants (the “June 2024 Warrants”) exercisable for 18,076 shares of common stock for $12.85 per share through December 17, 2029. The June 2024 Warrants were classified as a component of permanent equity.
 

On August 19, 2025, June 2024 Warrants exercisable for 1,814 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 7, “Financing Activities”).

March 2024 Warrant

In March 2024, the Company executed the First Amendment and Subsidiary Guarantee Consent as part of the 2024 Subsidiary Guarantee Termination with holders of the Secured Convertible Notes (see Note 8, “Convertible Notes”) in order to satisfy a closing condition for the DERMAdoctor Divestiture (see Note 15, “DERMAdoctor Divestiture”). In exchange for the consent of each holder, the option, at the holder’s election, to receive upon the closing of the DERMAdoctor Divestiture either, a new common stock warrant (the “March 2024 Warrant”), or a new unsecured convertible note (see Note 8, “Convertible Notes”). One holder elected the option to receive a March 2024 Warrant exercisable for 5,714 shares of common stock for $24.50 per share.

The March 2024 Warrant was initially classified as a liability from the date of issuance until Company stockholder approval on May 28, 2024, at which time it was reclassified to equity.

On August 19, 2025, all remaining March 2024 Warrants exercisable for 5,714 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 7, “Financing Activities”).

December 2023 Warrants

In December 2023, the Company issued new common stock purchase warrants (the “December 2023 Warrants”) exercisable for 14,451 shares of common stock for $43.75 per share through June 21, 2029.

The December 2023 Warrants were initially classified as liabilities from the date of issuance until Company stockholder approval was received on May 28, 2024, at which time it was reclassified to equity.

On August 19, 2025, December 2023 Warrants exercisable for 7,253 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 7, “Financing Activities”).

During the year ended December 31, 2025, the Company repurchased December 2023 Warrants exercisable for 1,857 shares of common stock for $3 thousand. 

May 2023 Warrants

In May 2023, the Company issued the following new common stock purchase warrants (collectively, the “May 2023 Warrants”):

In December 2023, the Company amended certain May 2023 Warrants to reduce their exercise prices to $43.75 per share. In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain May 2023 Warrants to reduce their exercise prices to $12.50 per share.

November 2022 Warrants

In November 2022, the Company issued the following common stock purchase warrants (collectively, the “November 2022 Warrants”):

In May 2023, the Company amended certain November 2022 Warrants to reduce their exercise prices from $1,102.50 per share to $262.50. In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain November 2022 Warrants to reduce their exercise prices from $262.50 per share to $12.50 per share as follows:

September 2022 Warrants

In September 2022, the Company issued new common stock purchase warrants (the “September 2022 Warrants”) exercisable for 1,874 shares of common stock for an initial exercise price of $1,102.50 per share through September 11, 2028.

In May 2023, the Company amended certain September 2022 Warrants exercisable for 1,364 shares of common stock to reduce their exercise prices from $1,102.50 per share to $262.50 per share. In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain September 2022 Warrants exercisable for 1,021 shares of common stock to reduce their exercise prices from $262.50 per share to $12.50 per share. On August 19, 2025, September 2022 Warrants exercisable for 522 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 8, “Financing Activities”). 

November 2021 Warrants

In November 2021, the Company issued new common stock purchase warrants (the “November 2021 Warrants”) exercisable for 6,123 shares of common stock for an initial exercise price of $3,246.25 per share through March 9, 2023.

In September 2022, the Company amended all November 2021 Warrants to reduce their exercise prices from $3,246.25 per share to $1,102.50 per share and extend their termination date to September 11, 2028. In May 2023, the Company amended certain November 2021 Warrants exercisable for 3,062 shares of common stock to reduce their exercise prices from $1,102.50 per share to $262.50 per share. On August 19, 2025, November 2021 Warrants exercisable for 536 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 7, “Financing Activities”). During the year ended December 31, 2025, the Company repurchased December 2023 Warrants exercisable for 1,225 shares of common stock for $3 thousand. 

July 2020 Warrants

In July 2020, the Company issued new common stock purchase warrants (the “July 2020 Warrants”) exercisable for 1,127 shares of common stock for an initial exercise price of $10,106.25 per share through January 22, 2026.

In September 2022, the Company amended certain July 2020 Warrants exercisable for 784 shares of common stock to reduce their exercise prices from $10,106.25 to $1,102.50 per share. In May 2023, in conjunction with the 2023 Private Placement, the Company amended certain July 2020 Warrants exercisable for 441 shares of common stock to reduce their exercise prices from $1,102.50 per share to $262.50 per share.

Summary of Common Stock Warrant Liabilities

The following roll-forward presents the Company’s warrant liabilities measured at fair value as of December 31, 2025 and 2024 (in thousands). The October 2025 Pre-Funded Warrants, which have a nominal exercise price, were recorded based on the market price of the Company’s common stock less the nominal exercise price upon issuance and at December 31, 2025.