Shareholders’ Equity |
3 Months Ended | |||||||||
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Mar. 31, 2026 | ||||||||||
| Shareholders’ Equity [Abstract] | ||||||||||
| SHAREHOLDERS’ EQUITY | 9. SHAREHOLDERS’ EQUITY
Common Stock
As of March 31, 2026, and December 31, 2025, the Company had 100,000,000 authorized shares of common stock. The Company had 12,575,983 shares of common stock issued and outstanding, as of March 31, 2026, and December 31, 2025, respectively. Each share of common stock is entitled to one vote.
On February 7, 2025, the Board approved and implemented a reverse stock split ratio of 1-for-2.6, which provided that every 2.6 shares of its issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. All share and per share amounts in the accompanying unaudited condensed financial statements and footnotes have been retrospectively adjusted for the reverse stock split.
Warrants
The Company accounts for Representative Warrants as equity-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”).
In connection with the merger that closed on December 1, 2025, the Company issued advisory warrants to purchase 745,663 shares of common stock, equal to 5% of the Company’s fully diluted shares outstanding as of October 20, 2025. The warrants have an exercise price of $1.78 per share and a term of 5 years. The Company evaluated the warrants under ASC 480 and ASC 815 and determined that they meet all of the criteria for equity classification. The grant date fair value of the warrants was estimated to be $898,301 utilizing a Black-Scholes model with the following assumptions: share price of $1.82, exercise price of $1.78, term of 5 years, volatility of 79.4%, risk-free rate of 3.58%, and expected dividend rate of 0.0%. The grant date fair value was recognized as a transaction cost of the merger with a corresponding increase to additional paid-in capital. Preferred Stock
On December 5, 2023, the Company authorized 10,000,000 shares of preferred stock with a par value of $0.01. In connection with the Merger, on December 1, 2025, the Company issued 7,477,017 shares of Series A Convertible Preferred Stock to the former stockholders of MindWave Innovations. The aggregate fair value of the Series A Preferred Stock was equivalent to the fair value of the net assets acquired from MindWave. The material terms of the Series A Preferred Stock are as follows:
The Company evaluated the Series A Preferred Stock under ASC 480 and determined that the instrument is classified in permanent equity based on the terms of the Merger.
Common Shares to be Issued
On February 2, 2026, the Company approved an advisory agreement previously executed on December 1, 2025, with E.F. Hutton (“The Advisor”), pursuant to which the Company is obligated to issue an aggregate of 4,558,044 shares of its common stock as consideration for advisory services provided. The agreement gained approval as of the date disclosed above, therefore was not recognized as an obligation of the Company prior to February 2, 2026. The Company evaluated the share commitment under ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the obligation qualifies for equity classification, as it represents an obligation to issue a fixed number of shares with no cash settlement features.
The fair value of the share commitment of $8,113,318, based on the closing market price of the Company’s common stock on February 2, 2026, of $1.78 per share, was recorded as an expense with an offsetting credit to common stock issuable within stockholders’ equity. As of March 31, 2026, the 4,558,044 shares had not yet been issued. |