Note 8 – Common and Preferred Stock

NTHI is authorized to issue 100,000,000 shares of common stock, par value $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share. The board of directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of shares of Preferred Stock in one or more series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock Designation.

During the six months ended June 30, 2025, the Company sold 727,750 shares of common stock at a price of $16.00 per share for gross proceeds of $11,644,005 pursuant to a private placement of its securities, issued 46,000 shares as part of advisory services related to the listing and as part of the private placement fee for the equity line of credit, issued 162,500 shares for the cashless exercise of warrants, and released 3,110,000 shares for the vesting of shares of restricted stock.

Series A Convertible Preferred Stock

On June 11, 2026, the Company entered into a Securities Purchase Agreement, pursuant to which the Company issued 6,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) for aggregate gross proceeds of $5,000,000 in a private placement exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D. The rights, preferences, and privileges of the Series A Preferred Stock are set forth in the Certificate of Designations, Preferences and Rights filed with the Secretary of State of the State of Delaware on June 10, 2026.

The Series A Preferred Stock has a stated value of $1,000 per share, for an aggregate Stated Value of $6,000,000, and ranks senior to the Company’s common stock. The Series A Preferred Stock is redeemable for cash at the Stated Value at the Company’s option on or before the redemption date, which is four months from the issuance date and may be extended by the Company for up to two additional one-month periods. If the Company does not redeem the Series A Preferred Stock on or before the Redemption Date, the Stated Value of each outstanding share increases by $166.67, and the holders may convert their shares into common stock at a conversion price equal to 80% of the lowest closing price of the Company’s common stock during the five trading days immediately preceding the conversion date, subject to a floor price of $1.00 per share and to beneficial ownership limitations.

The Company evaluated the Series A Preferred Stock under ASC 480, Distinguishing Liabilities from Equity, and concluded that the instrument does not require classification as a liability, as it is not mandatorily redeemable and does not meet the criteria for liability classification. Accordingly, the Series A Preferred Stock is classified as permanent equity. The Company further evaluated the embedded conversion feature under ASC 815-15 and ASC 815-40 to determine whether it required bifurcation from the host instrument and separate accounting as a derivative liability. Since the conversion price is variable, the conversion feature does not meet the “fixed-for-fixed” criteria required for the feature to be considered indexed to the Company’s own stock and is therefore not eligible for the scope exception. The Company concluded that the embedded conversion feature is not clearly and closely related to the economic characteristics of the host instrument and meets the definition of a derivative under ASC 815-10-15. As such, the conversion feature has been bifurcated from the Series A Preferred Stock and is separately recognized as a derivative liability, initially and subsequently measured at fair value, with changes in fair value recognized in the condensed consolidated statements of operations at each reporting period.

The Company allocated the $5,000,000 of gross proceeds between the derivative liability and the Series A Preferred Stock using the residual method, under which the derivative liability was recorded at its issuance-date fair value of $1,593,474, with the remaining proceeds of $3,406,526 allocated to the Series A Preferred Stock. The Company paid a placement fee of $400,000 (8% of gross proceeds) in connection with the offering, which was allocated between the derivative liability and the Series A Preferred Stock in the same proportion as the proceeds. The difference between the proceeds allocated to the Series A Preferred Stock and its aggregate Stated Value is not accounted for as a discount and is not amortized. It will be recognized as a deemed dividend, reducing income available to common stockholders, only if and to the extent the Series A Preferred Stock is redeemed for cash in excess of its carrying amount.

The fair value of the embedded derivative was determined using a Monte Carlo Simulation model, which incorporates the redemption and conversion outcomes available under the terms of the Series A Preferred Stock. The model simulates the Company’s future common stock price using a Geometric Brownian Motion framework and, in the conversion scenario, determines the conversion payoff based on the lowest simulated closing price during the five trading days preceding the assumed conversion date, subject to the $1.00 floor price. The conversion payoff was adjusted for a discount for lack of marketability (“DLOM”) to reflect the estimated period during which shares issued upon conversion would not be freely tradable. The probability-weighted value of the redemption and conversion scenarios was reduced by an implied calibration discount, which equates the modeled fair value of the Series A Preferred Stock to the cash proceeds received on the issuance date, and which is amortized over the expected term to the Redemption Date.

Key assumptions used in the Monte Carlo Simulation valuation of the embedded derivative were as follows:

Equity volatility was estimated based on the Company’s estimated equity volatility of a group of guideline public companies over a period commensurate with the expected term, given the Company’s limited public trading history. The risk-free interest rate at each measurement date was based on the U.S. Treasury yield curve at that date, interpolated to match the expected term. The probability of redemption reflects a market-participant assessment of the likelihood that the Company redeems the Series A Preferred Stock for cash at the Redemption Date, considering the Company’s available funding sources and execution risk.

The following table presents a reconciliation of the embedded derivative liability, which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3), for the six months ended June 30, 2026:

As of June 30, 2026, the fair value of the derivative liability was $1,654,795, and the Company recognized a loss of $61,321 for the change in fair value during the three and six months ended June 30, 2026, presented within loss on change in fair value of derivative liability related to Series A preferred stock in the condensed consolidated statements of operations. As of June 30, 2026, 6,000 shares of Series A Preferred Stock remained outstanding, and the aggregate carrying amount of the Series A Preferred Stock was $3,134,004. No shares of Series A Preferred Stock have been redeemed or converted as of the date of this filing.

Except for the Series A Preferred Stock derivative liability described above, as of June 30, 2026 and December 31, 2025, the Company had no other instruments that required classification as a derivative liability.

Private Placement – January 2026

In January 2026, the Company entered into a securities purchase agreement (the “January 2026 PIPE”) pursuant to which the Company agreed to sell, in one or more closings, up to an aggregate of 2,222,222 shares of its common stock at a price of $7.20 per share, for aggregate gross proceeds of up to $16,000,000. In connection with the January 2026 PIPE, the Company also agreed to issue warrants to purchase up to 2,222,222 shares of common stock at an exercise price of $9.00 per share, exercisable for a period of 5 years from the date of issuance.

As of June 30, 2026, the Company had completed closings under the January 2026 PIPE for an aggregate of 2,093,305 shares of common stock and warrants to purchase 2,093,305 shares of common stock, resulting in gross proceeds of approximately $15,071,783.

Warrants Issued in Connection with the January 2026 PIPE

In connection with the issuance of common stock under the January 2026 PIPE, each investor received warrants to purchase shares of common stock. The warrants have an initial exercise price of $9.00 per share and a contractual term of 5 years from the date of issuance. The warrants contain a down-round protective provision pursuant to which, if the Company subsequently issues equity-linked instruments at an effective price below the then-current exercise price of the warrants, the exercise price of the warrants will be adjusted downward to match the lower issuance price. The Company evaluated the warrants under ASC 815-40. In performing this evaluation, the Company applied the guidance under ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features, which excludes down-round features from the assessment of whether an instrument is considered indexed to the Company’s own stock. Based on this evaluation, the Company determined that the warrants meet the criteria for classification as equity. Accordingly, the warrants have been recorded within additional paid-in capital.

The aggregate proceeds of $15,071,783 received during the six months ended June 30, 2026 from closings under the January 2026 PIPE were allocated between the common stock and the warrants using the relative fair value method, resulting in $8,993,916 allocated to common stock and $6,077,867 allocated to warrants, each recorded within additional paid-in capital. The fair value of the common stock and warrants was measured separately at each individual issuance date during the period from January 29, 2026 through April 20, 2026, reflecting the market conditions and valuation inputs on each respective issuance date. The fair value of the warrants at each measurement date was determined using a Monte Carlo Simulation model that incorporates the down-round protective provision and management’s expectations regarding future financing events that could trigger the provision. At each measurement date, the aggregate modeled fair value of the common stock and warrants was reduced by an implied calibration discount, which equates the modeled fair value of the units to the cash proceeds received at that closing.

Key assumptions used in the Monte Carlo Simulation valuation of the warrants at each measurement date were as follows:

Equity volatility was estimated based on the median observed daily equity volatility of a group of guideline public companies over a period commensurate with the adjusted term of the warrants, given the Company’s limited public trading history. The risk-free interest rate at each measurement date was based on the U.S. Treasury yield curve at that date, interpolated to match the adjusted term of the warrants.

As of June 30, 2026, no down-round adjustment to the exercise price of the warrants had been triggered, and the warrants remained outstanding with an exercise price of $9.00 per share.

Private Placement – October 2024

On October 11, 2024, the Company entered into an agreement with RBW Capital Partners LLC, a division of Dawson James Securities, Inc. (“Broker”) to serve as placement agent and provide broker services in connection with the possible sale of common stock up to $10 million. If a sale is made between the Company and any institutional or individual third-party funding source introduced by the placement agent, the Company will pay a placement fee of 8% of the gross proceeds. In addition, the company agrees to pay; (a) 1.0% of the gross proceeds for non-accountable expenses; and (b) out of pocket expenses plus the costs associated with the use of a third-party electronic road show service up to $10,000. The agreement expired on January 11, 2025 and was amended and restated on January 29, 2025 to extend the term for another six months through July 29, 2025 and increased the placement fee to 12% from 8% of the gross proceeds, and eliminated the 1% non-accountable expense fee. This agreement expired in July 2025.

Under this agreement, through December 31, 2024, the Company closed on commitments from investors to purchase 625,000 shares of common stock of the Company at $16 per share for total commitments of $10,000,000, which were to be held in escrow until the Company’s registration statement was declared effective. During the three months ended March 31, 2025, prior to the Company having an effective registration statement, the Company closed on an additional commitment to purchase 102,750 shares of common stock of the Company at $16 per share, for total commitments of $1,644,005, also to be held in escrow until the Company’s registration statement was declared effective. On March 25, 2025, the Company’s registration statement was declared effective at which time the $11,644,005 in escrow was released to the Company.

In connection with the agreement, the Company paid $300,000 in placement agent fees to the Broker for securing $2,500,000 in commitments for the private placement, which was recorded as a reduction to additional paid-in capital.

Advisory Services

On October 3, 2024, as amended on January 23, 2025, the Company entered into an agreement with Broker, for financial advisory and investment banking services in connection with a direct listing of the Company’s common stock on the Nasdaq Global Market or other major US market. The agreement provides for a one-time fee of $250,000 payable three days after the direct listing and the issuance of 30,000 shares of common stock (which are restricted until the shares are registered by filing a resale S-1 within 30 days after the effective date of the direct listing). In addition, the Company agreed to pay up to $100,000 for fees and expenses of legal counsel and other out-of-pocket expenses plus the costs associated with the use of a third-party electronic road show service. Such fees were included in accounts payable and deferred offering costs in the accompanying consolidated balance sheets as of December 31, 2024. The fair value of the 30,000 shares issued in March 2025, amounting to $363,300, was determined using the closing day price of $12.11. This amount was recorded as an advisory fee on the consolidated statements of operations for the year ended December 31, 2025. The agreement expired on January 3, 2025 and was amended and restated on January 23, 2025 to extend the term for another six months through July 23, 2025. This agreement expired in July 2025.

Equity Purchase Agreement

On October 22, 2024, the Company entered into an equity purchase agreement (the “Equity Purchase Agreement”) with Mast Hill Fund, LP (“Mast Hill”) pursuant to which the Company may sell and issue to Mast Hill, and the investor may purchase from the Company, up to $50,000,000 of Company’s common stock. Under the Equity Purchase Agreement, the Company has the right, but not the obligation, to direct Mast Hill, by its delivery to the Mast Hill of a Put Notice from time to time, to purchase Put Shares (i) in a minimum amount not less than $50,000 and (ii) in a maximum amount up to the lesser of (a) $750,000 or (b) 150% of the average trading volume of the Company’s common stock during the five trading days immediately preceding the Put Date.

The actual amount of proceeds the Company receives pursuant to each Put Notice (each, the “Put Amount”) is determined by multiplying the Put Amount requested by the applicable purchase price. The purchase price for each of the Put Shares equals 95% of the Market Price, (as defined below) less the Clearing Costs (as defined below). Market Price is the lowest volume weighted average prices of the Company’s common stock on its principal market on any trading day during the Valuation Period (as defined below). The Valuation Period is the five trading days immediately following the date on which Mast Hill receives the Put Shares in its brokerage account. Clearing Costs are all the fees incurred by Mast Hill with respect to its brokerage firm, clearing firm, Company transfer agent fees, and attorney fees, with respect to the Put Shares.

The term of the Equity Purchase Agreement commenced on the effective date of the direct listing and will terminate on the earlier of (i) the date on which the Mast Hill shall have purchased Put Shares equal to the $50,000,000, (ii) twenty-four (24) months after the date of the Equity Purchase Agreement, (iii) written notice of termination by the Company to Mast Hill, (iv) this Registration Statement is no longer effective after the initial effective date of this Registration Statement, or (v) the date that, pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the Company, a receiver, trustee, assignee, liquidator or similar official is appointed for the Company or for all or substantially all of its property or the Company makes a general assignment for the benefit of its creditors.

During the six months ended June 30, 2026, the Company sold 76,648 shares of common stock at prices ranging from $8.40 to $8.97 per share under the Equity Purchase Agreement, resulting in net proceeds of $663,727. Since the shares were purchased at a discount as a result of the five-day settlement period, the settlement feature is considered a derivative liability. Changes in the fair value of the derivative liability resulted in a gain on settlement of $2,801, which was recognized in the condensed consolidated statements of operations during the six months ended June 30, 2026. There were no transactions under the Equity Purchase Agreement during the three months ended June 30, 2026 or during the three and six months ended June 30, 2025.

In connection with this agreement, we issued 16,000 shares of common stock to Mast Hill in March 2025. The fair value of the shares issued was determined by using the closing day price of $12.11 per share, resulting in a total value of $193,760, which has been recorded as additional paid-in capital in the consolidated balance sheets. As proceeds are received under the Equity Purchase Agreement, the related offering costs are reclassified as a reduction of additional paid-in capital.