STOCKHOLDERS’ EQUITY |
12 Months Ended |
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Dec. 31, 2025 | |
| Equity [Abstract] | |
| STOCKHOLDERS’ EQUITY | NOTE 10 – STOCKHOLDERS’ EQUITY
Designation of Series B Preferred Stock
Effective June 26, 2023, the Company filed a Certificate of Designation, Preferences, Rights and Limitations of the Series B Preferred Stock (the “Series B Preferred Stock”) with the Secretary of the State of Delaware that designated shares of the Company’s authorized and unissued preferred stock as convertible Series B Preferred Stock at a par value of $ per share.
Holders of the Series B Preferred Stock are not entitled to receive dividends and do not have redemption or voting rights. Furthermore, the Series B Preferred Stock does not have a liquidation preference. Shares of Series B Preferred Stock are automatically convertible into shares of the Company’s common stock at a ratio of 100 shares of common stock for each share of Series B Preferred Stock upon stockholder approval of such conversion.
As of December 31, 2025 and 2024, there were issued and outstanding shares of Series B Preferred Stock.
Designation of Series X Preferred Stock
On July 25, 2024, the Company revoked the authorization to issue shares of the Company’s Series A Preferred Stock, par value $ per share (the “Series A Preferred Stock”) and concurrently authorized the issuance of up to shares of the Series X Preferred Stock, a then new class of preferred stock.
Holders of the Series X Preferred Stock are entitled to receive dividends on shares of the Series X Preferred Stock on an as-if-converted-to-Common-Stock basis, without regard to any beneficial ownership limitation described in a letter of transmittal, equal to and in the same form and manner as dividends are paid to holders of the shares of Common Stock. Subject to any requirements of the General Corporation Law of the State of Delaware, the Series X Preferred Stock has no voting rights. The Series X Preferred Stock ranks on parity with shares of Common Stock as to distributions of assets upon liquidation, dissolution, or winding up of the Company.
As consideration for the Scienture Merger, the shares of Scienture common stock issued and outstanding immediately prior to the “Effective Time” of the mergers were converted into the right to receive, in the aggregate, (i) shares of the Company’s common stock and (ii) shares of the Company’s Series X Preferred Stock, each share of which was convertible into one share of common stock.
In September 20, 2024, all previously issued shares of Series X Preferred Stock were converted into a total of shares of common stock. As such, there were no issued and outstanding shares of Series X Preferred Stock as of December 31, 2025.
Hudson Global Ventures Stock Purchase Agreement
On October 4, 2023, the Company entered into a Securities Purchase Agreement the “Hudson SPA”) with Hudson Global Ventures, LLC (“Hudson”). Under the terms of the Hudson SPA, the Company agreed to sell, and Hudson agreed to purchase, Two Hundred Ninety () shares of Series C Preferred Stock (the “Purchased Shares”) at a price of $ per share and a Warrant to purchase up to 41,193 shares of Common Stock. Additionally, pursuant to the Agreement, shares of Common Stock were issued to Hudson upon closing for a commitment fee. The Company received $250,000 in exchange for the Purchased Shares, Common Stock, and Warrants, net of issuance costs.
On July 12, 2024, the Company converted shares of Series C Preferred Stock into shares of common stock at the election of the holder.
Common Stock
During the year ended December 31, 2025, the Company issued an aggregate of shares of common stock for net proceeds of $9,008,199.
On October 3, 2025, the Company issued shares of common stock to Arena Investors to fully satisfy the outstanding obligations under the First Closing Debentures. The Company recognized the fair value of these shares, totaling $189,673, as interest expense during the year ended December 31, 2025. This issuance resulted in the irrevocable discharge of all related security interests and financial obligations (see Note 9).
On October 10, 2025, the Company issued shares of common stock to Scienture convertible debt as consideration for a loan maturity extension and default waiver. The Company recognized the fair value of these shares, totaling $175,250, as interest expense during the year ended December 31, 2025 (see Note 9).
During the year ended December 31, 2025, the Company issued shares of common stock for services. The fair value of shares issued for services was $4,310,090 and was included in general and administrative expenses in the consolidated statements of operations.
During the year ended December 31, 2025, a warrant holder exercised warrants for shares of commons stock on a cashless basis (see Note 10).
Effective as of September 17, 2025, an aggregate of shares of common stock were issued to employees and consultants pursuant to the cancellation of stock options issued to such holders. The Company revaluated the cancelled options using the Black-Scholes options model immediately prior to modification and compared to the fair value of the shares issued at $ per share and the remaining expense to be recognized under the original option grant. Accordingly, the incremental difference of $ was recognized as stock-based compensation expense in accordance with ASC 718-20-35 during the year ended December 31, 2025.
During the year ended December 31, 2025, the Company issued shares of common stock at a fair value of $411,000 pursuant to the conversion of the August 2024 convertible note of $357,554. Accordingly, the Company recognized a $53,446 loss on conversion.
During the year ended December 31, 2024, the Company issued shares of common stock for services. The fair value of shares issued for services was $4,598,294 and was included in general and administrative expenses in the consolidated statements of operations.
During the year ended December 31, 2024, a warrant holder exercised a warrant and acquired shares of common stock for $16,567 in proceeds (see Note 13).
During the year ended December 31, 2024, an options holder exercised an option and acquired shares of common stock for $9,840 in proceeds (see Note 14).
On July 12, 2024, the Company converted shares of Series C Preferred Stock into shares of common stock at the election of the holder.
On July 25, 2024, the Company issued shares of common stock and shares of Series X Preferred Stock pursuant to the Scienture Merger Agreement. The aggregate fair value of the purchase price consideration was $78,646,184.
In August 2024, the Company issued shares of common stock pursuant to the exercise of warrants.
On September 20, 2024, all previously issued shares of Series X Preferred Stock were converted into a total of shares of common stock.
Arena Note Commitment Shares
As additional consideration for the Arena Investors execution and delivery of the Arena SPA with the Arena Investors, the Company issued the Arena Investors the SPA Commitment Fee Shares as described in Note 8 above.
In connection with any Closing following the First Closing, the Company agreed to issue to the Arena Investors participating in such Closing or their designee(s) a certain number of “Commitment Shares.” The aggregate number of Commitment Shares owing to each of the Arena Investors, or their designee(s), in connection with any Closing following the First Closing will be agreed among the Company and the Arena Investors participating in such Closing. For the avoidance of doubt, all of the Commitment Shares issued in connection with the First Closing on the First Closing Date were earned as of the First Closing Date regardless of whether a subsequent Closing occurs (see Note 8).
The Company issued to each Arena Investor participating in the First Closing its pro rata portion of shares of the Company’s common stock. The fair value of shares issued was $420,200 was recognized as a debt discount, which was amortized to interest expense in full as commitment shares in connection with first closing was fully earned as of first closing date.
Equity Line of Credit
On November 25, 2024, the Company entered into a purchase agreement (“ELOC Agreement”) with Arena Business Solutions Global SPC II, Ltd (the “Investor”). Under the ELOC Agreement, the Company had the right, but not the obligation, to direct the Investor to purchase up to $50,000,000 in shares of the Company’s common stock (the “ELOC Shares”) upon satisfaction of certain terms and conditions contained in the ELOC Agreement. The term of the ELOC Agreement began on the date of execution and would end on the earlier of (i) the first day of the month following the 36-month anniversary of the execution date, (ii) the date on which the Investor had purchased the maximum amount of ELOC Shares, or (iii) the effective date of any written notice of termination delivered pursuant to the terms of the ELOC Agreement (the “Commitment Period”). The Company terminated the ELOC Agreement effective as of May 22, 2025.
In consideration for the Investor’s execution and delivery of the ELOC Agreement, the Company agreed to issue to the Investor, as a commitment fee: (i) shares of the Company’s Common Stock (the “Initial Commitment Fee Shares”) and (ii) in two separate tranches, a number of additional shares of common stock (the “Additional Commitment Fee Shares” and, together with the Initial Commitment Fee Shares, the “Commitment Fee Shares”) equal to (a) with respect to the first tranche, divided by the simple average of the daily VWAP of our common stock during the five (5) trading days immediately preceding the effectiveness of the initial registration statement on which the resale of the Commitment Fee Shares are registered (the “Effectiveness Date”) and (b) with respect to the second tranche, divided by the simple average of the daily VWAP of our common stock during the five (5) trading days immediately preceding the two (2) month anniversary of the Effectiveness Date. The Additional Commitment Fee Shares were subject to a true-up after each issuance pursuant to the terms of the ELOC Agreement.
The Company issued the Initial Commitment Fee Shares on November 25, 2024. The fair value of the shares issued was $534,800 and was included in deferred offering costs in the consolidated balance sheets. In March 2025, the deferred offering costs previously capitalized were offset against the gross proceeds from the ELOC share issuances (see below).
In 2025, the Company issued to the Investor Additional Commitment Fee Shares. The fair value of shares issued was $971,732 and was recognized as offering costs in connection with the related ELOC Agreement share issuances. Accordingly, the fair value of the shares issued were offset against the gross proceeds and there was no net effect to stockholders’ equity.
In March 2025, the Company issued an aggregate of shares of its common stock pursuant to the terms of the ELOC Agreement. The issuance generated total gross proceeds, which after deducting applicable offering costs, resulted in net proceeds of $.
In April and May 2025, the Company issued to the Investor, shares of common stock as the final Additional Commitment Fee Shares owed to the Investor. The fair value of shares issued was $554,586 and was recognized as deferred offering costs in connection with the related ELOC Agreement share issuances. As mentioned above, the Company terminated the ELOC Agreement effective as of May 22, 2025.
Private Placements
In July 2025, the Company’s board of directors approved a capital raise in an aggregate amount of up to $3,000,000 pursuant to a form of Common Stock Purchase Agreement (the “Purchase Agreement”). During July 2025, the Company sold an aggregate of shares of common stock for aggregate proceeds of $1,679,993, pursuant to Purchase Agreements with eight investors.
Registered Direct Offering
On August 15, 2025, the Company issued an aggregate of shares of common stock for aggregate proceeds of $3,549,184, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with several institutional investors as part of a registered direct offering made pursuant to a shelf registration statement on Form S-3 (File No. 333- 289198), which was originally filed by the Company with the Securities and Exchange Commission (the “Commission”) on August 1, 2025, and declared effective on August 8, 2025.
ATM Program
On September 19, 2025, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with Maxim Group LLC (“Maxim”), acting as the sole sales agent for the offer and sale of the Company’s common stock, par value $ per share, through an “at-the-market” offering program (the “ATM Program”). These shares are issued pursuant to the Shelf Registration Statement on Form S-3 (File No. 333-289198), which was filed with the Securities and Exchange Commission on August 1, 2025, and declared effective on August 8, 2025. Under the terms of the ATM Agreement, the Company may sell shares having an aggregate gross sales price of up to $18,792,009, subject to a commission of 3.0% of the gross sales price payable to Maxim, along with the reimbursement of certain specified expenses.
As of December 31, 2025, the Company issued and sold an aggregate of shares of common stock under the ATM Program. These transactions resulted in aggregate net proceeds to the Company of $14,871,106, after deducting the applicable sales commissions and offering expenses. This activity represents a significant increase from the 100 shares of common stock previously issued under the program as of December 31, 2025.
Special Cash Dividend
On March 6, 2024, the Company announced the declaration of a special cash dividend of eight dollars ($) per share of common stock, payable to stockholders of record as of March 18, 2024, with the dividend being paid on March 22, 2024. The special dividend of $12,671,072 (in the aggregate) was paid using a portion of the proceeds from the closing of the sale of certain assets to MMS.
On July 9, 2024, the Company announced the declaration of a special cash dividend of one dollar and fifty cents ($) per share of common stock, payable to stockholders of record as of July 19, 2024, with the dividend being paid on July 22, 2024. The special dividend of $2,187,759 was paid using a portion of the proceeds received in May 2024 in connection with the sale of certain assets to MMS.
Restricted Common Stock
As of December 31, 2025, the Company had restricted shares of common stock outstanding under the option plans. As of December 31, 2025, shares were vested. The Company recorded stock-based compensation expense of $248,457 in the consolidated statements of operations for the year ended December 31, 2025. Unrecognized stock compensation outstanding on these grants was $ as of December 31, 2025.
Equity Compensation Awards
Each independent member of the Company’s board of directors (the “Board”) is to receive an annual grant of restricted common stock of the Company equal to $55,000 in value on April 1st of each year (or such date thereafter as the awards are approved by the Board), and valued on such same date, based on the closing sales price on such date (or the first business day thereafter), which restricted stock awards will vest at the rate of 1/4th of such awards over the following four calendar quarters, subject to such directors continued service to the Company.
The Board and the Company’s stockholders approved an amendment to the Second Amended and Restated 2019 Equity Incentive Plan (the “Plan”), which increased the available shares under the Plan to shares of the common stock.
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