v3.26.1
Common Stock and Preferred Stock
 6 Months Ended
Jun. 30, 2026
Common Stock and Preferred Stock [Abstract]  
Common Stock and Preferred Stock
10. Common Stock and Preferred Stock

 

Authorized Capital

 

VTI had been authorized to issue 20,000,000 shares of common stock, $0.001 par value per share, and 15,000,000 shares of preferred stock, $0.001 par value per share. In June 2024, the number of authorized shares of preferred stock increased to 16,000,000 shares. In August 2025, the Board of Directors of the Company approved a 5,000:1 reverse stock split. In August 2025, VTI amended the Articles of Incorporation of the Company to authorize three new series of preferred stock, with similar rights as the existing shares of preferred stock:

 

  a. Series D-1 – 23,658 shares authorized with an “original issuance price” of $8.874 per share

 

  b. Series D-2 – 315,256 shares authorized with an “original issuance price” of $5.886 per share

 

  c. Series Seed-1 – 900,000 shares authorized with an “original issuance price” of $0.936 per share

 

On April 24, 2026, VHI amended the Articles of Incorporation of the Company to effectuate a decrease in the number of shares of the common stock authorized for issuance from 300,000,000 to 50,000,000 shares.

 

VTI Common Stock Transactions

 

In August 2025, VTI issued 376,256 shares of common stock to certain advisors and consultants. The fair value of such shares of approximately $5.9 million is recorded principally as a Transactional and Financial Advisory Fee in the accompanying Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2025.

 

In August 2025, VTI issued warrants to certain preferred shareholders, who agreed to participate in the Concurrent Financing, to purchase 6,008,589 shares of VTI common stock at $0.001 per share. The warrants were immediately exercised, and VTI received $6,009 in proceeds from such exercise. The fair value of the warrants, or $2,457,513, is considered a shareholder transaction and recorded analogous to a “deemed dividend” in the Consolidated Statement of Stockholders’ Equity.

 

In August 2025, all of the preferred stock outstanding was converted into 1,241,680 shares of VTI common stock.

 

As discussed in Note 8, all of the outstanding VTI’s Promissory Notes and Bridge Notes and related accrued interest were converted into 534,850 shares of VTI common stock.

 

VTI Preferred stock

 

In August 2025, several preferred shareholders were issued shares of a new series of preferred stock in exchange for their current holdings in earlier issued series of preferred stock as follows:

 

  a. 11 shares of Series D preferred stock exchanged into 23,658 shares of Series D1 preferred stock

 

  b. 96 shares of Series D preferred stock exchanged into 315,256 shares of Series D2 preferred stock

 

  c. 203 shares of Series D preferred stock exchanged into 900,000 shares of Seed Series-1 preferred stock

 

Such shareholders received an aggregate of 1,238,604 additional shares of preferred stock. The estimated fair value of such additional preferred shares was $19,421,311 is considered a shareholder transaction and recorded analogous to a “deemed dividend” in the Condensed Consolidated Statement of Stockholders’ Equity.

 

As a result of the Merger transaction, all shares of preferred stock were converted into common stock.

 

VHI Stock transactions 

 

At the Merger date, there were 8,161,761 common shares of VTI outstanding, of which 6,843,451 of such VTI common shares were exchanged into 4,272,773 shares of VHI common stock as merger consideration pursuant to the Exchange Ratio specified in the Merger Agreement. The remaining VTI 1,318,310 common shares remain outstanding, against which certain VHI common shares are entitled as merger consideration (“Entitlement Shares”).

 

At the Merger date, there were 691,970 shares of VHI common stock outstanding, which were held by the former Reshape shareholders, and continue to be outstanding at December 31, 2025. The net liabilities of Reshape assumed at the Merger date were approximately $244,000. Subsequently, we have been able to reduce certain of such liabilities, recognized as an adjustment of the equity transactions associated with the Merger.

 

Private Placement offering in the Company and Share Subscription in VTL at Merger transactions (see Note 8) closed shortly after the Merger, and resulted in VTL receiving gross proceeds of $940,009 from the sale of 999 shares of VTL and the Company receiving $5,735,052 from the sale of 520,514 shares of VHI common stock, inclusive of the amounts received in advance in the form of bridge notes (see Note 7). Net of expenses of $100,000, the Company received an aggregate of $6,575,061. The amount recorded with the Condensed Consolidated Statement of Stockholders Equity of $6,463,646 includes the offset of the deferred offering cost of $111,415.

 

The Company issued 9,646 and 19,960 shares of common stock to a marketing vendor in January 2026 and December 2025, and recorded an expense of $30,000 and $100,000, respectively, recorded in selling, general and administrative expenses.

 

At The Market Offering

 

On August 20, 2025, The Company entered into Amendment No. 1 to the Equity Distribution Agreement dated May 30, 2025 (the “Sales Agreement” or “ATM”) with Maxim Group LLC (“Maxim”) to act as the Company’s exclusive sales agent with respect to the issuance and sale of up to $12,000,000 of the Company’s shares of common stock from time to time, in an at-the-market public offering (the “Offering”), less a 3% discount.  The Company has targeted a certain floor price and maximum daily sales as a percentage of daily trading volume at which it will sell shares under the Sales Agreement. In January 2026, the Company sold 1,089,545 shares of common stock at prices approximately between $4.00 and $6.00 per share under the Equity Distribution Agreement, resulting in net proceeds of $5,291,868, before deducting $6,000 for due diligence fees incurred with the Offering. 

 

Entitlement shares

 

In connection with the Merger, three put/call option agreements were put in place.

 

  a. The first put/call option agreement is between the Company and certain investors in VTI. Through this agreement, 1,318,310 shares of common stock held by Indian stockholders of VTI be exchanged for 825,307 entitled shares of VHI common stock pursuant to the put/call exercise in the future as per the terms of the agreements.

 

  b. The second put/call option agreement is between the Company’s Indian subsidiary, VHI, and investors in the bridge investments that came in the form of Compulsory Convertible Debentures that were converted to 86 shares in the Indian subsidiary at the Merger closing. Those shares are to exchange for 800,361 entitled shares of common stock of VHI pursuant to the put/call exercise in the future as per the terms of the agreements.

 

  c. The third put/call option agreement is between the Company’s Indian subsidiary, VHI, and investors for the concurrent (concurrent to Merger closing) financing for subscription of 999 shares in the Indian subsidiary. Those shares are to be exchanged for 89,671 entitled shares of common stock of VHI pursuant to the put/call exercise in the future as per the terms of this agreement.

 

VHI may exercise its call options for the specified shares of VTI or VTL in the above three option agreements upon certain defined liquidation events. The investors may exercise their put options for the purchase of their entitled shares of the Company upon certain defined financing and/or liquidation events, in all cases subject to approval by the Board of Directors of the Company and VTI. The consideration to be paid for such put/call options is based upon pro rata “liquidation event” proceeds or certain specified amounts, and in certain investor cases, for the exchange of common stock of VHI. These put/call options are equity classified since all actions under the agreements are subject to the Company’s control. Upon exercise, the Company will recognize a “deemed dividend” for the excess of the fair value of the stock received at such date, less its historical cost.

 

Between the Merger date and December 31, 2025, 233,695 of entitlement shares held by VTL shareholders and 46 entitlement shares held by VTI shareholders were exchanged for 233,741 shares of VHI common stock. There were no exchanges of entitlement shares from January 1 to June 30, 2026.

 

Since the shares discussed above are outstanding shares issued by subsidiaries of the Company, they are classified as non-controlling interests. As of June 30, 2026 and December 31, 2025, approximately 10% of VTL and 16% of VTI are owned directly by shareholders outside of VHI in VTI.

 

The non-controlling interest is summarized as of June 30, 2026, as follows:

 

      Entitled
shares		       Historical
Cost
Amount		  
VTI Shareholders     825,261     $ 540,488  
VTL note holders     566,666       55,167  
Investors in VTL common stock through the Concurrent Financing     89,671       940,009  
      1,481,598       1,535,664  
Loss attributable to non-controlling interest for the year ended December 31, 2025             (215,706 )
Non-controlling interest at December 31, 2025     1,481,598       1,319,958  
Loss attributable to non-controlling interest for the six months ended June 30, 2026     -       (56,738 )
Non-controlling interest at June 30, 2026     1,481,598     $ 1,263,220